Lake in the Hills officials are offering a carrot to draw new businesses to town.
The village board recently approved an incentive policy to help promote new investment from restaurants and independent small businesses looking to locate in areas where existing buildings require upgrades or remodeling.
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It allows officials to negotiate sales tax sharing so that a new business' interior build out and remodeling expenses could be offset based on how much revenue the intended use generates, said Gino DeVivo, village economic development representative.
"The incentive is open to retrofitting and (new) construction of retail space," DeVivo said. "It is designed to improve the competitive advantage of the village to attract new business investment by promoting reinvestment in existing spaces and new construction."
The goal is to position Lake in the Hills on a more competitive footing with neighboring communities, he added.
The village has a number of commercial corridors -- Algonquin and Pyott roads, Randall Road north of Algonquin Road, areas along Rakow Road north of Lake in the Hills Airport, and sectors along Route 31 -- with existing spaces requiring significant retrofitting.
"The traditional Randall Road corridor is highly competitive," DeVivo said. "That seven-mile stretch has quite a bit of vacant retail space. There's a lot of investment potential and we're positioning ourselves to capture that investment development potential in the future."
Sales tax sharing is not a new concept for the village.
In 2003, officials struck a deal with Costco to build a 136,000-square-foot store along the Randall Road corridor. The targeted site posed many challenges, including steep slopes requiring significant grading work and construction of a large retaining wall.
"We offset a lot of their site-in cost because of the unique topography and engineering issues," DeVivo said.
The village agreed to reimburse Costco 50 percent of the sales tax revenue generated from the store -- a maximum of $1.6 million that could be paid over 12 years. Costco's sales allowed the village to reach that amount in less than five years.
Today, Costco is the village's No. 1 sales tax producer.
Officials are trying to push for similar deals with much smaller businesses.
"It helps promote independent businesses launch," DeVivo said. "We've been reaching out to a number of restaurant entities and independent businesses. It's something that we can offer for the time being to help make these spaces that are existing a little more viable."
DeVivo said officials have simplified the language of the village's economic incentive policy to make it easier to understand and work with.
"We are not putting (businesses) through the hoops with unreasonable requirements and standards," he said. "It is all up for negotiation based on the value that's being put on the table. We're reaching out to anyone who is an entrepreneur or a restaurateur that is interested in opening up a unique eatery or a retail establishment in Lake in the Hills."