When the Riverside Village Board first discussed the possibility of creating a formal business district in the downtown area, trustees agreed they would take the temperature of downtown business owners before deciding to move ahead.

With that feedback in hand, on Aug. 18 Village President Joseph Ballerine announced that the business district initiative was being put on ice.

Ballerine said he had personally talked to a couple of business owners in the downtown, and he also received an opinion from the Riverside Economic Development Commission giving the idea a thumbs down.

At issue was the imposition of a 1-percent tax on sales within the business district, which would create a fund that could be drawn upon for property acquisition, economic incentives, public infrastructure improvements and other initiatives to retain existing businesses and attract new ones.

“Due to a number of economic factors including record-setting inflation, worker and supply line shortages, and the fact that many of our small businesses just barely survived COVID, the commission feels unanimous that the timing is not right to pursue an additional 1-percent tax in the central business district,” wrote Jennifer Fournier, the chair of the Riverside Economic Development Commission, in an Aug. 11 letter to the village board.

Fournier suggested that even bringing up the subject of a business district at this time was not a great idea.

“We feel the risk of merely asking at this time holds the potential to lose confidence from the very businesses we are actively working to support and retain,” Fournier wrote.

Peter Boutsikakis, co-owner of Riverside Foods at 48 E. Burlington St. in the downtown, formally protested the business district idea in a letter he sent to the Board of Trustees in late June after seeing a news article about the proposal in the Landmark.

In his letter, Boutsikakis pointed to measures by the state to combat inflation by freezing the state grocery tax and to a steep rise in the store’s costs for electric and natural gas service, increased competition with a new Amazon Fresh store opening in North Riverside and power outages that have resulted in food spoilage.

“An additional 1-percent new tax on business would have an impactful negative effect, and we would have to pass on that sales tax as a line item to our customers, causing us to be even less competitive,” Boutsikakis wrote.

Since 2017, Riverside trustees have created three business districts – all along Harlem Avenue – and imposed a 1-percent sales tax in each to create funds to spur economic development.

Business districts are created by statute and last for 23 years, like a tax-increment financing district. The key difference between the two tools is that a TIF district sequesters any incremental new property taxes into a special fund to pay for redevelopment initiatives, whereas a business district uses the 1-percent sales tax to create a fund for redevelopment initiatives within the district’s boundaries.

The village would have to hire a consultant at a cost of between $15,000 and $21,000 to manage the process, which includes public hearings and takes months to complete.

“I concurred with the EDC and a majority of the trustees to oppose doing this,” Ballerine told the Landmark in a phone interview. “The optics and timing just weren’t right.”

While the idea of creating a business district might be dead, Ballerine hinted that he had other ideas for addressing economic development in the downtown that likely would surface during the village board’s budget discussion this fall.

“The goal is to fund rejuvenation for the downtown business district,” Ballerine said. “If we can’t do it this way, how can you do it?”