ELMHURST – The Elmhurst City Council approved a committee report Oct. 5 that provides a 10-year sales tax incentive to the Acura portion of the Ed Napleton Elmhurst Imports, Inc. dealership.
Following a 10-3 approval, it will now be drafted into an ordinance. Although there is no confirmed date for the City Council vote, it will be in the near future, according to City of Elmhurst Communications Manager Kassondra Schref.
The car dealership petitioned the sales tax incentive because the Acura manufacturer is requesting all dealership stores meet certain standards.
To meet these standards, the dealership must add a new car wash, repair the existing facade, realign and add sales consultation spaces, construct a new customer lounge area, rebuild restrooms, retrofit existing signage and improve exterior landscaping.
The estimated cost of the project is more than $1.5 million, which is not currently financially viable for the Acura dealership without assistance, according to the Finance, Council Affairs and Administrative Service Committee.
Ed Napleton Elmhurst Imports, Inc. sells both KIA and Acura vehicles from the same dealership at 745 West Lake St., as well as pre-owned vehicles and parts, and it has only one sales tax identification number for all sales.
The city previously entered into a sales tax incentive agreement with Ed Napleton Imports, Inc. for the KIA portion of the business effective Jan. 1, 2014.
At the time, it was determined that the base sales tax amount for KIA, pre-owned vehicles and parts represents 70 percent of the total sales tax received from Ed Napleton Imports, Inc., and the remaining 30 percent represents the sales tax amount for Acura.
The new sales tax incentive would apply only to the Acura sales.
In the current agreement with Ed Napleton Elmhurst Imports, Inc. for the KIA portion of the business, both KIA and Acura operations of the dealership must stay in Elmhurst through 2022.
The new sales tax incentive, however, would last for 10 years starting Jan. 1, 2016, thus keeping the dealership in Elmhurst until 2026.
The committee also recommended that the city will receive 40 percent of the sales tax while Ed Napleton Elmhurst receives 60 percent, which is consistent with the current KIA incentive agreement.
First Ward Alderman Marti Deuter was in the previous committee that heard the request for the sales tax incentive for Ed Napleton Elmhurst KIA dealership. She pressed concerned that the benefit that the city was receiving from this first agreement would be lost if this second agreement was approved.
“We are incredibly fortunate to have the Napleton group here in Elmhurst,” Deuter said. “They have operations of 64 franchises in five states. They’re clearly a thriving business, and KIA sales are increasing dramatically, nationally... they’re breaking records. The same, as the report indicates, is not true for Acura.”
Deuter said that the City Council committed to investing in the KIA portion of the business so Elmhurst could benefit from the growth.
“We are seeing some of that growth now,” Deuter said. “I’m concerned that this incentive really cuts into that benefit that we are realizing now.”
Third Ward Alderman Michael Bram agreed that the city was losing out on the benefit of the KIA sales tax incentive agreement, and wondered how the 40 percent loss in revenue was going to be made up.
“How are we going to make these sales tax dollars in the budget, which is right around the corner?” Alderman Bram said.
Fourth Ward Alderman Noel P. Talluto countered by pointing out that extending the amount of time that both the Acura and KIA dealerships will remain in Elmhurst would make up for the loss.
“For an investment of $200,000, we are getting a very respected business, dealership, to stay in our town, and that results in an extra three years for them to be in our town,” Talluto said. “That results in an extra $1.3 million in sales tax revenue to the city, that is a return in investment of a minimum of six times. I will take that investment any day.”