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TO: Mayor Robert J. O'Connor
FROM: Bill Wiet, Chief Development Services Officer
DATE: November 16, 2016
SUBJECT:
To amend Resolution R15-261 to replace the rebate funding mechanism from the approved State Retail Sales Tax rebate, to the City's Food and Beverage Tax rebate. In doing so the difference in rebate formula would provide the necessary funds to the project as first recommended.
PURPOSE:
City of Aurora Ordinance #R15-261 outlined a tax revenue sharing agreement with JTE Family Properties, LLC (JTE). That Ordinance identified the tax revenue as "retail sales tax." The tax revenue sharing agreement should have been written as a food and beverage tax. The retail sales tax would not have produced the necessary funds to reimburse JTE for a portion of their improvements.
BACKGROUND:
Per the agreement, JTE purchased the vacant building at 1030-1034 Prairie Street. JTE renovated the property to operate as a restaurant, now known as Spartan House. Spartan offers a menu of pub food in a casual dining environmental, interactive vending, and five video gaming terminals. Per the agreement, JTE made required right-of-way improvements to Prairie Street, and the City of Aurora made required right-of-way improvements to Hartford Avenue. Given the total investment costs of the project, the renovation would not have been feasible without economic assistance from the City through a food and beverage tax revenue sharing agreement. At present JTE is exceeding its sales projections.
DISCUSSION:
The tax revenue sharing agreement will provide a rebate to JTE up to $110,000 over a ten year period of food and beverage tax generated by Spartan House. The current rate of food and beverage tax is 1.75%. The food and beverage tax rebate allocation shall be as follows:
Year 1 (90%): $18,900
Year 2 (80%): $16,800
Year 3 (70%): $14,700
Year 4 (60%): $12,600
Year 5 (50%): $10,500
Year 6 (50%): $10,500
Year 7 (50%): $10,500
Year 8 (50%): $10,500
Year 9 (50%): $10,000 (r...
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