CITY COUNCIL AGENDA ITEM
ACTION REQUESTED:
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Waive the first reading and pass the ordinance amending Section 3-1-9 of the Naperville Municipal Code, increasing the 2026 Special Events and Community Arts Grant Program funding cap to $2,510,000 (requires six positive votes)
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DEPARTMENT: Finance Department
SUBMITTED BY: Raymond Munch, Director of Finance
BOARD/COMMISSION REVIEW:
N/A
BACKGROUND:
In April 2004, the City exercised its home rule authority to establish a one percent (1%) Food and Beverage Tax, which is applied to the purchase of prepared food and beverages sold in restaurants and other establishments throughout Naperville. The City established this tax to fund what is now known as the Special Events and Community Arts (SECA) Grant Program. The SECA Grant Program provides funding for City services to support special events, as well as provide supplemental funding to entities that offer cultural, social, and artistic experiences for residents and visitors of Naperville.
Over time, the Food and Beverage Tax revenue has grown to support other needs, including public safety pensions, the Social Services Grant Program, supplemental support for Naper Settlement, and abating property taxes for debt service.
Revenue generated by the Food and Beverage Tax is allocated for these purposes through a formula established in the Municipal Code. Specifically, paragraph 4.1 of section 3-1-9 states:
“Recovery of the City's costs attributable to the collection of the Food and Beverage Tax shall first be distributed, thereafter, fifty percent (50%) of the taxes collected pursuant to the Food and Beverage Tax imposed herein, up to a maximum of one million nine hundred thousand dollars ($1,900,000.00) a year shall be contributed to the Special Events and Community Arts (SECA) Grant Program which will increase annually beginning in 2019 at the lesser of a two-percent (2%) flat rate or the Chicago-Naperville-Elgin, III.-Ind.-Wis. Consumer Price Index (CPI) rate…”
During the 2026 budget review process, the City Council evaluated a request from Naperville Community Television (NCTV17) for an additional $200,000 in ongoing operating support. On November 18, 2026, the City Council approved additional funding through a SECA City obligation.
To accommodate the additional funding for NCTV17 without negatively affecting the amount available for other potential SECA Grant recipients, the annual SECA Grant Program cap, as defined in the Municipal Code passage above, must be raised.
DISCUSSION:
While developing the 2026 annual budget, staff calculated the annual SECA Grant Program cap to be $2,181,851. That is the amount available for the entire program, including City obligations and the discretionary grants awarded through the SECA Commission. Adding $200,000 in funding to NCTV17 resulted in a reduction in the amount available for grants of approximately 40%. To maintain a consistent pool of grant funding, staff proposed raising the cap for 2026.
Staff recommended a revised SECA Grant Program cap of $2,509,935, which was determined by using actual CPI inflation data for the past five years instead of the two percent (2%) ceiling dictated by the Municipal Code. Staff presented an alternative option at the Nov. 10 budget workshop, which was to raise the cap by a flat $200,000; however, the City Council indicated a preference for the higher amount.
The revised cap provides for the following amounts to be awarded for the 2026 SECA Grant Program.
|
|
2026 Amount |
Status |
|
City Obligations |
$1,309,198 |
Awarded Nov. 18 |
|
SECA City Services |
$652,190 |
SECA Commission review |
|
SECA Grants |
$548,547 |
SECA Commission review |
|
Total |
$2,509,935 |
|
The revised cap reflected in the attached ordinance is rounded to $2,510,000, and is a one-time reset of the program cap, with the current methodology for future increases remaining unchanged.
FISCAL IMPACT:
The Food and Beverage Tax is projected to generate $7.0 million in revenue in 2026, plus some minor revenue from late fees and investment interest. That amount is sufficient to fund the increased SECA Grant Program cap without negatively affecting the other allocations within the fund. Funds will be distributed according to the formula in the Municipal Code, as follows:
|
Funding Allocation |
2026 Budget |
|
Program Administration |
$24,961 |
|
SECA - Grant Program |
$1,200,737 |
|
SECA - City Obligations |
$1,309,198 |
|
Police Pension |
$874,038 |
|
Fire Pension |
$874,038 |
|
Naper Settlement |
$1,040,400 |
|
Social Services Grant Program |
$750,000 |
|
Debt Service |
$1,018,179 |
|
Expense Total |
$7,091,551 |