Crystal Lake tables 5% self-storage tax as businesses raise objections

The Crystal Lake City Council has postponed consideration of a 5% self-storage facility rental tax after business leaders' pushback.

The tax was proposed as part of the draft budget as another revenue source since the service cannot be taxed by the traditional sales tax, according to city documents. City staff estimated Crystal Lake could receive roughly $150,000 annually from the proposed tax.

The proposal was listed on the agenda for Tuesday’s City Council meeting but was taken off the agenda that evening. Liberty Self Storage Facility owner Jack Schaffer and Hawthorn Storage owner James Keelan sent a letter to the mayor and city council earlier that day with concerns that the tax would be difficult and expensive for businesses to collect and that no self-storage owners were notified about it.

“If they sat down with the industry… they probably would have drafted a better bill,” Schaffer said in a phone call with the Northwest Herald.

Schaffer, who also served in the Illinois state Senate, said he received a call from Mayor Haig Haleblian Tuesday afternoon saying the city would table the proposal and notify self-storage facilities if it will be considered in the future.

“I will take the mayor’s word to the bank,” Schaffer said at the city council meeting. “I would just like to say thank you.”

There are 10 existing or planned self-storage facilities in Crystal Lake with about 4,000 units currently, according to city documents.

Before it was tabled, the proposal had aimed to impose the tax on customers and have the businesses collect it for the city, similar to the local 5% hotel/motel tax. Taxes collected would go toward capital improvements, according to city documents.

Crystal Lake’s capital fund includes the police department, Three Oaks Recreation Area, Public Works, engineering and facilities divisions and the information technology department.

“Enacting this tax would provide a revenue source from these businesses to the City to help support increasing capital demands of the community,” staff said in city documents.

The proposal also cited police calls to self-storage facilities, which can be “a drain on police resources,” the city document states. There have been five reports of burglaries at self-storage facilities in Crystal Lake since 2020, according to city documents.

“While each facility may implement safety precautions, calls for police assistance at self-storage facilities are typically more time consuming than responses for most service businesses,” staff said in document.

It is unclear if or when the proposed tax will be reconsidered in the future. Haleblian could not be reached for comment.

Lake in the Hills proposed a similar tax in September, but a motion to vote on the matter at a meeting on Nov. 14 failed to be seconded and therefore did not pass.

A 5% tax on self-storage facilities has been implemented in nearby municipalities including McHenry, Carpentersville and Mundelein.