Hoffman Estates approves sales-tax break for Ace Hardware
Hoffman Estates officials Monday further helped a long-sought Ace Hardware store survive in a difficult market by adding a village sales-tax break for the business owners to the Cook County property tax incentive that allows their landlord to charge lower rent.
Village Economic Development Director Kevin Kramer said the unanimously approved 10-year agreement creates a gradually decreasing rebate of the sales taxes.
The two incentives together recognize the hardship the owners took on in opening a business with low profit margins in a high-rent area, as well as that the space that became available to them is about a third larger than a typical Ace, Kramer said.
"This was always kind of talked about since we first met with the potential owner-operator and Ace corporate," he added.
The Ace opened in August at 675 W. Golf Road near the border between Hoffman Estates and Schaumburg, after both villages had spent years pursuing a medium-sized hardware store as an alternative to the area's big-box home-improvement stores.
Hoffman Estates' incentive will grant a full rebate of the store's local sales taxes in 2018, anticipated to be approximately $18,000.
The annual rebate will drop to 75 percent in 2019, 50 percent in 2021, 40 percent in 2023, 30 percent in 2024, 25 percent in 2025, and then will expire with the store's current lease at the end of 2027.
After 10 years, it's estimated the village will have earned $168,000 in sales tax from the store after the business has been rebated about $135,000.
Ace co-owner Mike Patel said the incentive is most welcome to a business like his trying to compete in Cook County. While his landlord has received a Class 7C property tax incentive from the county that helps lower his rent, this sales-tax break from the village provides additional assistance to the business itself in paying that rent.
The county incentive reduces property taxes on the site for five years - to roughly 55 percent the normal amount over that period, Kramer said. And it can be extended five more years after the first three.
While Patel said his business still may need an additional break after 10 years, village officials said they could make this initial agreement no longer than the lease itself.
Kramer said the biggest impact of the tax break is at the beginning to help the business recoup its startup costs early.