East Dundee alters taxing district in light of new TIF proposal

East Dundee is altering a special taxing area to make way for a new tax increment financing district that officials hope will spur the redevelopment of two underused properties.

The village last month began the process of creating the new TIF district in response to broker Joe Billitteri's request for financial incentives to repurpose a vacant office building at 201 Penny Ave. into eight two-bedroom apartments. The proposed TIF district would cover that property and a strip mall across the street at 210 Penny Ave.

In a TIF district, the property taxes that go to local governments are frozen at a certain level, which is set on a base assessed property value, for 23 years. Any taxes generated above that level can go back into redevelopment.

However, the strip mall is already included in East Dundee's Route 68 TIF district established in 2011. Since then, village records show, the 210 Penny Ave. property has not been redeveloped, and its equalized assessed valuation has dropped from $333,300 to $159,984.

Trustees voted 4-1 Monday to remove the strip mall from the aging TIF in order to include it in the new taxing district. It's a smart move for a property declining in value, Village Attorney Kathleen Field Orr said, as it would reset the clock and the property's base assessed value.

"This allows this board to look at both sides of the street as one development (area), which we believe would be better coordinated for overall future development plans," Orr said.

In a separate 4-1 vote, the village board approved an inducement resolution for the 201 Penny Ave. project. Though not yet promising Billitteri any specific incentives, Village President Lael Miller said, the measure ensures redevelopment costs would be eligible for future tax reimbursement once the TIF district is created.

Trustee Alan Hall cast the lone "no" vote on both measures.

Plans for the 201 Penny Ave. project include gutting and reconfiguring the building, upgrading its exterior and improving landscaping, Billitteri told trustees earlier. Each apartment would be about 930 square feet, he said, and carports might also be added.

With developers expecting to invest more than $1 million into the property, a tentative agreement between the village and Billitteri calls for a potential TIF reimbursement of roughly $250,000, Deputy Village Administrator Jennifer Johnsen said in a memo. Those funds, to be distributed on a sliding scale over the life of the TIF, would amount to about 60 percent of the anticipated tax increment at that site.

East Dundee must complete several other steps, including a public hearing, before trustees can vote on establishing the new TIF district.