Elmhurst Prepared to Approve Tax Rebate for Kia Dealer Upgrades

Correction 2:30 p.m. Tuesday: Napleton asked for a 75 percent rebate, but the city will offer them a 60/40 split.

By Carol Kania Morency

Pending final approval next month, Napleton Kia will get 10 years of sales tax rebates from the city of Elmhurst, which will help the dealership update its showroom at 745 W. Lake St.

But aldermen wrestled Monday not only with the need for the rebate but the generosity of the package offered to the dealer.

Napleton has told the city Kia is mandating that all dealerships meet certain standards, which will require the Elmhurst location to get a new facade, more sales consultation space, a refurnished sales floor and new exterior landscaping.

The estimated cost of the work is $1.5 million. The dealership has asked for a 75 percent sales tax rebate and has promised not to relocate either the Kia or the Acura franchise, also on the site, for the duration of the rebate.

The Finance, Council Affairs and Administrative Services Committee recommend offering Napleton a rebate based on 70 percent of total sales, which will ensure that the dealer only gets a rebate on the Kia portion of sales.

The committee wants to offer to split any annual growth in sales taxes 60/40, with 2012's $224,730 sales tax (70 percent of total 2012 sales tax received from Napleton) as a base. Assuming 3 percent annual growth, the split over 10 years would be $162,000 for the city and $244,000 for Napleton. If sales tax grows at 5 percent, the split would be $288,000 for the city and $432,000 for the dealership. The maximum payout would not exceed $750,000.

“It is important that we consider these types of requests to not only preserve what we have but what we would forgo if we were to lose an important contributor to our tax base,” 4th Ward Alderman Kevin York said.

Third Ward Alderman Michael Bram asked why Elmhurst was giving more incentive to Napleton than it received from south suburban Calument City to make the same improvements at the dealership there. According to Bram, Napleton will get $100,000 for six years from Calumet City.

Bram made a motion to reduce the incentive to lower the maximum payout to $600,000, but this vote failed 9-3. (Fifth Ward Alderman Chris Healy and 7th Ward Alderman Patrick Wagner were absent.) Bram also tried to amend the proposal to offer a 50/50 split of tax revenue between the city and the dealership. That move failed as well. 

Fifth Ward Alderman Scott Levin said the city usually creates incentives to attract, not keep, businesses, and that $1.5 million did not seem like much of a financial burden for the dealership.

“It's a little too rich for this particular set of circumstances,” he said of the city's proposed contribution.

First Ward Alderman Diane Gutenkauf agreed with Levin.

“Everyone in business has to stay fresh to attract new customers,” she said.

Levin also wondered if the dealership would they leave if they didn't get this incentive.

York pointed out that Elmhurst Ford left the city in 2011 for Bensenville.

The recommendation will be up for final approval during the next full City Council meeting Dec. 2.