TITLE
Recommendation to authorize City Manager to amend and modify the Sales Tax Sharing Agreement between the City of Long Beach and Circle Automotive Group. (District 4)
DISCUSSION
On March 17, 1992, the City Council approved a Sales Tax Incentive Program to encourage large-scale retail development, stimulate private investment in the retail sector, and enhance sales tax revenue in the City. New retail businesses or existing businesses planning to expand, which generate or are projected to generate more than $5 million in annual sales, may be eligible for the program. To an expanding business, the City would return up to 50 percent of the sales tax generated in excess of the existing tax revenue received by the City (the base amount).
On October 1 2002, the City Council approved a Sales Tax Sharing Incentive Agreement (Agreement) with Circle Automotive Group (Circle) as an incentive to encourage the expansion and redevelopment of the dealership located adjacent to the traffic circle on Lakewood Boulevard (Attachment A). At that time, Circle managed Mitsubishi, Volkswagen, Audi and Porsche automobile dealerships, all located within the City of Long Beach. The expansion and redevelopment project included renovation of the existing Audi dealership located on Lakewood Boulevard, and expanding its operations by acquiring and renovating the adjacent 1.44-acre property for a separate Porsche dealership.
Circle acquired the existing facility for $3.8 million and paid $2.8 million for the 1.44-acre expansion property. In 2002, the cost for renovating the buildings for dealership use was estimated to be $2.75 million for a total cost of $ 9.35 million. Circle requested financial assistance using the Sales Tax Sharing Incentive program to help defer the cost of expansion and redevelopment.
Under the 2002 Terms and Conditions, the City and Circle would share 50/50 the sales tax generated above the base year amount of $294,465, which reflects the amount of sale...
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