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Local Government Q&A Ancel Glink attorneys each month post a new question and answer on the website. Many of these questions have been edited and collected in a pamphlet in the Ancel Glink Library: 230 Questions that have Actual Answers. Set out below are a series of recent questions and answers. Test your knowledge of questions and answers about local governmental bodies with those listed below. Many of these questions are directed to municipalities, but others specifically deal with municipalities with some questions concern legal issues in the context of other governmental bodies. Many of these answers apply to all governments in Illinois. Click here to submit a question to Ancel Glink. Municipal Q&A - August 2005 Business Development District Sales Tax:
A New Revenue Source for Municipalities
ANSWER: On January 1, 2005, amendments to the Illinois Business District Development Act, 65 ILCS 5/11-74.3-1, became effective. The amendments create a new source of revenue for all municipalities, in the form of a 1% sales tax and a 1% hotel tax. These taxes are in addition to all existing retail occupation and service taxes and home rule sales taxes.
In order to implement the new taxing power, a municipality must determine that the proposed Business Development District is "blighted." The definition of "blight" is similar to that used in the TIF Act, 65 ILCS 5/11-74.4-1, but is more closely related to the definition used by the Federal government for urban renewal areas. The municipality must also determine that, unless the Business Development District is established, the area will not grow normally. This is the same "but for" test used in the TIF Act. Like a TIF District, the Business Development District may continue in existence for 23 years. The Development District Plan must contain a description of the proposed boundaries, estimated project costs, a description of anticipated obligations to be issued, the rate of tax to be imposed, and other details. A public hearing must be held before the Plan is adopted by ordinance.
Once the ordinance establishing the District is adopted, it must be filed with the Illinois Department of Revenue. The DOR collects the sales tax and remits the proceeds to the municipality. However, the hotel tax must be collected by the municipality directly.
The tax revenue may be used for any project that benefits the Business Development District. There are no "TIF-type" restrictions on the use of these funds.
Experience with similar taxes in Missouri communities around St. Louis shows that the additional sales tax is not a deterrent to shoppers, except as to "big ticket" items such as cars and major appliances. Consumers are willing to pay the additional tax in redeveloped business districts because of the convenience of additional retailers in the area.
Previous Questions
May a local government require a developer to pay the cost of review of development plans?
May a governmental body give money to a charitable or religious organization?
What is the new Illinois law regarding terms of office of elected public officials?
Are religious institutions entitled to special treatment in zoning cases?
What Must Municipal Officials Do To Comply With The New Federal and State Overtime Regulations?
What Must Municipal Officials Do To Comply With The New State Ethics Acts?
Can a special use or variance be granted only to a particular person for for a limited time?
Does charging a fee for private use of public property destroy its tax-exempt status?
Does the one-year tort statute of limitations always apply against governmental bodies?
Do fire protection district codes supercede municipal codes?
Are Courts Especially Hard On Governmental Bodies?
What Are the New Rules About Recording Closed Meetings?
What Does a Municipality Need to Know About Extending
Utility Lines?
Are Courts Especially Hard On Governmental Bodies?
How Can You Achieve Flexibilty in
Health Care Coverages in a Collective Bargaining Agreement?
Are political discussions subject to the Open Meetings Act?
What can be done about IMRF Overfunding?
How can a municipality regulate wireless internet service providers?
How can governments counter unionization?
Where can I find an outline of zoning and planning issues?
How are closed session Minutes taken, approved and reviewed?
Will insurance companies and governmental pools cover claims
for "regulatory takings?"
Who gets to choose the municipal attorney?
How are the Open Meetings Act and FOIA impacted by municipal
elections?
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