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* A fiscal note has been filed on the STAR bonds bill, which I long ago tagged as the “Worst Bill Ever.” This will give you an idea of how much sales tax money these developers are in line to snag…
The Illinois Department of Revenue estimates that the combined State and local sales tax available for debt repayment over a 20-year period at between $1.0 billion and $1.3 billion. This range represents the potential tax subsidy for the UTC development.
At least a billion dollars. You can easily see why they are willing to spend the money to hire some of the best lobbyists in Springfield. This is a bonanza.
One of the more interesting aspects of the fiscal impact note is the state sales tax revenues lost because the STAR bond district will start sucking customers away from surrounding areas…
After a few years of UTC operation, the losses from displaced taxable sales erode the early gain from the construction phase. If the full increment is used to pay debt service for 15 years, then the aggregate net State revenue loss over this period is between -$42 million and -$178 million. If 20 years, then the aggregate net State revenue loss over this period is between -$75 million and -$267 million.
The Department of Revenue didn’t do hasn’t done a new note for the proposed Marion project. [Rest of the graf deleted because the new note hasn’t yet been filed. Misread. Lack of sleep. Sorry. They can’t move this bill without that note, so we’ll see how long it takes Revenue to do it.]
* The developers have been tossing retail company names around in an effort to gin up interest in the project. But they have yet to approach at least some of those companies…
Two of the companies mentioned as possible anchors for a major development in Southern Illinois say they haven’t targeted the region in their expansion plans.
Great Wolf Resorts, which operates 12 water parks across North America, was identified by Swansea developer Bruce Holland as an example of what could be built in a 400-acre “destination development” being touted for Marion.
The company, however, isn’t necessarily on board.
“Our development team currently has no plans for a Great Wolf Lodge in Illinois,” said Steve Shattuck, a spokesman for the Wisconsin-based water park operator.
Similarly, a spokesman for outdoor outfitter Cabela’s said he hasn’t heard about a possible Southern Illinois location.
Nebraska Furniture Mart was more explicit…
According to eight of the mayors, Holland said he had several discussions with the furniture retailer and would be willing to give them a state-backed $100 million or greater incentive to locate in Glen Carbon. […]
Nebraska Furniture Mart Executive Vice President Robert Batt told The Telegraph that his company had received a letter of inquiry a long time ago from a member of Holland’s partnership group regarding the Glen Carbon site, but never conducted active negotiations.
“St. Louis is a market under consideration, which is true. But whether it’s in Illinois or Missouri remains to be seen,” Batt said.
“One thing I can guarantee you with 100 percent certainty is, we ‘ain’t’ going to Marion,” he said, adding with a quip: “We ‘ain’t the Marion kind.’”
That market, Batt said, is far smaller than the company prefers.
Comments like that led the Belleville News Democrat to wonder aloud about something that others are pondering…
Does the language leave a door open for the developers to use STAR bonds in Glen Carbon? A lot of people think that’s what this sudden strategy shift is all about.
It is pretty hard to believe that a destination business would want to locate in Marion, far from any major city — although we guess if the taxpayers are going to pay the tab, why not?
Whatever the location, the answer on STAR bonds remains the same: No.
* The bill zoomed through committee yesterday…
With one day left in the Legislature’s session, the House Revenue and Finance Committee passed the “STAR” bonds legislation to the full House on an 11-2 vote.
“To put something like this on the books is absolutely offensive, in my opinion,” said state Rep. Careen Gordon, D-Coal City. She said it was wrong for “the developer to come in and ask for so much” from the state amid a financial crisis.
If Forby and Bradley succeed, this will not necessarily pave the way for a STAR bonds development in the metro-east. Rebecca Rausch, a spokeswoman for the developers, said the bill still contains specific eligibility criteria that tenants would have to meet.
“It’s not like anybody could create a STAR bond district,” Rausch said. “It doesn’t open the flood gates for STAR bonds everywhere.”
Laws are changed all the time in Springfield. That’s what bills usually do. They don’t usually create totally new laws, they mostly just amend laws currently on the books. And this would be such a lucrative law that Chicago, Rosemont and countless others will rush to cash in. Guaranteed. TIFs were supposed to be strictly limited, too, remember. Now, half of Chicago is in a TIF district.
posted by Rich Miller
Friday, May 7, 10 @ 10:36 am
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I will never donate to or vote for anyone who votes for this trainwreck of a bill. End of story. This is a prime example of government officials and “businessmen” who give all of us a bad name via actions like this.
Comment by Ronaldus Friday, May 7, 10 @ 10:41 am
This bill is beyond irresponsible. And I especially agree on the bogus argument Rich mentions at the end of his post. What is going to stop Mayor Daley for seeking one of these? Or any other Mayor for that matter? And who could blame Daley? The West side of Chicago needs this kind of incentive as much as any area in the state.
This is Pandora’s box.
Comment by Cosmic Charlie Friday, May 7, 10 @ 10:41 am
This is worse than the Chicago parking meter giveaway. At least that didn’t use state funds to wreck current businesses and drive down existing commercial property values for the benefit of wired developers.
Comment by wordslinger Friday, May 7, 10 @ 10:46 am
Careen Gordon is right: It’s beyond disgusting for the state to volunteer giving-away up to $267 million at this particular moment - no matter how long the period of time over which the loss is stretched.
Particularly since this little toe in the door is attached to the big ol’ foot that’ll kick us squarely in the rear when other communities understandably demand their own STAR bond projects.
Comment by Linus Friday, May 7, 10 @ 10:47 am
The most interesting part of the STAR bill in it’s previous and current forms is the “eligible area” definition.
Bottom line: if these are such great opportunities, why do they need such a big infusion of cash?
Hypocrisy abounds: Sponsors of the original bill (Bost & Luechtfeld) are now strongly opposed because they know it will pull business from the areas they represent. Bradley, usually a pretty fiscally responsible guy, is a sponsor. Committee members need to be swapped out of Revenue to ensure passage.
There are so many things wrong with this…
Comment by Pot calling kettle Friday, May 7, 10 @ 10:50 am
If anything proves that the political class is corrupt, it is the unending push for this STAR bond bill.
When a community or business entity is in trouble a vast army of scammers and flimflammers mobilize to take advantage of the weak. Thousands of taxpayer funded projects throughout the country are in the red after the developers leave with their pockets are full of public money.
As we have seen in the use of the TIFF district programs, a decent plan becomes subverted by the political class and becomes an funding mechanism for the insiders. STAR bonds take public money and disproportionally rewards developers for projects that do not carry their own weight.
Any politician who supports this proposal should be run out of office on a proverbial rail. Perhaps tarring and feathering should be allowed as well.
Comment by Plutocrat03 Friday, May 7, 10 @ 10:57 am
The figures you’re using to argue against the project are for the MetroEast plan, the Marion plan is smaller and more restrictive.
Comment by Downstate Friday, May 7, 10 @ 11:00 am
Yes, I know, downstate.
Comment by Rich Miller Friday, May 7, 10 @ 11:02 am
good to see the developers are using Blago staff. That should instill trust all around.
Comment by L.S. Friday, May 7, 10 @ 11:07 am
Rich: Thanks for the correction on the fiscal note. More than the actual figures, the timing on the fiscal note is what will tell us whether Gov. Quinn is in bed with the developers. Revenue can drag its feet for 5 days if PQ wants to hold up the bill or they can come up with a number right now if he wants to help it along. I know most of your loyal readers already know this, but just in case any newbies jumped on today.
Comment by SAP Friday, May 7, 10 @ 11:19 am
Phil Pagano committed suicide this morning.
Comment by jerry 101 Friday, May 7, 10 @ 11:28 am
Are any of the legislators hearing from any of their constituents or interest groups who are opposing this STAR bond?
What kind of debate is happening in the state legislature? Are any of the arguments used by Rich being presented to the legislators or are they just shooting in the dark and lumping this in the “any development is good development regardless of cost” category? Do they really think through these bills, and especially “the worst bill ever”, before voting on them?
Comment by Vole Friday, May 7, 10 @ 12:17 pm
This is a bonanza.
“No - it is not!”, claims Lorne Green as Ben Cartwright, who today has announced that he has returned from the dead, along with Pernell Roberts as Adam, Michael Landon as Little Joe and Dan Blocker as Hoss.
“This is Bonanza!”, Ben Cartwright’s deep bass thundered across the room.
“Adam? I want you and the boys to head onto the Capitol Building. There are a bunch of varmit preparing to blow to smithereens the entire territory with STAR bonds! Heaven help this great land of ours if this happens!”
“Little Joe, I trust you can keep your hands off of the pretty ladies under the dome, right?”, asked Ben paternalistically. The boys laughed heartily, “Little Joe, you ole rascal!”, as Little Joe blushed with a crooked, knowing smile.
“Gee Pa”, Little Joe answered, “how could you ask a thing like that when we have a snootful of troubles in Capitol City? Them STAR boys are abscounding with every silver dollar with this scheme of theirs, and you’re wonderin’ if I have a hankering for some sweet legislative dalliances? This STAR bond is worse than when the Virginia City train was held up by the Blagojevich brothers!”
“Hey Pa?”, Hoss intoned forcefully, “when we find those billion dollar freeloaders, do we have enough rope to string them all up?”
“Son”, Ben seriously answered, “we’re going to have to handle this ourselves. The Territory is out of money to buy enough rope. The GOP is too puny to even hoist just one of those grafters over a cracker barrel, let along the branch of the hangin’ tree. OH - and don’t forget to fill out the Environmental Impact Statements this time before the hangings, I don’t want Judge Holmes to come down on us like he did when we shot that old horse in front of White Oaks Mall.”
“Move on out, boy! Don’t come back to the Ponderosa until these claim jumpers are facing justice!”
Comment by VanillaMan Friday, May 7, 10 @ 12:36 pm
This is all about lining the pockets of the developers. They use State money to build the project. Pay themselves for their work, then totter off. Whether the developemtn succeeds or fails they have no care since they pay themselves millions, and have zero risk in the venture.
Notice how the devlopers have very little motive to obtain real viable buisness entities for the devlopment and bring them onboard? after all, the developers have no money in the project why do they care what stores actually come on board?
Imagine a developer who was drivent to make a successful business on their own. Where are the Sam Walton’s, Bill Gate’s, Micheal Dell’s, etc of the world who built themselves on good ideas shouldering their own risks.
Comment by Ghost Friday, May 7, 10 @ 12:52 pm
I can’t believe the Southern Illinoisan editorialized in favor of this disaster. They should rent a copy of “76 Trombones” and pay close attention to Professor Harold Hill.
Comment by Dr. Reason A. Goodwin Friday, May 7, 10 @ 3:46 pm