Elmhurst's Stormwater Debt May Mean Tax Hike

ELMHURST, IL – Elmhurst is looking at ways to increase taxes to pay back tens of millions of debt.

On Monday, a City Council committee plans to resume its discussion about how to bring in more money to cover the debt. The panel also talked about the issue last fall.

According to a city memo this week, the city's principal and interest payments total $50 million over nearly two decades.

The stormwater debt is mainly covered by a 1 percent sales tax and transfers of property tax income from the city's main account.

Last year, the city increased its property tax levy by $1.3 million to help cover the debt. That's the amount by which the public library's tax levy dropped because it finished making payments on its new building. As a result, the city argued its increase had no effect on taxpayers.

In this week's memo, Christina Coyle, the city's finance director, listed possible options for tax increases. They were similar to those in a city memo last year.

"Moving forward, the City should identify a funding mechanism for the current debt service as well as future stormwater projects," Coyle said.

Here are the alternatives provided in the memo:

• Property tax – It is a stable income source, has a low administrative cost to the city and is broadly based, the memo said. The $1.3 million increase in the property tax levy could continue until the debt is paid off, with annual increases for new growth and inflation, estimated at 3 percent a year.
• Home rule sales tax — The city's home rule sales tax of 1 percent has paid for the majority of the stormwater fund since its creation. New home rule sales hikes must be made in 0.25 percent increments. "Sales tax is regressive, fluctuates, has low administrative costs, and is partially paid by non-residents," the memo said .
• Stormwater fee — Across Illinois, 29 towns, including 16 in the suburbs, charge stormwater fees to property owners. They are assessed in different ways. Some are flat. Others are based on the amount of impervious surface such as concrete on a property. Properties with more impervious surfaces generally contribute more to flooding. If the city used the simplest, fixed-rate method, it could charge a monthly amount of $6 for houses and $12 for other property types, according to the memo.