Economic Incentive Guidelines

Approved 12/12/11

Village of Glen Ellyn Economic Incentive Guidelines

Introduction

The Village of Glen Ellyn believes that local businesses are a valuable and important part of our community. Businesses contribute to the vitality and strength of our Village and Glen Ellyn aims to be a welcoming place for businesses. We welcome the opportunity to discuss business and development opportunities within the Village and the possibility of incentives that enable desirable economic development.

The purpose of these Guidelines is to present the primary objectives of Village sponsored economic incentives for all parties involved and to provide a general framework which will ensure both consistency over time and fairness in the consideration of economic incentive proposals. These internal Guidelines are intended to be flexible in order to address specific circumstances and may be waived or amended as the Village Board of Trustees deems appropriate.

Incentives are a tool to encourage and maintain quality development in the Village and should be used in the best interest of the community by providing growth and long-term value. The impacts on all stakeholders should be considered before the Village Board decides to approve or deny a request for incentives.

The referenced incentives are not inclusive and use of any incentive is at the sole discretion of the Village Board. All requests for incentives will be reviewed on a case-by-case basis and upon the merits of each situation. Meeting policy guidelines does not guarantee assistance and the approval or denial of one project shall not set a precedent for approval or denial of other projects. The Village’s intention should be to provide the minimum amount of assistance necessary to make the project viable while carefully considering the long-term financial and community impacts.

Goals and Objectives

The primary goals of economic incentives are to bridge the financial gap for quality projects which will generate substantial new revenues for the Village or generate additional jobs, and which would not take place in Glen Ellyn but for the existence of the incentive.

These goals are to be met by the following objectives:

1. Attracting businesses/developers to high priority redevelopment sites;

2. Attracting high priority and unique businesses to the Village that improve the overall mix of uses;

3. Improving properties which are considered unattractive or have been vacant for a long period of time;

4. Providing higher quality architectural and landscape treatments than the market will bear to further improve the aesthetics of an existing or proposed development, enhance adjacent property values, and improve the overall appeal of the Village’s commercial districts;

5. Introducing uses which further the Village’s reputation as a destination for shopping, dining, cultural events and entertainment;

6. Improving the variety of quality housing choices to support community diversity and nearby businesses, and increase the vibrancy and economic development potential of the downtown;

7. Retaining and providing for growth of high priority or significant anchor businesses whose closure would have considerable negative impact on surrounding businesses and the community;

8. Fulfilling other goals expressed within the Village’s 2001 Comprehensive Plan and 2009 Downtown Strategic Plan.

Types of Incentives

The following is a list of potential incentives the Board may wish to consider. Not all incentives will be appropriate for all projects and some projects may necessitate creative incentives that may not be listed below.

 Sales Tax Rebates

 Use of Village property or right-of-way for development at reduced or no cost, excluding previously vacated right-of-way

 Contribution toward public improvement or infrastructure

 Fee waivers: zoning, permits, etc.

 Cooperative provision of municipal services

 Industrial Revenue Bonds

 Special Service Area

 Business Development District (BDD): an increase in sales tax over a specified period of time used to fund improvements in the district

Eligible Projects

There are several types of eligible projects which may be considered for economic assistance. Examples of these projects are:

 Businesses attracted, retained, or expanded in the Village

 Development of previously identified priority development sites

 Business segments underserved in the Village

 Development consistent with the Downtown Plan

 Other projects that would enhance the Village and satisfy one or more of the identified objectives

Review Criteria

The threshold level of assistance given to the Developer should be limited to the minimum amount necessary to provide the Developer with a reasonable rate of return for the project in Glen Ellyn, and the level of return for the Village to consider an incentive proposal should be significant. 

Requests for economic assistance shall be evaluated on the merit of the proposal and the following criteria:

 Conformance with the Comprehensive Plan and Downtown Plan goals and objectives

 Improvement of economic base through attraction, retention or expansion of businesses

 Attraction of high priority business that would enhance diversity of businesses and vitality in the Village’s business districts

 Fulfillment of an underserved business segment

 Enhancement and diversification of Village revenue bases

 Presence of extraordinary costs above and beyond typical development improvement costs, such as prohibitively expensive:

o Environmental remediation

o Capital purchases

o Facility expansion

o Public infrastructure

 Provision of a variety of quality housing choices including those that support community diversity

 Enhancement of streetscape and pedestrian experiences

 Improvement of public infrastructure

 Improvement of existing parking and/or traffic circumstances not created by the applicant

 Remediation of blighted property

 Enhancement of cultural and/or environmental circumstances

 Creation of more marketable real estate space

 Significant increase in quality full-time permanent employment

 Quality of development and aesthetics above and beyond code requirements and design standards

 Impact on the immediate neighborhood

 Demonstrated ability to construct, operate and maintain the proposed project based upon past experience, reputation and credit history

 Demonstrated probability of economic success

The above criteria are not inclusive and do not prohibit other criteria from being considered.

Submittal Guidelines

By providing an incentive the Village is entering into a financial agreement; therefore is it appropriate to request detailed financial information from the developer or property owner to allow the Village to evaluate the likely success of the project and make an informed decision. The following is a general list of items the Village may wish to request of the developer in order to allow the Village a thorough review of the project, including any potential impacts and how the requested incentive may benefit the Village. The submitted documents should be considered the developer’s application for incentive.

1. Program Details

a. Summary of proposal and benefits to the Village

b. Area of property

c. Square footage of uses by type

d. Estimated number of employees (full-time and part-time)

e. Proposed construction timeframe

f. Complete list of all investors in the project identifying individual ownership interest

2. Projected Annual Sales

a. Total sales for 10 years

b. Breakdown of total sales between taxable items and exempt items (see “Attachment A” for details on items exempt from Home Rule Sales Tax)

3. Current equalized assessed value of the property

4. Current property appraisal

5. Market study, gap analysis and pro forma analysis of the project

6. Estimated construction cost and purchase price of property

7. Estimated utility usage (e.g., electricity, natural gas, telecommunication)

8. Estimated water usage

9. Description of incentive being requested

a. Dollar amount and proposed structure of incentive request

b. Description and amount of extraordinary costs related to development

10. Financial guarantees to ensure project completion such as letters of credit, and cash escrow

11. Any other relevant information requested by the Village and necessary to evaluate the request

The developer should submit an original and two copies of all the requested documents. Packets should be sent to:

Planning and Development Director
Village of Glen Ellyn
535 Duane Street
Glen Ellyn, Illinois  60137

Petitioners should be prepared to provide full financial disclosure for evaluation by an independent financial consultant approved by the Village. An amount from the petitioner, paid at the time of application, should be deposited into an escrow account to cover the Village’s costs for legal and financial consultation in reviewing the incentive request.

The Village should notify the developer when all the requested materials have been received. In the event the developer does not submit everything that was requested, review should not begin until those materials are received.

Review Process

Glen Ellyn welcomes business and development opportunities within our Village. We desire to initiate an open dialogue with business owners interested in remaining or locating in Glen Ellyn. Village staff is readily available to respond to questions and offer assistance to prospective businesses and developers. Applicants are encouraged to contact management in the Planning and Development Department to initiate discussion regarding potential incentives. Once an application is received the estimated timeframe for review is approximately 6 weeks and may include the following steps:

1. Submittal of documentation to Village management

2. Review of documentation by Village management (and/or consultant if desired by Village)

a. Calculate potential sales tax, property tax, utility tax, water revenue, miscellaneous one time fees (building permits, transfer tax, fee-in-lieu charges, etc.)

b. Determine if there are any State or County incentives available to coordinate a joint incentive package

3. Presentation of request, management analysis and recommendation to Finance Commission

4. Finance Commission Meeting for review and recommendation to Village Board

5. Village management prepares draft Incentive Agreement as recommended by Finance Commission, if applicable

6. Finance Commission recommendation, management recommendation, and draft incentive agreement forwarded to Village Board, if applicable

7. Village Board meeting for final consideration of incentive request

Incentive agreements should address the following items and include the following provisions:

 “But For” Standard: the petitioner should demonstrate that the project would not otherwise take place in Glen Ellyn “but for” the incentive.

 Dollar Amount and Term: A maximum dollar amount and term will be determined. Assistance should be at the lowest level possible within the least amount of time.

 Eligible Project Costs: incentives may not be used for soft costs such as legal, architectural or engineering consultant fees.

 Reimbursement for Failure: The incentive agreement should contain a claw-back provision to the Village for reimbursement of a pro-rated share of the incentive based on specified time periods should a business associated with an incentive cease to operate during the term of the incentive or another specified period of time.

 Look-back Provision: If the project generates a higher return than anticipated when the incentive was approved, the developer and Village shall split any increase at or above a specified threshold of the original projected rate of return.

 Permanence: Projects requesting an incentive should demonstrate their intent to remain within the Village for the foreseeable future. For example, a condition of the incentive may be a commitment for a lease period beyond the length of the incentive.

 Ownership: If the developer intends to sell the project (i.e. commercial or residential condominiums), the developer must retain ownership of the overall project until final completion.

 Pay-As-You-Go: Assistance will be provided by a “pay-as-you-go” method. Up-front financing requests will be considered on a case-by-case basis provided there is sufficient increment generation to meet initial financing and debt service costs.

 Limitation: no incentive will be provided for any project expenses incurred prior to approval of the project with the exception of Village grant funds.

 Other Assistance: when requested, the Village will assist developers in seeking State and Federal Incentives.

The Village Board has final authority to negotiate the terms of any economic incentive or to deny approval of an incentive proposal. The preceding guidelines do not limit Village Board action.

“Attachment A”

Exemptions to Home Rule Retailers and Service Occupation Taxes

Village Ordinance 5740 (3/30/09)

Retail and Service Sales that are Exempt from Taxes

o Food for human consumption that is to be consumed off the premises where it is sold (other than alcoholic beverages, soft drinks, and food which has been prepared for immediate consumption)

 o Drugs and medical appliances

o Prescription and non-prescription medicines

o Drugs

o Medical appliances

o Insulin

o Urine testing materials

o Syringes

o Needles used by diabetics

o Tangible personal property that is titled or registered with an agency of State government (e.g., cars, trucks, motorcycles, trailers, snowmobiles, aircraft)