Oak Park business may get incentive to stay

Agreement drafted to keep business in town

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By Anna Lothson

Staff Reporter

One local business may soon get an economic development incentive to stay in Oak Park — though it hasn't been publicly announced what that business is.

What has been publicly announced, as discussed Friday at a meeting of the Economic Development Committee of the village board, is that an expanding special services business with an estimated annual economic benefit to Oak Park of more than $500,000 could relocate outside town in an effort to find more favorable rent.

That estimate, which came from the Oak Park Development Corporation, was a major talking point during Friday's meeting where trustees debated the merit of offering an economic incentive package. This involves waving $4,000 in village fees and assisting the business by reimbursing the developer for interest paid on a commercial loan that will be taken out by the developer. The agreement would allow for the village to provide up to $50,000.

The developer's loan would be used by the business to purchase fixtures, furniture and equipment over a 5-year period. The village would pay off the loan in annual installments, according to the draft agreement. The village will also make 50 parking permits available for purchase by the business in village garages and lots near the property to help support employment growth for the business.

Village Manager Cara Pavlicek gave a brief update on the business, which was only referred to as "office A" during the committee's discussion. She informed the board the business would like to relocate within the community into a larger space but could choose to move elsewhere to find more competitive leasing terms.

"We do think the business does have other options," Pavlicek emphasized, later saying the company is "not bluffing" about possibly leaving. She and board members agreed they wanted to retain the business, and debated the appropriate way to approach the situation. Some frustration was aired about the fairness of giving one business a special incentive that may not be offered to others.

When asked if the push for an incentive for the business was a bluff, Pavlicek and OPDC President Sara Faust were on the same page.

"They will leave the community," Pavlicek said. Faust, who attended the meeting, shook her head in agreement. Faust also provided as assessment on the matter to the board.

In an OPDC memo to Business Services Manager Loretta Daly and Pavlicek, Faust wrote that "we currently estimate the initial aggregate economic impact of this retention as $546,000 annually." This is exclusive of village fees, she said.

She based the estimate on "professional modeling," which she said includes: "estimates on increased real estate taxes; company spend on local vendors, supplies, customer entertaining; and resident and non-resident projected local spending based on payroll."

"As the company grows in revenue and personnel, its impact will as well. We recommend the village's assistance in its retention," Faust concluded in the letter.

In presenting OPDC's perspective, Faust said her agency is "in absolute agreement of the recommendation," because it would be beneficial for the business to be able to expand in Oak Park. It's predicted that the company, which has about 25 employees currently, will double in size in the next year.

According to the draft agreement, the new leased office space would be approximately triple the firm's current space. The new space, approximately 9,500 square feet, would require a build-out of a vacant floor of a commercial office space in the greater downtown area. The firm will also execute a lease for the property and start the build-out within 12 months, once the agreement is signed with the village.

The agreement also details that a significant portion of the square footage the business desires to move into has been vacant for more than a year.

According to the draft agreement: "It is in the best interests of the village to enter into this agreement in order for the developer to increase its business potential within the corporate limits of the village and for the village to realize the substantial economic benefit as a result of this expansion."

Trustee concerns about offering the economic incentive to this particular business were that it could set a bad precedent for current or future businesses seeking similar assistance from the village and OPDC.

"If you're going to do it, you have to have a rationale," Trustee Colette Lueck said.

Pavlicek spoke in general terms about economic development and said it's important as the village works through this possible agreement that there are some baseline standards set. This could include identifying number of employees, median salary of employees, base annual revenue and what floor the business operates on as potential factors in where to offer incentives.

"I think economic development is strongest when it's creating and retaining service jobs," Pavlicek said. "I do think there are some standards out there."

Trustee Peter Barber, however, questioned the process, and said he wasn't sure why this particular business should receive an incentive. He asked if it was possible to see proof of the business' performance to ensure the company will actually grow.

Barber also worried about setting bad precedent and asked for management to get feedback from the business community on the matter.

The draft agreement outlines details about retention of the firm's business within the village, proof of employment growth, developer's authority and the terms for a timely performance for the potential deal.

Pavlicek said the matter comes down to property taxes since the business is not currently leasing the property. Trustees agreed the village must set standards that Pavlicek suggested to avoid potential future pitfalls with other businesses seeking a similar incentive.

No formal vote was taken since the matter was at committee level, but trustees agreed to review the agreement once elements of Friday's discussion were worked in. The agreement will need approval from the full village board before moving forward.

Correction: This story has been updated to reflect that the village will provide money toward the interest of the loan that will be taken out by the developer. The previous version of the story said the village would provide money for the loan.

Contact:
Email: anna@oakpark.com Twitter: @AnnaLothson

Reader Comments

20 Comments - Add Your Comment

Comment Policy

Whee  

Posted: October 30th, 2013 4:19 PM

Expanding special services organziation... wants to triple its space.... is this D97's latest ploy to get new administrative offices? Just halfway kidding.

Whaa  

Posted: October 30th, 2013 3:48 PM

Is it May Del Sol? Just Kidding

OP  

Posted: October 30th, 2013 3:06 PM

This is an effective bandaid for a much larger wound know as red tape, lack of responsiveness, TIF etc.

John Butch Murtagh from Oak Park, Illinois  

Posted: October 30th, 2013 2:55 PM

James and Uncommon - Don't property tax, rent, and sales tax belong in the equation?

James  

Posted: October 30th, 2013 1:36 PM

@Uncommon Sense, the free market also allows for a business, who would draw from the same demographic, to pimp themselves out to the highest bidder between cities. It's not about why OP is or is not attractive, they can get the same audience across the street or up the road and those villages will likely pay them so why not bid yourself out to the highest bidder? Free Market as you said.

maggy  

Posted: October 30th, 2013 1:01 PM

I hope it is Magic Tree Bookstore!! They have been a role model of what a local business should be! Staying in Oak Park for all the years, through thick & thin, AND always giving back to the Oak Park community. They should be supported more from the community & families in Oak Park.

John Butch Murtagh from Oak Park, Illinois  

Posted: October 30th, 2013 11:41 AM

The article was pretty clear that the business was seeking more space.

Uncommon Sense  

Posted: October 30th, 2013 11:16 AM

Ding Ding! We have a winner, Brian! Generally, I believe a locality should be so attractive that it shouldn't have to offer incentives to get businesses to stay or come here. If you just do things to make it attractive for all businesses across the board, you won't have to beg them to stay by offering incentives. You want to be the village that businesses move to from other towns because we make it a good place to run a business. This is how the free market works.

Brian Slowiak from Oak Park  

Posted: October 30th, 2013 11:03 AM

The question not asked:What makes the Village of Oak Park unattractive to this business that the want to move out?

Mimi Jordan from Oak Park  

Posted: October 30th, 2013 10:23 AM

A lot of assertions about this wonderful positive economic impact, but where's the proof? Did Daly or Faust review the company's financial statements? Did they analyze the company's rosy projections? Or did they just take the company at its word? Board members need to hold village staff and OPDC accountable and ask HARD questions before committing our tax money to this questionable proposal.

pkv  

Posted: October 30th, 2013 10:14 AM

Can I get an incentive to stay? Please?

Brendan  

Posted: October 30th, 2013 5:40 AM

There is a cost to move a business from one location to another. The village is merely picking up the bill if this business remains within village boundaries. If anything this proposal seems light. For a business that adds $500+ to the local economy it would make sense to sweeten the pot so this business will stay. The article states that the business is a business service company so it is likely that they can move anywhere. Let's keep a successful business in Oak Park for a change.

Q from Oak Park  

Posted: October 30th, 2013 12:13 AM

You need to read the story to understand what it is about. The village wants to loan a business that is going to double it's employees in a year, 50 thousand dollars so the business can buy fixtures, furniture and equipment. The business that is doubling it's employees isn't going to pay the village back. The village is paying the loan back. This is a village gift of your tax money so a business can buy office supplies, double their employee size because if the village doesn't, they will move.

Bridgett from Oak Park  

Posted: October 30th, 2013 12:05 AM

Did she shake her head in agreement? Maybe she nodded her head in agreement.

Stuart Leitch from Rockford, MI  

Posted: October 29th, 2013 6:57 PM

If this deal makes economic sense, the village should do it. If that sets a precedent for other businesses to request similar help, decide each case on its merits. That's how business works.

Clancy  

Posted: October 29th, 2013 6:40 PM

Papaspiros? I wanna use my "too good to be true" Groupon. He's slippery that Papa.

John Butch Murtagh from Oak Park, Illinois  

Posted: October 29th, 2013 6:32 PM

Gizmodog - It's Game Time! I think it is Divine Consign!

Ned Ryerson from River Forest, Illinois  

Posted: October 29th, 2013 5:19 PM

This has the potential of creating a dangerous precedent. On the state level, allowing compaines to leverage tax breaks hurts both the company's reputation and the leaders who give them out. On a village level, this could open some floodgates that will never close; and make each case personal. My suggestion: let the company walk; at the very least, village leadership will not have to negotiate with every business who wants a handout because their taxes are too high. And, they are too high.

Gizmodog  

Posted: October 29th, 2013 4:22 PM

Why is the identity of this business such a secret?

John Butch Murtagh from Oak Park, Illinois  

Posted: October 29th, 2013 2:40 PM

Providing businesses with incentives is not a democratic process or social services. If a business proves that the increased tax revenue over a reasonable amount of time there is nothing wrong with supporting growth. As far as consulting with businesses,isn't that a function of the .village's business committee, the Chamber of Commerce, etc. The precedent should be simple. If a business can prove it can repay the loan within the agreed period, and increase tax revenue in the same period of time to makeup the fee relief, it deserves approval.

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