PEORIA — The reason developer William Torchia withdrew his special sales tax increase request, putting the construction of a local Portillo's outlet in jeopardy, may boil down to one number: six.
That’s the number of votes necessary to pass the proposal, and a number that multiple members of the Peoria City Council said last week it was nowhere near achieving.
Yet there still may be a possibility of a revised deal in the works, with talks between city officials and Torchia continuing in order to salvage the prospects of the hot-dog-and-Italian-beef restaurant.
“I think there’s still some discussion underway, and I’ve got my fingers crossed,” said Torchia’s attorney, Bob Hall, on Friday afternoon.
It’s been a remarkable evolution for a project that was quietly in the works for months as the fast-casual restaurant chain continued its expansion and made plans to enter the central Illinois market. The public discussion of a Peoria location began just over three months ago.
In recent weeks it’s been beset by opposition, with At-Large Councilman Sid Ruckriegel emerging as one of the most vocal naysayers. In particular, he has questioned what he has called the precedent-setting move of setting up a special tax just for one business and argued that any future development coming to the community will want the same thing.
Proponents have said that in this instance it’s more analogous to a user fee — something that patrons can decide whether or not they’re comfortable paying, and elect to eat elsewhere if they don’t like the notion.
“Just because the city can pass a tax doesn’t mean the city should pass a tax,” Ruckriegel said.
Fourth District Councilman Jim Montelongo expressed his frustration last week with the tenor of the conversation so far.
“We need to be able to do better than jumping on Facebook and having a smear campaign,” he said. “It’s one thing to have an opinion, but you’ve got to do it respectfully. It should be handled sometimes in meeting rooms and trying to find a consensus on how to make it work.”
The possibility of a tweaked deal has some members of the council quietly hopeful, but also sending signals that it’s essential to see the developer accept some form of compromise.
Several members of the City Council, including Mayor Jim Ardis and 3rd District Councilman Tim Riggenbach, have publicly suggested before now that a shorter term for the added tax would be more palatable.
“The way the deal was structured is (dead on arrival),” 2nd District Councilman Chuck Grayeb said Thursday. “It would have to be significantly altered or amended, or I don’t think the votes will be there.”
He said he’s willing to listen, review any adjusted arrangement and take input from his constituents. Some restaurateurs in his district have complained that their own operations hadn’t received such aid, Grayeb said, but also pointed out there have been instances when the city has stepped up to aid them or other businesses.
He said that ensuring a true, community benefit is essential for any incentive, a nod to comments he has made in the past.
“As District Two councilman, if one of my restaurant operators came and said they wanted some help and said they really wanted to do something exciting and we could see some numbers that it would accrue a lot more sales tax for the city and it would seem to be structured properly, I would do everything I could,” he said.
At-Large City Councilman Zach Oyler noted that council members have not been shy about crafting incentive packages for developments, pointing to a list of such arrangements approved by councilors since the beginning of 2014.
That list, released by the city Thursday, includes 28 items — most passed by wide margins — ranging from large-scale developments such as the Louisville Slugger complex to a proposed Burger King on Knoxville Avenue across from the shuttered Cub Foods in Midtown Plaza.
“Many of those have city money, taxpayer money, in them,” he said.
On the list were three special service areas, including two council votes related to Louisville Slugger.
Oyler also said that given the city’s economic decline, development that can bring in revenue from outside city boundaries is important to pursue.
That’s part of the financial argument made by supporters of the Portillo’s project, including Les Cohen, president of Cohen Development Company, which operates Westlake Shopping Center.
He points to calculations he’s made based on his experience in development, suggesting increased property tax revenue, sales tax revenue and the impact of payroll on the community to the tune of $110 million over 30 years, including adjustments for inflation.
Much of that includes payroll, which Hall previously estimated at $2 million annually for 200 positions. Whether full- or part-time, Cohen says, it’s money not in the system now, and — inflation-adjusted — totals more than $95 million.
As to the question of how much of that sales tax revenue is pulled from existing Peoria businesses, Cohen argues that as a destination restaurant, some people will drive between 30 and 45 minutes to eat at a Portillo’s, and estimates given the amount of population in that range — exclusive of the Bloomington-Normal area to the east where there is already a Portillo’s — and a traffic count of 100,000-plus cars daily along Interstate 74, as much as half the business at a local outlet could come from outside the city of Peoria.
Cohen also owns the property on which a UPS Store sits and would be selling that property to Torchia in order for the Portillo’s deal to proceed.
But, he argues, it’s more than self-interest that drives his support. Indeed, Portillo’s can be seen as a lodestar with the company’s imprimatur sending a message about the city and that shopping corridor in particular.
“Having Portillo's here is a stamp of credibility and a mark of legitimacy for this region, because when national retailers come to town, they know that Portillo's is so hyper-vigilant on site selection ... that so many developers around the country are chasing it,” Cohen said. “That they chose that site, that site is automatically (blessed). That improves leasability not just for Westlake, but for Northwoods (Mall), for Glen Hollow (Shopping Center).”
Also part of the debate is a question as to why a special service area is required at all. It’s another of Ruckriegel’s objections, building on the question of setting a precedent.
“I’d like to take the citizens out of this,” he’s said. “Raise the menu price, not the sales tax.”
Cohen said that’s difficult to convince a national restaurant to do.
“These national retailers, they set their prices based on some very sophisticated demographic analysis of what they think their market will be, and their sales projections,” he said “They back in their total occupancy costs as a result of those forecasts. It's very difficult, in my experience, to move those numbers.”
Chris Kaergard covers politics and government. He can be reached at email@example.com or 686-3255. Follow him on Twitter @ChrisKaergard. Reporters Nick Vlahos and Steve Tarter contributed to this story.