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HomeMy WebLinkAbout2. COW Minutes 02/24/2015 COMMITTEE OF THE WHOLE MINUTES February 24, 2015 I. CALL TO ORDER – ROLL CALL The meeting was called to order at 7:04 p.m. in the Village Board Room of the Village Hall, 50 South Emerson Street, by Mayor Arlene Juracek. Trustees present included Paul Hoefert, John Korn, John Matuszak, Steven Polit, Richard Rogers and Michael Zadel. Staff present included Acting Village Manager David Strahl, Finance Director David Erb, Deputy Finance Director Lynn Jarog and Administrative Analyst Alexander Bertolucci. II. APPROVAL OF COMMITTEE OF THE WHOLE MINUTES FOR FEBRUARY 10, 2015 Motion made by Trustee Korn seconded by Trustee Rogers. Minutes were approved. III. CITIZENS TO BE HEARD None IV. REAL ESTATE TRANSFER TAX DISCUSSION Finance Director Erb provided the Village Board with an overview of the Village’s real estate transfer tax and stamp issuance process. He stated the real estate transfer tax has been in place since November 1987 and Mount Prospect has always been one of the few communities that levied the tax upon the buyer. He stated in 2000 the rate increased from $1 per $1,000 sale value to $3 per $1,000 sale value and there have been subsequent changes to administrative provisions in 2001 and 2007. He stated the stamp issuance process normally takes 20 minutes, but processing time is extended if outstanding property issues are identified. He stated the federal Fair and Accurate Credit Transactions Act (Red Flag Rules) in conjunction with the state’s requirements related to the Freedom of Information Act has made issuing a real estate transfer stamp cumbersome. He stated Red Flag Rules were intended for financial institutions that extend credit; however, the Red Flag Rules also apply to the Village’s utility billing process. He stated one example of a Red Flag Rule requirement is a Driver’s License must be presented before Finance establishes a new utility account. He stated Freedom of Information requests are submitted proactively by the potential property buyer to find outstanding issues that would prevent the sale of the transfer stamp. He stated in 2014 there were about 200 Freedom of Information requests submitted related to the transfer of properties. He stated the Village is compliant with the Red Flag Rules and Freedom of Information Act, but this has also made the real estate transfer stamp process less efficient and more time consuming for applicants. He stated to make the process more efficient staff proposes shifting the responsible party for paying the real estate transfer tax from the buyer to the seller. He provided an overview of the issues that arise from having the buyer responsible for payment. He stated staff also proposes to decouple the real estate transfer stamp issuance process 02/24/15 Committee of the Whole Page 1 of 4 from utility billing for an improve customer experience and reduce potential wait times. He stated the proposed changes would be effective July 1, 2015 and would be accompanied with a one year phase-in period that would adjust the real estate transfer tax amount based on the last time the tax was paid within the past 5 years. General comments from the Village Board members included the following items: 1) There were questions regarding the Fair and Accurate Credit Transition Act. 2) There was clarification regarding how outstanding items, like payments, property maintenance issues, or open permits prevent the purchase of a real estate transfer stamp. 3) There was discussion regarding how the current real estate transfer stamp process is delayed due to its link with utility billing. 4) There was discussion regarding shifting the responsibility for payment of the real estate transfer tax to be borne by the seller. 5) There was a suggestion to extend staff’s proposed phase-in period. 6) There was a discussion regarding how obstacles in the current administrative process would remain even if the responsibility of the real estate transfer tax was shifted from the buyer to seller. 7) There was discussion regarding how the proposed change would create a situation of double taxation for the residents who bought their home after 1987 and then decide to sell after the proposed change takes effect. 8) There was general discussion regarding transparency and fairness of a tax that is on a buyer versus on a seller. 9) There were questions regarding Freedom of Information requests and how the number of requests would be reduced if the party responsible for paying the real estate transfer tax is shifted to the seller. Mayor Juracek provided an opportunity for the members of the Village’s real estate community to present their comments and concerns. Christy Watychowicz, Law Office of Mark J. Watychowicz, 518 Northwest Highway spoke. She stated the stamp issuance process would significantly improve if a “clear period” of 24 hours would be established to purchase a real estate transfer stamp. A “clear” period is a prior confirmation period of what items are outstanding prior to actual purchase. She stated Des Plaines and Park Ridge have a “clear period.” She stated the “clear period” does not have to be long, because closings happen very fast and most people can pick up the real estate transfer stamp in 24 hours. She stated realtors use reference charts provided by title companies to know what communities charge a transfer stamp tax. She commented on the concern of double taxation by moving the tax to the seller. She stated she personally has limited experience with the Freedom of Information request portion of the real estate transfer stamp sale, because if there are outstanding issues on the sellers end they call the seller’s office to resolve them. Tom Zander, Picket Fence Realty, 400 W. Central Road spoke. He stated frustration is created at the closing table, because many relators outside of Mount Prospect are not aware of the Village’s transfer stamp tax and neither are the home buyers. He stated another obstacle in the stamp issuance process is scheduling the final water meter read with the seller and the requirement to present a Driver’s License when changing the utility account. He stated the current process is overcomplicated and it should be streamlined to improve the experience for new residents. 02/24/15 Committee of the Whole Page 2 of 4 General comments from the Village Board members included the following items: 1) There was a discussion regarding how to make the real estate transfer tax shift to the seller equitable, since residents who purchased a home after 1987 would be responsible to pay the tax again when they sell their home. 2) There was discussion regarding how the existing administrative process would be simplified if the responsibility was shifted to the seller like it is already in most communities. 3) There was a discussion regarding the use of technology to revise the administrative process, making more information available for public review to reduce the need for Freedom of Information requests, and a notification process to inform a seller of outstanding issues that need to be resolved prior to closing. 4) There were questions regarding implementation of a pre-approval period to purchase the real estate transfer stamp. 5) There was a question regarding if the Finance Commission reviewed the proposed modifications. 6) There was a discussion on notifying title companies if the proposed modifications are approved. Acting Village Manager Strahl stated it is staff’s prospective to simplify the process and one opportunity is to shift the tax payment to the seller. He stated as the Automated Meter Reader project progresses it will streamline the transfer stamp issuance process, since it removes the need for the seller to schedule a final meter read. He also stated the proposed decoupling of the transfer stamp and utility account sign up would simplify the process for the home buyer and seller, because the parties would be able to complete their respective portions independently. He stated Finance already arranges guaranteed “clear” windows to purchase a transfer stamp when requested. He stated staff would develop a rebate program to consider that would account for the equity issues with transitioning the responsible party for paying the real estate transfer tax from the buyer to the seller. Staff would seek still Village Board approval to switch the tax to the seller. General comments from the Village Board members included the following items: 1) There was a discussion regarding how a real estate transfer tax rebate would impact the revenue projections and future years’ budgets. 2) There was general discussion regarding the switch of tax responsibility from buyer to seller and various real estate transfer tax rebate options. 3) There was a general discussion regarding the Freedom of Information request process and making more documents available for public review to reduce requests. There was general consensus by the Village Board regarding the simplification of the real estate transfer tax process; however, staff would review the steps in transferring responsibility from buyer to seller and provide a revised phase-in period or tax rebate option. V. 2015 COMMITTEE OF THE WHOLE TOPICS Acting Village Manager Strahl stated staff has consolidated the submitted 2015 Committee of the Whole topics and tentatively scheduled topics for the upcoming calendar year. He stated the schedule permits staff to ensure that efficient research is undertaken to present to the Village Board recommendations and that such research is of sufficient quality to allow for a robust discussion and ultimately direction to staff. He 02/24/15 Committee of the Whole Page 3 of 4 also stated Village Board members may submit information related to a scheduled topic a month in advance to be considered in staff’s research. General comments from the Village Board members included the following items: 1) There was general discussion regarding schedule design and flexibility to add or move topics as needed. 2) There was a question regarding possible Committee of the Whole topics and if the topic ideas which have come up in passing during Village Board meetings were incorporated into the presented schedule. VI. VILLAGE STRATEGIC GOALS UPDATE Acting Village Manager Strahl stated staff has implemented the Strategic Plan for 2020 by incorporating the Strategic Goals into the Budget, Committee of the Whole topics, and department development plans with measureable success factors. He stated staff plans to further integrate the Strategic Goals into the budget process and other areas as applicable. He stated this discussion is only presented as informational and if there are areas in which the Village Board would desire additional effort focused toward staff would be open for further discussion. General comments from the Village Board members included the following items: 1) There was a suggestion to have an annual Committee of the Whole discussion to refresh and keep the Strategic Plan current. 2) There was a question regarding how the Strategic Plan is being implemented with staff. VII. MANAGER’S REPORT Acting Village Manager Strahl stated the March 17, 2015 Village Board meeting is rescheduled to Monday, March 16, 2015 as members of the Board plan to attend Northwest Municipal Conference’s Legislative Days in Springfield, Illinois. He stated April 7, 2015 Village Board meeting is rescheduled to Wednesday April 8, 2015 due to the Consolidated Election on April 7, 2015. VIII. ANY OTHER BUSINESS Trustee Zadel thanked WGN for the opportunity to participate in the inaugural Battle of the ‘Burbs and commented that it was a great experience. IX. ADJOURNMENT The meeting adjourned at 8:57 p.m. ALEXANDER BERTOLUCCI Administrative Analyst 02/24/15 Committee of the Whole Page 4 of 4