Crony Capitalism “Plays in Peoria”
On Tuesday night, the Peoria City Council approved taxing future sales on a leveled piece of property near Westlake Shopping Center. This 1% tax was not for schools, bike trails, or fire/police protection. This “enhanced” tax rate was set up to benefit the developer of the property by reimbursing him his costs associated with bringing the popular “Chicago Hot Dog” franchise, Portillo’s, to Peoria.
Over the past few months, developer William Torcia convinced our City Council that their assistance, in the form of an SSA, was the only possible way to bring the iconic restaurant to Peoria. As part of the arrangement, Torchia hopes to gain $650,000 to “recoup” costs associated with land acquisition and property development. The Libertarian Party of Greater Peoria stands in deep opposition to the actions taken Tuesday. We believe the City Council should not be picking winners and losers. Granting a 1% sales tax increase just for developer William Torchia, sets a terrible precedent. We believe that in a free market, any business worth opening, should be able to do so on it’s own and without taxpayer subsidies.
Time will tell, however, it’s possible that the City Council has opened a Pandora’s box. Developers for any future projects in Peoria will take this precedent and attempt to add similar taxes under the guise that the project is paying for itself. But the reality of the situation is the fee is only there to diminish the risk of the developer. This is a living and working example of “Crony Capitalism”.
On the surface, adding this restaurant looks appealing because it appears that Portillo’s will be a spigot of fresh revenue and jobs. It’s been estimated that the sales of Italian Beefs and Chicago Dogs will produce between $660 to $880 thousand dollars in annual tax revenue. We simply don’t see it that way. Our view, is that this “new revenue” is non-existent. To think that this new restaurant will not take customers from the dozens of other eateries within walking distance, is a pie in the sky at best. Establishments like 5 Guys, Panda Express, Chick-fil-A, Chipotle, and Sonic have created the environment that brings customers to the area. Let’s not forget the amazing local restaurants like Donnelly’s, Khouri’s, and Louie’s Sterling Family Restaurant! Every penny made at Portillo’s will come from one of those businesses.
The new jobs this Portillo’s will bring are not anything to write home about either! These jobs will be at or near minimum wage. They are not living wage jobs that will help middle class families. Also of note, Portillo’s isn’t even a “Chicago-owned” business. Berkshire, the private equity firm from Boston, purchased Portillo’s in 2014. Remember, all the profits you shovel into their registers will not only go out of town, but also out of state!
The estimated tax revenue numbers are questionable as well. The projections are likely based on the $8.2 Million in average annual sales of a Portillo’s location. That is an impressive number, however, the reality will tell a different story. Naturally, the average includes all the locations. Some will be above that median and some below. Where do you think Peoria will fall? Let’s not forget, Portillo’s just opened locations in Normal and Champaign. Once the mystique of the elusive Chicago food wears off, will we really have a long term sustainable business?
So why do the Libertarians disagree with this transaction? After all, this is a local business starting up and using consumer money to pay for expenses! That’s the free market right? Well, as stated before, it’s all about the precedent. There is no doubt that the floodgate has been opened. Don’t be surprised if you soon find your receipts covered in even more extra “taxes” and “fees”. We now have a city government tilting the playing field to assist a business owner and project in an area that is dripping with successful restaurants. The purpose of this tax isn’t something noble like renovating a rundown warehouse in downtown Peoria. We are building one more restaurant, on arguably the busiest commercial corridor of town. Other restaurants have built new facilities and are thriving in this area. Negotiating this surcharge was needless. If the numbers and revenue are as they say, Torchia could have increased rent to Portillo’s by $40,000 a year to accomplish the same numbers he gains by charging consumers.
Long story short, the City Council took favor on a developer and granted him his wish. This may be just one hot dog shop, but it’s the start of any number of “Special” taxes that you will pay in the future with little oversight or representation. Wake up Peoria! We’ve been played!
Libertarian Party of Greater Peoria