Old Orchard Business District Information

Old Orchard Business District Reimbursement Process

April 14, 2022

Per State of Illinois law, a Business District Allocation Fund must be created for every Business District in Illinois, and is the responsibility of the municipality to do so, which the Village has done.  This fund is required to specifically account for the additional one percent Business District sales tax collected at Old Orchard.  Like all sales taxes, the Illinois Department of Revenue collects taxes from every applicable business and Skokie’s portion of those taxes are then remitted to the Village monthly. Based on sales and the economic environment, there is no predictability of the amount of taxes collected and to be reimbursed to Westfield throughout the life of the Business District (23 years or less).  Westfield is taking all of the upfront financial risk as it pertains to their investment since the development agreement states that Westfield will spend $84 million for the project within the first 10 years or sooner.  The risk borne by Westfield is due to the fact that the taxes collected in the fund will be remitted in arrears to Westfield and are only for eligible costs defined by state law.  Twice a year, a meeting will be held and Westfield will be able submit to the Village reimbursement requests for development costs incurred at Old Orchard.  The Village will only release reimbursements up to the investment expenses as verified. To release reimbursements, Westfield is obligated to provide the Village a description of the eligible costs spent and a summary by category of expenditures along with copies of receipts, invoices, pay requests or other payment substantiation.  Should the Village determine that any portion of the funds requested from the fund are not eligible, the Village will provide notice to Westfield requesting additional documentation or validation from an outside audit firm. Skokie may unilaterally terminate the Business District Plan upon reimbursement to Westfield of all eligible costs upon completion of the project or should Westfield abandon the project as evidenced by failing to submit any project summary or project summary notice for 30 consecutive months.

Village Statement on Possible Westfield Old Orchard Sale

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April 12, 2022                                

Update Regarding Westfield Old Orchard Mall and Business District

During the recent creation of the Westfield Old Orchard Business District, the possibility of mall ownership changes or joint ventures were contemplated and addressed by Village leaders in the agreement between the Village of Skokie and Westfield Old Orchard. 

“The possibility always exists for significant properties to change ownership, as has historically been the case with Westfield Old Orchard mall that has had numerous owners over the years. Currently, as was initially announced in 2021 and recently reported in the media, the United States properties within the Global Westfield portfolio continue to be the subject of a possible sale,” said Village Manager John Lockerby.  “The Village carefully crafted the new Business District agreement so that all obligations transfer to any possible new ownership and no tax money is transferred until actual improvements are completed. The Village and Westfield – or Westfield’s successor - will continue to work together to ensure the mall’s transformation, achieving an even stronger flagship property status. On a national level, the mall industry is evolving to respond to e-commerce competition and the ongoing impact of changing pandemic conditions. The commitment to ensure Old Orchard’s relevance remains a top priority.”

Regardless of official ownership, the vision for the mall, including the Business District, remains unchanged. Plans are already underway for site improvements to heighten Westfield Old Orchard’s status as a best-in-class shopping destination for Chicago’s North Shore and beyond. Several new restaurant and retail concepts are coming soon to Westfield Old Orchard, including Tory Burch, Bar Siena, The Capital Grille, Alo Yoga, Reset by Therabody, Molly’s Cupcakes, L’Occitane, Marine Layer, Pie Five and Rod & Gunn, with more exciting announcements expected in coming months and throughout 2022. 

 “Westfield and the Village of Skokie have jointly developed a plan to secure a thriving future for the shopping center and we are fully committed to bringing new uses and diverse offerings, as well as enhancing the customer experience to create the best-in-class destination in the Chicagoland area,” said Dominic Lowe, U.S. Chief Operating Officer, Unibail-Rodamco-Westfield.  “In the coming months, we will announce new first-to-market retail and entertainment destinations that will transform the future of the center and the local community.”

The Village of Skokie’s innovative partnership with the Westfield Old Orchard ownership, as evidenced by the new Business District, ensures significant investments for the mall’s future success and insulates the property from the challenges experienced by so many retail shopping destinations. In addition, since the Business District was approved, Westfield has initiated conversations and meetings to explore the possibility of bringing new uses, including residential development, to the mall. 

Westfield Old Orchard is important to the region and community in many ways, including as a popular destination and resource to reduce the tax burden on other Skokie property tax payers.  Westfield’s annual property tax bill exceeds $14 million, of which approximately six percent, or $850,000, goes to the Village of Skokie. The remaining $13 million in funds go to Skokie school districts, Park District, Library and other taxing bodies.  Regardless of mall ownership, 100 percent of the investments made possible by the Business District will stay in Skokie, ensuring that Old Orchard remains a viable economic engine for many years to come. 

Westfield Old Orchard Center Business District Approved

Westfield 1 (JPG)


Westfield Old Orchard Business District Designation to Bring Exciting Enhancements That Create a Best-In-Class North Shore Destination

On March 7, 2022, the Skokie Village Board approved the designation of Westfield Old Orchard shopping center, the Village’s premiere sales tax generator, as an official Business District.  As the final step in the process, the Village Board passed a resolution on March 21, 2022 authorizing and approving the Old Orchard Westfield Redevelopment Agreement CLICK HERE. 

This decision followed a months-long, public project review and approval process. An initial presentation was made at the December 6, 2021 Village Board meeting, followed by a public hearing at the January 18, 2022 Village Board meeting as well as review, consideration and public comment at both the February 7 and March 7, 2022 Village Board meetings.

With this designation, Westfield Old Orchard becomes one of more than 220 Business Districts in the State of Illinois, with the sales tax rate at the shopping center to be increased by one percent no earlier than July 2022.  

“Westfield Old Orchard is an important asset to the Village of Skokie, with sales and property taxes from the center providing direct financial benefits for Village services as well as the Skokie Public Library, Skokie Park District, local elementary, high school and community college school districts and other taxing bodies,” said Mayor George Van Dusen. “In 1990, Village leaders made a bold decision to invest in improvements at Old Orchard that included the parking garage adjacent to Nordstrom which was pivotal to the retailer’s decision to locate at Old Orchard instead of other nearby centers. At the same time, the Village Board pledged to freeze property taxes at $15.4 million annually for at least five years – a pledge that has now been upheld for more than 30 years due to the Village’s continued, strategic economic development and prudent budgeting. These forward-thinking moves made for a great quality of life in our community while also contributing to the area’s regional standing, drawing people from around the Midwest to Skokie and surrounding communities, supporting their economies, too. The new one percent tax continues this historic pattern of wise investment to benefit Skokie and the entire region.”

The property tax burden at Old Orchard from Cook County, school districts and other taxing bodies accounts for 38% of tenant expense which is significantly higher than the national industry average of 12%, posing challenges to significant capital investment.  “Not only is Westfield Old Orchard the Village’s premiere sales tax generator, it is also a destination driver that brings people and additional businesses to Skokie” said Village Manager John Lockerby. “Now is the time to position Old Orchard’s future considering the changing retail environment in our region as well as increasing internet shopping trends.” 

All revenues generated from the designation of Westfield Old Orchard as a Business District will be directly reinvested by Westfield in urgently-needed upgrades to the shopping center’s infrastructure, customer amenities and overall ambience to ensure long-term business success and continued economic vitality. In addition to generating essential tax revenue, Westfield Old Orchard is Skokie’s largest private sector source of employment, creating jobs for approximately 3,200 area residents. 

“As we emerge from the unprecedented challenges posed by the COVID-19 pandemic, and as the retail environment continues to change so rapidly, we know businesses must transform to meet evolving customer expectations,” said Serge Khalimsky, Westfield Old Orchard’s General Manager. “At Westfield Old Orchard, we are passionate about the opportunity to invest in the center’s infrastructure, new uses and diverse offerings to create a best-in-class destination on the North Shore.”

Click here to see Mayor Van Dusen's February 17, 2022 Letter to the Editor of the Chicago Tribune.

Click here to see Frequently asked questions regarding the proposed Old Orchard Business District.

Click here to see letter of support from Chicago's North Shore Convention & Visitors Bureau

Click here to see letter of support from the Skokie Chamber of Commerce & Industry

Rationale for Consideration of the Westfield Old Orchard Center Business District

 

As one of the most significant economic drivers in Skokie, it is critical for the Village to help grow and enhance the viability of the Westfield Old Orchard Shopping Center (“Old Orchard” or the “Center”) as has been the case historically. Collectively, Old Orchard is the largest sales tax contributor for the Village and is a significant property tax generator for both Skokie School District 68 (K-8) as well as Niles Township High School District 219, the Skokie Public Library and Skokie Park District to name a few.  Furthermore, Old Orchard has been a significant point of pride for the Village and destination for the region since the center opened in 1956. 

Village staff and ownership from Westfield have been working collaboratively since 2019 to strategize ways in which to facilitate additional investment at Old Orchard.  The goal of this collaboration is multi-faceted to include increasing overall sales and taxes, as well as expanding the mix of tenants and services to create a ‘best in class’ experience for visitors and customers. Westfield has maintained hat extraordinarily high property taxes have and continue to be the key impediment which has and continues to discourage significant capital investment in the Center. In fact, Old Orchard has the highest property tax burden levied in the Westfield portfolio globally.  The property tax burden at Old Orchard accounts for 38% of tenant expense which is significantly higher than the national industry average of 12%.   This reality has dissuaded significant investment at Old Orchard over the past three decades as the last significant investment and expansion was completed in 1991.

As a strategic, prudent, and meaningful solution for improving and solidifying its standing as a top shopping and dining experience for the Village and region, a two pronged economic incentive approach was deemed necessary.  The first prong dealt with the Village Board recommending approval of a Cook County Class 7B property tax incentive for the redevelopment of the former Lord & Taylor Department Store.  The Village Board approved this recommendation at the December 6, 2021 Board meeting.  The second prong is form the, "Old Orchard Center Business District" in accordance with state law. At the February 7, 2022 Village Board Meeting, Skokie Mayor VanDusen and the Trustees voted 6-1 to direct Village Corporation Counsel to develop the appropriate ordinances and code amendments for formal consideration.  The Board considered and approved the formation of the Old Orchard Center Business District by a 6-1 vote on March 7, 2022.   The last step in the process occurred at the March 21, 2022 Village Board meeting whereas the Mayor and Trustees approved a resolution formalizing the Old Orchard Westfield Redevelopment agreement.

For more information please click on the following links below:.  

Resolution Authorizing and Approving the Old Orchard Westfield Redevelopment Agreement - CLICK HERE

Old Orchard Center Business District Plan as of 3-3-22 CLICK HERE

Board Memorandum and Collaterals - February 7, 2022 recommendation for designating the Old Orchard Center Business District, approving the Business District Plan, and making a determination of a blighted area finding and recommendation for a Village Code Amendment authorizing the imposition of a Business District retailer's and service occupation tax within the boundaries of the Old Orchard Center Business District - CLICK HERE

Board Memorandum and Collaterals  - December 6, 2021 recommending approval of a Cook County Class 7B Property Tax incentive for the former Lord & Taylor Space and outlining components of a Business District and requisite Public Hearing - CLICK HERE

Board Memorandum and Collaterals - January 18, 2022 Public Hearing - Proposed Westfield Old Orchard Center Business District - CLICK HERE

Board Presentation - PowerPoint Presentations - CLICK HERE

Sales Tax Sensitivity Summary - Gruen & Gruen Associates - CLICK HERE

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