COLLINSVILLE — Shoppers at Walmart and Home Depot in Collinsville Crossing soon will pay a higher sales tax.
The city council approved a change Monday to the business district around the Collinsville Crossing shopping center that will set the additional sales tax at Walmart to 1 percent and raise Home Depot's tax from 0.5 percent to 1 percent.
When the council signed an agreement in 2005 to develop Collinsville Crossing, the bonds were paid with a 1-percent sales tax levied on all businesses in the shopping center except Home Depot and Walmart. Home Depot would only agree to a half-cent tax; Walmart refused to accept any additional tax.
But with the recession, city leaders found sales taxes falling short of the required amount on the bonds: about $385,000 per year, according to finance director Tamara Ammann.
The proposal levies the same 1 percent sales tax on all businesses in Collinsville Crossing. Those businesses already collecting 1 percent will continue to do so.
The amendment also adds two streets south of the original development and a short stretch on the other side of Illinois 157, which will make those properties eligible for TIF funds for infrastructure and development.
The council voted 3-1 to approve the change, with Councilman Jeff Kypta voting no and Mayor John Miller absent.
"We can go over whether Collinsville Crossing was a good deal or a bad deal," said Councilwoman Nancy Moss, who was acting as mayor pro tem in Miller's absence. "I happen to believe it was, overall, a good deal. But if we do not do this, our property taxes will go up ... And you still have a choice whether or not to shop there."
Kypta said he voted no because he didn't want to raise any taxes at this time. "I know we have a problem to fix, but I just didn't want to do it," he said.
Ammann told the council that the city was about $1 million in arrears because of the shortfall in sales tax revenue. Of the tax was not extended to the big-box retailers, she said, it would have to come from the general fund.
Still pending is a proposal to create a new business district along St. Louis Road, from the Horseshoe Restaurant to the Fairmount Racetrack. That district would likewise create a 1-cent sales tax, raising funds that would be reinvested in infrastructure and development in what Mann calls a "blighted area."
The city also wishes to create a tax increment financing district in that area for similar reinvestment. Those votes are pending at a later meeting.
Contact reporter Elizabeth Donald at email@example.com or 239-2501.