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HomeMy WebLinkAboutVillage of Lake in the Hills - Public Financial ReportVILLAGE OF LAKE IN THE HILLS 1 VILLAGE OF LAKE IN THE HILLS, ILLINOIS Popular Annual Financial Report FISCAL YEAR ENDED DECEMBER 31, 2020 VILLAGE OF LAKE IN THE HILLS | 2020 POPULAR ANNUAL FINANCIAL REPORT 2 It is with great pride that the Village of Lake in the Hills Board of Trustees and I present to you the Village’s Popular Annual Financial Report (PAFR). This PAFR is specifically designed to be readily accessible and easily understandable to residents, employees, the general public, and other interested parties without needing a background in public finance. The PAFR draws out highlights and important elements from the Village’s Annual Comprehensive Financial Report (ACFR) and conforms to generally accepted accounting principles (GAAP). The PAFR publication is not required by any regulatory body or state statute. Rather, this document is entirely elective on the part of the Village. The Village of Lake in the Hills’ ACFR is over 100 pages long and contains more detailed financial information. While the ACFR is fully compliant with GAAP and has received an unmodified (“clean”) opinion from independent auditors, the document may be overwhelming for many. As such, the Village is pleased to offer the PAFR, which concisely summarizes significant financial information that may be of interest to our stakeholders. The Government Finance Officers Association (GFOA) of the United States and Canada, the recognized national association of government finance officers, encourages governments to publish PAFRs. However, only a small percentage of state and local governments in the United States choose to do so. Thus, in publishing a PAFR, the Village joins an exclusive group of progressive governments making an extra effort to communicate clear and concise financial information to its constituents. The PAFR is intended to make the Village’s finances more understandable to a wider audience. The PAFR, ACFR, and Annual Budget are all posted on the Village’s website. The Village will continue to make financial presentations and transparency a priority and provide open communication with its residents and businesses. We hope you find the 2020 PAFR to be a valuable resource that provides insightful information. As always, if you ever have a question about the Village’s finances, please do not hesitate to contact our Finance Director/Treasurer, Peter J. Stefan, at pstefan@lith.org. Sincerely, Russ Ruzanski Village President TABLE OF CONTENTS A Message from the President 2 Government Organization 3 Village Profile 4 Quick Facts 5 Operational Achievements 6 General Fund 8 Water Fund 10 Airport Fund 12 Revenue Trends 14 Property Taxes 16 Debt Status 17 About the PAFR 18 A MESSAGE FROM THE PRESIDENT Village of Lake in the Hills Residents and Businesses: Village PresidentRuss Ruzanski Village President Russ Ruzanski Village Clerk Cecilia Carman Village Trustee Stephen Harlfinger Village Trustee Ray Bogdanowski Village TrusteeBob Huckins Village TrusteeBill Dustin Village TrusteeSuzette Bojarski Village TrusteeDiane Murphy 3 GOVERNMENT ORGANIZATION How is the Village of Lake in the Hills Government Organized? The Village operates under the Trustee-Village form of government. Policy making and legislative authority are vested in the Village Board, which consists of a Village President and six Trustees all elected from the Village at large. All elected officials, including a Village Clerk, serve four-year staggered terms. The Village Board is responsible for establishing policy, passing ordinances, adopting the budget, appointing committees, and hiring the Village Administrator. The Village Administrator is responsible for carrying out policies and ordinances of the Village Board and for overseeing the day-to-day operations of the Village. Municipal services are delivered by five Village departments: Administration, Community Development, Finance, Police, and Public Works. Professional ServicesAdvisory Boardsand Commissions Chief of PoliceVillage Administrator Elected Officials Citizens of Lake in the Hills Village PresidentBoard of TrusteesVillage Clerk Finance Department Public WorksDepartment PoliceDepartment Community DevelopmentDepartment AdministrationDepartment VILLAGE OF LAKE IN THE HILLS | 2020 POPULAR ANNUAL FINANCIAL REPORT VILLAGE OF LAKE IN THE HILLS | 2020 POPULAR ANNUAL FINANCIAL REPORT 4 VILLAGE PROFILE The Village of Lake in the Hills was incorporated in 1952 and is located in Illinois, approximately 47 miles northwest of the City of Chicago. The Village occupies over 10 square miles, and has approximately 91 miles of streets. The population of the Village grew ever so slightly from 28,965 in the 2010 census to 28,982 in the 2020 census. There has been significant growth in population since the early 1990s due to the development of the west side of the Village. Because the population is over 25,000 residents, the Village is considered a home rule community. Home rule communities in Illinois have greater control of their finances because of additional revenue generating abilities. There are approximately 134 full-time equivalent employees that work for the Village of Lake in the Hills. There are four elementary schools and one middle school located in the Village within districts 158 and 300. Both districts have created initiatives to provide students with high quality education. TAXPAYER TAXABLE ASSESSED VALUE Costco Wholesale Corp $3,461,550 Randall Algonquin Plaza LLC $2,819,334 Lowe's Home Centers Inc $2,488,945 AMH 2014 2 Borrower LLC $2,395,781 Amerco Real Estate Co $2,163,365 Realty Income IL Prop 3 LLC / Kerasotes Theatres $1,628,131 McHenry State Bank Trust 13040 $1,597,399 1st Midwest Bank Trust 12871 $1,536,225 ARSC Real Est Holdings LLC $1,514,735 Prairie Stone Shops LLC $1,444,155 # OF EMPLOYEES School District 158 440 Costco Wholesale 227 Village of Lake in the Hills 192 Advanced Flexible Composites 150 Lowe's Home Centers Inc. 111 Unemployment Rate Top Five Employers Principal Property Taxpayers 4 LAKE IN THE HILLS Population VILLAGE OF LAKE IN THE HILLS | 2020 POPULAR ANNUAL FINANCIAL REPORT 5 QUICK FACTS Demographics GENERAL POPULATION CHARACTERISTICS (2020 CENSUS) Households, 2015-2019 9,679 Persons per Household, 2015-2019 2.97 HOUSEHOLD INCOME, 2015-2019 (2020 CENSUS AND AMERICAN COMMUNITY SURVEY) Median Household Income (in 2019 dollars)$92,872 Per Capita Income in Past 12 Months (in 2019 dollars) $36,784 HOUSEHOLD INCOME COMPOSITION (%) Less than $25,000 6.6 $25,000-$49,999 12.9 $50,000-$74,999 18.1 $75,000-$99,999 17.1 $100,000-$149,999 23.6 $150,000 and Over 21.7 HOUSEHOLD SIZE, 2015-2019 (AMERICAN COMMUNITY SURVEY) (%) 1-Person Household 18.0 2-Person Household 28.7 3-Person Household 16.8 4-Person Household 36.5 EDUCATIONAL ATTAINMENT, 2015-2019 (AMERICAN COMMUNITY SURVEY) (%) Less than High School Diploma 4.8 High School Diploma or Equivalent 22.7 Some College, No Degree 23.8 Associate’s Degree 10.4 Bachelor’s Degree 29.1 Graduate or Professional Degree 9.2 MEDIAN AGE, 2015-2019 (AMERICAN COMMUNITY SURVEY) 34.9 AGE COMPOSITION (%) Under 5 6.0 5 to 19 24.2 20 to 34 20.0 35 to 49 23.2 50 to 64 18.4 65 to 74 6.2 75 to 84 1.6 85 and Older 0.4 RACE AND ETHNICITY, 2015-2019 (AMERICAN COMMUNITY SURVEY) (%) White 77.3 Hispanic or Latino (of Any Race)12.1 Black (Non-Hispanic)2.2 Asian (Non-Hispanic)6.5 Other/Multiple Races (Non-Hispanic)1.9 VILLAGE OF LAKE IN THE HILLS | 2020 POPULAR ANNUAL FINANCIAL REPORT 6 OPERATIONAL ACHIEVEMENTS Strategic Planning In 2020, the Village continued to pursue the goals established in the 2017 Strategic Plan. This plan continues to widely influence the organization as its structure necessitates community input and interdepartmental collaboration. Of the set of six prioritized Key Action Items around which important organizational and operational activities can be managed, the first three were completed prior to 2020. Key Action Items #4- The Pursuit of Financial Health and #5-Data and Analytics saw progress in 2020, but were ultimately delayed due to the onset of the COVID-19 pandemic. The Village’s Strategic Plan is presented through the website www.lithplan.org. Pandemic Response 2020 was a year unlike any other. The single largest change was the response to a worldwide pandemic. What was planned to be another year focused on improving the effectiveness of Village operations rapidly changed to an emergency response requiring the daily agility to adapt to ever-changing circumstances. Village staff had to quickly consider how it could continue to provide governmental services in the face of a stay- at-home order. RE-ENGINEERING VILLAGE OPERATIONS Information technology staff faced the immense challenge of supporting a large portion of the Village staff with equipment and software services to work from home without sacrificing responsiveness or security. The initial efforts required many long hours, but ultimately produced a highly effective system. Some hardware was repurposed and some retired equipment was updated and returned to service in order to meet the The Village once again achieved great success in 2020. We would like to share some of the more significant achievements with our readers: needs. Each department developed procedures to provide essential services while protecting both staff and residents from further spread of the virus. Remote meeting capability was adopted, and everything from Village Board meetings with public access down to training programs were adapted to the new circumstances. Staff continually found innovative and cost- effective methods to safely deliver the services our residents expect. ASSISTANCE FOR RESIDENTS AND BUSINESSES Under the direction of the Village Board, efforts were also made to help some of the people hardest hit by the pandemic. Cash donations were made to both the Algonquin/Lake in the Hills and Grafton Township Food Pantries to assist them. A donation was also made to the Pioneer Center of McHenry County to help expand their support to the homeless. As stay-at-home orders were lifted, focus shifted to supporting residents and businesses in these difficult times. Late payment fees and water shutoffs were suspended to allow residents time to adapt. Reductions in licensing fees helped reduce financial impacts to some businesses. Coordination with the fire protection districts helped to expedite a transition to outside dining for food service operations. Continuing throughout all of this, public safety and infrastructure management continued to provide the essential services that keep a community functioning. INNOVATIVE PROGRAMMING The largest change came to the recreation functions. As restrictions were lifted, the recreation staff found unique and safe ways to take residents’ minds off the problems of the VILLAGE OF LAKE IN THE HILLS | 2020 POPULAR ANNUAL FINANCIAL REPORT 7 OPERATIONAL ACHIEVEMENTS (Continued) world. Virtual FuntastiCAMP replaced the usual in-person camp experience. Similar virtual experiences were adapted for the preschool program to allow participants continued growth and time with the friends they had made while in-person classes were conducted. Since not everyone could participate online, programs like Camp-in-a-Box were established to provide another recreation outlet. The entire Village staff used creativity and innovation to overcome obstacles never anticipated. Their extensive efforts to support Village residents and businesses overwhelmingly demonstrated that the phrase “people are our most important asset” is true in Lake in the Hills. Economic Development The pandemic could not stop the continued growth of the Village. Construction of the assisted living portion of the Melody Living senior housing development was completed and placed in service. In a similar manner, the PetSuites dog and cat care facility was completed and opened on Randall Road, further expanding the size and diversity of our business community. Additionally, in an effort to support our business community and update our regulations, the sign ordinance was thoroughly reviewed and modernized with input from the local businesses. The need to continually update our infrastructure was another focus of the year. The oldest portion of the water distribution system was replaced. Completion of this work significantly improved the integrity of the system and completed an over 20-year effort to replace unreliable portions of the water distribution system to improve safety and reduce costs. Work also continued on state-of-the-art upgrades to Water Treatment Plant 11, improving reliability and reducing operating costs. Woods Creek Stabilization The Village also progressed in its multi-phase Woods Creek streambank stabilization project. The intent of the Woods Creek restoration project is to stabilize approximately 1,817 linear feet of Woods Creek and improve the adjacent wetlands back to native conditions. In 2020, Streambank Stabilization Project Reach 10 of Woods Creek was completed. In addition to improving the quality of water entering Woods Creek Lake, the restoration of overgrown scrub and brush with prairie plants greatly enhanced the appearance of the neighborhood. Playground, Park, and Facility Updates The Turtle Island Park expansion and improvement project was completed in 2020. Half funded by an Open Space and Land Acquisition and Development grant, Turtle Island Park provides an excellent center for fishing and an environmental education site for family gatherings. These improvements are further extended by equipment replacements at three playgrounds and one skate park: Echo Park, Horner Park, Edward William Hynes Park, and Richard Taylor Skate Park. In-Squad Video Cameras The final phase of replacements for the in-squad video cameras was also completed in 2020. The replacements ensure reliability that protects the interests of both the responding officer and the general public. VILLAGE OF LAKE IN THE HILLS | 2020 POPULAR ANNUAL FINANCIAL REPORT 7 VILLAGE OF LAKE IN THE HILLS | 2020 POPULAR ANNUAL FINANCIAL REPORT 8 GENERAL FUND The General Fund is the Village’s primary operating fund, which supports core municipal services. • Various types of taxes provide most of the revenues for the General Fund. • The five General Fund Departments are comprised of four functions: General Government, Public Safety, Public Works, and Recreation. General Government includes Administration, Finance, and Community Development. • The Village maintains a minimum fund balance in its General Fund of at least 25% of the previous fiscal year’s total operating expenditures. Revenue Trends • Overall, total General Fund revenues increased by $570,185 or 3.2% from 2019 due in large part to the pandemic-related grants received in 2020. • Intergovernmental revenue increased by $1,281,098 as a result of those grants, which more than offset decreases in every other revenue category other than investment income, which increased by $80,137. • Our largest source of revenue, property taxes, remained flat once again as the Village’s 2019 tax levy collected in 2020 was the 10th consecutive year that property taxes have either decreased or stayed level – see “Property Taxes” on page 16 for more details. Expenditure Trends While expenditures for General Government and Public Safety increased in 2020, expenditures for Public Works remained constant while Recreation expenditures decreased. Total expenditures in the General Fund remained at $16.4 million for the second consecutive year as all departments kept spending limited to only essential purchases necessary for operations due to the uncertainty of revenues during the pandemic. Fund Balance Trends Since General Fund revenues increased to $18.6 million while General Fund expenditures remained flat at $16.4 million, the fund balance in the General Fund increased by $2.2 million. This increase is attributable mainly due to pandemic-related grants increasing revenues to $0.8 million over budget, while conservative spending policies and the elimination of the majority of recreation programming in 2020 reduced expenditures to a level that ended the year at $1.4 million under budget. 9 Statement of Revenues, Expenditures, and Changes in Fund Balance GENERAL FUND (IN MILLIONS)2018 2019 2020 REVENUES Taxes $12.2 $12.3 $12.2 Licenses & Permits $0.4 $0.3 $0.2 Intergovernmental $2.8 $3.1 $4.4 Charges for Services $1.7 $1.4 $1.0 Fines, Fees, & Forfeitures $0.4 $0.3 $0.2 Investment Income $0.3 $0.4 $0.5 Miscellaneous $0.3 $0.2 $0.1 TOTAL REVENUES $18.1 $18.0 $18.6 EXPENDITURES General Government $2.9 $2.4 $2.7 Public Safety $7.9 $8.2 $8.3 Public Works $3.7 $3.9 $3.9 Recreation $1.4 $1.9 $1.5 TOTAL EXPENDITURES $15.9 $16.4 $16.4 EXCESS OF REVENUES OVER EXPENDITURES $2.2 $1.6 $2.2 Transfers In $0.0 $0.0 $0.0 Transfers Out ($0.0) ($0.1) ($0.0) Change in Fund Balance $2.2 $1.5 $2.2 Fund Balance, January 1 $9.9 $12.1 $13.6 Fund Balance, December 31 $12.1 $13.6 $15.8 WHAT’S A TRANSFER OUT? Transfers out are comprised of health insurance funding. These are accounted and tracked in another fund of the Village. The revenue in the General Fund supports these operations and therefore transfers money to these funds to cover the costs. VILLAGE OF LAKE IN THE HILLS | 2020 POPULAR ANNUAL FINANCIAL REPORT General Fund Revenues General Fund Expenditures Intergovernmental 24% Charges for Services 5% Fines, Fees, & Forfeitures 1% Other Revenue3% Property Taxes30% Sales Tax26%Use Tax7% Other Taxes3% Licenses & Permits1% General Government16% Recreation 9% Public Works24% Public Safety51% VILLAGE OF LAKE IN THE HILLS | 2020 POPULAR ANNUAL FINANCIAL REPORT 10 WATER FUND The Water Fund is the Village’s largest proprietary revenue source. The Water Division is mainly overseen by Public Works, however, Finance employees also support operations. • On average, the Village pumps 2.2 million gallons of water on a daily basis from nine different wells. • The Village charges $3.59 per 100 cubic feet of water with a minimum quarterly charge of $46.09 for 800 cubic feet of water for residential accounts. • The Village provides water to over 9,500 customers consisting of over 9,300 residential households and over 200 commercial accounts. Revenue Trends • Nearly 100% of the revenue in this fund comes from the sale of water and other user fees. The remaining fraction of revenue comes from permits and other miscellaneous income. • The amount of water consumed in 2020 was more than in 2019, which was the main factor for the 4% increase in total water sales and services revenue. • Real estate taxes were a new revenue source in 2020 as $75,372 was generated to pay the principal and interest on the 2019 bond issue for water main improvements in an unincorporated area near the southeast section of the Village. • Total revenues increased by $32,043 or 0.8% from 2019 to 2020. Expense Trends • The majority of expenses for the Water Fund are personal services, which include salaries and other employee benefits needed to run the water distribution and treatment system. • As the Water Fund continues to add more capital assets, the amount of depreciation and amortization will continue to increase on an annual basis as the useful lives of those assets decrease. • Total operating expenses increased by a very modest $8,504 or 0.2% from 2019 to 2020. Net Position Trends Net position increased by $89,588 in 2020 even after factoring in depreciation and amortization expenses, indicating that the water rate is covering all expenses. 11 Statement of Revenues, Expenses, and Changes in Net Position Water Revenue Water Expenses WATER FUND 2018 2019 2020 OPERATING REVENUES Water Sales & Services $4,377,001 $3,975,832 $4,141,500 Permits & Other Misc. Income $3,294 $135,983 $2,358 TOTAL OPERATING REVENUES $4,380,295 $4,111,815 $4,143,858 OPERATING EXPENSES Personal Services $1,539,603 $1,569,442 $1,754,759 Professional Development $11,454 $11,283 $3,845 Contractual Services $580,557 $696,809 $558,065 Commodities $304,435 $281,292 $290,215 Capital Outlay $17,653 $151,580 $95,930 Depreciation & Amortization $1,383,858 $1,417,958 $1,434,054 TOTAL OPERATING EXPENSES $3,837,560 $4,128,364 $4,136,868 OPERATING INCOME (LOSS) $542,735 ($16,549) $6,990 NON OPERATING REVENUE (EXPENSES) Investment Income $68,217 $90,755 $49,310 Property Taxes - - $75,372 Interest & Fiscal Charges - ($2,588) ($55,513) Gain (Loss) on Sale of Fixed Assets $7,610 $20,634 $13,429 Total Non-Operating Revenue (EXPENSES) $75,827 $108,801 $82,598 NET INCOME (LOSS) BEFORE CONTRIBUTIONS $618,562 $92,252 $89,588 NET POSITION Net Position, January 1 $40,192,015 $40,715,063 $40,807,315 Change in Accounting Principle ($95,514) - - Net Position, December 31 $40,715,063 $40,807,315 $40,896,903 VILLAGE OF LAKE IN THE HILLS | 2020 POPULAR ANNUAL FINANCIAL REPORT Permits & Other Misc. Income 0%Water Service & Sales 100% Depreciation & Amortization 35% Personal Services 42% Capital Outlay2% Commodities7% Contractual Services14% Professional Development0% VILLAGE OF LAKE IN THE HILLS | 2020 POPULAR ANNUAL FINANCIAL REPORT 12 AIRPORT FUND The Airport Fund is the Village’s second proprietary fund. The Lake in the Hills Airport is a designated FAA reliever airport for Chicago O’Hare Airport. • The airport rents out a total of 20 hangars, one building, and 58 ground leases. • There are 111 aircraft based at the airport conducting an estimated 34,000 annual operations (number of takeoffs and landings). • In 2014, the airport began to sell fuel on-site which has become its main gross revenue source, although the purchase of fuel has also become its largest expense. • Rental income remains the largest net revenue source for the airport. Revenue Trends • In 2020, 51% of revenue in the Airport Fund was generated by fuel sales, another 44% was received from rental income, and the remaining 5% was the result of commercial activity fees and miscellaneous revenue. • Fuel sales revenue decreased by almost $70,000 or 14% in 2020 due to pandemic-related shutdowns in addition to generally lower fuel costs. • A $69,000 pandemic-related grant was received as assistance to fund airport operations during the pandemic. Expense Trends Expenses decreased by more than $80,000 from the prior year. The decrease can be attributed mainly to lower fuel costs in 2020 as fuel purchases were almost $62,000 less than they were in 2019. A runway paving project was also completed in 2019 that did not carry over into 2020 which also contributed to the decrease in expenses from the prior year. Net Position Trends Net position in the Airport Fund decreased by $223,280 in 2020. The Airport Fund relies heavily on grant revenue and contributions to fund its infrastructure improvement projects and there were no major projects completed in 2020. Therefore, after factoring in depreciation and amortization expenses, there was a decrease in net position. Cash flow on the other hand was positive as cash and cash equivalents increased by $138,271 in 2020, indicating that the airport is generating enough cash flow to fund day-to-day operations. 13 Statement of Revenues, Expenses, and Change in Fund Balance Airport Revenue Airport Expenses VILLAGE OF LAKE IN THE HILLS | 2020 POPULAR ANNUAL FINANCIAL REPORT AIRPORT FUND 2018 2019 2020 OPERATING REVENUES Commercial Activity Fees $39,160 $41,477 $43,661 Fuel Sales $487,820 $488,710 $418,899 Rental Income $360,591 $362,778 $360,814 Miscellaneous $2,756 $2,865 $419 TOTAL OPERATING REVENUES $890,327 $895,830 $823,793 OPERATING EXPENSES Personal Services $196,100 $233,922 $251,929 Professional Development $4,172 $3,970 $1,277 Contractual Services $108,502 $94,739 $108,961 Commodities $429,302 $426,499 $360,538 Capital Outlay - $46,500 - Depreciation & Amortization $392,060 $392,116 $394,340 TOTAL OPERATING EXPENSES $1,130,136 $1,197,746 $1,117,045 OPERATING INCOME (LOSS) ($239,809) ($301,916) ($293,252) NON OPERATING REVENUE (EXPENSES) Investment Income $5,556 $6,746 $3,787 Interest & Fiscal Charges ($5,418) ($4,218) ($2,815) Intergovernmental - $4,122 $69,000 Total Non-Operating Revenue (EXPENSES) $138 $6,650 $69,972 NET INCOME (LOSS) BEFORE CONTRIBUTIONS ($239,671) ($295,266) ($223,280) NET POSITION Net Position, January 1 $20,520,116 $20,280,445 $19,985,179 Net Position, December 31 $20,280,445 $19,985,179 $19,761,899 Miscellaneous 0%Commercial Activity Fees 5% Fuel Sales 51% Rental Income 44% Depreciation & Amortization 35% Personal Services 23% Contractual Services10% Commodities32% Professional Development0% VILLAGE OF LAKE IN THE HILLS | 2020 POPULAR ANNUAL FINANCIAL REPORT 14 REVENUE TRENDS Sales Tax Sales tax and income tax are two significant governmental revenue sources that the Village relies on to provide a high level of municipal services to our residents and businesses. Total sales tax revenue has remained on an upward swing since the recession in 2008-2009 and has shown year-over- year increases every year since 2009 except for 2020 when the pandemic impacted consumer shopping habits. In 2020, total sales tax revenue decreased by $116,189 or 2.4%. General sales tax revenues did increase slightly in 2020 to $2,962,031 from the $2,943,025 collected in 2019. However, home rule sales tax revenues did decline to $1,777,259 in 2020 from the 2019 level of $1,912,454. VILLAGE OF LAKE IN THE HILLS | 2020 POPULAR ANNUAL FINANCIAL REPORT 15 REVENUE TRENDS Income Tax Since 2011, income tax revenue has generally trended upward showing year-over-year decreases in only two years. In 2015, income tax revenue experienced a spike due to higher capital gains taxes paid to the State which were then distributed to municipalities on a per capita basis. This one-time surplus resulted in a decrease in income tax revenue in 2016 when distributions returned to uninflated levels. Then, in 2017, the State of Illinois changed its per capita distribution formula and allocated 10% less towards distributions to municipalities. However, for the past three years, income tax revenue has returned to its general upward trend. In 2020, even with the impact of the pandemic, income tax revenue increased by a modest $65,175 or 2.1% to a total of $3,176,175 which is the highest amount received by the Village to date. VILLAGE OF LAKE IN THE HILLS | 2020 POPULAR ANNUAL FINANCIAL REPORT 16 PROPERTY TAXES The Village’s largest revenue source is the property tax. Property taxes are used to pay for employer pension contributions, payroll taxes, liability and workers compensation insurance coverages, and portions of general operating and public safety costs. On behalf of our residents and businesses, the Village has kept its portion of the total property tax levy flat or decreased for the last eleven years since 2009. The Village’s 2020 levy accounted for 8% of the average property tax bill, while school districts made up 64%, and McHenry County made up 8%. The remaining 19% classified as “Other” is comprised of townships, fire protections districts, park districts, library districts, the Lake in the Hills Sanitary District, and the McHenry County Conservation District. Property Tax Levy 2020 Levy Paid in 2021 McHenry County 8%School Districts 64%Other 19%Village 8% VILLAGE OF LAKE IN THE HILLS | 2020 POPULAR ANNUAL FINANCIAL REPORT 17 DEBT STATUS The Village has issued several different forms of debt in the past which have been used to fund significant capital purchases and projects. The Village maintained its credit rating of Aa2 assigned by Moody’s Investors Services in connection with the issuance of the 2019 General Obligation Bonds. Moody’s Aa2 rating defines the Village’s outstanding debt securities as “judged to be of high quality and are subject to very low credit risk.” A good credit rating benefits the Village because it would allow the Village to be more attractive in the debt market and, therefore, would reduce funding costs in the form of lower interest rates if the Village were to issue additional debt. In 2017, the Village made the final payment on its 2009 General Obligation Refunding Bonds which were issued to advance refund a Debt Certificate issue that was originally issued in 2002 for the purchase of two parcels of land for open space and recreation purposes. Accordingly, since 2018, the Village has been debt-free as far as governmental activities debt is concerned. In regard to business-type activities, there are two outstanding debt issues: • In 2012, General Obligation Refunding Bonds were issued to advance refund a Debt Certificate issue that was originally issued in 2003 to finance improvements to the airport as well as water main replacement program costs. Principal and interest payments for that bond issue will continue through 2022. • In 2019, General Obligation Bonds were issued to finance water distribution system infrastructure improvements in unincorporated Lake in the Hills. This $1,495,000 bond issue will be repaid through a separate Special Service Area #51 property tax levy in that defined area. Rating Scale and Definitions Moody’s Rating Scale: The following is a ranking (from highest to lowest) of Moody’s long-term and short-term categories. The indicated relationship between long-term and short-term ratings is approximate and may not necessarily apply in all situations. Moody’s Long-Term Rating Definitions: Moody’s long-term obligation ratings are opinions of the relative credit risk of fixed- income obligations with an original maturity of one year or more. They address the possibility that a financial obligation will not be honored as promised. Such ratings reflect both the likelihood of default and any financial loss suffered in the event of default. Aaa Obligations rated Aaa are judged to be of the highest quality, with minimal risk. Aa Obligations rated Aa are judged to be of high quality and are subject to very low credit risk. A Obligations rated A are considered upper-medium-grade and are subject to low credit risk. Baa Obligations rated Baa are subject to moderate credit risk. They are considered medium-grade and as such may possess speculative characteristics. Ba Obligations rated Ba are judged to have speculative elements and are subject to substantial credit risk. B Obligations rated B are considered speculative and are subject to high credit risk. Caa Obligations rated Caa are judged to be of poor standing and are subject to very high credit risk. Ca Obligations rated Ca are highly speculative and are likely in, or very near, default with some prospect of recovery in principal and interest. C Obligations rated C are the lowest-rated class of bonds and are typically in default, with little prospect for recovery of principal and interest. Note: Moody’s appends numerical modifiers 1, 2, and 3 to each generic rating classification from Aa through Caa. The modifier 1 indicates that the obligation ranks in the higher end of its generic rating category; the modifier 2 indicates a mid-range ranking; and the modifier 3 indicates a ranking in the lower end of that generic rating category. Outstanding Debt Principal VILLAGE OF LAKE IN THE HILLS | 2020 POPULAR ANNUAL FINANCIAL REPORT 18 ABOUT THE PAFR The Popular Annual Financial Report (PAFR) is intended to provide selected information on the Village’s financial condition in a summarized, easily understandable format. Comments or suggestions for improving the document should be addressed to: Village of Lake in the Hills Finance Department – PAFR 600 Harvest Gate Lake in the Hills, IL 60156-4803 Or send an e-mail to the Finance Director, Peter J. Stefan, at pstefan@lith.org. This PAFR is based upon the Village’s Annual Comprehensive Financial Report (ACFR). However, the primary focus of the PAFR is the Village’s General Fund, Water Fund, and Airport Fund. These are considered to be the Village’s most significant funds. The Village maintains several other accounting funds. For more complete information on the Village’s finances, see the ACFR at the following address: https://www.lith.org/government/departments/finance/financials/ annual-comprehensive-financial-report-acfr The Village does not maintain any component units. The Lake in the Hills Sanitary District is a separate governmental entity.