Residents will face an increase to their utility tax starting March 1.
The City Council voted 3-2 to increase the rate from 1.25 percent to 4 percent — a 220 percent increase. That will be $4.67 more per month for the average residential user, and $19.01 more per month for the average commercial user, according to numbers previously provided by Finance Director Tamara Ammann.
The utility tax funds the city’s capital projects, including things like repairs to infrastructure not eligible for tax increment financing money or other funding support, and replacement of city equipment and vehicles.
Collinsville had the lowest rate of municipalities in the area that impose a utility tax, Interim City Manager Mitch Bair has said. And he says the old 1.25 percent rate failed “to generate sufficient revenues to support the basic needs related to capital facing the city,” according to a report from Bair related to the increase.
City officials estimate that the revenue generated by the tax would jump from $366,330 in 2015 to $1.32 million in 2016.
The City Council has been discussing the possibility of an increase for the last three months. The 2016 and 2017 city budgets, both approved with 3-2 votes, include revenues based in part on a 4 percent utility tax rate.
Mayor John Miller, along with Councilman Jeff Stehman and Councilwoman Cheryl Brombolich, defend the tax increase because they say it will allow the city to replace and repair important equipment, like police vehicles and ambulances, and fund projects they say citizens expect from the city, like local road and sidewalk repairs.
“We’re not the enemy,” Miller said during the meeting. “We’re the people running this business called the city of Collinsvile.”
Through all of the deliberations, Councilwoman Nancy Moss and Councilman Jeff Kypta have remained strongly opposed to the increase because they worry residents cannot afford it. They both voted against the rate increase at the Monday night City Council meeting.
“I believe this is not a matter of the city’s need,” Moss said. “If you look at our budget and the way that it has been swollen from the previous year and into the next two years, I believe, and I’m not the only one who believes that it is unsustainable.”
1.25 Collinsville’s previous utility tax rate
4 Collinsville’s new utility tax rate
5.15 The highest utility tax rate in the area
The utility tax ordinance that the City Council adopted includes a reimbursement program for senior, disabled and low income residents.
To be eligible for relief in the form of an annual flat rate of up to $55, residents will have to meet any of the following criteria:
▪ Are 65 years old or older.
▪ Qualify for benefits under the State of Illinois Senior Citizens and Disabled Persons Property Tax Relief and Pharmaceutical Assistance Act.
▪ Earn income at or below Section 8 Poverty Level Income Guidelines for the Madison County SMA, as established by the U.S. Department of Housing and Urban Development.
To obtain the relief for taxes paid during the previous calendar year, eligible residents will have to:
▪ Submit an application no later than April 30.
▪ Provide a property tax bill or current lease for the address for which utility bills were paid and for which reimbursement is sought.
▪ Provide all utility tax bills from the calendar year.
▪ Provide a copy of state or federally issued identification to verify proof of age; or provide an Illinois Person with a Disability Identification Card stating that the claimant is under a Class 2 disability; or provide a completed income tax return, IRS Notice 703 or an affidavit indicating that no income tax return was filed for the prior calendar year.
The ordinance states that the city will reimburse a resident who meets the requirements within 30 days following receipt of the application.
Moss said she felt the program is “burdensome,” specifically noting that residents are required to save all of their utility bills from the previous year.
Brombolich disagreed, saying she investigated the program with her parents, who are both in their late 80s. Her parents “save every bill they pay,” Brombolich said, and as long as they have some help in the process, she does not feel the program is burdensome.
Potential “southwest corridor” TIF district
The council also made a move toward creating a new tax increment financing district in the city Monday night.
An ordinance stating the city’s intent to designate a “redevelopment project area” and to induce development interest in that area was adopted by the City Council with a 3-2 vote. These are steps the city will take in order to establish the proposed TIF district.
The city will investigate whether the area known as the “southwest corridor,” which includes Fairmount Park Racetrack, Collinsville Middle School and a portion of land along St. Louis Road, is blighted. If research shows that it is, the city would consider creating a TIF area, the boundaries of which are “not precisely defined at this time,” according to the ordinance.
St. Louis-based urban planning and design company Peckham Guyton Albers & Viets, Inc., will conduct the study to determine if all or a portion of the proposed TIF area qualifies under the Tax Increment Allocation Redevelopment Act. The council previously approved a $59,000 contract with PGAV in June to study the eligibility of the proposed TIF district with a 3-2 vote.
The ordinance also encourages developers and property owners to pursue plans for redevelopment or other improvements to properties within the area. Leah Joyce, TIF director and interim economic development director, said at least three businesses are interested in making improvements that may later be reimbursed through TIF.
Moss said she felt the city had “enough TIF districts.” She voted against the ordinance along with Kypta.
Stehman said he supported the proposed district because it will help the city attract businesses that may be considering the metro-east for their development.
“Unfortunately, we are competing with other communities,” he said, and if Collinsville doesn’t offer incentives to developers, they will look elsewhere. “I’d love to say it’s a level playing field.”
For the second time, the council considered a redevelopment and economic incentive agreement with CDR Real Estate Investment Inc. to turn the former Microtel Suites at 6 Gateway Drive into a La Quinta Inn and Suites.
The council voted to reimburse the developer $271,000 after previously voting to table the proposed incentive agreement during its Oct. 13 meeting.
According to Bair, the developer was advised in November 2013 not to begin any site or structural improvements because the redevelopment agreement would need to be approved by the City Council. Between March and July 2014, the developer completed $874,366 in improvements, according to building permits for the property.
Moss, Kypta and Stehman all previously questioned whether this developer followed the usual process of requesting reimbursement from TIF money for development costs.
“We skipped over our typical process,” Bair said, in part because the developer was under corporate constraints from La Quinta to complete certain improvements on a timeline.
Miller has said he believes there was “some lag on the city’s part.”
“We were not in compliance with figuring the TIF as much as he was,” Miller said at the October meeting.
The project is expected to reach an estimated cost of $3.5 million. The TIF eligible project costs total $1.4 million. But the community development department recommended the council consider an incentive range between 0 and 20 percent, or a maximum of $271,000, a decrease from the proposed incentive agreement in October.
Moss and Kypta vote against the agreement Monday night.
Bair noted that the city does not have rules in place that the developer failed to follow. He suggested the council “establish clear parameters” for incentive agreements in the future.
In other business
The council also approved the following:
▪ Authorizing a $53,364 contract with Neumayer Equipment Company to replace fuel tanks and pumps at the streets department.
▪ Establishing salaries for the newly filled positions of certified building inspector ($65,000), and administrative assistant to the police chief ($57,890).
▪ Authorizing the expenditure of $10,154.75 in tax increment financing money to B&K Auto Sales and Services, Inc., the owner of 301 W. Main St. The money will be used for tuckpointing, masonry repair and replacement of five windows at 301 W. Main, which is where Ron’s Automotive is located.
The City Council meets next at 7:30 p.m. Feb. 8 at City Hall, 125 S. Center St.
Low income rebate eligibility
The following are the current Section 8 Poverty Level Income Guidelines for the Madison County SMA, as established by the U.S. Department of Housing and Urban Development.
- One-person family: $39,400
- Two-person family: $45,000
- Three-person family: $50,650
- Four-person family: $56,250
- Five-person family: $60,750
- Six-person family: $65,250
- Seven-person family: $69,750
- Eight-person family: $74,250
Source: Interim City Manager Mitch Bair