Tag Archives: generating revenue

Burr Ridge seeking donations from public to meet city’s needs

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In an era of declining revenue, a few communities are trying a new tactic: ask residents to donate money for needed city purchases.

The leaders of west suburban Burr Ridge have a list of dozens of items they want for the community, including a new patrol vehicle, a portable Breathalyzer and even a cordless saw.

But because they didn’t make it into the budget, they have put them on a wish list and are asking residents for help…

Stricker said village officials came up with the idea last year after learning that west suburban Riverside has a similar program. He said the village is still establishing a tax-exempt 501(c)(3) program, but added that residents have already given funds.

In 2011, Burr Ridge resident Alan Rose, the CEO of Rose Paving Co. in Bridgeview, donated $5,800 to the Police Department for new Taser devices, according to village documents. Resident Joyce Walsh also donated $5,000 to the Police Department in 2011 for its efforts in protecting the village.

As the article notes, Burr Ridge is pretty wealthy. The village of just over 10,500 residents, the median value of owner-occupied housing units is over $706,000, the homeownership rate is just over 95%, and the household median income is over $143,000, and 2.4% of the residents live in poverty. Perhaps in this sort of setting a donation program could work.

But, I can’t picture this as a viable long-term strategy for most communities. Could a local government wait for benevolent citizens? Could residents or businesses make donations and expect something in return like policies or decisions that benefit them? Public-private partnerships and cooperation in places like Chicago are one thing but relying on the public for donated money seems bound to lead to more trouble.

I wonder if this also could raise significant questions about what local communities really do need to purchase: if an item doesn’t make it into the budget, is it really necessary in the first place? Take the Burr Ridge items mentioned above: how worse off will the community be if the government doesn’t have a cordless saw or portable Breathalyzer?

When a suburb doesn’t support the big tax break supported office park

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An interesting story is brewing in Hoffman Estates where the State of Illinois wants to keep the Sears headquarters by continuing a major tax break but the local school district and some in the community don’t want to live with the reduced tax revenue for years to come. Central to the story: the tax break didn’t help fill up the 780 acre office park, leading to less tax revenue than expected even with Sears located there.

Instead, two decades after the special taxing area was created, some 200 acres remain undeveloped in the 780-acre park anchored by Sears Holdings Corp.’s headquarters. A swath of land that was supposed to generate $50 million in property taxes in 2012 raised only $25 million in the past tax year…

The ambitious project’s inception came at the pinnacle of “euphoria” over a booming commercial real estate market, said John McDonald, who teaches land economics and real estate at Roosevelt University. But that party ended with the economic slowdown of the early 1990s, and the market, he said, has not rebounded. There is no “desperate need for office space anywhere right now,” he said…

The inability of the park to pull in the predicted revenues underlies the battle over Sears’ future. The fight has largely centered on Community Unit School District 300, a financially strapped taxing body whose officials claimed it stood to lose more than $10 million in revenue per year under the original plan to extend the taxing area’s term.

The parties and legislators are continuing to discuss whether Sears would be required to keep some 4,000 of the roughly 6,100 jobs at its headquarters well into the future. The potential consequences should the company not meet that condition remain unclear, said Hoffman Estates Corporation Counsel Arthur Janura.

Typically, suburbs are thought to be in favor of these tax breaks as it helps lure new businesses to town. However, this situation is a cautionary tale about tax breaks: just because one is granted doesn’t necessarily mean that businesses will necessarily move in. If everyone is building big industrial or office parks and offering tax breaks, can everyone win? And in an era of falling tax revenue and rising costs, suburbs need to maximize their assets.

Of course, the State of Illinois will look really bad if Sears leaves as it will feed a (growing?) narrative that Illinois is generally bad for business. It will be fascinating to see how the State and Hoffman Estates come to some sort of agreement that everyone can live with.

Chicago looks at 63 ways to raise revenue

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Following up on a report this week that says American cities are facing falling revenues, a new report for the City of Chicago looks at 63 different ways to raise revenue. According to the powers that be, some of the ideas have merit while other are “non-starters”:

In a statement Tuesday afternoon, Emanuel — who must present his budget plan next month — said several of Ferguson’s ideas are “promising” and will be given serious consideration. But the mayor said “raising property taxes, income taxes or the sales taxes is off the table. And asking drivers on Lake Shore Drive to pay a toll is also a non-starter.”…

Ferguson’s report also suggests imposing a $5 London-style congestion fee on for driving in the downtown area during rush hours. The fee would be collected in an area bounded roughly from North Avenue south to the Stevenson Expressway, and from Halsted Street east to Lake Michigan, although it extends as far west as Ashland Avenue between Lake Street and the Eisenhower Expressway…

In addition, Ferguson also suggests creating a 1 percent Chicago city income tax, much as New York City imposes, for new revenues of $500 million per year. In suggesting the tax, Ferguson’s report points out that the State of Illinois increased its income tax to 5 percent last year, but froze the amount distributed to municipal governments, thus effectively reducing the percentage of the tax that cities receive…

Ferguson also suggests eliminating the city’s more than 160 Tax Increment Financing Districts, where property tax dollars for schools, parks, and other taxing districts are frozen for at least 23 years, so that all property tax increases afterward to go into a fund to improve struggling neighborhoods. Although TIF districts generate about $500 million a year, Ferguson says $100 million in new revenues could actually be generated by eliminating them and returning all property tax revenues to the city and other taxing bodies.

It would be interesting to see look at this document to see how many of the proposed options are already in place in other cities. Additionally, how many current revenue generating schemes in Chicago are used elsewhere? Why not learn from the “best practices” (or “necessary practices”) in place elsewhere?

A number of these ideas would generate significant conversations/controversies. There a number of people who have suggested congestion pricing for big cities but actually putting this into practice and selling it to the car-hungry American public is a difficult task. The smaller options, like changing the garbage system, would probably prove more popular or at least easier to implement but they probably wouldn’t have the kind of financial impact necessary to help the city fight a $635.7 million budget shortfall.

Mayor Rahm Emanuel may have impressed people so far but can he survive this upcoming budget battle?

Side effect of housing slump: lots of property tax appeals

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With property values dropping in recent years, one side effect is that more homeowners are appealing their property tax bills. This has led to some problems in local government as officials try to keep up with the increased number of requests:

From Los Angeles to Atlantic City, the New Jersey gambling resort whose credit rating Moody’s Investors Service cut by three levels last month, property owners are demanding lower taxes after real-estate values plunged. The disputes over billions in dollars come as municipalities are already slashing services such as police and fire protection and may depress revenue further as communities try to recover from the longest recession since the 1930s. In Michigan, Governor-elect Rick Snyder has warned that hundreds of towns face financial crises…

Oakland County, the Detroit suburb with Michigan’s second- highest median income, didn’t previously pay much attention to Tax Tribunal cases because any losses were covered by new construction gains, said Robert Daddow, deputy county executive. Now, about $3.9 billion in taxable value, or 5 percent of the county’s tax base, is under review, he said.

Cities and towns across Michigan had property-tax collections plunge as much as 20 percent in the past year, the steepest drop since a 1994 rewrite of state levies, forcing scores to decide whether to borrow to pay bills or risk default on bonds.

Municipal budgets “tend to lag economic conditions” by 18 months to several years, according to a National League of Cities report in October that Pagano co-wrote.

The consequences for local municipalities could be staggering: less tax revenue means fewer services and in the long run, unhappy residents. And this is not just a short-term problem – economic recessions like this can have a long effect as the communities must rebuild budgets and restart development projects. I particularly like the example from Oakland County: when times were good, these sorts of appeals didn’t matter much because new development covered whatever appeals for lower taxes were approved.

One of the hallmarks of suburban development after World War II was the interest many communities had in promoting tax generating land uses. Additionally, many residents desire low property taxes. When population growth and housing construction was on the rise, even residential properties, which bring in property tax dollars but also require outlays for increased levels of services, were seen as a good. But in worse economic times, communities will have to double down even more on this issue: what land uses generate the most money for the community at large?