Vernon Hills poised to approve rare sales tax rebate for Fashion Square

Vernon Hills trustees have agreed to give a rare incentive to a shopping center owner to help stimulate the village's troubled sales tax base.

Trustees on Tuesday informally agreed to a deal that would rebate about $1.1 million in sales tax to Chase Properties, owner of the Hawthorn Hills Fashion Square at routes 60 and 21.

Chase would use the money to fill the space formerly occupied by Wickes Furniture with a Dick's Sporting Goods store. The hope is to generate customer traffic and stabilize the center, which is more than half empty.

Village staff unanimously were directed by the board to prepare the ordinance to make the deal official. The only other similar agreement is with tech giant CDW Computer Centers Inc.

A small expansion of the Factory Card Outlet store also is planned for the Chase property, and an outlot will be created to house a new business.

Various aesthetic improvements for the center, including new landscaping, walkways and lighting, will be included in the agreement.

Chase officials told the village there likely would be more vacancies if a large tenant wasn't found. Dick's, which has signed a letter of intent, would occupy 52,000 square feet, about a fourth of the center, and would open in June.

Though there was some debate about the length of the agreement and size of early payments, trustees had no qualms about using the tactic to stir business.

The unspoken strategy was that a small slice of something would be better than a big slice of nothing.

"This is a drop in the bucket because they're planning on spending $6 million on improvements and build outs," said Mayor Roger Byrne.

The agreement would be for 20 years, with Chase getting 70 percent of whatever new sales taxes are generated for the first five years. Should sales outpace expectations, the agreement would end when the rebate total is met.

The pact would not apply to businesses that move to the center from other locations in town, a concern because Dick's is the parent company of Golf Galaxy, which is located in another center nearby.

"I don't want to see us spend money to add something and end up with a net gain of zero," said Trustee Thom Koch.

Trustees also insisted they have final say if a financial institution is proposed for the outlot, as banks don't generate sales tax.

"We have enough financial service entities in this town already," said Trustee Jim Schultz.

Schultz argued for a shorter-term agreement that would give Chase more money faster.

"I'd rather be more radical at this juncture than have this go on," he said.

Because of its vast commercial base, Vernon Hills does not have a local property tax. Sales tax from businesses, including Westfield Hawthorn mall, always are among the top in Lake County, and the village relies heavily on them to pay for day-to-day expenses.

The holiday outlook is grim and already-scaled-back sales tax projections for the current budget year recently were dropped by another $384,000.

The village also has been trimming expenses, including about $1 million on Tuesday. A more extensive look at the big picture, including the possibility of layoffs, is scheduled for Oct. 31.

Village leaders hope revenues, notably sales tax, will pick up, but without any guarantee, they essentially crafted their own stimulus package.

The sales tax rebate to Chase would be the second the village has ever offered. In 1996, it agreed to give back 35 percent of sales tax to CDW and upped the amount to 50 percent three years later.

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