Yorkville officials unanimously approved an abatement of Special Service area taxes where some residents will see their property taxes increase due to delinquent tax payments on vacant properties by the developers.
Rresidents in Raintree Village, Windett Ridge Homeowners Association, and Grande Reserve Central express their frustrations over the expected $120 to $300 increase in property taxes. The developers of the three subdivisions, Morgan Stanley Bank’s LLC holding company in Raintree Village, Windett Ridge LLC in Windett Ridge, and US Bank’s LLC holding company in Grande Reserve, failed to make the property tax payments this year.
The county sought to sell off the property taxes, but there were no takers. When property taxes on developments are not paid they are expected to roll over annually, which creates a gap in funding.
According to documents, the 236 homeowners in Raintree Village SSA unit 1, the 36 homeowners in Raintree Village Unit 2, and the 80 homeowners in Windett Ridge are at their maximum levy. The residents of Grande Reserve central will be levied a $1,962 SSA property tax, which is still $366 below the maximum SSA property tax of $2,328, which means they could see an additional tax hike.
Prior to Tuesday night’s vote Ward 1 Alderman Carlo Colosimo, in attempting to explain the increase in taxes, compared the SSA to an agreement by residents to purchase a $25 sandwich from a neighborhood deli once a year. For several years Colosimo said the residents would go to the fictional shop to purchase the sandwich, only to be told by the proprietor that the sandwich would only cost $20 that year. For several years residents got used to paying $20 for the sandwich, but one year the proprietor had to charge the full $25. Colosimo said the agreed upon price was always $25 for the sandwich, and the Special Service Areas always had a maximum amount that could be charged in property taxes.
“We’re not asking for a penny over $25 for that sandwich,” Colosimo said.
Special Service Areas were created as a financing mechanism for subdivisions to allow the cost of the infrastructure to be bonded by the cities, and for the repayment of those obligations to be put on a property tax bill for each subsequent property owner, including vacant property owners. The SSA funds contain a reserve account that can be used when funds to pay the debt service are scarce. However, city bond ordinances state the use of the reserve funds are a last resort measure, according to city documents. Increasing homeowners’ taxes is the only option city leaders currently see.
Additionally city aldermen said they wanted staff to recommend a policy that would prevent the city from working with real estate entities that have outstanding debts on property taxes for lots within city limits. Colosimo said some developers with outstanding debts operated under multiple business names and he wanted to craft a policy to prevent those entities doing business with the city.