PLANO – Gjovik Ford could move from Sandwich to Plano as soon as 2020 if the Plano City Council approves a retail sales tax rebate agreement for the dealership at its meeting Monday.
The Committee of the Whole on Thursday recommended the agreement to facilitate the dealership’s planned move to the southwest corner of Route 34 and Mitchell Drive in Plano, in what currently is a cornfield west of McDonald’s.
“The approval of the agreement will be huge for Plano,” Alderman Mike Rennels said. “In addition to the revenue from sales and property tax, the agreement will be an excellent opportunity to attract other businesses to town. Gjovik Ford is a well-established local business, and we are proud and excited to have them here in Plano.”
A tentative plan is for Plano to rebate most of the sales tax it collects to Gjovik, up to a total of $6.95 million, for a maximum of 23 years. The combined property and sales tax to be collected from the dealership project during the term of the agreement is an estimated $12.3 million. Based on Ford’s sales projections, it is expected that the rebate will reach the $6.95 million cap within 16 years.
For the first 15 years of the agreement, Gjovik will receive a rebate of 90 percent, and the city will receive
10 percent. For the next three years, Gjovik will be rebated 75 percent, and the city of Plano will receive 25 percent. After 18 years, Gjovik Ford has the option to extend the 25/75 percentage annually to a maximum of 23 years.
“There is no cost involved for the city. We will be refunding sales tax that will be generated by Gjovik, and once the amount is paid, which is estimated to be around 16 years, the city will receive the full amount of sales tax,” Rennels said. “Also, these numbers do not factor the property tax of the multimillion-dollar business or the sales tax or property tax for the future businesses that will occupy the adjacent outlots.”
Gjovik Ford plans to buy 22 acres of land and occupy between 10 and 11 acres, with plans to divide the rest and sell it to other retailers. The proposed two-story dealership building would be more than 37,600 square feet, which is more than triple the size of the dealership in Sandwich.
Scott Gjovik, dealer principal of Gjovik Ford, said the new dealership could be open by summer 2020.
“It’s an opportunity to create an auto dealership hub in the city of Plano, with Dempsey a mile west and developable land in between,” Gjovik said. “We are in a prime position to market and sell in Yorkville, Plano and Sandwich. There are long-term demographic opportunities for us with the relocation to Plano.”
Gjovik said there are no plans to move Gjovik Chevrolet Buick GMC from Sandwich to Plano.
Sandwich mayor ‘shocked’
Gjovik Ford generates about $225,000 a year in sales tax for the city of Sandwich. In May, the Sandwich City Council approved a 15-year sales tax rebate, with Gjovik Ford receiving $250,000 a year for 15 years or $800,000, whichever came first.
Three weeks later, the council refused to waive $26,000 in building and water/sewer connection fees for the proposed new dealership.
“We were also having difficulties with the soil conditions that could turn into significant problems down the line,” Gjovik Ford general manager Tom Conlin said. “We didn’t want to spend $12 million to $14 million on a new building that could settle and crack in half.”
Sandwich Mayor Rick Olson said he was shocked to learn of the relocation plans, but “the city of Sandwich has no negative feelings” toward Gjovik Ford.
“We were hoping to have many more years of business with Gjovik Ford in Sandwich, and this definitely came out of the blue,” Olson said. “... Gjovik Ford is one of the highest sales tax contributors, and we’ll have quite a hole in our budget.”