Tag Archives: Hospitality Improvement Zone

City Council, City of Peoria

Business District project costs to double if amendment passes

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A public hearing will be held at Tuesday evening’s City Council meeting on a proposed amendment to the downtown Hospitality Improvement Zone Business District Development Plan (or HIZ BDD Plan, for short). The amendment consists of these two changes:

  1. Adding Staybridge SuitesIn order to add property to the HIZ BDD Plan, the added property has to qualify as “blighted.” According to state ordinance a “blighted area” is an area

    which, by reason of the predominance of defective, non?existent, or inadequate street layout, unsanitary or unsafe conditions, deterioration of site improvements
    the definition of timesheet>, improper subdivision or obsolete platting, or the existence of conditions which endanger life or property by fire or other causes, or any combination of those factors, retards the provision of housing accommodations or constitutes an economic or social liability, an economic underutilization of the area, or a menace to the public health, safety, morals, or welfare. [65 ILCS 5/11-74.3-5]


    According to the council communication [note: large PDF file], Staybridge Suites qualifies “due to the deterioration of site improvements which constitutes an economic underutilization of the area.”

    Staybridge Suites was built in 1999 for around $7.5 million. In twelve years, we’re supposed to believe that it’s now “blighted” due to “the deterioration of site improvements”? Well, maybe, if it was built by the same contractor that built Riverfront Village. Still, if this is “blighted,” then every building in the City of Peoria is blighted:

    Looks like a real dump, doesn’t it? It’s worth noting that the council communication does not provide any documentation to substantiate this supposed “deterioration” and “economic underutilization.” It simply makes the claim without any evidence to back it up.

  2. Doubling estimated business district project costsThis is perhaps the most curious part of the amendment. The amendment increases the total estimated business district project costs from $6 million to $12 million. They’ve also lengthened the list of things on which they can spend that money. Here’s a comparison between the original plan and the proposed amendment:
    Original BDD Plan Amended BDD Plan (Proposed)
    The Business District costs are estimated at $6,000,000 and may include:

    1. Buying and selling of land.
    2. Infrastructure improvements.
    3. Rehabilitation of existing property.
    4. Development costs associated with new taxable private development.
    5. Façade and streetscape improvements.
    		 Business District project costs are estimated at $12,000,000 and may include the following, in accordance with the provisions of the Act:

    1. Cost of studies, surveys, development of plans and specifications, implementation and administration of a business district plan, and personnel and professional service costs.
    2. Property assembly costs.
    3. Site preparation costs.
    4. Costs of installation, repair, construction, reconstruction, extension or relocation of public streets, public utilities and other public site improvements within or without the business district which are essential to the preparation of the business district for use in accordance with the business district plan.
    5. Costs of renovation, rehabilitation, reconstruction, relocation, repair, or remodeling of any existing buildings, improvements, and fixtures within the business district.
    6. Costs of installation or construction within the business district of buildings, structures, works, streets, improvements, equipment, utilities, or fixtures.
    7. Financing costs.
    8. Relocation costs

    What is the meaning of all these additions? You know there’s a reason these changes are being made. If the original plan were sufficient, there would be no need for this amendment. Look closely at some of these changes.

    Note in particular number 4 in the amended list: HIZ BDD funds can be used for improvements “within or without [emphasis added] the business district which are essential to the preparation of the business district….” If I’m reading this correctly, it would appear that funds from the HIZ BDD could be used to prepare the new Big Al’s site, for instance, even though that site is not in the HIZ BDD, because moving Big Al’s is “essential” to a project in the business district. And check out number 8: “relocation costs.” Who do we know in the HIZ BDD that would be relocating? Number 7 should give us all pause: “financing costs.” I shudder to think what could be included under that item.

    Bottom line, raising the total estimated project costs figure means that the City can borrow (i.e., issue bonds) up to that amount and use HIZ BDD tax revenues for repayment. But HIZ BDD revenue has already been promised toward the repayment of the proposed Wonderful Development $37 million bond issue (if/when that ever comes to fruition). Nowhere does the City show that it could afford this increase in project costs, given our outstanding commitments for that same pot of money.

    Remember, if there isn’t enough revenue from the HIZ BDD tax and HIZ TIF revenues to make the payments on the Wonderful Development bonds, guess where they will get the money to repay those bonds? That’s right: the general fund. If you’ll recall, the City is planning to issue general obligation bonds for the Wonderful Development, which will be backed by the full faith and credit of the City of Peoria.

There is more to the expansion of the Hospitality Improvement Zone than meets the eye. The City Council and staff should disclose to the public why they want these changes and what they will mean to our financial situation so that the public hearing process can be as productive as possible.

City of Peoria, Taxes

New HIZ tax being collected all over Peoria

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Are Peoria businesses charging you too much sales tax? If they are, good luck getting them to fix it; you won’t find any help from the city or state. Check your receipt. For general merchandise, you should only be charged 8% in most of the City of Peoria.

My dad knows that, which is why he was surprised when some clothes that my mom bought at Northwoods Mall today were taxed at 9%. He wrote me to ask when the tax rate was raised, and how he could have missed the news. My dad has been reading the Journal Star cover to cover every day for the past fifty years, and he pays particularly close attention to financial information, so it would be very unlikely he missed big news like the sales tax going up a whole percent city-wide. And I have some experience exposing businesses that charge too much sales tax.

I checked the city’s website and confirmed that it was still 8%, broken down as follows:

  • 6.25% State of Illinois
  • 1.50% City of Peoria
  • 0.25% County of Peoria

He called the store and told them that information, and they said “it went up July first in Peoria to 9% from 8 1/4.” Dad said it was never 8 1/4% ever in Peoria, and the salesperson said “it is all done from their corporate offices in Minnesota,” and gave him the phone number for their corporate office. Oh, and by the way, they added, you’ll have to sit through a long automated voice-activated system before you get to talk to a real person. That’s customer service for you. So the local business isn’t taking action to fix the error.

Well, I called up the finance department at the City, and they told me that the tax rate did go up July 1st in Peoria to 9%, but only within the boundaries of the Hospitality Improvement Zone, or HIZ. You may recall that the City imposed a 1% additional sales tax on a small area downtown that includes the Pere Marquette, Holiday Inn City Centre, and Mark Twain Hotel; that money is to go toward building a new Marriott next to the Pere Marquette, so the other hotels get the pleasure of contributing to their competition and put themselves out of business. But I digress.

The City’s finance department went on to say that they’ve gotten several calls about this problem (i.e., businesses outside of the HIZ charging 9% sales tax), and that there appears to be some confusion among the city’s businesses as to what tax rate they are supposed to be charging. The person I talked to said one man called in saying he got charged 9% at a North Peoria gas station, and that the station refunded the overage when he went back to complain after talking to the city. I asked if the city could do anything to correct the problem, and they said all they can do is refer me to the Illinois Department of Revenue, and they didn’t have the number, but I could get it by calling information. So the City isn’t taking action to fix the error.

I called the Illinois Department of Revenue and they verified that the correct tax rate is 8% outside of the HIZ. It’s even on their website at http://tax.illinois.gov/ — you just click on the Tax Rate Finder link on the menu to the left and follow the prompts. The HIZ rate of 9% is listed first, which may be part of the confusion, but it also provides a list of the individual business addresses that are affected by the HIZ tax (there are only about 46 of them), and the next rate says “OUTSIDE ABOVE DISTRICT(S)” and lists the 8% rate.

I asked the representative what could be done about businesses overcharging, and she said that the correct rate is preprinted on the tax remittance form the businesses send to the state. She said the business can call Central Registration at 217-785-3707 with their Illinois Business Tax (IBT) number and verify the correct rate. But she said it probably wouldn’t do any good to report them to the “cheat line” (1-800-243-2811). As far as the state is concerned, as long as the business is remitting the total amount of tax they collect, they’re okay. It’s only tax fraud if they collect, say, 9%, but only remit 8%. As long as they remit the whole 9%, the state doesn’t care and is happy to keep the money. So the state isn’t taking action to fix the error.

Apparently no one is looking out for consumers in this town. Businesses can charge any additional tax amount they want and the city and state don’t give a rip. It’s up to you, the citizen, to take matters into your own hands and convince the businesses and/or their parent corporations that they’re overcharging us. There’s no penalty, no law against overtaxing. You have to take action to fix these business errors, and good luck doing it.