HomeMy WebLinkAbout12/13/1990 FC minutesFINANCE COMMISSION
Minutes of the Meeting
December 13, 1990
I Call to Order
The meeting was called to order at 7:35 p.m. Commission members in attendance were
Richard Bachhuber, Paul Davies, John Engel, Newt Hallman and Ann Smilanic. Also
present were Village Trustee George Van Geem, Finance Director David Jepson,
Assistant Finance Director Carol Widmer, two Village residents and two members of
the press.
II Approval of Minutes
The minutes of the November 29, 1990 meeting were accepted as presented.
III Stormwater User Charge Study
Finance Director David Jepson reviewed the recent Village Board decision in which
Board members agreed to proceed with the $1.1 million flood control project for
Central Road and WaPella Avenue and gave tentative approval for the $4.95 million
North Main/Prospect Manor area flood control project. The Village Board requested
the Finance Commission to consider possible funding sources for these and other
proposed flood control projects and to make a recommendation as to the preferred
method of funding.
David Jepson gave a brief overview of possible funding sources including some of
the unique features and advantages and disadvantages of the different revenue
sources.
Property Taxes Using property taxes as a funding source would require
levying a tax on all properties within the Village. The advantage of using
a property tax is that it is deductible for Federal Income Tax and is easy and
inexpensive for the Village to collect. A disadvantage is that there may be
disparity for many nonresidential properties. For example, a low -valued
property could benefit equally with a high -valued property and pay a
substantially lower tax. Also, with property taxes as a funding source, there
would be no way to give credit to a property which provided for detention of
storm water on its property.
Special Service Area Taxes Special Service Area taxes are property taxes
that apply only to a specific area. The advantage of this type of funding is
that the specific area of the Village deriving a benefit from a flood control
project would pay for it. However, the disadvantage is if 51% of the property
owners and 51% of the electors formally oppose the project, it will be
defeated and would not be able to be presented again for at least two years.
Also, there is a question as to whether the number of properties which
directly benefit from the project would be able to support the cost of the
project.
Special Assessment Financing The principal of Special Assessment Financing
is that the value of the property will be increased by at least the amount of
the assessment levied. This type of financing was used extensively by the
Village in the 30's, 40's, 50's, 60's and early 70's for water, sewer,
sidewalk and street projects. One of the advantages to this type of financing
is that each property is assessed individually. However, this type of
financing is rarely used today because of legal technicalities and because it
can add about 25% to the cost of a project.
User Charges A user charge is based on the theory that the beneficiaries
of a service and/or the contributors to a problem are the ones who help
support the service or improvement. Some types of user fees currently in use
include: toll roads, water systems and ambulance service. The advantages of
a user charge for flood control is that it is generally an equitable way of
charging, it provides a dedicated source of funds, it can give consideration
to properties providing detention, and it is easy to understand. One of the
disadvantages is the cost involved to collect the fees.
Other Taxes There are two other tax revenues that could provide funding
for flood control: a utility tax and a sales tax. A utility tax, currently
being used in Glenview, Niles, Park Ridge and several other communities, is
easy to administer because it is added to a utility bill and collected by the
utility company. An additional sales tax (in increments of 1/4¢) which is
being used in several communities, would be collected by the State of Illinois
along with the general sales tax. The logic of charging an additional sales
tax is that some of the tax is paid by people who do not pay Village taxes but
who benefit from certain Village services such as fire and police protection.
David Jepson stressed the importance that revenue sources other than property
taxes should be considered because many residents have expressed concern that
property taxes are too high. One of the reasons for this concern may be that
in Mount Prospect, unlike most other communities, refuse disposal costs are
included in the property tax. Dave also urged the Finance Commission to look
at funding in terms of a long-term approach both to regularly maintain and
to improve the stormwater system.
The Finance Commission members discussed each method of financing at great
length. One of their main concerns was that the financing method be a fair
method for all concerned. The Commission members felt that since boundaries
of a particular area could be defined, that area should pay for the
improvements. The members also indicated that they favored a two tier rate
for the defined area. The base rate for properties contributing to the
flooding problem would be established using the impervious method suggested
by RJN in their Stormwater Rate Study and then a surcharge would be added for
those properties directly benefitting from the stormwater improvements.
The recommendation below is what evolved from the discussion of the
commissioners:
Flood Control Improvement Projects should be paid for through a user
charge collected from the properties who either contribute to the need
for the project or benefit directly from the project. The user charge
shall be made up of a base charge for each residential unit and a
2
multiple of the residential charge for all non-residential property. An
additional charge shall be applied to those properties who directly
benefit from the improvement and a credit shall be given for any non-
residential property which provides detention facilities. If any
contributing factors to the need for the improvement project are the
result of storm water from properties outside the project area, such
portion of the project shall be considered a public benefit and paid
for by all the properties in the Village.
The vote was four ayes and one no for the recommendation.
IV Other Business
The December 27, 1990 meeting was cancelled and the January meeting was changed to
January 10, 1991.
Finance Director Dave Jepson gave each Commission member a copy of the 1991/92
Budget Schedule and asked them to put February 7, February 21, March 7 and
March 21, on their schedules as review dates for the 1991/92 budget.
V Adjournment
The meeting was adjourned at 10;55 p.m
CLW/sm
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Respectfully Submitted
1 r
Carol L. Widmer
Assistant Finance Director