Jane plans to build a new refrigeration storage facility to house perishable specialty crops, like apples and blueberries.
Jane researches the Lee-Ogle Enterprise Zone region and finds a suitable site for her facility. This lot is located in one of its cities or villages, and is served by municipal and regional utilities, and in close proximity to major highways.
She contacts the zone administrator and verifies that the site is in the Lee-Ogle Enterprise Zone. The site is not in a municipal TIF redevelopment area so it would be qualified for real estate tax abatement on improvements. She finds that the zone incentives have the potential to allow her investment to take an accelerated schedule, years ahead of what she previously thought possible.
The real estate improvements necessary to build out this facility total $5 million dollars. Additional non-real estate furnishings, technology, etc. total $200,000. Estimated use of natural gas per year is $10,000.
A one-time fee of ½ of 1% of the estimated building materials cost (a typical project is about 50% labor and 50% building materials) is paid to the enterprise zone, which would be $2,500,000 times .5% or $12,500.
Savings accruing from a Lee-Ogle Enterprise Zone project are as follows:
| Lee-Ogle Enterprise Zone Project Benefit Estimate | |
|---|---|
| Property Tax Abatement | |
| Fair Cash Value of Improvements | $5,000,000.00 |
| Equalized Assessed Valuation | $1,666,666.67 |
| Tax Rate for Units that abate | 9.90% |
| Annual Abatement Savings @ 50% per Year | $82,500.00 |
| Total Six Year LCEZ Abatement | $495,000.00 |
| Buliding Material Sales Tax Exemption | |
| Project Improvements Cost Real Estate | $5,000,000.00 |
| 50% Building Materials (Estimated) | $2,500,000.00 |
| Local Sales Tax Rate 8.0% | 8.00% |
| Building Materials Sales Tax Savings | $200,000.00 |
| Investment Tax Credit in Enterprise Zone | |
| Qualified Property Placed into Service | $5,200,000.00 |
| Investment Tax Credit Rate .5% | 0.50% |
| Investment Tax Credit Savings Total | $26,000.00 |
| Gas Use Tax Exemption | |
| Annual Purchase Gas Cost Total | $10,000.00 |
| Gas Use Tax Rate 5% | 5.00% |
| Gas Use Tax Exemption | $500.00 |
| Total One Time Benefits | $225,000.00 |
| Total Recurring Benefits-over 1st 6 years | $495,000.00 |
| Total Recurring Benefits-ongoing | $500.00 |
In summary, the Jane Refrigerated Storage Project, when undertaken in the Lee-Ogle Enterprise Zone after applying and paying a $12,500 fee to the enterprise zone, would benefit from $495,000 in local property tax abatement, $200,000 in savings from the Building Materials Sales Tax Exemption, $26,000 in Illinois income tax credits, and an on-going $500 per year savings on natural gas purchases.