By Dan McLeister
For The Elmhurst Independent
City Manager Jim Grabowski presented to the City Council a proposed redevelopment agreement proposal including $6 million for the expansion of the BMW auto dealership as part of a new Tax Increment Financing (TIF) District.
The Elmhurst Auto Group, of which BMW is a part, said it expects a 50 percent increase in vehicle sales with additional showroom and inventory space.
Grabowski said another unnamed municipality made a $6 million offer to BMW.
At a May 9th meeting for the Committee of the Whole, he listed possible financial considerations:
- Loss of not only BMW but also the entire Elmhurst Auto Group which includes Toyota and Jaguar;
- Elmhurst Auto Group is one of the highest sales tax-producing businesses in Elmhurst; (Together they sold $107,773,000 in vehicles and parts yielding $1,077,773 in sales tax revenue to the City of Elmhurst.)
- Loss of other dealerships;
- Loss of BMW would affect ability to attract other luxury auto dealerships;
- “Snowball effect”—potential catastrophic loss of sales tax revenue;
- Loss of a number of employees (currently 166) and ancillary revenue benefits;
- Loss of unique visits for sales and service an ancillary revenue benefits (44,681service visits and 32,594 sales visits).
The City Manager said due to the substantial land acquisition cost required, Elmhurst BMW approached the City for financial assistance to help in purchase of key parcels, which would allow BMW to stay in Elmhurst.
BMW North America notified Elmhurst BMW the proposed option was acceptable as long as key parcels could be controlled by a certain date. Elmhurst BMW purchased the former Gerber building at 500 W. Lake St., closing the sale on May 2.
Scott Levin (5th Ward) mentioned a favorable aspect for Elmhurst:
“Members of the Elmhurst Auto Group have deep family ties to the City,” he said.
“Six million dollars is a big ask,” commented Michael Bram (3rd Ward).
Kevin York (4th Ward), chairman of the Finance Committee, noted that if the proposal was declined and BMW left Elmhurst, “the initial loss could grow in short order.”
The City would transfer land improvement/acquisition funds from TIF II to TIF V for land acquisition ($3.6 million). It would issue revenue-based bonds to be repaid by incremental increases of sales tax generated by Elmhurst Auto Group for the remaining $2.4 million of incentive over a projected nine-year life.
The Development, Planning and Zoning (DPZ) will review the possibility of establishing a 5th TIF District and make a recommendation to City Council. If the recommendation is seen as a positive, the DPZ Committee would begin negotiation of a Redevelopment Agreement with Elmhurst Auto Group.
