Mundelein may split taxing district to help fund developments

Mundelein officials are considering splitting a special taxing district on the town's north side into two distinct zones to provide extra financial assistance for an upcoming $40 million retail and residential development and other projects.

The irregular-shaped, 100-acre zone — formally called a tax increment financing district — is south of Route 176 and east of Route 45.

It comprises commercial, residential, industrial and municipal properties, including much of the downtown business district. Notable landmarks include village hall, the Metra station, a post office and the Cardinal Square condominium and apartment complex.

A portion of real estate taxes generated by properties in the district is diverted to a special fund that helps pay for public improvements in the area, such as utility upgrades and flood relief.

Under state law, TIF districts can raise money for up to 23 years. Mundelein's TIF district was created in 2005, so it has about 12 years of life left.

Creating a new district gives the village more time to collect money to pay for improvements in that part of town, Village Administrator John Lobaito said.

“We will restart the TIF clock for 23 years,” he said.

Under the village's plan, the current TIF district essentially would be cut in half. The Canadian National railroad tracks running north-south through that part of town would separate the zones.

The western zone would contain the big development that triggered the discussion — a proposed six-story complex on Plaza Circle across from village hall that would feature up to 30,000 square feet of first-floor retail space and 130 apartments on the upper levels. A Chicago firm called Mega Realty is behind the proposal, which would occupy 3 acres and has been in the works since June 2015.

Lobaito said money in the TIF fund could be offered as an incentive to the developer to finalize the deal. Those revenues could be used to help pay for infrastructure improvements, the construction of public parking areas and other elements of the project, he said.

That potentially makes the project more affordable for the developer, officials said.

“Without the extended TIF revenue, the (Mega Realty) project would not make a return high enough to warrant its consideration,” Mayor Steve Lentz said.

And with village officials hyper-focused on improving the downtown area, they don't want to lose the project.

“It will help cement the Plaza area as a downtown destination, with shops and restaurants, for people to meet and hang out,” Lentz said.

A second proposed project in the downtown area could directly benefit from the TIF plan, too.

A developer has purchased the former U.S. Music Corp. factory at 444 E. Courtland St. The firm plans to replace the building on the 15-acre site with a residential project, the details of which haven't been announced.

Maps showing the current district's boundaries and the proposed changes are available on the village's website, mundelein.org.

A map showing the proposed boundaries for the second district hasn't yet been released. The changes to the existing district must be approved before the second one can move forward, Lobaito said.

A public meeting about the proposed changes to the taxing district is set for 7 p.m. April 5 at village hall, 300 Plaza Circle.

The district wouldn't merely split into two if the plan is approved. The zone west of the tracks will absorb about 10 additional properties and expand to about 97 acres, Lobaito said. The zone east of the tracks will end up at about 36 acres.

Additionally, some properties now in the western portion of the district will be removed so the real estate taxes they generate can be fully shared by local government agencies. Those sites include: a McDonald's restaurant on Route 45 near Division Street; a Shell gas station at Route 45 and Division Street; and Mundelein Community Bank, which is on a different corner at that intersection.

Village hall would be removed from the district, too. Although government buildings normally are tax exempt, the structure generates property taxes because a private company occupies the second floor.