Council Weighs Lifting Sales Tax Moratorium

An end to the moratorium on sales tax sharing agreements is being considered by the Highland Park City Council in light of a request by . 

Sales tax sharing agreements have been enacted between larger new businesses and the city as an incentive to locate in Highland Park. If the business achieves a set level of sales, it receives a rebate on the taxes it collects. 

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There has been a moratorium since 2008 because of the overall economic conditions, according to City Manager Dave Limardi.

The City Council has started an exploratory process to consider lifting the moratorium, which it discussed at Monday’s Committee of the Whole meeting. 

The Porsche Exchange is planning an expansion and wants to use a sales tax sharing agreement to help finance the effort. Its management said locations outside of Highland Park were being considered, but the city wants it to stay.

“It’s important to attract businesses to Highland Park to keep our tax base in place,” said  who is spearheading the city’s study at the request of Mayor Nancy Rotering.

“On the surface, it looks like the city is giving away tax dollars but if you lose it [the business], it is a total loss,” he noted.

In the past, the tax deals have been used mainly to entice new businesses to locate in the city. So  said Monday he was concerned that lifting the moratorium for an expansion could cause other businesses to ask for similar arrangements. 

“Before we make any change it’s best to be extra cautious,” Kirsch said.

The councilman noted that other automobile dealers such as Muller Honda might ask for the same consideration as The Porsche Exchange.

“Mr. [Mike] Muller is a formidable businessman," Kirsch said. "Mr. Muller will come here and say, 'I want my money now.' ” 

Before the meeting was over, the City Council directed Frank to proceed with caution and to gather more facts.

In the past, each agreement was individually negotiated, according to Frank. However, council members expressed a need for more uniformity. 

“We need more transparency than we’ve had in the past so people know everyone is treated equally,” Frank said. Without that, he warned, “there will be a level of unfairness.” 

On Tuesday, the city's Business and Economic Development Commission voted unanimously to recommend that the Council lift the moratorium on sales tax rebate agreements, according to Frank. 

In other business, the City Council reviewed a report from Finance Director Elizabeth Holleb, who detailed the options for paying the city's obligations to the pension fund for police officers and firefighters. 

None of the proposals would require an increase in the property tax levy, she said.