Joliet council backs hotel tax break
By Bob Okon email@example.com July 1, 2013 8:50PM
Updated: August 3, 2013 6:39AM
The Joliet City Council voiced support for $2.4 million in tax incentives for a new hotel and conference center, even though a vote on the package was delayed.
“I think everyone here understands that if you’re going to attract economic development you have to give incentives,” Mayor Thomas Giarrante said at Monday’s council meeting.
The incentive package proposal, however, was delayed amid some questions raised on the big breaks the new hotel complex would get in the city’s hotel, sales and food and beverage taxes. The hotel would pay none of those taxes in the first three years of operation and no more than 40 percent in the first 10 years.
Council members received an email from Joseph Pecora, owner of Heroes West Sports Grill, who contended the break on food and beverage taxes would hurt his business because the hotel plans to open a sports-themed restaurant. Heroes West is located near the proposed hotel complex.
Pecora did not attend Monday’s meeting.
Several council members said they would support the tax break, and none indicated they might oppose it. A few, however, suggested an arrangement could be made to offset the effect on competitors such as Pecora.
“There’s got to be a deal to be made to bring this needed development to our city but also not adversely affect one of our local businesses,” said Councilman John Gerl, adding that he “fully supports” the tax incentives.
Councilman Larry Hug said he had a proposal to “mitigate damage to head-to-head competition,” although he said he wanted the city attorney to review the plan before making it public.
Pecora, however, is not the only business person to express concern about the tax incentives.
The owner of the Holiday Inn Express and Conference Center has said the future competition would get an unfair pricing advantage if it does not have to pay the 7 percent hotel tax.
City Manager Thomas Thanas said he also has heard from another hotel operator, whom he did not name, with concerns about the tax incentives. Thanas said he decided to delay the vote on the tax incentive until the council’s July 15-16 meetings, so the final documents that outline the incentives will be available to the public before the vote.
But Thanas said the Joliet incentives are not unusual, compared to what other communities have done to support construction of hotel and conference centers because of the visitors and business they can bring to town.
He noted that Naperville is proposing a $7.5 million incentive package for a similar plan and noted that Normal put $25 million of city money into a hotel and conference center there.
“I have tried to structure this so there is no city money at risk,” Thanas said, noting that the rebates on city taxes will only come if the business is successful.
Representatives from Aurora-based Guru Hospitality Group, which would build the project near Interstate 80 at the Houbolt Road interchange, told The Herald-News they were willing to wait the two weeks until the next council meetings.
But CEO Sanjiv Mehrota’s suggested a compromise with the competition could get complicated.
“We’ve got to understand the other person’s philosophy and where he’s coming from,” Mehrota said. “At the same time, are we going to get immunity? If we build a steakhouse, are we going to say there’s not going to be another steakhouse in the neighborhood?”