8 million quarters to continue playing: Elk Grove gives Stern Pinball incentive to stay in town, expand

Elk Grove Village has awarded a pinball machine manufacturer up to $2 million in tax increment financing funds to expand and relocate its operations a few blocks away from its current location in the village business park.

Under an agreement approved by the village board this week, Stern Pinball will get the funds in installments over at least the next six years as part of its move to a renovated 163,875-square-foot warehouse at 1001 Busse Road.

The deal also calls for Elk Grove to support Stern's application for a Cook County Class 6b property tax break, which would allow the property to be assessed at lower levels over a dozen years.

Company officials said the costs to expand and move from its smaller 110,000-square-foot building at 2001 Lunt Ave. are prohibitive — and they considered leaving Elk Grove completely — so village officials decided to dip into their Busse-Elmhurst TIF district to defray the costs.

“That's exactly what TIF is meant for — to expand our manufacturing and technology base,” Mayor Craig Johnson said after the board's unanimous vote Tuesday night. “We use TIF money to reinvest. We're using it to get the biggest pinball maker in the world. It's a tourist destination. Why wouldn't we want to bring that to Elk Grove?”

The 917-acre business park TIF district is Elk Grove's largest and had generated the most incremental real estate taxes of all five village TIF districts that were in place as of last May. The district's revenues topped $27 million for the year, and it ended the period with $11.5 million in the bank, an annual fiscal report showed.

When the special taxing mechanism was set up in 2014, taxes generated above a set level began to be funneled into a special fund for development purposes, and away from other taxing bodies like schools.

Johnson touted the TIF deal as an overall benefit for the sprawling business park, since Stern's move will prompt upgrades to a building that's at least a decade old, while a data center that shares Stern's current building will have room to expand. Stern's new facility also will have a showroom and retail store.

Stern — the oldest and largest producer of pinball machines in the world — moved to Elk Grove from Melrose Park in 2015. Chairman and CEO Gary Stern touted the move in one of Elk Grove's first Makers Wanted TV commercials. In that ad, Stern said the company was lured by then-Wisconsin Gov. Scott Walker and officials in Indiana and Tennessee before deciding “the best place for us was here in Elk Grove Village.”

The new Stern building, for which it is signing a 10-year lease with Prologis, is being vacated by transportation and logistics firm Kuehne + Nagel, which is moving to a new building along Devon Avenue in Bensenville.

Under the 18-page TIF agreement, Elk Grove will pay Stern $1.25 million when the village issues a certificate of occupancy, $400,000 after the first five years, and $100,000 a year later. If Stern extends its lease five more years, or expands its footprint by at least 50,000 square feet, it'll get $250,000 more. But if it closes up shop or reduces its operations, the village has the right to recover funds pro rata.

Stern's budget — including building upgrades, prep work, move-in costs, and equipment and furniture — is $6.5 million, and its lease is $26 million, according to an exhibit of the agreement. The lease is set to begin in October 2023.