DeKalb Times

City of Dekalb City Council met August 25.

Here is the agenda provided by the council:

A. CALL TO ORDER AND ROLL CALL

B. PLEDGE OF ALLEGIANCE

C. APPROVAL OF THE AGENDA

D. PRESENTATIONS

      1. Proclamation: Honoring Dr. Leroy A. Mitchell Day (August 8, 2025).

      2. Proclamation: Recognizing the 35th Anniversary of the DeKalb Area Alano Club (August 16, 2025).

      3. Presentation: Recognition of Fehr Graham, Elliott & Wood, and Curran Contracting for Their Leadership and Expertise in Critical 2026 Street Improvements.

E. PUBLIC PARTICIPATION

F. APPOINTMENTS

      None.

G. CONSENT AGENDA

      1. Accounts Payable and Payroll through August 26, 2025, in the Amount of $3,377,803.95.

      2. Freedom of Information Act (FOIA) Report – July 2025.

H. PUBLIC HEARINGS

      None.

I. CONSIDERATIONS

      1. Consideration of a Revenue Sharing Agreement with TownePlace Suites and Fairfield Inn.

      City Manager’s Summary: On August 26, 2024, the City Council approved the final development plan for the TownePlace Suites and Fairfield Inn Hotel slated for construction on a 2.5-acre site at 902 Peace Road. The four-story, Marriott-branded hotel will contain 120 rooms, with 61 rooms designated as “standard stay” and 59 rooms dedicated to “extended stay” customers.

      In the past year, the developer, Pramit Patel (dba Peace Road Hotels, LLC), has worked with architects and engineers to create the site and building plans required for local permitting. The hotel is now permitted for construction.

      The creation of the final building and site plans has enabled Mr. Patel and his team to invite contractor bids for the project. In recent weeks, Mr. Patel has approached City officials to investigate whether or not some financial incentive might be available to bridge a funding gap. His financial challenge, in his words, is owing to “current economic conditions, tariffs, and inflation”, which have driven his construction budget to approximately $23.2 million – an increase of about $4 million over his estimated budget at the time of the Council approval in August 2024.

      Incentive Options

      a) Enterprise Zone Benefits. The property is in the DeKalb County Enterprise Zone. In Illinois, the Enterprise Zone program has a state-level and local-level component. Both are locally administered by the executive director of the DeKalb County Economic Development Corporation.

      For commercial projects, the state-level Enterprise Zone benefit is principally a tax exemption on sales tax paid on building materials used in new construction. This exemption applies to items that are permanently affixed to real property such as steel, lumber, plumbing, electrical, and HVAC systems, brick and mortar, glued down carpets, paint, wallpaper, etc.

      For industrial prospects, the principal local Enterprise Zone benefit is property tax abatement, which is scaled by the type of industrial project, the size of the initial capital investment, the square footage of industrial building space, and the number of permanent industrial jobs created.

      Peace Road Hotels, LLC has qualified for the state-level exemption on sales tax for building materials. The DeKalb County Enterprise Zone has not granted local property tax abatements to non-industrial uses.

      b) Sales or Use Tax Benefits. The City of DeKalb has participated in sales-tax sharing agreements with commercial prospects. On August 23, 2021, the City of DeKalb entered a sales tax sharing agreement with Brad Manning Ford, Inc. The terms were as follows:

            ▪ A 50/50 split of the aggregate state sales tax proceeds (1% sales tax in the Manning case);

            ▪ The sales tax sharing did not begin until a temporary occupancy permit was issued (for new parts space in the Manning case);

            ▪ The 50/50 sales tax sharing agreement extended until the total incentive was reached ($1,675,307 in the Manning case);

            ▪ The sales tax sharing agreement terminates when the maximum $1,675,307 incentive is reached, or once the ten-year term expires, whichever comes first.

            In the case of the Peace Road Hotels project, the tax in question is the hotel-motel tax. By virtue of its home rule status under Article VII, Section 6 of the Illinois Constitution of 1970, the City enacted a hotel-motel tax in 1984. This tax was increased to 7.5% in December 2018. The tax is levied on the rent charged for the privilege and use of renting a hotel or motel room in the City of DeKalb (see DeKalb Municipal Code, Chapter 55, Section 55.02).

            Mr. Patel has proposed the following terms, which are replicated in the attached draft agreement:

            ▪ A hotel tax distribution period of ten years, beginning on the first day of the next calendar month after the City’s issuance of a temporary occupancy permit;

            ▪ A sharing or distribution of the hotel tax revenue as follows:

                  o Hotel Tax Year 1: 90% of the Hotel Tax Revenue to the Company;

                  o Hotel Tax Year 2: 80% of the Hotel Tax Revenue to the Company;

                  o Hotel Tax Year 3: 70% of the Hotel Tax Revenue to the Company;

                  o Hotel Tax Year 4: 60% of the Hotel Tax Revenue to the Company;

                  o Hotel Tax Year 5: 50% of the Hotel Tax Revenue to the Company;

                  o Hotel Tax Year 6: 50% of the Hotel Tax Revenue to the Company;

                  o Hotel Tax Year 7: 50% of the Hotel Tax Revenue to the Company;

                  o Hotel Tax Year 8: 50% of the Hotel Tax Revenue to the Company;

                  o Hotel Tax Year 9: 50% of the Hotel Tax Revenue to the Company; and

                  o Hotel Tax Year 10: 50% of the Hotel Tax Revenue to the Company.

            ▪ A maximum or not-to-exceed payment over 10 years of $2,000,000.

            ▪ The City’s tax distribution to the company shall be payable solely from hotel revenues that are generated by the property at 902 Peace Road.

            ▪ Payments shall be rendered within 60 days of the City’s receipt of the actual tax proceeds.

            ▪ The City will be entitled to relevant tax returns for the hotel revenue to assure appropriate hotel tax distribution.

            A spreadsheet projecting the tax receipts and tax sharing is attached.

      City Council direction is requested. If the concept is supported by a consensus of the Council, a resolution authorizing the sales tax sharing agreement will be brought before the Council on September 8 for action.

J. RESOLUTIONS

      None.

K. ORDINANCES – SECOND READING

      None.

L. ORDINANCES – FIRST READING

      None.

M. REPORTS AND COMMUNICATIONS

      1. Council Member Reports.

      2. City Manager Report.

N. EXECUTIVE SESSION

      None.

O. ADJOURNMENT

https://www.cityofdekalb.com/AgendaCenter/ViewFile/Agenda/_08252025-2738