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Hoffman Estates might increase rebate for Duluth Trading Co.

Hoffman Estates trustees Monday recommended approval of a request to increase the level of a sales tax rebate to help a developer meet rising costs in its planned construction of a Duluth Trading Co. store in the village's Prairie Stone Business Park.

Baum Revision LLC made the request due to stricter development standards set by the Metropolitan Water Reclamation District and because an improving economy is causing construction contractors to raise their bids.

While the village board back in April approved a sales tax rebate of $140,000 over six years, the revised request is for $225,000 over 10 years.

The village board will vote on final approval of the project — including the revised tax incentive — at 7 p.m. next Monday, Oct. 19.

Baum officials made the original request because the bank that owns the foreclosed land is requiring the purchase of all 6.7 acres. At least one other business can be built on the site, and the developer is taking on the added financial burden of marketing it to someone else.

Village officials said they accepted Baum's explanation that the project isn't financially feasible without the sales tax rebate.

For the agreement to stay valid, Duluth Trading Co. must be open by Dec. 1, 2016.

For the first, partial year of the agreement, the developer would recoup 100 percent of the village sales taxes.

As each of the next 10 years passes, the developer would recapture a smaller and smaller percentage of the village sales tax, currently estimated at $140,000 per year.

Hoffman Estates Director of Economic Development Kevin Kramer said that over the course of the 10 years, the village is expected to have collected $5 for every $1 rebated to the developer.

The agreement will expire either when the developer receives the full $225,000 or after 10 years have elapsed.

Though the length of the agreement might be increased by four years, estimates show Baum LLC could receive its full share of the sales tax rebate in only about 6½ years, Kramer said.

Village Trustee Gayle Vandenbergh abstained from the otherwise unanimous recommendation because she works for W-T Engineering, the company doing the site plan.

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