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annually by O'Fallon's ensemble of automobile dealerships.
Because the city is not structured as a home rule municipality, the state of Illinois will not inform O'Fallon as to
specifically how much each dealership generates in sales tax revenues; O'Fallon is only privy to the total amount, said
Denton.
But Jack Schmitt Chevrolet of O'Fallon alone brought nearly $200,000 in sales tax revenue dollars to the city in 2004,
according to Kathy Federico, the dealership's executive manager.
"And this figure is just from sales by the Chevrolet dealership alone," she said. "The $200,000 doesn't include sales tax
revenue the city recognized from O'Fallon's Cadillac dealership."
Jack Schmitt, president of Jack Schmitt Automotive Group Inc., said the total sales tax dollars his multiple dealerships
bring O'Fallon each year totals approximately $500,000.
Schmitt credited the city for its aggressive strategy to attract not only car dealerships, but retail developments in
general.
"O'Fallon's aggressive recruiting of the dealerships has paid off," he said, "and it's noticeably strengthened O'Fallon's
economy. For instance, General Motors has a 25-year lease on the property for our two buildings here in O'Fallon (Chevrolet
and Cadillac). So whether we're here or not (Jack Schmitt), there will be a GM dealer here for that length of time."
In Illinois, a percentage of state sales tax assessed on the purchase of a vehicle is returned to the local municipality in
which the dealership is located. In contrast, in Missouri the share of sales tax generated via the sale of an automobile goes
to the municipality where the buyer lives.
Of Illinois' state sales tax on vehicles that totals 6.5 percent, the city of O'Fallon nets 1 percent.
Denton said it was an intentional strategy by the O'Fallon City Council to bring the dealerships here.
"If you look at our economic incentive policy we developed about eight years ago, that's clear. The idea of trying to bring
economic development to O'Fallon was to create high sales tax-generating businesses with low service demand. And car dealers
are the ideal. They bring a lot of sales tax revenue per unit sold, but they have low service demands; they don't require road
infrastructure and excess law enforcement services as some retail does."
The first dealer to set up shop along the I-64 corridor in O'Fallon was James Auffenberg Jr., president and CEO of the
Auffenberg Dealer Group of Illinois.
Auffenberg came to I-64 in 1989 and established the St. Clair Auto Mall.
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Making the decision to open a multi-brand dealership in O'Fallon, he said, meant making a major investment in
infrastructure and making a long-term commitment.
"When I look at some of the deals today like the one they passed in Fairview Heights for the mall, it's incredible," he
said. "When we came to this auto mall, the city of O'Fallon - which has been a real good partner - offered us up to $500,000
per store in rebates, and the city had a finite time period that you had to earn that back in."
That money had to be used for public infrastructure, Auffenberg added; it couldn't be used to build a private building.
"When you come to a piece of farmland and you have to put in storm sewers, sanitary sewers, roads, power lines, lighting
and sidewalks, it costs a lot of money to put the infrastructure in," he said. "In the early stages, our infrastructure costs
were far higher than we could recover. As we got into the later stages, the $500,000 figure diminished to $250,000 because
O'Fallon didn't have to be as aggressive. It had the dealerships and it didn't have to go out and attract them like it did in
the beginning."
One noticeable dealership missing in O'Fallon's array of dealers, said Denton, is a luxury car dealership - but that is
coming. Newbold Toyota currently sells BMWs, he said, but in the next few months Newbold will begin construction of a
freestanding BMW dealership.
"I think for a long time, automobile manufacturers didn't feel there was a market here for a luxury car dealership in
Southwestern Illinois," he said. "But thanks to all the residential and commercial growth, they're catching on."
Auffenberg also sees launching at least one luxury car dealership during his time at the helm.
"I think we would still like to grow and get a luxury car franchise," he said, "but at this point, most of the
manufacturers - whether it's Toyota with Lexus, or Nissan with Infinity or Honda with Acura - don't feel that this is where
they want to put their next point yet. All of those have two points in St. Louis and their market studies are saying they
should have a third point in St. Louis before they do one over here," Auffenberg added.
Although Southwestern Illinois' household incomes are improving, he said, they don't yet compare to Ellisville, Mo. or
Ballwin, Mo., where the average household income is over $100,000.
"In the market I serve, the average household income is a little less than $60,000," said Auffenberg. "Where do you want to
sell cars that cost $50,000? Where people make $100,000, or where they make $60,000? At some point as they grow, we'll get
included. It's just that we're not the highest priority with those income demographics. I think it will happen, and I
certainly hope it will happen in my working career."
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