Belleville leaders are considering a plan to give $1.2 million in tax increment financing money to Auffenberg Ford if the dealership remodels its existing site on South Illinois Street and promises to stay in business for 15 years.
The renovation is estimated to cost $1.5 million, but Jamie Auffenberg, president of the Auffenberg Dealer Group of Illinois, said the actual construction cost could be higher.
“I believe if it keeps the dealership in Belleville for another 15 or 20 years, that the property tax, the sales tax and all the taxes that are generated will be many times what was paid for the project by Belleville,” Auffenberg said.
The Finance Committee and the Economic Development & Annexation Committee have recommended the full City Council approve the plan when aldermen meet on Monday night.
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I believe if it keeps the dealership in Belleville for another 15 or 20 years, that the property tax, the sales tax and all the taxes that are generated will be many times what was paid for the project by Belleville.
Jamie Auffenberg, president of the Auffenberg Dealer Group of Illinois
Mayor Mark Eckert supports the proposal because the dealership produces sales tax revenue, which provides money for the city’s budget.
“They are very important to our community,” Eckert said. “They bring in a sizable amount of sales tax each year, and we are very appreciative of them being here.
“I know we’ll never make all the people happy when they read this story, but we think it’s the right thing to do, and I can tell you I feel good about locking in a 15-year additional commitment” from the Auffenberg family, Eckert added.
“I personally feel this is a good deal for Belleville. It’s certainly a good deal for Jamie Auffenberg. He’s a good businessman, but I think it’s a really good deal for Belleville.”
Ward 3 Alderman Kent Randle was the only Economic Development committee member who voted against the Auffenberg proposal on July 5.
“I think it’s extremely high,” Randle said of the proposed TIF District 3 grant that would cover 80 percent of the estimated construction cost. “I’ve got a fundamental problem with using TIF money in such a manner. I’d rather see $1.2 million being used to repair streets and other city infrastructure.
I’ve got a fundamental problem with using TIF money in such a manner. I’d rather see $1.2 million being used to repair streets and other city infrastructure.
Kent Randle, Ward 3 alderman
“Are there other means of funding that might be available? Why not rebate a portion of the sales tax instead? To me, that would seem to tie the project financing back to the store’s performance,” Randle said.
In Shiloh, village leaders are using a sales tax rebate worth up to $14 million as an incentive to get Auffenberg to spend $40 million to move the Auffenberg Auto Mall in O’Fallon to a 36-acre site off Frank Scott Parkway and Fortune Boulevard in Shiloh.
Auffenberg said construction on the Shiloh site cannot begin until he purchases the property, and that transaction will not be completed until next year.
In Belleville, Auffenberg hopes to begin the renovation in October and have it finished by March.
If Belleville aldermen approve the Auffenberg plan, it would be at least the second time TIF money would be used to assist Auffenberg.
In 1999, the City Council agreed to give Auffenberg $2.3 million in TIF payments in exchange for promising to stay in town for 15 years and spend $1 million on remodeling.
I personally feel this is a good deal for Belleville. It’s certainly a good deal for Jamie Auffenberg. He’s a good businessman, but I think it’s a really good deal for Belleville.
Mark Eckert, Belleville mayor
That decision was made in an effort to keep car dealerships from leaving Belleville. Eckert said the city had about 12 car dealerships in the 1990s. Today, the city has three new car dealerships.
Along with Auffenberg at 901 S. Illinois St., Oliver C. Joseph Chrysler Dodge Jeep and Ram is at 3795 W. State Route 15 and Cardinal Buick GMC is across the highway from Oliver C. Joseph at 3800 W. State Route 15.
“Car dealership revenues are very good for cities,” Eckert said. He said city officials are “down to fighting for these last three.”
As part of the Auffenberg proposal in Belleville, Auffenberg Ford Inc. would commit to $24 million annually in sales subject to sales tax.
If Auffenberg meets this goal, the city could get about $240,000 in sales tax revenue annually, according to Jamie Maitret, the city’s finance director.
And if Auffenberg maintained those sales over the 15-year span of the proposed agreement, the city could receive up to $3.6 million in sales tax revenue from the business.
The city receives 1 percent of the sales tax on each car sold by dealerships. Maitret noted that the sales tax collected is based on the sale after a trade-in value is deducted. For example, if someone buys a new car for $20,000 and their trade-in car is valued at $5,000, the sales tax is calculated on a $15,000 sale.
Eckert said state law prevents the city from releasing the exact sales tax figures from an individual business, but city officials are allowed to review state records to see if businesses are meeting their sales tax revenue goals set in exchange for receiving tax inducements from the city.
Randle said he is concerned about the lack of information aldermen are given.
“I don’t believe I have all the information to make an informed decision,” he said.
Here are highlights of the Auffenberg proposal:
▪ Belleville would pay Auffenberg $240,000 annually for five years from the Tax Increment Financing District 3 account for a total of $1.2 million. This TIF district is the largest one in the city. In a TIF district, property values in the district are frozen at their current levels and any additional revenue generated by a rise in property values is channeled into an account earmarked for infrastructure improvements and economic incentives in the district. The money is intended help develop property that would not see new growth “but for” the public investment.
▪ Auffenberg would promise to spend at least $1.5 million on the renovation; commit to annual sales subject to sales tax of at least $24 million; stay in operation for 15 years; retain the 69 employees at the Ford dealership; and add six more within two years for a total of 75.
Auffenberg said the renovation is designed to meet the latest standards for Ford dealerships.
“I’ve never done one of these that didn’t cost significantly more when you got into it than what is projected,” he said of the renovation cost.