Self-storage unit renters might face new tax in Lake in the Hills – and businesses could keep part of it

Renting a self-storage unit in Lake in the Hills might soon involve paying an extra tax.

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.

At a recent village board meeting, Lake in the Hills Director of Community Development John Svalenka gave an example the proposal's impact on cost, using a 10-by-10-feet storage unit. He said it was the cheapest officials could find in town and it rents for $84 per month. Under the proposal, the person renting it would pay an extra $4.20 in tax, or 5%.

As the business owners would have to collect and submit the tax, officials are suggesting letting them keep 5% of it. Out of the $4.20 in the example, the business owner would get to keep 21 cents and send Lake in the Hills $3.99, Svalenka said.

The tax would work like a sales tax, where it is paid for by the customer. Lake in the Hills is proposing a 5% fee, similar to ones that exist in McHenry and Carpentersville .

McHenry approved its tax in 2022 and Carpentersville approved its tax in 2021, according to both municipalities' records.

In Lake in the Hills, the tax would generate an estimated $120,000 per year. It would apply to traditional self-storage facilities like Extra Space Storage and outdoor vehicle storage.

Lake in the Hills officials also noted that they've incurred extra costs related to policing outdoor vehicle storage facilities, officials said. One facility located on Route 31 had 12 police visits from May 2023 to April 2024, according to village documents. When asked what the nature of the calls were, officials said it was a lot of auto theft and burglary-related calls.

Village staff broached the tax to get guidance from the board before determining whether to bring the proposal back for a vote. That could come next month, though officials said they would first notify affected businesses, which would also apply outdoor vehicle storage facilities such as truck storage lots recently approved along Route 31, village documents indicate. If approved, the tax could take effect Jan. 1, 2025, according to village documents.

One trustee asked how the tax would be enforced and how officials would know they were getting the right amount. Village staff said the owners would submit records, which the village could audit.

in response to a question from Trustee Bill Dustin, officials said they didn't intend for the proposed tax to apply to the Lake in the Hills Airport. When Dustin asked why not, village staff said they could look into it if they got guidance to do that.

Village staff said the tax is not meant to generate revenue, but rather offset their costs and make up a little bit of the revenue lost out on other uses.

The village board felt they needed more information, and Village President Ray Bogdanowski told the staff to come back in two weeks.