Elk Grove tightens rules on providing tax incentives

Elk Grove Village is tightening its rules on how many business property tax breaks it will support.

Mayor Craig Johnson said for years, Elk Grove has been known as the “king of 6bs” — that is, the Cook County Class 6b tax incentive, which allows industrial property that is being improved to be assessed at lower levels over the course of 12 years.

With the largest contiguous business park in the nation, Elk Grove currently has 162 such businesses receiving the tax break, which many businesses argue is necessary to be able to afford the cost of building improvements.

But Johnson said some businesses don't make the improvements they promise to do, and as a result, village officials will now be more judicious in how many 6b incentives they support.

“6bs serve a good purpose — a very good purpose,” Johnson said. “However to make 6bs, effective, we have to make sure the owners follow through on the promises they make not only to the community, but also to the county.”

A municipal resolution supporting Class 6b status is required by Cook County, which ultimately grants the property tax break. After a business receives 6b status, property is assessed at 10 percent of its market value for 10 years, at 15 percent in the 11th year, and 20 percent in the 12th year.

Normally, property would be assessed at 25 percent of market value.

Village officials who meet with businesses seeking 6b status say they will go through an updated “eligibility checklist” with each applicant that includes questions on how much they plan to spend on improvements and how many jobs might be created as a result of the business expansion.

“We're going to be very specific with what we're going to ask each of these businesses,” Johnson said. “We're going to go through the checklist item by item by item.”

Johnson said business applicants will be required to put down on paper what improvements they are planning to do, and then they have up to a year to follow through on those commitments. If they don't, the village won't support the business' 6b status.

The village board would take two votes: the first, a “placeholder” signifying that the board intends to support the business' Class 6b application, and the second, which is a formal vote to approve the application once improvements are made.

In the past, Johnson said the village was “too lax” and never followed up to see if improvements were completed. In one instance, he said a business owner promising to do facade improvements simply put on a “fresh coat of paint.”

“We just gave away willy nilly,” Johnson said. “They basically gave us false pretense for getting the 6b.”

Now, he says, the village will “hold their feet to the fire” to ensure improvements are made.

Johnson previously said the village board wouldn't be as receptive to supporting a business' 6b status if it is within the boundaries of the village's newly-created tax increment financing district, located on the east side of the business park primarily throughout the Busse Road and Elmhurst Road corridors. That's because money generated from the TIF could be used to fund both public and private improvements.

Applications for five businesses seeking 6b status will be considered by the village board April 8.