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Give Company A Tax Break? Niles Board Split

One company wanted to buy a vacant property to expand in Niles, but said it needed a tax break to do so. Trustees disagreed Tuesday over whether to just give it to them or wait until they could develop criteria for which companies get tax breaks.

 

A request from a business for a tax break gave rise to heated discussion on the Niles village board Tuesday.

Trustee Andrew Przybylo recommended the board grant a tax break called a 6B to Gustafson Group, LLC, which wants to purchase a vacant building in disrepair at 7430 N. Croname Road, Niles, and renovate it extensively to conduct business there. Gustafson is a family-owned business that has done commercial printing in Niles for 25 years, he stressed. 

The 6B is a Cook County program that gives businesses an incentive to occupy vacant property, according to a board agenda item explanation.

However, Trustee Chris Hanusiak urged the board to develop parameters and guidelines for when to grant businesses 6B status.

"We talked at the last meeting about establishing parameters for using 6B. There are many vacant properties, and we could get inundated with many 6B applications," he said.

He moved to table the vote to the next board meeting to give the board time to develop guidelines on when to grant businesses 6B status.

Chuck Ostman, the director of community development, noted that the property buyer and seller wanted to conclude the sale before the end of the year to get tax advantages. 

Przybylo and Mayor Robert Callero both indicated their willingness to develop parameters in the future, but urged the board to grant 6B status to Gustafson immediately.

"This is a question of loyalty. This is ludicrous," Przybylo said. He urged the board to pass it, saying, "Anything else is anti-business and is disruptive to community."

But Hanusiak said that if the village grants one business a tax break, other businesses have to pay a larger share of taxes. He questioned whether that was fair to other businesses. 

"We have to decide-- are we going to push other businesses out of Niles? Because their taxes could go up," he said. 

Trustees Jim Hynes and Louella Preston asked questions to try to clarify the property tax implications, and Finance Manager Scot Neukirch said that Cook County taxes collected from vacant property are typically less than that of a property designated a 6B.

Cook County taxes occupied commercial property at 36 percent. With the 6B, however, the business would pay 16 percent, he said. (UPDATE: Neukirch clarified after this article originally posted that he was using percentages from 2010, since that was the last time he worked on a 6B.)

The Cook County assessor's office website says that a 6B business gets assessed at 10 percent of its market value, instead of the usual 25 percent, for the first 10 years--a significant tax savings. Then it goes up gradually after that, according to the Village of Wheeling's website.

Hynes asked "who loses?", i.e., if someone gets a tax break, does someone else have to pay more?

Neukirch replied that municipalities do not lose money because the 6Bs are already factored in to the tax base when the levies are calculated.  

"We have to get educated so we know what we’re doing here," Hynes said. 

Callero turned to Hanusiak and said, "I want to make sure (to note) that your statement was incorrect that we’re putting taxes on the other businesses."

Hanusiak responded that the village needs parameters so that businesses can know if they qualify for 6B and so the village knows how to prioritize in case it gets 20 applications for 6B status.

"This is not against the company that’s filing this at all," he said. "... We don’t have any true understanding of what a 6B is."

"All this wisdom is dizzying. Call the motion," said Przybylo, asking for the vote to be called. 

Callero urged the board to grant 6B status to the company.

However, the board tabled the issue, deferring it until January, by a 4 to 1 vote with one absence.

A man in the audience asked if he could comment, was recognized, came to the podium and identified himself as John Gustafson, one of four brothers in the family-owned company. 

He told the board he agreed that they needed parameters, but that his company drew up the deal counting on the 6B status, and the deal would need to be closed by the end of the month.

"We don’t have a signed contract, we’ve been going back and forth. The building is a dive and we’ve got to put a lot of work in," he said. He said the company has three other buildings in Niles, none of which are 6B.

Materials presented to the board indicated the Gustafson's printing company, JohnsByrne, employes 131, and the expansion would allow them to hire "hopefully" 10 more full-time and 35 more part-time employees. 

After he finished, Callero asked the trustees if they wanted to make a motion to re-open the vote, but none of the trustees responded.

"I’m sorry, Mr. Gustafson, I’m ashamed of this board," Callero said.

During the public comment period, Harry Achino, a resident and businessperson, expressed his displeasure with the board's decision and said he apologized to the Gustafsons for getting caught in the middle of a political squabble. 

"What was missing in the discussion was the real estate taxes they are paying on all their other properties," he said.

Norbert Johnson, also a resident and business person, echoed his comments.

George D. Alpogianis December 13, 2012 at 12:54 PM
This is really a shame. Niles has always been a PRO-business community and that's why we have always been high up on the ladder for sales tax revenue in the state. Once again, people speaking out of line and not understanding what it takes to run a business have squashed expansion of not only more SALES tax revenue, but a total of 40 new jobs in our Village. Louella Preston and Jim Hynes have always worked for some form of government or educational based employer and do not know what it takes to run a business, balance a budget or how to build a business. Time to move over and let some new blood in. as much as I was against spending $100000.00 plus on televising these meetings, I now stand corrected. The WHOLE Village can see what a terrible job they are doing and how they are hurting us with foolish decisions and are more worried about correcting puncuations and spelling errors made in the minutes and notes.
KC December 13, 2012 at 03:02 PM
Very sad situation. 4 Trustees who serve our community and don't know what a 6B property tax is. Check the records they voted before to approve these. Now because of an election they deny a business owner of 25 years by tabeling. All 4 are cowards and followers. Thats what you get when you elect people who don't know how to serve a community. Two can't find the answers in text books, one a lawyer states I don't know, the other sells cabinets and thinks he is the polish prince here to save Niles. The leader, Chris has got the other three following him like sheep to the slaughter. Every month its something new but nothing ever gets done dealing with the real issues because they don't know how to deal with them. They have done enough damage and we can get two out very soon and the other two shortly. Poor Mary Marusek how did you get sucked in on this ticket. You had a solid chance to win on your own but followed the leader, shame on you because you got enough support the last election to win this time around but forget it now. Keep going against business and you could claim the increase in property tax when business moves out.
Bob G December 13, 2012 at 03:54 PM
Mr Neukirch according to what i read the 6b will tax at 10 % not 16%. So as our finance manager you should get that right unless the 6b has been updated. This was found in 2 minutes on Cook County Assessor website. If we are going to vote on things like this we should at least know what they are. "Under the incentive provided by Class 6b, qualifying industrial real estate would be eligible for the Class 6b level of assessment from the date that new construction or substantial rehabilitation is completed and initially assessed or, in the case of abandoned property, from the date of substantial re-occupancy. Properties receiving Class 6b will be assessed at 10% of market value for the first 10 years, 15% in the 11th year and 20% in the 12th year. This constitutes a substantial reduction in the level of assessment and results in significant tax savings. In the absence of this incentive, industrial real estate would normally be assessed at 25% of its market value." This is a Cook County tax incentive. Niles would have to approve the property being considered by a legal ordinance. If I am reading correctly this is a property by property incentive and each application would need to be approved by the village. So yes standards will be needed going forward but this looks reasonably safe and good for the village.
HARRY ACHINO December 13, 2012 at 04:47 PM
What was missing from this article Pam was the arogance and true understanding of how local government works by four members of the board. I might be wrong but I think the number of full time jobs that were projected was 135. What really happened, the Gustafson family got caught in the crosshairs of a political battle that will finally end in April. As we are coming out of a deep recession, can we really afford to lose these jobs and the extra tax revenue the property generates? Chris Hanusiak once again proved he will stop at nothing to foward his political agenda. The Gustafson's are just collateral damage in Hanusiack's quest to become king of Niles. When it was pointed out by the mayor and confirmed by the village finance manager that Hanusiak had his facts wrong and the B6 would help the village and the other commercial property owners in Niles, he just sat there with a blank look on his face. It was expected that Hynes and Preston would vote with Hanusiak, but what was truly disappointing was the fact that Rosemary Palicki joined them. Three trustees approeched me after the meeting, Hynes ( The caped crusader for the legal community, who has produced hundreds of billable hours for his cronies, ) Preston and Rosemary. A heated discussion ensued with Hynes, for which i'm surprised he didn't hand me an invoice for legal advice, a polite discussion was had with Preston and Rosemary and once again Hanusiak sat their with a blank look on his face.
HARRY ACHINO December 13, 2012 at 04:53 PM
One last thing. I urge my fellow citizens to come to the next board meeting and see this fiasco for yourslves. if you can't make it, watch the telecast. Some of our elected officials make Honey Boo Boo lool like a brain surgeon.
CK December 14, 2012 at 01:26 AM
Pro-business? Was it so your buddy Blase could make more socalled insurance recommendations the kind of which put him in prison??? I watched the TV and saw the four trustees act as they should while the Callero character ranted and raved and let the Harry guy below do the same. I'm glad people had the chance to see this mayor behave in such a way that makes a normal person cringe. Yes its time for a change, a change which dumps the Blase created and controled trustees and current mayor for people who are honest and ethical and KNOW PROPER BEHAVIOR AT PUBLIC MEETINGS. The WHOLE world can see what a terrible job Callero is doing by insulting trustees who voted their consciences. He turned the meeting into a circus. For decades there was a kickback artist who got sent to prison and now a ranter. Your buddy Callero should be apologizing to us for such shameful bahavior. I looked up the bios on Preston and Hines and see that they are lawyers- the same professional as your hero Blase. Did you tell Blase that he should do something else? My neighbors told me Blase got involved in businesses AFTER he was mayor and I need not wonder how and why. Business is a always good background especially if some body starts their own business and not get handed an ongoing operation. Know what I mean?
Pam DeFiglio (Editor) December 14, 2012 at 04:57 AM
Hi Bob G, I spoke to Mr. Neukirch just after this article was posted, and he said his information was from 2010, which was the last time he worked on a 6B. He said it has since been updated--and what you found is the updated information. I have updated the story to reflect this. Thank you for commenting.
George D. Alpogianis December 14, 2012 at 07:03 PM
Dear CK, I am glad to see that you agree with the bulk of what I said. I understyand business. My father worked hard to get Kappy's going and insisted that I do the same. He made me do the same as him, take out a loan with my brother to buy his partners out and has just moved into semi-retirement about 1 month ago. NOBODY should be handed a business without working for it, entitlements are what is ruining our country. As Trustee Hynes, he is a lawyer that worked for the government, never in his own practice as far as I know. Trustee Preston has a law degree, and I believe never practiced as far as I know . She was also part of the Chicago Board of Education for years as I stated earlier. Lets not forget that we ran together on the same ticket 4 years ago, and I was amazed how she threw everyone, including myself under the bus as quick as she was done with them. That's why I chose not to run with her this time. The L6 would have benefited the Village greatly, since Sales Tax $$ were involved and the Village only sees a minute part of property taxes. Lets not also forget that during Blases' tenure, 2 Walmarts, 2 Targets, 3 Jewels and 2 Home Depots were opened and still provide a great source of revenue for US!
HARRY ACHINO December 14, 2012 at 08:09 PM
CK, Since you are to much of a coward to use your real name, your opinion is just more BS floating around cyberspace. George was kind enough to respond to your ranting and ravings I will not. Peace and have A nice day.
CK December 17, 2012 at 02:44 PM
Dear Mr. Alpolgianis: The minister said yesterday that we are supposed to tell others things to make their life better and so then ours is. I cant see why you say I agreed with the bulk of what you said. I didn't agree with anything. I was upset that you went after the two trustees becuase of their jobs. Blase was a lawyer and didnt have business until he was in power. Did you tell him he wasn't qualified. Governor Quinn who gave you a pardon is a lawyer and not a businessman. Did you complain to him about his lack of credentials to be a village trustee and even governor?????? As for the big boxes coming to niles, those locate at places identified by professional market researchers and not to places becuase some guy is mayor. My neighbors tell me that when Old Orchard got Fields Niles got Goldblatts under Blase. They also told me that years ago in Blases time many small businesses left Niles. Get real. Merry Christmas sir.
CK December 17, 2012 at 02:47 PM
Better thought to be a coward than be known as a screwball
Matthew Lagodzinski December 18, 2012 at 03:57 PM
In principle, I agree that there needs to be criteria to either approve or deny 6B requests. In the absence of that being defined prior to this request, I don’t think its fair to penalize the requestor. That being said, after watching the video it seemed clear to me that a more constructive discussion could have been attained if the request was presented a bit differently. The issue seemed to boil down to the following decision tree. The property is currently vacant, collecting 22k worth of taxes. First question, considering all of the repairs required, is it likely the property sell without a 6B (to any investor)? If the answer to that is No, then I think the response is to approve and collect the additional 14k in taxes for whatever that duration is. If the answer is Yes, then the question is, how long is the Village willing to wait to for a buyer to purchase outright without a dependency for the 6b (80k range)? From that decision, you can calculate the lost opportunity in collecting tax revenue with the 6B while hedging for that purchase without the 6B. If in the long run that is more palatable for the Village, then the vote should be to deny. Obviously there are other considerations, perceptions of being anti-business, etc. I think this will be the hard part to include in any parameters going forward as there will need to be subjectivity in creating a risk profile based on the property and location and not necessarily the investor.

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