BACKROUND

In July 2013 the Village Board created the Affordable Housing Trust Fund.  Later that year, in October 2013 the Board approved the creation of the Zero Interest Loan Program.  Since their creation, the fund balance of each of these programs has increased.  The Zero Interest Loan Program has recently had increased loan activity with local area businesses.  In regard to the Affordable Housing Trust Fund, the Planning Department will be making recommendations on how this Fund will be utilized in future correspondence. 

Due to the light activity and small dollar transactions of these programs in the early years, these programs did not warrant the creation of separate funds for accounting and budgeting purposes.  In lieu of a fund, the programs have been accounted for as an assigned fund balance reserve on the General Fund’s balance sheet.  The Planning Department has also maintained spreadsheets documenting the details of these programs for audit purposes.  Over the next few years, the activity in both of these funds is expected to increase.

The source of funds for the Affordable Housing Trust Fund are from three primary sources:

1. Cash payments in lieu of constructing affordable units.
2. Income from fees collected from the Village’s transfer of Industrial Revenue Bond cap.
3. 1% of all gaming revenue received by the Village after the first full year after the Village starts receiving such revenue.

The source of funds for the Zero Interest Loan Program comes from Cook County Class 6b and 7c property tax abatements in two ways:

1. A $1,000 application fee for municipal consideration of the tax abatement.
2. A rebate to the Village of 10% of savings under the abatement over the first:

a. 5 years of the Class 6b program award

b. 3 years of the Class 7c program award

Due to the higher fund balances and projected activity in these programs, Finance Staff now needs to amend the accounting treatment of these programs by creating two separate funds.  This can be accomplished by transferring the 12/31/18 assigned General Fund reserve balance of $188,873 to the Affordable Housing Trust Fund and $243,785 to the Zero Interest Loan Fund, and amending the 2019 Budget to reflect these transfers.

RECOMMENDATION

It is recommended that the Village Board of Trustees amend the 2019 Budget to reflect the creation of the Affordable Housing Trust Fund and the Zero Interest Loan Fund, by transferring the assigned General Fund reserve balance amounts as of December 31, 2018 of $188,873 and $243,785 respectively to these funds.