The Batavia school district will rebate $3.2 million of future property taxes to the Chicago Premium Outlets Mall to help pay for the expansion of the mall.
The school board Tuesday approved an agreement with the city of Aurora, which will rebate another $800,000.
The Aurora City Council Tuesday approved the expansion of the mall. It also agreed to provide up to $24 million overall in financial incentives, through tax rebates and the creation of a new tax-increment financing district, for the expansion.
The mall's owners, Simon Property Group Inc., plan to enlarge the mall by almost half, at an estimated cost of $110 million. Part of the expansion would build on the former Sealmaster factory property on Bilter Road.
The city-school district agreement covers the part of the expansion that lies in the former Aurora TIF District 2.
The property taxes to be rebated will come from increases in the property value that will come about because of the expansion, said Kris Monn, the school district's assistant superintendent for finance.
David Hulseberg, president and chief executive officer of the Seize the Future Development Foundation, said the mall's owners are aiming for it to be the megamall of the Midwest, with 250 stores. "Rosemont (Fashion Outlets of Chicago mall) can't be as big as we can be," he said. Seize the Future is a public-private economic development effort for Aurora.
The deal also sets a minimum equalized assessed valuation for the mall. Even if the actual property value were to drop below that, the district would be able to collect taxes based on the guaranteed value.
The district would rebate taxes for up to 10 years or $3.2 million, whichever is reached first. The district will get to keep 10 percent of the property taxes raised each year.
The agreement does not apply to property taxes collected to repay the school district's debt.
The mall is the district's largest taxpayer, sending it $2.86 million this year, according to its 2013 tax bill on the Kane County treasurer's website.
"We believe that without this additional type of financing this expansion might not take place," Monn said.
The Aurora City Council is expected to vote on the agreement with the school district within a month. The school district will send the rebate money to the city, which will then send it to the property owner.
In a tax-increment financing district, the assessed value of property is frozen for the purpose of distributing tax money to local units of government. But the increase in taxes created by the increase in value of improved or redeveloped properties is funneled back into improvements, such as roads and other infrastructure.