By a 5 to 1 vote, Homewood trustees approved a resolution Tuesday, June 28, in support of Class 8 property tax relief for the site where Krispy Kreme will be building a doughnut shop this summer.
The application for tax relief is being submitted to Cook County by the property owner, BSG LLC, according to village officials.
Economic development consultant Don Peelman, representing BSG, told trustees the class 8 designation is necessary to make the project feasible.
If the county approves the designation, the property tax rate for the site would be reduced for 12 years. It would be based on 10 percent of market value, the same rate as residential property, for the first 10 years. The rate would go to 15 percent for the 11th year and 20 percent for the 12th year. After the 12th year, the rate will return to the normal commercial property rate of 25 percent of market value.
Economic Development Director Tom Vander Woude said in a memo to the board that the Class 8 designation is an attempt by Cook County to level the playing field for the South Suburbs as they compete for businesses with nearby Illinois and Northwest Indiana counties that have much lower property tax rates.
Trustee Anne Colton cast the dissenting vote, and trustees Lisa Purcell and Larry Burnson said they saw the tax incentive as an unfortunate but necessary tool to balance high county tax rates.
“We wouldn’t have businesses on our Halsted corridor if we didn’t entice people, because they can easily go somewhere else,” Purcell said.
“The board is placed in a precarious situation,” Burnson said. “We have to grant these kinds of abatements just to keep our businesses viable. It would be nice if county of Cook and the state of Illinois would change their tax codes so we wouldn’t have to be approving these kinds of things.”
Colton prefaced her objection to the measure by saying she is delighted Krispy Kreme is building in Homewood. But she said she worries about the effect the tax break would have on other property owners.
“The way this works is that everybody else’s taxes go up, because the levy is the levy,” she said. “I’m not prepared to do that, not in this economy.”
Trustee Jay Heiferman asked whether the project would go forward even without the tax break.
Carlos Larcada, president of Chicagoland Restaurants LLC, which is developing the Krispy Kreme shop, said plans were based on the hope that the Class 8 designation would be approved.
“We would have to go back and work the numbers,” he said.
Peelman said without the tax break, the tax liability for the new building would be about $14 per square foot.
“That would be cost prohibitive,” he said.
The site at 17815 Halsted St. is currently occupied by Washington Square Pancake House. The restaurant is slated to be demolished in mid-July.
Related story:
- Krispy Kreme to replace Washington Square restaurant this summer (H-F Chronicle, June 15, 2016)