What does Aurora think of using $325,000 in tax dollars to subsidize a grocery store?
A grocer who has two East Aurora locations wants to open another Carniceria El Paso Grande grocery store at the old Aldi location (2134 W Galena Blvd), and he is seeking financial assistance from the city.
During the finance committee meeting, agenda item 24-0528 prompted some tough questions. El Paso let its construction insurance lapse prior to a hailstorm that caused some water damage in the building. Additionally, the business owner paid $550,000 for a tortilla-making machine that was never delivered. The restaurant owners are contemplating legal action to recover the $550,000, and the term, “fraud” was used during the discussion. Item G. in the Redevelopment Agreement (RDA) articulates how your tax dollars will be spent (see graphic).
Consequently, the Grocer needs financial assistance to open the Grocery Store. Specifically, the Grocer needs $325,000 in order to open the Grocery Store for the following expenses:
- $115,000.00 to payoff of loan related to the replacement of the Grocery Store’s roof
- $30,000.00 to purchase two new kitchen exhaust hoods for the Grocery Store
- $180,000.00 to purchase merchandise to stock the Grocery Store”
From my conversations with people who live in Ward 5, there is a strong interest in having a Whole Foods or Trader Joe’s. I don’t recall anyone asking for a Carniceria El Paso Grande (admittedly I have not been in either of their east side locations). The argument of city staff is that the grocery store will generate new revenues from people patronizing this grocery store from neighboring communities like Oswego, Yorkville and Montgomery. I have serious doubts that we will draw $110,000/year in new grocery tax revenues from other communities. This location is more likely to reduce revenues from the existing Aldi, Jewel or other Aurora grocery stores, including east side El Paso grocery stores.
During the Finance Committee discussion Alderman Bugg made the strongest arguments that the fire in one of this grocer’s east side locations should be irrelevant because the fire damage was covered by insurance. He also debunked the COVID excuse because the property owners bought it during COVID and knew what they were getting into. Other committee members focused on the fraud case and wanted to make sure that there be language in the RDA that would allow recover some of the $325,000 if the grocer won the lawsuit. This language was added, but there is nothing that compels the owner to file suit, and it pays the bank loan first, then if anything is left, the city is paid back.
There is a slight pay-to-play element here in that El Paso donated $3,750 to Mayor Irvin and another $1,000 to Alderman Llamas. These are not huge amounts, but they reflect someone with a “little extra to give.” (Updated thanks to information provided by Hector Ochoa Jr).
Another misleading part of this is the language, “forgivable loan.” During the Committee of the Whole discussion another alderman said that the $325,000 would be paid back. That’s misleading because the “paying back” is happening with taxpayer dollars. When you go to the grocery store and buy goods you pay a tax on those goods. In this RDA, one half of a percent of the taxes you pay will be used to “repay” that “loan.” It is incredibly misleading because the taxpayers are giving the business owner $325,000 and then “repaying it” with tax dollars collected on grocery sales.
Finally, the Irvin Administration, at taxpayer expense, made a video to make the case in favor of the grocer’s subsidy. The perpetual spin and PR from this administration is part of the “pressure” that is used on council members to urge them to vote in favor of Irvin-backed legislation.
The upside of this proposal is that this is a local business owner. He has run two successful businesses on the east side, and I think in this instance he simply overextended himself, made some bad decisions and has had some bad luck.
Please feel free to weigh in and let me know what you think about this latest bailout.
John Laesch is known for his unwavering commitment to populist issues. With a strong focus on social justice, environmental sustainability, and inclusive policies, he seeks to lead Aurora toward a more equitable and forward-thinking future.