As part of a 2004 deal to receive $5.6 million in public money and free land, the developer of a downtown Palatine condominium and commercial building agreed that all businesses there would generate sales tax for the village in exchange for its financial assistance.
Palatine leaders cut that sales-tax requirement from 100 percent of the building to 65 percent in 2006, to help The Providence building boost its commercial occupancy.
Now the building's current owner, Palatine Providence Javin Properties LLC, is asking to drop the percentage even lower.
Charles Haas, whose firm Imperial Asset Management LLC manages the property, said the requirement needs to drop to 25 percent to help land a new tenant. If the village agrees, Haas said, the Illinois Bone and Joint Institute would fill a vacancy at 51 Bothwell St.
Haas said it's been difficult to secure sales-tax producers to satisfy the 65 percent threshold. The Providence needs more leeway to fill the empty spaces, he said.
"We want to be a good partner, a good addition to the village," Haas said. "It's never our motive to just get somebody in there. We really want quality."
Palatine village council members discussed the proposal at their latest meeting and referred the matter back to top administrators for further evaluation and to work with the owner. Palatine's administrators have written that they are against completely eliminating the sales tax requirement.
"While this is ultimately a policy question for the village council, staff would note that the original 100 percent sales-tax requirement was a significant part of the overall (tax increment financing). The village provided $5.6 million in direct TIF assistance, as well as provided all the real estate for the project," a memo to the council reads.
In a TIF district, property taxes paid to local governments are frozen at existing levels, and tax revenues above that in future years are diverted to a fund controlled by the village to pay for redevelopment and infrastructure upgrades.
Mayor Jim Schwantz questioned how much of an effort the owners have put into getting sales tax-producing tenants. Haas responded that much work has gone into trying to fill The Providence's vacant space.
"Over a number of years, obviously we've courted several retail tenants," Haas said. "I've shown the property 25 to 50 times a year to interested clientele. Parking is obviously a concern. We just haven't gotten movement. We've used online avenues. We've obviously had advertisements up in the windows that have generated a lot of interest."
Village documents show the most recently available commercial occupancy level at The Providence was 13,374 of 18,663 square feet of space. Tenants include Gianni's Cafe, Evolve Chiropractic, Christie's Dairy Delights, Salon MMM and Cornerstone Realty.