East Dundee continues fight against Wal-Mart funding
East Dundee officials continued their fight Tuesday to prevent Wal-Mart from receiving more than $4.3 million in special tax funding to build a new store in nearby Carpentersville, arguing to an appellate court panel that a judge erred when he dismissed the case last year.
The new 183,000-square-foot Wal-Mart Supercenter will open June 22 at Route 25 and Lake Marian Road.
Richard Gleason, an attorney for East Dundee, said the village is not trying to stop the store from opening. Rather, East Dundee, which estimates a loss of between $60,000 and $80,000 a month in sales tax revenue after its Wal-Mart closes, is trying to prevent Carpentersville from using special taxing district funds to poach business from its neighbor.
East Dundee attorneys have argued state law prohibits the use of Tax Increment Financing district funds for a project less than 10 miles away; the new Carpentersville store is about three miles from the soon-to-be-shuttered East Dundee site.
Kane County Judge David Akemann last year dismissed East Dundee's lawsuit, saying the village lacked standing to sue.
Gleason said allowing Carpentersville to give TIF funds to Wal-Mart would set a dangerous precedent for towns seeking to broaden their tax bases at the expense of neighbors.
"There is nothing to indicate this is a problem that's going to go away," Gleason argued, adding Akemann based his decision on an outdated case where the two stores were 60 miles apart. "We are trying to make sure Carpentersville doesn't use TIF money to entice businesses away from East Dundee, in this case Wal-Mart."
Appellate justices took the matter under advisement, but Justice Kathryn Zenoff questioned who could sue under the state's TIF act if a neighboring municipality that stands to lose tax revenue cannot.
"Would the statute be advisory with no teeth? What's the remedy?" Zenoff asked.
Wal-Mart attorney John Simon said the world's largest retailer performed a "rigorous market analysis" in plotting its next superstore a decade ago and was not trying to skip from town to town to collect TIF money.
"Wal-Mart operates in an intensely competitive environment and its decisions are driven by market forces," Simon said. "Wal-Mart has had success because it knows its markets."
In a TIF district, property values in a designated area are frozen for up to 23 years. As redevelopment occurs, the tax revenue from the increased property value, or increment, is used to fund infrastructure improvements within the district or defray costs for a developer.