$1 Million Sales Tax Rebate Deal With Evanston VW Dealership Approved
EVANSTON, IL — The Evanston City Council on Monday approved a tax break worth of up $1 million to the operator of a local Volkswagen dealership in a bid to prevent it from relocating.
The 50-50 sales tax rebate agreement expires after five years, regardless of how many cars SKA Motors Evanston sells at its 1033 Chicago Ave. location.
According to city staff, the dealership currently generates about $327,000 per year in sales tax. In order to reach the $1 million in sales tax revenue within the term of the deal, it would have to exceed 3 percent annual growth.
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Shawn Kohli, the dealership’s owner, initially sought to keep 75 percent of the local sales tax it generated over the next 10 years.
Kohli first sought about $2.5 million in tax breaks before reducing his request to $2 million and eventually settling on half that amount in a series of meetings with Evanston’s Economic Development Committee.
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The dealership is planning to undergo about $1.5 million in renovations this year that are mandated by the Volkswagen Auto Group, according to a memo from Paul Zalmezak, Evanston’s economic development manager.
Citing the dealership’s high property taxes, Kohli first floated the possibility of moving a few miles southwest to a spot in Skokie near the village’s borders with Chicago, Evanston and Lincolnwood.
Skokie village staff contacted him to inquire about his interest in potentially relocating to the village the week after his initial tax break request was floated at the committee’s December meeting.
Kohli responded to Skokie Community Development Director Johanna Nyden by confirming he had looked at a development in Skokie. But, he said, Evanston was “trying to make some attempts to keep me in place.” Kohli he would keep Nyden posted as things progress.
Two days later, Nyden, a former Evanston city staffer, responded to “offer any assistance and historical knowledge” to the car dealer and referenced past sales tax rebate agreement Evanston had arranged with other dealership.
Kohli claimed at the committee’s January meeting that Nyden “really wants us and she’s willing to make some pretty big promises,” the Evanston RoundTable reported.
Following the meeting, Nyden copied staff of both towns on her correspondence with the car dealer to clarify that Skokie was not “actively recruiting” the VW dealership and had not “made an offer of economic assistance to Mr. Kohli or any of his associates.”
Zalmezak questioned why a Skokie village staffer would offer to provide information to an Evanston business about how Evanston’s past tax breaks have worked, though he noted that there was “plausible deniability” within Nyden’s email.
“I’m really uncomfortable with the ways our communities were played against each other in the media,” Zalmezak said at the February committee meeting. “I understand why that community responded the way they did because there is not an official request from Skokie.”
As part of the final deal, Kohli also offered to provide for a car repair high school internship program through Evanston Township High School, an automotive workforce apprenticeship. The car dealer committing to two workforce trainees over the five-year agreement.
The car dealer must stay in Evanston for at least 10 years, or it must give back the sales tax rebates.
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Councilmembers voted 6-2 to approve the deal at Monday’s City Council meeting.
Alds. Krissie Harris, 2nd Ward; Melissa Wynne, 3rd Ward; Jonathan Nieuwsma, 4th Ward; Eleanor Revelle, 7th Ward; Devon Reid, 8th Ward, and Juan Geracaris, 9th Ward voted in favor.
Alds. Clare Kelly, 1st Ward, and Tom Suffredin, 6th Ward, voted against, while 5th Ward Ald. Bobby Burns was absent from the tally.
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