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Scales tip toward no video gaming in Elgin, while city council also weighs incentives for Portillo’s

Updated: August 11, 2012 6:05AM

ELGIN — City Council members Wednesday will continue a discussion about opting into the state’s video gaming act where the scales appear to be tipped toward not participating. The council that night also will weigh moving forward plans and an incentive package for bringing a Portillo’s restaurant to Randall and Bowes roads.

Elgin’s council would have to overturn rules already on the books then put new ones in place to join towns opting into the state’s video gaming act, one of the measures Illinois legislators put in place to fund a $32 billion capital bill.

Materials for the Wednesday Elgin meeting note that 65 Elgin establishments could be eligible to have such gambling per the act.

A study the state commissioned estimates the median (but not average) each machine would bring in would be $45,000 per year. Based on those projections, the total median tax per machine would be $13,500, and the municipal share of that tax would be $2,250 per year from each machine. Elgin could also make money by charging its own licensing fee. Qualifying places in Illinois can have five machines. Assuming the average take is close to the median, if just 20 of the 65 establishments choose to have the gaming, the city’s projected revenue could be $225,000 per year.

Data from gaming oversight bodies in five states that already allow video gaming have the average annual take per machine ranging from more than $19,520 in Montana to almost $65,000 across the terminals in West Virginia.

At the same time, Grand Victoria Casino staff has told the city of an industry study analyzing the effect video gaming would have on an existing Illinois casino indicated a two-to-three percent drop in revenue would occur.

Monday, Assistant City Manager Rick Kozal said the city had not been provided a copy of that study. If the study’s projections are correct, with the city’s 2012 budget anticipating $11.9 million in revenue from the casino, that decline could mean $297,500 less for the city from the Grand Victoria.

By August, legal gaming machines can be installed in bars, restaurants, truck stops, veterans and service organizations in places that have opted into the program. Hampshire, Hoffman Estates, Huntley, and South Elgin will be allowing the gambling, and Carpentersville will be discussing the matter soon. East and West Dundee have opted out.

Some Elgn council members seemed inclined to allow the gaming only at veterans and service clubs. But Kozal said the city’s legal staff has researched the matter, and it is their opionion that the state would not allow the city to parse the act to favor just those groups.

Portillo’s fast track

Last week, the city’s Planning and Zoning Commission moved along plans for a Portillo’s to be built on the lot at Randall and Bowes roads where Sam’s Club is being constructed.

The city’s economic incentive proposal would fast-track the permit process for construction and waive an estimated $134,000 in development fees.

According to supporting materials for the Wednesday meeting, “Portillo’s is the highest-grossing fast-casual restaurant in the country and realized more than a quarter-billion dollars in sales last year. Portillo’s restaurants average $6.8 million in annual revenue.”

The restaurant has 47 locations, most of them in the Chicago area.

Portillo’s is estimating that it would generate $7.2 million from the Elgin restaurant in 2013, while employing 120 people in various capacities.

The city would collect $162,000 in sales tax from that revenue — $28,000 more than the estimated development fees.

Portillo’s also is considering a 16,000-square-foot retail development that could be occupied by eight tenants and would front Bowes Road.

An economic and fiscal impact analysis of the proposed incentives is set to be done by the Incentis Group and submitted to the city for review in at least two weeks, Kozal said.

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