First posted 3/5/2009 2:21 p.m.
As village council members prepare to funnel tax money to a struggling auto dealership that has threatened to close its operation, several elected officials said it makes little difference whether the company’s owner actually needs a public subsidy.
The Currie Group, which operates two dealerships on Roosevelt Road in Forest Park, is looking for at least $1 million to help offset renovation costs that are part of a proposed restructuring to help counter a severe sales slump brought on by the recession.
But the president of the company, Abraham Jaffe, is one of the United Kingdom’s wealthiest citizens, and was worth an estimated $169.2 million in 2008.
Jaffe has operated a series of auto dealerships in the UK and Chicago area for decades, according to reports published in The Times of London and www.talkingmotors.com, which focuses on the auto industry. In an April 2008 update of the Sunday Times’ annual list of the UK’s wealthiest, Jaffe ranked 644th out of 2,000.
Within the automotive industry, Jaffe was the seventh richest entrepreneur, according to the 2008 reports.
“I was unaware of that fact, but it really doesn’t matter one way or the other,” Commissioner Mark Hosty said. “If they’re going to sell a Chrysler or a Chevy, I want them to do it in Forest Park.”
At least two commissioners said that car dealerships simply generate too much tax revenue for municipalities to let them close or walk away without a fight. If Forest Park doesn’t grant the Currie Group the tax breaks it’s looking for, someone else probably will, they said.
“Yeah, we may be principled,” Commissioner Marty Tellalian said of rejecting the dealership’s request, “but we may lose a business.”
An attorney for the Currie Group, Matt Creen, declined to provide details on the financial relationship between Jaffe and the Forest Park dealerships. Jaffe is listed with the Illinois Secretary of State’s office as the president of the local businesses.
During a Feb. 23 council meeting, Creen appeared alongside Currie Group Vice President Steven Jankelow to request a tax break from the village. The company has been losing money as a result of the frozen credit markets, they said, and it’s likely that a Chevrolet dealership at 7901 Roosevelt will be relocated to the Chrysler dealership at 8401 Roosevelt. The company expects to stop selling Chrysler vehicles altogether.
That consolidation will require a renovation of the showroom, which is expected to cost $2 million to $2.5 million. Creen and Jankelow told the council they would like the village to cover half the cost of that project.
Creen said during the council meeting that the nation is suffering from “bailout fatigue” given all the federal money being pumped into private ventures. However, in a March 4 e-mail to the Review he downplayed the role public funds would play in the company’s plans.
“We have not claimed we do not have the resources to fund our proposed renovations,” Creen said in an e-mailed statement. “To the contrary, we are trying to convince our owners to make an additional investment of $2 million or more as required by [General Motors] for our relocation, despite the fact they have already invested millions in Forest Park with little or no return. We have not asked for any money to fund these renovations, only a share of the future revenues we generate. Our investment will solidify our position in the village of Forest Park and give it the best opportunity to retain the benefits of the sales tax revenue we have generated and will continue to generate into the future as well as scores of jobs. Other villages would surely welcome us under these circumstances, but we remained committed to staying in Forest Park. Forest Park is not risking anything to agree to share the future revenues. If we do not generate the revenues, the village will not have to share anything with us.”
Tax breaks in the form of revenue sharing agreements are not unusual in Forest Park, but are most often used to lure new businesses. Bed, Bath and Beyond, on Harlem, and Living Word Christian Center, which owns the Forest Park Mall on Roosevelt, both secured tax breaks as an incentive to redevelop properties in Forest Park.
Trage Bros. on Madison, however, inked a deal in 2001 to use village funds to help pay for a renovation and expansion, according to a 2007 municipal audit.
For Tellalian, the key factor in deciding to grant Currie Group a tax break will be the company’s business plan. The American auto industry is in dire straits, and Tellalian said he’s looking for some assurance that the dealerships will be viable.
According to a Feb. 10 letter from the company’s vice president, Jankelow, the Chrysler dealership lost $462,800 in the last 12 months and the Chevrolet dealership lost some $80,000 in January alone.
However, said Tellalian, that the company is willing to sink several million dollars into a renovation suggests there is an expectation of success.
Hosty said he wants language in the agreement that guarantees Forest Park gets its money back if the company goes under.
Both Hosty and Tellalian said that, in general, these arrangements leave a sour taste in their mouths and smack of profiteering. Both mentioned Wal-Mart as an example of a company that can afford to expand without pitting communities against one another in a bid to offer the sweetest deal.
“Everyone has a sense of fairness,” Tellalian said. “I think [taxpayers] will look at this and say it’s not really fair.”
Forest Park Finance Director Judy Kovacs recently informed council members that they may be forced to cut several construction projects planned for 2009 to avoid deficits that would harm the village’s credit rating. Kovacs said she supports offering a tax break to Currie Group, though, because the village would lose too much if the company takes its business elsewhere.