Council Approves Downtown Business Development District

Editor's Note: This article has been changed to note Alderman Funkhouser's employment is with Imperial Construction, not Imperial Investments.

Yorkville officials approved the establishment of a business development district that will increase sales tax by 1 percent for businesses operating within the established boundaries.

The district will benefit businesses owned by Imperial Investments, including Cobblestone Bakery and Bistro and The Follies Theatre. The boundaries of the district stretch from Hydraulic Street to Von Emmon Avenue and from the west alley to Route 47, said City Administrator Bart Olson.

Aldermen overwhelmingly supported the plan with Ward 3 Alderman Chris Funkhouser abstaining, citing a conflict of interest.

Imperial Investments city-backed plan to revitalize downtown Yorkville has been in the works for months. In November the Yorkville City Council held a public hearing on the establishment of the plan that put a 1 percent sales tax in place to raise money to be spent on public improvements in the area of the business district. Initially the proposal was for a .5 percent tax, but it was amended by downtown developers Imperial Investment following the company’s revelation of unplanned expenses, including sprinkler system installation and higher than expected fees to connect to sanitary services. The proposed district will only include properties owned by Imperial Investments and can only be used to improve those specific properties, according to city documents.

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Under the terms of the agreement, Imperial Investments plans to invest a minimum of $2 million into the district, Olson said.

City Attorney Kathleen Field Orr said unlike a Tax Increment Finance District, a business development district can use the tax funds for construction, rather than solely for renovation and redevelopment.

The additional 1 percent sales tax would be collected by the individual businesses and submitted to the state with other sales tax receipts. The state then divvies the sales taxes back to the appropriate recipients. The earmarked 1 percent would be remitted to the city of Yorkville, which then places the money into an account specifically for that business district, Orr said.

Ward 1 Alderman Carlo Colosimo, serving as acting mayor Tuesday night, called the 1 percent tax a user tax.

“If a customer wants to walk across the street and purchase the same product to avoid the 1 percent, they can do that. The responsibility falls on the developers’ shoulders (here),” he said.

Ward 3 Alderman Marty Munns said city officials have been talking about downtown development for at least 12 years and the creation of the business district would lessen the burden on taxpayers and eventually create new jobs.

“If it works it’s a good thing for the city,” Munns said.