Summary of Funding Options

The following provides an overview of funding techniques that is based on the experience of the consultant team. Details of the current legal and financial implications change over time due to changes in legislation, case law, and practical experience. These techniques will, therefore, require careful evaluation when being considered for planned improvements in Oswego's downtown.

Special Service Area Financing

This is a mechanism authorized for use by Illinois municipalities to finance facilities, improvements, or special services for a specific geographical area. It could be utilized by Oswego, for example, to help pay for the general maintenance of sidewalks and public spaces associated with the Main Street Development Plan.

A tax is levied only on those properties that are located within the geographical area, and these properties are taxed at the same rate, based on equalized assessed value, typical for other local property taxes. The taxes that are paid are deductible for federal income tax purposes. Use of funds from this financing mechanism has included streetscape beautification, pedestrian ways, landscaping, street construction, street lighting, removal of snow, sewers, etc.

The establishment of a special service area requires a public hearing. A petition filed within 760 days of the hearing, signed by 51 percent of the service area property owners can defeat the passage for two years. If there is no petition against the creation of the proposed special service area, the special service area is created, bonds may be sold, and taxes levied as with other property taxes.

Fund Raisers

Fund raising can be a creative method for generating local support of the downtown plan, particularly for improvements associated with parks, plazas and the Waubonsee Creek Promenade. Civic and service groups, churches, institutions, the Park District, local businesses and corporations, and individual residents can participate in programs such as "buy a brick" or buy a tree". This kind of funding promotes community spirit and identity. However, it does require a strong public relations effort to sell the benefits of downtown improvements to the community-at-large.

General Fund

Village general funds could be earmarked from the general operating fund for specific improvements, such as a facade improvement program. For example, the Village may wish to set aside funds to encourage business to participate in a matching grant program that is based on the type of improvement and the lineal feet of storefront that is improved.

Illinois Main Street Program

The Illinois Main Street program provides training and technical assistance to participating communities through on-site consulting visits and regional and statewide workshops. Design services are in cooperation with the Illinois Historic Preservation Agency. Assistance is offered to Main Street businesses in cooperation with the Department of Commerce and Community Affairs, Small business Development Center Network. Towns pay no participation fee for consulting services, but are responsible for the financial support of their local program.

Although this program does not provide funds for implementing downtown plans, the Illinois Main Street Program offers a variety of services that could be utilized by the Village of Oswego. Participants in this program can obtain direct, on-site technical assistance that includes ideas for fund-rasing, development of a business strategy that targets specific markets, workshops on merchandising, design review assistance (including historic architecture review) and training.

Also, Main Street representatives provide assistance with a community's promotional programs and can provide assistance in researching grants for funding downtown improvements.

Membership in the Main Street Program is open to anyone involved or interested in revitalizing a traditional downtown or neighborhood commercial district. This includes mayors, professional downtown managers, chambers of commerce, etc. Oswego can become an Illinois Main Street Community by filling out the appropriate forms.

Transportation Equity Act for the 21 st Century (Tea-21)

As the successor to ISTEA, TEA-21 provides funding opportunities related to transportation enhancement projects. This includes: bikeways, trails and bridge facilities.

Illinois Department of Commerce and Community Affairs (DCCA)

DCCA has a variety of programs aimed at aiding communities and businesses in Illinois. Directly applicable to the Main Street Streetscape plan is the Affordable Financing of Public Infrastructure Program. Through this program, the State of Illinois can provide low-interest financing for public infrastructure improvements that improve the health, safety and economic climate of Oswego.

Motor Fuel Tax Funds

Oswego's motor fuel tax fund could be used toward some of the improvements identified in the Comprehensive Downtown Plan. Permissible use of motor fuel taxes by a municipality include the following:

Construction and maintenance of:
- Municipal streets
- Extensions to municipal streets
- Municipal alleys
Safety islands and sidewalks
Street lighting
Street planning
Tree trimming and removal
Off-street parking facilities
Payment of principal and interest on road bonds
Marking of bicycle routes
Traffic control devices and street name signs

Illinois Department of Natural Resources Grant Programs (IDNR)

The Illinois Department of Natural Resources Grants Program offers various grants directed at park and open space development funding. A grant application may be made through the Oswegoland Park District to acquire funds directed toward the construction of the Waubonsee Creek promenade, west side recreation area, and the integration of the island park trails into the Fox River Trail system.

Sales Tax Rebate

All, or any portion of the Village's share of retail sales tax revenue (one percent of the retail sales), could be rebated to a retailer or property owner, to serve as an incentive to meet the Village's recommended development goals. Such a program works best with those retailers that have high sales volumes, such as supermarkets, and/or those whose volumes are likely to increase dramatically as a result of new construction or significant expansion.

Illinois Development Finance Authority (IDF):

IDF oversees a number of economic development programs that may be applicable to the redevelopment needs in the downtown. These programs are listed below, with a brief description of the opportunities available under each program:

Local Government Bond — The Local Government Bond Program assists units of local government in financing capital improvement projects. IDFA issues tax-exempt securities in the municipal market, and uses the proceeds of this sale to purchase securities issued by a local government. Smaller municipalities who do not have access to a level of credit that is needed to pay for proposed projects typically use this program.
Municipal Lease Program — This program provides units of local government with lo cost, tax-exempt financing for capital equipment and real estate purchases, and other capital improvements. As with the Local Government Bond Program, smaller municipalities who do not have access to a level of credit required to pay for proposed projects typically use this program.
Affordable Financing of Public Infrastructure Program — The Affordable Financing of Public Infrastructure Program provides units of local government with low-cost, short-term financing for acquisition, construction and improvement of public facilities, and related equipment.

Special Assessment Area Financing

This funding mechanism was approved by the Illinois General Assembly before the establishment of the special service area authorization identified above. In a special assessment area, each property is assessed a payment individually, based on the benefits that are expected to accrue to each property owner. Determining the amount of benefit is often a complex, costly and time-consuming procedure. Unlike special service area financing, the special assessment bond indebtedness is not included in the maximum allowable municipal debt.

Tax Increment Financing

The purpose of the law that establishes this funding technique is to enable municipalities to redevelop blighted neighborhoods, business districts and industrial areas. It enables them to acquire land, make public improvements, rehabilitate buildings, and clear properties for new development, including related design costs. It can be used only where necessary to raise funds to pay for public costs that a municipality must expend in order to attract a private developer within the designated TIF district. The district's equalized assessed valuation for real estate tax purposes is frozen. The tax revenue stream at this valuation level

continues to go to the respective taxing jurisdictions. The local taxes generated by an increase in the district's assessed valuation go to a special fund to pay project costs. This increase in taxes, or tax increment, are commonly used to retire bonds sold to finance public improvements noted above. When the bonds are paid, the TIF district is dissolved, and the property taxes based on the full assessed value of the district once again go to the various local taxing bodies, including school and park districts. The establishment of the district also is susceptible to veto, both by a 51 percent vote of the property owners, or rejection by the affected taxing jurisdictions.