Democracy on the Front Lines
City Administrator’s Blog
Walter Denton
November 2, 2009
STAR Bonds are back in the news. You may recall there was a lot of attention last spring when a group of developers attempted to pass a STAR Bond Bill through the legislature that seeks to establish a 900-acre business district in Glen Carbon. The special legislation is necessary because so-called “STAR Bonds” work differently than traditional economic incentives in that all sales taxes are rebated to the developer for the purposes of developing the business district. The rebated sales taxes include local, county, state, hotel/motel, and food/beverage.
A bill was approved by the legislature but Gov. Quinn placed an amendatory veto on the bill and reduced the sales tax rebate down to 50%. The developers claim that a 50% rebate makes the project undoable, so they entered the legislature’s fall veto session with intentions of restoring the original bill.
The developers negotiated several iterations of a new bill to area mayors. The newest feature included a Legoland theme park on 200 acres of the site. Other versions included using STAR Bond financing only on the six “destination” parcels and not on the standard retail sites that would be competing with regional cities.
In the end, the bill’s sponsors could not pull a revised bill together in time and announced they would try again in the next legislative session in January.
Some of the proposals were less harmful to cities, but in the end the City of O’Fallon believes the STAR Bond Bill is detrimental to southwestern Illinois. Because of the excessive incentives in the bill, it puts surrounding communities at a competitive disadvantage. On a level playing field, we willingly compete for development with neighboring communities. This, however, is not a level playing field.
The STAR Bond’s incentive package threatens to considerably reduce sales and sales tax revenue for all the current commercial areas in Edwardsville, Alton, Fairview Heights, Granite City, Columbia, Swansea, O’Fallon, Shiloh, Belleville and Collinsville. We don’t have a problem competing, but this is inequitable and unfair and strictly to the benefit of one developer at the expense of area businesses and communities.
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