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* The highly controversial STAR Bonds bill was supposed to spark a huge retail revival in the Marion area. Under the law, the developer would get to keep the first 20 years of sales tax revenues which would normally go to state and local governments. That revenue stream could then be used to finance the project.
The original plan was to put the STAR Bonds district in Glen Carbon, in the thick of an already existent Madison County retail explosion. Local opposition stopped that plan in its tracks, so the General Assembly kept the concept alive by moving it to Marion, which is by Carbondale.
Three years later, nothing has happened. And the developer pulled out this week…
Bruce Holland of Millennium Development LLC resigned from the STAR Bond project in a letter to city officials Monday, according to Mayor Bob Butler.
The letter, a short one paragraph, gave no explanation as to why the developer was walking away, said Butler. […]
Butler said the city has another developer seriously considering taking over the project. An official decision could be made in the next 10 days to two weeks Butler said.
* The developer’s excuse…
Holland said that after three years, few retailers have come forward expressing interest in the development. He said representatives from Bass Pro Shop and Nebraska Furniture Mart initially visited the proposed site. Bass Pro Shop was interested in the site, Holland said, but the lingering effects of the recession have apparently thwarted any further large retail development for the time being.
“In fact, the retail industry is still somewhat in recession,” Holland said. “You don’t see any big-box users being built in the last few years.”
Um, OK. I guess the massive Scheels outdoor and sporting goods store which opened in Springfield two years ago was a mirage, as was the gigantic new Menard’s “super store” that opened here last month. Both of those stores, by the way, are not in STAR Bonds districts.
While Holland’s failure is bad news for Marion, there is a bright side.
Look, we most definitely need to help spur economic development, but this STAR Bonds thing is dangerous. We already have a huge fiscal problem. Giving up state sales tax revenue streams in order to spur development that will likely hurt retailers in surrounding areas is just not a good idea, particularly if it spreads all over the state, like TIF districts have.
* Related…
* Grundfos to move North American headquarters to Chicago area
* My boss wants my Facebook password? - Illinois moves to legalise employer access to workers’ accounts
* New software is automating digital health records — and saving clinics a fortune
* Passenger rail car maker Nippon Sharyo grows in Rochelle
* ComEd’s “Smart Switches” Reducing Service Interruptions
posted by Rich Miller
Wednesday, May 1, 13 @ 10:54 am
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Agree with Rich. This idea smelled bad from day one.
Comment by walkinfool Wednesday, May 1, 13 @ 11:02 am
what’s the bright side?
Comment by Dozer Wednesday, May 1, 13 @ 11:03 am
Bad business all around. Set your tax rates to be competitive and to pay for the services you provide and then let what happens happen. I hate when some businesses get tax breaks and others don’t. Just doesn’t seem fair or ethical.
Comment by Fan of the Game Wednesday, May 1, 13 @ 11:15 am
How’d it get moved to Marion?
Comment by Chicago Cynic Wednesday, May 1, 13 @ 11:18 am
“He said representatives from Bass Pro Shop and Nebraska Furniture Mart initially visited the proposed site. Bass Pro Shop was interested in the site, Holland said, but the lingering effects of the recession have apparently thwarted any further large retail development for the time being.”
Recession didn’t stop the Bass Pro coming to East Peoria.
Comment by FormerParatrooper Wednesday, May 1, 13 @ 11:19 am
A really ugly concept, giving away the store to supposed new retailers at the expense of existing businesses.
If the market was there, Bass Pro Shop would be there without any breaks.
Comment by wordslinger Wednesday, May 1, 13 @ 11:22 am
This post is right on the money in every point made. STAR Bonds were a pure show horse from the start. I will never forget the headline of the Southern Illinoisan the day after Quinn flew into Marion for a ceremonial signing.
“Jobs to “last a lifetime!” #FAIL
Comment by John A Logan Wednesday, May 1, 13 @ 11:31 am
Was it a Freudian slip that ComEd’s story is posted under the headline for this post? Lol
Comment by dang Wednesday, May 1, 13 @ 12:26 pm
Wordslinger, Bass Pro rarely goes anywhere without some sort of incentive:
http://www.theatlanticcities.com/jobs-and-economy/2012/08/why-have-so-many-cities-and-towns-given-away-so-much-money-bass-pro-shops-and-cabelas/2906/
Comment by G'Kar Wednesday, May 1, 13 @ 12:35 pm
This area in Marion is right next to I-57, so it is sure to get a lot of drive by patronage. I would think that it would draw some big name store…like Pro Bass, since that is big hunting and fishing territory. I don’t think Quinn has been back there since then, which was right before the last election.
Comment by rusty618 Wednesday, May 1, 13 @ 12:45 pm
I hated the STAR bonds from day one. I am delighted to see that they are not working out. What a horrible idea.
Comment by soccermom Wednesday, May 1, 13 @ 12:50 pm
Actually agree with wordslinger. This development with tennants such as Bass Pro, would take more money out of the local economy than it brought in. Take profits away from established local businesses and send them to a company based elsewhere. That along with the lost tax revenue is more of a drain than a boost on local economy.
Comment by SO IL M Wednesday, May 1, 13 @ 12:55 pm
There’s a fine locally owned sporting goods store right in the neighborhood in Marion that pays plenty of local taxes. They already have that white elephant of a shopping mall and should quit while they’re somewhat ahead.
As an aside, how old is Mayor Butler these days? He must be pushing 90. Thejob must agree with him.
Comment by Arthur Andersen Wednesday, May 1, 13 @ 1:08 pm
Worst law ever? How about State Senator Don Harmon’s proposal to allow psychologists to begin prescribing drugs without a medical degree?
Comment by Anonymous Wednesday, May 1, 13 @ 2:07 pm
“Worse Law Ever” Question of the Day, Rich?
Comment by Cincinnatus Wednesday, May 1, 13 @ 3:37 pm
As an aside, how many tourists or sportsmen would stop in Marion, IL to pick out a sofa at the Nebraska Furniture Mart?
Comment by Arthur Andersen Wednesday, May 1, 13 @ 3:44 pm
I think it’s worthwhile to quote Rich’s coverage of this idiotic concept when it passed:
* The problems with and questions about this specific project are legion…
The Illinois Senate on Sunday sent Gov. Pat Quinn a bill that will provide an unusual state tax benefit to the developers of a planned commercial hub at Glen Carbon.
The proposed $1.5 billion development, called University Town Center, would be funded with “sales tax revenue’’ (STAR) bonds, which would be paid off by using the sales taxes collected within the development.
More…
Holland wants to build the complex near the intersection of Interstate 270 and Illinois 157, and has plans for new restaurants, retail stores, performing arts and entertainment. Holbrook said the development would bring 10,000 construction jobs and 3,000 permanent jobs to the region. But Haine and Hoffman said they worry it will take jobs and businesses away from other metro-east communities.
More…
Supporters say the project will create 10,000 construction jobs and 3,200 permanent jobs. They argue that the taxes paid by those workers – along with construction costs and other activities – will more than make up the estimated $15 million that the state will lose from sending back the sales tax revenues to pay off the bonds.
More economic worries…
A project of this size is likely to divert business from other Madison and St. Clair businesses. Motels in the area are currently running at 54% capacity (down 24% from last year) and we have an approved hotel on hold. O’Fallon alone has more than 175 acres of Interstate-ready retail building lots that do not require government support. O’Fallon and Fairview Heights have three major furniture stores and a national electronics store sitting empty and available immediately for rent.
The prerequisite political connection…
Also involved [in the development project is] John Costello, son of U.S. Rep. Jerry Costello, D-Belleville.
Environmental concerns…
“The amendments did not change the floodplain requirement. An eligible site must be at least 600 acres and have 30 percent in the 100-year floodplain. The Glen Carbon site is 900-plus acres, 100 percent is in the 100-year floodplain. It consists entirely of jurisdictional and prior-converted wetlands, which play an important role in storing floodwaters and trapping sediment that comes from water flowing from the bluff.”[…]
“… That water will go elsewhere, not remain on site,” Andria said.
At last check, the developer had signed no contracts to actually bring any retail, hotel, etc. establishments to the site. He doesn’t even own all the land. The STAR bonds would help pay for that.
* How the bonds work: The developer will get all the state sales tax money generated by businesses in the STAR bond district. That can be used to sell bonds, which the developer can use to build both horizontal and vertical infrastructure - roads, sewers or even stores for the companies he’s luring.
* The immediate problem is obvious. A study by the Dept. of Revenue claims the state will lose $15 million a year in sales tax revenues. There’s only so much money that will be spent on retail in a given area. So some retail spending will shift to the STAR bond district, creating losers elsewhere in the region. Businesses won’t be able to relocate to the district, but as experience with TIF districts have shown, they may be able to get around that.
* And that brings me to the real problem with this legislation. The bill is specifically written for the Glen Carbon site, but laws can be changed as easily as 1-2-3 in Springfield. Rosemont is already looking at a STAR bond district. A suburban Will County town has already contacted its lobbyist about getting in on the action. Chicago would be foolish not to make a move in that direction.
TIF districts are a much abused economic development tool, but that’s local property tax money we’re talking about here, so it’s no skin off the state’s back. But this STAR bond thing is state money. How long do you think it’ll be before Mayor Daley and others decide to let their TIF districts expire and convert them to STAR bond districts? Half of Chicago, remember, is already in a TIF district.
* Imagine the budgetary consequences for Illinois in just a few short years if this thing spreads. And it will spread. That’s guaranteed. Stuff like this always spreads. Just look at Nevada. It used STAR bond districts to lure a Cabela’s (a name that is also being mentioned for the Illinois site) to Reno and a Legends casino in nearby Sparks. Legends, by the way, is also part of a Kansas City STAR bond development.
And now, Las Vegas wants in on the act…
And as Reno developers work to protect their own projects, Las Vegas businesses also are working their own deals. Harrah’s Entertainment wants a special exemption for the stadium it wants to build with STAR bonds and the city of Las Vegas wants to be able to use STAR bonds in its redevelopment areas.
Once this thing starts, it’ll never stop. Guaranteed. It won’t be long before a very large chunk of this state is in a STAR bond district, meaning that state sales tax money will be spent on local projects, meaning that the state’s budget situation will only get worse while the locals try to cannibalize each other. Mark my words.
posted by Rich Miller
Comment by soccermom Wednesday, May 1, 13 @ 4:32 pm
If it were not for all of the funny stuff we do in this state to benefit specific developers and businesses, we absolutely could reduce tax rates for everyone and everyone (Business, government, taxpayers) would be better off for it. I always go back to columnist George Will’s assessment of Illinois: “Comprehensively misgoverned”.
Comment by Skirmisher Wednesday, May 1, 13 @ 4:37 pm
I liked the related connection to ComEd’s rate hike bill… funny how $3/month is now $5/month and maybe higher thanks to the retro-active rate hikes passed this year in Senate Bill 9.
Comment by SportShoz Wednesday, May 1, 13 @ 5:04 pm
Thanks john Bradley and Gary forby for nothing.
Comment by ironman Wednesday, May 1, 13 @ 11:05 pm
Glad that this giveaway will not materialize. materialize. Zero sum game: questionable “growth” at the expense of existing businesses, not to mention a grabbing of money rightfully belonging to school districts by risk adverse mega corporations. Truly corporate welfare!
Comment by Steve Downstate Thursday, May 2, 13 @ 5:45 pm