HomeMy WebLinkAbout96-176 P
Resolution No. 96-176
RESOLUTION
DETERMINING THAT CERTAIN REAL ESTATE LOCATED ALONG
GIFFORD ROAD IS APPROPRIATE FOR CLASS 6B
COOK COUNTY REAL PROPERTY ASSESSMENT CLASSIFICATION
WHEREAS, Bailey Development, L.L.C. is the owner of
certain real estate located within the City of Elgin and
intends to seek Class 6b Cook County Real Property Assessment
Classification; and
WHEREAS, Bailey Development, L.L.C. intends to expand its
existing facility and acquire additional unimproved property
for manufacturing purposes; and
WHEREAS, the City Council has determined that the
Class 6b Cook County Real Property Assessment Classification
for 12 acre portion of Permanent Index Number 06-30-400-005,
legally described on the attached Exhibit "A" (Subject
Property) , is necessary for expansion of its existing
manufacturing facility to occur on the Subject Property; and
WHEREAS, the City Council has determined that the
Class 6b Cook County Real Property Assessment Classification
is necessary for development to occur on the Subject Property.
NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE
CITY OF ELGIN, ILLINOIS, that it hereby finds and determines
that the Subject Property is appropriate for classification 6b
under the Cook County Real Property Assessment Classification
Ordinance.
BE IT FURTHER RESOLVED that it hereby finds and
determines that the Subject Property along Gifford Road,
Elgin, Cook County, Illinois, being a portion of Permanent
Index Number 06-30-400-005 is appropriate for classification
6b under the Cook County Real Property Assessment
Classification Ordinance.
BE IT FURTHER RESOLVED that the City of Elgin supports
and consents to the Bailey Development, L.L.C. application for
classification 6b under the Cook County Real Property
Assessment Classification Ordinance for the Subject Property.
BE IT FURTHER RESOLVED that the City Clerk be and is
hereby authorized and directed to furnish the Office of the
Cook County Assessor with two certified copies of this
resolution.
s/ Kevin Kelly
Kevin Kelly, Mayor
Presented: June 12 , 1996
Adopted: June 12 , 1996
Omnibus Vote: Yeas 6 Nays 0
Attest:
s/ Dolonna Mecum
Dolonna Mecum, City Clerk
•
•
Agenda Item No .
(:(2)
etei
May 7 , 1996
TO: Mayor and Members of the City Council
FROM: Richard B. Helwig, City Manager
SUBJECT: Cook County Class 6b Real Estate Tax
Incentive Bailey Development, L.L.C.
PURPOSE
To provide the Mayor and members of the City Council with
information regarding a request from Bailey Development
L.L.C. for approval from the City for participation in the
Cook County Class 6b Real Estate Tax Incentive Program.
BACKGROUND
In May of 1986 , the Cook County Board of Commissioners ap-
proved an ordinance amending the Real Property Assessment
Classification Ordinance to provide for real estate tax incen-
tives for various types of nonresidential developments . The
amended ordinance provides for three separate incentive class-
es that apply to industrial and commercial developments .
These are: Class 6 , which applies to industrial properties;
Class 7 , which applies to commercial developments, and Class
8, which applies to both commercial and industrial properties
under limited conditions .
Since the adoption of the amended Cook County ordinance, the
City has processed five real estate tax incentive requests
under Class 6b of the ordinance. Among other prerequisites ,
Class 6b requires the local municipality to determine that
development would not occur without the incentive. The City
has not processed real estate tax incentive requests under
any of the other provisions of the amended Cook County ordi-
nance.
' n
Basically, Class 6b is applicable to any manufacturing facili-
ty which is newly developed, substantially rehabilitated,
re-utilized following a prolonged vacancy, or located in a
State of Illinois Certified Enterprise Zone. Class 6b pro-
vides for a reduction of the Cook County real estate tax
assessment factor for industrial properties from thirty-six
percent to sixteen percent for eight years , twenty-three
' Bailey Development, L.L.C.
May 7 , 1996
Page 2
percent for the ninth year, and thirty percent for the
tenth. Thereafter, the assessed valuation is the full thir-
ty-six percent of the fair market value. The State equaliza-
tion most
liz -
tion factor for Cook County continues to apply.
recent State equalization factor for Cook County is 2 . 1135 .
The factor for Kane County is 1 .0588 . Since the equalization
factor in Cook County is approximately two times that of Kane
County, the 6b tax program brings the amount of taxes paid by
the Cook County business on to an equal footing with those
paid by Kane County businesses for a period of eight years .
The City received a request for approval of a 6b tax incen-
tive for 12 . 0 acres located on Gifford Road near Spaulding
Road. In the course of City Council consideration of 6b
requests in the past, a number of questions were raised re-
garding real estate tax revenue for the City and School Dis-
trict U-46 .
Bailey is planning on building a new 46 , 000 square foot facil-
ity on this property to manufacture precast concrete struc-
tures . Construction is to commence this year with the 6b
incentive in place . This facility will provide 30 to 50 jobs
for Elgin. The jobs will be primarily factory jobs but will
also include trucking, maintenance, accounting and administra-
tion.
The property is part of index number 06-30-400-005 and is
zoned general Industrial . The entire parcel is 23 . 97 acres .
The total 1994 taxes paid in 1995 for the index number was
$1 , 980 . Of that total tax amount, $983 . 00 was allocated to
Schoolt $447 . 00, or1ng 4 . 63 percent of the 22 . 57 percent of the total tal tax, tax.
tax,Inaddition, was
In
allocated to the City of Elgin.
Bailey purchased the property in 1996 for $360 , 000 . Bailey
proposes to construct a 46 ,000 square foot industrial build-
ing to manufacture precast concrete structures . The construc-
tion costs are estimated at slightly over $2 ,4
00 , 000 . Howev-
er, some of the construction costs are specific to the indus-
t value.
try and do o fair to markete value keof the subject r property t
properrtywi
estimatedwill
the
be approximately $2 , 000, 000 .
Without 6b Incentive
- Equalized Assessed Valuation $ 1 , 521,720
- Overall Tax Rate $10 . 861/$100 EAV
- Annual Taxes $ 165,274
Bailey Development, L.L.C .
May 7 , 1996
Page 3
With 6b Incentives
- Equalized Assessed Valuation $ 676 , 320
(years 1 - 8 ) 972 ,210
(year 9 ) 1 , 268, 100
- Overall Tax Rate $10 . 861/$100 EAV
_ Annual Taxes
(years 1 - 8 ) $ 73, 455
(year 9 ) 105 , 592
(Year 10) 137 , 728
TEN YEAR IMPACT
Without 6b Incentive
- Total Taxes $ 1 , 652 , 740
With 6b Incentive
Years 1 - 8 $ 587 , 640
Year 9 105, 592
Year 10 137 , 728
Total $ 830, 960
Current Taxes Paid Without Project
Total City of Elgin U-46 Others
Taxes (22 . 6%) (49 . 6% ) ( 27 . 8% )
Current $1 , 980 . 00 $ 447 . 00 $ 983 . 00 $ 550 . 00
Impact on Various Taxing Bodies Over Ten Years :
Total City of Elgin U-46 Others
Taxes ( 22 . 57% ) (49 . 63% ) ( 27 . 8% )
W/O 6b $1, 652 , 740 $ 373 , 024 $ 820,255 $ 459 , 461
With 6b $ 830, 960 187 , 548 412 ,405 231 , 007
Variance $ 821 ,780 $ 185, 476 $ 407 , 850 $ 228, 454
Bailey is requesting that an ordinance be passed approving
the 6b classification and expressly stating that the City of
Elgin supports and consents to the Class 6b application and
that it finds Class 6b necessary for development to occur on
the above property.
•
Bailey Development, L.L.C.
May 7 , 1996
Page 4
COMMUNITY GROUPS/INTERESTED PERSONS CONTACT
This matter will be reviewed with School District U-46 and
their comments will be obtained.
FINANCIAL IMPACT
If the project does not proceed, property taxes over a ten
year period will total $19 , 800 . If the project does proceed
and the 6b incentive is granted, property taxes over the ten
year period will total $830, 960 . If the project proceeds and
the 6b incentive is not granted, property taxes over the ten
year period will total $1 , 652 , 740 .
LEGAL IMPACT
None.
ALTERNATIVES
None.
RECOMMENDATION
The 12 . 0 acres of property located along Gifford Road in
Elgin is currently undeveloped. The firm is considering an
expansion of its business within the Cook County portion of
the City of Elgin and the boundaries of School District
U-46 . In order to equalize the amount of property taxes paid
by the company between Kane and Cook County, staff recommends
support for the 6b incentive program request.
Respectfully submitted,
414,„--1/74/ )174/e4
Raymond H. Moller
Director of Business Services
and Properties
cam.
Richard B. Helwig
City Manager
RHM/skg
Attachments
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SENT BY;FAGEL & HABER ; 5- 3-96 ;10:47AM ; FAGEL & HABER--' 17088315610;# 2/ 8
FAGEL 8 HABER
ATTORNEYS AND COUNSELORS AT LAW ALA+I.FAcu Swum,CODES ALLENSON
loc.A.Hum WILLIAM P.ANruI
ESTABLISHED 1962 Ron)flAaarrr CMRISYINA Dwrro
ALurtN D.ME7ER5 PATRICRI.CULLARTON
140 SOUTH DFAKPORN STREET,14ni FLOOR DENNIS E.QUAID 1UHN S.DRUMM
C+1HICACo. IL 60603•(312)346-7500 CIA,„T.KEYSOR V,cro&A.Du LAMER
STEVW J.TIPLINSKY 1A.m.M.Dam.'
FAx(312J 580-2201•Caus,NOPLAWLAW•TEux%54542 WALnR D.C],,ROvw THOMAS!.CoLz
SNur,N M.Lax STUAAT P.KRAUSRorr
Writer's Direct DIal No.;(312) 580.2223 IOMN I.CULLERTON LAVRENCE T.KRULivK•!,
R,Gr•MRo H.CHA►MAN GAME A.MORIT
JASON W.IivN hySa D.Mimu AN
May EE 2 1996 RORT B.Ct1A►MAN LAURA A.O'Neil.
IAMES R LATTA SARA I.THn&AS
HOWARD M.BURRING TON DOUGIA5 A.WOLR
DONALD 1.Vocu.
Mr. Raymond Moller Nokto,N Coin Or Courant.
CNA M Ce nu LEONARD R.KOIMIN
Elgin Director of Business Services &Properties c.coMAN MAYNARD E.Ruitiau
150 Dexter Ct. MARTIN M.RUR[N
Warm knri SHANAHAN
Elgin, IL 60120 sAT,C.HAua,
Re: Application of Bailey Development, L.L.C. to the City of Elgin for an Ordinance
Approving Class 6b Assessment Classification for the Property in Elgin, Illinois; PART
OF P.I.N.: 06-30-400-005
Dear Mr. Moller:
Please consider this letter a formal application by Bailey Development, L.L.C.
("Bailey") to the City of Elgin for a resolution supporting Bailey's Class 6b assessment
application to the Cook County Assessor for the above-referenced property ("the Property").
The Property
The Property consists of 12 acres of vacant land located on Gifford Road near the
inoDerseetion of Spaulding Road, The Property is a section of what was formerly identified for
tax purposes as P.I.N. 06-30-400-005. A copy of the survey and legal description of the
Property is attached. An application for a tax division with a new P.I.N. is pending, The
property will be assigned a new P.I.N. Copies of the first installment of the 1995 tax bill,
Sidwell map, and the Assessor's printout for P,I.N, 06-30-400-005 are attached.
Proposed Construction
Bailey purchased the Property in 1996 for$360,000. Bailey proposes to construct a
50,000 sf. industrial building to manufacture precast concrete structures. The construction
costs are estimated at slightly over$2,400,000±. However, some of the construction costs arc
specific to the industry and do not add to the market value. After completion, the estimated
fair market value of the subject will be $2,000,00Q±.
SENT BY:FAGEL & HABER ; 5- 3-96 ;10:48AM ; FAGEL & HABER-, 17089315610;# 3/ 8
FAGEL 8 HABER
ATTORNEYS AND COUN5ELORS Al Ltiv
Mr. Raymond Moller
May 2, 1996
Page 2
Necessity of the Class 6b Real a Tax; rwentiyg
The development of the Property will increase the revenues to the City of Elgin.
Additionally, without the incentive, the project is not economically feasible. The expenses of
construction, equipment purchases, and payroll expenses will not be economically feasible
without the Class 6b real estate tax incentive.
The Class 6b incentive program provides for a 10 year reduced level of property tax
assessment. The incentive reduces the assessed valuation from 36% of market value to 16%
for eight years, and then to 23% in the ninth year, and 30% in the tenth year.
In the portion of Elgin located in Cook County, assuming a 36% assessment level, a
10.8% tax rate, and a 2.1135 state equalizer, the effective tax rate for a manufacturing facility
is approximately 8.21% of the property's market value (36% x 10% x 2.1407 = 8.21%).
In the portion of Elgin located outside of Cook County, assuming a 33.33%
assessment level, a 6.5% tax rate, and state equalizer of 1, the effective tax rate is
approximately 2.16% of the property's market value (33.33% x 6.5% x 1 = 2.16%). Even
with the Class 6b real estate tax incentive, the effective tax rate is approximately 3.4% of the
fair market value (16% x 10.8% x 2.1135 = 3.4%), which is still higher than in Kane and
other counties in Illinois. Moreover, the 3.4% effective tax rate only lasts for eight years and
gradually increases back up to 8.21%.
These percentages have serious impacts to a company looking to build a substantial
industrial facility. As vacant land, the current assessment records show an assessment of
8,629 and an annual tax bill of$1,995. Even with the incentive, the Annual tax bill is expected
to be almost $74,000. However, without the incentive, the taxes make the project too
expensive to construct in Cook County. The following table provides a summary of the taxes
based on all the different scenarios and clearly illustrates the need for the incentive:
Market Value: ( $53 93� $2,000,000 $2,030,000 $2,000.000
Assessment Level: 16% 36% 16% 33%
Assessed valuation: 8,629 720,000 320,000 660,000
State Equalizer: 2.1407 2.1407 2.1407 1.0000
Tax Kate: 10.800% 10.800% 10.800%
Annual Taxes: $1,995 $166.461 $73,983 y4_2 90900 _ .
c BY:FAflF1 & HABER ; 5- 3-96 ;10:48AM ; FAGEL & HABER-, 17089315610;# 4/ 8
FAGEL 6 HABER.
ATTORNEYS AM)COUNSELORS AT LAIR'
Mr. Raymond Moller
May 2, 1996
Page 3
Conclusion
This project will expand the economic base and employment for Elgin and the
surrounding communities. The Property has been vacant and unproductive. Unless Bailey
proceeds with this proposal, all indications are that the Property will remain vacant for a
considerable time. The Cook County Assessor's office will not review an application for
preliminary approval without a resolution from Elgin Park in support of the application.
Bailey has been informed that the next opportunity to pass a resolution supporting Bailey's
Class 6b assessment application at a City Council meeting will be on May 22, 1996, and
respectfully requests that this matter be addressed on that date.
Kindly contact me if you have any questions or require any additional information.
Sincerely,
ullerton
PJC:jc
cc: Mr. Jim Nondorf
SENT BY:FAGEL & HABER ; 5- 3-96 ;10:49AM ; FAGEL & HABER-, 17089315610;# 5/ 8
PIADCR 4-LC'tlO i I I •LAMM • iYIJ r41.40V4kr' L.nw VI I av&lJ'w a
EXHIBIT"A"
THAT PART OF THE EAST HALF OF THE SOUTHEAST QUARTER OF
SECTION THIRTY,TOWNSHIP FORTY-ONE NORTH,RANGE NINE,
EAST OF THE THIRD PRINCIPAL MERIDIAN,BOUNDED AND
DESCRIBED AS FOLLOWS; BEGINNING AT THE INTERSECTION OF
THE EAST LINE OF GIFFORD ROAD(SAID LINE BEING 30.0 FT. EAST
OF THE PARALLEL WITH THE CENTER LINE THEREOF); WITH THE
SOUTH LINE OF LOT TWO IN THE DIVISION OF SAID SECTION
THUiTY(ANTE FIRE RECORDING); THENCE SOUTH 89 DEGREES 04
MINUTES 17 SECONDS EAST,BEING AN ASSUMED BEARING ON THE
SOUTH LINE OF SAID LOT 2,A DISTANCE OF 723.03 THENCE SOUTH 01
DEGREES 47 MINUTES 37 SECONDS WEST ON A LINE PARALLEL WITH
THE EAST LINE OF SAID GIFFORD ROAD,A DISTANCE OF 723.
03 FEET; THENCE NORTH 89 DEGREES 04 MINUTES 17 SECONDS WEST
ON A LINE PARALLEL WITH THE SOUTH LINE OF SAID LOT 2,A
DISTANCE OF 723.03 FEET TO THE EAST LINE OF SAID GIFFORD
ROAD; THENCE NORTH 01 DEGREES 47.SECONDS 37 MINUTES EAST
ON THE EAST LINE OF SAID GIFFORD ROAD,A DISTANCE OF 723.03
FEET TO THE POINT OF BEGINNING,ALL IN COOK COUNTY,
ILLINOIS.
CO
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'" VOLUME PROPERTY INDEX NUMBER TOWNSHIP TAX CODE NEIGHBORHOOD
061 06-30-400-005-0000 HANOVER 16016 030
LOCATION ELGIN
TAXPAYER BAILEY DEVELOPMENT
ADDRESS 1740 RIDGE 110
CITY-ST ZIP EVANSTON IL 60201-590S LAST TRI YEAR 1992
ASSESSMENT VALUATIONS
1993 1994 1995 PROPOSED
LAND S.629 8,629 e,629
IMPROVEMENTS 0 0 0
TOTAL 8,624 8,629 6,629
oz! CLASS 2-39
LAND SQ FEET 1,044,220 IRREGULAR LOT NO
CURRENT MARKET VALUE 53,931
[Qi. HOMEOWNERS EXEMPTION 1995
SENIOR EXEMPTION 1995 NO
CERTIFICATE OF ERROR 1995 NO
DISABLED VETERANS EXEMPTION 1994 NO
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115016 19951HANOVER J {_- 06-30-400-005-0000 061 1
95- 1
00000468606 063040000500003 09518 063040000500003
1
1ST INSTALLMENT PAID IN FULL
IF PAID ON OM LATE PAYMENT 0f'SO-400-000-0000
BETWEEN THESE OATES AMOUNT DUE IS BAILEY DEVELOPMENT
a.00 P OR CURRENT OWNER
0.00 1740 RIDGE 110
0.00 EVANSTON IL 50201-5808
TAX ANT. INTEREST CAST TOTAL
1 [_—I 06304000050000/0/95/E/0000046860/1
COOK COUNTY COLLECTOR PROOF OF PAYMENT - 1995
UIEOEEVIEW NTIAPEOH OFFICE MARKIiAU EfNMdi OFFICE MA YW000 0RANOI OFF MC IAOKIE MANCM OFIICE ROLLING MEADOWS SRAM CH L) ICt
10700 SOUTH 76TH AVENUE 165TH AND KED21C AVLNUC MAYWOOD CIVIC 011KTE11 5600 OLD OMCIIAPID ROAD 7I?I EUCLID AYENUL
NIMOsINIW. 'LLNOIS B045h MARRHAM. ILLINOIS 60426 IS00 MAYBROOK DRIVE SKORIE, ILLINOIS 60077 ROLLING NEADOWE, ILLIMOIF 60000
AMYYYOOu. ILLINUIS 60151
I
VOLUME 061 1 AEA'ear -m fA IC o 000o IOWA 1101c WARM
1 -`2t 0 AMOUNT DUET 4N.40
Q MCI fAXMROLLEACK TAX
°Are PAW IAA .• I STATUTORY INTEREST PAID INTEREST PAID COS1 Pal SERIAL NEL
01-22-1* 44. Z 012216001244
I i, PAYI�I RF�MTId RAS NM T1A��FKOM THE�1'AW1KT
O /f/>�//NN�J �M�TO MOM Cal
EKE Al ne ogY2 o TM 191RIv COLIKCTa
f/ `� // gli"n^a- 000K COUNTY COI 1 FCTC41
2ND FINAL AMOUNT DUE - 4
Pa 7-7f
DATE PAID TAX AAIOUNt PAID MITEREST PA (j1i��SI PA+O SERIAL NO. ASSEYSGD VALUATION`C 1J l//CC<) STATE EQIIAI LZATION FACTOR
r1^ EQUALIZED vALUATION
J (Q) CURRENT TAX RATE
((( ./ . GROSS TAXES BEFORE D EMFTION
E000t
�(/f/ V ES. T PfDr 1 ZE DEDUCT DEDU[Tlon
SA. TAX FREEZE DEDUCTION
HOMEOWNER'S EXEMPTION DEDUCTION
4)(;,,C?
TOTAL TAXES AfTEN EXEMPTION
/\ PRIOR YEAR EouALIZEO VALUATION
1ST ESTIMATED BALANCE DUE I C`)fq YEAR TAX RAT;
>(�vJ(}/ Y.EiW TOTAL TAXES
21D FINAL BALANCE DUE
4)�
SAILEY DEVELOPMENT
ON CURRENT OWNER
1740 RIDGE 110
EVANSTON IL 60201-$10I
HOURS !AM TO S N MONDAY TIMU FRIDAY WHEN PAYING IN PERSON DO NOT DCTACII
WHEN PA WC BY MAR PLEASE DETACH ANC KEEP FOP YIYL,M NKc0NNO I
1ST INSTALLMENT DLJE DATE-IIARCSI 1, 1!%
IF YOU PAY AFTER THE DUE DATE(S), USE THE PAYMENT SGIERR.E ON 61421 PAYMENT STUN. THE STATUTORY 1.95 PENALTY PEN
MIITM Do MAID IALAIICES HMS TEEN CALCULATED FOR YOU, DFPBIO1PE ON DATE OF PAYMENT. YOU MAY SUMMIT ONE CHECK FOR THE
GRAND TOTAL DUE.
TOWN YEAR TOWNSHIP FINAL AMOUNT DUE PERMANENT Rem.LSfATE INDEX NUMEFII VOLUML
18016 1995 HANOVER 1 I 06-30-400-005-0000 061-1 95-2
04-30-400-005-0000
IF PAID ON 00l LAAMOUNT
PAYMENT IIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIUIIIIINII
IkTIIlp Till! GATES AMOUNT OU! If i
0 00 P BAILEY DEVELOPMENT
0 0o I -] OR CURRENT OWNER
__ 0 90 I 1740 RIDGE 110
TAX ANT, INTEREST COST TOTAL EVANSTON XL 00201-S108
'-...._lIl.� �.