RES-2014-104 RESOLUTION NO. 2014-104
A RESOLUTION OF THE CITY COUNCIL OF THE
CITY OF ANAHEIM ESTABLISHING AN
AUTOMOBILE DEALERSHIP ECONOMIC
ASSISTANCE PROGRAM AND DETERMINING SAID
ACTION IS EXEMPT FROM THE CALIFORNIA
ENVIRONMENTAL QUALITY ACT PURSUANT TO
CEQA GUIDELINES SECTIONS 15060(c)(2) AND
15060(c)(3) AND NOT A PROJECT UNDER SECTION
15378
WHEREAS, existing law prohibits cities from subsidizing the relocation of big box
retailers and auto malls within the same market area, but otherwise generally allows local
governments to make their own decisions regarding local economic development matters; and
WHEREAS, the loss of redevelopment has left the City of Anaheim ( "City "), as well as
all cities within the State, with a loss of local resources to encourage economic development; and
WHEREAS, based upon the decision to terminate redevelopment statewide, the
Governor and State Legislature recognized the necessity for local governments to encourage
employment and retain jobs and businesses by giving economic assistance to businesses and the
importance of facilitating public input by requiring local agencies to provide specified
information to the public before approving any economic assistance of $100,000 or more and to
review, hold hearings, and provide reports at specified intervals. These requirements were
codified by the passage of Assembly Bill 562 on October 13, 2013, which went into effect on
January 1, 2014 and added Section 53083 to the California Government Code (herein referred to
as "AB 562 "); and
WHEREAS, the Bradley -Burns Uniform Local Sales and Use Tax Law (California
Revenue and Tax Code §7200 et seq.) applies to the sales of tangible personal property in which
a percentage of California's sales and use tax rate is distributed back to the jurisdiction where
sales were generated to support local general funds. For many jurisdictions, including the City,
this amount is one percent (1 %). Sales tax is payable to the City from the State Board of
Equalization; and
WHEREAS, the City Council recognizes the vulnerable economic recovery that the
federal, state and local governments are experiencing and that the automobile dealerships located
within the City are one of the major contributors to the City's general fund, the loss of which
would be detrimental and undermine the City's economic recovery and cause significant impacts
to services; and
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WHEREAS, the City Council desires to be proactive in retaining automobile
dealerships that currently exist within the City, as well as encouraging new automobile
dealerships desiring to locate within the jurisdiction of the City to do so, by establishing an
equitable economic development program that will assist qualified dealerships (herein referred to
interchangeably as the "Automobile Dealership Economic Assistance Program" or the
"Program "); and
WHEREAS, sales tax revenue is an important resource for the City that helps fund
critical public services; and
WHEREAS, sales tax revenue generated to the City from the City's Resort Area has
historically been a great asset to the public and to City residents, and promises to remain strong
and viable going forward; and
WHEREAS, encouraging and developing other businesses in the City that are, or can be,
key sources of sales tax revenue would diversify and increase revenue sources for the City's
general fund, which supports public services provided by the City to its residents and local
businesses; and
WHEREAS, the expansion of existing automobile dealerships and the opening and
operation of new automobile dealerships within the City will attract both local and regional
shoppers and can reasonably be expected to generate increased sales tax revenues to the City.
Moreover, the expansion of existing automobile dealerships and the opening and operation of
new automobile dealerships will increase the economic competitiveness of the City, maximize
public revenues, and maintain and enhance a consistent business - friendly environment; and
WHEREAS, during a recent economic downturn, the City's revenue stream suffered
when several automobile dealerships closed, and the market opportunities created by those
closures may now present an opportunity for existing automobile dealerships to expand and new
automobile dealerships to locate in the City; and
WHEREAS, the City desires to incentivize automobile dealership development in the
City by providing economic assistance equal to a portion of the increased sales tax revenues
generated by new and expanding dealerships by establishing the Automobile Dealership
Economic Assistance Program; and
WHEREAS, the City Council finds and determines that the establishment of the
Automobile Dealership Economic Assistance Program by the adoption of this resolution is not
subject to the California Environmental Quality Act of 1970, as amended (Public Resources
Code Section 21000 et seq.; herein referred to as "CEQA "), pursuant to Sections 15060(c)(2)
and 15060(c)(3) of the State of California Guidelines for Implementation of the California
Environmental Quality Act (California Code of Regulations, Title 14, Chapter 3; herein referred
to as the "CEQA Guidelines "), because it will not result in a direct or reasonably foreseeable
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indirect physical change in the environment and is not a project as defined in Section 15378 of
the CEQA Guidelines; and
WHEREAS, the City Council determines that the Automobile Dealership Economic
Assistance Program is consistent with the City's economic goals and strategies, is a matter of
City -wide importance, is necessary for the preservation and protection of the public health,
safety or welfare of the community, and is in accord with the public purposes and provisions of
applicable State and local laws and requirements.
NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Anaheim
that the foregoing recitals are true and correct and constitute a substantive part of this Resolution.
BE IT FURTHER RESOLVED that the Automobile Dealership Economic Assistance
Program ( "Program ") is established as follows:
Section 1. Purpose of Program and Findings.
The purpose of the Automobile Dealership Economic Assistance Program is to provide
economic development incentives for the expansion of existing Automobile Dealerships and the
opening and operation of new Automobile Dealerships within the City that (i) provide desirable
and attractive shopping experiences for both local and regional shoppers, (ii) promote job
creation opportunities in the City, (iii) encourage property upgrades and enhancements in the
City's commercial and industrial areas, (iv) can reasonably be expected to generate increased
Sales Tax revenue to the City, which will support the public services the City provides to its
residents, visitors, and businesses, (v) increase the economic competitiveness of the City, and
(vi) maintain and enhance a consistent business - friendly environment.
Section 2. Definitions.
For the purposes of this Resolution, the following definitions shall apply:
1. "Automobile Dealership" or "Dealership" means any existing or new business
selling or intending to sell new passenger vehicles, sport utility vehicles and/or pickup
trucks (collectively referred to as "motor vehicles ") pursuant to a California Vehicle
Dealer License and a franchise, license or similar agreement granted by a motor vehicle
manufacturer within the City and engaging in related ancillary activities such as the sale
of previously owned motor vehicles, the repair of motor vehicles, the sale of parts and
automotive merchandise, the leasing of new or used motor vehicles, and motor vehicle
dealership administration.
2. "City Assistance" means payments to be made by the City to the Owner or
Developer of an Automobile Dealership pursuant to a Participation Agreement equal to
forty (40 %) of the Sales Tax Increment generated by the participating Automobile
Dealership and received by the City from the State Board of Equalization.
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3. "Cost" or "Costs" as applied to a Dealership eligible for City Assistance
pursuant to this Program means reasonable and necessary costs incurred by a qualified
Dealership, including but not limited to:
a. Costs to obtain any property right or interest necessary to operate an Automobile
Dealership on a parcel of land in the City (but excluding any monthly lease
payments and any insurance, taxes or maintenance cost required to be paid by the
qualified Dealership pursuant to the lease or similar agreement);
b. Costs for the construction, installation, reconstruction, rehabilitation or
improvement of the Dealership, including all costs associated with feasibility
studies, surveys, architectural and engineer services, and attorney's fees,
construction insurance and bonds;
c. Interest on any indebtedness incurred to implement the Dealership;
d. Other costs or expenses related to construction of the Dealership as provided for in
the Participation Agreement.
4. "Developer" means any person or entity in the business of developing or
improving real property for the purpose of operating an Automobile Dealership thereon,
and with whom the City Council may, in its sole discretion, enter into a Participation
Agreement under this Program.
5. "Owner" means any person or entity that owns and operates or intends to own and
operate an Automobile Dealership and has legal authority to enter into a Participation
Agreement with the City on behalf of a Dealership.
6. "Participation Agreement" means a written contract between the City and an
Owner or Developer of a qualified Automobile Dealership that provides for City
Assistance. A Participation Agreement may include such provisions, restrictions, and
conditions as the City Council deems necessary and appropriate to give effect to the
intent and spirit of the Program.
7. "Sales Tax" means that portion of any and all California sales and use tax revenue
derived from any business operations of a Developer or Owner (including any affiliates
of Developer or Owner) on or from the site of a Dealership that are allocated to and
received by the City from the State Board of Equalization under the Bradley -Burns
Uniform Local Sales and Use Tax Law (California Revenue & Tax Code § 7200 et
seq.), as such law may be amended from time to time; provided that such Sales Tax is
legally available for use by the City and not otherwise subject to state or federal
restrictions or limitations on such use.
8. "Sales Tax Base" means the historical production of Sales Tax by an existing
Automobile Dealership, as calculated in the Sales Tax Report defined herein. The Sales
Tax Base shall be calculated in a manner that takes into account the then - current
economic state relative to the historical performance of an Automobile Dealership. In
addition, it shall use a method determined by the preparer of the Sales Tax Report for
averaging production over an appropriate period determined by the City, and as
adjusted for inflation using the most recent available 12 -month period for the Los
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Angeles- Riverside- Orange County, CA Consumer Price Index, with the intent being to
ensure that a Participation Agreement does not reward a participating Dealership for
increases in Sales Tax arising from general economic conditions, as opposed to
increases resulting from improvements made by an Owner or Developer.
9. "Sales Tax Increment" means, on an annual basis, the difference between the
Sales Tax Base and the amount of Sales Tax actually generated by a participating
Automobile Dealership and received by the City from the State Board of Equalization.
It shall be determined by reference to actual receipts. For new Dealerships, all Sales
Tax received by the City shall be deemed to be Sales Tax Increment unless adjustments
or additional conditions are incorporated into a Participation Agreement. Under no
circumstances shall the City be liable for providing City Assistance in the event that, or
to the extent that, Sales Tax Increment is not actually received and retained by the City.
10. "Sales Tax Report" means the report to be prepared for every Program application
that establishes the appropriate Sales Tax Base to be used in calculating the Sales Tax
Increment and City Assistance. The Sales Tax Report shall be prepared by City staff or
by a qualified economic consultant engaged by the City. The cost of preparing a Sales
Tax Report, whether prepared by City staff or an outside consultant, shall be paid by the
Owner or Developer of the Automobile Dealership applying for participation in the
Program.
Section 3. Participation Requirements.
1. Eligible existing Automobile Dealerships include those Dealerships currently operating
on property in the City zoned for commercial and/or industrial use and that have a
cumulative operating history (inclusive of related business entities beneficially owned
by the same individuals) of not less than five (5) years in the City of Anaheim.
Participation requirements include the commitment, as contained in a Participation
Agreement, to implement a minimum of four (4) of the criteria listed below:
a. Plan and implement renovation or rehabilitation of an existing commercial or
industrial property for an Automobile Dealership, including, but not limited to,
upgrading and expanding permanent building improvements and structures,
parking, landscaping, tenant improvements, signs and equipment that are
permanently attached to a building;
b. Plan and implement expansion to improve and/or expand the operations of an
Automobile Dealership;
c. Plan and implement consolidation of operations to a location in the City;
d. Retain and /or create of employment opportunities in the City; and
e. Generate a minimum of $10 Million Dollars ($10,000,000.00) in annual taxable
sales.
2. Eligible new Automobile Dealerships shall include those Developer(s) and /or Owner(s)
who desire to open an Automobile Dealership within the City, who are not operating
such a business within the City as of the date of application for assistance under this
Program, and who have not operated such an Automobile Dealership within the City
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within one (1) year of the date of the application. Participation requirements shall
include all of the following:
a. Identify a suitable location in the City's commercial or industrial zones;
b. Plan and implement expansion, relocation and/or consolidation of its business
operations in the City, which shall not diminish market share of similar business
operations; and
c. Create employment opportunities of not less than fifty (50) full -time jobs in the
City; and
d. Will generate a minimum of $10 Million Dollars ($10,000,000.00) in annual
taxable sales.
3. Eligible new and existing Automobile Dealerships are both required to complete all of
the following to the satisfaction of the City Manager:
a. To submit to the City Manager or his authorized representative (herein referred to
interchangeably as the "City Manager ") a completed application for participation
in the Program on the City's Program application form together with all supporting
documentation that may be required by the City Manager; and
b. To receive approval for participation in the Program from the City Manager; and
c. To commit to or be prepared to enter into a Participation Agreement in a form that
is satisfactory to the City Manager and the City Attorney for consideration and
potential approval by the City Council.
4. For an Automobile Dealership located on property that is not owned by the Owner of a
Dealership and is rented or leased from a third party, the Owner must have the right to
occupy the subject property pursuant to an enforceable lease or rental agreement that
permits the use of the subject property for a Dealership and has an unexpired term of not
less than the term of a Participation Agreement. The Owner must obtain the consent of
the owner of the subject property to recordation of the Operating Covenants in the
Official Records of the County of Orange, provided that such property owner shall not
assume any of the obligations of the Dealership under the Operating Covenants and
provided, further, that the Operating Covenants shall be subordinate to the property
owner's right, title and interest in and to the subject property and any monetary
encumbrances of record or any subsequent refinancing thereof. The City Council, in its
sole discretion, may approve such terms or conditions as it deems appropriate in order to
obtain the property owner's consent. If the property owner and the Owner of such a
Dealership are under common control, recordation of the Operating Covenants shall be
a requirement of approval of a Participation Agreement.
Section 4. Automobile Dealer Economic Assistance Program.
1. Subject to the following statutory exceptions, the City Council is authorized to enter into
Participation Agreements with Owners and /or Developers of Automobile Dealerships in
accordance with this section:
a. The City may not enter into a Participation Agreement with an Automobile
Dealership that is relocating from the territorial jurisdiction of another local agency
within the same market area, if the agreement would violate the provisions of
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California Government Code Section 53084, as that section may be amended from
time to time;
b. The City may not enter into a Participation Agreement with an Automobile
Dealership if the agreement would violate California Government Code Section
53084.5, as that section may be amended from time to time. Such a violation may
arise, subject to exception, if the agreement would result in reduced Sales Tax
revenues received by another local agency from a vehicle dealer that is located
within the territorial jurisdiction of that other local agency from the tax proceeds
collected under the Bradley -Burns Act, and the Automobile Dealership maintains a
physical presence in the territorial jurisdiction of that other local agency.
2. City Assistance for qualified Automobile Dealerships pursuant to this Resolution is
intended to assist Owners and /or Developers in recovering or offsetting the costs of
establishing new Dealerships and/or expanding or improving existing Dealerships in
order to generate employment opportunities, diversify and/or strengthen the local
economy and increase sales tax revenue for the City.
3. For each Participation Agreement, the City Assistance rate shall be 40% of the Sales
Tax Increment. Participation Agreements shall expire on the earliest of the following
dates: (a) ten (10) years from the commencement of operation of the qualified
Dealership, or (b) full reimbursement of the Costs incurred establishing new Dealerships
and /or expanding or improving existing Dealerships, as provided in the Participation
Agreement, subject to audit verification.
4. The City Council shall hold a public hearing on all contemplated Participation
Agreements. Notice of the time and place of the meeting shall be published pursuant to
laws of the State of California. At this meeting, the City Council shall consider all
evidence before it, which shall include the information contained in the Sales Tax
Report and all information required by Government Code Section 53083, subdivision
(a).
5. The City shall make all City - prepared Sales Tax Reports presented to City Council for a
contemplated Participation Agreement available for public inspection and copying, at a
cost not to exceed the cost of duplication, no later than the time of publication of the
first notice of the public hearing mandated by this Section 4 and for the entire term of
the Participation Agreement.
6. As part of the public hearing on a contemplated Participation Agreement, the City
Council may approve, approve with modification or deny the Participation Agreement.
Section 5. Operating Covenants.
Subject to the provisions of Section 4, Subsection 3 of this Resolution, each Owner and/or
Developer that enters into a Participation Agreement with the City may be required to record
against the participating Automobile Dealership property certain Operating Covenants, to run
with the land, including, but not limited to the following:
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1. Continuing Use. During an Automobile Dealership's participation in the Program, the
Owner and/or Developer covenants and agrees for itself, its successors, assigns or
designees, to continually operate and use the Dealership property for the same purposes,
in the same manner, and at the same level of quality, or higher, as that which the
Dealership operates upon execution of the Participation Agreement. All uses conducted
on the Automobile Dealership property shall conform to all applicable provisions of the
City's Municipal Code and General Plan.
2. Maintenance. During the Automobile Dealership's participation in the Program, the
Owner and/or Developer covenants and agrees for itself, its successors, assigns or
designees, to continually maintain and repair or cause to be maintained and repaired, the
Dealership property, including but not limited to buildings, structures, parking areas,
lighting, signs, and landscaping, to be in good condition conforming to all applicable
laws, including all applicable provisions of the City's Municipal Code, and shall keep
the Dealership property free from any accumulation of debris or waste materials.
3. Non - Discrimination. During the Automobile Dealership's participation in the Program,
the Owner and/or Developer covenants and agrees for itself, its successors, assigns or
designees, that the Business and any of its employees shall not discriminate against any
person on the basis of sex, marital status, race, color, religion, ancestry, national origin,
physical handicap, sexual orientation, or domestic partnership status.
Section 6. General Fund Revenues.
All Sales Tax revenues or Sales Tax Increment remitted to the City by the State Board of
Equalization, which were collected by a business, are general fund revenues of the City and
shall be deposited in the City's general fund. The City's obligation to pay Sales Tax Increment
(or any portion thereof) under a Participation Agreement does not constitute a pledge of any
particular funds of the City.
Section 7. Termination of City Assistance.
The City may terminate a Participation Agreement on ten (10) days' written notice, or a longer
time period as specified in a Participation Agreement, if an Automobile Dealership violates any
of the provisions in a Participation Agreement or this Program, provided that such violation or
violations has /have not been cured at the end of said ten -day period, or such other time period
provided for in a Participation Agreement. The City shall give notice to the Owner as required
by the terms of a Participation Agreement.
Section 8. Administrative Rules and Regulations.
Consistent with the intent and goals of this Program, the City Manager may adopt
administrative rules and regulations for implementation and furtherance of the requirements of
this Program.
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THE FOREGOING RESOLUTION is approved and adopted by the City Council of the City of
Anaheim this 17thday of June 2014, by the following roll -call vote:
AYES: Council Members Eastman, Murray, Brandman and Kring
NOES: Mayor Tait
ABSENT: None
ABSTAIN:None
CITY OF ANAHEIM
By
MAYOR OF THE ITY OF ANAHEIM
ATTEST:
%441A. (1 &4S _
CITY CLERK OF THE CI OF ANAHEIM
102821 -v 1 /TReynolds/DPayne
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