DeKalb bars, restaurants not seeing enough sales to justify city tax rebate, say city officials

DeKALB – Seven months into a hospitality recovery tax rebate program for DeKalb businesses, city officials are calling the lack of sales to justify those rebates distressing for local businesses.

DeKalb City Manager Bill Nicklas said the city had originally estimated back in late March that they would be looking at rebating about $400,000 for bar and restaurant taxes. He said there are about 126 restaurants and bars in town that could qualify if they reach a threshold of $3,000 in taxes collected.

“The fact that we’ve done [about] $100,000 [in rebates] means they haven’t generated enough sales to justify that rebate,” Nicklas said.

The City Council previously approved the tax suspensions that went into effect April 1 for hospitality businesses and restaurants who pay a 7.5% hotel and motel tax and 2% restaurant and bar tax to the city. For DeKalb's six hotel and motel businesses, their taxes the city collects were suspended through June 30. For the 126 restaurants and bars who pay those taxes, the suspension would remain through the end of the year.

If hotels reach a threshold of $6,000 in taxes collected, then they will begin to pay taxes to the city, according to the ordinance.

According to city documents, the city saw nearly $20,000 in hospitality tax rebates from March through September. For restaurant and bar tax rebates, that number for that same time period is about $109,000.

If things had gone well sales-wise from May or June onward, Nicklas said, then restaurants and bars would have surpassed the $3,000 threshold by now.

"Right now, the sales aren’t up, and that's a distressing result of the mitigations in place," Nicklas said.

Nicklas said he's not sure what else the city can do at this point. He said whether businesses can be open or not is not within local authority currently.

Nicklas said COVID-19 continues to gallop through local communities right now and he doesn't see that changing in the weeks ahead. He said he hopes that changes, but if it doesn't, that blanks out the most important time of the year in sales for most businesses.

“That’s a terrible way to end the year if you’re a business," Nicklas said.

Nicklas said suggestions like roll back liquor license fees at the city level have been brought up but no plans have been drafted as of Monday. In the meantime, he said, the Illinois Municipal League has pretty much been speaking for the city, along with other communities, when it comes to the state government side of things.

“I have nothing but respect and sadness for families that have not been able to do what they love to do, which is to serve," Nicklas said. "I understand [the mitigations], but it doesn’t mean I like it and I wish there was an alternative, but I’m not in control of alternatives right now.”