Yorkville subdivision residents facing additional tax burden
By Steve Lord firstname.lastname@example.org January 16, 2013 5:56PM
Updated: February 19, 2013 1:56PM
YORKVILLE – Caryn Macek had a hint of emotional desperation in her voice Tuesday night.
“I’m not rich,” Macek said, addressing the Yorkville City Council. “I’m a nurse, and
I pay $1,500 a month in child care so I can keep my job.
“This is so unfair for people like me. The big banks won’t pay anything, the developers won’t pay. They’re probably in their 7,000-square-foot houses. And the big banks won’t even return my phone calls.”
Almost all the subdivision residents who turned out at Yorkville City Hall had the same feelings of desperation about facing a property tax increase this year of $150 to $300, brought on by a perfect storm of a bad economy, a failing real estate market and plummeting property values.
Moreover, homeowners learned that the increased taxes could be a yearly thing because of what City Administrator Bart Olson called an “unprecedented” situation, where even investors at the annual county tax sale showed no interest in picking up lots in three subdivisions for only the price of back taxes.
“Investors said no thanks,” Olson said. “No one’s really seen that before.”
The situation is the latest in what has become the ongoing problem of subdivisions in town that were never finished because the developers went bankrupt, and in some cases, left town.
In the Raintree Village, Windett Ridge and Grande Reserve developments, it has caused a bevy of problems, the latest being unpaid property taxes on vacant lots that the existing homeowners must now pay.
Special service areas, or SSAs, are common tools to front-fund residential or commercial subdivision infrastructure. The idea is that the money for sidewalks or streets can be raised ahead and recaptured over time by those who benefit from the money. Homeowners sign contracts, usually as part of their closings, saying they will pay their share of the tax. With an SSA, the money is collected over time as part of the property tax payments.
In Raintree Village, Windett Ridge and Grande Reserve, the city used its bonding power to sell bonds to private investors to raise the money for such improvements as water and sewer, sidewalks and roads. The idea is that as each lot is filled in, that new homeowner would pay a share. Until the lots were developed, the developer would pay the taxes on the property.
But because the developers are now gone or have no money, no one is paying the property taxes or the special service area taxes on the vacant lots.
So, for 2012 taxes payable in 2013, the additional tax payments for each taxpayer will be: $300 for Raintree Village SSA one, passed in 2003; $190 for Raintree Village SSA two, passed in 2004; $250 for Windett Ridge; and $150 for Grande Reserve.
What upset homeowners the most was that there is no recourse for them to collect the money from those who are supposed to be paying for it. The city cannot sue. It has no standing in the case because the city is not aggrieved, said Katherine Field Orr, Yorkville city attorney.
And it would be fruitless for the homeowners to sue the developers, because they have no money.
In some cases, developers sold some of the lots to Bank of America and Morgan Stanley, which have either put them off to affiliates or held onto them. But they are not paying the taxes.
“(The law) does not give us the right to sue our bad neighbors,” Orr said.
The only other help for homeowners, Olson said, is for the city to become “developer friendly” enough to attract investors who might buy the vacant lots to develop them. Olson said the city is trying to do that, whether through direct incentives such as the BUILD program, or by bringing more amenities to town, such as the new movie theater.
But the bigger problem is what the lack of interest in the land at tax sale indicates — plummeting property values.
“This is going to kill property values in this community,” said Scott Harmon, a Raintree Village resident. “The larger financial institutions are being bailed out by the taxpayers. And we can’t even get investors to come in and do bond reissues.”