Strong Economic Performance Reflected in Village Reports, Budget

Strong Economic Performance Reflected in Village Reports, Budget

Northbrook continues its steady recovery from the pandemic, as reflected in recent Village reports on economic indicators and revenue. Those positive trends contribute to a budget for the coming year with no increase in the tax levy, above-minimum contributions to pension funds, and increased investment in Village facilities, staffing, and economic development strategies.

According to a summary of economic indicators from Northbrook Department of Development and Planning Services, 2021 was a period of growth and recovery across most sectors. Construction permits reflected an increase in investment of $10.3M compared to 2020, with the greatest gains in non-residential and home improvement permits. Major townhome projects by The Jacobs Companies and M/I Homes are nearing the halfway point of their completion, and new proposals are under review for large developments at the former Green Acres and Maurice Sporting Goods sites along with Pointe Drive and Covenant Village. On the residential rental side, multifamily vacancies have fallen to only 1.6 percent compared to 7.5 percent in surrounding communities.

For non-residential development, retail space vacancy rates now hover around 5.7 percent. Asking prices for retail rent in 2021 climbed back to over $18/square foot, after a sharp drop in 2020. Office vacancy rates have come down slightly but remain around 15 percent, with the largest spaces in the Skokie Boulevard corridor. Industrial vacancies are still low at 4 percent, and will be further reduced by the proposed redevelopment of the 205K square foot space at 4000 Commercial Blvd.

In a report on the third quarter of the Village’s current fiscal year, Village staff noted that the revenues are estimated to be 16.12% higher than budgeted, and expenditures 3.04% lower.  Federal aid of approximately $4.5M under the American Rescue Plan Act (ARPA) was partially received in the current fiscal year and the rest budgeted to be received in the next fiscal year, offsetting lost previous revenue to fund government services expenses. Sales taxes continue to provide a significant boost, with estimates as of the third quarter exceeding the FY22 budget by around $2.835M. Sales taxes have exceeded budget every month since April 2021.

In presenting the draft FY 22/23 budget to the Trustees’ Administration and Finance Committee, staff laid out six core elements:

  • No tax increase
  • Initiatives toward Climate Action Plan goals
  • Establishment of Facility Capital Projects Fund for projects including renovation or replacements of Fire Station 11, the Police Station and the Public Works Fleet Maintenance Garage
  • Support for special events and community organizations
  • Investment in core services, including IT and economic development consultants
  • Retaining and attracting staff talent in a competitive job market

Revenues are expected to be only slightly higher in the coming year, with modest growth in sales tax and income tax. Expenses are budgeted to increase by about 9 percent, but the budget still forecasts a surplus in the General Fund and fund balance over the 40 percent reserve policy.

Following the Administration & Finance Committee review, Trustee Robert Israel commended staff for their work during the full Board meeting on March 8. “The Village Manager and staff have come up with a budget that we believe represents the best interests of the Village,” said Israel. He noted the anticipated revenue increases from sales tax proceeds and the one-time ARPA income. “It includes increased pension contributions, keeps our commitments for the Climate Action Plan, provides some staff modifications to address additional community needs, supports efforts for organizational operational assessments and the recommendations of the CIP, and maintains a flat tax levy. In summary, it was the Admin and Finance recommendation to move forward to the full Board with this budget as presented.” The draft budget is expected to be presented at the Board of Trustees meeting on April 12.