Frequently Asked Questions Table of Contents

Transcription

1 Frequently Asked Questions Table of Contents What is Home Rule?... 4 If Home Rule is repealed, what would the total property tax increase be for all taxing bodies?... 4 What is a TIF?... 4 What are the alternatives to the Village providing its own water and wastewater treatment and distribution/collection?... 4 If the Village loses Home Rule status, who would be in charge of the Village s services?... 5 If we lose Home Rule status, we lose revenue?... 5 Does the Refuse Fee change from year to year?... 5 What revenue sources does the Village stand to lose if Home Rule status is repealed?... 5 Why is it so difficult to attract a grocer for the old Dominic s space in the River Valley Shopping Center?... 5 Does Home Rule Sales tax keep us from getting a grocery store?... 6 Why did Wal-Mart move from East Dundee to Carpentersville?... 6 Doesn t GAT Guns bring in a lot of tax revenue?... 6 Where did the petition to remove Home Rule come from? Why is it on the ballot now when it was originally granted in 2004?... 6 How often can a referendum to remove Home Rule authority be on the ballot?... 7 Speedway estimates doing $11 million in taxable sales per year, which yields $440,000 in annual sales tax. $440,000 is 4% of 11 million. Isn t Home Rule Sales Tax 2%?... 7 Does our Sales Tax Equal West Dundee s?... 7 What is the debt per capita of surrounding municipalities?... 7 Do homeowners that are on septic and well get any relief in the property tax rate?... 8 If Home Rule is repealed, what is your plan? Will you allow taxes to go up by 300% or have you looked at cuts? If so, where and how much?... 8 Is there a limitation on property tax increases or can Home Rule municipalities raise taxes every year?... 8 Would seniors be exempt from any future property tax increase?... 8 What constitutes a consultant fee?... 8 What was the former Administration and how has it changed?... 8 How would East Dundee residents benefit from the removal of Home Rule?... 9

2 How much do the educational presentations cost?... 9 How much did the special edition newsletter cost?... 9 From , Village spending was out of control. How does spending like that happen and no one is aware?... 9 What will the impact of the $500,000 reduction in staffing cuts be?... 9 What safeguards have been put in place to ensure that a lack of visibility to the true financial situation is not repeated? What oversight is now in place to avoid a lack of budgetary controls in the future? How could 4-5 years of financial mismanagement by the Village Administration be overlooked by the Village Board and President? Why is the ballot language worded so oddly? Won t there be significant property tax increases every year for some time to come? Will the $1,200 property tax increase be for one year or for multiple? You mentioned that eliminating home rule would result in an increase in property taxes of $1,200 for a $185,000 home. You also mentioned that thanks to the recently adopted restrictions on our village against raising taxes beyond what a non-home rule village could do, our property taxes could only increase by the lesser of 5% or the current rate of inflation. The $1,200 increase mentioned earlier is well outside of those parameters, so how could our taxes go up that much if we cease to be a home rule village? Both the Village's self-imposed limitation and the limitation placed on non-home rule municipalities are regarding annual property tax increases imposed by the Village but neither of these limitations apply to general obligation bonds which are backed by property taxes. That is because the property taxes are the guarantee to the bond holders that the bonds will be paid by the Village. Neither the State nor Village has or can place limitations on property taxes that are used to make annual debt payments for general obligation bonds. The Village can only choose to abate the taxes if other revenues are available Are any ideas on the table for the Haeger Potter facility? Why do we need Assistant Village Administrators? Why can t we reduce the staff of the Police Department by using more Part Time staff instead of Full Time Staff? When was it discovered we were in debt? When was the last audit done before it was discovered? What line items put us in debt?

3 There is no one line item within the budget that has put the Village in debt. The Village s debt is associated with specific public infrastructure and economic development projects. For a listing of the Village s debt and associated projects, click here How much revenue has been collected from video gaming licenses and taxes? How much increased development have we gained with the Village s various TIFs? How many Village Administrators has there been since 2005? Is the rental inspection program still active? In addition to bonds, what else is paid for by Home Rule Sales Tax? Outside of Home Rule Sales Tax, which is primarily generated from non-residents, has there been any significant tax increase to the residents of East Dundee? Will our water and sewer rates go up as a result of a loss of Home Rule? Will a road program be reinstated? How will roads be repaired if the Village loses Home Rule Status? Why is the Village pushing hard to keep Home Rule? How many buildings does the Village own? Why did the Village get into debt? How many voters do you expect to participate in the vote on March 20 th?

4 What is Home Rule? Home Rule is defined as the transfer of power from State to local governments for the purpose of facilitating self governance. It is automatically granted under the Illinois Constitution to all municipalities with a population of 25,000 or more. Home Rule can also be granted to a municipality through referendum for communities with a population of less than 25,000. Home Rule is widely understood as the authority which grants local governments control over local issues and greater flexibility in revenue generation. East Dundee became a Home Rule municipality in 2004, when voters approved a referendum changing the Village s status to Home Rule. If Home Rule is repealed, what would the total property tax increase be for all taxing bodies? Unfortunately, the Village cannot know for certain what the total property tax increase will be for residents if Home Rule is repealed because the Village has no control over other taxing bodies. However, the Village portion is anticipated to increase by 304% if Home Rule is repealed due to the removal of Home Rule revenue sources such as Home Rule Sales Tax. Without those Home Rule revenues, debt payments will be made from property tax revenues, rather than being abated, or canceled. What is a TIF? A Tax Increment Financing District (TIF) is an economic development tool that the Village can use to incentivize investment. Within a TIF District, the valuation of properties is frozen. Any taxes on the increase in value after the creation of the TIF go into a special fund with restricted uses such as for public infrastructure and economic development. The Village currently has 8 TIFs and has used them to encourage development in the Downtown, along Route 72 and Route 25, and along Penny Ave. What are the alternatives to the Village providing its own water and wastewater treatment and distribution/collection? The Village has limited options for obtaining water and wastewater services for its residents. The Village currently provides its residents with these services using two treatment plants and a Village owned distribution system. The Village could potentially contract these services out to regional entities. These options have periodically been analyzed to maximize efficiency and effectiveness, as well as to ensure that the most cost effective option is being utilized. The Village will continue to examine its options as circumstances change. 4

5 If the Village loses Home Rule status, who would be in charge of the Village s services? Regardless of the Village s Home Rule status, many of the Village s services such as road maintenance, public safety, and water and wastewater treatment would have to continue to be provided and the financial cost of providing those services would also remain. The Village would collect the general obligation debt service payments from the property taxes so the Village s budget for these services would not be affected. If we lose Home Rule status, we lose revenue? If the Village loses Home Rule status, the Village will lose access to Home Rule revenue sources that it currently utilizes such as Home Rule Sales Tax and the Vehicle Title Transfer Fee. These revenues account for approximately 40% of the Village s General Fund revenue sources. Does the Refuse Fee change from year to year? When the Refuse Fee was authorized by the Village Board, the ordinance included a sunset provision. This means that the Village Board will reconsider the Refuse Fee with each year s budget and will make a decision whether or not to continue the fee based upon current economic and financial conditions, new revenue growth, and a variety of other factors. What revenue sources does the Village stand to lose if Home Rule status is repealed? The Village stands to lose $1.65 Million in revenue if Home Rule is repealed. This total includes Home Rule Sales Tax, the Vehicle Title Transfer Fee, Video Rental Tax, fees associated with the Commercial and Rental Inspection Program, and increased video gaming license fees. In addition to the $1.65 Million, the Village could also potentially lose revenue from several proposed developments. The Village anticipates that these developments would result in an additional $300,000 in revenue. Why is it so difficult to attract a grocer for the old Dominic s space in the River Valley Shopping Center? There are a number of issues that have made it difficult to attract a new grocer into the open space in the River Valley Shopping Center. Up until recently, Dominick s continued to pay the rent to the landowner despite not having occupied the space for 9 years. Because of this, the landowner had little incentive to fill the space. To persuade the landowner to buy out Dominick s, the Village initiated eminent domain proceedings. As a result, the landowner settled with Dominick s and for the first time since Dominick s closing, Dominick s is completely out of the picture. The Village has conducted several studies on the economic need for a grocer within the area and hopes to attract a grocery store to the space. It is important to note that there are several impediments to overcome including the significant amount of renovation needed to make the space suitable for a grocer. 5

6 Does Home Rule Sales tax keep us from getting a grocery store? The Village has not seen any indication that Home Rule Sales Tax has influenced the process of obtaining a grocer for the former Dominick s space. It is important to note that like other taxes on foods, Home Rules Sales Tax does not apply to many of the items sold within grocery stores. Why did Wal-Mart move from East Dundee to Carpentersville? Wal-Mart moved from East Dundee to Carpentersville for a variety of reasons. Wal-Mart desired a larger store and based upon demographics, location, and other factors, Wal-Mart decided that Carpentersville was the best location for them. In addition, they were incentivized by Carpentersville to leave East Dundee. The Village worked with Wal-Mart for years in attempts to keep Wal-Mart within East Dundee and ultimately entered litigation against Carpentersville to prevent the move from occurring. Despite these efforts, Wal-Mart left the community in The Village is excited about the current discussions about the old Wal-Mart site. Plote Developments is planning to invest between 5-10 million in two different buildings on the lot. These developments could create approximately 200 jobs and significantly increase the property values in the space. The Village has also heard interest from other businesses and is hopeful that the space will not remain vacant for long. Doesn t GAT Guns bring in a lot of tax revenue? The store does bring in a significant amount of tax revenue. The store is one of the few locations within the Village that generates Amusement Tax revenue. In addition, the store generates sales tax revenue. The Village does currently have debt associated with the development. Once the associated debt is paid off, the Village will see a corresponding spike in uncommitted revenues. Where did the petition to remove Home Rule come from? Why is it on the ballot now when it was originally granted in 2004? State statute allows a resident to file a petition with the Village to place a binding referendum on Home Rule status on the ballot. In December, a resident gathered the required number of signatures and filed the petition with the Village. As a result, the referendum question on the Village s Home Rule status will be on the March 20 th ballot. 6

7 How often can a referendum to remove Home Rule authority be on the ballot? If the referendum fails on March 20 th, it cannot be placed on the ballot again for four years. Speedway estimates doing $11 million in taxable sales per year, which yields $440,000 in annual sales tax. $440,000 is 4% of 11 million. Isn t Home Rule Sales Tax 2%? Speedway is located within a Business Development District (BDD). Because of this, sales on the Speedway project will be subject to the.75% BDD sales tax. In addition, all sales will be subject to the state shared sales tax of 1%, as well as the Home Rule Sales tax of 2%. The Village is utilizing a more conservative estimate of taxable sales resulting from the property, but is expecting the redevelopment to result in approximately $400,000 in sales tax revenue. However, as part of the redevelopment agreement, the Village will rebate 41% of the sales tax revenue back to Speedway. Does our Sales Tax Equal West Dundee s? West Dundee has a Home Rule Sales Tax of 1.5%, compared to East Dundee s Home Rule Sales Tax of 2%. However it is important to note that West Dundee has a Food and Beverage Sales Tax of 1%. In addition, both West Dundee and East Dundee have BDDs, which impose additional sales taxes for purchases made within those districts. The sales tax for an individual purchase will vary widely depending on where the purchase was made and what items were purchased. What is the debt per capita of surrounding municipalities? The total debt for the surrounding municipalities can be found at the following links. West Dundee Comprehensive Annual Financial Report p AA269/$file/CAFR-Audit-Report_FYE pdf Carpentersville Comprehensive Annual Financial Report p CAFR.aspx Sleepy Hollow Comprehensive Annual Financial Report p. 42. Debt per capita not shown. Audit.pdf Gilberts Comprehensive Annual Financial Report p

8 Do homeowners that are on septic and well get any relief in the property tax rate? No, because property taxes are not used to fund water and sewer operations. These operations are funded by water and sewer fees as these funds operate like a business. If Home Rule is repealed, what is your plan? Will you allow taxes to go up by 300% or have you looked at cuts? If so, where and how much? Due to the significant cuts made over the course of the last year, the Village Board believes that there is not additional room to cut within the budget. The loss of home rule revenue sources would reduce General Fund revenues by $1.65 Million, or by approximately 40%. Because it would be extremely difficult to compensate for that loss of revenue through cuts, the debt service for the general obligation bonds will be paid for through property taxes. Is there a limitation on property tax increases or can Home Rule municipalities raise taxes every year? There are not limitations on property tax increases for a Home Rule municipality. However, the East Dundee Village Board has placed self-imposed restrictions on its ability to raise property taxes to mirror the restrictions on non-home Rule Municipalities. For more information on the limitations the Board has created, visit Would seniors be exempt from any future property tax increase? Unfortunately, seniors would not be exempt for a property tax increase. Due to the way property taxes are collected, the Village cannot exempt a specific class of property owners from an increase. However, seniors do benefit from a Senior Exemption which allows a qualified senior to reduce his or her property s taxable valuation by $5,000 and the Senior Freeze Exemption which effectively freezes the taxable valuation of a property at a base year, preventing the taxable valuation from increasing. For more information about these exemptions, contact the Kane County Assessment Office at (630) What constitutes a consultant fee? The Village has historically hired consultants to provide professional advice on specific topic areas. Examples of historically used include a land planner, engineer, general attorney, and a sustainability consultant. Over the past several years, the Village has reduced these fees by $500,000, or by approximately 77%. What was the former Administration and how has it changed? On May 1, 2017, the Village appointed a new Village Administrator. Since that time, the Village has made a number of changes to improve the Village s financial condition including reducing staffing costs by $500,000, reducing discretionary expenditures, and increasing revenues. 8

9 How would East Dundee residents benefit from the removal of Home Rule? Proponents of limiting Home Rule suggest that the primary benefits of repeal would be the limitations imposed upon the Village by the State of Illinois. If Home Rule is repealed, referendum approval would be required for property tax increases above PTELL limitations (5% or the rate of inflation, whichever is less) and for the issuance of debt. How much do the educational presentations cost? The only associated cost for presentations is the printing of the presentation slides for distribution to the audience. This cost is estimated at approximately $300. How much did the special edition newsletter cost? Overall, the newsletter cost $ and took the place of the normal Spring/Winter newsletter. The newsletter came in under budget, costing less than Fall 2017 newsletter. The Village felt that it was important to provide residents with factual, unbiased information regarding the Home Rule referendum questions in advance of the March 20 th Primary Election. From , Village spending was out of control. How does spending like that happen and no one is aware? The documentation the Village Board should have received including, but not limited to monthly treasurer s reports, as well as revenue projections, actuals, and expenditures included in the budget were oftentimes inaccurate or missing. In addition, the previous administration did not accurately track the Village s TIF commitments. The position of Administrator changed and the new Village Administrator was appointed on May 1, Since that time, the Village has actively worked to improve its financial condition through a reduction of staffing costs and discretionary expenditures, as well as modestly increasing revenue What will the impact of the $500,000 reduction in staffing cuts be? These cuts were made at the direction of the Village Board after the new Administrator was appointed on May 1, These cuts were strategically made to limit the impact to service delivery and had minimal impacts on Village services. The Village was able to operate utilizing existing staff by increasing efficiency. One area these cuts can be seen is in the Marketing Department. Although the department was cut, existing staff was able to complete a full season of events. The Village has also opted to forgo hiring for empty positions within the Public Works and Police departments and feels that current service levels are able to be maintained utilizing existing staff. 9

10 What safeguards have been put in place to ensure that a lack of visibility to the true financial situation is not repeated? The current Administration has taken several important steps to improve transparency to the Village Board and to the community. First, the Administration made a concerted effort to disclose the factors that negatively impact the Village s financial condition through the audit s transmittal letter, a presentation to the Board, and interaction with the local press. In addition, the Administration now provides the Board with monthly treasurer s reports and has worked to make the annual budget into a more transparent and more easily understood document. As part of the effort to provide the Board with more comprehensive and transparent information, the Administration has also proposed the hiring of a professional TIF consultant to analyze the condition of the Village s 8 TIFs. Finally, the Village has worked to educate the community about the Village s finances through the quarterly printed newsletter and through the launch of an electronic newsletter. To sign up for the electronic newsletter, click here. What oversight is now in place to avoid a lack of budgetary controls in the future? In addition to the efforts to improve transparency, the Village has also instituted a number of internal controls including the consolidation of funds, preventing expenditure overruns by strictly holding to the budget, checking every line item to ensure accuracy, and creating additional authorization practices for purchases. In addition, the Village has split the responsibility of creating revenue and expenditure projections to ensure that revenue projections cannot be inflated to match expenditures. How could 4-5 years of financial mismanagement by the Village Administration be overlooked by the Village Board and President? The Village Administrator failed to provide the Village Board and President with accurate assumptions and projections. For example, the budget included revenues that were higher than they should have been and did not include some of the financial commitments that were made on behalf of the Village. The result was a budget that appeared to be balanced, but actually was not. In addition, the actuals, which show what happened during the year, were not clearly reported to the Board. Because of this, the Board was not aware of the budget deficit for a period of several years. Most of this occurred because many of the TIF commitments came due at the same time and were not properly tracked by the Village Administration. The Village Board appointed a new Administrator on May 1, Why is the ballot language worded so oddly? The binding question has to be worded exactly as it currently appears on the ballot. It will read Shall the Village of East Dundee, IL cease to be a Home Rule unit? A vote yes is a vote to repeal home rule authority, while a vote no is a vote to keep home rule authority. State statute requires the ballot question to be worded in this way. 10

11 Won t there be significant property tax increases every year for some time to come? Will the $1,200 property tax increase be for one year or for multiple? If Home Rule is repealed, the Village estimates that there would be a $1,200 property tax increase for a home valued at $185,000 for the upcoming year. However, the amount of property tax needed to fund debt service payments could change every year as these payments fluctuate, but would continue until the debt is completely paid off. However, if Home Rule is maintained, the Village will continue to abate the property taxes related to debt service. You mentioned that eliminating home rule would result in an increase in property taxes of $1,200 for a $185,000 home. You also mentioned that thanks to the recently adopted restrictions on our village against raising taxes beyond what a non-home rule village could do, our property taxes could only increase by the lesser of 5% or the current rate of inflation. The $1,200 increase mentioned earlier is well outside of those parameters, so how could our taxes go up that much if we cease to be a home rule village? Both the Village's self-imposed limitation and the limitation placed on non-home rule municipalities are regarding annual property tax increases imposed by the Village but neither of these limitations apply to general obligation bonds which are backed by property taxes. That is because the property taxes are the guarantee to the bond holders that the bonds will be paid by the Village. Neither the State nor Village has or can place limitations on property taxes that are used to make annual debt payments for general obligation bonds. The Village can only choose to abate the taxes if other revenues are available. Are any ideas on the table for the Haeger Potter facility? There aren t any proposals on the table at the moment. The Village is working with the business that is currently in the facility to fix the code violations that are present within the building. If code compliance isn t reached, the current business may vacate the property. At that point, the landowner can fix the code violations and rent the property to another business or begin discussions regarding the redevelopment of the property Why do we need Assistant Village Administrators? The Village needs an Assistant Village Administrator because of the restructuring of the organization. As part of the staff reduction that led to a savings of $500,000, the Administration Department has absorbed the responsibilities previously held by the Marketing Department and the economic development consultant. In addition, having an Assistant Village Administrator brings additional expertise to the Village, enabling better analyses of financial conditions and other policies, saving the Village money in the long term. 11

12 Why can t we reduce the staff of the Police Department by using more Part Time staff instead of Full Time Staff? The Village has reduced the Police Department by one position. However, the Village cannot replace full time staff with part time staff because it is restricted by Illinois law. The Village can only utilize part time staff as it has in the past and cannot expand the use of part time staff. For East Dundee, this means that part time staff is primarily used for coverage of open shifts due to paid time off and for the creation of ten hour, rather than twelve hour shifts. When was it discovered we were in debt? When was the last audit done before it was discovered? Audits are conducted on an annual basis and all debt must be approved by the Board prior to bond issuances. What line items put us in debt? There is no one line item within the budget that has put the Village in debt. The Village s debt is associated with specific public infrastructure and economic development projects. For a listing of the Village s debt and associated projects, click here. How much revenue has been collected from video gaming licenses and taxes? The video gambling tax is projected to bring in $155,000 in FY 18, while the Video Gaming Licenses are estimated to have brought in $35,000 in revenue. How much increased development have we gained with the Village s various TIFs? The Village has seen 37 different projects completed with TIF assistance, with three additional projects currently in progress. These projects include both economic development and public infrastructure projects. How many Village Administrators has there been since 2005? The Village has had five Village Administrators since Is the rental inspection program still active? The Village currently operates a rental and commercial inspection program to aid in the preservation of housing values. The program does conduct inspections of both residential homes and commercial buildings. For more information, contact the Village s Building department at (847) , ext

13 In addition to bonds, what else is paid for by Home Rule Sales Tax? For the upcoming fiscal year, Home Rule Sales taxes are expected create approximately $1.45 Million, while the required debt service payments are estimated at $1.94 Million. While the Home Rule Sales Tax is a General Fund revenue, meaning that it can be used for operating expenditures, the Home Rule sales tax currently goes entirely to pay for the Village s debt service payments for the Village s bonds. Outside of Home Rule Sales Tax, which is primarily generated from non-residents, has there been any significant tax increase to the residents of East Dundee? The Village has recently raised its property tax by 13% to cover police pension obligations. Prior to this increase, the Village s portion of the property tax bill was essentially frozen for a period of seven years. The Village has also increased water and sewer rates to fund maintenance of its water and sewer infrastructure and has created a refuse fee to fund refuse services. Will our water and sewer rates go up as a result of a loss of Home Rule? Water and sewer rates will not be affected by maintaining or losing Home Rule Status. Water and sewer rates will increase according to a schedule that was put together by a professional engineer. Over time, these increases average approximately 3% a year. This schedule was put together to avoid future rate spikes and are necessary to ensure that the Village is able to maintain its water infrastructure. Will a road program be reinstated? How will roads be repaired if the Village loses Home Rule Status? The current budget for Fiscal Year 2019 includes a road program. If the Village loses Home Rule status, the road program is budgeted to continue because the required debt service payments will be collected from property taxes. Why is the Village pushing hard to keep Home Rule? The Village cannot support or oppose the referendum to remove Home Rule. Instead, the Village has attempted to provide its residents with the necessary information to make an informed decision regarding the Home Rule referendum questions. It is important for residents to fully understand all potential impacts of the removal Home Rule authority. 13

14 How many buildings does the Village own? The Village owns the following buildings: Village Hall 120 Barrington Ave Police Station rd St Water Treatment 225 Prairie Lake Rd Wastewater Treatment 401 and 448 Elgin Ave Public Works Garages 446 Elgin Ave A Portion of Summit School 611 E Main St Former Water Treatment Facility Barrington Ave Depot Visitor Center 319 N River St Caboose 112 Railroad St Why did the Village get into debt? The Village made a conscious decision to take on debt in order to fund public infrastructure and to promote economic development in an effort to transform the Village. The Board approved the bond issuances expecting that Home Rule status would be maintained, enabling Home Rule revenue sources to abate the property taxes associated with the bond issuances. To learn more about bond abatement, click here. How many voters do you expect to participate in the vote on March 20 th? It is difficult to know how many voters will vote on March 20 th and the Village does not put together an estimate of the number of voters. Numerous factors influence turnout on Election Day including weather and the efforts of the various campaigns. 14