Congressman's son would benefit from state funded shopping mall

By Steve Korris | Oct 2, 2009

SPRINGFIELD – Congress collects income taxes, and a Congressman's son will collect sales taxes if Illinois legislators stick with a plan for a 900 acre mall where Illinois Route 157 meets Interstate 270 in Glen Carbon.

A bill that passed the House and the Senate this year would capture at least $15 million a year in state sales taxes and channel it to mall developers including John Costello, son of U.S. Rep. Jerry Costello (D-Belleville).

John Costello identified himself as a principal of the proposed University Town Center on a witness slip for a hearing at the Capitol in April.

Bruce Holland of Holland Construction identified himself as president.

Gov. Quinn did not sign their bill, offering instead an amendatory veto that would split taxes with them on a 50-50 basis.

Legislators will consider Quinn's offer at a veto session starting on Oct. 14.

The bill authorizes at least $300 million in what legislators call STAR (sales tax and revenue) bonds to finance a project that would generate at least $300 million a year in retail sales.

Costello, Holland and others would repay the bonds with proceeds from the five percent tax that the state would normally collect.

While the state budget would shrink, Glen Carbon's budget would multiply.

Project costs could include roads, sewers, schools, a police station, a fire station, salaries of city workers and - if leaders justify it - a new city hall.

Community group GlenEd Citizens has arranged for a public information open house with developer Bruce Holland on Tuesday, Oct. 13 at 7 p.m. The group's spokesperson Karen Bracki O'Koniewski said the location has not yet been determined.

In August developers met with Glen Carbon officials for a presentation in which only village trustees were permitted to ask questions.

Though legislators envision job creation, economic growth, and better public morals, Illinois Department of Revenue Director Brian Hamer sees only a hole in the budget.

In a fiscal note he predicted cannibalization, warning that the mall wouldn't create new sales but would capture sales from other stores.

He supplied evidence that in six years, a STAR bond mall near Kansas City wiped out a third of Kansas furniture stores within 150 miles.

He wrote that "most sales activity in this district will most likely be drawn from the adjacent area near Southern Illinois University, in Edwardsville, as the development's own name suggests."

Illinois legislators figure folks won't mind empty stores on their streets if government meets their every need and provides every comfort in utopian surroundings.

The bill declares that "the private sector, without the assistance contemplated in this Act, is unable to develop major tourism, entertainment, retail, and related destination projects in this State."

It says, "[T]he State has a responsibility to help create a favorable climate for new and improved job opportunities for its citizens and to increase the tax base of the State and its political subdivisions by encouraging development by the private sector…"

"[S]tagnation of local tax bases and the persistent loss of job opportunities in the State may continue and worsen if the State and its political subdivisions are not able to provide additional incentives to developers…"

Legislators wrote that they passed it "in the interest of promoting the health, safety, morals, and general welfare of all the people of the State."

They pledged "cooperative and continuous partnership between government and the public sector," leaving readers to guess whether they really meant private sector.

Costello's group could have called it Public Option Mall.

Sen. James Clayborne (D-East St. Louis) sponsored the bill, which originally would have captured not only state sales taxes but also regional sales taxes for flood protection, transit and parks.

In the House revenue and finance committee, after a short debate, seven Democrats and three Republicans voted yes and one from each party voted no.

On May 29, the committee adopted an amendment requiring consent of the revenue director prior to a STAR bond issue.

The committee also decided against capturing flood, park and transit taxes.

For those hearings, developers delivered hundreds of witnesses who signed slips and marked themselves as proponents.

In addition to three Hollands appearing as principals, at least six others with the same last name appeared.

Engineering firm TWM rounded up more witnesses than anyone else, and names on their slips suggest that many brought carloads of relatives.

St. Elizabeth's Hospital and the Little Knights Football Club joined the chorus.

Waves of supporters rolled in from O'Fallon and Waterloo, but few showed up from Belleville and a single soul from Edwardsville appeared.

Three lawyers from Greensfelder, Hemker and Gale represented the developers, plus a fourth from Kansas City.

The Illinois Taxpayers Federation opposes the bill.

Federation director Thomas Johnson said in a Sept. 30 interview that the group adopted a policy two years ago opposing any new tax credits or exemptions.

"There isn't a fiscal plan in place that is balanced and reasonable," Johnson said. "This is just not the time to do it in the economics of our state."

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