West Dundee considering financing options for downtown redevelopment

To continue advancing West Dundee's downtown plan, village officials are considering two special financing options.

A business district and a special service area are proposed for the village's downtown area, which extends from Lincoln Avenue south along the riverfront to Oregon Street and is bordered on the west by Third Street.

The financing options would impose additional taxes for consumers and property owners that would help pay off debts, fund marketing services and contribute to redevelopment project expenses, Village Manager Joe Cavallaro said.

"Our intent here is to try to improve the downtown, obtain more parking and make more walkable space," Village President Chris Nelson said.

But not all downtown stakeholders are supportive of the idea, said Randall Errington, owner of Bikini Bottom Bar & Grill at 107 W. Main St. He told the village board Monday taxing both property owners and consumers makes the village undesirable. The additional tax burden, he said, would hurt his business.

"You're making your town so uncompetitive, it's unbelievable," he said.

The village sent letters to downtown business owners and is continuing to seek feedback, Nelson said. A public hearing on the business district will be held March 21, and another for the special service area will take place April 18.

"If business owners don't see the value in (taxes) to fund some of the projects down here, then we'll consider looking at other sources," he said.

Last fall, village officials issued $2 million in bond proceeds for various downtown redevelopment projects: Acquisition of properties at First and Main streets, beautification projects, a market study and economic incentives for investors.

The village is contributing some available funds to pay off those bonds but needs other means to meet their annual $137,000 debt repayments, Cavallaro said.

The proposed business district would impose an additional 1 percent sales tax to the downtown area, which would bring the overall sales tax there to 9.5 percent, Community Development Director Tim Scott said.

In a business district, the revenue generated by the additional sales tax can be used for improvements in that area. The estimated $65,000 generated per year as a result of the tax would allow the village to "move forward with the implementation of our downtown plan," Cavallaro said.

With the creation of a special service area, the village would levy an additional 40 cents per $100 in taxable downtown property value, according to village documents. This would generate $70,000 annually, half of which would go toward redevelopment. The other half would go toward participating in the Discover Dundee marketing initiative with East Dundee.

If the proposal is approved, the owner of downtown property with an assessed value of $106,450 would pay $426 more per year in property taxes, according to a letter sent to business owners.

If downtown stakeholders don't support the Discover Dundee program, Cavallaro added, the village could opt out of the second part of the proposal and only levy a 0.2 percent tax for downtown improvements.

"It's imperative that downtown businesses and property owners have an ownership, stake and participation in such a program," he said. "If there's not a support and a belief that the program has merit, then from the village's perspective, I think that speaks volumes in terms of should we or should we not be involved."