Belleville

Belleville TIF plan near Shrine gets praise, criticism

Belleville Mayor Mark Eckert says the Shrine project is a “win-win-win.”
Belleville Mayor Mark Eckert says the Shrine project is a “win-win-win.” News-Democrat file photo

Belleville’s latest TIF plan elicits praise as a “win-win-win” deal or criticism for “corporate handouts.”

The Tax Increment Financing district proposed for Illinois 15 for an upscale hotel, Hofbrauhaus brew pub, other restaurants, gas station and convention center complex next to the National Shrine of Our Lady of the Snows would rebate $6 million back to the developers. The center could produce $500,000 in annual sales tax revenue for the city, according to what Mayor Mark Eckert calls a “conservative” estimate. In total, the developers would receive up to $15.69 million in tax rebates from the city and up to $1.25 million in sales tax breaks on construction material purchased in Illinois.

It’s been in the news for months. Now the official public hearing for the TIF plan will be at 6 p.m. Monday at City Hall. The City Council is scheduled to vote on the TIF plan on May 26. A majority of aldermen have indicated support for the district.

The developers – Chuck and Chane Keller of Effingham and Forrest Langenfeld of Centralia – could spend up to $60 million to build the complex, up from an initial estimate of $50 million. Construction could begin in July if all tax incentives are approved by mid-June.

Supporters say the project will raise Belleville’s profile in the region by attracting the Hofbrauhaus, which would be the only one in the area and the eighth one in the country, and it would boost the economic outlook for the Shrine. Critics have questioned the need for another TIF in a city that currently has 18 such districts, as well as whether the city has done a good job vetting of the developers.

“I see this project as a win-win-win,” Eckert said. “I can’t wait til they break ground and I can’t wait until we have the first ribbon cuttings. I think it’s going to be a catalyst for new growth and development in the Route 15 corridor. It’s a big shot in the arm for all of Belleville but it’s particularly a shot in the arm for west Belleville.”

“They have to spend the $50 to $60 million and they have to pay their taxes before they get a dime back,” said Eckert, who noted since he became mayor about 10 years ago, he has tried to persuade a developer to open an upscale hotel in the city but the hotel chains typically want to build new hotels along an interstate.

“Some people have been saying this will be giving away money from the citizens of Belleville,” Ward 1 Alderman Ken Kinsella said in a prepared statement. “This is misleading. While the money will belong to the citizens for a short period of time before half of it is rebated to the developers, all the money will have come directly from the developers. None of this money will come from the citizens of Belleville but half of it will go to the city.”

Langenfeld said: “One thing that needs to be made perfectly clear is that this project, all of the construction of the facility is being done with private money. The city is spending some money extending sewer (lines) to this project site. That’s a decision they made for that whole west end of Belleville to have more than adequate sewer (lines) out there to fund future growth. The Keller family is not getting any discount on tap-on fees. They’re paying what anyone else would have paid for a project of this size.”

Belleville will spend more than $2 million to design and build sewer lines to site.

City officials and residents who criticize the city’s handling of the project agree on one thing: They all hope the “cool” idea gets off the ground. But they still have questions.

City Clerk Dallas Cook believes the Keller family could build this project without TIF money. He doesn’t oppose the other tax breaks proposed for the developers.

“I feel like (TIF districts) should be used for infrastructure, not for corporate handouts,” Cook said. “I think (the developers) have been very successful. But ... those who have been given much, much is expected. I would hope that they would respect the city as well and do everything to be open and honest with us about what they can and cannot do with their funding.”

“I believe that being the successful gentlemen that they are, they could do this without any extra incentive from TIF. I would like to see their private investment done privately.”

Eckert said all of the incentives are necessary.

“The numbers don’t work for them,” Eckert said. “Coming off this recession and investing $50 to $60 million … to make this project go, that’s a major commitment and ‘but for’ the TIF and the incentives that we’ve agreed to with them, this project wouldn’t make it.”

Chane Keller said the TIF funding is needed for the site preparation work. He also said the site doesn’t have an abandoned coal mine that needs to be filled in.

Ward 3 Alderman Kent Randle is concerned that aldermen have not seen enough financial information about the developers. This type of information would include assets, liabilities and liens placed on properties. “I want to know what your banker knows,” Randle said.

“Without the financial disclosures, how do 16 elected representatives make an informed decision? I want nothing more than for this project to be a success,” Randle said. “But I think in order to vote in favor of it, it’s imperative that that financial information be disclosed to the people who are going to vote on the development.”

Eckert said personal financial information involving the developers was included in their application for tax incentives, but the mayor declined to release the information. The Kellers and Langenfeld also declined to release this information.

The City Council members have not been given that information, but city staff have reviewed it, Eckert said.

Langenfeld said, “In a private business, you have to walk a fine line between how much you put out and absolutely tell your competitors and the whole world. There’s not many companies that do that.”

Ward 7 Alderman Trent Galetti also would like to see more information about the feasibility of the project. He said officials from a national hotel chain would have done site-selection research.

“They crunch these numbers. They got to be somewhere. So why haven’t I seen them?”

Langenfeld said city officials have done their due diligence in vetting the project.

“Anyone who tries to put this under the cloak of darkness — that is not the case,” Langenfeld said. He said the Kellers have a lot of competitors in the hotel industry and they need to be cautious in releasing information.

The Keller family first entered the hotel business more than 50 years ago in Effingham, where they currently have a convention center. The family has an interest in at least seven hotels affiliated with brands such as Radisson, Holiday Inn, Holiday Inn Express, Crowne Plaza and Country Inn.

The family has either full or partial ownership in nine hotels: Four are in Minnesota, three in Illinois and one each in Iowa and North Dakota.

City resident Michael Hagberg, a former candidate for City Council, has closely followed the city’s involvement with the Shrine project and the series of tax incentives offered to the developers. He is concerned about a section of the proposed TIF agreement that covers the estimated future budget for the TIF fund. “I just wish I had more answers,” he said.

Eric Shauster, assistant director of economic development, planning and zoning for the city, told Hagberg the estimates were derived from possible future costs for the developer, the city and taxing bodies extrapolated over the 23-year life of the proposed TIF district.

Here’s a breakdown of the tax incentives offered to the developers, who formed a Missouri corporation called Missionary Ventures for this project:

▪  The TIF would give property tax rebates of $6 million, which would take an estimated 16 years to accrue.

▪  The business district allows a 1 percent sales tax to be collected at the complex. The developers would receive $7.13 million over 23 years.

▪  The developers would receive $2.56 million in hotel tax rebates over a 16-year period.

These three incentives total $15.69 million. The sales tax and hotel tax would only be paid by customers who go there.

Also, the developers could get a $1.25 million sales tax exemption on building materials.

For the city to reap $500,000 in annual sales tax revenue from the site, the following businesses would need to be operating: one hotel, a convention center, the Hofbrauhaus and four restaurants and a gas station with convenience store.

The City Council approved the development agreement with the Kellers and Langenfeld in February.

Contact reporter Mike Koziatek at mkoziatek@bnd.com or 618-239-2502. Follow him on Twitter: @MikeKoziatekBND.

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