Libertyville may give car dealers a hand

For nearly four decades, Libertyville's auto row has been a destination for car shoppers and a finely tuned sales tax engine, pumping millions of dollars each year into the village budget.

The dozen or so dealerships along or near Milwaukee Avenue have provided customers with a wide selection and the village with an integral source of money.

However, sales have slipped the last few years, and for the first time, some road side assistance for beleaguered dealerships is being considered. On Tuesday, the village board will hold the first of two public hearings on a plan to create three business districts encompassing the dealerships.

"The village wants to make sure they stay here and invest here. You have to protect it," said Edward Werdell, chairman of the village's economic development commission.

While village leaders have been trying to diversify the business base, auto dealers remain the rock of sales tax receipts, accounting for about 65 percent of the annual total or about $4.8 million.

What could or should be done to assist them has been discussed from time to time, and this proposal is not a specific reaction to current economic conditions, according to those involved with the plan.

"Auto dealers are major employers," Werdell said. "To lose any employer will have an adverse effect on the local businesses."

The designation would allow the village to share with a given dealer as much as 60 percent of any new sales tax revenue it generates to buy land, expand buildings or make other improvements.

Under the terms of the plan, a minimum of 25 percent of any dealer project would have to be dedicated to exterior or site improvements, such as signs or lighting. The minimum value of its project would have to be $25,000, and not more than half the cost could be reimbursable.

The average of three years of prior sales for a given participant would be used as the base, with a portion of new sales over that amount eligible to be shared. The program would be retroactive to include projects completed in the last two years.

The Libertyville proposal calls for dealers to make the improvements before they would get any money.

Village officials stress the proposal is an incentive, not a bail out, and is one of few options available to a cash strapped, non-home rule community.

"The intent is not to front the money or make a loan," said Heather Rowe, the village's economic development coordinator. "We can't afford to give away existing taxes. If you grow your business, we can find a way to assist you."

Whether that's a realistic possibility in the short term is open to debate, as the auto industry has been hammered.

"It's based on the idea that sales will someday return to a growth level," Rowe said. "Most dealers expect that to occur at some point in the next 18 months. It depends on which dealers and which lines."

October sales for General Motors sank 45 percent, and the company's chief executive said he expected that month to be the industry's worst performance since 1975. GM on Friday reported a third-quarter loss of $2.5 billion and said it might run out of money next year.

Ford Motor Co. sales dropped 30 percent in October, and the company plans to cut 2,260 jobs. Toyota, Honda and Nissan sales also each dropped a minimum of 23 percent last month.

"Most dealers are going to wait until they think it's the optimal economic time," said Dan Marks, the second generation owner of Libertyville Lincoln Mercury. Marks, who also is a member of the village's economic development commission and is on the board of directors of the Chicago Automobile Trade Association, said local dealers generally were positive about the proposal.

"Most of the dealers are well capitalized. They're able to weather the storm," he said.

The village notes that while several dealerships have undergone renovations, the configurations of the buildings and lots date to the 1970s. Upgrades or expansions have been hindered because of the constraints of the properties and high land cost.

"Several dealerships have indicated to the village that they will need to consider relocation or closure of their operations if they are unable to make necessary changes," according to a draft copy of the plan.

The incentives would limit closures and relocations, promote expansion, soften the blow for land acquisition and allow for consolidation, according to Rowe.

Mark Battista, director of the Bob Rohrman Auto Group, which operates 46 dealerships in Illinois and Indiana, including Libertyville Mitsubishi, said the proposal was a "great idea."

And while it may be awhile before some dealers would consider it, the timing is right, he reasoned.

"If your sales are down ... at least your bench mark has been lowered," he said.