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Vernon Hills committee leans to keep conversion-certificate review but remove or restrict pilot payment-in-lieu provision
Summary
After a lengthy Committee of the Whole discussion, staff was directed to draft amendments that would retain the village's conversion-certificate review but eliminate or tightly define the pilot payment-in-lieu of sales tax provision, with a future public hearing planned.
Committee members spent an extended session reviewing the village's conversion-certificate program, created in 2010 to limit non-retail conversions in designated retail-overlay areas once more than 20% of space shifts away from retail. Staff described market changes and the program's effects on landlords and leasing; the village attorney warned the program's pilot payment-in-lieu provision could be legally arbitrary unless clear standards are added.
Director Jennings summarized options: minimally add standards for when a pilot would apply; increase administrative flexibility for long-vacant units; overhaul the 20% threshold and create weighting for higher-productivity uses; or eliminate the program entirely. "So that's the range of the 4 potential options," Jennings said. The village attorney cautioned that the pilot provision, which can require a sliding scale payment of sales-tax-equivalent amounts over five years, contains no clear criteria. "The concern with that particular part of the program is...it's very arbitrary, and it would not withstand, judicial scrutiny, if you were to require a payment in lieu of sales tax," the attorney said.
Trustees cited both landlord concerns about predictability and the village's need to protect sales-tax revenue (the village does not levy property tax). Several trustees used the Planet Fitness conversion as an example: a long-vacant large unit that benefited the center's activity when repopulated. Board discussion repeatedly returned to two themes: preserve board oversight and standards for conversion decisions, and remove or tightly constrain the pilot requirement to avoid arbitrary application and legal risk.
Committee members directed staff to draft an amendment that at minimum addresses the lack of standards for the pilot and, if possible, to present draft language for committee review prior to a Planning & Zoning public hearing. Staff also noted alternative policy tools (impact fees, amusement taxes or other revenue mechanisms) could be explored if the committee wants to recapture revenue associated with lost sales-tax-generating space. The draft amendment will come back to the Committee of the Whole before scheduling the planning-and-zoning public hearing.
