Champaign to consider incentives for auto dealership move

CHAMPAIGN — The Ford City auto dealership in Champaign would move to north of Interstate 74, and the Carriage Center property on South Neil Street would be available for significant redevelopment under an agreement to be reviewed at a Champaign City Council study session on Tuesday.

The owners of Ford City could receive financial incentives of up to $6.2 million under the proposed agreement.

Ford City, and possibly other auto dealerships owned primarily by the Shapland family of Champaign, would move from the south side of Champaign to tracts on the north side of the city, east of Prospect Avenue and north of I-74 that once housed a Mitsubishi dealership, a Best Buy store and a number of smaller businesses.

The Carriage Center property could be redeveloped for retail or hotel use, city officials say.

Champaign Mayor Don Gerard said he supports the agreement and called it "a really important initiative for Champaign, to keep those local businesses here, keep that revenue and to look forward in how we're going to literally develop and shape the landscape of our community."

Council Member Tom Bruno said he would vote for the agreement.

"I think it will pass the city council without significant hesitation," Bruno added.

George Shapland told The News-Gazette on Friday that he believes the redeveloped properties "could be great for Champaign. Hopefully it will be a win-win for everybody."

In a memo to city council members, City Manager Steve Carter said the project "represents an opportunity to relocate successful auto dealerships in Champaign, to preserve existing sales tax revenue and grow additional sales tax revenue in the future.

"Also, dealerships tend to locate in very specific locations with proximity to and visibility from interstate highways and tend to cluster together to attract a larger base of purchasers using brand diversity. Tracts of land large enough to accommodate multiple dealership projects within the city with good interstate access are scarce and expensive to assemble. These two factors make it important to work with the developers to relocate Ford City to the proposed area north of I-74."

Although city officials say the package of financial incentives to the Shaplands is still being negotiated, the general outline calls for the reimbursement of all taxes of greater than $300,000 a year generated at both the north Champaign and the Carriage Center properties for as long as 12 years. The dealerships generated an average of $300,000 in sales taxes to the city from auto and parts sales between 2009 and 2011.

Sales tax revenue would be reimbursed from the north Champaign site. Other tax revenue, including sales taxes and possibly hotel-motel and food and beverage taxes generated at what is now the Carriage Center site, also would be reimbursed.

Shapland is a board member of The News-Gazette Inc., and also is a member of the board of the Marajen Stevick Foundation, which owns this newspaper.

City officials see the 17-acre Carriage Center property as the potential location for "a combination of retail and hotel or other kinds of use that would generate more tax," said Craig Rost, the city's deputy city manager for development.

Property tax revenue would not be a part of the reimbursement, Rost said.

Rost said the financial incentives are needed to help encourage infill; "otherwise, development just sprawls into the greenfields because it's cheaper."

"Greenfield development is always less expensive than infill because with infill you've got to not only buy the property at its current market value which is usually set at its highest and best use — if you have a different use in mind it's too bad for you — so you're paying market value. Then you have to tear down the structures that are there at an additional cost. And you have to talk people into selling things that weren't necessarily on the market."

Rost said construction of the new Ford dealership, estimated at approximately $15 million, could begin later this year and be completed "by this time next year."

It's unclear which other Worden Martin dealerships besides Ford City would move to the north Champaign site, Shapland said Friday. Worden Martin also operates Subaru, Nissan and Carmart stores in Savoy.

"What Worden Martin sells up there in terms of brands of cars is still undetermined," Rost said of the north Champaign location. "We're not encouraging an exodus of dealerships that are in Savoy right now. We're just trying to keep what we have. Years ago we lost a couple of dealerships to (Savoy) and that woke everybody up to the fact that this is a lot of sales tax money and that when they start growing somewhere, they tend to stay there."

Although this isn't Champaign's first infill redevelopment project, Rost said it's the largest. Other projects where developers were reimbursed for infill included the I Hotel, the County Market store near Campustown, the Hilton Garden Inn and the proposed Hyatt Place downtown.

Bruno said he would vote for the redevelopment plan for a number of reasons.

"The reuse of the South Neil property, that has tremendous potential. Imagine all that dealership on South Neil becoming something like Village at the Crossing (the retail development at Windsor and Duncan roads) or maybe a full-size supermarket or a Whole Foods store or a mixture with housing," he said. "Whereas if (Shapland) goes to Urbana or Savoy with his dealership, we have an empty spot there on South Neil that maybe doesn't get developed.

"And of course we have an eyesore up on I-74 and North Prospect if we don't do something with that area. After the Menards and the Best Buy moved north from there 10 years ago, those places have been Halloween shops for the last decade."

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Sid Saltfork wrote on July 21, 2012 at 11:07 am

Maybe, it makes sense.  Although on the surface, it sounds like the states competing for businesses.  The State of Illinois gave money to the CME, and Sears to keep them in Illinois.  The money could have been used to fund services to citizens instead of the cuts to services that resulted.  Has it filtered down to municipalities competing against each other now?  Do businesses need governmental financing to be successful?

bmwest wrote on July 21, 2012 at 2:07 pm
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It's a typical example of what economists call the prisoner's dilemma.  Though the country as a whole would be better off not engaging in business incentives, at least not in competition with other areas of the same country, each of the potential locations for the business have a personal incentive to win and so they do.  The only way to put an end to community and state incentive competition would be to ban it.

Arthur Andersen wrote on July 21, 2012 at 6:07 pm
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This would be a waste of tax money, to be blunt. The automakers subsidize and/or mandate their dealers to maintain the dealership properties at a certain specification and level of quality. Location relative to the most direct competition may also be dictated as a condition of maintaining a franchise. Take note that Ford City's most direct competitor just completed a substantial renovation project that was likely so mandated.  As Carter's own memo indicates, this is the best location for the dealership and all concerned know that, with or without the windfall subsidy for the Shaplands. There aren't any Interstates around Savoy, just other W/M dealerships, and Urbana is short on sites. Oh, and I'll eat my hat if Fox Development isn't already lined up for the "massive redevelopment project."  

sameeker wrote on July 22, 2012 at 7:07 am

Think of how much money could be saved if all forms of corporate welfare were abolished.

Bob from Champaign wrote on July 22, 2012 at 7:07 am

Wow, you people are amazing.  It appears to me that all the business asked for was a break from sales taxes for 12 years.  Even that was only equal to their current annual payment. If they're successful and sell more at their new location, then they still have to pay.  Still paying property taxes, and other taxes as well.   How much sales tax is the North Prospect location generating right now?  A big fat goose egg.  It will take at least 5-7 years to get the two areas completed and back up an running. Helping businesses defray some of the redevelopment costs isn't "corporate welfare".  Solyndra-style boodoggles are.

sameeker wrote on July 22, 2012 at 10:07 am

You must be thinking of halliburton when you speak of boondoggles. Remember the hundreds of billions in no-bid contracts given to them under Bu$h? Soldiers who have served in Iraq have told me how they started doing their own laundry because their cloths were filthier then before when halliburton did them. They then told me that they were ordered to send them to halliburtons laundry anyway to have them done. Ask anyone who served in Iraq about the corruption with halliburton and blackwater and you will hear plenty. Either way you slice it, the ford deal is more corporate welfare. Socialized costs and risks, privatized profits.