Residents Express Frustration Over Increase in SSA Taxes

Residents of three Yorkville subdivisions expressed their frustrations over increasing property taxes due to lack of payment of Special Service Area taxes on vacant properties by neighborhood developers during a special city council meeting.

Residents in Raintree Village, Windett Ridge Homeowners Association, and Grande Reserve central can expect to see their property taxes increase between $120 and $300 due to the delinquent 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. County officials 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.

During the open forum residents called upon city leaders to hound the developers for the outstanding taxes in order to protect the residents.

“Why can they not pay?” Raintree resident Scott Harmon asked of the banks and other entities that own the properties. “Why can’t Morgan Stanley use some of their vast resources to pay their taxes?”

One resident concurred. She said she was not wealthy and the increasing property taxes would be a burden. She criticized the lack of accountability shown by the developers and tasked city leaders to be stronger stewards for residents.

City Administrator Bart Olson said he attempted to contact the three agencies, but only heard from Windett Ridge, LLC, who informed him they did not have the money to pay the delinquent taxes.

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.

Olson called the situation unprecedented. City officials sought to sell off the property taxes, but there were no takers.

“This is the first time 150 lots went up and people said ‘no thanks,’” Olson said.

Amy Cesich, a resident of Raintree Village, said the city talks about being developer friendly, but questioned when the city would be more friendly to individual taxpayers.

“Why aren’t we going after the LLCs?” she asked.

City Attorney Kathleen Field Orr said it would be difficult to file lawsuits against the developers. She said the homeowners purchased their property knowing the houses were in a SSA and that there were risks of property values increasing due to delinquency.

Harmon criticized the city’s lack of ability to remedy the situation, saying the rising property taxes will “kill” property values in the city.

Residents also urged city leaders to perform greater due diligence on future developers to avoid future SSA issues.

Due to the problems with the three SSAs, Mayor Gary Golinski said he could not see approving any future SSAs in Yorkville as long as he is mayor.

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.

While the three subdivisions are struggling with the SSA taxes, Olson said other SSAs in the city, including ones in Autumn Creek and Bristol Bay are doing well with new homes being developed.

Olson said the city wants to maintain an image as business friendly community so new businesses come into the area, and new residential homes are erected, which would eventually lower property taxes.

City officials took no action on the taxes Tuesday night, but must approve the abatement by Feb. 12, otherwise the property taxes will automatically increase to their maximum capacity.