SYCAMORE CITY COUNCIL AGENDA November 17, 2014

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1 SYCAMORE CITY COUNCIL AGENDA November 17, CALL TO ORDER 2. INVOCATION 3. PLEDGE OF ALLEGIANCE 4. APPROVAL OF AGENDA 5. AUDIENCE TO VISITORS CITY COMMITTEE MEETINGS No Meetings are Scheduled REGULAR CITY COUNCIL MEETING 7:00 P.M. 6. CONSENT AGENDA A. Approval of the Minutes for the Regular City Council Meeting of November 3, B. Plan Commission Minutes from October 13, C. Payment of the Bills for November 17, D. Annual Report on the Financial Condition of the Police and Fire Pension Funds. 7. PRESENTATION OF PETITIONS, COMMUNICATIONS, AND BILLS. A. Recognition of the City of Sycamore Police Department as an Accredited Tier I Agency through the Illinois Law Enforcement Accreditation Program. The Illinois Law Enforcement Accreditation Program (ILEAP) provides rules and regulations establishing an accreditation process that encourages and provides law enforcement agencies with a voluntary opportunity to demonstrate that they meet the model standards developed by the Illinois Law Enforcement Agency Accreditation Council. The council consists of an Executive Board appointed by the Illinois Association of Chiefs of Police. The board was tasked by their respective associations with developing and maintaining a formal accreditation process specific to Illinois law enforcement agencies, including the development of a comprehensive set of professional standards. 1

2 As part of the process an independent team of assessors representing the Illinois Law Enforcement Accreditation Program (ILEAP) conducted site visits to review and examine all aspects of the City of Sycamore Police Department s policies, procedures, management, operations and support services. The President of the Illinois Chiefs Association, Fred Hayes will present the City a plaque acknowledging Sycamore Police Department s status as an ILEAP Accredited Agency. B. A Proclamation Honoring the DeKalb Municipal Band for 160 Years of Continuous Music. 8. REPORTS OF OFFICERS 9. REPORTS OF STANDING COMMITTEES 10. PUBLIC HEARINGS None 11. ORDINANCES A. Ordinance No An Ordinance Amending Title 9, Building Regulations, Chapter 4, Electricity and Fire Protection, Section 9-4-2, Codes Adopted, Subsection A, Electrical Code Adopted, and Subsection D, Additions, Revisions, and Deletions to Electrical Code, in the City Code of the City of Sycamore, Illinois. Second Reading. Every three years, the National Electrical Panel, under the supervision of the National Fire Protection Agency, reviews and revises the National Electrical Code (NEC). In August of 2013, the National Fire Protection Association adopted NFPA # 70, also known as the 2014 National Electrical Code. For decades, the City of Sycamore has enforced one or another edition of the National Electrical Code. Presently, the City enforces the 2008 National Electrical Code along with various adopted amendments to the code. Although the 2014 NEC has been accepted by the NFPA, it has always been the Building & Engineering Department s preference to remain one code cycle behind because revisions inevitably grow out of its usage on a national stage. This approach is not uncommon; there are very few municipalities that have rushed to adopt the 2014 code for the same reason. However, the 2011 code edition is now well-tested and has become the norm in the field. Accordingly, the City s Building & Engineering Department has taken steps toward its adoption. A letter, including the proposed amendments, was mailed to all local electrical contractors who hold licenses in the City of Sycamore informing them of the proposed amendment. Additionally, Building & Engineering Department personnel have been proactive in advising contractors during routine inspections. Given the minimal change in content from the current code, it is anticipated that the impact of the 2011 edition will be minimal. The Building Department will make themselves regularly available to provide support to those individuals with questions if they arise. The Building & Engineering department requests Council adoption of the 2011 National Electrical Code, Annex H of the 2011 National Electrical Code (Administration and Enforcement), deletion of Article (Electrical Board) of Annex H, as well as all proposed amendments. City Council approval is recommended. 2

3 B. Ordinance No An Ordinance Approving a Request from Jenny Kingren, Owner of Huckleberry s Pet Parlor, for a Special Use Permit to Operate a Kennel (Indoor) at the Property Located at 423 North Main Street, #2 in the City of Sycamore, Illinois (PIN number ). First and Second Reading. In August, Jenny Kingren, owner of Huckleberry s Pet Parlor approached the City with a request to expand the services her business provides to include overnight pet accommodations. At that time the Unified Development Ordinance only allowed businesses such as Huckleberry s to offer pet grooming, pet wash, doggie daycare and dog training. Based on the restrictions outlined in the UDO staff denied her request. Following these discussions, staff reviewed surrounding communities in an effort to gauge where kennels are typically zoned, if allowed. Several of the communities reviewed distinguish between indoor and outdoor kennels, with indoor kennels typically permitted in light manufacturing zones. In October, the UDO was modified to allow indoor kennels as a special use within M-1, Light Manufacturing zoned districts. However, it was noted that there will be limited locations appropriate for indoor kennels. The special use criteria should be applied in order to determine if the property at 423 North Main Street is an appropriate fit. Section Special Uses: Standards of the City s Unified Development Ordinance outlines that a Special Use Permit shall be granted only if evidence is present to establish that: A. The proposed structure of use at the particular location requested is necessary or desirable to provide a service or a facility which is in the interest of the public and will contribute to the general welfare of the neighborhood or community; B. The proposed structure or use will not have a substantial adverse effect upon the adjacent property, the character of the neighborhood, traffic conditions, utility facilities and other matters affecting the public health, safety and general welfare; and C. The proposed structure or use will be designed, arranged and operated so as to permit the development and use of the neighboring property in accordance with applicable district regulations. D. Such other standards and criteria as are established by the ordinance for a particular Special Use as set forth in Section and as applied to Planned Developments as set forth in Article 4.4. When applying the special use criteria staff found minimal concerns as the business is presently operating in a similar fashion to what is being proposed. The only concerns noted were the time frame that animals would be taken out for walks during night hours and the number of animals that would be allowed. As a result the following conditions were proposed for the special use: No animals will be outside unless on a leash and supervised by a staff member. No animals will be outside between the hours of 10:00PM and 6:00AM. No more than 30 cats and/or dogs will be allowed. 3

4 With these conditions, the Plan Commission voted 9-0 to forward a favorable recommendation to the Council regarding the special use permit for Huckleberry s Pet Parlor to operate an indoor kennel at 423 N. Main Street. C. Ordinance No An Ordinance Approving a Request from Curtis and Karen Lang for a Change of Zoning of the Property Located at 525 Brickville Road (PIN number ) from the Current Zoning of M-2, Heavy Manufacturing District to M-1, Light Manufacturing District, and a Special Use for the Operation of an Arts and Recreation Center (Indoor) in Unit 1. First and Second Reading. Curt and Karen Lang recently purchased a building along Brickville Road and met with City staff to discuss permitted uses. The Lang s discussed the possibility of a multi-use instructional building that included sports, arts and possibly other disciplines. Rather than loosely interpreting the use, staff researched other communities to determine if similar multi-disciplinary uses are carved out and if so attempt to establish the appropriate zoning. Based on information collected an Arts and Recreation Center Use (Indoor) was created as a permitted use in C-3 zoning and as a special use in M-1 zoning. There are two requests being made for this property. The Lang s are requesting that the property located at 525 Brickville Road be re-zoned from M-2 heavy manufacturing to M-1 light manufacturing and that a special use permit be granted for Unit 1 of the building. Request for Zoning Change In sequential order, the first step would be to assess the request for a change of zoning. The property is currently zoned as M-2, Heavy Manufacturing. The property sits between the Sycamore Industrial Park which is zoned for heavy manufacturing and residential properties across Brickville Road that front North Avenue and Parker Street. Conventional zoning calls for a buffer between zoning transitions, although that does not always prove practical. For example, a typical zoning may include heavy industrial uses, bordered by light industry, followed by commercial, then multi-family residential and single family residential zones. Staff has reviewed the request and finds that: Rezoning the property helps buffer the residential properties immediately to the east. Most of the permitted uses in heavy manufacturing are allowed in light manufacturing districts with a few exceptions. Examples of the exceptions include the manufacturing of metal products, perfumes and cosmetics and the operation of textile mills. These are examples of uses that might involve noise or smell spillover into the adjacent neighborhood. The requested zoning is consistent with the area as all but one of the properties along the west side of Brickville Road is zoned M-1, Light Manufacturing. As a result of the review, staff feels that the request to rezone the property is consistent with accepted zoning practices and is a better fit to abut residential uses. 4

5 Special Use Request The building in question is roughly 20,000 square feet and the Lang s intend to utilize three units: Unit 1-This unit is approximately 1,600 square feet and runs the span of the front of the building. The special use request applies to this unit only. The space would primarily be utilized as an arts studio operated by local artist Chelsea McGhee. In addition to utilizing the space to create her own work, the space will be used to encourage and nurture creativity in the community. The studio would offer classes to children in groups no larger than 10. Birthday party groups of would be offered where the kids can celebrate while painting a project. Hours of classes and parties would vary between 3:30-7pm. For adults, plans include social painting parties where the studio would provide the paint, easels, aprons & instructions. Groups, couples or individuals can come and follow step-by-step instructions to create their own painting to take home. Bridal Showers, Ladies Night and Company Team Building are all different events that are planned. In these classes the maximum number of artists in the class will be 20. Hours of these events would be in the evening, for two hours with additional daytime hours during the weekend. All classes and parties will require pre-registration. The classes will be listed on the website, with the times and the fees. The studio will not be open for walk-ins, as the participants that come to paint will need to register before arrival. Future plans include creative space, as a gallery, or studio space for other artists and musicians as the business develops. Unit 2-This unit is approximately 12,000 square feet located in the center of the facility and will likely be utilized as warehouse space. No special use is being requested for this unit. Unit 3-This unit is approximately 6,600 square feet toward the rear of the facility and will likely be leased as warehouse space. Initial plans included the possibility of a sports instruction center, however after assessing parking needs, the Lang s have decided to move in another direction. No special use is being requested for this unit. Section Special Uses: Standards of the City s Unified Development Ordinance outlines that a Special Use Permit shall be granted only if evidence is present to establish that: A. The proposed structure of use at the particular location requested is necessary or desirable to provide a service or a facility which is in the interest of the public and will contribute to the general welfare of the neighborhood or community; B. The proposed structure or use will not have a substantial adverse effect upon the adjacent property, the character of the neighborhood, traffic conditions, utility facilities and other matters affecting the public health, safety and general welfare; and C. The proposed structure or use will be designed, arranged and operated so as to permit the development and use of the neighboring property in accordance with applicable district regulations. 5

6 D. Such other standards and criteria as are established by the ordinance for a particular Special Use as set forth in Section and as applied to Planned Developments as set forth in Article 4.4. Staff reviewed the special use request and criteria and determined the following: As noted above the traditional zoning would allow for a buffering of uses. The special use requested appears to be a better fit with adjacent properties across Brickville Road than other uses permitted in M-1 districts (i.e. a recycling center). A parking plan was required to indicate where patrons of not only Unit 1 would park, but how parking needs of the remainder of the building would be served. Parking Typically, when new uses are proposed for existing buildings, parking becomes a concern. The Lang s have prepared a parking plan that indicates the property can accommodate more than 20 parking spaces. Table E of Article 6.7 of the UDO addresses parking requirements and the number of required spots. Based on the proposed uses, the number of parking spaces required would be as follows: Unit 1 (1,600 sq. ft.): 8 spaces. Recreation related uses require 1 space per 200 square feet of net floor area. Unit 2 (12,000 sq. ft): 3 spaces. Warehouse uses require 1 space per 5,000 square feet net floor area. Unit 3 (6,600 sq. ft.): 2 spaces. Warehouse uses require 1 space per 5,000 square feet net floor area. Given the City s table of parking requirements and the proposed uses, this property more than satisfies the minimum parking requirements as approximately 18 spots are currently available and paved. As is the case with any property, staff encourages that the maximum number of parking spaces be created. The Plan Commission considered both requests on November 10 th and voted to forward a favorable recommendation to the Council. D. Ordinance No An Ordinance Establishing the DeKalb County Enterprise Zone. First Reading. Late last year, the DeKalb County Economic Development Corporation began collecting the necessary data and information to apply for an Illinois Enterprise Zone designation. DeKalb County has retained Craig Coil of the Development Consortium to prepare the application materials, which must address the qualification criteria. The Enterprise Zone designation helps local communities and taxing bodies advance the local economy and expand the tax base. Participating units of government need to pass designating ordinances and approve an Intergovernmental Agreement. 6

7 According to the Illinois Department of Commerce and Economic Opportunity (DCEO) the Illinois Enterprise Zone Program is designed to stimulate economic growth and neighborhood revitalization in economically depressed areas of the state. This is accomplished through state and local tax incentives, regulatory relief, and improved governmental services. Economic factors reviewed in the enterprise zone application include: Unemployment Employment Opportunities Poverty Abandoned Coal Mine, Brownfield or Federal Disaster Area Large Scale Business Closings Vacant Structures Tax Base Improvement Plan Public Infrastructure Improvement Plan Career Skills Programs Equalized Assessed Valuation Evidence must be presented that demonstrate that at least three of these ten factors are met for DeKalb County to apply for an Enterprise Zone. State Incentives Businesses located (or those that choose to locate) in a designated enterprise zone can become eligible to obtain special state and local tax incentives, regulatory relief, and improved governmental services, thus providing an economic stimulus to an area that would otherwise be neglected. These businesses may be eligible for the following State incentives: Exemption on the retailers occupation tax paid on building materials. Investment tax credit of.5 percent of qualified property. Exemptions, such as an expanded state sales tax exemption on purchases of personal property used or consumed in the manufacturing process or in the operation of a pollution control facility. Exemption on the state utility tax for electricity, natural gas and the Illinois Commerce Commission s administrative charge and telecommunication excise tax are available for companies that make the minimum statutory investment that either creates or retains the necessary number of jobs. These state incentives provide real value to industrial development projects. In commercial areas, the sales tax exemption would reduce the cost of construction materials. An enterprise zone administrator is responsible for compliance of the zone, maintains information regarding state and local incentives available to companies considering new investment within the zone, 7

8 and would make eligibility decisions based on uniform criteria. An Enterprise Zone Advisory Board would be established to guide administration. Local Incentives Local incentives typically involve property tax abatements. Craig Coil, the consultant hired by DeKalb County to lead the application process has recommended that a unified tax abatement program be implemented to better the chances of successfully obtaining the enterprise zone designation. Taxing bodies throughout the County are reviewing the proposed unified abatement program as shown below: 8

9 The proposed tax abatement program would increase the abatements from the current three-year 90%, 75%, 50% program to a five year program of 90%, 80%, 70%, 60% and 50%. The City would not participate in the ten year program being proposed within 3.5 miles of interstate 88. Participation in tax abatement programs require deferring new property tax dollars as an incentive to attract new business and jobs to the community. An example presented below includes two parcels in the Sycamore Prairie Business Park that are roughly the same size. Parcel #1 which is undeveloped yields less than three dollars per year in property tax revenue to the City. The second parcel, which is developed, brings over nine hundred times as many dollars into the City. Parcel #1 Parcel #2 Acreage Status Undeveloped Developed EAV $389 $361,065 City Rate Dollars $2.97 $2, Using the same example, the following table shows the impacts if Parcel #1 remained undeveloped and if Parcel #2 was provided a five-year abatement to facilitate development. Parcel #1 Parcel #2 Year 1 (90%) $2.97 $ Year 2 (80%) $2.97 $ Year 3 (70%) $2.97 $ Year 4 (60%) $2.97 $1, Year 5 (50%) $2.97 $1, Year Total $14.85 $4, Enterprise Zone designation would put the City in a stronger position to compete with other municipalities and states that already possess similar programs. Utilizing the zone to increase new business opportunities would help diversify the tax base, increase job opportunities and help move the local economy forward. It is important to note that the zone is not limited to new business, rather it offers opportunities to existing businesses looking to expand or reinvest within the zone. The attached Enterprise Zone map shows the properties included in the proposed zone. The map can be modified as needed by the Enterprise Zone Advisory Board if necessary at some point in the future. E. Ordinance No An Ordinance Authorizing the Mayor to Execute an Intergovernmental Agreement to Govern the DeKalb County Enterprise Zone. First Reading. Ordinance authorizes the Mayor to execute an intergovernmental agreement to establish provisions to govern the DeKalb County Enterprise Zone. The intergovernmental agreement includes the County of DeKalb, the Town of Cortland, the City of DeKalb, the City of Genoa, the City of Sandwich, the City of Sycamore and the Village of Waterman. 9

10 The administration of the Enterprise Zone will be under the jurisdiction of the DeKalb County Economic Development Corporation with the zone administrator responsibilities being fulfilled by the Executive Director of DCEDC. The zone will include an advisory board consisting of the DCEDC Executive Board of which the City of Sycamore has seat. Costs associated with administration of the Enterprise Zone will be paid by DCEDC. These costs will be offset by administrative fees paid by developers as allowed under the Enterprise Zone Act. The City will not incur any costs to administer the Enterprise Zone. In addition, the intergovernmental agreement outlines the local tax abatement policies of the respective agencies. Any action taken on Ordinance with regards to the City s property tax abatement program will be inserted into the Intergovernmental Agreement. The consultant hired by DeKalb County to lead the application process has recommended that a unified tax abatement program be implemented to better the chances of successfully obtaining the enterprise zone designation. 12. RESOLUTIONS None 13. CONSIDERATIONS A. Consideration of the Annual Property Tax Levy in the City of Sycamore. By the end of the calendar year, the City Council must adopt its annual property tax levy. The City of Sycamore is one of nine local taxing bodies that annually receive operating revenue from property taxes. The combined or composite property tax rate for residences and businesses located in Sycamore was $ per $100 EAV in 2014, based on the 2013 levies. The City s 2014 rate--- $ represented 7.06% of the overall rate applied against the EAV of our residences and businesses. A breakdown of how property tax dollars are distributed is illustrated below: 10

11 The City of Sycamore uses the monies raised through property taxes primarily to fund the general operations of the city departments, but also uses a substantial portion of the collected taxes to fund the city s pension obligations. The table below shows the breakdown of annual levy including operational and pension obligations in recent years: Property Tax Category General Operating 1,528,278 1,545,064 1,567,631 1,548,022 1,442,362 1,407,322 1,407,322 1,407,322 FICA/IMRF 310, , , , , , , ,175 Police Pension 233, , , , , , , ,525 Fire Pension 309, , , , , , , ,599 Crossing Guards 20,000 20,000 20,000 20,000 20,000 20,000 20,000 20,000 Totals 2,401,957 2,462,006 2,548,176 2,624,621 2,624,621 2,624,621 2,624,621 2,624,621 Fire and Police Pension Each year an independent actuary reviews the current position of the Fire and Police Pension Funds and recommends amounts that the City would need to contribute in order to achieve specific funding benchmarks at the end of a specific period of time. This model makes assumptions regarding a number of different variables such as return on investment, rate of salary increases, life expectancy, etc. Pension funding has plagued many municipalities in Illinois. The funding shortfall is a combination of lower than expected returns on investments, changes to pension provisions, greater frequency of disability pensions and other plan related factors. In addition, many municipalities fund an amount that is less than the actuarial required amount. Sycamore has historically funded its pensions at the actuarial requirement through a combination of property tax and personal property replacement tax dollars. Investment returns for both the Fire and Police Pension Funds performed near the 7.75% return assumption (+7.06% for Police and +8.54% for Fire) in FY2014. The investment return assumption was reduced from 8% last year as a result of minimal returns in the fixed income portion of the fund portfolio. Nevertheless, these investment gains are only part of the 5-year asset smoothing and the losses from 2009 are still being felt. The combination of under-funding by many municipalities and the recessionary market losses against a 2033 amortization period posed a serious problem a few years ago. As a result, the State of Illinois passed Public Act to reset the amortization period to 2040 and establish 90% as the required funding target. These changes were designed to provide some relief, especially to municipalities such as Sycamore that honored the funding obligation. In an attempt to force municipalities to appropriately fund pensions, the Act stipulates that the any City not making the minimum contributions will have state grant funds diverted to the pension funds starting in fiscal year In addition, a recent Illinois Department of Insurance study suggested another variable, the mortality tables, be modified away from the 1971 mortality tables in favor of a more current 2000 model. Therefore, the City s long-time actuary, Tim Sharpe has submitted actuarial assumptions for the Fire and Police Pension Funds indicating the required contribution using two options; a goal of 100% funding using the 2000 mortality tables and the minimum required contribution using the 2000 mortality tables with a 90% funding goal. 11

12 Pension Fund Contribution 100% Funding 2000 Tables 90% Funding 2000 Tables Police $368,874 $422,346 $360,721 Fire $584,147 $671,845 $489,079 The City s 2011 tax levy was the first time that the option of a 90% funding goal was in line with State Statute. However, the City Manager recommended continuing the 100% target as it was attainable without compromising service levels. This has not come without sacrifice as property tax funds for general operations have been reduced by $160,309 since the City started freezing the levy in The past two years alternative pension funding of approximately $25,000 came for the Sales Tax Distributive Fund and will need to again this year unless replaced through the property tax levy. Last year when the 2000 mortality tables were introduced the City funded an amount roughly half way between the 90% and 100% funding goal. Be reducing the return assumption the funding percentage decreases slightly even with strong investment returns and salary increases in-line with the plan. With the changes to the mortality tables and investment returns, keeping a 100% funding goal would increase the combined total required contributions by $141,170 for a total of $1,094,191 which is $244,391 more than the minimum required by State Law. The City Manager would like to move toward using the 2000 mortality tables, yet doing so while maintaining a rather static tax levy and current service levels would prove very difficult. A balanced approach would be to fund an amount in the middle of the 90% and 100% options ($391,534 for Police and $580,462 for Fire), which is $122,196 more than the minimum required by law. As EAV begins to grow over the coming years, realized revenue will be applied toward pension funding to move toward the new standard. The annual required contribution is funded by the property tax levy and a portion of personal property replacement tax receipts. The personal property replacement tax receipts are estimated to be $28,170 for the Police Pension Fund and $42,672 for the Fire Pension Fund. After deducting the PPRT portion the levy is $363,364 (+6.40%) for Police and $537,790 (+3.70%) for Fire. The percentage of liabilities funded in the Police Pension Fund decreased to 74.9% (from 75.9% in 2013) and the Fire Pension Fund decreased to 65.2% (from 65.3% in 2013). IMRF, Social Security and Medicare The City s IMRF and FICA (Social Security and Medicare) obligations are calculated by the City Manager. In recent years, the IMRF/FICA obligations for Water Division and Treatment Plant employees have been paid from the Water and Sewer Funds. Altogether, IMRF, FICA, Fire and Police Pensions costs for which levies were voted in 2013 ($1,197,299) constituted about 45.62% of the City s property tax receipts. As a point of reference, in FY01 pension obligations constituted 24% of the City s property tax receipts. The City s combined obligation to Social Security and Medicare is 7.65%. Apart from Fire and Police personnel, full-time employees contribute to the Illinois Municipal Retirement Fund (IMRF). IMRF accumulates money needed to pay benefits from member and employer contributions and from investment returns. The Fund was 87.4% funded as of the end of 2013 after posting 20% investment returns. As a result of the investment gains, the regular IMRF contribution rate for 2015 is estimated to be 10.75%, a decrease of 8.74% from the 2014 rate of 11.78%. The City has maintained the same levy for IMRF ($337,175) the past two years and the same is proposed for

13 The combined Fire and Police Pension Fund, IMRF, FICA and Medicare levy contributions total $1,238,329 for Calculating the Levy and Rate The starting point is estimating the City s equalized assessed valuation (EAV) for the coming year. Sycamore s final rate setting EAV in 2013 was $343,636,270. The County Supervisor of Assessment s preliminary estimates for the City s EAV for 2014 is $338,226,345 which is $5,409,925 (-1.57%) less than This reduction in EAV is after the net impact of $3,436,970 in new construction is factored in. While the overall EAV declined for the fifth consecutive year, there is reason for optimism as the decline is much less than the 5.1%-9.6% decreases experienced the past four years. Based on the EAV trends and the three-year average used to determine property values it appears EAV will stabilize and possibly begin to increase in Variables in the calculation of the new community-wide EAV include the value of homestead and senior exemptions and any equalizing multiplier established to maintain uniform assessments across all township districts. The EAV estimate must also allow for Board of Review actions following complaints about real property assessments later this fall. This estimate includes deductions for exemptions, the senior freeze, appeals, and TIF. The estimate also assumes negative equalization factors for Sycamore Township (0.9812), Cortland Township (0.9650) and DeKalb Township (0.9520). Since the actual EAV for 2014 will not be known until the final tax extension is published next spring, the actual City tax rate, determined by dividing the City levy by the City EAV, will be uncertain. If the actual EAV published next spring is not as high as the projected level, the final City rate may be slightly higher than expectations. Historic City EAV, City Levy and City Tax Rate Totals: Year EAV City Levy City Tax Rate*Per $100 EAV 1966 $27,220,176 $216,252 $ $44,278,153 $679,882 $ $56,800,908 $934,248 $ $145,647,122 $1,792,999 $ $155,861,773 (+7%) $1,822,000 (+2%) (-5%) 1998 $165,664,346 (6.3%) $1,896,660 (+4%) (-2%) 1999 $172,022,591 (3.84%) $1,934,593 (+2%) (-2%) 2000 $185,519,631 (+7.85%) $1,973,285 (+2%) (-5%) 2001 $201,706,953 (+8.7%) $2,032,484 (+3%) (-5.37%) 2002 $216,389,113 (+7.28%) $2,134,108 (+5%).98627(-2.1%) 2003 $241,138,805 (+11.4%) $2,198,131 (+3%).91223(-7.5%) 2004 $261,496,432 (+8.4%) $2,264,075 (+3%) (-5%) 2005 $309,324,156 (+18.3%) $2,331,997 (+3%).75444(-12.9%) 2006 $359,225,508 (+16%) $2,401,957 (+3%).66912(-11.3%) 2007 $410,867,373 (+14.3%) $2,462,006 (+2.5%).59965(-10.4%) 2008 $442,308,820 (+7.6%) $2,548,176 (+3.4%).57759(-3.6%) 13

14 2009 $458,665,816 (+3.7%) $2,624,621 (+3%).57227(-0.9%) 2010 $435,237,682 (-5.1%) $2,624,621 (0%).60303(+5.38%) 2011 $410,684,047 (-5.66%) $2,624,621 (0%).63913(+5.98%) 2012 $371,153,227 (-9.62%) $2,624,621 (0%).70761(+10.71%) 2013 $343,636,270 (-7.41%) $2,624,621 (0%).76429(+8.01%) As a home rule community the City and the Library (a component unit of the City) are not subject to the provisions of the Property Tax Extension Limitation Law, commonly referred to as tax caps. However, previous City Councils have generally chosen to levy within the extension limitation for the year, which for capped taxing bodies means the lesser of 5% or the percentage increase in the Consumer Price Index during the twelve month calendar year preceding the levy year. For 2014 extensions, the County s cap has been established at 1.5%. City Levy Options Five options are presented below for consideration. There are several factors that should be considered when reviewing the options. As a result of declining EAV and the City s levy freeze the past five years, both the percentage of the City s operating budget attributed to property tax and the dollars available to general operations has drastically been reduced. Working through the recession, the City has taken an approach aimed at providing stability to residents and businesses as the community rebounded from the economic lows. The Council needs to consider balancing the needs of the community and those of City operations and obligations when deciding the appropriate tax levy. In Fiscal Year 2008, property taxes made up 16.04% of all general operating revenues. Since that time property tax dollars coming into the general fund have been reduced and only make-up 12.44% of operating revenues. The narrative for each option highlights the proportionate share of property tax revenues as a percentage of the general fund and the net change in funds available for general operations. For each option the resulting impact on the average homeowner is illustrated depending on which township the property is located in. 14

15 Option #1: 1.57% Decrease in the Tax Levy Total Levy 2,462,006 2,548,176 2,624,621 2,624,621 2,624,621 2,624,621 2,624,621 2,583,414 Police Pension 259, , , , , , , ,364 Fire Pension 327, , , , , , , ,790 FICA/IMRF 310, , , , , , , ,175 Crossing Guards 20,000 20,000 20,000 20,000 20,000 20,000 20,000 20,000 General Operations 1,545,064 1,567,631 1,548,022 1,442,362 1,407,322 1,407,322 1,407,322 1,325,085 City-Wide EAV 410,867, ,308, ,665, ,237, ,684, ,153, ,636, ,226,345 City Tax Rate Overall Impact: Should result in a level City tax rate of Property Taxes minus the portion going directly to the Police and Fire Pension funds would represent only 11.86% of all budgeted FY15 General Fund expenditures ($14,180,842), versus 12.71% in 13.08% in FY 13, 13.39% in FY12, 14.4% in FY11 and 15.4% in FY10. Decrease the funds available for general operations by $82,237. Resulting Impact on Single-Family Homeowner: In past years, we have identified the average price of all homes sold in our community over the previous year. In 2014, according to the DeKalb Area Association of Realtors the average price of all detached single family homes sold year-to-date is $191,826. The resulting equalized assessed valuation would be $63,942. When the respective 2014 multipliers are applied the EAV for the same home is reduced as shown in the chart below. The chart below shows the estimated change in the City tax bill for the average home in 2013 (payable in 2014) and the average home in 2014 (payable in 2015) after the township multipliers ( Sycamore, DeKalb, Cortland) are applied: Average Sycamore Twp. DeKalb Twp. Cortland Twp. Property EAV 63,942 62,740 60,873 61,704 City Tax Rate City Tax Bill $ $ $ $ Difference -$9.49 -$ $17.40 In this scenario the average homeowner s tax bill would decrease by an estimated $9.49-$17.40 depending on the township that property is located in. 15

16 Option #2: No Increase in the City Levy Total Levy 2,462,006 2,548,176 2,624,621 2,624,621 2,624,621 2,624,621 2,624,621 2,624,621 Police Pension 259, , , , , , , ,364 Fire Pension 327, , , , , , , ,790 FICA/IMRF 310, , , , , , , ,175 Crossing Guards 20,000 20,000 20,000 20,000 20,000 20,000 20,000 20,000 General Operations 1,545,064 1,567,631 1,548,022 1,442,362 1,407,322 1,407,322 1,407,322 1,366,292 City-Wide EAV 410,867, ,308, ,665, ,237, ,684, ,153, ,636, ,226,345 City Tax Rate Overall Impact: Should result in a City tax rate of Property Taxes minus the portion going directly to the Police and Fire Pension funds would represent 12.15% of all budgeted FY15 General Fund expenditures ($14,180,842), versus 12.71% in FY 14, 13.08% in FY13, 13.39% in FY12, 14.4% in FY11 and 15.4% in FY10. Decrease the funds available to for general operations by $41,030. Resulting Impact on Single-Family Homeowner: In past years, we have identified the average price of all homes sold in our community over the previous year. In 2014, according to the DeKalb Area Association of Realtors the average price of all detached single family homes sold year-to-date is $191,826. The resulting equalized assessed valuation would be $63,942. When the respective 2014 multipliers are applied the EAV for the same home is reduced as shown in the chart below. The chart below shows the estimated change in the City tax bill for the average home in 2013 (payable in 2014) and the average home in 2014 (payable in 2015) after the township multipliers ( Sycamore, DeKalb, Cortland) are applied: Average Sycamore Twp. DeKalb Twp. Cortland Twp. Property EAV 63,942 62,740 60,873 61,704 City Tax Rate City Tax Bill $ $ $ $ Difference -$1.84 -$ $9.88 In this scenario the average homeowner s tax bill would decrease $1.84-$16.33 depending on the township the property is located in. 16

17 Option #3: Maintain Property Tax Proportion of General Fund Budget Total Levy 2,462,006 2,548,176 2,624,621 2,624,621 2,624,621 2,624,621 2,624,621 2,703,539 Police Pension 259, , , , , , , ,364 Fire Pension 327, , , , , , , ,790 FICA/IMRF 310, , , , , , , ,175 Crossing Guards 20,000 20,000 20,000 20,000 20,000 20,000 20,000 20,000 General Operations 1,545,064 1,567,631 1,548,022 1,442,362 1,407,322 1,407,322 1,407,322 1,445,210 City-Wide EAV 410,867, ,308, ,665, ,237, ,684, ,153, ,636, ,226,345 City Tax Rate Overall Impact: Should result in a City tax rate of Property Taxes minus the portion going directly to the Police and Fire Pension funds would represent 12.71% of all budgeted FY15 General Fund expenditures ($14,180,842), versus 12.71% in FY14, 13.08% in FY 13, 13.39% in FY12, 14.4% in FY11 and 15.4% in FY10. Ensures diversification of general operating revenues with no further erosion in the percentage of property tax as a revenue source. Resulting Impact on Single-Family Homeowner: In past years, we have identified the average price of all homes sold in our community over the previous year. In 2014, according to the DeKalb Area Association of Realtors the average price of all detached single family homes sold year-to-date is $191,826. The resulting equalized assessed valuation would be $63,942. When the respective 2014 multipliers are applied the EAV for the same home is reduced as shown in the chart below. The chart below shows the estimated change in the City tax bill for the average home in 2013 (payable in 2014) and the average home in 2014 (payable in 2015) after the township multipliers ( Sycamore, DeKalb, Cortland) are applied: Average Sycamore Twp. DeKalb Twp. Cortland Twp. Property EAV 63,942 62,740 60,873 61,704 City Tax Rate City Tax Bill $ $ $ $ Difference $ $2.13 $4.52 In this scenario the average homeowner s tax bill would increase by $12.80 for properties located in Sycamore Township and $4.52 in Cortland Township and decrease $2.13 in DeKalb Township. 17

18 Option #4: Maintain Levy; Apply Rate to New Construction Total Levy 2,462,006 2,548,176 2,624,621 2,624,621 2,624,621 2,624,621 2,624,621 2,651,565 Police Pension 259, , , , , , , ,364 Fire Pension 327, , , , , , , ,790 FICA/IMRF 310, , , , , , , ,175 Crossing Guards 20,000 20,000 20,000 20,000 20,000 20,000 20,000 20,000 General Operations 1,545,064 1,567,631 1,548,022 1,442,362 1,407,322 1,407,322 1,407,322 1,393,236 City-Wide EAV 410,867, ,308, ,665, ,237, ,684, ,153, ,636, ,226,345 City Tax Rate Overall Impact: Should result in a level City tax rate of The same levy as the past five years is applied to existing EAV to calculate the rate of $ The rate is then applied to new construction EAV of $3,436,970. Property Taxes minus the portion going directly to the Police and Fire Pension funds would represent 12.34% of all budgeted FY15 General Fund expenditures ($14,180,842), versus 12.71% in FY14, 13.08% in FY 13, 13.39% in FY12, 14.4% in FY11 and 15.4% in FY10. Slight decrease in the funds available for general operations by $14,086. This would need to be offset by utilizing alternative funds to make-up the difference. Resulting Impact on Single-Family Homeowner: In past years, we have identified the average price of all homes sold in our community over the previous year. In 2014, according to the DeKalb Area Association of Realtors the average price of all detached single family homes sold year-to-date is $191,826. The resulting equalized assessed valuation would be $63,942. When the respective 2014 multipliers are applied the EAV for the same home is reduced as shown in the chart below. The chart below shows the estimated change in the City tax bill for the average home in 2013 (payable in 2014) and the average home in 2014 (payable in 2015) after the township multipliers ( Sycamore, DeKalb, Cortland) are applied: Average Sycamore Twp. DeKalb Twp. Cortland Twp. Property EAV 63,942 62,740 60,873 61,704 City Tax Rate City Tax Bill $ $ $ $ Difference $3.15 -$ $4.97 In this scenario the average homeowner s tax bill would increase or decrease slightly depending on which township the property is located in. 18

19 Option #5: Increase Levy Using a 1.5% Tax Cap Factor Total Levy 2,462,006 2,548,176 2,624,621 2,624,621 2,624,621 2,624,621 2,624,621 2,691,338 Police Pension 259, , , , , , , ,364 Fire Pension 327, , , , , , , ,790 FICA/IMRF 310, , , , , , , ,175 Crossing Guards 20,000 20,000 20,000 20,000 20,000 20,000 20,000 20,000 General Operations 1,545,064 1,567,631 1,548,022 1,442,362 1,407,322 1,407,322 1,407,322 1,433,009 City-Wide EAV 410,867, ,308, ,665, ,237, ,684, ,153, ,636, ,226,345 City Tax Rate Overall Impact: Should result in a level City tax rate of A 1.5% levy increase is applied to existing EAV to calculate the rate of $ The rate is then applied to new construction EAV of $3,436,970. Property Taxes minus the portion going directly to the Police and Fire Pension funds would represent 12.62% of all budgeted FY15 General Fund expenditures ($14,180,842), versus 12.71% in FY14, 13.08% in FY 13, 13.39% in FY12, 14.4% in FY11 and 15.4% in FY10. Increase in the funds available for general operations by $25,687. Resulting Impact on Single-Family Homeowner: In past years, we have identified the average price of all homes sold in our community over the previous year. In 2014, according to the DeKalb Area Association of Realtors the average price of all detached single family homes sold year-to-date is $191,826. The resulting equalized assessed valuation would be $63,942. When the respective 2014 multipliers are applied the EAV for the same home is reduced as shown in the chart below. The chart below shows the estimated change in the City tax bill for the average home in 2013 (payable in 2014) and the average home in 2014 (payable in 2015) after the township multipliers ( Sycamore, DeKalb, Cortland) are applied: Average Sycamore Twp. DeKalb Twp. Cortland Twp. Property EAV 63,942 62,740 60,873 61,704 City Tax Rate City Tax Bill $ $ $ $ Difference $ $4.33 $2.29 In this scenario the average homeowner s tax bill would increase by $10.53 in Sycamore Township, $2.29 in Cortland Township and decrease $4.33 in DeKalb Township. 19

20 Recommendation For the past five years the City has maintained a static property tax levy. Since that time, employer contributions to the Fire and Police funds have increased by $186,512 annually resulting in over $100,000 less available to general operations. During the recession of and subsequent years the City has been mindful of the financial stressors that our residents and businesses have felt. The City s goal is providing quality services to our residents and to help attract and retain business by adding predictability to the City portion of the property tax bill. As the economy starts to improve, the City needs to be diligent in assessing key revenues. This includes ensuring the appropriate mix of revenue sources. While property tax revenues have diminished as a percentage of the City s budget there is reason for optimism as new development and investment in the community continues to increase. As continued investment is made in our community the tax base becomes increasingly more diversified and other sources of revenue are supplemented as a result of new business. The City s approach has been one of balance; attempting to continue to provide high level services within our means. The balanced approach is not always the easiest as it means providing services and ensuring pension obligations are met with fewer dollars or revenue sources that are less predictable. The City Manager recommends option #4 which holds the levy the same while adding revenues associated with new construction. The added EAV from new construction will provide enough new revenue to offset the majority of the City s Fire and Police pension obligation increases. With this recommendation the City Manager suggests the levy ordinance keep the funds available to general operations static and utilize $14,086 in alternative funding toward pension obligations. As a result, homeowners and businesses will see little to no change in the portion of their tax bill that goes to the City, the City will rely on other sources of revenue for operations and pension obligations will be met. City Council direction is requested. B. Consideration of the Sycamore Library Annual Property Tax Levy. The Sycamore Library is a component unit of the City of Sycamore. Each year the City levies property taxes for the Sycamore Library that are decided by a separate Library Board. As a component unit of the City, the Library is not subject to the limitations of property tax caps. However the City Manager has recommended the Library consider the 1.5% CPI cap as a guide for determining its levy. The Sycamore Public Library Board met on November 11 th and considered the Library s budget and 2014 levy. The Library has decided to freeze its levy at $971,702. Even with the freeze, the proposed Library tax rate increases slightly from (2013) to (2014) as a result of a decrease in the estimated community EAV. Year Library Levy $764,059 $814,487 $839,521 $872,564 $915,366 $943,400 $971,702 $971, % 6.60% 3.10% 3.94% 4.90% 3.06% 3.00% 0.00% City-Wide EAV 410,867, ,308, ,665, ,237, ,684, ,153, ,604, ,226,345 Library Tax Rate % -1.00% -0.15% 9.52% 11.18% 14.04% 10.94% 1.03% 20

21 Resulting Impact on Single-Family Homeowner: In past years, we have identified the average price of all homes sold in our community over the previous year. In 2014, according to the DeKalb Area Association of Realtors the average price of all detached single family homes sold year-to-date is $191,826. The resulting equalized assessed valuation would be $63,942. When the respective 2014 multipliers are applied the EAV for the same home is reduced as shown in the chart below. The chart below shows the estimated change in the City tax bill for the average home in 2013 (payable in 2014) and the average home in 2014 (payable in 2015) after the township multipliers ( Sycamore, DeKalb, Cortland) are applied: Average Sycamore Twp. DeKalb Twp. Cortland Twp. Property EAV 63,942 62,740 60,873 61,704 City Tax Rate City Tax Bill $ $ $ $ Difference -$.05 -$5.42 -$3.03 As a result of the proposed levy the average homeowner will pay slightly less property taxes to the library next year. Until the Sycamore Public Library is established as a separate taxing authority through referendum, the City Council is obliged to pass though the Library s levy request, provided the annual Library levy does not exceed.6% of the community s EAV ($2,029,358 based on the estimated EAV). Sarah Tobias, Executive Director of the Library has prepared a draft budget for the City Council and will be available to answer questions or provide clarification. When combined, the City and Library levies form the corporate levy. The resulting proposed corporate levy would be $3,623,267. The corporate tax rate would increase from in 2013 to in 2014 as a result of the reduction of estimated EAV. Whenever a community plans a corporate levy increase of more than 4.9%, the Truth in Taxation Act requires a public hearing. Even though the corporate tax levy increase is well below this threshold, it is the City s practice to hold a public hearing for the annual tax levy. The City Manager intends to hold a public hearing on the corporate property tax proposal on December 1st with a first reading on the levy ordinances. City Council direction is requested. C. Consideration of Options for Phase III of the Wastewater Treatment Plant Improvements. In May 2005, the City began working with McMahon Associates to plan for future treatment plant expansion and collection system improvements. Tim Bronn has been the principal representative of McMahon Associates. The initial plan presented in 2005 included a two phase project that would ultimately result in an increase in the rated plant capacity from 2.97 MGD (million gallons per day) to 4.99 MGD. As the project has evolved an additional phase was added making the project three phases as outlined below: 21