STERLING – Kunes and the city of Sterling are partnering to bring growth to the dealership, and to a stretch of Lincolnway that has lost several businesses in the last few years.
Kunes plans to expand by splitting one of its two Sterling dealerships in two, creating a new-car sales and service facility at 3200 E. Lincolnway.
An agreement between the two that provides the dealership with economic incentives, in the works for 2 months, passed unanimously at Tuesday's City Council meeting.
As part of the deal, the city will provide a graduated sales tax rebate for 15 years, to help pay for the $3.2 million Kunes says is needed to buy and refurbish the Sauk Valley Media building.
In exchange for the financial assistance, the company agrees to maintain its current dealership at 2502 N. Locust St. for at least 5 years as a used car site, and to create 10 to 12 full-time jobs.
Kunes also agrees to have the new site, at which it will continue to sell new Chryslers, Buicks, Jeeps and Rams, up and running by Dec. 31, 2020.
By moving into a larger, more high-profile location, Kunes not only will be able to sell more cars, as it asserts in the agreement, but also will be able to add more bays and expand its repair service, CFO David Hayes said at the meeting.
In fact, at 55,000 square feet, the new lot will be the largest in the Kunes Country Auto Group network of 16 locations, Hayes said.
Providing incentives "to induce Kunes to undertake and complete its project" will spur economic development, enhance the city's tax base and help with job retention and creation, the city said in the agreement.
"We're adding jobs, and they're good-paying jobs," Mayor Skip Lee said. "That's a very visible corner leading into one of our biggest commercial districts."
The benefits of such economic development could trickle down to the Northland Mall area and beyond, he said.
Here's how it will work: The city and Kunes set a baseline of about $166,000, which both sides agreed is the amount of retail sales tax made at the Lynn/Locust dealership in 2018.
Under the agreement, the city will give Kunes back a portion of the sales tax the state gives the city that's generated by sales made at that location, above that $166,000 baseline.
For 6 years, Kunes will get 80% back. That number then drops to 75% for 2 years, to 70% for 2 years, and by 10% in each of the subsequent 5 years.
Hayes declined to cite the cost of the building.
In Sterling, Kunes also owns and operates Kunes Country Ford Lincoln, 3 blocks north of the Lynn and Locust location, at 2811 N. Locust St., and 2 miles west of the Lincolnway/Lynn Boulevard site.
It is not involved in the agreement, and there are no changes in the works there, Hayes said.
"We want both areas to be vibrant," he said.
SVM, a division of Shaw Media, will be consolidating the bulk of its operations into its building at 113 S. Peoria Ave. in Dixon, while maintaining a distribution center in Sterling, the location of which is being determined, and a customer service location at 100 E. Main St. in Morrison.
Lincolnway/state Route 2, the city's major retail hub, has seen a loss of several large businesses in the last few years, including Staples, Fashion Bug, Kmart, Bergner's, JCPenney and Sears.
Kunes Country Auto Group, headquartered in Delavan, Wisconsin, has 16 locations in Illinois and Wisconsin, including dealerships in Morrison, Oregon and Mount Carroll, as well as Macomb, Monmouth, Antioch, Woodstock and Quincy (where there also are two sites).
In Wisconsin, Kunes is in Elkhorn and Stoughton, and has two locations in Delavan.
Kunes came to the Sauk Valley in April 2015, when it bought the Sterling, Morrison and Oregon locations from the Pete Harkness Auto Group. It has owned the Mount Carroll dealership, at 764 W. Commercial St., since 2005.
The family-owned business, which was founded in Delavan in 1996, sells Ford, Lincoln, Chevrolet, Buick, GMC, Cadillac, Chrysler, Dodge, Jeep, and Ram brands.