TITLE
Recommendation to authorize City Manager to execute all related documents to implement a business and job retention loan using Community Development Block Grant (CDBG) funds amortized over five years in the amount of $600,000, with interest at five percent per year to Worthington Ford, Inc., with $200,000 being dispersed upon execution of the loan agreement, and $400,000 being dispersed upon the U. S. Department of Housing and Urban Development (HUD) approval of the City's FY 2010 - FY 2011 Action Plan Amendment. (Citywide)
DISCUSSION
The past 18 months have been extremely difficult for auto dealerships. In 2009, almost 1,800 dealerships closed nationwide. According to the California New Car Dealers Association, over 200 dealers have closed in the state since 2008. New light sales have fallen dramatically. California new vehicle registrations fell from 1,447,460 in 2008 to 1,038,271 in 2009, a decline of 29.3 percent; and that followed a decline of 23 percent in new vehicle registrations in 2008 compared to 2007.
While Worthington Ford has been impacted by the downturn, they remain a significant contributor in terms of sales tax and job creation. Worthington Ford is one of the most recognized retailers in Long Beach and has been a top ten generator of sales tax revenue for Long Beach since 1976.
Long Beach has assisted auto dealerships in the past through loans and/or sales tax agreements. Worthington Ford submitted the attached letter requesting financial assistance from the City for their retention and expansion efforts. In this letter, Nick Worthington, Corporate Director, is requesting that the City partner with them to remain in Long Beach and to expand into the adjacent vacant Champion Chevrolet site. Assistance from the City will retain significant sales tax revenue for Long Beach, retain the 115 current employees of Worthington Ford, and reactivate a closed auto dealership.
It is proposed that the assistance to Worthington Ford be in the form ...
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