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President Darch Gives State of the Village Address

Post Date:02/27/2017
  For a complete script of the State of the Village, click here.
 
  For a complete copy of the PowerPoint presentation given, click here.
 
   Watch President Darch's State of the Village here.
 

President Darch presented the State of the Village at the Board of Trustees meeting held Monday, February 27, 2017. 

The following is the text of the presentation. 

"One of the big successes of 2016 was reaching our fundraising goal for Barrington’s White House. Over $6.8 million dollars from private donors – individuals, clubs, organizations, foundations, and businesses - have made real the vision of a refurbished historic building in the heart of Barrington serving as a community and cultural center. It also serves as office space for charities, and as the site for regular senior social activities, sold out cultural performances of local, regional, and national talent, and private events which generate rental and other revenue to support operations. We have had over 7,000 visitors to the White House during 2016 and 52 local volunteers contributing over 1,738 hours to its success. The Barrington White House project was recognized by the American Public Works Association – Chicago and Lake Branches – as the Historic Preservation Project of 2016.

Next door to the Barrington White House, the Barrington Village Center Project was recognized by the APWA Lake Branch as its Infrastructure and Environment Project of 2016. That project – our Barrington Village Center redevelopment is now 92% leased. Some of the other good economic news for 2016 is as follows:

  • 49 new businesses opened in the Village
  • 3 new restaurants opened – NeoTeca, Southern Belles, and Farmhouse on North, and the Heart of Europe Café was recognized as the best donut shop in Illinois.
  • Our overall office occupancy as reported by Lake County Partners’ 4th quarter 2016 report was 88.8%, while retail occupancy was 93.7%, which exceeds retail occupancy in Arlington Heights, which was 93% and in Palatine where it was only 86% for the same period.
  • Our housing values were up in 2016. Zillow indicates a 2.7% increase in median sale prices, while a local real estate expert tells us the median price for sales closed in January 2017 was 7.3% higher than that median price for sales closed in January 2016. Additionally, the Village has issued 922 building permits this year for various projects.
  • In December, the Village closed on the sale of the former Adco site to Monroe Development which is currently constructing a 64-unit luxury residential building at West Liberty and Hough Streets.
  • In November, the Village Board passed an ordinance opting out of the Cook County Board’s new paid sick time and minimum wage ordinances. The Village took that action to level the playing field between our Cook County and Lake County businesses and Barrington was the first community to take such action.
  • Some of the new businesses which have been opening of late or will open soon are: Flesk Craft Beer Brewery opening in the Ice House Mall this spring, Glitz and Glam which opened February 1st on Main Street, next to Ciao Baby, Moda Bridal Salon which opened on Valentine’s Day on Cook Street in the yellow house – the former Bravura site, McGrath Autos purchased the Volvo site on Hough Street and Life Cooking is coming to the Foundry.

We continued to work on major infrastructure projects in 2016 and the results of that effort will be evident in 2017, 2018, and beyond:

  • Major sewer replacement from West Liberty to Summit in 2017 – 2018
  • New entrance to the commuter lot with traffic signal on Route 14 just south of the animal hospital – final engineering and land acquisition in 2017
  • A new traffic signal will be installed at the Grove/ Dundee intersection in 2017
  • The Hart Road/ Route 14 intersection improvement with sidewalks along Hart Road and around the Barrington High School campus to Main Street is on for 2018.
  • An additional $4 million was acquired from IDOT for land acquisition for the Route 14 underpass of the CN rail line – a project which can have the greatest impact on reducing train generated traffic congestion and providing a clear path for police through town and an ambulance on its way to the hospital.

Speaking of ambulances – we are happy to have added a 3rd ambulance to our public safety fleet. It has state of the art features which improve treatment in the field, and allows us to have an ambulance in reserve so that we are always able to have two front line ambulances able to respond to overlapping calls, if needed.

The overall strong financial position of the Village was acknowledged in November 2016 after a review by Moody’s reconfirmed the Village Aa+ bond rating which is the best rating we can achieve as a non-home rule municipality of our size.

So let’s review what is contributing to our strong financial position:

By law and practice, the Village always produces a balanced budget. Overall our budget shows a 12% decrease in expenditures when 2009 is compared to 2016. Our policy is to budget conservatively [SLIDE 1], so we estimate revenue (sales tax, property tax, etc.) conservatively and our expenditures realistically so if we achieve greater revenue, and you can see that since 2011, we have had an average annual surplus in the General Fund of $1.2 million, we can transfer the surplus for capital improvements or to make additional pension contributions. In this way, we expend per our budget and do not over spend so if revenues ever come up short, we do not have an issue.

A large revenue source for our operations is sales tax. [SLIDE 2] As you can see, our sales tax revenue has increased steadily since 2009. We estimate – based on receipt of 11 of 12 months of sales tax revenue – that for 2016, the increase over 2015 receipts will be 6%.

[SLIDE 3] The third slide shows our Aa+ Bond Rating and the strengths in the Village’s finances which support it.

[SLIDE 4] This slide indicates the overall financial health of our Village in terms of assets and liabilities. The information presented here is for FY 2015 as that is the latest year presented in our CAFR – Comprehensive Annual Financial Report, which we complete each year to present our financial information. The 2016 CAFR will come out later this year when our 2016 audit is completed. We see assets far exceed liabilities and that we have enough cash to cover all current debt.

So, let’s look at debt for a minute. [SLIDE 5] So we see that we have $32.8 million in debt – money that the Village owes and is repaying. That is comprised of:

  • $.85 million – to be repaid - less than a million for the Cook Street Plaza public parking
  • $1.9 million – remaining on 20-year bonds used for building the Village Hall (which replaced our 100 year old Village Hall) and to build a new centrally located Public Safety Facility in 1999/2000.
  • $1.9 million for street improvement project
  • $4.4 million – is from the financing used for the White House renovation which is being repaid from $6.8 million in private donations. Those pledges are being paid ahead of schedule, so our hope is to repay this sooner than 2019.)
  • $6.4 million – was for the Village Center project to be repaid by 2023.
  • $17.4 million – is for borrowing for water and sewer projects done over the last few years and also currently underway. This debt is repaid through water and sewer payments and is paid by all system users – so folks in Inverness, or in Barrington Hills who are on Barrington’s municipal water system are also helping to pay this debt, not just Village residents.

On this slide, you also see the part of our pie which shows the Village’s net pension and benefits liability.  This is not a debt in that we have borrowed or spent this money, but rather based on our actuaries’ estimates of what our liability is to pension members in one of Barrington’s 3 state-mandated retirement funds.

[SLIDE 6] If you live on the Cook County side of town when you received your tax bill this year, you noticed some changes from your 2015 bill. Cook County lists the various taxing districts on your bill and their various debts, liabilities, and funding percentages.

[SLIDE 7] So, just focusing on the Village of Barrington for a minute – you can see that in 2015 Column 1 showed the money owed by your taxing district – as $29,207,020 – which on the 2016 bill is $56,411,564. That change is because of an accounting/ financial statement change that required the Village (and all governments) to now show our net pension liability with other debt in that column. (So, as we saw 2 slides ago, that is what makes up the $56 million dollar number.)

The second column should more appropriately be called pension benefits the State of Illinois has promised – as our 3 pension funds – IMRF, Police, and Fire are all state mandated and state controlled in terms of benefit levels to be paid, age, and years of service eligibility, etc. etc. As indicated in the notes, this 2nd column is a statement of “gross liability” (without regard to pension assets on hand) and is stated for 2016 using new mortality tables, etc. required by the new GASB (government accounting rules). I should note that this number would be much higher if we had not reduced our fire department employee count from 39 to 19 in 2014 when the Fire District and the Village separated.

The third column indicates the “unfunded” portion of the pension benefits (so the liabilities less the assets we have in the funds – unfortunately not shown here) and in the last column the percentage our pensions are funded.

[SLIDE 8] So this slide depicts the $84.8 million in liability – stated on the tax bill and shows $59.4 million in pension assets we have toward that liability – giving us the 70% funding status. Each year, the Village contributes our actuarially required contribution to bring the funds to 100% funding by 2040 – as required by state law. When possible, we make additional contributions.

[SLIDE 9] And this has worked well for us as you can see where our Village is in funding level compared to other suburban communities.

For all municipalities funding our state mandated pensions takes a lot of our resources.  The IMRF pension fund – covering our employees who are not police or fire personnel is a consolidated fund to which Barrington and other municipalities across the state contribute to fund our accounts. The rules for this fund are a little different than those for police and fire and the pooled, consolidated fund has lower administrative overhead and better investment returns most of the time.  If you recall, Slide 6 – the Cook County Tax Bill – you might notice that several of the other taxing bodies – park and library districts – had higher funded percentages. This is, in part, because all of their employees are in the IMRF fund.

Our public safety pension funds – the Barrington Police Pension Fund and the separate Barrington Firefighter Pension Fund are controlled by state law and like the IMRF fund – we, the Village taxpayers, are responsible for making sure they are fully funded, but we do not have the administrative cost savings or the higher investment returns which could come if our police and fire funds were consolidated with the other 661 individual police and fire pension funds state wide. Like the IMRF model, each community would have its own account to which it would contribute so that one community is not subsidizing another, but each receives the benefits of consolidation – lower cost, higher return. This consolidation model is something that the Illinois Municipal League, on behalf of the 1,298 communities in Illinois has made one of its key legislative agenda items in Springfield this year.  For Barrington, a 10.2% average annual increase over the last 10 years in what we must contribute to our Public Safety pension funds in order to meet our required contribution is unsustainable and so we are acting to address that in Springfield.

[SLIDE 10] Our financial slide show ends on a happy note – all of our Village property tax payers will see an 8.37% reduction in the Village portion of their 2018 property tax bills, and in 2019 they will enjoy an additional 9.96% decrease. This is because as we saw in an early slide, the 20-year bond debt issued in 1998 to build the Village Hall and the Public Safety building is being retired and we all benefit from that.

I thank our police and fire personnel, our public works employees, employees in development services, economic development, financial services, human resources, IT, and our other communication, events and administrative staff, our Barrington’s White House staff, and our Village Manager for your tremendously capable effort this year. Your work has made our Village safer, more attractive, cleaner, financially sound, entertained, culturally more satisfied, and better informed. To our many volunteers on boards, commissions, at Barrington’s White House and at all of our events, and in our many local charities, we thank you for the hours you give and the heart you keep in our Village. And to the Village Clerk and our Board of Trustees to whom I make this report each year, I thank you for the service you give to Barrington – for your careful thought and deliberation, your patience, time, and effort in working to achieve community goals which continue to make Barrington a great place to live, work, and play. 

Thank you."

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