By the end of the year, the regional flood prevention district could be taking on a large amount of debt in order to carry out levee upgrade projects.
The Southwestern Illinois Flood Prevention District Council is looking to borrow money to pay for projects that would help bring the area’s levees up to the 500-year flood protection level.
Chuck Etwert, the district’s chief supervisor of Construction and the Works, expects the district to issue $65 million to $70 million worth of bonds by the end of the year.
The district council has approved a resolution authorizing the district to issue up to $100 million in bonds, but Etwert said it most likely won’t be that high.
After the bonds are issued, Etwert said the district would spend the next calendar year working engineering and design of the projects. Physical construction of bringing the levies to a 500-year flood level would begin during the 2017 fiscal year which begins on Oct. 1, 2016.
The district is carrying out projects rather than pledging cash because the district and the U.S. Army Corps of Engineers could not agree on the inclusion of project labor agreements on levy projects.
The U.S. Army Corps of Engineers is committed to paying for 65 percent of the cost of bringing the levies up to the 500-year level. The remainder would come from the flood prevention district.
Federal government officials have yet to give final approval on whether projects carried out by the flood prevention district will count toward a work-in-kind credit. However the district’s planned projects have been identified by the U.S. Army Corps of Engineers as work needed to bring the levees to the 500-year protection level.
Final approval of the projects might be as much as two years away, even though the district is confident the projects would be accepted.
“We don’t want to wait two years and do nothing,” Etwert said. “It’s too important of an issue, you never know when the 500-year flood will come. The sooner you can get work done, the better.”
How much the district can borrow is based on how much revenue it receives from a 25 percent sales tax, and on interest rates, which are at historic lows.
“If rates go up higher, we’ll borrow less,” Etwert said. “We have to wait and see.”
Before the flood prevention district issues the bonds, the action has to be approved by the St. Clair, Madison and Monroe county boards.
Terry Liefer, chairman of the Monroe County Board, said he expects his board to review the request within the next month.
He said he expects Monroe County Board members to give their blessing to the bond issue.
Madison County Administrator Joseph Parente said he expected his county board to consider the bond resolution in October.
“The board just needs to pass the same resolution the flood prevention district passed,” Parente said. “The board has been committed to the project.”
The St. Clair County Board is scheduled to review the request next week.
St. Clair County Administrative Adviser Dan Maher, who also sits on the flood prevention council, said the bond sale is expected to take place in November.
He added the district will need a bond rating, and rating agencies will look at whether the state could withhold money from the district.
“We should do fairly well on our bond rating because the state can’t interfere with the sales tax,” Maher said.
In 2010, the flood prevention district took out $94 million in bonds to help with work along the levees to bring them up to a 100-year flood level.
“It was always the intent of council to do two separate bond issues, and possibly a third if the need should arrive,” Maher said.
The district will stay in existence until all of the debt is paid off.
Etwert said almost all of the work to bring the levees to a 100-year flood level should be done by the end of the calender year.
So far $36.5 million of $61.2 million of work has been completed, Etwert said.
Restoring the levees to the 100-year flood level allows them to be accredited by the Federal Emergency Management Agency and avoids higher flood insurance rates for area property owners.
The Army Corps of Engineers has the authority to increase the levee protection level to the 500-year flood level, but doing so depends on funding.