Another taxing district for East Dundee, this time in Gateway area

East Dundee trustees have added another site to the list of special taxing areas in the village.

The village board approved creation of a business development district to jump start development at the corner of Route 25 and 68.

Trustees voted 6-0 in favor of establishing the taxing district for the property known as Dundee Gateway. Trustee Jeff Lynam was absent.

The site includes about 7½ acres on the southeast corner of the intersection, as well as about 1½ acres on the southwest corner. A Thornton's gas station is under construction on part of the southeast parcel.

Under the designation, an additional half-percent sales tax is applied to all purchases in the district, bringing the sales tax rate there to 9 percent. Revenue generated by the additional tax is used to boost the business development district.

"The primary purpose of the Dundee Gateway business development district is to allow incentives to potential businesses and for future improvements to the intersection and adjoining roadways," Village Administrator Frank Koehler said.

The increased tax rate is effective Jan. 1, 2010. The sales tax rate in areas outside of a business development district remains at 81/2 percent.

The Illinois Department of Transportation is requiring Oak Brook-based developer Dmyterko and Wright, the company that owns the property and is developing the Thornton's gas station, to complete about $900,000 in road improvements, including adding curbs, gutters and turn lanes, Koehler said.

The incentives will enable the developer to focus on building up the remaining 71/2 acres, Koehler said.

Trustee Michael Ruffulo said the taxing district is needed because the economic downturn is hampering village efforts.

"I supported it because this village needs some sort of commercial growth," Ruffulo said.

The village earlier this year approved a business development district for Dundee Crossings, just south of Dundee Gateway at Routes 25 and 72.

The business development district is similar to a tax increment financing district (TIF), except revenue is sales tax-driven. In a TIF district, property taxes are frozen for up to 23 years and any increased revenue from rising property values is used to improve the development.

There are now three TIF districts and two business development districts in East Dundee. Parts of the Prairie Lakes industrial area, downtown and Dundee Crossings are TIF districts, with a fourth district in the works, Koehler said.