Biggers Mazda negotiates 15-year sales tax rebate with Elgin
The city of Elgin is planning to establish an economic incentive agreement with Biggers Mazda that will rebate to the dealership 25 percent of the sales taxes it generates over the next 15 years.
The city council as a committee of the whole unanimously voted Wednesday in favor of the agreement, which includes "fast track" permitting and a waiver of building permit fees. In return, the dealership, which has been located at 1320 E. Chicago St. for 17 years, agreed to stay in Elgin for another 15 years. The full city council still must give final approval.
Biggers Mazda owner Jim Leichter said he was "thrilled" council members OK'd the deal. If the dealership hits sales projections, the sales tax rebate will amount to $1.5 million over 15 years, or about $100,000 per year, he said.
The city's 2019 general fund budget estimates $26.8 million in sales tax revenues. The city budgets conservatively for that and typically does better than anticipated by the end of the year, CFO Debra Nawrocki said.
The impetus for the deal is a corporate "image program" established by Mazda Motor Corp., which is requiring Biggers Mazda to make an estimated $2.5 million in capital improvements to the Chicago Street building. The dealership got a competing offer from Bartlett but really wanted to stay in Elgin, Leichter said.
"Our identity is Elgin," he said. Two other Biggers dealerships - selling Chevrolets and Mitsubishis - are across the street.
Councilman Terry Gavin called it "a fair deal." Others said the decision wasn't easy, because typically economic incentive agreements in Elgin last 10 years.
"We did go back and forth with Biggers Mazda on this one a number of times," Councilman Toby Shaw said. "This is where we landed to be able to retain Biggers in our community."
The dealership employs 26 people and generates about $8.8 million in annual revenues.
Mayor David Kaptain said the decision wasn't a slam dunk but will pay dividends for the city.
"It was not easy to do this," he said. "It does change the way we have provided incentives, and I always start to get edgy when we start setting a precedent."
Bartlett had offered Biggers Mazda a free 6-acre parcel valued at $925,000 along Route 20 near Route 59 and a 50 percent share of the sales taxes generated by the dealership for 15 years, with a maximum rebate of $5 million. This would have been Bartlett's first car dealership, said Village Administrator Paula Schumacher.
"Our thinking was to go in with our strongest offer," she said. "We own that property, which is why we could make that rich of a deal. We thought that a better use than it being dormant."
As for Elgin's offer, "I think they did what communities do - they put their best foot forward," Schumacher said.
Negotiations with Elgin started about 1½ years ago, Leichter said. A first round of talks was held about three years ago, when the corporate program was established on a more discretionary basis, he said.