VILLAGE OF BUFFALO GROVE, ILLINOIS Notes to the Financial Statements December 31, 2022

NOTE 3 – DETAIL NOTES ON ALL FUNDS – Continued

TAX ABATEMENTS – Continued

The Village has entered into a tax abatement agreement with Zonatherm. In order to encourage Zonatherm to maintain its business operation in the Village, and to assist with their project in the Village, the Village agrees to share home rule sales tax received by the Village using a formula which corresponds to new sales tax generated by Zonatherm over a finite period of time. For the fist sales tax year, 100 percent of that year’s incremental municipal sales tax above the base of $100,000 will be paid to Zonatherm. For the second sales tax year 90 percent of that year’s municipal sales tax above the base of $100,000 will be paid to Zonatherm. For the third sales tax year 80 percent of that year’s municipal sales tax above the base of $100,000 will be paid to Zonatherm. For the fourth sales tax year 70 percent of that year’s municipal sales tax above the base of $100,000 will be paid to Zonatherm. For the fifth sales tax year 60 percent of that year’s municipal sales tax above the base of $100,000 will be paid to Zonatherm. For the sixth sales tax year 50 percent of that year’s municipal sales tax above the base of $100,000 will be paid to Zonatherm. For the seventh sales tax year 50 percent of that year’s municipal sales tax above the base of $100,000 will be paid to Zonatherm. The entire distribution cannot exceed $500,000 in aggregate. This agreement will end upon the completion of the seventh year or the $500,000 cap. In the event that Zonatherm ceases the business with seven years or generate less than $1,000 in sales tax in any sales tax year, Zonatherm shall reimburse the Village 100 percent of the municipal sales tax payments received. The Village had no incentive payments for the year ended December 31, 2022.

In order to encourage BITS to relocate its business operation to the Village of Buffalo Grove, and to assist with their project in the Village, the Village agrees to share a portion of its home rule sales tax received by the Village using a formula which corresponds to new sales tax revenue generated by the business over a finite period of time. For the first sales tax year, 75 percent of that year’s home rule sales tax received by the Village for the first $40,000,000 in annual taxable sales and 100 percent ofthat year’s home rule sales tax for annual taxable sales greater than $40,000,000. For the second sales tax year, 75 percent of that year’s home rule sales tax received by the Village for the first $40,000,000 in annual taxable sales and 100 percent of that year’s home rule sales tax for the annual taxable sales greater than $40,000,000. For the third sales tax year, 75 percent of that year’s home rule sales tax received by the Village for the first $40,000,000 in annual taxable sales and 100 percent of that year’s home rule sales tax for the annual taxable sales greater than $40,000,000. For the fourth sales tax year, 75 percent of that year’s home rule sales tax received by the Village for the first $40,000,000 in annual taxable sales and 100 percent of that year’s home rule sales tax for the annual taxable sales greater than $40,000,000. For the fifth sales tax year, 75 percent of that year’s home rule sales tax received by the Village for the first $40,000,000 in annual taxable sales and 100 percent of that year’s home rule sales tax for the annual taxable sales greater than $40,000,000. For the sixth sales tax year, 75 percent of that year’s home rule sales tax received by the Village for the first $40,000,000 in annual taxable sales and 100 percent of that year’s home rule sales tax for the annual taxable sales greater than $40,000,000. Should BITS relocate or cease its business within the first two years of the agreement BITS shall reimburse the Village 85 percent of the total home rule sales tax distributed. Should BITS relocate or cease business after two years of this agreement than BITS agrees to reimburse the Village 75 percent