City plans to create business district on east end of Sterling

STERLING – The city is looking to add a new tool to its economic development toolbelt.

The City Council plans to create the Lincoln Highway Business District, which will encompass the old Kmart site on the east side of town, to help pay for improvements needed to attract development to the area.

A business district is used by cities to impose an additional sales tax or hotel tax on businesses within the district only. The money raised is used to improve the site so as to entice tenants and promote economic development.

Such districts usually also benefit surrounding businesses by generally improving the area, increasing property values and attracting more consumers.

Barring any unforeseen developments, the City Council plans to adopt the Lincoln Highway Business District Plan, which it will present to the public at a hearing at 6:30 p.m. Aug. 16 in City Hall, 212 Third Ave.

Comments for and against the plan will be taken under consideration before the designation is voted on in September or November.

Highlands Development LLC of Kansas City, Missouri, bought the 15-acre site at 2901 E. Lincolnway for $1 million.

It already has one major tenant lined up: The Veterans Administration, which has outgrown its 10-year-old clinic at 406 Ave. C, plans to lease part of the refurbished store for a new and larger clinic.

The rest of the old store, vacant now for nearly 8 years, and the outlying buildings to the west will be developed into retail and office space, and that’s where the new business district comes in.

How it works:

The base sales tax rate for Illinois communities is 6.25%. The state gets 5% of that, the county gets .25%, and the community gets 1% of all sales. In a business district, the city can impose an additional sales tax in .25% increments up to 1%, within the defined area.

That extra money raised in the business district can be paid back to developers to help defray some development costs, or used by the city to pay for infrastructure improvements and other costs within district.

The district also will be eligible for grants.

The city hired development advisors SB Friedman of Chicago to study the Kmart site and draw up a plan for the business district; it completed its report in April.

Under the terms of the Illinois Business District Development and Redevelopment Act, an area first must be determined to be blighted, to lack growth and development through private investment, and to be unlikely to be developed without the creation of a business district, all of which was determined.

“Given the overall decline in property value, excessive vacancies, limited new private investment and existing site deterioration, it appears unlikely that significant private investment would occur in the area without creation of the business district,” the report said.

Go to https://tinyurl.com/scdrtpuf to read the plan.

Kathleen Schultz

Kathleen A. Schultz

Kathleen Schultz is a Sterling native with 40 years of reporting and editing experience in Arizona, California, Montana and Illinois.