The city of Elgin is getting less than anticipated in tax increment district financing revenues this year, which means the city council will decide how -- and if -- it will fund certain downtown projects in 2014, Chief Financial Officer Collen Lavery said.
Elgin should increase its fire and police pension contributions, Lavery said, a move she hopes will happen sooner rather than later.
The good news is that Elgin's general fund reserves are "healthy" at $41.7 million, or about five months' worth of day-to-day operations, she said.
The city council could decide to use those reserves to fund the increase in pension contributions, as well as lend some money to the TIF fund to pay for downtown projects, Lavery said during a city council strategic planning session last week.
In a TIF district, taxes to local units of government are frozen at a certain level, and the higher property taxes that are generated by the improved property are funneled back into improvements on the property.
The TIF district has 12 years remaining, so it could repay back any loan from the general fund, she said.
Based on the city's latest actuarial report issued in March, the city should increase its contribution to the fire pension fund by about $450,000 and to the police pension fund by about $1.7 million, Lavery said.
The report was based on changes to employee turnover and retirement rates as calculated by the state, she explained.
Elgin has been diligent about funding both pension funds appropriately, she said.
"I'm hoping (the city council) will agree to start funding the increase in 2013 instead of 2014 and just get ahead of the game," she said.
TIF revenues this year are at about $2.7 million, down from $3.5 million in 2012, she said. The 2014 budget will be based on 2013 revenues.
Lavery said three unfunded downtown projects are expected to be on the table for 2014:
• An estimated $1.5 million in amenities, including landscaping, is estimated to be needed for Riverside Drive. Construction is expected to be done this fall.
• An additional $1.4 million for the sixth -- and final -- phase of the Central Business District streetscape project. Initial estimates put the project at $4.1 million, but the latest estimate is $5.5 million, Lavery said.
A yet-to-be-determined request for financial assistance from a developer interested in buying and rehabbing the Elgin Tower Building, she said.
Based on preliminary assessments, "We do not have the funding to do all those things unless we find another financing source," Lavery said.
The city council is expected to tackle both the pension and unfunded projects issues as it begins discussions about the 2014 budget later this summer.