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HomeMy WebLinkAbout99-64 - Automobile Dealership Sales Tax Incentive Program• RESOLUTION NO. 99- 64 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF NEWPORT BEACH ESTABLISHING AN AUTOMOBILE DEALERSHIP SALES TAX INCENTIVE PROGRAM WHEREAS, the City Council adopted Resolution No. 96 -88, which Resolution established an Automobile Dealership Sales Tax Incentive Program; and WHEREAS, the City Council wishes to amend certain provisions of said Program; and WHEREAS, in adopting this Resolution the City Council makes the following findings and determinations: 1. FINDINGS: • A. The City has the legal authority to adopt this Resolution and provide qualified businesses with sales tax incentives by virtue of the laws and constitution of the State of California and the Charter of the City of Newport Beach. B. Public entities are, to an ever increasing extent, offering financial assistance and other incentives to encourage major retailers to locate, relocate or expand within their jurisdiction. C. The City of Newport Beach has adopted an aggressive program of economic development and endorses the concept of granting financial assistance to qualified businesses to preserve and enhance municipal revenues. D. Many public entities are able to readily provide financial assistance through redevelopment agencies, an option not presently available to Newport Beach. E. The provision of financial assistance through sales tax rebates will preserve and enhance municipal revenues in that: 1. Existing businesses will be encouraged to expand their operations and increase retail sales; is2. The City may retain existing businesses that would otherwise relocate to another jurisdiction; so • 3. The City will attract major sales tax generators that would otherwise remain in or relocate to, other jurisdictions; 4. Assistance will be provided only to reimburse businesses for project costs that may make their expansion in or relocation to Newport Beach feasible. 5. Assistance will only be provided from incremental sales tax generated by the business expansion or relocation. 6. Covenants and commitments associated with sales tax rebates require a long term commitment to the community and use of business practices which maximize sales tax revenue. NOW, THEREFORE, BE IT RESOLVED that the City Council of the City of Newport Beach establishes an Automobile Dealership Sales Tax Incentive Program, as follows: 1. DEFINITIONS: • A. "Automobile dealership" shall mean the business of selling new automobiles and /or light trucks pursuant to a franchise, license or similar agreement granted by an automobile manufacturer and ancillary uses such as the sale of previously owned vehicles, the repair of vehicles, the sales of parts and automotive merchandise, the leasing of new or used vehicles, and automobile dealership administration. B. "Base sales tax" shall mean: (i) that portion of sales taxes received by the City from the imposition of the Bradley -Bums Uniform Local Sales and Use Tax Law (commencing with section 7200 of the Revenue and Taxation Code of the State of California) from the operation of an automobile and /or light truck dealership on a parcel of land within the City of Newport Beach during the most recent twelve (12) month period (four quarters) for which sales tax revenue for the site has been reported to the City; or (ii) a sum established by the City Council based upon an analysis by staff or consultant of the amount of sales tax revenue that would be generated by the automobile and/ or light truck dealership in the absence of enhancements or improvements funded in whole or in part by the sales tax increment, but in no event less than the amount necessary to satisfy the criteria for a "qualified business." • C. "Business" means any organization, individual, association, corporation, partnership, venture or other entity, its subsidiary or affiliate which exists for profit making purposes and to otherwise secure economic advantage. -2- • D. "California Sales and Use Tax Law" shall mean the Bradley -Burns Uniform Local Sales and Use Tax Law (commencing with section 7200 of the Revenue and Taxation Code of the State of California), or any similar or successor law. E. "Commencement date" shall mean the date of a Reimbursement Agreement as indicated in the introductory paragraph to the Agreement, irrespective of the date of execution by one or all the parties. F. "Cost" or "Costs ", as applied to any project assisted pursuant to this program , means any and all reasonable or necessary costs incurred by or on behalf of a qualified business to: (i) Obtain any property right or interest necessary to operate an automobile dealership from a parcel of land in the City of Newport Beach (but excluding the monthly lease payments themselves and any insurance, taxes, and maintenance cost required to be paid by the qualified business pursuant to the lease or similar agreement); (ii) The construction, installation, reconstruction, rehabilitation or • improvement of the project, including all costs associated with feasibility studies, surveys, architectural and engineering services, and attorney's fees, construction insurance and bonds; (iii) Interest on any indebtedness incurred to implement the project prior to, during, and for a reasonable period of time following construction of the project; (iv) Reserves for debt service and for repairs, replacements, additions and improvements to the project; and (v) Such other costs or expenses as may be specifically provided for in the Reimbursement Agreement and which are related to the construction or operation of the project. G. "Fiscal year" shall mean any twelve (12) month period (four quarters) for which sales tax information is available from the State Board of Equalization commencing on the first day of any quarter. H. "Governmental approvals" shall mean permits, consents, authorizations and other entitlements required to be issued by, or obtained from, • any governmental agency having jurisdiction over the project. -3- • I. "Project development schedule" shall mean the schedule for completion of any Project. J. The term "Qualified business" shall mean any business which meets the following criteria: (i) Is authorized pursuant to an agreement with an automobile manufacturer to sell new automobiles within all or a portion of the City of Newport Beach; (ii) Has received all Governmental Approvals required for the operation of an automobile dealership within the City of Newport Beach; (iii) Operates or intends to operate, an automobile dealership whose primary business is the sale or lease of new motor vehicles. (iv) Is a major sales tax generator or produces evidence that the business could become a major sales tax generator. (v) Owns, leases or otherwise controls a parcel or parcels of land within the City of Newport Beach zoned for use as an automobile • dealership or establishes, to the satisfaction of the City, that an ownership or leasehold interest in property zoned for an automobile dealership will be acquired within a reasonable period of time. (vi) Demonstrates the financial ability to establish a new, or operate an expanded, automobile dealership including the financial ability to pay for project improvements as well as operating expenses from projected revenue and sales tax reimbursement. K. The term "quarter' means any one of the three month periods during a fiscal year commencing July 1, October 1, January 1 and April 1. L. "Sales tax increment" means, for each fiscal year the amount of sales and use taxes received by the City from the imposition of the Bradley -Burns Uniform Local Sales and Use Tax Law from the operation of the dealership(s) by the qualified business within the City of Newport Beach less the base sales tax revenue. The term sales tax increment shall not include any of the following: (i) Any portion of taxes derived by the City from the operation of the dealership(s) by the qualified business that the City may be required to pay, transfer, assign or allocate to any other entity or entities by • law (but not by contract or agreement); and -4- • (ii) The State Board of Equalization's administrative and processing fee attributable to the City's portion of such taxes (calculated at the same percentage as applied City wide). The sales tax increment shall not be considered to have been received by the City until the City is able to confirm receipt of the taxes from the State Board of Equalization. 2. APPLICATIONS: A. Any prospective qualified business may apply to the City for a reimbursement agreement pursuant to this Chapter by filing an application with the City in such form and setting forth such information as the City may require in order to enable the City to evaluate the applicant, the project, its proposed costs and public benefits. Such information shall include, without limitation, the following: (1) Information regarding the experience, expertise and financial capability of the business and its contractors, consultants and agents in completing and operating similar projects; (ii) Basic concept plans for the proposed project; • (iii) The status of agreements with manufacturers for the sale of new motor vehicles on the project site; and (iv) An economic pro forma detailing the sources and uses of funds, including, but not limited to, estimated development costs, operating income and expenses, sources of financing, and economic returns. B. Applications must be filed prior to City issuance of any building permit for the project. 3. PROCESSING AND ACCEPTANCE OF APPLICATIONS/ REIMBURSEMENT AGREEMENT: A. The City Manager shall, upon receipt of a completed application, evaluate the proposal and may direct analysis by an independent consultant. Following the evaluation of the proposal, the matter will be presented to the City Council. The City Council shall, in its sole discretion, have the authority to reject the application or approve a reimbursement agreement. The City Council may indicate its tentative acceptance of an application and direct staff to prepare a • reimbursement agreement to be submitted to City Council for review and approval. -5- • B. The City Council shall, in its sole discretion, have the authority to approve, disapprove or modify the proposed reimbursement agreement. The reimbursement agreement shall be consistent with the terms and provisions of this program and shall: (1) provide for rebates to qualified businesses of a portion of the sales tax increment, if any; (2) specify that the rebate shall be for the sole purpose of reimbursing the qualified businesses for costs incurred for a project necessary to make the project financially feasible; (3) specify that the rebate shall expire on the earliest of the following dates: (a) ten (10) years from the commencement of operation of a project; or (b) full reimbursement of the costs incurred by a qualified business for a project that the City has agreed to reimburse; (c) such earlier date as may be agreed to by the City and the qualified business; or (d) the end of the City's then - current fiscal year, unless the City appropriates funds for the rebate for the following fiscal year; (4) identify the costs incurred or to be incurred by a qualified business for a project; (5) contain a covenant by the qualified business to complete the project, to remain and operate the project for a specified period of time; (6) contain a covenant to maximize the City as the point - of -sale for goods and services sold as a result of business activities on any portion of the project site consistent with applicable requirement of law. 4. ADDITIONAL POWERS: • In addition to all other powers specifically enumerated by this Resolution, the City Council is authorized to contract for and do all things necessary or convenient to carry out the purposes of this Resolution, provided, however, that the City shall not have the power to operate a project under this Resolution as a business. S. ADDITIONAL INCENTIVES: The City Council may in a reimbursement agreement waive payment of all or a portion of any fee otherwise required to be paid to the City pursuant to the Newport Beach Municipal Code. 6. CONFIDENTIALITY PROVISION: Documents provided to the City by any prospective qualified business, or pursuant to a reimbursement agreement, and which are deemed proprietary in nature shall be considered confidential and shall not be disclosed unless required • by law. 0 • 7. INTERPRETATION: This program shall not be interpreted, construed or applied to conflict with any provision of State law which preempts local regulation of the subject matter. J • ADOPTED, this 13th day of September 4ennis c ' r 'Neil , Mayor ATTEST: LaVonne, City Clerk F: \users\catXshared\da\ Resolution \AutoSalesTax \090999.doc -7- • STATE OF CALIFORNIA } COUNTY OF ORANGE } ss. CITY OF NEWPORT BEACH } I, LAVONNE M. HARKLESS, City Clerk of the City of Newport Beach, California, do hereby certify that the whole number of members of the City Council is seven; that the foregoing resolution, being Resolution No. 99 -64, was duly and regularly introduced before and adopted by the City Council of said City at a regular meeting of said Council, duly and regularly held on the 13th day of September, 1999, and that the same was so passed and adopted by the following vote, to wit: Ayes: Adams, Glover, Debay, Ridgeway, Noyes, Mayor O'Neil Noes: Thomson Absent: None Abstain: None IN WITNESS WHEREOF, I have hereunto subscribed my name and affixed the is official seal of said City this 14th day of September, 1999. City Clerk Newport Beach, California (Seal) •