The Commercial-News, Danville, IL

Editorials

April 26, 2013

City's deal works for all

DANVILLE — Danville city officials approved a deal this week to give back half of the sales tax revenue — up to $100,000 — to a new, large retail store that wants to locate in the Village Mall.

It is not unusual for municipalities to offers incentives to seal the deal on new development. In the past, city officials approved deals to bring in the Danville Crossings complex, which includes Walmart, and others.

Some of those deals in the past involved rebates on property taxes. So the city paid money out even if the new business didn’t make a dime.

The five-year deal with yet unnamed retailer headed for the mall doesn’t do that. It involves only sales tax revenue. It’s better way to do business and it protects the city budget — to a degree.

If the new store generates $200,000 in sales tax revenue for the city, then the mall will receive half and the city keeps half.

If the new retailer generates $1 in sales tax revenue, the mall will receive 50 cents and the city keeps 50 cents.

In either case, no money leaves city coffers until it has come in first. That’s a much better way to handle rebates.

As long as city officials don’t estimate an unrealistic number, they stand to gain an edge in Danville’s budget.

That makes city officials winners, the mall and its retailers winners and local taxpayers winners because the additional revenue will help officials hold the line on property tax rates.

Plus, the deal has the potential to attract more customers to the mall and surrounding businesses, pushing the city’s take of sales tax revenue even higher. That makes it look like an especially good deal for all.

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