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posted: 1/16/2014 5:44 PM

Libertyville considers changes to car dealer incentive program

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Libertyville officials are considering revisions to sweeten a program designed to help auto dealers make improvements to their properties.

The village is proposing to streamline a rebate program based on auto sales.

"I think it will enhance the program," said Glenn Bockwinkle, general manager at Acura of Libertyville and head of the Libertyville Mile of Cars marketing consortium. "This is a positive move."

In response to the economic downturn, village officials in December 2008, created three business districts. They included more than a dozen auto dealerships that for decades have been a key sales tax revenue source.

Because dealers were under pressure from manufacturers to upgrade, reconfigure or expand their facilities, village officials wanted to provide an incentive for them to stay and invest.

That incentive provided a rebate of up to 60 percent of any "new" sales tax that exceeded a threshold based on three consecutive years of sales.

The potential increase in incentives would be dependent on the sales growth of the dealerships, according to Heather Rowe, economic development coordinator.

"The village's adjustment to the program is necessary to make sure the program addresses the current industry situation," Rowe said.

To date, improvements and property acquisitions at four dealerships that have agreements established or under consideration are valued at about $17 million, according to Rowe.

However, auto sales have not rebounded as much as expected and program tweaks are needed to address the current situation and reinforce the original intent, she added.

In 2001, the village received about $5.7 million in sales tax from the automotive and filling stations category, about 71 percent of total sales tax revenue. In 2012, the last full year for which figures are available, the amount from that category dropped to about $3.7 million or 61 percent of the total collected.

In the same period, total sales taxes collected by the village fell from about $8 million to about $6 million.

Under the revision, four categories of threshold amounts and maximum rebate percentages would be combined into two. Eligible dealers could receive up to 40 percent or 60 percent of new sales above threshold amounts of up to $499,999 and $1 million or more, respectively. Maximum rebate amounts of 30 percent and 50 percent would be eliminated.

The recession and a housing market crash affecting disposable incomes were among the rapid changes that have affected the auto industry, according to Rowe.

Besides sales tax, dealerships are important for jobs, community programs and traffic they bring to town, according to the village.

The village board is expected to vote on the revisions at an upcoming meeting.

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