Richmond Village President Peter Koenig reviews the proposed municipal budget line items and spread sheets for fiscal year 2016. The village continues to make interest-only payments to the Illinois Environmental Protection Agency on a $7 million loan for expansion of its wastewater treatment facility. Photo – Gregory Harutunian/for Chronicle Media

Despite proposed cuts to allocated municipal funds, part of austere budget measures made Feb. 18 by Illinois Gov. Bruce Rauner, the payments on Richmond’s debt service for an Illinois Environmental Protection Agency construction loan continues in solvency. The interest-only disbursements, forwarded twice annually, are still under review by state officials.

At issue is the village’s request for debt relief from the agency in restructuring the loan, which has been on hold due to the state agency’s mandate of compliance with federal guidelines in doing so. In 2013, the village accepted an IEPA offer to make payments toward the interest on the $7 million loan as discussions driving down the principal amount continued.

The debt came through bonds for construction work to expand Richmond’s sewer and water treatment plant. Construction was completed in 2007, ahead of a planned 1,600-home residential development forwarded by Peter Bell, Marcamp Investments, Tamarack Development, and the Northeastern Land Management. More than 500 acres of the site were wetlands, and property entrance considerations at Broadway Street hindered the project.

Revenue from the residential development was meant to offset the costs of construction but the subdivision never materialized, leaving the village responsible for the debt. The village and developer concluded their litigation with a settlement last year, and have made no further contacts.

“We had a two-prong dilemma, where we had all this looming residential growth plus our water treatment plant was becoming obsolete, and couldn’t keep up with IEPA regulations,” said Richmond Village President Peter Koenig. “We would pay this debt any way that we could, if possible.”

“In theory, the payments are supposed to come from revenue generated by our utilities, specifically water and sewer. The village made its appeal to the IEPA, nearly two years ago, for relief to restructure the payments according to our abilities and based upon the current economy.”

Village Clerk Karla Thomas delineated the present repayment schedule. “Our bond amount was not to exceed $7 million, and the payments being made to the IEPA now were re-worked in 2008, in the amounts of $85,331. 39, paid on a semi-annual basis. These payments each represent interest only, and the next payment is due June 30.

The restructuring options for the village are further being complicated by federal guidelines meeting state loan repayment protocols. Geoff Andres, the IEPA’s state revolving fund manager had acknowledged the 2008 accord being the result of the major residential development that fell through, and the re-amortization of loans are generally over 20 years, so a longer period required approval.

Those dual issues of extending the loan past a 20-year time frame and a final determination by the IEPA director are the probable scenarios that could prove to be sticking points, he also said the agency wants to work with the village.

“This is a process that extends beyond the state level, encompassing federal involvement,” Koenig said. “With approximately $7 million in principal (balance) owed, we are not default and current with our payments. The matter requires cooperation with federal guidelines to meet the obligations by which the state is bound.”