ACTION REQUESTED:
Title
Communication from the City Manager with a Request to ADOPT the following ORDINANCES Regarding the LOUISVILLE SLUGGER SPORTS COMPLEX:
A. An ORDINANCE Establishing the PEORIA SPORTS CENTER PROPERTY TAX SPECIAL SERVICE AREA in the City of Peoria, Illinois;
B. An ORDINANCE Establishing the PEORIA SPORTS CENTER HOTEL TAX SPECIAL SERVICE AREA in the City of Peoria, Illinois;
C. An ORDINANCE Establishing the PEORIA SPORTS CENTER SALES TAX SPECIAL SERVICE AREA in the City of Peoria, Illinois;
D. An ORDINANCE Establishing the HOLIDAY INN PROPERTY TAX SPECIAL SERVICE AREA in the City of Peoria, Illinois;
E. An ORDINANCE Establishing the HOLIDAY INN HOTEL TAX SPECIAL SERVICE AREA In The City Of Peoria, Illinois;
F. An ORDINANCE Establishing the HOLIDAY INN SALES TAX SPECIAL SERVICE AREA in the City of Peoria, Illinois.
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BACKGROUND: On February 11, 2014, the City Council approved the First Amendment to the Annexation Agreement (originally between the City, Chambers family and other third parties and dated September 7, 1999) that outlined certain zoning changes and financial commitments in regards to the Louisville Slugger Sports Complex. That agreement requires that the City create Special Service Areas (SSA) in conjunction with the construction and opening of the Sports Complex and Holiday Inn and Suites. The ordinances establishing the SSAs were tabled by the City Council on July 22, 2014.
An SSA is an economic development tool established by state law that allows municipalities to create defined geographic areas in which special services, such as conduit financing, can be provided. These special services are paid for by additional revenues generated exclusively by properties and/or businesses within the SSA. For this project, the City will use the SSAs to borrow $9.6 million through a general obligation bond, provide the proceeds of that bond to the Developer, allowing the Developer to construct the project. The City would then repay those bonds with revenue generated by additional property, hotel and sales taxes generated exclusively by the project (see below).
Per the amended annexation agreement, the City needs to create separate SSAs for the imposition of property taxes, hotel taxes and sales taxes for each of two separate geographic areas, for a total of six SSAs:
• The “Peoria Sports Center Special Service Area” would include the sports complex property as well as the other four hotels owned by the Developer (Hampton Inn, Wingate, Country Inn and Suites, and Candlewood Suites) and the public right-of-way to establish contiguity.
• The “Holiday Inn Special Service Area” would be a one-parcel SSA that would allow for the construction of a new, 114-bed Holiday Inn and Suites. This must be a separate SSA from the first because there is no method by which contiguity to the other parcels can be achieved with public right-of-way.
The property tax SSAs would levy an additional property tax on all property within the SSAs in an amount equal to the annual bond repayment. The hotel tax SSAs would increase the hotel tax in the area by 3% (from 6% to 9%). The sales tax SSAs would increase the sales tax by 1% (from 8.25% to 9.25%). It is important to note that these tax increases only impact the properties within the SSAs. Sales taxes at retail establishments in the Shoppes at Grand Prairie, for example, would remain the same. Should a new hotel be constructed that is not within the SSA, its hotel tax would only be 6%.
Please note that the attached ordinances have been revised.
FINANCIAL IMPACT: The First Amendment to the Annexation Agreement approved on February 11, 2014 binds the City to the financial contribution of $9.6 million. The SSAs create a mechanism to repay the bonds that will be required to make that contribution. There is no anticipated cost to the City and very little, if any, risk that sources of revenue in the SSAs will be insufficient. The project as a whole will be very beneficial to the City and should help increase hotel and sales taxes.
NEIGHBORHOOD CONCERNS: A public hearing was held on each of the proposed SSAs on April 22, 2014. There was no comment given. There has been opposition voiced regarding the project as a whole (though not necessarily the financing mechanism) by some residents of the Timberbrook subdivision.
IMPACT IF APPROVED: The SSAs will be created.
IMPACT IF DENIED: The SSAs will not be created and the City may be in default of its agreement.
ALTERNATIVES: None.
EEO CERTIFICATION NUMBER: Not applicable.
WHICH OF THE GOALS IDENTIFIED IN THE COUNCIL’S 2014 - 2029 STRATEGIC PLAN DOES THIS RECOMMENDATION ADVANCE?
1. Grow Peoria: Businesses, Jobs, and Population
WHICH CRITICAL SUCCESS FACTOR(S) FROM THE COMPREHENSIVE PLAN DOES THIS RECOMMENDATION IMPLEMENT?
1. Grow employers and jobs.
DEPARTMENT: City Manager's Office