Agenda Date Requested: May 27, 2008

Action Requested: requests City Council

AUTHORIZES THE CITY MANAGER TO ENTER INTO AN AGREEMENT WITH CAMIROS, LTD IN THE AMOUNT OF $12,000 TO CONDUCT A TAX INCREMENT FINANCING (TIF) ELIGIBILITY STUDY AND A BUSINESS DEVELOPMENT DISTRICT (BDD) ELIGIBILITY STUDY FOR THE PROPOSED HOSPITALITY IMPROVEMENT ZONE (HIZ). THE ACTUAL BOUNDARY OF THE TIF, BDD AND THE REDEVELOPMENT PLAN WILL BE DETERMINED AS PART OF THE STUDY.

Background: The Peoria Civic Center has completed a major expansion. The Center now contains over 110,000 square feet of exhibit space, 27,000 square feet of meeting space, and 18,000 square feet of pre-function space.

In 2002, the Civic Center Authority hired Johnson Consulting to analyze the Center’s master plan. In the consultant’s experience and opinion, hotels physically attached to Convention Centers in northern climates are much more successful than hotels that are not attached. According to the study, downtown Peoria needs more hotel rooms, a view shared by the Peoria Area Convention and Visitors Bureau. The Peoria Civic Center Authority indicates that a number of potential conventions have not selected Peoria because of the lack of an adequate number of rooms.

Improved downtown hotels are desirable to support the Civic Center, and to match the quality of hotels provided by our competitors. Improved civic, entertainment, restaurant, and retail services are needed.

In 2006, the Civic Center and the City retained HVS, a quality hospitality industry consultant. The study documented the need for more and better hotels to support the Civic Center. It also documented the fact that the downtown hotels continue to struggle, with relatively low occupancy.

In 2007, a study by a Six-Sigma Black Belt further examined the need for more hotel rooms to increase economic activity in the City Center.

Downtown Peoria faces serious competition from other conference and convention centers. The addition of the Lincoln Museum has greatly enhanced Springfield’s attractiveness for conferences. Normal is completing a major new conference center and hotel with substantial governmental assistance. The Embassy Suites is near completion in East Peoria, and received substantial TIF assistance. Tinley Park built their center with substantial governmental assistance, and is preparing a major expansion. Four new hotels are underway or planned near Grand Prairie. These hotels are a welcome economic addition to the City, but will also further challenge downtown business.

On January 8, 2008, the City Council authorized the Director of Economic Development to meet with downtown hoteliers and other property owners to investigate possible methods to assist in the development of Peoria’s downtown. Staff met with all of the interested parties and taxing bodies to discuss the establishment of a Hospitality Improvement Zone (HIZ) that could have a variety of incentives to assist the businesses located within the zone. Over 15 presentations were made and the Initiative received broad community support for a Tax Increment Financing District (TIF) and a Business Development District (BDD).

Hospitality Improvement Zone (HIZ) Presentations Made to Date

City Council
Downtown Hotel Owners
Downtown Property Owners
Sanitary District
Peoria County
Peoria Township
Detweiller Trust
Planning Commission
Heart of Peoria Commission
PACVB
PCC
Library
Various citizens and developers
City staff
Mass Transit District

EDC
_________________________________________________
Requested Meetings

Economic Development Stakeholders
Chamber of Commerce May 27, 2008
Chamber of Commerce June 5, 2008
District 150 - Will schedule after agreement on previous TIF's is complete
Park District - No presentation needed, letter was enough
ICC - Requested but not placed on agenda

More Info on www.peoriaed.blogspot.com
under Hospitality Improvement Zone

Tax Increment Financing (TIF):

BUT For the TIF Incentive, the development of the Hospitality Improvement Zone Project Area cannot proceed.

In order to use the tax increment financing technique, a municipality must first establish that the proposed redevelopment project area meets the statutory criteria for designation as a “blighted area” or a “conservation area”, a redevelopment plan must then be prepared which describes the development or redevelopment program intended to be undertaken to reduce or eliminate those conditions which qualified the redevelopment project area as a “blighted area” or “conservation area,” or combination thereof, and thereby enhance the tax bases of the taxing districts which extend into the redevelopment project area. The statutory requirements are set out at 65 ILCS 5/11-74.4-3, et seq.

Business Development District (BDD):

If the corporate authorities of a municipality desire to impose a tax by ordinance pursuant to subsection (12) or (13) of Section 11-74.3-3, the following additional procedures shall apply to the designation of the business district and the approval of the business district development or redevelopment plan:

(1) The corporate authorities of the municipality shall hold public hearings at least one week prior to designation of the business district and approval of the business district development or redevelopment plan.

(2) The area proposed to be designated as a business district must be contiguous and must include only parcels of real property directly and substantially benefited by the proposed business district development or redevelopment plan.

(3) The corporate authorities of the municipality shall make a formal finding of the following: (i) the business district is a blighted area that, by reason of the predominance of defective or inadequate street layout, unsanitary or unsafe conditions, deterioration of site improvements, improper subdivision or obsolete platting, or the existence of conditions which endanger life or property by fire or other causes, or any combination of those factors, retards the provision of housing accommodations or constitutes an economic or social liability or a menace to the public health, safety, morals, or welfare in its present condition and use; and (ii) the business district on the whole has not been subject to HB0826 Enrolled LRB093 05628 WGH 05721 b Public Act 093-1053 growth and development through investment by private enterprises or would not reasonably be anticipated to be developed or redeveloped without the adoption of the business district development or redevelopment plan.

(4) The proposed business district development or redevelopment plan shall set forth in writing: (i) a specific description of the proposed boundaries of the district, including a map illustrating the boundaries; (ii) a general description of each project proposed to be undertaken within the business district, including a description of the approximate location of each project; (iii) the name of the proposed business district; (iv) the estimated business district project costs; (v) the anticipated source of funds to pay business district project costs; (vi) the anticipated type and terms of any obligations to be issued; and (vii) the rate of any tax to be imposed pursuant to subsection (12) or (13) of Section 11-74.3-3 and the period of time for which the tax shall be imposed.

The Economic Development Department is requesting that the City Council approve the selection of Camiros, Ltd as the TIF/BDD consultant to conduct the Eligibility Study and write the Redevelopment Plan. The Eligibility Study will determine whether a portion of the City to be known as the Hospitality Improvement Zone qualifies for designation as a Business Development District under the provisions contained in the Act. If the Project Area so qualified, develop a redevelopment plan for the HIZ in accordance with the requirements of the Act.

RFP RESPONSE FROM CONSULTANTS:

An eligibility study is required to establish a TIF/BDD. The process requires 90 days, and requires a public hearing, culminating in adoption by the City Council. The following are the cost of the proposals from the consultants to prepare the TIF/BDD studies:

Camiros Ltd $ 12,000
Duff & Phelps $ 39,500
McKenna Development Strategies $ 42,000
Development & Municipal Initiatives, LLC $ 42,500
Kane McKenna $ 55,000 Plus travel

Staff recommends that the Council approve Camiros, Ltd, at a cost of $12,000 to conduct the study. They have the substantial experience for the best price. The bid cost are substantially lower because the Department of Economic Development has done and will continue to do a substantial portion of the work, including the development of the TIF/ BDD area maps, GIS work, assistance in field work, mailings, etc. In addition, Camiros conducted the Eagle View and Warehouse District Eligibility Study, resulting in the creation of the TIF’s. Their work was very good.

Financial Impact: If the TIF and BDD are approved the City anticipates existing hotels will use the incentives to upgrade and improve their facilities. New hotel operators may also develop within the HIZ area. The BDD permits an additional Sales and/or H tax to be levied on businesses within the BDD. The TIF captures new property tax increment, which, subject to Council approval, can be used to incent redevelopment and/or build needed infrastructure.

NEIGHBORHOOD CONCERNS: The businesses and residents of downtown Peoria have ask for assistance in the redevelopment of blighted commercial areas.

Impact if Approved: Redevelopment and new commercial development will be encouraged, which would revitalize business and stabilize the surrounding area.

Impact if Denied: If the HIZ TIF/BDD is not created the area will remain as it is at present,

Alternatives: None.

EEO Certification Number: 02614

RELATIONSHIP TO THE COMPREHENSIVE PLAN: The development of the HIZ TIF/BDD is consistent with the Comprehensive Plan.

VISION: WE HAVE A HEALTHY, THRIVING ECONOMY.

GOAL: A. Provide an economic environment that supports existing and new businesses.