Lake in the Hills moves toward new tax on self-storage units

Lake in the Hills could ring in the new year by levying a user tax on self-storage facilities.

Village officials first brought up the idea in September, but the board had questions about how the tax would be collected and whether the tax would apply to the Lake in the Hills airport.

Self-storage facilities do not create a lot of sales tax revenue, jobs or foot traffic for other businesses, and they don’t generate as much property tax as industrial or retail uses because their assessed value tends to be lower, according to village documents.

The village staff is proposing an additional 5% sales tax for the self-storage facilities, similar to ones levied in McHenry and Carpentersville. The Lake in the Hills tax would apply to traditional self-storage facilities but also outdoor vehicle storage facilities.

The village gave an example of a storage unit that goes for $84 a month. Director of Community Development John Svalenka in September said that was the cheapest one officials could find in town. The example unit would pay $4.20 per month under the proposed tax.

Lake in the Hills also is proposing allowing the business owners to keep a portion of the tax to offset their costs in collecting it; in the example, the business owner would get to keep 21 cents of the tax and send the remaining $3.99 to the village.

Vehicles and airplanes are not defined similarly in the Lake in the Hills code, and officials said that was why aircraft was not included. Village documents indicate there is an existing $18.73 storage fee for an aircraft stored at the airport. Officials also confirmed that there is no non-airplane storage at the airport; Lake in the Hills officials said in response to a question from Trustee Bill Dustin that they used to allow non-airplane storage but no longer do after the Federal Aviation Administration said they could not do that.

If enacted, the tax is expected to raise an estimated $120,000 in revenue each year. Village officials said in September that the tax is not designed to generate revenue, but rather offset costs and make up revenue lost on other uses.

The Village Board said in late October that it was interested in moving forward with the self-storage tax. Svalenka on Friday said the village mailed out notices to all the self-storage businesses Oct. 25, but it has not heard from any of them. Svalenka said the mailing wasn’t required but was done in the spirit of transparent government.

The Village Board is expected to take up the issue Nov. 14. Village documents indicate that if the tax is approved, it could go into effect Jan. 1. If that is the timeline the Village Board chooses, Lake in the Hills would send out another notice to the businesses.

Svalenka said officials think the six-week timeline outlined is enough time. He said the businesses already have procedures in place to bill tenants and would have to make edits to that.