Friday, May 29, 2009 Posted on Fri, May. 29, 2009

STAR bonds bill: Controversial incentive package for billion-dolllar retail center heads to House floor

BY SCOTT WUERZ
News-Democrat

A vote could come as soon as today on a controversial incentive package designed to enable construction of a billion-dollar entertainment and retail center in Glen Carbon.

Legislators last Friday submitted a third amendment to the Sales Tax and Revenue (STAR) bonds bill that they hope will satisfy those worried the development, University Town Center, will damage surrounding businesses. The House Revenue Committee passed it 8-3 Thursday, and it heads to the House floor.

"You're never going to make everyone happy," state Rep. Tom Holbrook, D-Belleville, said. "But we believe we have met the major concerns people have. The Department of Revenue will be involved at every level, and I believe this is the best way to bring jobs to Southwestern Illinois that would otherwise go to St. Charles, west (St. Louis) County or someplace else in Missouri."

Rebecca Rausch, spokeswoman for Swansea developer Bruce Holland, said the new amendment will make the project more difficult. But the builder is still willing to move forward on the project, to be located near Interstate 270 and Illinois 157.

"The latest changes go even further down the line of what Rep. (Jay) Hoffman and Sen. (Bill) Haine have asked for," Rausch said. "The latest amendment gives the Department of Revenue the authority to approve every project within the district and for every project, there would be an economic impact study required."

The biggest concern is that the $900 million development would attract businesses and their customers away from other metro-east cities in much the same way the St. Clair Square shopping mall in Fairview Heights drew business away from downtown Belleville in the 1970s.

Hoffman, D-Collinsville, disagreed that the third and latest amendment addresses his concerns. "This still doesn't have any teeth," he said. "There is nothing to make sure that there wouldn't be cannibalization of existing businesses and jobs from the surrounding area."

Hoffman pointed to a 2008 Kansas Legislative Division of Post Audit study he said shows a similarly funded development in Kansas City, Kan., called Village West destroyed surrounding shopping centers. According to the report:

• Since 2002, 34 percent of stores within 150 miles of the Nebraska Furniture Mart anchor store in Village West closed, while 13 percent shut down.

• Before 2002, neighboring Johnson County had 42 percent of Kansas' furniture sales. After Village West was built in Wyandotte County, that total fell to 19 percent. Meanwhile, Wyondotte County, which sold 1.5 percent of the furniture in Kansas before 2002, sold 49 percent after the construction of Village West.

But supporters of the project say facts were cherry-picked from the Kansas report, which actually concludes Wyandotte County and the state benefited.

Rausch said the Illinois Department of Revenue report on the subject to legislators didn't include that:

• Statewide furniture sales increased 88 percent after Village West was built.

• Sales tax from furniture sales increased 68 percent after 2002.

• The number of furniture store employees statewide increased 27 percent.

"Another major factor is that the study found 50 percent of people who shopped at Nebraska Furniture Mart were from out of state," Rausch said.

Belleville, Collinsville, Edwardsville and O'Fallon leaders fear University Town Center would hurt their retail bases. The St. Clair County Board passed a resolution opposing the STAR bonds bill.

"Some of the changes that were made do some things to address our concerns," O'Fallon City Administrator Walter Denton said. "But, in general, I think it is bad policy to have special incentives for one area in which no one else can participate."

Madison County Board member Helen Hawkins, a Granite City Democrat, said she is worried the massive development would make flooding problems in the area worse.

"The water table is so high in the lowlands," she said. "How could they be so cruel as to bring this big thing in and make things even worse for the people who live in the bottoms?"

Contact reporter Scott Wuerz at swuerz@bnd.com or 239-2626.