Saturday, Nov. 07, 2009

New STAR bonds bill to give neighboring communities a cut of revenue

Changes to a revised bill that proposes to create sales tax revenue bonds in Illinois includes giving a share of property tax revenue generated from the "STAR" bond district to neighboring communities.

The bill is still being drafted and will be presented before the General Assembly in January. An initial bill that legislators approved earlier this year hit a roadblock Aug. 28, when Gov. Pat Quinn issued an amendatory veto.

The new version includes a Community Improvement Fund, which would capture 15 percent of the incremental property taxes generated within the STAR bond district and redistribute that money to neighboring communities located within a 10-mile radius.

Unlike the initial bill, the new one excludes funding incentives for retailers and limits those developments that would be eligible for sales tax revenue bonds to "entertainment" and "destination" venues.

The new legislation ultimately paves the way for a proposed $1 billion development called University Town Center in Glen Carbon. University Town Center spokeswoman Rebecca Rausch said a "destination" venue is defined as a tenant that has at least 150,000 square feet, will invest at least $30 million in a store and currently doesn't have another Illinois location within 70 miles. She said an "entertainment" venue is defined as having an entertainment/amusement use, occupying at least 50 acres and an investment of at least $100 million.

Rausch said the new proposal is a compromise that comes after several meetings that bill sponsors Rep. Tom Holbrook, D-Belleville, and Sen. James Clayborne, D-Belleville, had with other lawmakers, the governor's office, the Illinois Department of Revenue, metro-east mayors and others.

"This legislation, from where we sat in March to where we are now, is truly collaborative on every local level to the highest level of state government," Rausch said.

Holbrook said the project will revitalize the corridor along Interstate 255 by creating attractions as well as 10,000 construction jobs and 3,500 permanent jobs in the region.

"I think this bill addresses all of the true purposes of STAR bonds in a much clearer fashion," Holbrook said. "I have said all along that I care about all communities of metro-east, not just the one this is going in."

Leaders from cities that stand to benefit from the property tax-generated fund in Edwardsville, Fairview Heights and O'Fallon could not be reached for comment Friday. Collinsville Community Development Director Paul Mann declined comment. Glen Carbon Mayor Rob Jackstadt also could not be reached for comment.

Previous provisions that lawmakers initially passed in the original bill during the past session of the General Assembly remain:

* No businesses may relocate to a STAR bond district within a 25-mile radius and have its revenues pledged to pay STAR bonds.

* An economic impact study must be conducted by an independent economist chosen by the director of the Department of Revenue. The study must consider any adverse effects on similar projects and businesses, as well as municipalities, within the projected market area and draw conclusions about the net effect of the proposed STAR bond project on the local, regional and state economies.

* Automobile dealerships are prohibited from STAR bond districts.

* "Local sales taxes" do not include the hotel tax, utility taxes, the Local Mass Transit District Tax, the Metro-East Park and Recreation District Tax or the Flood Prevention District Tax. All of these taxes will continue to be collected and distributed to the applicable taxing districts.

* Prior to approval of a STAR bond project plan, a regional public meeting at a public location within 20 miles of the STAR bond district must be held to evaluate the merits of the plan, and the testimony must be reported to Illinois Department of Revenue. There are numerous other public hearings that must be held at the local level throughout the planning and project-approval process.

"University Town Center's goal remains the same," Rausch said. "That is to arrive at an economic incentive that is significant enough to attract unique destination opportunities to Illinois. We think that this legislation will help us do that. We're hopeful we can work with and continue to work with legislators on the local level and other public officials on the local level when lawmakers return in January."