Incentives, economic growth fuel Vernon Hills sales tax boost

In terms of space for shops and restaurants, the Vernon Hills Town Center is a relative blip on Vernon Hills' vast retail landscape. But what's happening there may be indicative of a bigger trend that has village officials more optimistic than they've been in years.

Sales tax numbers for the village are on par with those seen in better days. And though the corner has not been completely turned, the village has made up a considerable amount of ground.

“We're doing the best we've done since 2008,” said Finance Director Larry Nakrin. “We had dropped $1.2 million in sales tax. It appears we've picked up about $1 million of that back.”

For the fiscal year ending April 30, the village received nearly $10.3 million in sales tax compared with about $10.4 million for the same period four years ago. Vernon Hills does not levy a municipal property tax and sales tax accounts for about half its revenues.

“I think things are generally improving,” said Village Manager Mike Allison. He added that sales figures are closer to estimates more consistently than has been the case.

Economic activity has been evident throughout the community.

“A big part of it are the sales tax agreements we've done and adding the stores,” to fill vacant big boxes, he added.

With recent arrivals including Real Urban Barbecue, for example, the retail center and focal point at the village's southern entry at routes 45 and 21 is fully leased.

“Our biggest problem at the Town Center is we don't have enough parking,” said Margie Georgopulos, who is in charge of leasing. “We're so busy.”

To address the problem, the Taxman Corporation received permission from the village to convert potential buildable space into a temporary parking lot for employees and valet parking.

Parking also has been an issue for Mariano's Fresh Market, which opened just over a year ago on Milwaukee Avenue at Gregg's Parkway on the north end of town. Because of its popularity, the store late last year built another parking lot and has plans to acquire two outlots for even more parking.

“I think it's an improving economy, albeit slow,” Assistant Village Manager John Kalmar said of rise in sales tax revenues. “I think Mariano's has made a tremendous impact on our community. It has filled a grocery need or void people underestimated or didn't realize was here.”

Kalmar said Vernon Hills has fared better than many communities because it is a regional shopping draw. Although there has been general growth, the long-awaited recharge was sparked by a bundle in village incentives to developers.

“It's fair to say the new stores we've brought in have made a difference,” Nakrin said.

Beginning in 2009, the village made six sales tax rebate deals totaling $4.2 million. The packages ranged in amount and length. With the exception of Mariano's, which was new construction, they have been used to renovate gaping big box vacancies with more popular uses.

Besides Mariano's, newcomers include: Steinhafels Furniture; HH Gregg Electronics; Gordman's department store; TigerDirect; and Chase Properties, which renovated and brought Dick's Sporting Goods as an anchor to the Hawthorn Hills Square strip center.

The village has an even bigger stake in the Town Center development, of which Taxman's 37,000 square feet of retail space and 85 rental units are a part. The village designated the area as a special taxing district several years ago.

“We invested almost $11 million there through the (tax incremental financing) district but it spurred $50 (million) to $60 million in investment,” according to Kalmar.

He noted that ongoing plans, including a proposed $40 million to $50 million expansion and renovation at Westfield Hawthorn mall, should sustain the village in the long run.

“We are cautiously optimistic that the trend line is going up,” he said.

Westfield also has requested an incentive from the village but no decisions have been made.

The drop in sales tax in recent years prompted cost cutting measures by the village, including retirement incentives and not replacing employees who left, and changed the way it operates.

“This has had a profound impact on the psychology and approach we've taken to government,” Allison said. That means that while the budget belt may loosen some with the increase in revenue, there won't be a landslide of spending.

“We're still being cautious,” he said.