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2016-12 RESOLUTION NO. 2016 - 12 A RESOLUTION ADOPTING A REVENUE COLLECTION POLICY FOR THE VILLAGE OF BUFFALO GROVE WHEREAS, the Village of Buffalo Grove is a Home Rule Unit pursuant tote Illinois Constitution of 1970; and WHEREAS, the Village strives to maintain a diverse revenue base to fund its services, and WHEREAS, in is in the best interest to identify the major sources of revenue and describe the method of collection; and WHEREAS, the Village should make every effort to attain compliance in payments to ensure effectiveness and efficacy in revenue management: NOW, THEREFORE, BE IT RESOLVED BY THE PRESIDENT AND BOARD OF TRUSTEES OF THE VILLAGE OF BUFFALO GROVE, COOK AND LAKE COUNTIES, ILLINOIS, as follows: Section 1. The President and Board of Trustees of the Village of Buffalo Grove approve a Resolution adopting a Revenue Collection Policy which is attached hereto as Exhibit A. Section 2. This Policy shall be effective upon Village Board Approval. AYES: 6 - Uggheii-ner, Weidetifeld,Johnson NAYS: 0 - Notie ABSENT: 0 - Noite PASSED: Agr ILI H�2(11 6. APPROVED: Apj•j[ 18,20 10. Beverly Suss Village President�— � ATTEST: Village Clerk | | Exhibit�A VILLAGE OF BUFFALO GROVE _ REVENUE COLLECTION POLICY 1. Purpose The purpose of this document is to serve as a guide to identify major revenue sources, the method of collection, and the process of improving compliance rates. The ability of Village to influence the success of collection is discussed with each category. 2. Scope The scope of this document will be to explore all defined and ordinary revenue streams of the Village. Revenues will be identified by category, which will correspond directly to the budget document. Within each category a discussion of each type or similar type revenue will be addressed. This document will not discuss each revenue line item in the budget nor will it go in depth about miscellaneous one time or non-recurring revenue. 3. Overview Listed below is an overview of each revenue category that includes a short synopsis of the system of collection of major revenues and the influence the Village has on the collection of the revenue. It also includes a collection plan to improve collection of the revenue. 4. Revenue Sources 4.1 Real Estate Taxes Real estate property tax revenues are one of the most stable as collections typically exceed ninety-nine percent of the amount levied each year. Once the counties are directed tm extend the levy, the Village has no ability to either control the timing ofthe tax bill mailings or the collection of the amount due. The counties control the revenue distribution dates to the Village. The counties do add late fees to late payments. In the event the property tax is not collected from a parcel the property will be sold at a judicial sale to recoup the amount owed. The Village does have an option to allow each county to overextend the levy to offset loss in collections. Lake County allows for an over-extension of two percent on the debt service levies. Cook County allows for an overextension of three percent on corporate purpose and pension levies and five percent on debt service levies. Historically, with strong rates of collection, the Village opts out of the over-extension option through resolution. 4.2 Utility Billing Enterprise The Village directly bills all water utility customers for the amount of water consumed and for a storm water management fee.The storm water fee is charged as a flat amount Page 1 | | -Ex/ it A to residential properties and based upon square footage for commercial/industrial properties. In order to create efficiencies in billing, the Village also bills all Lake County sanitary sewer fees to Lake County properties. Over ninety-three percent of the water billing revenue due is paid on time. The entire Village is billed over a two month period. Commercial, industrial and multifamily properties are billing monthly. Lake County single family households are billed on odd months and Cook County single family households are billed on even months. The Village uses combination of penalties including late fees and service interruption fees to reduce the number of delinquent service accounts. Late fees are assessed to service accounts that fail to pay the amount due by the due date. Water utility customers have approximately twenty-one days to pay the Village. The late fee is charged ata rate Vf1.5 percent per month un the balance due. For those accounts that fall into delinquency past sixty days, the account is subject to be shut off. 4 warning notice is mailed to the service address with the date of the impending service interruption. Once the water isturned off, the customer must pay service interruption charge to reinstate service. At any point inthe billing and collection process, upto water being shutoff, a resident can enter into a payment plan for past due balances. Upon a successful completion of the terms of the plan, the customer will avoid losing water service. A utility customer is limited to one payment plan arrangement per year. All customers are required to pay the entire water bill balance, current and outstanding, before a real estate transfer tax stamp is issued. 4'3 State Taxes The State is responsible for collecting and remitted base sales taxes (1Y6), home rule sales tax (196), income and use tax (per capita), telecommunications tax (6Y6) and motor fuel tax (per capita). Enforcement of revenue collection is handled by the Illinois Department of Revenue (|DOR). Payments are made to the village on a monthly basis. Staff monitors the |DC)Rxvebsite to ensure timely remittances from the State of Illinois. 4.4 Locally Co||ectedTames/Fees The Village collects certain tax revenues, defined by state or local ordinance, directly from the taxpayer, These types of taxes include natural gas ($.05/thernn), electricity (sliding usage scale — maximum by statute), and cable franchise (5Y6). The finance department currently monitors these taxes on a monthly basis for the utility taxes and bi-mnnnth|y for the cable franchise fees. Page 2 | | Euu A Upon a new property being established in the Village, that address b forwarded tothe utility companies including, ComEd, NiCOR or 0orthshome Gas, Comoasi and/or AT&T to establish taw collections. Staff ia provided with an annual list of accounts by the utility companies to cross reference with the Village's G|Sdata. 4'5 Village Imposed Tames The Village imposes taxes related to locally generated revenue from specific businesses. These taxes are defined by ordinance. These taxes include prepared food and beverage tax(196) and hotel/motel tax (596). Staff reviews the State of Illinois tax filings (ST-1) to compare to the amount paid to the Village. The Village requires state tax documentation to be remitted with the payment of these taxes for auditing purposes. The Village reserves the right to audit a businesses' tax records if staff determines that the business may either be underreporting taxable income or not submitting taxes ona bnoe|y basis. Real estate transfer taxes ($3/$I,0OO sales consideration) are collected when homes are sold. The real estate transfer tax stamp will not be issued unless all obligations owed the Village are satisfied. 4.6 Licensing Fees Business, tobacco, liquor, vending machine, chauffer, alarm, and pet licenses are minor revenue sources and renew annually. The major licensing efforts are for business licenses that are due January 1't and liquor licenses due May It when the renewal period ends the Community Development will send the inspector out to ensure those businesses that did not renew, or the new businesses that did not obtain the proper licenses are no longer conducting business. Businesses found to be without the appropriate licensing will be dosed until the license fee and all associated fines for operating without a license are paid. Gaining compliance for pet licensing is perennial challenge. For animal licensing, the Village will attempt to work with the counties to obtain rabies certificate data. Those residences with a pet that received a rabies inoculation, but did not purchase an animal tag, will receive a notice about the Village ordinance requiring atag. 4-7 Community Development Revenue and Fees Building development, engineering, contractor registration, plan review, filing, inspection, and permits fees are easy to collect based upon the conditional nature ofthe Page 3 | | Exhibit A fee. Without the payment of the fee work cannot proceed. The Community Development Department performs random inspections of neighborhoods to ensure all work is being completed under permit and to the specifications of adopted building codes. To improve compliance, the Village doubles the cost of permit fees when work is completed without permit. 4'8 Fines and Administrative Fees Fines and administrative fees are an important revenue into the Village of Buffalo Grove. Certain line items like accident reports, impounding fees, DUI assessments, subpoena fees, and bail fees have a high rate of collection because the user has a direct need as result mf paying those fees. Other items Village ordinance fines, false alarm fees, and paramedic services are more volatile. Paramedic Service fees are collected less than billed due to insurance reductions and in some cases the timeliness is stretched out over a long period of time due to the fact that users do not pay and these fees are ultimately collected through a collection agency or written off. Village ordinance fines are more difficult to collect. There is an escalating penalty based on the length a ticket remains unpaid.There are also two programs in place to recapture unpaid fines. One was mentioned previously, a resident cannot sell a home until all financial obligations are met The second program is the Village's participation in the Illinois Debt Recovery Program.This program collects any debt due the Village through a garnishment from the debtors pay check or tax refund. This will be an additional part of the regular collection process for the Village of Buffalo Grove. After the debt has been outstanding for seven years it is no longer eligible for the Illinois debt recovery program it will be sent toa collection agency toberecouped. The Village also collects a portion of tickets that go to Cook and Lake County.The Village adopted an Administrative Adjudication Program. Local ordinance violations are sent to administrative adjudication to be heard. Upon the disposition of the hearing, the adjudicate must pay the fine prior 10 leaving Village Hall. 4'9 Golf Revenues The Village owns and operates two 18 hole golf courses. Fees are charges to play daily 8o|t use the driving range, to obtain a membership, and purchase merchandise. Collection rates are not an issue as a service or product is not received without payment. Both golf courses are home to restaurant facilities that are required to pay rent for use of the Village owned facilities. Both tenants currently pay 5 percent of the net earnings from their restaurant operations back to the village. The funds are due by the 15m of Page 4 Exhibit A the concurring month. The rent payment is to be accompanied by the state of Illinois sales tax submission document to ensure the appropriate amount is paid to the Village as an internal audit of the process. Within the lease agreement is the option for Village staff to inspect financial records. 4.10 Investment Income The Village has implemented a strategy of purchasing A+or higher municipal step bonds and other securities backed by FDIC, insurance, or the full faith in credit of the United States Government. The terms will be staggered to take advantage of better interest rates on longer term investments, while concurrently investing in short term ventures that yield a competitive term and make funds available as the Village needs them based on the cash flow analysis completed by the finance department. The collection of this revenue is highly reliable and therefore there is no plan to improve collections. The Village will look for opportunities to increase revenue by continuous reviewing collection patterns of revenue and examine methods to increase the compliance rates. The policy will be reviewed annually and amended with new sources of revenue and/or changes in the strategies to collect the revenue. Page 5