Businesses Upset With Portillo's Tax Incentives

Upset with a sales tax kickback Portillo's will receive to build in New Lenox, local restaurant owners are banding together to oppose the incentives.

Business owners contacted Patch on Tuesday but declined to give their names. Mayor Tim Baldermann confirmed that he will be meeting with representatives from the business on Thursday.

At the April 9 Village Board meeting, trustees approved an economic incentive agreement that will give back 1/2 the sales tax revenue generated by Portillo's, which plans to open this fall in a lot by and .

The agreement will last seven and a half years. Even after that incentive, the village conservatively estimates it will get an additional $100,000 in sales tax revenue from the addition of Portillo's.

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Banding Together

According to the business owners who contacted Patch, the following restaurants have agreed to voice opposition to the Portillo's tax incentives: 

, , , , , , , , , , , and even national chains here in and .

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At least some representatives asked for a meeting with Baldermann on Thursday, though the mayor said at this point nothing would change. 

"Since Portillos is getting a kick back, why aren't all the other restaurants in New Lenox not getting their fair share," a commenter called Papa Joe's 1 said in a previous article. "We have been paying dearly for many years!"

The mayor said he's happy to work with businesses and hopes they will be understanding. He pointed to various things the village does to work with local businesses, such as highlighting them on Channel 6 TV shows or providing opportunities to sell food at the concert series. 

"I understand they're frustrated, but if somebody thinks they're entitled to the same incentive as somebody else when it's apples and oranges, that's not good business sense," Baldermann said. 

Why Give Tax Breaks?

Baldermann said his explanation to the business owners Thursday would be pretty simple. To illustrate the value Portillo's could bring, Baldermann said the highest grossing New Lenox restaurant does $1.3 million in annual sales. Portillo's is converatively estimated to do more than $8 million a year in sales. 

"Even after we pay out the incentives, they will bring in three times more sales tax than any other restaurant," Baldermann said.

Building Costs: The mayor said restaurant owners should keep in mind that Portillo's has to "dig a hole and build a building." Right now, that lot by Target is undeveloped. "Most of our restaurants bought an existing building or moved into another building," he said. "Portillo's has costs that no one else has had."

Competition: It's no secret that Portillo's is a business that's highly sought after. Other communities vying for Portillo's offered the same incentives, and if New Lenox didn't the village could have lost out on the business, Baldermann said. "They're not just a hot dog stand," he said. "They could go anywhere they wanted."

Common Practice: Baldermann said tax incentives such as this are a regular occurrence for businesses that can bring in a high amount of sales tax, pointing to Walmart and Target as other local examples. But he said there are other indirect ways that local restaurants could see these incentives. For example, Bill Bolker got a tax kickback to develop the Calistoga Plaza, where Badda Bing's and Charleston's rent space. 

"We've got great restaurants in town and I want people to go to our local restaurants," Baldermann said. "But they have to understand why a place like Portillo's would get incentives."