Maywood Approves $1.4M Tax Break Over Manager’s Warnings Of Possible Tax Hike For Residents

Sunday, October 7, 2018 || By Michael Romain || @maywoodnews 

Featured image: National Cycle in Maywood, which secured a tax break so that it can expand its footprint and shore up its finances. | Google Maps 

The Maywood Board of Trustees recently signed off on a significant tax break for one of the village’s oldest businesses even as the village manager warned that the measure could lead to higher taxes for other property owners in town.

During a regular meeting on Sept. 18, the village board voted 5 to 2 in favor of a resolution in support of granting National Cycle Inc. a Cook County Sustainable Emergency Relief Class 6b property tax incentive that company officials estimated could translate into around $1.4 million in tax savings over 10 years.

Trustee Kimyada Wellington and Melvin Lightford voted against the measure. Trustee Ron Rivers was not at the meeting.

Wellington and Lightford were among board members who voiced strong opposition to the tax break, which is offered to companies that can demonstrate economic hardship. Maywood Village Manager Willie Norfleet said that by approving the tax break, the board could be passing on higher taxes to residents in order to make up for taxes it would lose.

Board members in favor of the tax break, however, argued that the incentive was necessary if one of the village’s oldest businesses and one of its largest employers is to remain in Maywood.

At a regular board meeting on Aug. 4, National Cycle representatives said that the tax break was necessary because the company had experienced turbulent market conditions and a change in financial fortunes since last year, when it embarked on plans to purchase a strip of village-owned property near its facility at 2200 S. Maywood Drive in order to construct a roughly 29,000-square-foot expansion of its existing facility.

National Cycle, a motorcycle windshield manufacturer that has been in Maywood for 83 years, was supposed to begin construction on the expansion in the summer, but the planned work was halted after a large bid fell through, company representatives said in August.

In a September 26 board memo from village attorney Michael A. Marrs, the company faced “changing business conditions, including the on-going uncertainty in U.S. trade regulations with Europe and China, which have caused National Cycle to lose orders and have caused price increases.”

The county tax break only applies to companies located in the same facility for 10 years, operate in property that is used for industrial purposes and shows evidence of at least three of 13 signs of blight.

A company also has to provide detailed a financial justification for why the tax break is necessary in order for it to maintain its operations at the current location, among other criteria. In addition, the municipal board where the company is located must also vote on a resolution in order for the company to secure the tax break.

According to financial projections National Cycle representatives provided to the board in August, the company paid $226,201 in property taxes in 2017. A Class 6b SER tax incentive would have reduced that tax bill by 60 percent, to $90,481.

If given the tax break, National Cycle could see $135,720 shaved off of its property tax bill each year for 10 years, from 2018 through 2027 — amounting to $1,357,000 in savings to the company during that time period.

Since Maywood collects 58 percent of that property tax revenue (the other portion goes to other taxing bodies, such as the library and schools), those savings to National Cycle could translate into around $787,000 in lost tax revenue for the village over the course of a decade, village officials said.

The board voted to grant National Cycle the tax break contingent on the company completing its expansion, which they said could potentially offset at least a portion of the $1.4 million in projected tax revenue that the village could lose.

As part of the initial redevelopment agreement, the village had agreed to pay an estimated $408,000 to pave an adjacent right-of-way that would serve the new building addition. The village had also granted the company a tax break on the new property. The most recent tax break would apply to all of National Cycle’s manufacturing operation.

On Oct. 2, the board voted on changes to that initial redevelopment agreement to reflect that National Cycle has since agreed to pay for paving the right-of-way.

In addition, National Cycle must close on the sale of the village-owned property by Oct. 31 and begin construction on the expansion on or before Sept. 18, 2021. The expansion must be substantially completed by Sept. 18, 2023, or else the village could take steps to terminate the tax break.

During the Oct. 2 meeting, Maywood Village Manager Willie Norfleet repeated the warning he gave board members in August, telling the board that losing nearly $800,000 could further diminish the village’s capacity to fund services make emergency purchases.

Currently, Norfleet added, the village is looking for money to replace a decommissioned aerial ladder truck for the fire department, but it does not have the roughly $800,000 needed to buy a new one.

Norfleet also pointed out that if National Cycle does not adhere to the terms of the amended redevelopment agreement, the village does not have much power to hold the company accountable. For example, if it wanted to terminate the tax break, the village would have to file a request with the county.

“If the tax levy stays the same, the tax rate will potentially need to be increased and residents may have to pick up the differential,” Norfleet warned. “You have passed on a tax burden with the reality that you’re asking [the company] to do something that is not enforceable.”

For their part, National Cycle representatives have assured board members that they will stick to the time frame set out in the agreement.

“Once we decide to construct, we want to construct as fast as possible,” said Patrick Miguel, a National Cycle representative, on Oct. 2.

When National Cycle representatives presented their request for the tax break to the board in August, some residents voiced their opposition during public comments while Wellington urged the company to understand “the status of the village. We don’t have money and we’re putting this back on the residents.”

Board members in support of the tax break, however, said that National Cycle should be treated similar to larger companies that have gotten tax breaks in the past, such as Aetna and Cintas.

“The citizens in Maywood want business,” Mayor Edwenna Perkins said in August. “We cannot give them business, unless we give [the businesses] some support.”

“This is a tough decision that has to be made,” said Trustee Isiah Brandon at the Oct. 2 meeting. “You have a business in front of us who has been in the village for 83 years. Do you want to lose everything or try and work with them in order to save what we do have, with the possibility of them expanding as well?” VFP 

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