STAR bonds bill tabled in committee; new bill raises three new local taxes
SPRINGFIELD – Developers seeking state sponsorship of a $300 million amusement venue and shopping mall in Glen Carbon have a financial plan that would raise three new local taxes.
The village of Glen Carbon would collect a fourth of a penny on each dollar in sales of personal property at University Town Center, with options to multiply it to a penny later.
Glen Carbon would also levy a special one percent property tax on University Town Center, to assist in providing special services.
Fifteen percent of each year's increase in property taxes on the 600 acre project would flow through a trust fund to nearby municipalities and Madison County.
A bill in the Illinois Legislature would further equip Glen Carbon to appropriate other revenues and issue general obligation bonds for University Town Center.
On Feb. 11, the House revenue and finance committee referred the bill to its sales tax subcommittee.
Subcommittee members placed it on their agenda for Feb. 18, but on that date they adjourned without taking it up.
To repay at least $300 million in revenue bonds, the bill pledges not only state and local support but also private funds, grants, tax credits and other government assistance.
The development group includes John Costello, son of U.S. Rep. Jerry Costello.
Developers proposed last year to repay revenue bonds by diverting all state sales taxes from the state treasury to their project.
Revenue director Brian Hamer opposed the plan, predicting it would erode the present and future tax base.
He called it unreasonable to believe all or most sales at University Town Center would be new sales beyond what would otherwise occur elsewhere in the state.
"This raises the prospect of cannibalization, the process whereby new retail, restaurant, or hotel developments siphon business away from existing businesses in nearby markets," he wrote.
Gov. Pat Quinn heeded the advice and signed an amendatory veto that would have split sales taxes with the project on a 50-50 basis.
Developers rejected the offer, and the bill died.
This year's bill would let developers retain sales taxes from an amusement venue and big "destination stores."
The state treasurer would collect sales taxes from smaller stores.
Hamer doesn't favor or oppose the bill, pleading instead a shortage of data.
"We currently have only the most limited information on proposed development costs," he wrote.
"We have no information about the planned bond issues," he wrote.
"There will be an early net positive impact in the construction phase from construction spending and associated employment, but a net negative impact thereafter once UTC is operational and as taxable sales are displaced from outside of the district," he wrote.
He predicted an increase in income tax revenues from new jobs, but didn't estimate any decrease in income tax revenues from displacement of workers.
"To the extent that this occurs, the negative state revenue effects will be larger," he wrote.
Under the current bill, Glen Carbon officials would notify the revenue director that they had begun considering creation of a mall district.
The revenue director would hire a consultant to study the project's feasibility.
State commerce officials would hold a regional hearing and issue a report.
Glen Carbon would adopt a resolution and submit it to the revenue director.
If the plan meets all criteria, including potential creation of 1,000 jobs, the revenue director would have to approve it.
Finally, Glen Carbon would hold a public hearing.
Five years after University Town Center opens, the revenue director would determine if it created 1,000 jobs.
If not, a penalty would apply.
After seven years, appointees of top state officials would determine the project's benefits and detriments in the state as a whole.
If they find negative impact, no developer could obtain sales tax financing for a similar project anywhere in the state.