Hospitality Improvement Zone (HIZ)

City Council Agenda Date Requested: January 22, 2008

Action Requested: AUTHORIZE CITY STAFF TO MEET WITH DOWNTOWN HOTELS AND OTHER PROPERTY OWNERS TO INVESTIGATE POSSIBLE METHODS TO ASSIST DOWNTOWN.

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 competition from other conference and convention centers in the regioin. 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 has opened in East Peoria, and received substantial TIF assistance. Tinley Park built their center with substantial governmental assistance, and are preparing a major expansion. Four new hotels are underway or planned near Grand Prairie without any assistance. These hotels are a welcome economic addition to the City, but will also further challenge downtown business.

The City of Peoria continues to search for ways to assist our downtown business compete with these new challenges. Possible ways to assist downtown business include the formation of a Hospitality Improvement Zone (HIZ), with these possible programs

Enterprise Zone (sales tax on materials & 5 year property tax abatement, already in place)

Historic Tax Credits for buildings older than 1936. (The year is a federal requirement)

Creation of a Tax Increment Financing (up to 23 year property tax incentive)

Business District Development and Redevelopment District (new sales or hotel tax)

Special voluntary HRA Tax to be used for capital improvements

Special Service Assessment for capital and infrastructure improvements

City or Civic Center supported capital expenditures

New Façade Improvement Program

RECOMMENDATION: Authorize staff to meet with downtown business, citizens, and governments to investigate possible methods to help our downtown compete.

Financial Impact: None at present. There may be impact, depending on steps that the Council may choose to pursue after completion of the meetings.

NEIGHBORHOOD CONCERNS: Not known, but will be investigated as part of the meetings..

Impact if Approved: Staff will meet with representatives of downtown business and report back to the City Council.

Impact if Denied: No staff action will be taken.

Alternatives: None.

EEO Certification Number: N/A.

RELATIONSHIP TO THE COMPREHENSIVE PLAN: Downtown improvements are consistent with the Comprehensive Plan.

VISION: WE HAVE A HEALTHY, THRIVING ECONOMY.

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