519 W ALGONQUIN LLC is requesting Village approval for a Cook County Class 7c Property Tax Classification relative to 519 W. Algonquin Road, consisting of two parcels of property. The property is currently occupied entirely by European Crystal Banquets. In August 2018, the Village Board approved plans to develop a nine-story, 62-room boutique hotel above the banquet hall, involving 5,200 SF of demolition to the existing facility while retaining 10,850 SF. The property tax abatement in question would apply to the hotel construction, which consists of 45,000 square feet, but not the remaining banquet facility.
In order for the petitioner to construct the proposed hotel, 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 current cap on number of renewals.
The Village's guidelines for Class 7c applicants are based upon employing at least 100 workers, showing financial benefit to the Village, and commitment to providing 10% of their property tax savings over the first five years towards the Zero Interest Loan program.
The applicant provided a revised conceptual plan to the Conceptual Plan Review Committee on Wednesday, September 26 that would have increased the number of rooms to 100. This proposal has since been withdrawn and the applicant plans to move forward with the proposal approved by the Village Board in August.
According to the incentive application, the European Crystal Hotel would employ 51 full-time equivalent workers at this property. The applicant is requesting an exemption to the municipal requirement of at least 100 employees. The applicant anticipates having a positive financial impact on the Village by:
- Generating approximately $525,000 more in property taxes after the incentive expires than if the site were to remain at its present use.
- Garnering $695,000 in combined food & beverage and hotel taxes during the five-year life of the Class 7c.
- Attracting visitors who will support local businesses, adding sales taxes as well.
- 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:
- 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.
Equalized assessed value was stagnant from 2013-2015, and decreased in 2017 from the previous year. Income tax statements were provided. The property has not been vacant, but new construction is an eligible expense under the Class 7c program. The developer 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, hotel, and food & beverage taxes.
The developer is looking to bring a boutique hotel concept to Arlington Heights that would be a destination and differentiate itself from other local hotels so as not to be direct competition. The Class 7c incentive would allow for the development of this hotel, creating additional employment and tax-generating opportunities.
RECOMMENDATION
It is recommended that the Village Board approve the attached Resolution Approving Certain Property to Participate in the Cook County Class 7c Commercial Urban Relief Eligibility Incentive, which supports the application for a partial Class 7c tax incentive for a hotel development at 519 W. Algonquin Road.