Would Vernon Hills company leave town over rejection of $1.37 million tax deal?
Though praised as a good corporate neighbor, American Hotel Register Co. representatives failed to persuade Vernon Hills trustees to hand over $1.37 million in sales taxes for interior building upgrades the company believes will help it attract millennial workers.
Tight economic times in the village and an aversion to what would be a precedent-setting agreement were cited as reasons to deny the request, although some trustees said they remain willing to negotiate with the firm.
Whether that will happen is undetermined, as an occasionally animated hourlong presentation and back-and-forth with company officials Wednesday ended with no clear answer. Mayor Roger Byrne ended the session suggesting he had a possible solution but did not elaborate.
"I'll talk with the (village) board and staff and see if my idea floats," he said. He declined Thursday to discuss his idea.
"We've got to meet with the powers that be at American Hotel," he said.
Bob Baker, the company's general counsel, said the American Hotel's board will meet next week and could discus moving its headquarters to Chicago.
"I felt like it was Oak Brook telling McDonald's that they better get out of town," he said Thursday.
The privately held company, the nation's largest distributor of hospitality products, wants $1.37 million in sales tax rebates over 10 years to help fund a $3.3 million interior upgrade at its headquarters, 100 S. Milwaukee Ave.
Despite paying an average salary of $76,894, American Hotel Register is competing against companies in downtown Chicago for top tech help in areas such as e-commerce and software analytics, according Baker.
Suburbs are being abandoned for urban centers and young professionals have come to expect certain workplace amenities like a coffee bar or lounge area, he added.
"These are the highest-paying starting jobs in the country, and guess what? They don't want to come to Vernon Hills," Baker said. "We need to offer comparable amenities."
Company representatives have twice been informally rejected by village leaders, but Baker said he wanted to air the issue and make the case publicly. He was joined by several top company executives.
Vernon Hills does not have a village property tax and is heavily dependent on sales tax from its vast base of retail stores, restaurants and other businesses. It has entered into several sales tax-sharing agreements in the past, but not for solely interior improvements.
"This is a precedent I don't agree with at all," Byrne said.
Baker highlighted previous sales tax-sharing agreements that ended with the recipients closing, and he argued that the village treats business unequally.
"You favor (retail) over us," he said. Keeping the company competitive will grow the village's employee base and attract residents to Vernon Hills, he added.
Longtime Trustee Thom Koch Jr., who was first elected in 1993, said past agreements were to fill vacancies. They represented new tax revenue, he added, and were supported because "half of something is still more than half of nothing."
"You're as good a corporate citizen as I've ever dealt with," he told Baker. However, the timing of the request "couldn't be worse" as the village deals with sales tax issues and the loss of revenue to the state.
"The level (of incentive) you're asking is too high," Koch added.
Others were skeptical upgrading the interior would have the desired effect.
"The only thing that works is to have a presence downtown. I don't care what amenities you put into this facility," said Trustee Jim Schultz. "In my mind, it's not going to pay off."
Baker on Thursday said the village's reliance on retail incentives is "incredibly short-term and dangerous thinking."