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Highland Park staff outline proposed sales‑tax rebate for McGrath Kia at 250 Skokie Valley Road
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Summary
City staff described a proposed sales tax rebate for McGrath Kia that would return incremental city sales tax above a $500,000 baseline, recommend a 50/50 revenue split, and cap payouts at $2 million over a term of up to 12 years; staff will return a formal agreement to a future agenda.
City staff presented details of a proposed sales tax rebate agreement for WKN Automotive Inc., doing business as McGrath Kia, at 250 Skokie Valley Road during the Committee of the Whole meeting on Jan. 12, 2026. Staff asked council for feedback on rebate maximums, revenue splits and the draft term before returning a formal agreement for consideration.
Staff said the city’s baseline for McGrath was set at $500,000 (the city portion of 1% sales tax). Staff estimated roughly $300,000 could be returned to the applicant under the projected scenario, and recommended a 50/50 revenue split on incremental sales tax above the CPI‑adjusted baseline. Staff proposed a maximum payout of $2,000,000 and a term of up to 12 years, with payments stopping earlier if the cap is reached.
A McGrath Kia representative described the corporate‑mandated showroom and service upgrades required at the site and estimated total project investment at about $3.8 million. The applicant said the upgrades are required by Kia corporate and not purely a local initiative: "This is not something they are choosing to do on their own," the representative said.
Corporation counsel warned that rebate payments are not a city obligation outside received tax revenue: "The payment of the rebate is not a city obligation. It is not a general fund obligation. It is only an obligation if there is sales tax generated and we only pay it when we receive the sales tax from the state," counsel said.
Council members asked for clarifications about the math behind the baseline, CPI adjustments, and what the city’s net revenues would be after any rebate. Staff explained that the rebate applies only to the annual increment above the baseline (example: if the city receives $550,000 in a year, the $50,000 increment is the pool subject to the revenue split) and said the city has budgeted funds in the 2026 budget to account for a potential agreement (payouts would occur in later years if triggered).
Staff described eligibility thresholds used historically (investment minimums of $75,000 for existing dealerships and $250,000 for new dealerships, plus documentation that the project will generate new incremental sales tax) and noted the city uses applicant projections plus state returns and comparable dealerships to model long‑term outcomes. Staff also said packet material includes examples dating back to 2005 and that they can provide additional aggregated analysis on past program outcomes.
Next steps: based on council feedback staff will continue negotiations with McGrath and prepare a formal development and rebate agreement, which will be brought back to the council on a future agenda for formal consideration and possible vote.
