St. Charles alderpersons recommend amending $5.2 million incentive for new McGrath Honda dealership

A $5.2 million incentive that McGrath Honda received from the city of St. Charles to build a new dealership on the site that formerly housed the Pheasant Run Mega Center is being amended because the dealership found other financing for the project.

McGrath Honda recently opened at its new location. The dealership received a $5.2 million incentive from the city to redevelop the 12-acre site and expand the former Mega Center building into a 52,000-plus-square-foot dealership and service facility.

St. Charles Economic Development Director Derek Conley told alderpersons during the City Council’s Planning and Development Committee meeting Monday that the incentive offset extraordinary redevelopment costs, including initial public infrastructure improvements to electric, water and sanitary sewer, to better position the remainder of the former resort property for redevelopment. Part of the incentive included reimbursing McGrath $1.2 million for public utility improvements.

The original agreement called for a total incentive of $5.2 million paid over 15 years. Gary McGrath, the president and owner of McGrath Honda of St. Charles, has requested an amendment to the original agreement.

“Mr. McGrath has indicated that he was able to finance this project through a combination of private funds and a commercial mortgage loan and no longer needs the $1.2 million for utility improvements in the form of an upfront reimbursement,” Conley told alderpersons.

The amendment converts the $1,256,000 from an upfront reimbursement to a sales tax sharing reimbursement.

“This effectively means the reimbursement for the public infrastructure will be distributed over the next 15 years from the sales tax generated from the Honda dealership,” Conley said.

McGrath also has agreed to reduce the maximum total incentive amount from $5.2 million to $5.1 million, Conley said.

Alderpersons unanimously recommended amending the incentive agreement, which will go to the full City Council for approval.