Oswego is looking at placing a referendum question on the June ballot for a new real estate transfer fee as a way to generate revenue to offset future water rate increases due to switching to Lake Michigan water.
Village trustees recently discussed adding a fee on the closing of new homes as a way to provide funding for the costs of Oswego bringing in Lake Michigan drinking water through a connection with the DuPage Water Commission.
Oswego, Yorkville and Montgomery in December decided to go with Lake Michigan water via the commission after years of studies and analysis.
Village trustees as a committee of the whole Tuesday will follow-up with questions about the proposed fee, specifically about refunds or exemptions when existing residents sell a home and purchase another residence within the village.
The village would need to start the referendum process by Tuesday to place the question on the June 28 ballot, village officials said.
Refunds or exemptions for residents who own a residence and move to another house in town are included in similar ordinances at most of the municipalities that staff reviewed, according to a village staff report.
“Exact wording of the refund or exemption will be finalized with the writing of the ordinance to be considered April 5. For now, staff would need to get direction on what the Village Board desires to allow for refunds or exemption transactions so that a draft ordinance can be available before a public hearing is held,” Oswego Finance Director Mark Horton said in his report to trustees.
Staff prefers a tax exemption rather than a rebate for current residents who own a property, sell that property and purchase a replacement property in town, Horton said.
Municipalities that have implemented a real estate transfer tax require an exempt stamp to be recorded on a deed and charge a $25 to $50 fee to cover the administrative burden for reviewing all of the required documentation and approving a tax exemption, Horton said.
Oswego has to publish a notice in order to have an April 5 public hearing on the proposed fee.
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“The Village Board is required to explain the reasons for the tax and accept testimony from the public,” Horton said of the proposed hearing.
Linda Girardi is a freelance reporter for The Beacon-News.