Southern Tazewell Enterprise Zone

Enterprise Zone - Proposed Amendment #3 Information

The City of Pekin will be holding a public hearing on Friday April 15, 2022 at the Pekin City Hall City Council Chambers to discuss proposed boundary amendments to the Southern Tazewell Enterprise Zone (STEZ) that will add and delete various parcels in the City of Pekin and surrounding areas in Tazewell County. The hearing will also discuss the purpose of the proposed boundary changes, and to identify any local plans, tax incentives or other programs that should be adjusted in connection with the Southern Tazewell Enterprise Zone.

At the hearing, interested persons or agencies will be afforded an opportunity to be heard with respect to the aforementioned communities' intent to amend the Southern Tazewell Enterprise Zone. Citizens wishing to provide public comment should submit their comments to by 11:00 am Friday, April 15, 2022 and citizens’ comments will be read aloud at the hearing. A full legal description of the properties, parcels, and map is available at this link or by contacting the city manager at (309) 478-5371.. The City of Pekin requests that any hearing impaired person wishing to attend this Public Hearing notify the city manager at (309) 478-5371 by Wednesday, April 13, 2022 so that arrangements can be made to provide an interpreter.

BACKGROUND
The City of Pekin is an intergovernmental partner with Tazewell County, the Village of Morton and the Village of Tremont in the creation and administration of the STEZ. Here is a link to a map of the currently situated Enterprise Zone. An Enterprise Zone is a geographical area designated by the State of Illinois to provide certain development incentives (see link). In 2015, the entities mentioned above collaborated on a joint application to the State to create a new enterprise zone called the Southern Tazewell Enterprise Zone (STEZ). This zone was approved and effective as of January 1, 2016 for 15 years. It covers up to 15 square miles in various areas of the jurisdictions listed above and includes the following approximate breakdown between the parties:
Square Miles
Pekin Component 4.19
Morton Component 4.55
Tremont Component 0.26
Tazewell County Component 6.00
Total 15.00

PROPOSED AMENDMENTS
The City of Pekin pursued two successful amendments in 2016 and 2017 to add and delete parcels or territory from the STEZ. This proposed 3rd Amendment to the STEZ aims to make the zone more effective and streamline its boundaries in Pekin with other incentive based programs of the city. This amendment calls for the following changes:

1. Add parcels or territory that align with currently existing TIF District and Business Development District boundaries in Pekin along Derby Street, Court Street, Broadway and other key development areas. The layering of incentives from the Enterprise Zone, TIF and BDD will create a better environment for investment, growth and development. Some parcels include areas that are in Tazewell County, such as Pekin Municipal Airport and the city-owned Gamble Farm along Illinois Route 98. These areas have also been identified as being active or have the potential for future development.

2. Delete parcels or EZ territory that are undevelopable and unnecessarily waste Pekin’s share of the enterprise zone. These areas include:
a. bodies of water such as the Illinois river, the Pekin State Fish and Wildlife Area; and ponds, etc.;
b. areas such as public, utility, and railroad right-of-way; and
c. developed property such as the federal prison or property used by utilities.
Eliminating these areas allows the City to redistribute its square mileage more effectively.

The following weblink shows a map of both the deletions and the additions to the proposed enterprise zone map. Below is a breakdown of each entity’s enterprise zone component by square miles after the proposed amendment (15 square miles is the maximum).

Square Miles (Amendment #3) Change
Pekin Component 3.70 -0.49
Morton Component 4.55 0.00
Tremont Component 0.26 0.00
Tazewell County Component 6.37 0.37
Total 14.88 -0.12

3. Amend Pekin’s local incentives to waive and enact certain fees. As it stands now, a developer pays what is called an Enterprise Zone Fee, equal to .5% of their building materials for a project located in the enterprise zone. Building permit fees are presently waived. Under the proposed amendment, building permit fees would be applicable in the Pekin portion of the enterprise zone and the Enterprise Zone Fee would instead be waived. This allows the City to fairly charge its permit fees equally across the city, while still providing some incentive and relief from the Enterprise Zone Fee. Additionally with the amended boundaries, more projects would benefit from the layering incentives through the city’s TIF and BDD districts, in addition to Enterprise Zone benefits, all to lower development costs.

4. Lastly, the legal description for the entire STEZ has been updated to a format that is more acceptable to the Illinois Department of Commerce and Economic Opportunity (DCEO), utilizing a more a precise description of the area comprising the zone, rather than a listing of parcel identification numbers and the “short legal” attached to each parcel.

The process to amend the enterprise zone takes the following steps:

Hold a Public Hearing, scheduled for Friday April 15 at 12pm at the Pekin City Hall Council Chambers.
Have all partnering governmental entities adopt an amended enterprise zone ordinance, that has as an attachment an amended intergovernmental agreement covering the proposed changes;
Make application to the Illinois Department of Commerce and Economic Opportunity (DCEO); and
Wait for a decision from DCEO which could take up to 90 days.

In conclusion, the proposed amendments would help make the usage of Pekin’s portion of the Southern Tazewell Enterprise Zone more effective and streamline enterprise zone benefits with TIF and Business Development Districts to foster more growth and development in key areas of the community.

Enterprise Zone Information & Map

The Illinois Enterprise Zone Program is designed to stimulate economic growth and neighborhood revitalization in economically depressed areas of the state through state and local tax incentives, regulatory relief and improved governmental services.

A wide range of financial incentives are available to businesses that expand or locate in the Southern Tazewell Enterprise Zone. Pekin’s Enterprise Zone is part of a broader zone jointly created by the City of East Peoria, Village of Morton, the Village of Tremont, Tazewell County and the Illinois Department of Commerce and Economic Opportunity in 2016. The Southern Tazewell Enterprise Zone is shown on the attached map.

Enterprise Zone Project Application
Enterprise Zone Map

Enterprise Zone Incentives

1. Abatement of Property Tax on New Improvements
Property tax on real estate improvements that raise a commercial, industrial or manufacturing property’s fair market value is abated at 100% of property tax on the new improvement is abated for the first five (5) years after project complete.

Property tax abatements apply to building renovations, expansions and construction of new buildings. The property tax abatement provisions do not exempt owners of property in the Enterprise Zone from property tax altogether. The program abates property tax on new improvements, but not abate the tax paid on existing buildings and land. Abatement on an individual property is also limited to the amount of tax attributable to eligible improvements on the property. Property tax abatement through the Enterprise Zone does not “freeze” an owner’s property tax. The tax due on a property during the ten-year abatement schedule will fluctuate based on reassessment and changes in the tax rate.

Property Tax Definitions

Fair Market Value: the amount a willing buyer would pay a willing seller for a given piece of real estate. The fair market value is determined by the Township Tax Assessor to establish the assessed value.

Assessed Value: One-third of a property’s fair market value. The total assessed value for a given property has two components--the value of land and the value of improvements.

Improvement: A building or other structure else attached to land which cannot be readily removed.

Tax Rate: The formula applied to assessed value to determine the property tax due for a property. The tax rate is often expressed as “$8.64 per $100 of assessed value”.

2. Deduction of Sales Tax for Building Materials
100 % of sales tax on materials used for construction or renovation of buildings in the Enterprise Zone can be deducted at the time of purchase. This provision applies to commercial or industrial construction. The sales tax deduction applies to items that are permanently affixed to real property, such as lumber, mortar, glued-down carpets, paint, wallpaper and similar affixed items. As a rule of thumb, sales tax on any building materials that would remain with the property if the property were sold is eligible for the deduction. The deduction does not apply to materials purchased for routine maintenance, repair or upkeep of the property. The sales tax deduction includes both the local and state portion of sales tax. Any retailer who pays Illinois sales tax can deduct the sales tax, so long as the purchaser provides the retailer with a Certificate of Eligibility for Sales Tax Exemption, which is issued by the City’s building inspector.

3. Waiver of Building Permit Fees
City building permit fees on any renovation, expansion or new construction project within the Enterprise Zone are waived. This waiver of fees applies to building, plumbing, electrical, demolition, and zoning certificate fees for permits issued for rehabilitation, expansion or new construction.

Fees charged for permits issued for normal repair or replacement of electrical, plumbing or mechanical systems are not waived. Filing fees for rezoning or special use applications are not waived.

4. Enterprise Zone Fees
Pursuant to Illinois Public Act 97-905, Enterprise Zones are permitted to collect fees for sales tax abatement certificates that are issued to project applicants within designated enterprise zones. The Southern Tazewell Enterprise Zone charges a fee of (.5%) of the value of building materials, not to exceed $50,000.00 per project. Fees must be paid to the Enterprise Zone Administrator prior to the release of sales tax abatement certificates.

5. State of Illinois Tax Incentives
There are a number of state tax incentives for investment in an Illinois enterprise zone. These incentives are related to income, utility, and sales taxes. The programs are listed below. Detailed information on each program is available from the City of Pekin, Greater Peoria Economic Development Corporation or the Illinois Department of Commerce and Economic Opportunity (see contacts listed below).

Enterprise Zone Investment Tax Credit
Corporate Contribution Deductions
Income Tax Deduction for Financial Institutions
Manufacturing Machinery and Equipment Sales Tax Exemption
State Utility Tax Exemption

Enterprise Zone Questions & Answers

Q. Do I have to apply for Enterprise Zone benefits?

A. To take advantage of the benefits, an owner or developer of property within the Enterprise Zone must simply obtain a building permit (the fee for which is waived) and a “certificate of eligibility” from the City of Pekin’s Economic Development Department.

Q. Can the boundaries of the Zone be changed to include my property?

A. There are detailed procedures to amend the boundaries of the Enterprise Zone. The Zone may be extended to incorporate a property if a specific improvement to the property is being considered. Contact the City of Pekin or for detailed information.

Questions about Pekin’s Enterprise Zone?

Bruce Marston
Interim City Manager
City of Pekin
111 S. Capitol Street
Pekin, Illinois 61554
Phone: 309-478-5371
email: bqmarston@ci.pekin.il.us