NORMAL — Normal could pay more for Portillo's than anticipated.

A $1.8 million tax break for the developer buying and clearing the Chicago-style hot dog eatery's 202 Landmark Drive site is likely to cost $2.3 million when interest is included.

"We asked to put in the agreement ... what if we decide to pay it all off right upfront? Then all we're paying is $1.825 million. We don't pay any interest costs. But we have to come up with that cash now. That's an option," said City Manager Mark Peterson.

Because the town will pay 8 percent interest on the outstanding balance of that obligation, the true cost to taxpayers will be higher than $1.8 million — $2.3 million if paid over five years and $2.5 million if paid over seven years.

Nonetheless, the Normal City Council unanimously approved the deal, which will use town sales tax revenue generated by the restaurant.

"That $400,000 (in annual sales tax revenue) that we're very likely to get after our $1.8 million has been paid, if we didn't spend that $1.8 million, we would not be getting," said council member Cheryl Gaines. "This isn't, 'We're going to lose money.' This is an investment to make money."

Though Portillo's will pay sales tax to the town, the break is necessary, said City Manager Mark Peterson, because the Oak Brook chain will pay only $220,000 in annual rent to developer Bloomington Landmark Development Inc.

The developer, an entity of Chicago developer Tartan Realty Group, will pay $4.35 million to buy and clear the land — currently a Motel 6 — and receive only $202,400 in annual return.

Peterson said that 4.65 percent rate of return is too low for the developer to participate, and the town's money will bring that return to 8 percent yearly.

"Would it happen without this money? Sure it would. It just wouldn't happen here (in Normal)," said council member Kevin McCarthy of the development.

Portillo's will pay to build the restaurant and own the building. Peterson said the town will receive no substantial gain in property tax or liquor fees.

"The Motel 6 on that site is producing $40,000, give or take, per year of income to the town," said council member Scott Preston. "Giving up $40,000 to make $500,000 (in possible annual revenue from Portillo's), in many cases, makes a lot of sense. It's a great deal for taxpayers."

Council members and staff downplayed the idea that the restaurant will take business, and therefore sales tax revenue, from existing eateries — including in Bloomington, which has rejected sharing sales tax with Normal.

"This (Portillo's) is going to be a destination," said council member R.C. McBride.

Marc Tiritilli, who is opposing Koos for mayor in the April 4 election, disagreed.

"Their plans are a very large downstate expansion. The uniqueness of Normal will dissipate very soon," he said of Portillo's after the meeting. "I'm all for Portillo's coming to town. Not on a taxpayer-subsidized basis. And the idea that this wouldn't have happened, I really don't believe that."

Tiritilli and another frequent critic of Normal's spending, council candidate Ron Ulmer, could not address the council under a policy limiting public comment to one every 45 days.

"If there’s no other place available, I’m against it because we don’t need a Portillo's that will cost taxpayers $1.8 million,” said Ulmer, who is running against McCarthy, Preston and newcomer Chemberly Cummings.

Peterson said no other site proved suitable for Portillo's, which wanted a large, very accessible location on Veterans Parkway.

"Is it good for the community? Does the community want it? And can we afford it?" said Koos of his criteria. "We've demonstrated the affordability of it, and there's no question this community wants a Portillo's. It's a hot dog, I know, but it's the hot dog everybody wants."

Follow Derek Beigh on Twitter: @pg_beigh


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