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updated: 5/9/2011 10:24 PM

Gurnee Dist. 56 superintendent questions Waukegan tax zone

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Gurnee Elementary District 56's superintendent expressed concern at a public hearing Monday night over the number of years Waukegan plans to use a special taxing zone to lure businesses to the city's west side.

Although formal approval hasn't been granted to the proposed tax-increment financing district, Woodland Foods in Gurnee already has started rehabilitating a building it plans to move into just a short hop east to Waukegan.

In these districts, tax revenue generated by a property's increasing value is diverted to a special fund that pays for certain public and private improvements. The proposed zone in Waukegan is near Sunset, Delany and Green Bay roads.

Tax increment financing districts are controversial because government agencies such as schools do not receive the increased property tax money for up to 23 years.

At Monday night's public hearing before the Waukegan city council, District 56 Superintendent John Hutton asked that the taxing zone length be about 15 years instead of 23. He said he understands that Waukegan views the district as a way to spur development.

Parts of Waukegan are within District 56's boundaries. In a letter, Hutton also questioned whether the area designated for the business tax incentives qualifies as blighted.

Woodland Foods Chief Executive Officer David Moore said his company has had a need to consolidate operation because it's been using buildings through five or six leases in Gurnee. The specialty foods distributor is on Swanson Court near Route 41 in Gurnee's east side.

Moore said he was approached last year by Kenosha Area Business Alliance Inc. representatives after they learned of his company's desire for a bigger building. He said incentives from the state of Wisconsin and Kenosha County were being dangled before Waukegan entered the picture.

Waukegan's proposal to place Woodland Foods in the special taxing area has led the company to already spend more than $1.9 million on construction for what will be an "absolute state-of-the-art food plant," Moore said at the public hearing.

At least 140 jobs will move from Gurnee to Waukegan when Woodland Foods' new plant opens. The company plans to have more than 130,000 square feet in Waukegan for distribution of nuts, chiles, salts and other items.

"Woodland Foods is very strong," Moore said. "The project is moving along very well."

In 2002, the company gained Gurnee village board permission to expand its facility on Swanson Court. Along with District 56, the proposed special taxing zone in Waukegan is within the boundaries of Gurnee-based Warren Township High School District 121.

Joseph Pilewski, a Duff & Phelps consultant for Waukegan on the tax-increment financing plan, said the city has 90 days from Monday's public hearing to finalize an agreement with Woodland Foods. He said the city council also must hold a final vote on the tax incentives within 90 days.

Pilewski said Waukegan meets the state's Industrial Jobs Recovery Act in creating the tax incentives for the area. The standards include Waukegan's lack of growth and higher unemployment rate compared to the rest of the suburbs.