City of Crystal Lake, IL Enhanced Sales Tax Incentive Program

[Amended 9-7-2010 by Ord. No. 6603; 1-15-2013 by Ord. No. 6893; 3-4-2014 by Ord. No. 7007]

There is established within the City an Enhanced Sales Tax Incentive Program (ESTIP).

The purpose of the Enhanced Sales Tax Incentive Program created by this article is to encourage the recruitment, retention, establishment and/or substantial expansion of sales tax generating businesses within the City, thereby stimulating the economy of and within the City, providing employment for residents of the City and others, further expanding the goods and services available for purchase and consumption by businesses and residents of the City, and further increasing the sales taxes collected by the City, which increased sales tax collections will enable the City to provide expanded and improved municipal services to and for the benefit of the residents of the City, while at the same time providing public or public-related improvements at no cost, or at deferred cost, to the City and its taxpayers and residents.

§ 228-3 Definitions.

As used in this article and all sections thereof, the following phrases shall have the following meanings:

NEW RETAILERS

New sales tax generating businesses, other than existing auto dealerships and new auto dealerships, which have no physical facility within the City limits of Crystal Lake for the display and sale of merchandise as of the date of the adoption of this article and which commence the sale and display of merchandise from a physical location within the City limits of the City of Crystal lake following the adoption of this article.

BASE AMOUNT

An amount to be negotiated by the City Manager or the City Manager's designee, and agreed upon by the applicant; provided, however, the City Manager shall use as a basis for negotiation an amount which is not less than the annual average of the sales tax sales receipts attributed to applicant's business operated upon the subject property over the three previous calendar years, unless such lesser base amount is approved by the City Council. In the case of a newly established business, the base amount shall be determined by the City Manager, based upon the City Manager's review of the newly established business's business plan or other documentation reasonably required by the City Manager to determine the amount of sales taxes which would likely be generated from the new business without the participation by applicant in the ESTIP.

ENHANCED SALES TAX

The amount of sales tax (as hereinafter defined) collected by the City in a calendar year over and above a base amount as defined herein.

EXISTING AUTO DEALERSHIPS

New titled motor vehicle, recreational vehicle, and watercraft franchises which have no physical facility within the City limits of Crystal Lake for the display and sale of such vehicles or watercraft as of the date of the adoption of this article. Dealership ownership changes that occur without adding new franchises are considered existing auto dealerships.

NEW AUTO DEALERSHIPS

New titled motor vehicle, recreational vehicle, and watercraft franchises which have no physical facility within the City limits of Crystal Lake for the display and sale of such vehicles or watercraft as of the date of the adoption of this article and which commence the sale and display of such vehicles or watercraft from a physical location within the City limits of Crystal Lake after the adoption of this article.

OWNER OR APPLICANT

The record owner or potential record owner of real property upon which one or more businesses is operated.

LOCAL SALES TAX

The 1% municipal sales tax charged for retail sales within the City.

§ 228-4 Basis for participation.

Participation in ESTIP shall be based upon approval by the City Council of the City of Crystal Lake, exercising its legislative discretion in good faith. ESTIP is intended to provide an economic incentive to eligible existing auto dealerships, new auto dealerships and new retailers which intend to engage in projects for improvements, as defined by this article and which meet the minimum project costs and annual minimum taxable sales thresholds listed in Table 228-4(A) below, and the criteria for approval set for in § 228-9.

Table 228-4(A)
	Minimum Taxable Sales	Minimum Project Costs	Maximum City Cost Participation in a Project
Existing auto dealerships	$5,000,000	$1,000,000	50% of total eligible project costs, not to exceed $1,000,000
New auto dealerships	$5,000,000	$250,000	50% of total eligible project costs, up to an amount to be negotiated with the City
New retailers	$3,000,000	$500,000

In order to be considered for inclusion in the ESTIP, prior to commencing a development project an existing auto dealership, new auto dealership or new retailer must submit an application to the City on forms to be provided by the City, which application must contain documentation deemed sufficient by the City Manager, establishing the business's likelihood to generate taxable retail sales in excess of the minimum taxable sales thresholds listed in Table 228-4(A) during the first year of operation of the business following completion of the improvements. The application shall contain accurate, written cost estimates of eligible improvement expenses provided by qualified contractors, subcontractors and/or vendors, all of which are to be verified by the City to ensure completeness.

§ 228-5 Approval of agreement; conditions; effect.

Approval by the City Council of an agreement implementing this ESTIP shall entitle the successful applicant to share in such percentage of enhanced sales taxes derived from applicant's property as may be determined by the City Council and incorporated into such agreement; provided, however, that applicant shall use said amounts only for improvements such as those specified in § 228-6 and which are expressly approved by the City Council at the time of consideration of the application. The time period in which said enhanced sales taxes may be shared shall not commence until all public or public-related improvements are completed and meet City standards, and shall be limited by the City Council, in its discretion, to the earlier to occur of 1) the date as may be specified by the City Council in such agreement; or 2) the date on which the maximum payments allowed by such agreement have been paid by the City to the applicant. The applicant must file a complete ESTIP application prior to commencing improvements. The City cannot retroactively approve an ESTIP agreement if the improvements have already begun prior to the City receiving a complete application.

§ 228-6 Permitted uses of funds.

The uses to which any shared enhanced sales taxes may be put by an applicant shall be strictly limited to those improvements installed or constructed by the applicant.

As used in this chapter, "improvements" shall include, but is not limited to, public improvements, including, but not limited to, streets, sidewalks, curbs, gutters, pedestrian malls, street lights, drainage facilities, public utilities, landscaping, decorative structures, redevelopment of existing properties, occupancy of existing vacant space, public art, fountains, identification signs, traffic safety devices, bicycle paths, off-street parking facilities, benches, restrooms, information booths, public meeting facilities, principal buildings, building additions, and all necessary, incidental, building facades, architectural enhancements, and appurtenant structures and improvements, together with the relocation and improvement of existing utility lines, and any other improvements of a similar nature which are specifically approved by the City Council.

Nothing contained herein shall limit the City Council from appropriating additional capital improvement funds for capital improvements directly or indirectly affecting the property in question as a part of the City's regular appropriation, capital improvement, or budget process.

§ 228-7 Incremental payments.

The amount of the enhanced sales taxes relative to any party participating in the ESTIP shall be determined by the City annually. If in any calendar year sales taxes generated by the applicant's business operated upon applicant's property do not at least equal the base amount so as to create enhanced sales taxes for such calendar year, then no funds shall be shared with the applicant for such calendar year, and no funds shall be shared until the deficit for such calendar year and any other cumulative deficit from prior calendar years have been met.

§ 228-8 Existing tax revenue sources unaffected.

It is an overriding consideration and determination of the City Council that existing sources of City sales tax revenues shall not be used, impaired, or otherwise affected by this Enhanced Sales Tax Incentive Program. Therefore, the City Council conclusively determines that only enhanced sales taxes generated by the properties described in an application, and a subsequent agreement, shall be subject to division under this article.

It shall be the affirmative duty of the Finance Director of the City of Crystal Lake to collect and escrow such enhanced sales taxes payable to the owner in a separate account apart from the sales taxes generated by, and collected from, any other sales tax generating sources within the City and to provide an accounting system which accomplishes the overriding purpose of this section. Interest earnings on such account shall accrue to the City. Such funds shall not be considered City funds for purposes of any ordinance or resolution allocating sales tax monies from particular sources to particular purposes but shall be applied exclusively to this program.

The City Council of the City of Crystal Lake conclusively states that this article would not be adopted or implemented but for the provisions of this section.

§ 228-9 Criteria for approval.

Following the comprehensive staff review of the required application documents, City staff shall present the complete application and draft of the agreement required in § 228-10 the City Council for its consideration. Approval of an application for inclusion in this ESTIP shall be given by motion adopted by a majority of the City Council, at a public meeting held as a portion of a regularly scheduled City Council meeting. In addition to the threshold standards set forth in § 228-4, the City Council shall also consider the following factors in determining whether to approve the application:

The amount of enhanced sales taxes which are reasonably to be anticipated to be derived by the City through the expanded or new retail sales tax generating business;

The public benefits which are provided by the applicant through public works, improvements, additional employment for City residents, etc.;

The quality of the proposed development;

Whether the proposal utilizes an existing building(s);

Whether the proposal represents redevelopment to an area or building in the City;

Whether the proposal represents job diversity in industry sectors and is part of a growing industry;

The proposal's contribution to the diversity of retail within the City;

Whether the proposal brings a value-added result to the City or a development within the City (for example, by moving the company's corporate headquarters to the City);

The amount of the business assistance as a percentage of new revenue anticipated to be created by the proposal (for example, by relocation of the company to Crystal Lake);

The amount of expenditures which may be deferred by the City based upon improvements to be completed by the applicant at the applicant's expense;

The conformance of the applicant's property or project with the Comprehensive Plan, zoning ordinances and building codes of the City; and

The agreement required by § 228-10 having been reached, which agreement shall contain and conform to all requirements of § 228-10.

§ 228-10 Agreement with City required; contents.

Each application for approval submitted to the City Council shall be subject to approval by the City Council solely on its own merits. Approval of an application shall require that an agreement be executed by the owner and the City, which agreement shall, at a minimum, contain:

A list of those public or public-related improvements which justify the applicant's approval, and the amount which shall be spent on such improvements;

The maximum amount of enhanced sales taxes or fees to be shared, and the maximum time during which the agreement shall continue, it being expressly understood that any such agreement shall expire and be of no further force and effect upon the occurrence of the earlier to be reached of the maximum time of the agreement (whether or not the maximum amount to be shared has been reached) or the maximum amount to be shared (whether or not the maximum time set forth has expired);

A statement that the agreement is a personal agreement which does not run with the land;

A statement that the agreement shall never constitute a debt or obligation of the City within any constitutional or statutory provision;

The base amount which is agreed upon by incremental period, and the fact that if, in any incremental period as specified, sales taxes received from the property do not at least equal said amount, there shall be no sharing of enhanced sales tax funds for said incremental period, and that any deficit for any such period shall be carried over to succeeding periods until the difference between the base amount and the amount of sales tax actually paid is recovered by the City;

A provision that any enhanced sales taxes subject to sharing shall be escrowed in the event there is a legal challenge to the ESTIP or the approval of any application therefor;

An affirmative statement that the obligations, benefits and provisions of the agreement may not be assigned in whole or in any part without the expressed authorization of the City Council, and further that no third party shall be entitled to rely upon or enforce any provision hereof;

That the agreement shall be subject to the annual appropriation of sufficient funds for payments as provided in this article;

Any other provisions agreed upon by the parties and approved by the City Council.

§ 228-11 Findings.

The City Council has enacted this article as a joint benefit to the public at large and to private owners for the purposes of:

(1)

Providing the City with increased sales tax revenues generated upon and by properties improved as a result of this Program;

(2)

Encouraging the construction of public improvements by private owners without debt obligations being incurred by the City; and

(3)

Allowing applicants an opportunity to improve properties which generate sales activities, which improvements make those properties more competitive in the marketplace and further provide to applicants additional contingent sources of revenues for upgrading said properties.

The City Council specifically finds and determines that creation of this ESTIP is consistent with the City's powers as a Home Rule Municipal Corporation, and that exercise of those powers in this article promotes the public health, safety and general welfare. Notwithstanding any provision hereof, the City shall never be liable or responsible for any debt or obligation of any participant in the ESTIP.