UAL Accused of "Sham Business"
01-14-2013, 03:55 AM
#1
Keep Calm Chive ON
Thread Starter
Joined APC: Feb 2008
Position: Boeing's Plastic Jet Button Pusher - 787
Posts: 2,086
UAL Accused of "Sham Business"
01-14-2013, 08:18 AM
#5
Gets Weekends Off
Joined APC: Jan 2012
Posts: 203
Originally Posted by FlyingNasaForm
Good for UAL. To me not giving the gov't money is like not giving an addict their drug.
01-14-2013, 05:02 PM
#7
Gets Weekends Off
Joined APC: Feb 2008
Posts: 332
American operates a fuel purchasing division right down the street from ours. United got the bad press first. If the city pushes this too hard we will move headquarters back to the thriving, tax friendly city of Houston.
01-14-2013, 05:12 PM
#8
Chief Jeppesen Updater
Joined APC: Oct 2005
Position: Executive Transport Driver
Posts: 3,080
Originally Posted by IAHB756
American operates a fuel purchasing division right down the street from ours. United got the bad press first. If the city pushes this too hard we will move headquarters back to the thriving, tax friendly city of Houston.
01-14-2013, 05:54 PM
#9
Line Holder
Joined APC: Jan 2011
Posts: 55
Sycamore flying high on sales tax from airline fuel
By NICOLE WESKERNA - [email protected]
Created: Thursday, August 25, 2011 5:30 a.m. CST
Updated: Thursday, August 25, 2011 2:16 p.m. CST
SYCAMORE – Agreements among Sycamore and two major airline subsidiaries have helped the city raise millions in sales tax revenues in the past decade.
Although the two 25-year agreements mean lost revenue for Chicago, where the airlines operate, they’ve proven to be a boon to Sycamore.
Sycamore has had an agreement with a subsidiary of American Airlines called American Aviation Supply since 2004. An agreement has been in place with the United Aviation Fuel Corp., a subsidiary of United Airlines, since 2001.
The subsidiaries purchase their fuel in Sycamore, which has a sales tax rate of 8 percent, rather than purchasing fuel in Chicago, which has a sales tax rate of 9.75 percent.
In Illinois, sales tax is applied where orders are accepted, allowing airlines to capture the 8 percent sales tax rate for fuel purchases instead of the 9.75 percent rate in their city of operation.
Sycamore has captured millions of dollars through the agreements. According to a document provided by Sycamore City Manager Bill Nicklas, the city’s local share of tax revenue from airline fuel sales has garnered about $6.1 million since 2001. In 2010, the city netted $818,476 through the tax revenue from airline fuels.
“We always use the revenue for capital purposes,” Sycamore Mayor Ken Mundy said.
The revenue has gone toward sidewalk, street, sewer and wastewater treatment plant improvements in past years, Mundy said. None of the money, which he said the city considers “extraordinary income,” is used for operation purposes such as paying employee salaries.
More recently, the revenue covered an approximately $20,000 agreement between the city and the Voluntary Action Center to fund running a daily bus line through the city, Mundy said.
“I won’t say [these projects] wouldn’t have happened,” Mundy said, “but we were able to use some of the funds to accelerate them a little faster.”
United Airlines spokesman Mike Trevino confirmed United Airlines Fuel Corp. has been operating an office in Sycamore where the company makes its jet fuel purchases since 2001. He declined to comment about why the company chose Sycamore over Chicago or any other surrounding city. He said fuel is one of the company’s largest expenditures.
An American Airlines spokesman declined to comment about its fuel purchases in Sycamore.
The American Aviation Supply company operates an “order acceptance center” at the Sycamore Center, according to 2004 city council meeting minutes. The office, according to the document, is a place where employees review, process and approve purchase orders. The city receives about $1,000 a month in rent for the office.
“In the last 10 years, it’s made a tremendous difference in terms of capital expenditures,” Nicklas said.
Nicklas said the revenues have helped purchase ambulances, a firetruck and about a dozen police squad cars. He acknowledged there are some shams out there when it comes to similar agreements, but Mundy said the agreement was made legally through the Illinois Department of Revenue.
“It’s a pretty common practice,” said Roger Hopkins, who was the executive director of the DeKalb County Economic Development Corp. when the deals occurred.
Hopkins said the county has lost sales tax revenues to surrounding communities with better tax incentives, such as Libertyville, so the incentives can go both ways.
Of the 8 percent sales tax, Sycamore keeps 2.75 percent of the revenue. According to an updated United Aviation Fuel Corp. ordinance from 2003, the city expected its share of the revenue to reach higher than $500,000 per year between the year 2020 and the end of the contract in 2026. The agreement with American Aviation Supply goes through 2030.
Sycamore isn’t the only government entity that profits from the agreements. Gary Hanson, deputy county administrator, said 0.25 percent of the revenue gained by Sycamore goes to the county, generating approximately $2 million each year from the fuel sales alone. Those funds then go into the county’s operating fund, he said.
Mundy said, especially in this business climate, companies are looking to use every tax exemption and exclusion possible. What it boils down to, he said, was saving enough funds to help people continue working.
“Our economic future depends on how many jobs we can find,” Mundy said.
By NICOLE WESKERNA - [email protected]
Created: Thursday, August 25, 2011 5:30 a.m. CST
Updated: Thursday, August 25, 2011 2:16 p.m. CST
SYCAMORE – Agreements among Sycamore and two major airline subsidiaries have helped the city raise millions in sales tax revenues in the past decade.
Although the two 25-year agreements mean lost revenue for Chicago, where the airlines operate, they’ve proven to be a boon to Sycamore.
Sycamore has had an agreement with a subsidiary of American Airlines called American Aviation Supply since 2004. An agreement has been in place with the United Aviation Fuel Corp., a subsidiary of United Airlines, since 2001.
The subsidiaries purchase their fuel in Sycamore, which has a sales tax rate of 8 percent, rather than purchasing fuel in Chicago, which has a sales tax rate of 9.75 percent.
In Illinois, sales tax is applied where orders are accepted, allowing airlines to capture the 8 percent sales tax rate for fuel purchases instead of the 9.75 percent rate in their city of operation.
Sycamore has captured millions of dollars through the agreements. According to a document provided by Sycamore City Manager Bill Nicklas, the city’s local share of tax revenue from airline fuel sales has garnered about $6.1 million since 2001. In 2010, the city netted $818,476 through the tax revenue from airline fuels.
“We always use the revenue for capital purposes,” Sycamore Mayor Ken Mundy said.
The revenue has gone toward sidewalk, street, sewer and wastewater treatment plant improvements in past years, Mundy said. None of the money, which he said the city considers “extraordinary income,” is used for operation purposes such as paying employee salaries.
More recently, the revenue covered an approximately $20,000 agreement between the city and the Voluntary Action Center to fund running a daily bus line through the city, Mundy said.
“I won’t say [these projects] wouldn’t have happened,” Mundy said, “but we were able to use some of the funds to accelerate them a little faster.”
United Airlines spokesman Mike Trevino confirmed United Airlines Fuel Corp. has been operating an office in Sycamore where the company makes its jet fuel purchases since 2001. He declined to comment about why the company chose Sycamore over Chicago or any other surrounding city. He said fuel is one of the company’s largest expenditures.
An American Airlines spokesman declined to comment about its fuel purchases in Sycamore.
The American Aviation Supply company operates an “order acceptance center” at the Sycamore Center, according to 2004 city council meeting minutes. The office, according to the document, is a place where employees review, process and approve purchase orders. The city receives about $1,000 a month in rent for the office.
“In the last 10 years, it’s made a tremendous difference in terms of capital expenditures,” Nicklas said.
Nicklas said the revenues have helped purchase ambulances, a firetruck and about a dozen police squad cars. He acknowledged there are some shams out there when it comes to similar agreements, but Mundy said the agreement was made legally through the Illinois Department of Revenue.
“It’s a pretty common practice,” said Roger Hopkins, who was the executive director of the DeKalb County Economic Development Corp. when the deals occurred.
Hopkins said the county has lost sales tax revenues to surrounding communities with better tax incentives, such as Libertyville, so the incentives can go both ways.
Of the 8 percent sales tax, Sycamore keeps 2.75 percent of the revenue. According to an updated United Aviation Fuel Corp. ordinance from 2003, the city expected its share of the revenue to reach higher than $500,000 per year between the year 2020 and the end of the contract in 2026. The agreement with American Aviation Supply goes through 2030.
Sycamore isn’t the only government entity that profits from the agreements. Gary Hanson, deputy county administrator, said 0.25 percent of the revenue gained by Sycamore goes to the county, generating approximately $2 million each year from the fuel sales alone. Those funds then go into the county’s operating fund, he said.
Mundy said, especially in this business climate, companies are looking to use every tax exemption and exclusion possible. What it boils down to, he said, was saving enough funds to help people continue working.
“Our economic future depends on how many jobs we can find,” Mundy said.
01-14-2013, 09:18 PM
#10
Gets Weekends Off
Joined APC: Nov 2006
Posts: 492
Originally Posted by FlyingNasaForm
Good for UAL. To me not giving the gov't money is like not giving an addict their drug.
Originally Posted by CleCapt
Just remember the same guys that are interpreting the govt rules differently are the same guys that will see your shiny new contract differently.
They have cost Cook County an additional $60 million and Metra, Pace and the Chicago Transit Authority another $96 million, according to the RTA, which oversees the three agencies and relies on sales tax revenue for much of its funding.
So United saves a few million, and now the CTA is raising fares, while Metra is looking at raising fares as well.
Big corporations save money, which is passed on to the consumer.
HAHA!
Thread
Thread Starter
Forum
Replies
Last Post
EngineOut
Regional
153
05-10-2017 10:12 AM
