CITY COUNCIL AGENDA ITEM
ACTION REQUESTED:
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Consider the request to adopt the resolution authorizing the City Manager to execute amendments on behalf of the City to extend the existing hotel tax rebate agreements with Embassy Suites, Hotel Arista, Hotel Indigo, and Marriott for an additional two years
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DEPARTMENT: City Manager's Office
SUBMITTED BY: Douglas Krieger, City Manager
BOARD/COMMISSION REVIEW:
N/A
BACKGROUND:
The City previously entered into development incentive agreements with the owners of four local hotels: Embassy Suites, Hotel Arista, Hotel Indigo, and Marriott. Each agreement was established during the development or redevelopment of the subject property. Each is a standalone agreement with unique terms and conditions. While the incentives granted under the agreements are similar, none have any direct relationship or dependency with each other.
The financial incentive common among all four agreements is a 20-year rebate by the City of Naperville of their local hotel/motel taxes and State of Illinois sales taxes received by the City of Naperville. The table below summarizes the four existing agreements.
Development
Inception Year
Term (years)
Taxes Eligible
for Rebate
Maximum Incentive
Expiration Year
Embassy Suites
2015
20
100% of hotel,
75% of sales
$7.5M
2035
Hotel Arista
2008
20
100% of hotel,
50% of sales
$7.5M
2028
Hotel Indigo
2017
20
100% of hotel,
50% of sales
$7.5M
2037
Marriott
2012
20
100% of hotel,
100% of sales*
$10M
2032
*Rebate of annual amounts exceeding 2009 base revenue; rebate reduced to 50% after first $7.5M is paid
On a quarterly basis, the Finance Department analyzes tax receipts for each subject property and issues payments according to the terms of the agreements. Those payments are netted against the revenues collected. From April 1, 2020, to March 31, 2022, hotel revenue plummeted as the pandemic brought the hospitality industry to a near standstill. As a result, all four hotels experienced significan...
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