CITY COUNCIL AGENDA ITEM
ACTION REQUESTED:
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Receive the estimated 2021 property tax levy for the City of Naperville, including the Naperville Public Library, and direct staff to publish notice for a Truth-in-Taxation hearing on December 21, 2021
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DEPARTMENT: Finance Department
SUBMITTED BY: Rachel Mayer, Finance Director
BOARD/COMMISSION REVIEW:
N/A
BACKGROUND:
Pursuant to 35 ILCS 200/18-60, City Council is to determine the amounts of money, exclusive of election costs, estimated to be necessary to be raised by taxation upon the taxable property in the City. The proposed estimate of levy can then be considered for final approval by City Council at the December 21, 2021 City Council meeting. This satisfies the minimum 20 days requirement between the estimate of levy and the adoption of the levy.
By law the City is required to approve and file with the DuPage and Will County Clerks a tax levy ordinance by the last Tuesday of December if the municipality chooses to raise revenue through real estate taxes. Several statutorily required steps need to occur prior to the filing of the levy. These steps include:
1. Make tentative annual budget available for public inspection and publish notice of a public hearing.
2. Hold a public hearing on tentative annual budget and pass an ordinance approving annual budget.
3. File approved budget with County Clerks within 30 days of approval, but before tax levy ordinance is filed.
4. Estimate the amount of taxes to be levied at least 20 days prior to approval.
5. Determine whether a Truth-in-Taxation hearing is required.
6. Publish notification in the newspaper of Truth-in-Taxation hearing not less than seven days and no more than 14 days prior to date of the Truth-in-Taxation hearing.
7. Hold Truth-in-Taxation hearing and adopt levy ordinance.
DISCUSSION:
The chart below shows the 2020 final levy and the final 2020 extension. The 2020 levy is used to support 2021 City operations, pension obligations and debt service. The City is required to levy property taxes for an amount necessary to cover all debt service, therefore the 2020 levy figure is inclusive of all General Obligation (GO) debt service and the City’s initial request. On December 15, 2020, City Council approved a levy of $62,126,976, followed by the abatement of debt service funded by the utility funds and other special revenue funds in the amount of $8,624,089. The final amount extended to property owners per the counties was $54,060616, which resulted in a final rate of 0.6949.
|
Purpose |
2020 Final Levy |
2020 Final Extension |
|
General Corporate |
6,543,160 |
6,612,594 |
|
Debt Service |
18,052,070 |
9,522,279 |
|
IMRF |
2,743,559 |
2,777,331 |
|
Naperville Fire Pension |
9,748,334 |
9,849,024 |
|
Naperville Police Pension |
7,307,901 |
7,382,878 |
|
Naper Settlement |
2,796,952 |
2,831,789 |
|
Naperville Public Library |
14,935,000 |
15,084,721 |
|
Total Levy |
$ 62,126,976 |
$54,060,616 |
|
Debt Service Abatements |
(8,624,089) |
- |
Staff estimates the initial 2021 property tax levy at $62,695,482. This amount does not include abatements related to utility and special fund debt service. The 2021 levy is used to support 2022 City operations, pension obligations and debt service.
Per Illinois state statute, municipalities are required to publish for a Truth-in-Taxation hearing if the amount of the requested levy is 105% greater than the prior year’s extension. Therefore, when comparing the 2020 extension to the 2021 levy, the levy increases 15.9% (before debt service abatements), requiring the City to provide notice and hold a Truth-in-Taxation hearing.
To provide a more accurate comparison of the year-over-year property tax requirements, staff provided the 2021 recommended property tax levy with and without debt service abatements in the chart below. This amount of $54,428,624 is what staff estimates is needed to support the proposed 2022 Annual Budget. This total represents the full amount to be levied, after debt service abatements, and represents a 0.7% increase from the 2020 extension and is projected to result in an extended rate of 0.6794.
The final 2021 extension and tax rate will be determined once the final equalized assessed valuation (EAV) has been determined by both DuPage and Will counties.
|
Purpose |
2021 Recommended Levy |
2021 Recommended Levy (w/abatements) |
|
General Corporate |
6,750,000 |
6,750,000 |
|
Debt Service |
16,946,019 |
16,946,019 |
|
Debt Service Abatements |
- |
(8,266,858) |
|
IMRF |
2,213,424 |
2,213,424 |
|
Naperville Fire Pension |
10,049,006 |
10,049,006 |
|
Naperville Police Pension |
7,519,417 |
7,519,417 |
|
Naper Settlement |
3,907,616 |
3,907,616 |
|
Naperville Public Library |
15,310,000 |
15,310,000 |
|
Total Levy |
$62,695,482 |
$54,428,624 |
The values shown in the preceding tables are derived from a variety of sources including:
Naperville Library Levy Request
The Library portion is based on the request made by the Library Board. The Naperville Public Library is more than 90% funded by property taxes. The Library Board requested City Council approve a levy of $15,310,000, an increase of 2.5% from the prior year.
Naper Settlement Levy Request
The Naper Settlement portion is based on the request made by the Naperville Heritage Society. The Settlement receives more than 85% of its annual funding through property taxes. The Heritage Society requested a levy of $3,907,616, an increase of 39.7% from the prior year.
Public Safety Pension Levy
Per the 2021 actuarial valuation report, the required contributions to the Fire pension increased $363,951, or 3.5%, and the Police pension increased $274,795, or 3.5%. The total required public safety pension contributions amount is $18,708,811. The property tax will fund $17,568,423. The Food and Beverage Tax will fund the remaining $1,140,388 of the public safety pensions.
IMRF Pension Levy
The portion allocated to the Illinois Municipal Retirement Fund (IMRF) is based on the actuarially calculated percentage given to the City by IMRF. The rate decreases from 10.85% in 2021 to 8.58% in 2022. The 2021 levy amount totals $2,213,424 million, a 19% decrease from the prior year, and accounts for the General Fund portion of IMRF contributions.
Debt Service Levy
The debt service value is based on the City’s actual annual debt service requirements. Exclusive of any abatements, this amount decreases to $16,946,019. Inclusive of abatements for the utilities and other funding sources, this amount totals $8,679,161, which is a decrease of 8.9% from the 2020 extension.
General Corporate
The general corporate portion of the property taxes are $6,750,000. This levy is utilized to support City operations. The 2021 levy amount is an increase of $206,840, or 3.2% from the 2020 extension.
FISCAL IMPACT:
The total recommended tax levy, inclusive of abatements, is $54,428,624, which supports 2022 City operations, pension obligations and debt service.