In 2023, the Illinois General Assembly passed the Tourism Preservation and Sustainability District Act that allows hotel owners to petition a government unit to create a tourism preservation and sustainability district (otherwise known as a tourism improvement zone) through ordinance if the hotel owners believe their business will represent more than 50% of the transaction charges collected inside the district. The ordinance allows hotel and lodging businesses within the district to impose a 5% or less transaction fee on their room rates, to be collected by the local unit of government. These revenues would go to a state-certified Convention and Visitors Bureau or existing tourism nonprofit for marketing, sales efforts, events and other local promotional activities that enhance area tourism.
Petition and Hearing Requirements
Petition: Hotel owners must submit a petition to their local municipality or county to create a district. The Petition must include:
- The name of the district
- A map showing the boundaries of the district
- The initial and maximum rates of the transaction charge for hotels within the proposed district
- The length of the proposed term of the district not to exceed 5 years upon formation or 10 additional years upon each renewal
- A brief description of the services to be provided by the local tourism and convention bureau
- Information specifying where the complete district plan can be obtained by the governing body
- Information specifying that the complete district plan shall be furnished to the governing body upon request
- The business owners that file the petition must certify on the petition that they believe they will pay more than 50% of the transaction charges proposed to be levied by the district, as determined by the last 12 months of the State hotel operators’ occupation taxes.
Resolution: The local government passes a resolution of intent, outlining the district's boundaries, proposed fees, and services. The Resolution must be adopted within 60 days after the filing of the written petition and must include:
- The name of the district
- A description of the boundaries of the district
- The initial and maximum rates of the transaction charge for hotels within the proposed district
- The length of the proposed term of the district not to exceed 5 years upon formation or 10 additional years upon each renewal
- A brief description of the services to be provided by the district
- The time and place of a public hearing on the formation of the proposed district
- A statement that any hotel proposed to be subject to a transaction charge has the opportunity to be heard at the public hearing regarding the district formation and an opportunity to file objections to the district formation with the clerk at any time prior to the conclusion of the public hearing
Public Hearing: A hearing is held for hotels and the public to provide input and objections.
Ordinance: If approved, an ordinance creates the district, imposing the transaction charge.
Definitions
“Benefit Zone” means a zone (i) located within a district, (ii) established by the governing body of the district based upon the degree of benefit derived from the services to be provided within the zone, and (iii) in which the governing body may impose unique transaction charges based on the degree of benefit intended to be provided.
"Business Owner" means a hotel owner or the hotel owner’s representative.
"Improvement" means the acquisition, construction, installation, or maintenance of any tangible property that has an estimated useful life of 5 years or more and that is reasonably related to the enhancement of tourism.
"Hotel" means any building or buildings in which the public may, for consideration, obtain living quarters or sleeping or housekeeping accommodations that will benefit from a district's services or improvements. "Hotel" includes, but is not limited to, inns, motels, tourist homes or courts, lodging houses, rooming houses, retreat centers, conference centers, and hunting lodges. "Hotel" does not include a short-term rental
"Local tourism and convention bureau" means either a unit of local government or a nonprofit corporation (i) that has as its sole purpose the promotion of tourism; (ii) that is operating with a paid, full-time staff; (iii) that receives local hotel or motel tax receipts from one or more municipalities or counties; (iv) that represents one or more municipalities or counties; and (v) that either is recognized by the Department of Commerce and Economic Opportunity as a certified local tourism and convention bureau or has been in legal existence as a nonprofit corporation for a minimum of two years before contracting with a governmental unit to implement services and improvements in a district.
"Services" means marketing, promotions, sales efforts, events, and other activities that are reasonably related to the enhancement of tourism.
"Short term rental" means a single-family dwelling or a residential dwelling unit in a multi-unit apartment structure, condominium, cooperative, timeshare, or similar joint property ownership arrangement that is rented for a fee for less than 30 consecutive days. "Short-term rental" includes a dwelling unit rented for business travel or recreation.
"Transaction Charge" means a special charge that is imposed upon a hotel in a district that is either a fixed dollar or percentage rate per hotel room per night.