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City Council Minutes 2013 01-15-13 special meeting MINUTES OF THE SPECIAL MEETING OF THE CITY COUNCIL OF THE UNITED CITY OF YORKVILLE, KENDALL COUNTY, ILLINOIS, HELD IN THE CITY COUNCIL CHAMBERS 800 GAME FARM ROAD ON TUESDAY, JANUARY 15, 2013 Mayor Golinski called the meeting to order at 7 : 00 p.m. and led the Council in the Pledge of Allegiance. ROLL CALL City Clerk Warren called the roll . Ward I Koch Present Colosimo Present Ward II Milschewski Present Kot Present Ward III Munns Absent Funkhouser Present Ward N Spears Present Teeling Present Also present: City Clerk Warren, City Attorney Orr, City Administrator Olson, Finance Director Fredrickson, Administrative Intern Weckbach QUORUM A quorum was established. Mayor Golinski thanked people for coming. He explained that the meeting was called to talk about SSA' s in the subdivisions of Raintree, Windett, and Grande Reserve. SSA Abatement Ordinances (CC 2013 -06) Ordinance Abating Special Service Area Taxes for Special Service Area Number 2003-100 (Raintree Village Project) and Approving the Amended Special Tax Roll Ordinance Abating Special Service Area Taxes for Special Service Area Number 2003-101 (Windett Ridge Project) and Approving the Amended Special Tax Roll Ordinance Abating Special Service Area Taxes for Special Service Area Number 2004- 104 (Central Grande Reserve) and Approving the Amended Special Tax Roll Ordinance Abating Special Service Area Taxes for Special Service Area Number 2004-107 (Raintree Village H Project) City Administrator Olson gave a presentation on SSA' s. (See attached.) Mayor Golinski opened the floor to citizen comments. John Rowoldt, resident, City Administrator Olson, and City Attorney Orr discussed the developers coming in and paying for taxes in the Grande Reserve subdivision. Amy Cesich, Raintree Village, and City Administrator Olson discussed the payoff amounts for the bonds. Amy Cesich asked why the City is going after the residents for payment and not the corporations. City Attorney Orr explained. Amy Cesich pointed out the website states if the developer or residents don't pay their SSA' s that doesn't affect other residents. City Administrator Olson explained when that statement came out, the assumption was the calculations were correct and everyone would be paying $2400 each year going forward. Amy Cesich stated if residents were to pay off their taxes, and if the lots were not sold, the residents would be in a dire situation for they would have the sustainability of the entire neighborhood. City Administrator Olson stated if all existing homeowners in Raintree Village were to pay off the tax then a certain portion would go to make the bond payment each year. Once that money runs out, it is the bond holder' s risk. If money runs out the vacant property owners are the ones that are left with the obligation to pay each year. Amy Cesich asked if the residents get a refund once the lots are sold. City Attorney Orr explained. City Administrator Olson, City Attorney Orr and Amy Cesich discussed the issue of going after the developers and the recourse of what happens when a resident does not pay taxes on their property. City Attorney Orr gave the scenario of what could happen if things don't go well. Worst case scenario is that it would be an investor' s tool to bid low on the real estate taxes. There is a process in the law to keep property owners forever from paying their real estate taxes . Amy Cesich asked if the City tried going to the developer of the LLC to ask if they could pay at least the portion of the bond that is due. City Administrator Olson has been in contact with Windett Ridge, LLC and the manager of Raintree Village. Alderman Teeling asked about the obligation each president has with their SSA and the maximum they will pay. City Administrator Olson & City Attorney Orr explained the issue of the maximum obligation and discussed the vacant property portion. Scott Harmon, Raintree Village, City Administrator Olson, and City Attorney Orr discussed the delinquent tax amount, vacant lots, SSA' s in Raintree Village, two phases, and the City' s liens on parcels. Karen Macek, Raintree Village, said the document states the last resort is to come to the residents . She wanted to know why the City did not go to The Minutes of the Special Meeting of the City Council — January 15, 2013 — Page 2 of 2 the fund first. City Administrator Olson stated it is contractually obligated that the City does the calculation and abate property taxes first before going to the fund. Shawn Wright, Windett Ridge, and City Administrator Olson discussed Windett Ridge ' s maximum assessment numbers and the percentages it goes up each year. They also discussed that if the SSA was paid by the builder then there is no future obligation. Kathy Neddo, Windett Ridge, and City Administrator Olson discussed the phases of Windett Ridge in regards to the SSA' s and the number of lots. Kathy Neddo asked City Administrator Olson a question in regards to the bonds and who holds them. City Attorney Orr explained. Kathy Neddo had a discussion with Peter Raphael, City bond underwriter, and City Administrator Olson about the builders and risk assessment. The builder has left her community in ruins . She believes the City should do its due diligence when a builder comes back into the City. Al Zamora, Raintree Village, asked why the communities cannot sue the landowners. City Attorney Orr stated they can and explained the issue. Bonds were issued and dollars were used to do the infrastructure . Residents signed they would pay the maximum tax. The residents have not been paying the maximum tax. The maximum tax calculated at 9% . The City has been abating that percentage for it has had 100% payment. Mr. Zamora believes the City should be chasing that bad money. Scott Harmon, Raintree Village, stated the residents of the vacant lots signed an agreement and should be held accountable. City Attorney Orr said there is a process in place in the state law that those taxes have to be paid. Unfortunately, the accountability isn't the type to give the residents relief. He discussed Raintree Village phase two and what would cover the shortfall. City Attorney Orr and Peter Raphael, City bond underwriter, answered Mr. Harmon ' s question. Alderman Colosimo discussed making the City of Yorkville marketable so developers want to come to Yorkville. Ann Bean, Windett Ridge, asked of the current development, how many are SSA funded, what is the success rate, and is this something the City will continue to offer. City Administrator Olson discussed the two communities that are doing well . Mayor Golinski said as long as he is Mayor there will not be any more SSA' s. Kathy Neddo asked City Administrator Olson if he knew what was going on with Windett Ridge, LLC lots and he did not. John, Raintree Village, asked if the City has done any benchmarking in other areas of Illinois to see how this has been handled. No statistical analysis has been done. He asked if Yorkville does business with the companies that handle the taxes. City Administrator Olson stated the City does not have any bank accounts with them. He is not aware if pension funds are held through these companies. Adam, Raintree Village, wanted to know a date the City is free of this situation. City Administrator Olson said it depends on the subdivision. It is usually a 25 year process . Adam, resident, City Administrator Olson, City Attorney Orr, and Peter Raphael, City bond underwriter, discussed pay off amounts for the residents and if there was an active plan to get developers to come to the City. Shawn, Windett Ridge, asked how the City will get a new builder to come in. City Attorney Orr said having liens against the property means the City of Yorkville will be involved in the buy sell. This will keep the Council involved in the process. Shawn, resident, asked about fines and if those go back to the community. City Attorney Orr said fines go to the general fund. The legal purpose is not to keep someone from developing but to allow the Council to engage the developer and track what the City has been left with. He asked why the general fund has not helped the residents of Windett Ridge . City Attorney Orr couldn't answer that question but said general funds of the entire community have been used to keep the subdivision looking as good as possible. Betsy Bruce, Grande Reserve, asked if Autumn Creek and Bristol Bay, were rolling SSA' s into the purchase price of their home or if purchasers are actually going off the chart. City Administrator Olson stated some of both. She asked if the City can require builders to have buyers roll the SSA' s into the price of their home. City Attorney Orr stated it cannot. A citizen asked if the City is obligated by law to notify the homeowners when the maximum tax changes again. City Administrator Olson stated there is no legal obligation for the Council to notify residents. City Attorney Orr asked City Administrator Olson when the last tax installment was accounted for. It was September. City Attorney Orr stated the study is not done until November. The City gets the decision in December. By law the City is required to do the tax abatement ordinance by the last week of December. The Council did not for they chose to back off. City Administrator Olson called the county which said they would take the abatement ordinances later in order to get this word out. Since the City was made aware of the shortfall it has been a mad scramble to get this information. Alderman Colosimo received paperwork a few days before Christmas and knew he needed to let the residents know. Alderman Funkhouser said the abatement ordinances come up every year and are reviewed by the Council, who tries to protect the residents. There is a legal obligation that it must be paid to the extent possible. This is not an easy process. The Council' s hands are tied to a certain extent. ADJOURNMENT Mayor Golinski adjourned the meeting. Meeting adjourned at 8 :35 p.m. Minutes submitted by: Ke I a4,�Ue� Beth Warren, City Clerk, City of Yorkville, Illinois 1 United City of Yorkville SSA Abatement Ordinances Special City Council Meeting January 15, 2013 Overview What are SSAs? What is happening in my subdivision? Why is the SSA tax going up? What happens in the future? SSA Prepayment Analysis FAQs . 1 What are SSAs? http://www.yorkviIIe.iI.us/depts_fin_ssa.php Normal development Developer pays for infrastructure Costs go into home price SSA development City bonds for infrastructure Costs are repaid as an SSA tax by future property owners What are SSAs? SSA information shows up on title searches as a lien Each property owner would have signed off on the SSA information at time of closing 1 What is happening in my subdivision? Table 5 in all Admin Reports SSA 2003-100 Raintree Village (North, 1) Single Family 2012 tax - $2,030 Single Family 2013 tax - $2,328 Increase of $297.96 Duplex 2012 tax - $1,661 Duplex 2013 tax - $1,906 Increase of $244.10 United City of York,i I I SS A 2003-100 { w ;. } r a - � w* S:p � p e,t1at'g v a � •"r f 1 1 a r. 1r 1 t "Z-O rAC�iPm � pp �..�7fAQAaC r 1 What is happening in my subdivision? SSA 2003-101 Windett Ridge Single Family 2012 tax - $1,947 Single Family 2013 tax - $2,192 Increase of $244.32 SSA 2004-104 Grande Reserve Central Single Family 2012 tax - $1,807 Single Family 2013 tax - $1,962 Increase of $155.00 What is happening in my subdivision? SSA 2004-107 Raintree Village (South, 2) Single Family 2012 tax - $2,148 Single Family 2013 tax - $2,328 Increase of $179.14 Duplex 2012 tax - $1,759 Duplex 2013 tax - $1,906 Increase of $146.82 Townhome 2012 tax - $1,484 Townhome 2013 tax - $1,609 Increase of $124.28 1 r µpr! q y 9th y r CO7Mla TO.Atiae `96'57.66" 8E612535.06 W e�eP 232 r- Ott li.2007 F.ye elt 1.62 km Why is the SSA tax going up? Establishing ordinances for each subdivision are included in the handouts Maximum special tax Special tax requirement, definition Includes 'reasonably anticipated delinquent special taxes" Abatement procedures 1 Why is the SSA tax going up? Administration Reports Table 7, "unpaid special taxes" column Property tax sale did not result in any buyers What happens in the future? Best case scenario: Property owners (current or future) pay the tax SSA fund is replenished, SSA tax goes down the following year City is trying to make Yorkville as developer-friendly as possible Commercial development Residential incentives 1 What happens in the future? Worst case scenario: Continued delinquencies, resulting in maximum tax Maximum tax can only increase 1.5% per year, or about $35 What happens in the future? Worst case scenario, maximum tax Grande Reserve Central $366 below maximum tax Raintree Village 2003-100 (north, 1) Single family $35 below maximum tax Duplex $29 below maximum Windett Ridge $33 below maximum tax Raintree Village (south, 2) At maximum tax . 1 What happens in the future? What else is the City doing to help? Help comes when someone pays t e property taxes on the vacant lots The best solution is to have a progressive and business friendly approach to community development. Countryside - NCG Movie Theater Downtown redevelopment BUILD program SSA Prepayment Analysis Any SSA taxpayer can prepay their entire SSA obligation at anytime, saving years of interest costs and getting out from under the SSA obligation Prepay instructions can be obtained from the City's SSA Administrator David Taussig & Associates 800-969-4382 1 SSA Prepayment Analysis Assuming you paid the SSA off today, compared to paying the maximum tax rate for the remainder of your SSA SSA 2003-100 Raintree Village (north, 1) Single Family Prepay - $24,381 Single Family, max SSA - $54,649 Duplex prepay - $18,991 Duplex, max SSA - $44,734 SSA Prepayment Analysis SSA 2003-101 Windett Ridge Prepay - $21,964 Max SSA - $50,669 SSA 2004-104 Grande Reserve Centra Prepay - $23,845 Max SSA - $56,975 1 SSA Prepayment Analysis SSA 2004-107 Raintree Village (South, 2) Single Family, prepay - $26,206 Single Family, max SSA - $60,158 Duplex, prepay - $21,472 Duplex, max SSA - $49,247 Townhome, prepay - $18,137 Townhome, max SSA - $41,563 FAQs Can't the City just abate a large portion? No, that would be illegal Can the City take over the property? We could but it would not be a good investment for the City Can we sue the property owners? Maybe, but it would be very costly and might not be fruitful Are there other solutions to getting the owners to pay? Continue to study options, but no 1 1 FAQs Can residents refuse to pay this tax? Yes, but we do not recommend it as they risk losing their property through the property tax sale Can we refinance the bond? We can, but buyers for refinancing bonds won't touch it due to the high rate of delinquent properties FAQs The City Council must approve the abatement ordinances by the middle of February January 22 City Council or February 12 City Council 1/16/2013 Questions? Bart Olson, City Administrator 539-553-8537 directJ_ine bolson @yorkville.il.us David Taussig & Associates, Inc. City's SSA Administrator 1-800-969-4382 Kathleen Field Orr, City Attorney Present at tonight's meeting Peter Raphael, City Bond Underwriter Present at tonight's meeting i ill i i CITY CQI7N W.MEETING -- \JA4L4 ,9 IrL4 I � [ l PLEASE PRINT NAME : SUBDIVISION OR BUSINESS : i f i I V\,- e 2 i RAire-��/� r za DTI/ 12 T V l OJ l �C y� e 1� f S i C ve SIGNIN i l I 7 ,q . CITY COUK,-IL: I STING -5f tj 5 x013 PLEASE PRINT NAME : SUBDIVISION OR BUSINESS : I l )© arz' r czo %/Y)Gl✓1� �/c � ��'i � ( �/`�iNJ� e' �1G z- . Fell i uree„ TerWe � � Litt I 1"2 f 9 ( U Ir ztlu [(,91vdt, 0 c ; ; w�� C L- S j co .� �Z c�� �. �( ►�- i SIGNIN i S PC 61 A L CITY COUNCI:MEETING Public Comment PLEASE PRINT NAME: SUBDIVISION OR BUSINESS: SIGNM