Food tax may rise in Naperville
It's not so much a matter of how anymore, it's how much.
Gov. Rod Blagojevich this week signed into law a special food and beverage taxing district in downtown Naperville. As a result, the city's parking deck financing puzzle became a little less puzzling.
The new law allows cities to impose an additional food and beverage tax of up to 2 percent in a specific area no greater than one square mile.
It's one of the few funding mechanisms downtown business owners and Naperville's city council seem to agree on.
"I don't think anyone sees it as the be-all, end-all," said Downtown Naperville Alliance Executive Director Patti Roberts, "but it's a portion of the pie."
Just how big a portion remains to be seen. Initially, city officials sought a 1 percentage point hike. However, there has been some discussion among restaurant and bar owners about increasing the amount if it means reducing or eliminating other funding proposals, Roberts said.
"We've had restaurants who have expressed a willingness to have an additional 2 percent, but that's not the vast majority," she said.
Naperville had pushed the legislation all session specifically to help finance several downtown parking deck projects in the works.
The city is looking to finance a new $16 million, four-story deck at Nichols Library and a $6 million addition at the Van Buren parking deck. The city also has offered to pay $4 million toward a new parking deck at the proposed Water Street development.
The city's finance director, Doug Krieger, said a 1 percentage point hike in the existing food and beverage tax to the 42 downtown restaurants would generate about $700,000 annually. That's about half the amount needed each year to cover a 20-year bond debt.
City officials and business owners have been split on how the remaining funds should be collected. City officials and downtown retailers believe restaurants should pay more since they are believed to generate more traffic. However, restaurant owners argue there is no accurate data to prove which businesses generate the most traffic.
Recently, the city council suggested an impact fee on restaurants would be its preference instead of the traditional Special Service Area property tax on all downtown commercial buildings.
"If the food and beverage tax was more than 1 percent there'd be less need for a fee," said Councilman James Boyajian. "That may be their preference."
Krieger said he plans to meet with downtown business leaders next week to gauge how much of a hike is preferred.
The new law also requires 75 percent of the impacted restaurants have to approve the food and beverage hike before it can be imposed, so the two sides will work on a method for collecting that vote, he said. Krieger believes if the restaurant owners agree to a hike, it could be implemented by the first of the year.