CarMax To Joliet: Give Us These Sales Tax Incentives

JOLIET, IL — At Tuesday's regular meeting, Joliet's City Council will review plans calling for significant sales tax breaks for the CarMax company. The nationally known used car dealership wants to open a new location along Route 59 near Theodore Street, across from the Family Video store. The project goes before the city council this week.

According to Joliet, CarMax is seeking the following financial incentives:

• 70 percent of sales tax generated from sales/service to the fifth anniversary of the agreement
• 60 percent of sales tax generated from sales/sales from the fifth to 10th anniversary of the agreement.
• 50 percent of sales tax generated until the maximum rebate amount of $3.7 million.

A memo drafted by interim city manager Marty Shanahan indicates the sales tax incentives being sought by CarMax are reasonable. Shanahan urges the council to approve them.

"CarMax has not 'shopped' this partnership to other communities, however, without public assistance CarMax will need to reevaluate options," a city of Joliet memo explains.

"As we all know, neighboring communities are willing to offer lucrative incentives to lure dealerships in order to create new opportunities. As a result of this competitive environment, our approach to auto dealership incentives need to strongly consider the incentive market being created by our neighbors."

According to Shanahan's memo, "The maximum rebate of $3.7 million amount is expected to be achieved after approximately 15 years of operation, at which point the sales tax sharing program would cease. The anticipated total sales tax generated over the 15-year period would amount to $6,280,386 of which $3,700,000 would be shared with CarMax and the remaining $2,580,386 with the city of Joliet."

The nearest CarMax stores to the proposed site in Joliet at Route 59 and Theodore Street are in Naperville and Tinley Park, respectively.

CarMax estimates that approximately one-half of its sales at the proposed Joliet location will be siphoned from their Tinley Park and Naperville stores. The new facility will effectively be cannibalizing (a) significant amount of business from other existing CarMax facilities, thus limiting the profitability," the city of Joliet notes.

Also, the CarMax development is expected to be a magnet for other commercial development on Joliet's far west side. CarMax would occupy about 5 acres of a 40-acre tract.

"The CarMax is the driving development that is expected to spark further development on the site," the city of Joliet contends. "Based upon the above, it is recommended the City Council approve a resolution for a sales tax rebate agreement with CarMax Auto Superstores Inc."