44 Vail, LLC is requesting Village approval for a Cook County Class 7c Property Tax Classification relative to 44 S. Vail Avenue, consisting of three parcels of property. The site has been 100% vacant since March 2018. The property tax abatement in question would apply to the renovation of the approximately 57,000 square foot structure, formerly owned and occupied by AT&T, into a multi-tenant commercial office building. While there are no tenants in-hand at this point, the renovations would allow for growth in the Village’s daytime population, and reoccupation of key office space within the Downtown.
In order for the petitioner to renovate and re-tenant 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 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 a formal commitment to providing 10% of their property tax savings over the first three years towards the Arlington Heights Zero Interest Loan program or other economic programs.
Per these guidelines, the applicant estimates that approximately 62-82 workers will occupy the building once it reaches full capacity. This is based upon a calculation of one worker per 500 square feet. The applicant anticipates having a positive financial impact on the Village as the property is anticipated to generate around $850,000 in property taxes over the five-year life of the incentive, as opposed to only $436,000 million if it remains vacant. Additionally, new workers will provide residual revenues to the Village via patronage to other businesses in the community.
The County requires that the application meet four eligibility factors as well:
- A real estate tax analysis verifying stagnation or a reduction in EAV during three of the past six years.
- Evidence of vacancy and marketing efforts, and three years of income tax statements.
- Verification of the “but for” clause (i.e. development would not occur but for the incentive) and economic feasibility following the incentive period.
- Certification of increased tax revenue and employment.
From 2015-2020, equalized assessed value stagnated four times, and decreased in 2016. The property has been completely vacant for over three years, and with the ongoing high regional office vacancy due to the lingering effects of the pandemic, it may be extremely difficult to find another tenant (or multiple tenants) to re-occupy the property.
The owner has stated in their application that, due to the high rate of property taxes in Cook County (more than double, per square foot, compared to Lake County), the renovation is not economically feasible without the abatement. And as stated above, increased tax revenue is shown through increases in property taxes, as well as indirect sales and food & beverage taxes.
The applicant is looking to renovate a key office property in the Downtown, bringing new businesses and workers to the community. With the pandemic, there has been limited investment in office space in the region. This renovation would provide for much-needed reinvestment in our community’s office space, helping diversify the Downtown land use mix and providing daytime population to support our other businesses. In summary, the Class 7c incentive would allow for the establishment of new employers within the community, creating additional jobs and tax-generating opportunities.
Note: A request to amend the existing parking agreement with the former owner will be in a separate transmittal.
RECOMMENDATION
It is recommended that the Village Board of Trustees approve a Resolution supporting the application for a Class 7c tax incentive for the renovation and re-occupancy of 44 S. Vail Avenue. This approval is subject to compliance with all Village codes and regulations.