Incentive deal proposed for dealership coming to Elgin
By Mike Danahey email@example.com @DanaheyECN on Twitter September 23, 2013 3:22PM
Updated: October 25, 2013 6:15AM
ELGIN — The city council on Wednesday will consider annexing land along Randall Road into Elgin and approving an economic incentive agreement with Brilliance Subaru of Elgin Inc. that would waive building permit fees and rebate 25 percent of the sales tax revenue generated by the dealership over 10 year.
The owners of Brilliance Honda of Crystal Lake were awarded a Subaru franchise earlier this year, contingent upon them acquiring a site by the fall. Supporting material for the council meeting states, “Brilliance originally attempted to negotiate the purchase of a parcel in the Randall-90 auto mall but was frustrated by the auto mall owner’s conditions of sale. When the Randall-90 auto mall owner was sued by its lender in a foreclosure action, that lawsuit clouded the marketability of the auto mall’s parcels and prompted the auto dealer to seek alternative locations on Randall Road.”
At that point, Brilliance was introduced to the city through the Elgin Development Group, looked at five potential sites along Randall Road, and settled on the vacant parcel at 14N250 Randall, on the west side of the road at Capital Street just south of Interstate 90.
“The parcel is not within the city’s corporate limits, and the city council is being asked to annex and zone the parcel for use as an automobile dealership on this evening’s city council agenda,” the material states.
The meeting material also notes that Brilliance would be investing $6.8 million to buy the parcel, build the dealership and equip the facility. It would employ 60 to 75 people with an annual payroll of $3.9 million to $4.5 million.
“New vehicle sales are projected at $37.5 (million) to $45 million annually, with used car sales totaling $13.5 (million) to $18 million annually,” the council material states. “Parts and other retail sales are estimated to generate $2.5 (million) to $3 million annually. The city will receive approximately $38,600 in annual property tax revenue for the dealership, with all other taxing bodies collectively realizing approximately $165,000 in annual property tax revenue.”
The Brilliance incentive proposal favorably compares with those of the city’s Cook County Retail Automobile Dealership Incentive Program and the incentives for the new-car dealerships at the Randall-90 auto mall, the material states.
“The Cook County program for existing new car dealerships provides 50 percent sales tax rebates over a seven-year period for increases in sales tax in excess of the preceding three-year month average or a 35 percent rebate over a five-year period of the increase in retail sales tax received by the city. The incentives for the new car dealerships at the auto mall include sales tax rebates of up to 50 percent for a 20-year period in addition to graduated real estate tax rebates,” the material states.
If all goes as suggested Wednesday, Brilliance intends to break ground on the dealership Oct. 10., the day after final legislative approval would be granted by the council. An economic impact analysis of the project conducted by Incentis Group consultants is expected to be completed and given to council members in advance of Wednesday’s meeting.
According to the meeting packet, Subaru sales in the United States are up 27 percent for the first seven months of 2013, exceeding the overall market increases by three times. This represents the sixth straight year of sales gains for Subaru, including 2009, the year that bankrupted both GM and Chrysler.
Councilman Terry Gavin said Monday that he has been following the Subaru deal in the works for two months and that he is thrilled the dealership is coming to Elgin. Mayor David Kaptain noted that the deal is similar to those offered in the past, involves “new dollars,” and that car dealerships are among the biggest generators of sales tax dollars for the city.