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Tough to swallow

Opinion: Editorials

July 14th, 2020 3:18 PM

By Editorial

The Landmark View

When it comes to municipalities, especially small ones like North Riverside, handing out generous corporate welfare packages to companies that prefer redirecting public money back to themselves, we've always been ambivalent.

There's a certain gun-to-the-head feeling about such asks from corporations, who cry poor and indicate that unless you give them something to sweeten the pot, they may just take their toys elsewhere. 

Lord knows, there are plenty of municipalities who'd be willing to take a car dealer off your hands, so small towns like North Riverside find themselves perpetually in a bind. They need the sales taxes to function, and they need big businesses like car dealerships to provide those taxes.

To soften the blow, the companies argue the money it will save through rebate schemes like the one approved Monday for Zeigler Ford in North Riverside, inventory will double, sales will double and, in the end, the village will collect the sales tax revenues it needs.

But, are automobile sales at dealerships really doing that great right now? The pandemic has driven more and more people online and we may be in the midst of a fundamental change in the way new cars are purchased.

This sales tax rebate deal the village just signed with Zeigler Ford will last 20 years. Can anyone actually imagine what the retail sales environment will look like in North Riverside in 2040?

We have a hard time imagining what it's going to look like in 2025. If the COVID-19 pandemic lingers well into 2021, life will begin changing permanently. Living in a nation completely unable to settle on a comprehensive national response to the emergency, it's impossible to predict how this will pan out. Will a vaccine arrive to save the day or will we slide in and out of quarantine as cases spike and fall?

We just don't know.

So, the prospect of giving up what likely will be hundreds of thousands of dollars annually in sales taxes at such a time is a tough ask, though, granted, Zeigler Ford pulling out in two years when their lease with Rizza Auto Group expires is no bargain, either.

The sales tax rebate deal, then, is a real leap of faith for North Riverside, who we now guess will be approached by other businesses for similar deals. Although this kind of thing isn't exactly new. While the village never wanted to rebate sales taxes in the past, it had given incentives in the form of cash grants.

Joe Rizza Ford got one in 2007, Best Buy got one in 2005 and in 2012 the village paid a development company $6.8 million to land Costco.

Those, however, were short-term incentives, paid back to the village in the form of new, unencumbered sales tax revenues.

Zeigler Ford has said it will increase its inventory in North Riverside and ramp up sales all while pumping millions as an investment in the property, which it intends to buy. Just how quickly the company will be able to ramp up sales, or if it will, remains to be seen.

In the meantime, the village just swallowed hard and hoped for the best. Good luck.

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