1 CREATIVE FINANCING REAL ESTATE TRANSFER TAX BEST PRACTICES FORUM REAL ESTATE MANAGEMENT COMMITTEE FACILITY MANAGEMENT COMMITTEE PROFESSIONAL DEVELOPMENT COMMITTEES ILLINOIS ASSOCIATION OF SCHOOL BUSINESS OFFICIALS Presented to Annual Educational Conference, May 15, 2008

2 CREATIVE FINANCING REAL ESTATE TRANSFER TAX Moderator Paul Halversonretired Chief School Business Official and local government official 34 years Presenters/Panel Stephen NelsonGilfillanCallahanNelson Architects Paul Halversonretired Chief School Business Official and local government official 34 years

3 CREATIVE FINANCING REAL ESTATE TRANSFER TAX What we will cover School District situation Need for revenue (unrestricted) Intergovernmental relations/cooperation Referendum Board of Education Policies Current Status Panel case studies question and answer

4 School District Situation Independent fiscal analysis operating revenues face a shortfall of $850,000 annually (NIU Center for Governmental Studies, March 2005) Board of Education policy for balanced budgets Board of Education policy for student housing adequacy, planning

5 School District Situation Continuing moderate growth State funds –Not timely –Unreliable for planning (construction) –Unfunded mandates –Not consistent with local planning efforts

6 School District Situation Need solution for increased revenue (unrestricted) Tax rate referendum ?? Reduce expenditures Need community support for any referendum success Developed into Sycamore Mayor’s Ad Hoc Committee on Growth Management City of Sycamore, School District, Sycamore Park District, Sycamore Library, DeKalb County Economic Development Corporation, Sycamore Economic Development Commission, DeKalb County Buidling & Development Association

7 Targeted Solution Real Estate Transfer Tax Sycamore is home rule municipality Creates new (unrestricted) source of funds intended to supplement School District operating revenues Applies to move-ins from another location for impact of growth to pay for increase of spending need Does not impact property tax rate

8 Targeted Solution Real Estate Transfer Tax Based on 2004 real estate transactions, approximately $850,000 would be paid and available to the School District –Range of permits 1997 (88) 2005 (712) –estimate thru 2014 (approx. 250) Unrestricted funds for School District planning Board of Education determines appropriate need (continues intergovernmental cooperation with school purpose being public)

9 InterGovernmental Cooperation Continued relationship after AdHoc action and Sycamore City Council action All stakeholders accepted School District role in community (property tax, value of education, relation to work force, relation to property values)

10 InterGovernmental Cooperation Process AdHoc Committee Sycamore City Council Sycamore City attorney review Sycamore adopted ordinance –Included discussions on impact fees, transition fees, annexations Citizens Committee (broad based)

11 Referendum question Shall the City of Sycamore, pursuant to its home rule powers, impose a real estate transfer transfer tax at a rate of one-half of one percent (.005), to be paid by the buyer of the real estate transferred, subject to an exemption for Sycamore homeowners purchasing homestead real estate within the city and other exemptions as defined in the governing ordinance, with the revenue of the proposed transfer tax to be used for support of the Sycamore School District?

12 Real Estate Transfer Tax Paid by buyer at time of closing To the Sycamore City Treasurer Funds maintained with separate account –Specific accounting and report Paid to School District School District budget process –Specific accounting and report

13 Board of Education Policies Fund Balance – minimum targets Balanced Budgets – adopted Abatement Moody’s rating ASBO International – Comprehensive Annual Financial Reporting excellence in reporting (CAFR)

14 Current Status Court lawsuit in process Constitutionality? Federal and State Home rule School funding

15 BEST PRACTICES FORUM CREATIVE FINANCING CHALLENGE Discuss issues Network with other ASBO members Think outside the box, think with a new box Pressure on School Business Officials to be creative for solutions to your situation

16 Creative Financing School District Challenge Contact for follow-up questions Steve Nelson Paul Halverson

17 LEGAL AND PRACTICIAL STEPS FOR SCHOOL PROPERTY MANAGEMENT ASBO Committees Association of School Business Officials State and International Professional Development 24 Committees Legislative Resource

18 LEGAL AND PRACTICIAL STEPS FOR SCHOOL PROPERTY MANAGEMENT Question and Answer

19 LEGAL AND PRACTICIAL STEPS FOR SCHOOL PROPERTY MANAGEMENT Biography/Vitae