Washington, Illinois, is taking steps toward a new funding tool that could help revive Washington Plaza and support commercial development across the city. The City Council has given initial approval to a Business Development District that could generate an estimated $700,000 annually through a limited sales tax dedicated to eligible projects.
Key takeaways
The proposal would:
- Create Washington’s first Business Development District.
- Add a 0.25% sales tax on most purchases within the district.
- Direct revenue toward local economic development and infrastructure.
- Include Washington Plaza and several major commercial corridors.
- Potentially take effect Jan. 1, pending final council approval.
The initiative is designed to provide long-term, locally generated funding for commercial improvements rather than relying on property taxes or general fund allocations.
How the district would work
The proposed district would raise about $700,000 each year through a 0.25% sales tax. The levy would bring the total sales tax rate within the district to 9.25%.
Food, prescription and nonprescription drugs, and titled items such as automobiles would be exempt, following the same restrictions as Washington’s home rule sales tax. Revenue could be spent only on qualifying economic development and infrastructure projects within the district. Salaries and pension obligations would not be eligible expenses.
City Administrator Jeff Fiegenschuh described the plan as a sales-tax-based economic development program, rather than one funded through property taxes. He also identified reducing or eliminating the city’s property tax levy as a long-term goal.
Washington Plaza at the center
Washington Plaza, on the city’s west side, is within the proposed boundaries. The area covered would extend along Washington Road and Peoria Street to just beyond Wilmor Road and include Freedom Parkway and North Cummings Lane.
The city and the plaza’s property owner are already pursuing improvements, including a new park and infrastructure work. A dedicated revenue stream could provide additional support for those efforts, as well as redevelopment of vacant or underused properties.
Broader economic goals
City officials say the district could fund infrastructure, attract new businesses, support existing companies and strengthen Washington’s tax base. Other potential benefits include reinvestment in commercial areas and a more consistent source of money for long-term development projects.
Council member Jamie Smith said she would like to see the district eventually expand to the city’s east end, suggesting the initial proposal could become part of a broader development strategy.
Questions about existing grants
Several council members raised concerns about the city’s current business improvement grant program, which has $250,000 available annually from the general fund. With the new district potentially providing dedicated development revenue, members said they would like the grant program eliminated, reduced or significantly revised.
That decision could determine how the city coordinates its existing assistance programs with the new district’s project-based funding.
Next steps
The council held the required public hearing before its meeting, and no members of the public spoke. Final approval is scheduled for the council’s next meeting on Sept. 15.
If approved, the Business Development District would begin operating Jan. 1. Washington would join nearby communities including East Peoria, Pekin, Morton, Tremont, Creve Coeur, Peoria, Peoria Heights, Bartonville and Hanna City, many of which already use business-district sales taxes to fund local improvements.
