December 4, 2009
In September Fitch Ratings announced an upgrade of the Forest Preserve District of Cook County’s outstanding unlimited tax general obligation bonds totaling $115 million to ‘AA-’ from ‘A+.’ However, Fitch noted that the District is vulnerable to decisions made by its Board of Commissioners, who also serve as the governing board of Cook County. Fitch expressed support for Senate Bill 176, which would establish a separate Board of Commissioners for the District, and stated that the greater autonomy created by such a board would be a positive credit factor for the District.
The Civic Federation and the Friends of the Forest Preserves released a report calling for the separation of the Boards of Commissioners for the District and Cook County in 2008, and we commend Senator Don Harmon and Representative Elaine Nekritz for their leadership in sponsoring legislation to separate the boards. The Civic Federation believes that the shared board structure has created an inherent and unavoidable conflict of interest for the Commissioners. Many of the current Commissioners have shown an interest in promoting economic development and other uses of District property that conflict with the District’s core mission to preserve natural land. A recent example of this conflict was the recent consideration of a transfer of 30 acres of District land to the Village of Hinsdale.
Fitch cited a number of factors for the Forest Preserve District upgrade including:
• improved financial performance since 2003;
• management initiatives, including a 15% unreserved corporate fund balance policy;
• low direct debt levels with no plans for additional debt; and
• District management’s ability to control expenditures by adjusting staffing and service levels and reducing capital spending.
Fitch recognized that the District is not immune to economic challenges facing Cook County, which currently faces an unemployment rate higher than the state average and “significant subprime mortgage exposure.” However, Fitch announced that the District’s rating outlook is stable. The District’s bond upgrade is especially noteworthy as Fitch also recently reported that municipal downgrades are currently outpacing upgrades by more than two-to-one.
The Civic Federation supported the District’s FY2010 budget proposal because the District will reduce its property tax levy by $1.1 million and use a portion of its budget reserve funds, rather than increase taxes, to balance its budget. However, the Civic Federation warned that the Forest Preserve District faces fiscal pressures due to rising personnel costs and should transfer law enforcement duties to the Cook County Sheriff and swimming pools to local park districts to maximize operating efficiency.