West Dundee to vote on special taxing district for downtown improvements

West Dundee trustees are expected to decide Monday on a funding mechanism for several downtown improvements, which may include the creation of a special taxing district.

Village officials intend to redevelop properties along the Fox River and just south of First and Main streets. Proposed enhancements include stabilizing the riverfront, demolishing existing structures, creating a plaza, improving landscaping and replacing the former ACE Hardware building with additional parking.

Since issuing $2 million in bond proceeds last year for such improvements, the village has been discussing financing options to help fund their annual $137,000 debt repayments. Trustees earlier this year, for example, approved implementing a 1 percent downtown business district sales tax, which is expected to generate $65,000 per year.

Now, West Dundee is also mulling over the establishment of a special service area that would raise property taxes for dozens of downtown parcels - a concept that has been denounced by several affected business owners. If approved, it would extend from Lincoln Avenue south along the river to Oregon Avenue and west to Third Street.

"It feels very unfair that you're burdening small businesses," Lisa Dombrowski, owner of a Washington Street property, told trustees this week, adding she has "no confidence" it will benefit existing businesses. "We are saying we're not getting value from this."

The village first proposed levying an additional 80 cents per $100 in taxable downtown property value, which officials said would generate about $34,000 annually.

But after Dombrowski and other business owners spoke out against the tax hike and suggested other funding mechanisms, Village Manager Joe Cavallaro said, the staff is instead recommending "a three-year phased-in approach (that) would gradually transition the SSA increase onto the properties."

In that case, the village would levy 40 cents per $100 in taxable value the first year of the special service area, which would bring in $17,000, he said. The other $17,000 would come from one-time building permit fees from Oelheld, a new company at Oakview Corporate Park.

In the second year, the levy amount would raise to 60 cents, generating about $25,000, according to village documents, while officials would pull the remaining $8,000 from elsewhere in the budget. The levy would likely be set at the full 80 cents in subsequent years.

For a property with an assessed value of $164,795, the owner would pay $659 the first year, $988 the second and $1,318 each following year.

"There's a substantial compromise in terms of an alternative as it relates to reducing the financial impact on downtown property owners," Cavallaro said.

Trustees also indicated they are not in support of creating a second special service area, which would have funded the village's participation in the Discover Dundee marketing campaign.

Still, Bikini Bottom Bar and Grill owner Randall Errington said he believes higher taxes will lower property values and deter potential investors.

"We want to see you do all these wonderful things," he said. "We want to help you, and no one is listening to us."

The village board will vote Monday on whether to establish the special service area, as well as the phased-in funding strategy, Executive Secretary Kim Tibbetts said. The village must decide the amount levied for the following year by December.