Title
Prior Debt Commitment Reduction (PDCR) Initiative
History
Executive Summary
The Prior Debt Commitment Reduction (PDCR) initiative establishes a formal, ongoing process to catalog prior debt commitments, identify reduction opportunities, and report measurable progress. The Village was previously on a trajectory toward a maximum potential General Obligation (GO) debt of $274,295,000. In the last year, commitments have already been reduced by millions, and PDCR will maintain discipline and transparency in further reductions.
History
During previous debt discussions, the new Village Board requested that Village staff review options for reducing debt commitments from the prior administration. As the Village Board is aware, because of prior commitments, the Village was on a trajectory of having a maximum potential General Obligation Debt of $274,295,000. In just over a year, the new Village Board has already reduced these commitments by millions. This new Prior Debt Commitment Reduction (PDCR) initiative establishes a formal, ongoing process to catalog prior debt commitments, identify reduction opportunities, and report measurable progress.
How Did the Village Get to this Point
Five-Year Financial Plan - At the June 5, 2023, BOT meeting, the Village Board approved the Capital Improvement Plan and Five-Year Financial Plan - The Five-Year Financial Plan included $68.3 million in new governmental debt (see p.78 of Five-Year Financial Plan). At the same meeting, the Village Board adopted a first-ever Natural Gas Tax, a first-ever Electricity Tax, and significant increase in the Home Rule Sales Tax, along with the elimination of the Vehicle Sticker as part of the Five-Year Financial Plan.
2023-2027 Utility Rate Study Adoption - At the October 3, 2022, BOT meeting, the Village Board accepted the Five-Year Utility Rate Study and approved the corresponding water and sewer rate increases. The Five-Year Utility Rate Study included $30.15 million in new governmental debt (see Section II of the Five-Year Utility Rate Study). At the same meeting, the Village Board adopted water and sewer rate increases for the proceeding five-year period as part of the Five-Year Utility Rate Study.
Centennial Park West Concert Venue - In 2023, the Village broke ground on the Centennial Park West concert venue. As reported at the December 1, 2025 Committee of the Whole, the Centennial Park Concert venue opened on June 8, 2024 at a cost of $12.5 million. A 20-year debt service on $12.5 million is approximately $930,000 annually. The current approximate annual operating costs for the Centennial Park West concert venue is $250,000, which is expected to increase in future years. In 2025 alone, the Village spent $1.83 million for the Centennial Park West Concert venue. At this rate, the total 20-year cost, not factoring inflation, would be $36.68 million. In 2026, the new Village Board significantly reduced concert expenses. Additionally, the 2026 budget includes a Centennial Park West Strategic Operating Plan. At a previous Village Board meeting, the Village Board discussed the lack of a business plan as part of the development of Centennial Park West. In order to assist with deciding the future of Centennial Park West, the Village is currently undertaking a strategic operating plan. Community engagement is an important element in the development of the strategic operating plan.
Three-Year Audit Backlog - In the past year, the Village resolved a three-year backlog in completing annual audits. Updating these financial policies is part of the Village’s new commitment to transparency and sound governance across all Village operations. Without the audits, the complete debt picture was incomplete.
TIF Bonds -
• Downtown Orland Park TIF - At the October 7, 2024, BOT Meeting, the Village Board approved a Redevelopment Agreement (RDA) with Edwards Realty. As part of the RDA, the Village pledged $33 million in GO debt as part of the redevelopment project (see page 14 of the RDA). The GO Debt is to be paid back from the created Downtown Orland Park TIF District and the separately created Business Improvement District (BID). The BID overlays an additional 1% sales tax on the business within the Downtown Orland Park boundary.
• Dick’s House of Sport (former Sears) - In 2024, when the creation of the TIF was being discussed, the original plan was for Dick’s to receive tax incentive on a “Pay-As-You-Go” method. In Pay-As-You-Go TIF (or Pay-Go TIF), the developer pays for upfront development cost and is reimbursed for TIF-eligible costs twice annually as the increment becomes available (when the tax base increases). Following the March 17, 2025, Board of Trustee meeting in which the Village Board adopted an inducement agreement with the Dicks’ House of Sports, the Pay-Go option was dropped and instead former Mayor Pekau agreed to issue debt to upfront the incentive to Dick’s House of Sports. This upfront payment was going to be provided through GO TIF debt along with another approximately $3 million in GO TIF debt for stormwater improvements that the Village was going to construct.
• Former Andrew Corporation Property - At the August 19, 2024, BOT meeting, the Board adopted an inducement agreement for the Former Andrew Corporation Property. The adopted Resolution includes the following language:
WHEREAS, Village and Developer desire such Expenditures be able to qualify for consideration as “redevelopment project costs” that can be reimbursed from proceeds of the tax increment generated by the Proposed Project to the extent such costs qualify under the Act; and
WHEREAS, the Village may reimburse the Developer for the Expenditures by issuing debt instruments secured by the incremental revenue generated by the Proposed Project (the “Obligations”);
With regard to the planned TIF GO Debt issuance, as indicated in separate correspondence, the Village was planning on issuing $25.5 million in GO Debt to be repaid through TIF generated increment. Subsequently, additional conversations were had in which the Former Andrew Corporation property TIF was to be expanded to incorporate the former clean-fill site adjacent to Centennial Park for the funding and construction of turf fields. The total GO Bond to be issued would have then been $43.7 million (assuming the lower cost concept).
• Former Terry Lincoln Mercury - At the August 19, 2024, BOT meeting, the Board adopted an inducement agreement for the Former Terry Lincoln Mercury property. Similar to the Former Andrew Corporation Inducement Resolution, the Former Terry Lincoln Mercury Resolution includes the same type of TIF and debt issuance language. The last plan included a condominium project. With regard to the planned debt issuance, as indicated in separate correspondence, the Village was planning on issuing debt to be repaid through TIF generated increment. It was estimated that the bond issuance was going to be $10 million for the incentive and additional $5 million for the adjacent intersection improvement (143rd Street and John Humphrey Drive).
• Former Petey’s 2 - At the August 19, 2024, BOT meeting, the Board adopted an inducement agreement for the Former Petey’s 2 property. Similar to the Former Andrew Corporation Inducement Resolution and the Former Terry Lincoln Mercury Inducement Resolution, the Former Petey’s 2 Resolution includes the same type of TIF and debt issuance language. With regard to the planned debt issuance, as indicated in separate correspondence, the Village was planning on issuing debt to be repaid through TIF generated increment. It was estimated that the bond issuance was going to be $18 million for the incentive and additional $3 million to complete the 161st Street extension to Ravinia Avenue.
Additional Commitments
Other preliminarily committed TIFs are further described below. This additional information is not included in the maximum potential GO Debt figure because the Village has not yet been provided estimated figures.
• Crossroads TIF - When the petition for the Crossroads Apartment Development at the SEC of 159/LaGrange failed 4-3 at the on June 17, 2024, Board of Trustees meeting, the developers were approached with the possibility of establishing a TIF that could assist with a owner-occupied development instead of rentals.
• I-80 TIF District - There have been previous discussions with regard to the creation of a TIF for the parcels West of Wolf Road along I-80. These parcels, referred to as Centennial Crossings, are a 246-acre greenfield parcel, currently located in unincorporated Orland Park. Although unincorporated, the Village has been working very closely with the property owner toward an annexation agreement. At the September 16, 2024, Village Board meeting, the Village Board agreed to a joint marketing agreement with the property owners underscoring the advancement of development opportunities, particularly a data center.
• Jefferson Avenue TIF - Previously, Village Staff had very preliminary discussion with former Mayor Pekau regarding a potential Jefferson Avenue TIF as a way to redevelop the area.
• Orland Square Mall/John Humphrey Drive Business Improvement District - A Business Improvement District is similar to a TIF District, but instead of income generated from property taxes, business improvement districts generate revenue from a sales tax overlay. As part of the Downtown Orland Park redevelopment, a 1% sales tax business improvement district overlay was added to the Downtown Orland Park boundary. A similar business improvement district was previously reviewed at the request of former Mayor Pekau for Orland Square Mall (including the ring road), and businesses along John Humphrey Drive. The Illinois Business District Development and Redevelopment Law authorize a municipality to impose a tax designed to fund the development or redevelopment of certain designated areas within a municipality. The business district sales tax is imposed by the municipality in the form of the Business District Retailers’ Occupation Tax and Business District Service Occupation Tax. This revenue could be used for several needed capital improvements (ring road, façade improvements, etc.).
Budget Priorities
Every administration sets priorities through their adopted budgets. The current Village Board budget priorities include infrastructure and public safety improvements.
Public Safety
The prioritization of public safety, which this year included hiring more police personnel, is producing very real results.
- Thefts have declined 46% compared to this time last year, falling from 464 in 2025 to 249 in 2026.
- Traffic enforcement also remains a top priority. So far in 2026, OPPD has conducted 13,998 traffic stops, more than double the 6,450 stops made during the same period last year.
- In the past year, the Village has experienced a $2.5 million increase in general sales tax revenue. This growth is driven largely by a strengthened local economy and improved public perception, but also improved public safety. Feedback from businesses, residents, and stakeholders points to several contributing factors:
o A significant reduction in prior cycles of negative publicity
o A visible increase in public safety presence and performance
o Higher operational and community standards
o A renewed, proactive “open for business” approach that attracts commercial activity
These improvements directly support more organic consumer spending and greater trust in Orland Park’s commercial corridors.
Infrastructure
Because prior spending prioritized CPW and revenue limitations constrained other capital work, the Village must identify alternative funding mechanisms to address a backlog of infrastructure needs.
The Ravinia Avenue Extension, in process for over a decade, can now proceed as a result of new revenue from the Amazon Retail Store. Current property taxes of approximately $46,945 are expected to rise by about $945,000, to nearly $992,000 annually. The project is anticipated to generate roughly 200 construction jobs and 500 ongoing on-site jobs.
Debt Primer
Illinois local governments can borrow money in a number of different ways. These various mechanisms for borrowing are either long-term or short-term, and they can be repaid through tax revenues, user fees, or special assessments.
Long-term debt is a commonly used means of financing large capital assets such as infrastructure, buildings, and large pieces of equipment. Issuing debt increases the total cost of the asset through the payment of interest, but it also allows local governments to acquire or build capital assets sooner by borrowing up front for assets that they could not otherwise fund from existing cash resources. By spreading out debt payments over many years, local governments can also smooth out their expenses and create a more predictable cash flow.
Short-term debt can be used to cover a temporary cash flow deficit or provide for an interim method of financing until long-term borrowing has been secured. The amount of debt a government may incur is generally limited by Illinois state statutes (with exceptions for Home Rule municipalities), and whether the debt is being repaid with tax or nontax revenue sources. Federal law establishes rules about the tax status of government securities and the process for issuing and disclosing debt obligations.
Another increasingly type of borrowing are leases and installment contracts. Because of the increased popularity of lease and installment contracts, the Governmental Accounting Standards Board (GASB) issued Statement No. 87 which went into effect on June 15, 202. GASB 87, as it is now referred to in shorthand, is the lease accounting standard.
General Obligation (GO) Debt
General obligation bonds are secured by the full faith, credit and taxing power of the municipality, which should result in the lowest possible interest rates for financing a capital project. Since the (GO) debt is secured by the full faith and credit of the local government issuing the debt, the municipality pledges its tax revenues unconditionally to pay the interest and principal on the debt as it matures. Another advantage is generally lower costs of issuing general obligation bonds, when compared to most other methods of financing capital projects. This is because the legal structure for the issuance of general obligation bonds is less complex than most other financing methods. Because GO debt usually has lower interest rates, even when Village debt is ultimately being pledged by a specific revenue structure such as Water and Sewer rates, it is more financially advantageous to issue Water and Sewer capital bonds as GO bonds as opposed to Revenue Bonds.
PDCR Framework - How the Village Will Reduce Commitments
1. Comprehensive Inventory: Maintain an authoritative ledger of prior debt commitments and obligations, with amounts, maturities, revenue sources, and legal instruments.
2. Risk and Cost Assessment: Evaluate interest-rate risk, coverage sufficiency, and lifecycle cost for each commitment.
3. Reduction Strategies: Pursue defeasance, restructuring, scope optimization, pay-go alternatives, and revenue-backed offsets where prudent.
4. Governance and Controls: Establish standardized approval gates, disclosure checklists, and post-issuance compliance monitoring.
5. Reporting Cadence: Publish quarterly dashboards and an annual PADCR report summarizing reductions achieved and commitments outstanding.
6. Community Engagement: Integrate resident and business feedback for major projects affecting taxes, service levels, or district boundaries.
Recommended Action/Motion
I move to recommend to the Village Board approval of the Prior Debt Commitment Reduction (PDCR) initiative as a formal process for reviewing debt reduction and reporting progress to reduce prior commitments.