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HomeMy WebLinkAboutSS2 - Automobile Sales Tax Incentive Program2Ewaoa> CITY OF NEWPORT BEACH COMMUNITY AND ECONOMIC = DEVELOPMENT PLANNING DEPARTMENT 3300 NEWPORT BOULEVARD NEWPORT BEACH, CA 92658 (714) 644 -3200; FAX (714) 644 -3250 PROJECT: SUGGESTED ACTION: Summary Hearing Date: Agenda Item No.: Staff Person: REPORT TO THE MAYOR AND CITY COUNCIL Review of Automobile Sales Tax Incentive Program And May 24, 1999 Study Session SS2 Sharon Z. Wood (949) 644 -3222 Requests for Assistance from Jaguar (South Coast Motorcars) and Sterling BMW Provide Staff with Direction on Program and Requests from Jaguar and Sterling BMW The City Council has adopted Resolution 96 -88 (attached), which establishes an automobile dealership sales tax incentive program, but the City has never entered into an agreement to provide such assistance. Staff has received a new request for assistance for a satellite Jaguar showroom, and an earlier request from Sterling BMW has been re- initiated. Because of the passage of time since the program was established, as well as changes in economic conditions and the composition of the City Council, staff is requesting that the Council evaluate the program and provide direction on the requests from Jaguar and BMW. Background This program was established in October 1996, after the City had received a request for assistance from Sterling Motors. Sterling had just purchased the former Newport Imports site on Coast Highway and received a Land Rover franchise, and was in the process of relocating its BMW dealership into the larger Coast Highway facility and improving its Jamboree Road facility for the new Land Rover dealership. Because this was a new program for everyone involved, there were several iterations of both the program and the agreement with Sterling Motors. Before the agreement was finalized, Sterling sold the Land Rover dealership, and the process had to be restarted separately for each dealership. When the new applications were submitted and analyzed, staff and our economic consultants, Keyser Marston Associates, Inc., (KMA) determined that both dealerships were making reasonable profits. It would have been difficult to recommend that the City Council approve assistance when Resolution 96 -88 includes the finding that, "Assistance will be provided only to reimburse businesses for project costs that may make their expansion in or relocation to Newport Beach feasible." In addition, the Resolution's section on Processing and Acceptance of Applications/Reimbursement Agreements states that, "The reimbursement agreement shall be consistent with the terms and provisions of this program and shall:... (2) specify that the rebate shall be for the sole purpose of reimbursing qualified businesses for costs incurred for a project necessary to make the project financially feasible..." Staff advised both dealerships that we could not recommend City Council approval of their assistance requests, and both indicated that they did not wish to pursue the requests at that time. Evaluation of Existing Program Why Assist Automobile Dealerships The City assisted Fletcher Jones Motorcars to remain and expand in Newport Beach with the provision of a new site because of the significant sales tax revenue generated by the dealership. The City was concerned about Newport Beach's loss of the former Land Rover and Newport Imports Jaguar dealerships, and the reestablishment of both businesses was an early goal of the Economic Development Committee. Staff continues to field inquiries from potential automobile dealers looking into Newport Beach locations and expansions, and we are always asked about City incentives. It would be helpful for the City Council to evaluate the existing incentive program, and either reaffirm, modify or discontinue it. Many cities, especially those with redevelopment agencies, provide assistance to automobile dealerships, because they are significant sales tax generators and generally are not economically feasible businesses when land costs are high. In Newport Beach, restaurants are the highest generators of sales tax, accounting for 21% of total, while new automobile sales account for 12% of total sales tax. As individual businesses, however, automobile dealers rank very high among sales tax generators, with Sterling BMW, Newport Auto Center and Fletcher Jones Motorcars being in the City's top ten sales tax generators, and Land Rover being in the top twenty. Although sales tax and other City revenues have improved since earlier in this decade, the City may still wish to attract and retain automobile dealerships because of their positive fiscal impacts. Although the expanded BMW dealership and the new Land Rover dealership have done well without City assistance, recent economic feasibility studies (for the Airport Area and the Bristol Corridor) have shown that land prices are too high to make the development of new automobile dealerships feasible without City assistance. The cost of land has been the reason given staff by some potential dealers who have chosen to locate elsewhere, and is one of the reasons cited in the Jaguar request discussed below. From this, it would seem that some form of City assistance is needed if the City wishes to attract automobile dealerships as part of its economic development program. How the Newport Beach Program Works Resolution 96 -88 provides general goals and guidance for the City's existing automobile dealership sales tax incentive program, but does not include specific standards for evaluating when and how much City assistance is warranted. The Findings section makes a connection Page 2 between assistance and project feasibility, provides that assistance will be provided only from incremental sales tax, and states that a long -term commitment to the community will be required. The Definitions section provides specific guidance on project costs that may be eligible for assistance, and the type of business that may qualify for assistance. Section 3, Processing and Acceptance of Applications/Reimbursement Agreement provides that the City Manager shall evaluate proposals, which may include analysis by an independent consultant. Proposals are then to be presented to the City Council, which has sole discretion to reject or approve a reimbursement agreement. If the City Council wishes to retain the program, the Council may wish to consider whether to modify it by providing greater specificity as to when assistance is warranted, how much assistance should be provided, and to what extent assistance should be tied to economic feasibility of the project. Jaguar Request The Ford Leasing Development Company is building a new Jaguar and Aston Martin dealership, South Coast Motorcars, in Mission Viejo. Through their early marketing events, Ford and Jaguar have determined that a satellite facility is needed in Newport Beach. Because of State regulations regarding distance between dealerships, Corona del Mar is the only feasible location in Newport Beach for a Jaguar dealership. After exploring possible sites in the area, Jaguar has reached tentative agreement for the site on the north side of Coast Highway between Hazel and Seaward, which formerly had a Unocal station. Ford and Jaguar are requesting City assistance in establishing the facility because of the high cost of the site and construction, as explained in the attached letter. The Jaguar request is a departure from what the City had considered in earlier requests, because it includes a request for $600,000 cash up front, in addition to a request for reimbursement of $600,000 in sales tax. The City Attorney is uncertain if there is a valid public purpose for the City to advance money to a private business, and will research this question further if the City Council is interested in providing this type of assistance to Jaguar. As with the earlier sales tax reimbursement requests, staff has asked KMA to analyze Jaguar's request. KMA believes that some assistance can be justified under Resolution 96 -88, because of the high site cost and unusual circumstances of the facility which increase construction costs. These circumstances include the need for a parking structure because of the small site size and the unusually high proportion of expensive showroom space over less expensive service space, since major service will be provided in Mission Viejo rather than Newport Beach under the satellite concept. The requested up -front cash contribution of $600,000 is proposed to be repaid via the City's retention of all sales tax until that amount is reached, which is projected to occur in the fifth year of operation. The requested reimbursement of sales tax would then begin, with the City and Jaguar each receiving 50% until the second $600,000 is reached, which is projected to occur in the tenth year of operation. After that, the City would retain all the sales tax, which is projected to be a minimum of $210,000 per year. The City is projected to recoup its full incentive in the 11 th year of operation. Page 3 If the City Council wishes to provide some assistance to Jaguar but is uncomfortable with an up- front cash contribution, or the City Attorney determines that would be improper, there are options that could be considered. The contribution could be made as a reimbursement of costs after project completion, rather than up front. Alternatively, the City could reduce project costs by waiving development permit fees. This would not equal the requested amount of $600,000, but that could be achieved through a longer term of sales tax sharing if the Council desires that level of assistance. Finally, the City could limit its assistance to sales tax reimbursement. BMW Request As noted in the background section of this report, the City received a request for assistance from Sterling BMW in 1998, which staff did not believe met the requirements of Resolution 96 -88. BMW has re- initiated its request through contacts with Council Members and the attached letter. BMW's request is for reimbursement of 50% of their incremental sales tax for a period of five years. Because the new request was received so recently, an updated analysis has not been prepared. Based on KMA's earlier projection of sales tax, this assistance package would result in the City reimbursing approximately $207,500 to Sterling. (Sterling estimates this amount to be $187,475.) After five years, the City would receive the full incremental sales tax of $125,000 or more per year, in addition to the base sales tax from the level of sales activity that would have occurred without the expansion. Additionally, Sterling is requesting reimbursement for the six months they owned the Land Rover dealership. Staff does not have an estimate for the amount of this reimbursement. Land Rover Request Land Rover has not re- initiated its request for assistance, but staff believes that is a possibility if the City Council chooses to reimburse sales tax to Sterling BMW. Therefore, staff is providing information from our earlier analysis to help the Council understand the implications of any action they may choose to take. The application that was made by Land Rover after it was purchased from Sterling did not include a specific reimbursement request. The earlier request, made jointly with Sterling, was for a reimbursement of 50% of incremental sales tax for five years. Because Land Rover was a new business to Newport Beach, staff considered all the sales tax incremental, which results in higher assistance amounts than for BMW. Again based on projections by KMA, the total amount of reimbursement over five years would be approximately $533,000. Economic Development Committee Review There was not time to place this issue on an agenda for the EDC, but their Executive Committee discussed it on May 12, 1999. That group felt that the City Council should retain the program, and continue to evaluate requests on a case by case basis, with the City providing assistance only to the extent necessary to make projects economically feasible. Further, the Committee felt that Jaguar's request is for more assistance than the City should provide. Page 4 Conclusion Staff is requesting that the City Council review the automobile dealership sales tax incentive program, and take action to reaffirm or discontinue it, or provide staff with direction to modify the program. In addition, staff is requesting the Council to consider the requests from Jaguar and Sterling BMW, and indicate whether the City should provide assistance to these dealerships. If the Council desires to provide assistance, it would be appropriate for the Council to give staff direction on the terms to be included in a reimbursement agreement. SHARON Z. WOOD Assistant City Manager Attachments V 1. City Council Resolution No. 96-88 2. Letter from Ford Motor [and Services Corporation 3. Letter from Sterling BMW Page 5 RESOLUTION NO. 96 -88 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF NEWPORT BEACH ESTABLISHING AN AUTOMOBILE DEALERSHIP SALES TAX INCENTIVE PROGRAM In adopting this Resolution the City Council makes the following findings and determinations: 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; 2. The City may retain existing businesses that would otherwise relocate to another jurisdiction; 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: A. "Automobile dealership" shall mean the business of selling new automobiles and /or light trucks pursuant to a franchise, license or similar Nis. v6 -88 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 -Burns 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. 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. 2 1 iu::, . 7b -.) b 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. 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: W 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. "Sates tax increment' means, for each fiscal year the amount of sales and use taxes received by the City from the imposition of the Bradley -Bums 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 (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. rINEWNPRMIS . 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 -3- 9 Res. 96 -88 and public benefits. Such information shall include, without limitation, the following: A. Information regarding the experience, expertise and financial capability of the business and its contractors, consultants and agents in completing and operating similar projects; B. Basic concept plans for the proposed project; C. The status of agreements with manufacturers for the sale of new motor vehicles on the project site; and D. 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. 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. 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. 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. 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. -4- Res. 9b -ad 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. This program shalt not be interpreted, construed or applied to conflict with any provision of State law which preempts local regulation of the subject matter. ADOPTED, this 28th day of October , 1996. ATTEST: CITY CLERK t%nlbisYewMdaxncn1.d= de%W -16&96 rnro-26 Ukl'—p MAYOR -5- 1)' Ford Motor Land Services Corporation April 21, 1999 Ms. Sharon Wood Assistant City Manager City of Newport Beach 3300 Newport Blvd. Newport Beach, CA 92663 2099 State College Blvd. Suit 330 Anaheim, CA 92806 Tel. (714) 748.6777 Fax (714) 748.6780 Subject: Project Assistance for the establishment of a new Jaguar and Aston Martin Dealership in Corona del Mar Dear Sharon: As you know, the Ford Leasing Development Company is in the process of building South Coast Motorcars, an exclusive, luxury Jaguar and Aston Martin dealership, in Mission Viejo. The company desires to build a satellite sales /showroom dealership in Corona del Mar. An option on an ideal location has been negotiated and the company is in the process of planning the new facility. The budget allocated for these two facilities is inadequate to build them and the company is requesting financial assistance from the two cities involved, i.e. Mission Viejo and Newport Beach. An agreement from Mission Viejo has been negotiated and approved by the City Council and final documents are being drawn for execution. The Corona del Mar facility is far more expensive per square foot because of a number of factors: i.e. small parcel of land, higher price per square foot, small building, relocation of some utilities, extra retaining walls and other items. Here are some factors to assist you in understanding the complexities of this venture. Based upon the negotiated lease for the property, the net present value of the remaining site is $1,520,035 for 11,568 sq. ft., or $131.40 per sq. ft. Ford's appraised value is $925,440, or $80.00 per sq. ft., a difference of $593,035. (Note: The highest comparable in Corona del Mar in the Bandera's Restaurant site, at Marguerite and Coast Highway, at under $60 per sq. ft. on a long -term ground lease. As one can see, Jaguar is determined to be in Newport Beach.) The cost of construction is estimated to be $1,479,139, of which the Jaguar portion is $980,526, or $163.61 per sq. ft., including the building of a canopy over outside display. In addition, we have a Jaguar finishes budget of $100,000 and the leasing commission of $84,000. Sharon Wood April 21, 1999 Page 2 Typically, a Jaguar facility is built for approximately $65 to $85.00 per sq. ft. plus finishes, although, this project was allocated $900,000 to complete, Thus, the project is deficient in funds to the tune of over $657,551. In addition, the dealership its faced with an operating loss of $647,600 in its first year of operation. (Pro forma attached.) We are requesting a loan from the City in the amount $1,200,000 in order for Jaguar to make its investment into the Newport Beach/Corona del Mar market area. We need $600,000 CASH up front to enable the completion of construction, with the remainder to be paid back out of sales tax generated by the franchise. Our proposal would be that the City receive payment from 100% of the sales tax generated by the franchise until the first $600,000 is repaid (forcast to be within the first five years) and then split on a 50150 basis for ten years until the second $600,000 is paid to the franchise. Thus, the City's obligation will expire in fifteen years, or less, depending on the taxable sales achieved by the franchise. Also attached, is a site plan and elevations, showing the Jaguar facility, as well as the office portion, belonging to the Landlord, Mr. Magdi Hanna, also the owner of the adjacent Gallo's. The plan includes: A 3000 sq. ft. showroom for two or three display vehicles A canopy covering two or three outdoor display vehicles Offices Restrooms Four minor service stalls Rooftop parking deck A 2000 sq. ft. office, plus the rehabilitation of the exisitng Gallo's parking lot. All in all, it is planned to be a "jewel box" type sales/service boutique, magnificent automotive sculpture garden showing of incomparable luxury vehicles and other art It will be a great upgrade and the best possible use for that site. Please review this request and get back to us as soon as possible. We are currently proceeding with our due diligence with the City staff. However, unless we can meet the financial obligations of the development, we will not receive appropriations from Franchising to proceed. Thank you for your consideration Very truly yours, an S. Roger Ro onsultant g Enclosures: Proforma and Site Plans cc: L. Williams, South Coast Motorcars B. Weiner, Jaguar Cars, America D. J. Woolard, Ford Motor Land Services R. J. Lynn, Ford Motor Land Services W. W. McNair, Ford Motor Land Development is ^I.11n -w -6 -- -- -I 13 6` Z0 ' 3E)Fdd 08L60667L6 41LIN7 1IX� W J J Z Y a a 0 LL 0 0 w 9Z:9L 66, 80 bdu 0 woo z va �rj F- ®04 H ya ew ®0 d = Z 00 II £0,30lid 0BtLOL6btL H U) IL Lu Lud T i m � lY O U a J I m I� W ' In m u P i i i C-P 9F:91 66, 80 21dd Y Q W o! H W � � 3 u � � a o N � a e Q, ® U v f+ 004 00 ®La � I F e U a I a v � H ' �0 �U r l,5 STERLING BMW jp,,0o r S'ea 4 3000 WEST COAST HIGHWAY NEWPORT BEACH. CALIFORNIA 92663 (714)645.5900 Fax (714) 645 -0044 May 11, 1999 Ms. Sharon Wood Assistant City Manager City of Newport Beach, 3300 Newport Blvd., Newport Beach, Ca 92658 Dear Ms. Wood, RECEIVED BY PLANNING DEPARTMENT CI Y �C rl O .. ^ i, Ci 1. I iA"f 1 ( 19:i9 AM PM 7151° 11011111:111213141516 On May 5,1999, I met with you, Mr. O'Neil and Mrs. Glover concerning our request for assistance from the City under Resolution 96.39 I understand that before our request in granted, it is necessary for you to amend Resolution 96.39 in order to clarify its purpose. We first applied for assistance from the City on May 20,1996 and moved "BMW" from 1540 Jamboree to our present location at 3000 Coast Hwy. Our previous location at 1540 Jamboree was converted into a Land Rover Dealership and began operations on Oct. 1, 1996. At that time both dealerships required extensive remodeling to satisfy the requirements of "BMW" and "Land Rover". The acquisition, the remodeling, signs; equipment, etc. exceeded $7,000,000. The corporation under Mr. Minor's ownership paid the entire cost for both "BMW" and "Land Rover". We owned and operated the "Land Rover" Dealership for a period of six months (from Oct. 1, 1996 to March 28, 1997), at which time it was sold to Mr. Townsend and Mr. Vass. Our request for assistance from the "City": A refund to us of 50% of the increase in your Sales Tax Revenue over the Basic year of the previous 12 months prior to moving to our new location (10 -1 -95 to 10- 1-96) which according to our sales tax reports is $187,475.00 for the period of 5 years beginning with year 1997 0997 —1998 —1999 — 2000 — 2001). A similar formula could apply to "Land Rover" since we paid for all the remodeling costs, owned and operated the dealership for a period of 6 months (4h quarter 1996 and 1" quarter 1997). The base for the 1° year would be 0 and the base for the following 4 years would be the 1" year (1996). However, if Resolution 96.39 only applies for reimbursement of costs and terminates upon the sale of the business to a 3'a party, we may be entitled to the assistance for the period we owned it (10 -1 -96 to 3- 28 -97). I appreciate our positive meeting of last Wednesday and thank you and Mr. O'Neil and Mrs. Glover for taking the time to discuss our request. As soon as Resolution 96.39 has been amended, please let me know, so we can finalize this matter. Sincerely, . Belanger Vice President and General Manager Cc :Dennis O'Neil Cc: Norma Glover 16