Fees, tax hikes, layoffs ahead for Lake Zurich?
Lake Zurich residents could see higher tax bills, fewer services and new fees, if the pace of downtown redevelopment doesn't pick up soon.
Village officials are pondering options to make up for an anticipated $750,000 shortfall in 2009 in revenue from a special taxing district.
That's because one of two projects under way -- a five-story condominium building planned for Main Street across from the lakefront promenade -- has stalled indefinitely due to a housing market slump.
An earlier townhouse project is only half complete.
The tax increment financing district established in 2002 over the entire downtown area allows the village to capture taxes from increased property values into a 23-year fund to be used for redevelopment purposes.
Village officials expect just short of $1.4 million in that incremental revenue this year, Village Administrator John Dixon said.
That should cover the $1.3 million in principle and interest the village must pay on two $10 million bonds issued for redevelopment. But there won't be much left to pay what the village owes Lake Zurich Unit District 95 in tuition costs for new students coming from redevelopment.
That bill was about $455,000 this year.
District 95 officials have long feared that situation.
"It does kind of reinforce some of the issues that we brought up to them over a year ago, that we were concerned about the revenues down the road," District 95 Superintendent Brian Knutson said.
Knutson said village officials have promised to pay the district what's due.
"I am confident that they will honor their commitment," he said. "(But) what if this continues and how long can they find other ways to do it? That's part of everyone's concern."
The village also won't have enough TIF income to pay the interest on a loan it took out for redevelopment.
Dixon said the village will have to get creative and find ways to cut its expenses or create new revenue sources.
Options include establishing new utility taxes, spending less on road improvements next year, suspending capital improvements and laying off staff.
"We could reinstitute other fees that would bring in funds," Dixon said. "We looked at an entertainment tax about 10 years ago or so, which we did not enact. We could do a referendum to increase taxes. We could borrow additional funds."
The village must approve its tax levy for the coming year in the next month. By then, it must decide whether to go out for a referendum next year to increase taxes.
Another option is using property taxes instead of TIF revenues to pay interest on certain bonds. That would raise residents' taxes for the year the bonds are not abated.
"The decision could be any combination of things," Mayor John Tolomei said. "The board is weighing all of those options right now."