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DeKalb city council unanimously approves tax suspensions for hotels, restaurants amid COVID-19

DeKALB – For the second time this week, the DeKalb City Council took unanimous steps to cut local businesses some slack in uncertain economic times fueled by the COVID-19 pandemic.

“What we have to realize is that the reason we’re here tonight is because we wanted to do something quickly,” Mayor Jerry Smith said.

The council in a special meeting Thursday approved tax suspensions which go into effect April 1 for hospitality businesses and restaurants who pay a 7.5% Hotel/Motel and 2% Restaurant Bar tax to the city. For DeKalb’s six hotel and motel businesses, their Hotel/Motel taxes the city collects will be suspended through June 30. For the 126 who pay Restaurant Bar taxes, their suspension begins April 1 and would remain through Dec. 31.

If hotels reach a threshold of $6,000 in taxes collected, then they will begin to pay taxes to the city as per the ordinance. For restaurants and bars, that threshold is $3,000.

City Manager Bill Nicklas, who proposed the suspensions after seeing what cities such as Rockford did for tax deferrals, said DeKalb’s approach wasn’t typical.

“There is a lot of assumption related to what I’ve proposed tonight that I can’t say are extraordinarily reliable,” Nicklas said. “We are all guessing. None of us can say how long this current crisis will last.”

John Finn, manager of Pizza Villa, 824 W. Lincoln Highway, said in a letter ready by Smith that not paying a Restaurant Bar tax would help businesses suffering amid indefinite state-mandated closures and stay-at-home orders.

“Anything the city can do to free up some money being paid out at this time would be great,” Finn said.

Though the council’s support was unanimous, Ward 4 Alderman Greg Perkins, who ended up voting yes on the measure, initially voiced concerns over how the suspension would impact the city’s budget.

“I think deferring is a conservative way and we can make a decision as more details emerge,” Perkins said. “We put a lot into the budget and this effectively unbalances the budget in some ways. We haven’t given consideration into where we’re recovering those things and that makes me a little uneasy.”

Under the approved measure, city revenue would be impacted due to loss of tax collection, however, Nicklas said council could approve plans to halt hiring for the time being and utilize the city’s $9.5 million reserve fund balance.

Ward 2 Alderman Bill Finucane said desperate times call for desperate measures.

“None of us have ever faced a catastrophe such as this,” Finucane said. “Even if we lose ten [businesses], that’s going to be a more significant impact on the longterm budget than what we’re doing now.”

Ward 1 Alderman Carolyn Morris, who participated in the meeting remotely though an audio feed from her home, said she was “thrilled” by the measure and suggested the city might count on marijuana sales to bring some relief.

“Places that we can maybe hope to see some sort of return to replace this money would be, maybe this is overly optimistic, but from our cannabis taxes,” Morris said. “That’s a new revenue source that we haven’t really accounted for yet and hopefully that local dispensary, maybe it’ll get going.”

Pramit Patel, owner of the Hampton Inn, 663 S. Annie Glidden Road and the forthcoming Home 2 Suites, said hotels are especially hard hit due to canceled sporting events and other tourism halts which began long before the state closures.

“This is a time of fear and stress for a majority of us,” Patel said in a letter. “We are all in this together and so we will come out of this together.”

Source: The Daily Chronicle

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