ACTION REQUESTED:
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Communication from the City Manager with a Request to Review a Revised CITY OF PEORIA ECONOMIC DEVELOPMENT INCENTIVES POLICY.
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BACKGROUND: The mission of the City of Peoria’s Incentives policy is to expand the City of Peoria’s tax base by developing, retaining, expanding, and attracting businesses and employment opportunities. An incentives policy provides the private sector with clearer expectations, maximizes public and private investment, and increases the overall economic activity and vitality of the City.
On April 21, 2015, City Council held an economic development policy session which included a review and discussion of a proposed economic development incentives policy. City staff has amended the incentives policy based on the feedback from Council members during the policy session (attached). Below is a highlight of Council’s specific concerns and considerations regarding the development of an incentives policy:
Incentives Policy Guidelines
From the discussions at the policy session, it was asked whether the incentive policy was too restrictive and/or uncomplimentary comparative to other municipalities based on the suggested eligibility requirements and considerations. The incentives policy guidelines have been revised to focus on the primary goals of providing incentives: attract and retain priority industry clusters, create jobs at livable wages, and spur capital investment. The incentives eligibility is now collapsed into two main categories:
• Entitlement incentives: These are programs offered by the City through local, state, and/or federally funded sources and programs (i.e. TIF, Enterprise Zone, Revolving Loan Fund). Each entitlement program contains specific predetermined program rules and eligibility requirements.
• Enhanced Incentives: In addition to providing entitlement programs where available and applicable, enhanced incentives (i.e. property tax abatement, permit fee discounts, infrastructure improvements) will be offered to businesses that meet the primary goals of attracting and retaining priority industry clusters, wage and salary benefits, job creation, and capital investment.
The “Enhanced Incentives” are limited to companies making a significant capital investment of at least $5 million and create at least 20 new jobs that pay at least a “living wage” (see page 4). The primary incentives offered are an abatement on incremental property taxes (for locations outside of an Enterprise Zone or TIF) and potential discounts on building permit fees (see page 5).
Wage and Salary Criteria
There was a discussion at the policy session regarding the range of acceptable wages for businesses to qualify for enhanced incentives. City staff is proposing that the State of Illinois Livable Wage for one adult be the wage threshold to meet the Wage and Salary Criteria. The 2015 livable wage for one adult is $11.08.
Finance Review Committee
It was noted at the policy session that a finance committee is needed to assess the City’s risk and return on investment in large scale developments/projects. The revised incentives policy states that when the City is providing upfront partial financing in excess of $250,000, a finance committee will be formed to review financials to determine the risk and solvency of the project.
Public Input
City staff has worked in collaboration with Peoria County to draft the revised incentives policy. The Greater Peoria EDC was also consulted to ensure that the City of Peoria’s incentives policy will be complimentary with other incentives offered throughout the Peoria region.
Community Economic Development
The incentives policy supports the development and expansion of entrepreneurs, small businesses, and retail service industries to enhance the local and regional economy.
Incentives Reporting
City staff will prepare and submit to Council an annual report of all economic development program activities and incentives for 2015 in the first quarter of 2016.
Overall, the incentive policy will serve as a guide to maximize the investment of public resources with private investment. Any incentives offered beyond entitlement programs will be governed by a legal agreement between the City and business/investor. Individual agreements would require City Council approval.
FINANCIAL IMPACT: N/A
NEIGHBORHOOD CONCERNS: Not applicable.
IMPACT IF APPROVED: Staff is seeking further direction from the City Council regarding the policy. Such direction will be incorporated into a final policy which will be brought to Council for approval at a future meeting. When approved, the incentives policy will guide City staff in a methodical and transparent approach to offering incentives that will maximize the benefits of leveraging public resources with private investment for economic growth.
IMPACT IF DENIED: Not applicable as staff is only seeking direction on how to proceed.
ALTERNATIVES: Council can suggest changes to any of the elements of the policy, such as eligibility criteria (level of investment, number of jobs, wage) or incentives offered.
EEO CERTIFICATION NUMBER: N/A
WHICH OF THE GOALS IDENTIFIED IN THE COUNCIL’S 2014 - 2029 STRATEGIC PLAN DOES THIS RECOMMENDATION ADVANCE?
1. Financially Sound City Government, Effective City Organization
2. Grow Peoria: Businesses, Jobs, and Population
WHICH CRITICAL SUCCESS FACTOR(S) FROM THE COMPREHENSIVE PLAN DOES THIS RECOMMENDATION IMPLEMENT?
1. Have an efficient government.
2. Grow employers and jobs.
DEPARTMENT: City Manager's Office