City’s economic development manager challenges Skokie assertion that it wasn’t trying to recruit the business

By Bob Seidenberg

rseiden914@gmail.com

Members of the city’s Economic Development Committee Wednesday night backed a modified sales-tax sharing deal with the owner of a local car business – this one substantially lower and shorter in duration than the one he originally placed on the table.

Committee members voted 4-1 with one abstention, recommending in favor of the proposed agreement with Shawn Kohli, the owner of Volkswagen’s SKA Motors, located at 1033 Chicago Ave.

Kohli’s original request called for the dealership retaining 75% of the sales tax revenue as long as he operated in Evanston. The city would lose out on some $2.5 million in revenue over 10 years.

$1 million cap

The new proposal, which the committee recommended, is for a 50% share of sales tax over the next five years, with the total share capped at $1 million.

Council Member Melissa Wynne, in whose Third Ward the dealership is located, supported the proposal after having told the dealer previously that his prior requests were too high.

She called the new figure “an appropriate division of the sales tax,” and told Kohli at the meeting, “it gives you an incentive for you to grow.”

The proposal next goes to the City Council for consideration at its March 11 meeting.

Payback requirement

SKA Motors sales taxes totaled approximately $327,000 in 2022, Paul Zalmezak, the city’s economic development manager, said in a memo. Assuming a 2% growth rate over the five years, he said, the dealership would generate approximately $1,736,466 over that time, retaining approximately $868,233 under the 50-50 agreement.

Moreover, the total amount the dealership would receive would be $1 million, compared to Kohli’s first request which had no time limit.

So if SKA Motors was able to generate $2 million in sales tax in year one of the agreement, the city would share $1 million of it with the dealership, and that would conclude the tax-sharing agreement, he said.

The agreement includes a payback rule, requiring SKA Motors to return the total sales tax revenues shared if the dealership relocates from Evanston within 10 years of the date of executing the contract.

If SKA Motors relocated the business now, Zalmezak said, the city would lose approximately $327,000 annually based on the 2022 sales tax figures, totaling $1.7 million over the five years.

Real estate taxes vs. sales taxes

If SKA were to relocate, the property would most likely be redeveloped as multi-family residential, with the city making up a portion of the loss of sales tax revenue with the property tax generated by the development, Zalmezak said.

Council Member Devon Reid (8th Ward), chairing the meeting, argued that it’s a fair balance between a residential property at the site versus continuing with the dealership.

He said he personally would prioritize “keeping our young folks and families here in town.”

Wynne, however, noted that developing on the west side of Chicago Avenue is not as simple as some people might suggest, noting that the city had a residential project come through the council but then fail to move forward.

Kelly questions story line that dealership was pursued by Skokie

Council member Clare Kelly (1st Ward), the lone member of the committee to vote against the proposal, said the amount the city was going to give the dealership still “just seems like a lot.”

She urged Kohli to appeal to Volkswagen headquarters to cover some of the cost of a mandated $1.5 million renovation – something the company doesn’t do with individual dealerships, Kohli maintained.

Kelly also said she was concerned about staff memos emphasizing the possibility of losing the business to Skokie, portraying the village as “actively pursuing Mr. Kohli’s dealership, and making big promises.”

Instead, officials there have repeatedly denied those assertions “because it’s simply not true,” she said.

Zalmezak had included a line in his memo to the committee for its Jan. 24 meeting that said Kohli “reports Skokie officials have contacted him and offered to assist him with relocation.”

But in a Jan. 30 email to Kohli,  Johanna Nyden, the community development director in Skokie (who previously held that position in Evanston), wrote, “The Village of Skokie has learned that you presented to the City of Evanston’s Economic Development Commission that the Village of Skokie is actively recruiting your dealership from Evanston. As you and I both know, this is not true. No member of the current village staff has ever met with you on your potential Skokie project. To clear any confusion with our colleagues in Evanston, who are copied on this email, no current Village of Skokie employee made an offer of economic assistance to Mr. Kohli or any of his associates nor has any knowledge of interest in a Skokie location.”

However, Zalmezak pointed the committee to a pair of emails Nyden and Kohli had exchanged more than a month earlier.

Opening the door for a conversation: Zalmezak

A Dec. 12 ,2023, email from Nyden to Kohli opens congenially about a conversation the two had had before she left Evanston to work in Skokie. Nyden then asks, “Can you please call me about your proposal for the Skokie location? The Village has no knowledge of this proposal and wasn’t aware of your interest in Skokie. As you can imagine, we have had some interest from the community as to whether this is happening and I would like to know a bit more about your plans to come to Skokie.”

Kohli responded that day, noting that “I did look at a development site in Skokie but Evanston is trying to make some attempts to keep me in place. I’ll keep you posted as things progress.”

On Dec. 14, Nyden responded in another email to Kohl, “Sounds like a plan. Let me know if you need anything.  I also was the staff member who managed the process with Autobarn/Richard Fisher on both sales tax sharing agreements [in Evanston in 2004 and 2014] and the relocation with TIF to the Tech Center, so if I can offer any assistance and historical knowledge, let me know.”

Addressing the EDC committee, Zalmezak asked, “Now why would somebody in Skokie reach out to offer help, provide information, to an Evanston business about how things work in Evanston?”

“I don’t know – I would suspect that that was an opportunity to open the doors and have a conversation” about moving to that village, he told officials.

Reid suggested that Zalmezak’s concerns could be viewed more as speculation because “it certainly could have been just seeking to understand more about the tax agreement, and I think it’s important that when information is presented in a memo it’s unclear whether it’s fact or speculation.”

‘Inaccurate information’

Kelly said the information provided committee members was presented as “this has been offered [an invitation to relocate to Skokie] and obviously that weighs in [the city’s decision] – that was inaccurate information that was provided,” contributing to their view of the situation.

Nyden declined to comment when asked about Zalmezak’s comments, referring a reporter to Patrick Deignan, director of communications and community engagement in Skokie, who also held a similar job with Evanston.

“The village only learned of the dealership’s interest [in Skokie] through the media and has not engaged in any negotiations with the dealership,” Deignan said.

After the EDC meeting, Zalmezak parsed the message from Nyden: “There’s plausible deniability in the way Nyden’s email was drafted – ‘Hi, I’ve heard you’re interested,’ though no formal mention of possible sites. There is reference to what we did for Richard [Evanston car dealer Richard Fisher for whom the city fashioned two intricate sales tax sharing agreements in 2004 and 2014].”

Zalmezak asked, “Why would you do that, if you’re not pursuing him?”