The Palatine Village Council approved a "groundbreaking" agreement to provide water to a new retail development in Deer Park Monday in exchange for 20 percent of the sales tax realized.
Village Manager Reid Ottesen said the 25,000 gallons per day would fit easily into Palatine's water allotment.
"This is the first time ever we have collected sales tax outside of our boundaries," said Ottesen.
The agreement is an amendment to one reached between the two villages in 1999 for Palatine to provide water to the Deer Park Center mall on Rand Road. At that time, Deer Park paid $900,000 for a new Palatine water tower and was responsible for the entire cost of extending water to the center, he said.
The property that will share sales tax is south of Deer Park Center on Rand Road, said Ottesen.
"We have a valuable asset," he said. "We might have been trying to attract to Palatine the businesses that they will get there. I proposed the sales tax-sharing, and they thought it was reasonable and fair."
Ottesen said he did not know of other municipalities doing this, although years ago when he worked in Peoria that city shared gambling revenue with a nearby community.
Deer Park officials could not be reached for comment or information on what type of businesses are planned for the property.
Ottesen said Deer Park clients pay three times the price charged residential water users in Palatine.
Ottesen said the property in question was not included in the original water agreement because it was not in Deer Park at the time. Since then it has been annexed.
Palatine is entitled to 8 million gallons of water per day averaged throughout the year, said the village manager. In the winter customers use 4.5 million gallons, and in the summer it is about 8 million.