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TO: Mayor Richard C. Irvin
FROM: Christopher Minick, Chief Financial Officer
Trevor Dick, FAICP, LEED AP
Assistant Director of the Mayor’s Office of Economic Development
DATE: April 7, 2025
SUBJECT:
A Resolution authorizing the execution of sales tax revenue sharing agreement with Valley Honda to modernize and expand its existing dealership location.
PURPOSE:
Valley Honda and City staff acknowledge that there is a need for economic assistance from the City of Aurora in order to complete a significant renovation of the current dealership. Economic assistance has been determined to be necessary given the Honda required total investment cost.
BACKGROUND:
Founded in 1969, Valley Honda moved from its former facility in Aurora on New York Street. In 2005, Robert Navarre purchased Valley Honda from Richard Santori, and since then the dealership has grown to become the 7th largest Honda dealership in the United States and the largest retail automobile dealership in the State of Illinois. In November 2020 Valley Honda was acquired by Roush Holding, Inc., a 100 percent Employee-owned company based in Columbus, OH., and currently all employees of Valley Honda are owners of the company.
Valley Honda's large on-site inventory attracts Honda buyers, not just from Aurora but from surrounding communities. Valley Honda has been recognized by American Honda Motor Co., Inc. for its tremendous commitment to customer satisfaction. In 2024, Valley Honda for the eighteenth straight year was the winner of the Honda President's Award, Honda's highest dealership honor for customer satisfaction.
DISCUSSION:
Valley Honda vehicle dealership proposes to expand and modernize its automobile dealership at an estimated total cost of $17.5 million dollars, which will bring Valley Honda’s total anticipated investment in the Dealership, including property acquisition costs, to be more than $46,000,000. The expansion involves adding 1,080 square feet to the Client and Showroom areas, and 4,033 square feet at the Service areas.
This expansion and modernization will overcome the following:
Extreme congestion accessing the service operation
Solution: The project will add a third service drive land alleviating the congestion of front of the current service drive while continuing to have the necessary amount of parking spaces.
Insufficient amount of space to accommodate staffing needs for serving customers digitally and traditionally:
Solution: The project will expand the square footage of the showroom thus accommodating additional personnel needed in the sales department.
Insufficient amount of space to accommodate staffing needs for administrative personnel.
Solution: The project will expand the square footage of administrative offices adding increased administrative and customer-facing digital office space, meeting rooms, and associate restrooms.
Electrification
Solution: The project will build the infrastructure necessary to accommodate the sales and service of battery electric vehicles.
Job Retention/Creation:
|
Current # of Employees |
215 |
More than 102 are Aurora residents and all are owners of Valley Honda |
|
New Positions |
28 |
Full/Part Time in Year One |
|
|
Total of 310 |
Full/Part Time by 2030 |
|
Average Wage |
Service Technician $ 45.00 per hour Sales Consultants $ 55.00 per hour Assistant Service Managers and Porters $25.00 per hour Administration $40.00 per hour |
Exclusive of life, health, dental. |
Aurora has a long history of entering into these agreements with auto dealerships. It is common for cities to enter into sales tax-sharing agreements with car dealerships. These agreements are often used as economic development tools to attract and retain businesses within the City. By sharing a portion of the sales tax revenue generated by the dealership, the City can incentivize the business to stay and grow locally, which in turn can lead to job creation, increased economic activity, and additional revenue for the city.
This Agreement is modeled after the two most recent sales tax-sharing agreements with an auto dealership. In 2022 the City Council entered into two agreements with Napleton to renovate the existing Hyundai Dealership, and to construct a new Genesis Dealership.
Taxes Eligible for Rebate: 1% Sales Tax to City Related to Vehicle Sales
2.25% Home Rule Sales Tax- Parts and Miscellaneous
The parties anticipate that this project will enhance the City’s real estate and sales tax bases, and support employment opportunities in the City.
Highlights of the agreement:
The agreement proposes to rebate to Valley Honda up to $12,800,000 over a Fifteen (15) year period. Note that the Reimbursement Cap is consistent with the percentage paid to Napleton for the overall Hyundai and Genesis projects.
The City would retain the first $1,050,000 of sales taxes generated by the Valley Honda dealership annually.
Sales tax revenues above the $1,050,000 base will be divided based on a 65% (Valley Honda)/35% (City) basis up to the $12,800,000 cap or the expiration of the 15-year term.
The dealership must remain in business for 15 years or a portion of the sales tax reimbursements must be returned to the City.
IMPACT STATEMENT:
The City deems it to be of significant importance to encourage development and redevelopment within the City, so as to maintain a viable real estate tax and sales tax base and employment opportunities.
RECOMMENDATIONS:
That this resolution be approved.
cc: Finance Committee
CITY OF AURORA, ILLINOIS
RESOLUTION NO. _________
DATE OF PASSAGE ________________
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A Resolution authorizing the execution of sales tax revenue sharing agreement with Valley Honda to modernize and expand its existing dealership location.
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WHEREAS, the City of Aurora has a population of more than 25,000 persons and is, therefore, a home rule unit under subsection (a) of Section 6 of Article VII of the Illinois Constitution of 1970; and
WHEREAS, subject to said Section, a home rule unit may exercise any power and perform any function pertaining to its government and affairs for the protection of the public health, safety, morals, and welfare; and
WHEREAS, Valley Honda is the owner of real property ("Subject Property") located at 4173 Ogden Avenue; and
WHEREAS, Valley Honda has proposed to significantly reinvest in the subject property into an updated Honda dealership and has agreed to invest approximately $17,582,253 toward such project (the "Project"); and
WHEREAS, Valley Honda and the City acknowledge that Valley Honda requires economic assistance from the City in order to complete the Project, given the Total Investment Cost, and that the Project would not be economically feasible, but for the economic assistance promised by the City in this Agreement.
WHEREAS, after due and careful consideration, the City has determined that it is in the best interests of the City to provide economic assistance to Valley Honda for the Project pursuant to its authority as a home rule unit of local government and the authority conferred by law;
NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Aurora, Illinois, as follows: that the sales tax revenue sharing agreement attached to this resolution as Exhibit A shall be and hereby is approved; and further
BE IT RESOLVED, that the Mayor is authorized to execute a sales tax revenue sharing agreement that substantially and materially conforms to the provisions of the sales tax revenue sharing agreement set forth in Exhibit A on behalf of the City; and further
BE IT RESOLVED, that the several City Officers and employees designated in the sales tax revenue sharing agreement shall be and hereby are authorized to perform the functions and duties set forth therein described.