Woodstock manufacturer could receive $900,000 tax break as part of $3.6 million expansion

Woodstock City Council to consider deal Tuesday

A Woodstock business that manufactures conveyor systems and more products used by the plastics industry could receive a $900,000 rebate in property taxes from the city over the next two decades as part of a planned 30,000-square-foot expansion of its facility.

If the plans come to fruition, the company, Molding Automation Concepts, which also is known as MAC Automation, would nearly double its footprint at the 1760 Kilkenny Court property where a 40,000-square-foot structure already exists.

The project would cost about $3.6 million total and also include renovations to the current interior. City staff is recommending elected officials approve a tax incentive of $900,000 to help offset the cost, with staff predicting the addition could add between almost $700,000 and $1 million in taxable value to the property.

The incentive being proposed, which could be approved by the Woodstock City Council on Tuesday, would limit property taxes on the new value added by the project until the business is reimbursed $900,000 by the city in taxes it would have had to pay without the deal.

“The agreement proposes to begin reimbursement at 75% of the increased portion, then decrease this percentage by 3% each year until the commitment is paid,” city staff said in a memo to the council. “This gradual decline in the percentage reimbursement is intended to serve two purposes: First to offset some of the investment cost, but second to reduce the budgetary impact for MAC, which would expect to have seen an immediate doubling of their property tax obligation.”

City staff estimates it will take 16 to 18 years for MAC to see the full payback while increasing their net property tax payments by 3% per year.

Staff contends the added property value and corresponding increases in tax revenue for local governments are worth giving the business a temporary tax break.

“The developer has certified that the project would not be able to be accomplished without assistance,” city staff said.

MAC employs 57 people, with about 40 in fabrication and 17 in engineering, sales and administration, city staff said. It would add at least 10 more workers in the first two years after expansion. The new positions would include assemblers, welders and machinists at an average annual wage of $35,000, city officials said.

“MAC has explored options for expansion in other communities, as well as out of state, but would prefer to stay and grow in Woodstock,” city staff said.

The council in 2018 expressed initial support for MAC’s expansion and hinted officials could be open to a tax break to help make it happen.

In fact, the project was one of the catalysts for the city establishing its second tax-increment financing district, the mechanism that allows these tax breaks to take place for properties in certain areas of the city, and extending its reach to MAC’s property.

The project would require MAC to acquire additional land to the north of its facility, add new loading docks and parking areas and redesign the stormwater flow and detention on the site.

“This project has been in development for several years, and was one of the key sites on the Lake Avenue and Highway 14 corridor, which influenced the scope of the TIF, approved in January 2019, to include this area of Woodstock,” city staff wrote in the memo.

Sam Lounsberry

Sam Lounsberry covers local government, business, K-12 education and all other aspects of life in McHenry County, in particular in the communities of Woodstock, McHenry, Richmond, Spring Grove, Wonder Lake and Johnsburg.