ILLINOIS DEVELOPMENT
FINANCE AUTHORITY

In November 1991, the Local Government Financial Planning and Supervision Act was amended, enabling IDFA to provide technical and bonding assistance to cities in severe financial crisis.

The two-part bill, Illinois Senate Bill 1421, was passed in 1988 and calls for a government task force to be established when cities are unable to meet debt and payroll obligations. Part I of the bill presents a broad plan for technical assistance to any Illinois city in distress; Part II, the Distressed Cities Act, was specifically designed to provide government assistance to financially troubled East St. Louis. The recent amendment expands that mandate to allow IDFA to step in and aid other Illinois cities with serious financial problems to determine if state intervention is necessary.

According to Tom Fitzsimmons, director of the Illinois Municipal League, cities are facing financial difficulty because of shortfalls at the federal and state levels. "Sales taxes are down, government funds are slow in coming, yet municipalities have obligations that need to be met," Fitzsimmons said.

IDFA Consultant A.G. Ansani says that this year an estimated three or four Illinois cities will need technical and financial assistance that this act, as amended, can provide.

Based on her work on the East St. Louis Task Force, Ansani was part of the IDFA team that established the basis for the Senate Bill amendments.

Four years ago, IDFA staff and select financial and business experts were asked to participate in an analysis of East St. Louis' near-bankrupt status. At the time, the city had debt in excess of $4 million, had misspent an estimated $3 million, was unable to meet city payroll and had no refuse collection service. Two IDFA papers summarizing the situation were the keystones of the resulting Senate Bill 1421.

Led by IDFA Executive Director Ronald Bean, IDFA staff went back to alter the bill to enable the Authority to provide financial analyses and assistance to cities with the following criteria:

• Populations of 25,000 or less,
• Failure to pay debt obligations for more than 180 days,
• Failure to pay more than 20 percent of payroll for more than 30 days.

Once the analysis is complete, IDFA can make recommendations regarding the need for state assistance to stave off bankruptcy. Last spring, Bean received a call from Ford Heights Mayor Gloria Bryant regarding the town's inability to meet payroll and debt obligations of approximately $1 million to $2 million. Called the nation's poorest suburb, Ford Heights has almost no retail businesses or industry. Census figures for 1980 indicate that 39 percent of the town's residents are at or below poverty level, leaving resources for property tax revenue.

A city ordinance was passed authorizing IDFA to examine Ford Height's financial condition. Ansani and IDFA staffer Kevin Kenzenkovic began a two-part analysis that will determine if a financial emergency exists and the amount of financial assistance needed to get the town back on its feet.

"Each community is an important thread in the fabric that keeps the state healthy," Bean said. "Assistance that will enable solvency and lead to increased tax revenue is critical to the entire state's well-being." •

March 1992 / Illinois Municipal Review / Page 29