Development proposed for downtown East Dundee eligible for tax reimbursement

East Dundee may offer financial assistance to investors of another mixed-use development proposed for downtown.

Developers intend to build a new building at 306 and 308 N. River St., the empty lot between Aliano's Ristorante and Piece-A-Cake Bakery. The development is expected to contain retail space on the first floor and apartments on the top floors.

During a special meeting Monday, the village board approved an inducement resolution for the project. Though not yet promising village funds to the development, the measure ensures site acquisition and various project costs are eligible for future tax reimbursement, Village Administrator Bob Skurla said.

"This is the first step," Village President Lael Miller said. "It doesn't mean we've agreed to anything."

The site of the proposed development has been vacant for decades, but was always intended to be rebuilt, Skurla said.

Frank Tomasello, a developer of the project, also owns the 310 N. River St. building that houses Aliano's. Some retail space planned for the new building may be used for the expansion of the Italian restaurant, Skurla said, which is already having trouble accommodating large dine-in crowds.

"(Investors) are on a fast track of wanting to close on the property very quickly," Skurla said. But if they buy the land before asking for tax increment financing money, he said, they'd be "implying they don't need the TIF money."

In a TIF district, the property tax revenues that go to local governments are frozen at a certain level, which is set on a base assessed property value.

Any taxes generated above that level can go back into redevelopment.

The village may also choose to reimburse investors using business development taxes, or 0.75 percent of incremental sales tax generated within the village's business development district.

After developers bring forth more specific plans for the project, including anticipated costs and a contractor's statement, East Dundee will draft a redevelopment agreement for village board consideration. That deal would outline the village's financial commitment, if any, to the project.

"We cannot reimburse them a penny without a formal redevelopment agreement," Skurla said.