Sales Tax Rebate
The City of St. Charles is committed to fostering economic growth and revitalization through strategic financial incentives, including our Sales Tax Sharing Agreements, also referred to as Sales Tax Rebate Agreements. These agreements are designed to support local businesses or developers overview by stimulate community development by redistributing a portion of the sales tax revenue collected from retail activities.
How does Sales Tax Sharing work?
When a retailer participates in a Sales Tax Sharing Agreement, they receive a rebate or share of the sales tax revenue generated from their business activities. This arrangement allows businesses to use the refunded funds for various property enhancements and improvements. By investing these rebates back into their property, businesses can undertake significant upgrades, renovations, and expansions that might otherwise be financially challenging.
The primary goal of these agreements is to alleviate the financial burden associated with substantial development and redevelopment projects. This, in turn, helps to attract new businesses, retain existing ones, and enhance the overall economic vitality of our community. As businesses grow and improve their properties, they contribute to the city’s attractiveness and competitiveness, which benefits the local economy as a whole.
For the local government, these agreements help balance the scales of development costs and provide a financial incentive for businesses to invest in the city. This strategic investment in property improvements not only enhances the business environment but also contributes to the overall revitalization of the area, leading to a more vibrant and prosperous community.
Through these Sales Tax Sharing Agreements, the City of St. Charles aims to create a win-win scenario: businesses receive financial support to enhance their operations, the city benefits from increased economic activity, and the community enjoys a more dynamic and attractive environment.
What projects are eligible?
Eligibility of a sales tax sharing incentive is based on the development proposals meeting the Financial Assistance Incentive Criteria outlined below, however interested parties should consult the entire the Economic Incentive Policy(PDF, 39KB).
Financial Assistance Incentive Criteria: Two of the following criteria must be met in order for incentive requests to be considered:
1. Attracting, retaining or expanding businesses for the purpose of improving the City’s economic base.
- Documentation of financial projections must be provided by the firm making the request and will serve as the basis for the agreement.
- Existing sales, property, or transfer sales from existing St. Charles businesses must be accounted for in the projections.
- Revenue sharing will be predetermined for a fixed period of time, based on a percentage of new revenues generated, and will include a “cap” amount.
- When applicable, “claw-back” provisions will be utilized. For example, when recipients fail to meet investment, wage, or job creation commitments, they will be required to repay a pro-rated share of the incentive reflecting the level of deficiency as determined prior to the agreement.
2. Desirable businesses that would enhance the vitality of the City.
3. Serve an under-served business segment.
4. Presence of extraordinary development/redevelopment costs such as:
- Remodeling/demolition
- Environmental remediation
- Capital purchases
- Facility expansion
- Public infrastructure
- Governmental impositions (road impact fees, storm water retention, road improvements, etc).
5. Proposed increase in employment.
- Firm has long-term lease for building and/or facility in St. Charles. Long-term is defined as 10 years or more.
- A minimum of 10 new full time employees.
6. Enhance the streetscape and pedestrian experience and improve the vitality of the area.
7. Improving public infrastructure.
8. Providing a variety of quality housing choices.
9. Quality of development and overall aesthetics are in excess of the mandated legal requirements and design standards.
How to Apply
Before applying for financial assistance, applicants must first meet with city staff to review the approval process, discuss their financial request, and outline the project's general details. This pre-meeting does not involve discussing specific incentive terms but provides guidance on how to proceed with the application. To apply, submit an application packet along with a $7,000 fee to cover the City’s legal, administrative, and review costs. This fee is refundable if not fully used, but additional costs for external consultants must be covered by the applicant.
The Part 1: Financial Assistance Application(PDF, 114KB) is a preliminary review that allows staff and the City Council to assess the request and its initial terms, though it does not guarantee approval. Applicants need to show why financial assistance is necessary and provide relevant documentation. If the request is below $1,000,000, involves only pay-as-you-go funding, applies to a single Zoning Lot, and does not involve TIF or BD assistance, the Part 1 step may be skipped.
The Part 2: Sales Tax Rebate Financial Assistance Application(PDF, 96KB), on the other hand, provides a detailed review of the need for assistance, final terms, and comprehensive documentation, including financial commitments, plans, developer background, and cost estimates. The City Council will use this information to decide whether to approve or deny the request.
Applicants are also required to submit audited financial statements for the past three years (or two years if comparative), interim financial statements for the current year, and a list of all investors with their names, addresses, and ownership interests. If needed, documents may be provided directly to the City’s financial advisor or legal counsel to maintain confidentiality.