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posted: 9/12/2017 5:30 AM

East Dundee amends incentive agreement with auto dealer

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  • The East Dundee village board amended a redevelopment agreement with the Cucci Ford automobile dealership at 800 Dundee Ave. after realizing the business was not generating as much tax revenue as expected.

      The East Dundee village board amended a redevelopment agreement with the Cucci Ford automobile dealership at 800 Dundee Ave. after realizing the business was not generating as much tax revenue as expected.
    Rick West | Staff Photographer

 
 

East Dundee is amending the incentives offered to an automobile dealership after realizing the business is not generating as much tax revenue as expected.

The Cucci Ford dealership at 800 Dundee Ave. completed a roughly $2 million renovation last year that included improving the building's show rooms, service center and facade, Village Administrator Jennifer Johnsen said.

In September 2016, the village board agreed to reimburse the dealership for up to $527,840 of the project costs using a pay-as-you-earn model. The deal allowed Cucci to recapture 90 percent of tax increment financing funds and all business development district taxes generated at the site through 2023.

However, Johnsen said, it became clear that initial projections were far too high when Cucci was only eligible to receive $9,000 in the agreement's first year. "It was not anywhere near what was anticipated," she said.

The village board on Monday unanimously approved a new deal that would instead allow the dealership to recoup up to $395,000 using all TIF and BDD taxes, as well as any state-shared sales tax dollars distributed to East Dundee above a $300,000 base.

"The village isn't going to lose anything they have today," Johnsen said. "If they don't generate additional sales tax, they don't get anything, or it takes a lot longer (to get their reimbursement)."

In a TIF district, the property tax revenues that go to local governments are frozen for 23 years at a certain level, which is set on a base assessed property value. Any taxes generated above that level can go back into redevelopment.

In a BDD, revenue from an additional sales tax implemented in a certain area can be used for improvements.

East Dundee initially offered the tax incentives to encourage Cucci to revitalize its property rather than move to another town, Johnsen said. Despite a lower overall reimbursement, company representatives are happy with the renegotiated agreement, she said.

Still, Trustee Scott Andresen, who was elected this spring, questioned how the terms of the initial deal were so unrealistic.

"Apparently they were so far out of whack that we have to go back and give (Cucci) more money from somewhere else," he said. "I don't want to keep doing that."

Johnsen, who wasn't employed by the village at the time, said officials likely thought the company's investment in the site would significantly increase its assessed value. In reality, she said, the project focused largely on property's interior, and its EAV did not change.

The village is now working closely with the Dundee Township assessor's office on all projections, Johnsen said. The dealership is expected see an annual 2 percent sales tax growth and 1 percent EAV increase over the next several years.

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