Highland News Leader

City Council votes to table business district vote for six weeks

It will be another 6 1/2 weeks until the City Council considers the idea of creating new business districts that would allow Highland to levy a new sales tax.

The council decided to table three agenda items during its meeting on Sept. 18 until Nov. 4. The items consisted of adopting three business districts that would encompass defined areas within Highland. If the districts are implemented, the city could then raise the sales tax within those areas by up to 1 percent for 23 years, without voter approval.

The three new business districts would be as follows:

▪ District A: Northtown and areas along Walnut Street and U.S. Highway 40.

▪ District B: Downtown district including areas along Broadway and Highland Road.

▪ District C: Centered along Frank Watson Parkway, much of which is still undeveloped.

The extra tax would provide an additional estimated $1 million to the city. Those monies could be used for development and redevelopment projects within the district. But, city officials have said they would like to use the tax to fund the construction of a new public safety building.

Because the city held public hearings regarding the creation of the business districts in August, the council only has 90 days before it can vote to create the districts without having to hold more hearings.

When items are placed on the agenda again, the council will have several options, according to to the President Moran Economic Development, the Edwardsville-based consulting firm hired by the city in July to draft the business district plan, Keith Moran.

The council can choose to adopt the districts, with or without implementing the sales tax, so the districts can be used in the future. But, Moran said doing this would start the timer on the 23-year lifespan of the districts which would decrease the amount of funds the city could collect.

The council could also choose to revisit the plans and rewrite the boundaries of the districts. But Moran said that option would entail another round of public hearings.

Lastly, the city could choose not to adopt the proposed business districts. However, Moran said if the council were to scrap the plan or not approve it “as is” in the 90 days after the public trials, the current development plan would be useless. He said if the council decided to change their minds later down the line the city would have to commission another study to reaffirm the business districts. The first study from Moran cost the city $41,900.

During council meeting on Sept. 5, the council weighed the options of whether or not the tax should be put to vote. Many of the comments from the council members relayed the city’s immediate need for funding. But private feedback from the public over the past two weeks had the council taking a step back on Monday.

Feedback from a business owner

Steve Kloss, the owner of The Tin Shed, a furniture store in Highland, sent out a letter to all of the Highland Chamber of Commerce members, the mayor and council members over the weekend. In the letter, he said he had concerns for Highland businesses if an additional tax was implemented. Kloss was the lone person to stand up and speak to the council during the meeting Monday. However, almost every seat in the council chamber was full.

During the meeting, Kloss relayed that that there are many things changing the world of retail business, including big box stores, the internet, higher real estate taxes, higher workman’s compensation, and smarter consumers.

“Retail is never going to come back like it was,” Kloss said.

Kloss also said that, while the tax would still have an impact on smaller “mom and pop” stores, what he is really worried about is competition with big-ticket items.

“It’s all about the larger tickets, and you’ve got so much incredible competition and people pay attention to that,” Kloss said.

Kloss used builders buying bulk lumber as an example. If the proposed 1 percent sales tax would be passed, Highland’s sales tax rate would be 8.85 percent. If a builder were to buy $1 million worth of lumber in Highland, it would mean an extra $25,000 in sales tax compared to if they were to buy that lumber 20 minutes away in Aviston, where the sales tax rate is currently 6.25 percent. After speaking with some local builders, Kloss said he was told they would do business elsewhere if the tax is imposed.

“And I’ve had plenty of builders tell me that,” Kloss said.

In his letter, Kloss included a layout of the current sales tax in the area as it would be compared with Highland if taxes were to increase.

Sales tax in the area would be as followed:

▪ Highland, proposed 8.85 percent;

▪ Breese, current sales tax rate 6.25 percent;

▪ Carlyle, current sales tax rate 6.75 percent;

▪ Troy, current sales tax rate 6.86 percent;

▪ Aviston, current sales tax rate 6.25 percent;

▪ O’Fallon, current sales tax rate 7.85 percent; and

▪ Greenville, current sales tax rate 7.75 percent.

“Perception is everything,” Kloss said “We do not want the perception Highland is an expensive community.”

Kloss also said that 65 percent of his business is from customers who live outside of Highland, and he believes that large portion of his customer base could be deterred by the tax increase.

“My gut says this is probably the same for most all of your businesses, too,” Kloss said in his letter.

Council members’ opinions

Councilwoman Peggy Bellm said, while her concerns rest with how businesses would be affected by the sales tax, she is also skeptical about how the money would be spent.

Director of Public Safety and Highland Police Chief Terry Bell said the combined police, fire and EMS departments have a about $1 million a year, if you include the annual cost needed to build a $14 million new public safety building, or the cost for drastic renovations of the current public safety facilities.

While Bellm said most of the feedback she received was not opposed to using the money for public safety, many said they were opposed of it being used for a new building.

During the meeting, Bellm said that, even with the tax, she knows the city still could not afford a $14 million facility, and that is if the tax brings in the full $1 million that has been estimated.

“There is not going to be a shiny new building,” she said.

Bellm also said she felt the business districts and the tax needs to be reexamined, because Highland cannot afford to lose businesses.

Without another “good, hard look,” she said that she could not vote yes in good conscious. At the end of the day, she felt alternatives for public safety need to be examined further.

“We need to be extremely careful how we do this,” Bellm said.

Councilman Aaron Schwarz echoed some of the same opinions, although he felt that the problem is not with the tax. Schwarz said the most appropriate way to find funds for public safety would be through a sales tax, because people outside the community who use Highland’s public safety would contribute. But he said the “1 percent” amount might need to be lowered, or changed in certain areas of the business districts.

Schwarz also said he thought the district boundaries should be reexamined to maybe exclude some business areas. He said he was concerned that the tax would hurt Highland’s big-ticket businesses more than small business.

“I wouldn’t drive to Edwardsville to buy a candle, but I would drive to Edwardsville to buy $1,000 of furniture,” Schwarz said.

Schwarz agreed with Bellm that the council needed more time to make the correct decision.

Councilman Rick Frey said he was in favor of voting for the adoption of the business districts, without implementing a tax immediately. While he said he is in favor of a sales tax, he would not vote for on a 1 percent sales tax raise without more time to review options.

Frey said Highland needs to focus on drawing in more businesses, and establishments might be deterred by the high tax rate. He also said he was afraid businesses would continue to struggle if the sales tax was higher. However, Frey said money for infrastructure and public safety improvements needs to come from somewhere, though he does not think that money should be spent on a new public safety building.

“I’m a promoter of business,” Frey said. “I want to do things that will help them. But if we don’t have the money to fix our water lines and fire department that is not helping.”

Councilman Neill Nicolaides declined to comment.

Other business

Sportsman Road construction begins

City Manager marke Latham said that construction on a section of Sportsman Road road has begun.

Director of Public Works Joe Gillespie said the section of the road under construction is from Northtown Way to the western edge of Rural King. Gillespie estimated that this section of the road will be closed for about four weeks until the repairs are finished, weather permitting. Rural King customers will have access to the business from the rear entrance behind Tri Ford, according to Gillespie.

Parade request approved

The council approved a request from the Highland Moose Lodge 2479 for use of the Square for the annual Veterans Day Parade on Nov. 12 from noon to 3:30 p.m. The parade is coordinated by Veterans of Foreign War Post 5694 and American Legion Post 439 and sponsored by the Moose Lodge. The event will begin at 2 p.m. and will start at the intersection of Olive and Main streets and will end at the Square. Veterans in the surrounding community are welcome to participate in the parade. Rides will be furnished for participants and walkers are also welcome.

Appointment approved

The council approved Mayor Joe Michaelis’ appointment of Heather Warren to the Parks and Recreation Advisory Commission. Warren will replace Jason Stroehlein, whose term expired on July 31. Warren’s term will expire on July 31 in 2020.

KRC fees approved

The council approved an increase to the annual membership fees for the Korte Recreation Center.

Annual membership fees will increase by $15 and three-month membership fee will increase by $5.

Parks and Recreation Director Mark Rosen said the last increase in KRC membership fees was in May of 2016. Rosen said a three-month pass will go from $145 to $150 for a resident family of five, and the annual pass for a resident family of five will go from $420 a year to $435 per year.

The fee increases will go in effect on Nov. 1, according to Rosen.

Currently, he said the KRC has 560 annual memberships and averages about $104,000 in general admission revenues. Rosen said he is confident the increases will bring a minimum of $15,000 extra to the department.

Rosen said the increases are needed for a number of reasons, including an anticipated minimum wage increase and the need to build reserves to address current and future maintenance issues.