First Ascent LLC is requesting Village approval for a Cook County Class 7c Property Tax Classification relative to 3400 W. Euclid Avenue, consisting of two parcels of property.  The site has been vacant since 2009 when the CoCo Key Waterpark permanently closed.  The property tax abatement in question would apply to the renovation of the approximately 42,000 square foot facility into a destination rock/wall climbing and fitness facility.

In order for the petitioner to renovate the building, a Class 7c property tax abatement is being requested.  The Class 7c incentive applies to commercial properties whereas the 6b is designated for industrial users.  Additionally, the Class 7c incentive lasts only five years, with only one renewal opportunity, whereas the 6b lasts 12 years with no existing cap on number of renewals.

The Village's guidelines for Class 7c applicants are based upon employing at least 50 workers, showing financial benefit to the Village, and commitment to providing 10% of their property tax savings over the first five years towards the Arlington Heights Zero Interest Loan program.  Additionally, in 2018, the Village approved an amended PUD for the Arlington Downs development, which included a special use for First Ascent at this site (Ord. #18-019).  Planning & Community Development staff have been working with First Ascent and the current property owner over the past year to assist in moving this entertainment venue forward, and the Class 7c approval is critical to the financing of the redevelopment.

Per the incentive application, First Ascent would employ five full-time and 55 part-time workers at this property upon opening.  Plans would be to add 15 more part-time employees by Year 5.  The applicant anticipates having a positive financial impact on the Village in the following regards:

• Following the incentive period, the property will generate $160,000 more in annual property taxes than if it were to remain vacant.
• The Village would get approximately $5,000 in sales taxes from First Ascent on an annual basis.
• Residual sales taxes, and food & beverage taxes, will come from customers that stay in Arlington Heights to dine, shop, buy gas, and so forth.
• The reuse of a property that has been vacant for over a decade.
• Potential generation of the next phase of development at Arlington Downs, bringing in further sales taxes, food & beverage taxes, and property taxes to the community.
• Agreeing to provide the Village with 10% of their property tax savings over the first three years of the abatement in order to help fund the Zero Interest Loan program or other economic development programs as needed.  

The County requires that the application meet four eligibility factors as well:

1. A real estate tax analysis verifying stagnation or a reduction in EAV during three of the past six years.
2. Evidence of vacancy and marketing efforts, and three years of income tax statements.
3. Verification of the “but for” clause (i.e. development would not occur but for the incentive) and economic feasibility following the incentive period.
4. Certification of increased tax revenue and employment.

Equalized assessed value was stagnant from 2016-2018.  Income tax statements were provided.  The applicant has expressed that, but for the abatement, it would not be financially feasible to undertake this construction. And as stated above, increased tax revenue is shown through increases in property, sales, and food & beverage taxes, both direct and indirect.

The developer is looking to bring a destination fitness concept to Arlington Heights which offers a primary amenity (rock climbing and wall climbing) that would differentiate itself from other Arlington Heights fitness users.  The Class 7c incentive would allow for the development of First Ascent, creating additional employment and tax-generating opportunities.

RECOMMENDATION:

It is recommended that a Resolution for the property at 3400 W Euclid Avenue to participate in the Cook County Class 7c Commercial Urban Relief Eligibility Incentive, be approved.