The Village’s 2016 budget includes a bond issue to be used to cover the costs associated with the construction of a new Police Station. During the budget and property tax discussions last November, the 2015 tax levy payable in 2016 was more complex than normal for the following reasons:
- Due to existing debt that is maturing, the Village’s debt service level is decreasing until the Village sells bonds for the new Police Station. We had planned on levying a Public Building tax for one-year to approximate the decrease in the debt service levy from the maturing debt. That way, the Village’s total property tax levy would not go down significantly in 2015 and up significantly in 2016.
- The Village had planned on selling bonds for the Police Station in the fall of 2016, but based on the State’s property tax freeze proposal the bonds are being sold in January 2016.
Since the bond sale is occurring at the beginning of 2016, bond principal and interest charges will be incurred this year. The planned multi-year debt service property tax levy is approximately $6.8 million through 2020. In order to ensure that the total new debt service levy for 2016 remains at about $6.8 million, the Village needs to abate a portion of the one-time Public Building Fund levy
With the sale of the bonds, the abatement of the Public Building Fund can be determined, as the entire amount of this levy, except for $261,300 can be abated. The $261,300 represents the final year abatement that was previously approved by the Village Board in December 2015 for the Senior Center bonds, plus the remaining difference from the revised 2017 debt service levy. As a result, for 2016 the debt service property tax levy plus the Public Building Fund levy will equal about $6.8 million. For levy years 2017 through 2020, the debt service levy will be about $6.8 million and the Public Building Fund levy will be eliminated.
At the Village Board meeting on January 19th, Staff will provide the Board with a comparison of the original 2015 tax levy compared to the revised levy that will result from the bond sale and this abatement ordinance. It is anticipated that the revised levy will be at or slightly lower than the original levy, ensuring that the Village’s tax levy will not be higher than what the Village Board has already approved. It is still early enough in the County’s property tax process to have these changes included in the final 2015 levy payable in 2016.
Recommendation
It is recommended that the Village Board adopt the attached Ordinance Abating, In Part, Taxes Levied for the Year 2015 Heretofore Levied for the Public Building Fund of the Village of Arlington Heights.