Tax incentive between Vernon Hills and CDW extended

  • Vernon Hills has amended its long-standing economic incentive agreement with technolgy retailer CDW to share sales tax.

      Vernon Hills has amended its long-standing economic incentive agreement with technolgy retailer CDW to share sales tax. Paul Valade | Staff Photographer

 
 
Updated 12/19/2014 6:22 PM

Vernon Hills has modified and extended the term of an economic incentive agreement with technology retailer CDW LLC to ensure the juggernaut stays in town.

"We really wanted to cement our relationship with CDW that Vernon Hills was a good place to stay," Village Finance Director Larry Nakrin said. "They've been very successful -- a lot more successful than we ever imagined they would be."

                                                                                                                                                                                                                       
 

Village trustees this past week approved the second change to the original agreement, crafted in 1996 to lure the giant company from Buffalo Grove. The revised agreement effectively extends the duration another 11 years to 2030. The percentage amount of the village sales tax rebate to the company based on gross sales also has been increased, to a maximum of 56.3 percent from 50 percent.

"They continue to exceed what we've anticipated and it's important for us to make sure they want to stay in Vernon Hills," Nakrin said.

Sales reported by the Fortune 500 company have risen from $3.8 billion in 2000 to $10.8 billion in 2013. Net sales of $3.27 billion for the third quarter of 2014 were 14 percent higher than the same period a year ago.

The revised pact also includes a change from CDW Computer Centers Inc. to the new corporate moniker and the addition of three wholly-owned subsidiaries as parties to the agreement.

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Specific figures were not immediately available but because of its continued success, the agreement over the years has amounted to million of dollars in rebates to the company and has netted the village millions in sales tax revenue to be used for its general operations. CDW has multiple sales locations and Vernon Hills gets credit only for sales of goods made to customers in Illinois.

"I think it's fair to both parties involved. We've had an excellent relationship with them over the years," said Mayor Roger Byrne, who in 1996 held the post and was among those who led the effort to draw CDW from Buffalo Grove to a 29-acre site at CDW Way and Milwaukee Avenue, in the Continental Executive Parke.

The incentive was the first given by the village and would remain such for 13 years, until the economic downturn resulted in several empty big box stores and threatened Vernon Hills' retail base.

"I thought it was going to be the only one," Byrne said.

The original agreement with CDW required the village to rebate 35 percent of the sales tax generated from sales of $65 million or higher; 20 percent for sales of $50 million to $65 million; and, nothing for sales less than $50 million.

                                                                                                                                                                                                                       
 

In 1999, the terms were changed to a 50 percent rebate for sales of $200 million or more; 35 percent for sales between $65 million and $200 million; 20 percent for sales of $50 million to $65 million; and nothing for sales of $50 million or less.

The revised agreement calls for a rebate of 56.3 percent for sales of $200 million or more; 39.5 percent for sales between $65 million and $200 million; and, 23 percent for sales between $50 million and $65 million.

"The key obviously for us was to continue this relationship long term," Village Manager John Kalmar said. "Fortunately, we have a long-standing deal with them."

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