DeKalb works on ready-made property tax-abatement package

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By Chris Rickert - City Editor DeKALB - Taking a cue from their counterparts in Sycamore, DeKalb officials are looking to put together a ready-made property tax-abatement package that would involve all local taxing bodies and would be used to try to attract major industry to the city. On Wednesday, the city council approved sending a draft of the plan to the Economic Development Committee for review. The committee will then forward its recommendations to the council. Assuming aldermen go along with the plan, it would be up to the city to get seven other taxing bodies - most significantly the DeKalb School District - to sign off on it. The draft distributed Wednesday would give local taxing bodies the option of offering warehouse and industrial operations a 90 percent break on their property taxes in their first year of operation, 80 percent in the second and so on through year five. In year six, facilities would be assessed in full. It's the same package Target Corp. received from local taxing bodies for agreeing last year to build a 1.5 million-square-foot distribution center on DeKalb's south side. The company also received other city and state incentives. For so-called "knowledge-based enterprises," including high-tech firms or other professional service providers, the taxing bodies could offer tax breaks of 90 percent in the first and second years of operation, 80 percent in the third and so on until year five, after which the abatements would expire. Although the council expressed support for the prepackaged tax breaks, some aldermen did so with reservations. "My gut reaction to that concept is it's not a good negotiating position," said Alderman Pat Conboy, 5th Ward. "Don't give away the store unless you need to." Alderman Kris Povlsen, 2nd Ward, said he worried that the five-year abatement plan might be perceived as a start to negotiations by some companies, which then might ask for further public subsidies. Sixth Ward Alderman Dave Baker suggested the prepackaged plan could be approved with a sunset provision that would eliminate it at some point in the future, perhaps after the city has attracted a significant amount of industrial development. Offering multimillion-dollar corporations large tax breaks and other publicly funded subsidies as incentive to open a facility in a particular area has become a matter of course, according to Roger Hopkins, the executive director of the DeKalb County Economic Development Corp., and Mark Goode, a real estate developer who helped attract the Target project. They urged the council to get behind the prepackaged plan. In the "real world," Goode said, companies make decisions on where to locate in as little time as a month. A community needs to have something ready to offer if it is to "stay in the game" of competing with other communities for a project, he said. Without a prepackaged incentives plan to offer companies, "We run the risk of being wiped out of the competition in nine out of 10 cases," Hopkins said. Backers of the tax breaks and incentives point out that even with the breaks, large industry pays much more in taxes than if the land were to remain undeveloped. The DeKalb School District would be the institution most affected by the property tax abatements, because it collects the majority of property taxes. "I think that it's a good idea for the taxing bodies to sit down and have some kind of boilerplate incentives program," school board Presi-dent Andy Small said. He also said the abatements given to Target were sensible and that he would be open to approving a similar deal for other industrial or warehousing projects the city might want to attract. Last year, six Sycamore taxing bodies approved a prepackaged property tax incentives plan that would offer prospective companies tax breaks of at least 90 percent in their second year of operation, 75 percent in their third and 50 percent in their fourth. The Sycamore School District refused to go along with that plan but did approve the use of a less generous one. Chris Rickert can be reached at crickert@pulitzer.net.