CITY COUNCIL AGENDA ITEM
ACTION REQUESTED:
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Pass the ordinance establishing Special Service Area No. 36 for downtown maintenance and marketing services to replace expiring Special Service Area No. 33
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DEPARTMENT: Finance Department
SUBMITTED BY: Raymond Munch, Director of Finance
BOARD/COMMISSION REVIEW:
N/A
BACKGROUND:
In 1970, the Illinois Constitution Convention granted municipalities and counties the authority:
“to levy or impose additional taxes upon areas within their boundaries in the manner provided by law for the provision of special services to those areas and for the payment of debt incurred in order to provide those special services.”
The establishment of a Special Service Area (SSA) is controlled by the Special Service Area Tax Law (35 ILCS 200-27-5 et seq.) and defined as “a contiguous area within a municipality in which special governmental services are provided in addition to those services provided generally throughout the municipality, the cost of the special services to be paid from revenues collected from taxes levied or imposed upon property within that area.”
Naperville has utilized SSAs since 1976 to pay for a variety of functions, including the provision of free parking in the downtown (SSA No. 1), the payment of debt service (SSA No. 21 - Van Buren Parking Garage), and the maintenance and marketing of the downtown (SSA No. 17, 20, 22, 24, 26, and 33). At this time, SSA No. 33 pays for the maintenance and marketing of the Central Business District and will expire in 2025.
Services are paid for by using a formula developed in 2000, whereby the maintenance services are two-thirds funded by the City through the General Fund and one-third funded by the property owners through the special assessment. In addition to the one-third maintenance cost, the City levies a marketing component for the Downtown Naperville Alliance (DNA) funded 100% by the property owners. SSA No. 33 was created in 2020 and will expire in 2025.
Staff recommends the creation of the new SSA No. 36 for the maintenance and marketing of the downtown as a replacement to the existing SSA No. 33.
DISCUSSION:
The Illinois statute clearly outlines the procedures to establish an SSA. First, an ordinance calling for the establishment of the SSA must be passed; second, a public hearing needs to be scheduled; and third, an ordinance establishing the SSA must be brought before the City Council. A timeline of critical events in the SSA renewal is attached and outlined below.
Timeline of events
At its May 20, 2025, meeting, the City Council passed the ordinance proposing the creation of SSA No. 36 and provided for a public hearing to be held on August 19, 2025. Staff notified property owners through direct mail and notice in the newspaper of the public hearing for the establishment of the SSA to be conducted at the August 19, 2025, City Council meeting. This public hearing initiated the required 60-day objection period. If the 60-day period passes, and an objection petition signed by at least 51% of the owners of record within the SSA is not filed with the City Clerk, then the City Council will be requested to take final action.
No objection petition has been filed as of October 10, 2025, and staff is requesting final action on the establishment of the SSA be taken at the October 21, 2025, City Council meeting.
The new special service area must be in place before November 2025 in order to allow for enough time to levy the required 2025 taxes payable in 2026.
Collaboration with DNA
In addition to the maintenance efforts, the DNA markets the downtown through print, radio, direct mail, internet, and social media to expand the downtown customer base. The DNA also provides administration of the gift card program, training, and merchant meetings, along with other services that promote business expansion and retention. DNA has increased their annual marketing request to $510,000 for 2026; the property owners cover 100% of the marketing expense.
City staff met with members of DNA over the last year to discuss expenditures, revenues, assessed valuations, and marketing of the downtown. DNA, in partnership with staff, hosted two open houses in May to give property owners a chance to discuss the proposed SSA.
SSA No. 36
Special Service Area No. 36 will provide special municipal services that include parking lot operations and maintenance, maintenance of the public parking garages, custodial services, sidewalk and parking lot snow removal, maintenance of landscaping, streetscape, and street lighting, holiday lighting on parkway trees and buildings, sidewalk maintenance including brick paver repair, special directional signage, and capital improvements. Property owners will cover one-third of the annual maintenance expenses over the five years of the SSA, while the City covers two-thirds of the maintenance expenses.
The proposed SSA No. 26 tax rate averages 1.35% per annum over the proposed five-year term.
Recommendation
Staff recommends the same maintenance service level provision, an increase in marketing expenses, the same five-year term as SSA No. 33, the same cost-sharing formula for maintenance and marketing, and the same maximum tax rate of 2.5% per annum of Equalized Assessed Valuation (EAV). The boundaries of the new SSA would exclude the residential properties located at 110 S. Washington Street, which were built after the creation of SSA No. 33 and are inconsistent with the other property types included with the SSA. An area map of the proposed SSA is attached.
If approved, the new SSA would start in 2026 and expire in 2030.
FISCAL IMPACT:
The City will be responsible for two-thirds of the maintenance costs for the downtown from 2026-2030. The marketing expenses are fully funded by the downtown property owners with no City contribution.