Skokie Carvana Tower On Hold After Suspension Of Illinois Dealership License

SKOKIE, IL — After the Illinois Secretary of State's office suspended online used car dealership Carvana's license to do business in Illinois, Skokie village officials said they have halted their review of the company's applications for building permits.

The Secretary of State's office opened an investigation into the business practices at the publicly traded Tempe, Arizona-based company earlier this year after receiving about 95 signed complaints, according to spokesperson Henry Haupt.

In response to the probe, the office's enforcement arm issued a temporary suspension order for the company's Illinois dealer's license "for misuse of issuing out-of-state temporary registration permits and for failing to transfer titles," Haupt said.

The announcement adds to the uncertainty surrounding Carvana's plans to erect a 134-foot glass "car vending machine" between the Edens Expressway and Harms Woods nature preserve.

Despite complaints from bird advocates, nearby condominium residents and others, the company received near-unanimous approval of its plan from the Skokie Village Board in February and closed on its purchase of the property last month.

But earlier this month, Carvana laid off one in six of its employees as it faces record financial losses and sharp declines in its stock price.

And even before the news that state regulators had suspended its license to sell cars, company officials were unwilling to say whether they still planned to build the Skokie tower.

The company posted a $506 million loss in the first quarter of the year and subsequently eliminated the jobs of 2,500 people, about 12 percent of its workforce, reportedly notifying most of its laid off employees over Zoom.

In addition to the planned Skokie facility, Carvana currently operates a "vending machine" tower in Oak Brook.

"During the suspension order, Carvana may not sell vehicles in Illinois," according to the secretary of state's spokesperson. "Vehicles that have already been purchased, but not yet delivered can still be delivered to the purchasers during the suspension, but no new vehicle sales can occur in Illinois during the suspension order."

In Skokie, the suspension of the company's business license means the village's building department will take no actions to review plans for site work, utility work or any other construction plans for the facility until the company's issues with state regulators are resolved, according to a letter from Corporation Counsel Michael Lorge to Carvana Senior Director of Real Estate and Development Bret Sassenberg and Construction Project Manager Cara Wegner.

"The Village of Skokie has determined that this is a direct violation of Village Code and of the Village Ordinance approving your site plan," Lorge told the company officials.

The village attorney said Carvana had submitted plans to begin work at the tower site, but they have yet to be approved. Lorge said the site work construction permit submission was returned on April 11 with comments, while the general building permit was not approved because it was missing information.

"Finally, we instruct that you do not proceed with any work on the site and that you make no further submissions or have any further contact with the Village of Skokie Building Department until such time as I inform you that you may contact the Department again," Lorge said.

Carvana has also faced sanctions or threats of discipline from state regulators for similar issues in Florida, Michigan and North Carolina, according to Barron's, which first reported news of the suspension of the company's license.

Veronica Cardenas, a senior public relations specialist for Carvana, provided the following statement on behalf of the company in response to the suspension order.

"Carvana has compliantly operated as a licensed dealer and good corporate citizen in the State of Illinois for several years, and we strongly disagree with the State’s characterization of both the facts and the law leading to this action," it said. "We are actively working with the State to resolve this issue, and they have agreed that we will continue delivering already purchased vehicles. We look forward to resolving this issue with minimal disruption to customers."

Related: 'Right-Sizing' Carvana Won't Say If It Still Plans To Build Tower In Skokie