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Evanston’s Economic Development Committee voted Wednesday night to offer more financial aid to Autobarn’s expansion project than an already sweetened proposal from city staff.

Staff proposed providing $2.5 million in funding from the Howard-Hartrey tax increment financing district plus a two-year sales tax sharing agreement capped at $500,000.

That was an increase from the $2 million in TIF funding staff had recommended last month.

But Autobarn owner Richard Fisher said he needs more aid to make the project work — and the committee voted to uncap the sales tax sharing agreement and let it run for four years.

Fisher said that because of high property taxes and other expenses, his three Evanston dealerships earned just a 0.7 percent pre-tax profit last year — about $750,000 on roughly $112 million in sales.

Fisher estimated that at current sales levels the four year agreement would add an extra $500,000 to his bottom line over its four year term, compared to the plan proposed by city staff.

Fisher last month purchased the long-vacant 222 Hartrey Ave. property built as the headquarters for Shure Inc. for $2.5 million.

He plans spend roughly an additional $3.5 million to turn it into a service facility for some of his Chicago Avenue dealerships and also store hundreds of new and used cars there.

Alderman Ann Rainey, whose 8th Ward includes the Hartrey property, said, “My position is that we need to do whatever it takes to make this work.”

The project, Rainey said, would reduce noise and congestion problems for residents along Chicago Avenue, and would also create 30 new jobs on Hartrey.

Alderman Jane Grover.

Although Alderman Jane Grover, 7th Ward, and some other committee members tried to add conditions to Rainey’s motion for the four-year sales tax deal, they all ended up voting for it.

A 2005 Autobarn tax sharing agreement with the city which ended last year, provided the company with about $1.5 million to fund a variety of improvements to its Chicago Avenue dealerships after the city persuaded Fisher not to move the dealerships to property he’d purchased in Skokie.

Earlier in planning for the Hartrey project Fisher had asked for $4 million in TIF assistance from the city as well as a renewal of the sales tax sharing agreement.

The TIF assistance would be structured as a forgivable loan — with the amount to be forgiven based on additional sales tax revenue to the city from the dealership over the next 15 years. If Autobarn were to close, or move out of the city during that time period, the loan would be in default and the remaining balance would have to be repaid to the city.

As a condition of the new sales tax sharing agreement, Fisher would have to agree not to seek any further sales tax concessions from the city for his existing dealerships for 50 years.

The proposal now goes to the full City Council for final approval.

Related stories

City eyes $2 million loan to auto dealer (Jan. 22, 2014)

Neighbors mostly support Autobarn expansion (Aug. 28, 2013)

Sales tax rebates popular for auto dealers (Aug. 27, 2013)

How TIF’d up are we? (Aug. 26, 2013)

Autobarn to seek tax breaks for Shure site (July 24, 2013)

Bill Smith is the editor and publisher of Evanston Now.

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10 Comments

  1. Too big to fail

    What's interesting is Fisher said high property taxes ate into his profits.

    Fisher is a big fish. How do all the small fish survive with high property taxes? Aldermen can't give loans and grants to every small business owner.

    The problem is excessive spending and high property taxes. Aldermen Ann Rainey proves my point – "We need to do whatever it takes to make this work." Whatever it takes? Does she think Autobarn is too big to fail?

    Does anyone think if Autobarn declares bankruptcy it would pay back the city's forgiveable loan?

  2. More Council largesse. How about the residents?

    I'm sure a large number of Evanston residents would like to get some of the Council largesse.

    Maybe to buy a car, pay off their mortgage [or keep from foreclosure] or even have enough food to eat.

    The Council instead decides to pour "their" money [of course really taxpayer's] to companies left and right that THEY think are 'winners.'  Maybe if they understood a little more about economics and their responsibiliites, we would not be in such bad economic shape—but I assume they will have moved out of Evanston and even the state before bills come due and the roof colapses.

  3. Corporate Welfare
    Why are we giving millions of dollars to private corporations? The rest of the businesses and homeowners in Evanston are forced to pay more in taxes, all so we can have an ugly car dealership occupy Chicago Ave. instead of businesses we might actually like? And any alderman who says “do whatever it takes” needs to be thrown out of office for being fiscally irresponsible.

  4. Boosting Aid to Autobarn

    How about boosting aid to current Evanston residents by stopping subsidies/tax breaks for private businesses? Our taxes have increased far exceeding the services we receive. They need to go down to match what we get for the taxes we pay–and they can't do that with subsidies.

  5. Irresponsible comments from Alderman Rainey

    "My position is that we need to do whatever it takes to make this work."

    And my position is, Alderman Rainey should be voted out of office.

    Alderman Rainey shows no respect for taxpayers and other businesses in Evanston. She fights like a bulldog to get the City to buy property on Howard Street, provide subsidies for businesses in her ward such as Ward 8 Wine Bar and Peckish Pig. BEWARE of the Howard Street Theater that is still under consideration.

    I applaud the City's and Alderman's efforts to enhance and improve economic development in Evanston.

    I deplore the frequent "gifts" of subsidies, grants and forgivable loans. These "gifts" are taking money out of my wallet and yours to benefit the privileged few. Speaking of FEW, are they still trying to get a loan from the City of Evanston? If so, tell them to go to a bank. Banks are in business to provide loans. When City government gets into this business, there are conflicts of interests and poor decisions generally get made.

    The most brazen issue though is the lack of accountability, transparency and disclosure when our city officials decide to give away tax payer money. What's the process, what are the parameters, where is the follow up? For example, how is our loan, yes, it's my money and your money that was loaned to Chicago's Home of Chicken & Waffles doing? I haven't heard a peep, nor have i heard anything from any number of other giveaway programs.

    It's UNACCEPTABLE !!

    1. Just make it illegal
      The only way to end the city council’s ability to make these “loans” is to have a city ordinance that forbids the City of Evanston from using taxpayer’s money to in any way to fund a private business. Let’s get a referendum on the ballot for the next possible election date to stop this practice. I think that too many of our elected officials think that any money that is not comming out of their wallet is “free money”. This needs to stop.

  6. City like state

    I was just reading an article that was on the internet last week and I wish that I had saved the web address.

    It stated that over the last 10 years, the state has lost about 650 million from loans and other deals that the state has given to keep companies from moving out of state. It looks like Blogo and Quinn have a terrible track record.

    I wounder what Evanston's track record is when they ape the state.

    This deal looks like it is insane. It looks like Autobarn is just milking the city. This is what we need …. no we need more …… no we need more… more …. more ….more.  because you tax us to death.

     

    How do you think we feel when Evanston (Wally) and our school system never gets enough tax dollars from the citizens.

    How do you think we feel when the city wastes 2 million on a parking lot for Trader Joe's. They would have moved here without that deal and TJ is still laughing at us.

    I would like to see the city account for their actions.

    I would like to see Richard Fisher open his books if he was so close to losing money in Evanston.

  7. Lack of comprehension

    I don't think posters understand how these programs work or where the money comes from, or the long term benefit to taxpayers.  I may be wrong but this is what I understand from the above article.

    1st point, 2.5 million comes from the Howard TIF, that means those are dollars generated from, and only from, the commercial property development on Howard derived from that existing TIF.  Only dollars generated from that particular commercial development are used,  not a dime comes from general taxpayers.  

    Now, taxpayers, schools districts, etc., only receive the taxes as they existed before the tif, and those taxes were frozen at that level for the term of the tif.  But I believe this tif has repeatedly given extra dollars to the school districts before they were required to. 

    The extra TIF revenue derived from that successful TIF can, by state law, only be spent within that TIF district, intended primarily for further commercial driven economic development of that area.  So this "deal" is exactly what those tif dollars were set aside to do, create greater commercial development.  Again, general taxpayers are not having their money used.

    The taxpayer benefit is long term, once the tif expires, the City and school districts get huge increases in tax revenue from a greatly improved commercial tax base.  Evanston tifs have been hugely successful, plenty of data has been shown to prove that, even district 202 has spoken how increased tif money has been a budget savior.

    Autobarn will increase the assessed value of dead land, therby increasing r.e. tax revenue by millions, provide some 30 more jobs, and continue high ticket sales tax revenue for Evanston for years to come.  As opposed to moving to and giving it all to Skokie. 

    The second part, if I understand the article, comes from the increases above existing levels in sales taxes generated.  And that alone looks to be enough to pay the city back, meaning the increased r.e. taxes will become all taxpayer gravy.

    From what I see it's commercial development funding more commercial development, which all has a very large return to the taxpayer.  Post stating that it's the taxpayer directly "funding" this with no benefit in return seems very uninformed.

    From what I can see, as a general taxpayer, I fully support this type of investment, the benefit is fairly obvious to me.   

  8. How about expanding customer service?

    I know physical expansion maybe the strategry for the Autobarn, but when I was in the market to buy a new car, their total lack of customer service or at least respect. I think an investment in training and customer service may help them before they decide to make their lot bigger so they can continue to hide from customers. 

  9. Generally car dealerships

    Generally car dealerships factor in absorption of their overhead, meaning how much of your fixed expenses being absorbed by your service department.  Bench marks can be as high as 70%.  Now, by moving his service departments to an offsite location, he will have to rely solely on new and used car gross, thereby lowering his overall gross significantly.  Considering he netted only .07% from sales of $112Million, means how many more new and used cars will he have to sell to break even!!  I call this a bad business plan!!

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