Naperville food, liquor tax goes to vote

Downtown restaurant owners will decide the fate of Naperville's financing plan for three parking deck proposals.

The city wants to institute an extra 1.5 percent tax on food and drinks sold at the 40-plus sit-down eateries and watering holes downtown. In order to do that, 75 percent of the owners of those businesses have to approve of the plan.

That would increase the food and beverage tax at downtown bars and restaurants to 2.5 percent. The additional tax would generate about $600,000 annually that would go toward offsetting the cost of constructing two new parking decks and a major addition to the Van Buren Avenue deck. The city council unanimously approved financing plan at Tuesday's meeting.

"Have we started doing the survey? Because just in case we don't get 75 (percent) we have to come up with a contingency plan," said Councilman Doug Krause.

City and Downtown Naperville Alliance officials expect to visit downtown restaurants and bars in two weeks to distribute ballots and answer any questions the owners may have regarding the tax hike. No one has set a timeline for tabulating the votes, but city officials said they would like to start collecting the tax Feb. 1.

Alliance leaders representing restaurant and bar owners gave preliminary approval to the city's financing proposal at a council workshop in October.

At least one parking deck developer appears to have faith that the tax hike will go through because demolition next to the Van Buren Avenue parking deck began last week to make way for the addition.

The city successfully lobbied state legislators this year to allow the special taxing district. They could have sought as much as a 2 percent increase.

The tax increase also comes with the stipulation that if a home rule sales tax is implemented in the city, the food and beverage tax will decrease by the same amount. The council has consistently rejected calls for such a sales tax.

"This council has been crystal clear with its desire to not implement a home rule sales tax," said Doug Krieger, the city's finance director. "My guess is the faces will absolutely change in the future and the views may not, but we wanted our bases to be covered."

The council also directed staff to continue researching an impact fee that would charge businesses based how much vehicular traffic they bring to the downtown area.

The city has never conducted a study that determines how much more traffic is generated by restaurant uses than retail or office uses. That report is due by June 1, 2008.