Hospitality Improvement Zone Update

The City Council directed staff to meet with local governments, business owners, and civic groups to discuss the possibility of a Hospitality Improvement Zone. Staff have conducted numerous presentations and meetings, as shown below:

City Council
Downtown Hotel Owners
Downtown Property Owners
Sanitary District
Peoria County
Peoria Township
Detweiller Trust
Planning Commission
Heart of Peoria Commission
PACVB
PCC
Airport Authority
Library
Mass Transit District
Various citizens and developers
EDC Staff
City staff
________________________________________
Requested Meeting - Scheduled Date

Economic Development Stakeholders - May 28, 2008
Chamber of Commerce - June 5, 2008
ICC - They have not scheduled, requested twice
District 150 - They will schedule after we reach agreement on Warehouse and Eagle View TIFs
Park District - No presentation desired by Park District, letter was enough.

Most agencies took no formal position for or against the proposed HIZ TIF. The Airport Authority did formally support the TIF with a letter in support.

More Info on Blog http://www.peoriaed.blogspot.com/, under Hospitality Improvement Zone (HIZ) TIF

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 complete 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.

The City of Peoria can 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

Tax Increment Financing (TIF) (23 year property tax incentive)

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

Special HRA Tax to be used for capital improvements

Special Service Assessment for capital and infrastructure improvements

City or Civic Center supported capital expenditures

Façade Improvement Program

These programs were formally discussed with business groups. In general, the groups noted that the area is struggling now, and additional taxes would only worsen the situation. The Enterprise Zone and historic tax credits are already in place. There was support among business groups for the TIF and BDD.

STAFF RECOMMENDATION: Authorize staff to retain a consultant to prepare a redevelopment plan and TIF and BDD eligibility studies. The process requires several public meetings and notices, and takes approximately 120 days.

Use the TIF, Enterprise Zone, Historic Tax Credits, and BDD to encourage and incent reinvestment in downtown Peoria hotels to reestablish Peoria as the premier midstate Illinois Conference and Convention City.