Fearing that late property tax collections would slam the budgets of libraries, villages and schools, Cook County Board President Toni Preckwinkle offered local taxing bodies up to $300 million total in interest-free loans in July to get them through the final months of 2022.
Of the roughly 500 local governmental bodies across the suburbs that county officials estimated were eligible, however, only 49 applied, with a total ask of $104 million, according to county data received through an open records request.
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Twenty-one cities, towns and villages applied for relief. So did 13 park districts, seven fire districts, five library districts, and three school districts.
The largest ask, from the village of Dolton, was for $11 million. The smallest, from the Robbins Park District, was for $100,085. Taxing jurisdictions in the city of Chicago were not eligible.
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Preckwinkle announced the loan program as a way to help taxing districts bridge a months-long delay in receiving property tax revenues. Bills that are typically due by August 1 have still not been sent out, thanks to a spat between Cook County Assessor Fritz Kaegi’s office and the county’s Board of Review, which hears appeals to property tax assessments.
While Preckwinkle has pledged bills will go out before the end of the year so that individuals would still be able to “take full advantage of the federal, state and local tax deduction” on their 2022 federal income taxes, districts that depend on that revenue for operations were presented with a cash flow problem. The county said it was willing to lend as much as $500 million in total to taxing districts, interest-free, to help.
To qualify, districts had to have less than 120 days cash on hand and a bond rating that’s lower than Cook County’s (A2 from Moody’s, A+ from S&P, and AA- from Fitch).
Not all of the 49 who applied met the eligibility criteria of the program, a county spokesman said, and some applications are still under review. So far, six applicants have been sent funds.
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Ted Nelson, a spokesman for the county’s Bureau of Finance, chalked up the low participation to boosted revenues, in part.
“Based on our outreach efforts, the combination of federal relief money out there, bigger than expected (personal property replacement tax) distributions and sales tax revenue increases caused by inflation, all contributed to better than expected cash on hand,” he said in an email. “Furthermore, many local taxing jurisdictions are quite comfortable with doing their own borrowing.”
Despite the low participation, Nelson said the county considers the program well worth it. “These local taxing districts will be able to continue providing vital services to residents without fear of not having enough cash on hand to pay for it. This breathing room is so important to local governments, and we are glad to (be) able to provide this financial assistance.”
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The vast majority of applicants are in the west, southwest and south suburbs. Some areas had multiple taxing bodies request loans: In Calumet City, for example, Calumet Memorial Park District, its library, School District 157 and the city government itself applied for a total of $13.8 million in loans. In several areas, the village and its park district both applied: in Dolton for a combined $12.2 million, in Bridgeview for a combined $5.6 million, and in Berwyn for a combined $10.7 million.
Kristi DeLaurentiis, the executive director of the South Suburban Mayors and Managers Association, said she’d yet to hear back from taxing districts her organization represents, but told the Tribune she was “a little bit surprised that there were not as many applications as anticipated.”
She commended the county for launching the program and had encouraged mayors and managers to apply, but does not believe low uptake was because local communities don’t need the help. It’s “not because communities are cash rich, especially not in South suburbs” where bedroom communities generate less sales tax revenues and where many towns and villages only collect a portion of what they’re owed in property taxes.
Many communities have kept belts tightened during COVID-19, and “because so many communities have taken such a conservative approach, they may have sufficient funds to see them through” and didn’t qualify, she added.
The county had estimated the loan program would cost $5 million out of pocket. With fewer applicants though, “we anticipate that the borrowing will cost the County less than the $5 million initially reported,” Nelson said. “The ultimate cost to the County will be relatively small but the benefit to places like Dolton or Robbins will be huge.”
The city of Berwyn and the North Berwyn Park District also applied for loans: Berwyn for $10.4 million and the park district for $300,000. The city of Blue Island applied for $2 million and its Library Fund applied for $400,000. Hazelcrest ($6 million), Park Forest ($4 million), Oak Lawn ($3 million) and Lansing ($2.8 million) also applied.
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The maximum loan is intended to cover four months of revenue gap. Those with the least cash on hand — 60 days or fewer — would get the full loan amount. Those with somewhere between 61 and 90 days cash on hand would get 75% of the maximum loan amount, and those with 91-120 days cash on hand would get 50%.
The county partnered with a private lender, PNC Bank, to loan the suburban agencies money so that they don’t have to take on short-term debt with interest.
To pay the loan back, each local taxing jurisdiction would be required to direct the Cook County Treasurer to intercept the first dollars the jurisdiction is set to receive from second installment property tax revenues and turn it over to Cook County.
