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HomeMy WebLinkAbout23 - Automobile Sales Tax Incentive Program• 4? O p i 'Dn V li CITY OF NEWPORT BEACH COMMUNITY AND ECONOMIC DEVELOPMENT PLANNING DEPARTMENT 3300 NEWPORT BOULEVARD NEWPORT BEACH, CA 92658 (714) 6443200; FAX (714) 644 -3250 Date: Agenda Item No.: Staff Person: REPORT TO THE MAYOR AND CITY COUNCIL SUBJECT: Review of Automobile Sales Tax Incentive Program And Request for Assistance from Jaguar September 13, 1999 23 Sharon Z. Wood (949) 644 -3222 SUGGESTED ACTIONS: A. Adopt Resolution 99 -_, adding a provision limiting the time in which applications may be filed to the existing incentive program; AND B. 1) Direct staff to prepare a Sales Tax Increment Reimbursement Agreement with Jaguar that provides for reimbursement not to exceed $112,000; OR 2) Direct staff to prepare a Sales Tax Increment Reimbursement Agreement with Jaguar that provides for reimbursement in another amount; OR 3) Decline to provide assistance to Jaguar. The City Council reviewed the Automobile Dealership Sales Tax Incentive Program on May 24, 1999, and referred it to the Economic Development Committee (EDC). At the same meeting, the Council considered a request from Jaguar for assistance in developing a new, satellite dealership in Corona del Mar. The request was for $600,000 cash up front and $600,000 in reimbursement of sales tax. Although the Council did not take formal action on this request, some members indicated that it was beyond the intent of the established incentive program. DISCUSSION . Incentive Program The EDC reviewed the incentive program at their meeting of June 30, 1999, and unanimously passed a motion endorsing the existing program. Committee members stated that the City should be attracting high sales tax generators, even in strong economic times, because the City needs to have these businesses in place to be prepared for future economic downturns. EDC also • recommended modifying the program to limit the time in which a dealership may apply for assistance, to avoid the recent situation in which the City Council was considering a request for assistance from a dealership that has been operating profitably for some time. The EDC minutes and a resolution incorporating the recommended provision into the program are attached for the City Council's consideration. The new provision may be found in Section 2, Applications. It limits the filing of applications for assistance to the period of time prior to issuance of a building permit for a new dealership or expansion of an existing one. Staff is recommending permit issuance as the cutoff for applications because it is directly related to location or expansion projects, which are the focus of the existing incentive program. Additionally, preparing construction drawings and securing a building permit are major commitments to a project that a business would not take without having project financing secured. Jaguar Request The EDC also discussed the request from Jaguar at their meeting of June 30. In light of the City Council's indications that the amount of the request may be beyond the intent of the program, the Committee felt it was inappropriate for them to make specific recommendations with regard to Jaguar. However, a motion supporting the concept of sales tax sharing with Jaguar carried unanimously. One of the comments directly related to the Jaguar request was that south Orange County has become an easier and more attractive destination as a result of the toll road and • increased shopping opportunities. In particular, Mission Viejo has renovated its mall and is assisting the primary Jaguar dealership, and Newport Beach should assist the satellite dealership to retain sales tax in the City. Jaguar submitted a revised request for assistance in July, which is attached. The new request is limited to $600,000, to be provided through equal sharing of the local sales tax. As provided in Resolution 96 -88, staff obtained an analysis of this request from Keyser Marston Associates, Inc. (KMA), the firm that has analyzed all of Newport Beach's requests for assistance from automobile dealerships. KMA used the same method that has been used to analyze the requests from Sterling BMW and Land Rover Newport Beach. This method compares the cost factor of the proposed dealership with the industry standard throughout Southern California. Typically, occupancy costs as a percentage of sales range between 1.2% and 1.7 %. At the middle of this range, 1.4 %, which was used in the analysis for the Fletcher Jones Motorcars transaction, the proposed Jaguar dealership would have a feasibility gap of $46,500 in the first year of operation and $65,200 in the second year. Therefore, the total amount of assistance that KMA found to be warranted for the dealership development project is $111,700. The difference between the feasibility gap identified by KMA and that identified by Jaguar ($600,000) results from Jaguar's inclusion of non -real estate, business operational costs. Experience Management Group, which is developing the South Coast Motorcars facilities for Jaguar, has done studies on bringing Jaguar sales back to Newport Beach. This research has shown that Newport Beach residents prefer to purchase their luxury automobiles in Newport Page 2 Beach, and that they value high quality, personalized treatment when purchasing an automobile. To satisfy these preferences and make the satellite dealership successful, Jaguar believes they • need to make extraordinary expenses for the showroom interior design and for staff, including an on -site General Manager, as outlined in the attached letter. The incentive program adopted by the City Council in 1996 focuses on dealership development costs, or the real estate costs included in the analysis by KMA. However, the definition of "Costs" does include "other costs or expenses ... which are related to the construction or overation of the project." (Emphasis added.) Therefore, the City Council could find that assistance beyond $111,700 is warranted. This could be accomplished by extending the time over which sales tax is shared, and/or by waiving City fees, which is authorized in Section 5 of the Resolution. Staff estimates that City fees for this project would be approximately $50,000. Benefits to City If the City agrees to share 50% of the local sales tax generated by Jaguar to close the projected gap of $111,700, sales tax sharing would end in the third year of operation, after which the City would receive all of the local sales tax. The annual amount of tax is projected to grow from approximately $185,000 in the fourth year, to $200,000 after ten years of operation, and to $265,000 after 25 years of operation. Over 25 years, the City's total tax revenue is projected to be approximately $5.1 million, with a net present value of approximately $1.7 million. . With the reimbursement of $600,000 requested by Jaguar, 50% sales tax sharing would end in the eighth year of operation, after which the City would receive all of the local sales tax. Over 25 years, the City's total tax revenue is projected to be approximately $4.7 million, with a net present value of approximately $1.4 million. Jaguar has indicated that they will not establish a satellite dealership in Newport Beach without City assistance. SHARON Z. WOOD Assistant City Manager Attachments: 1. Resolution 2. Economic Development Committee Minutes, June 30, 1999 3. Letter from Ford Motor Land Services Corporation, July 20, 1999 4. Letter from Experience Management Group, August 31, 1999 Page 3 RESOLUTION NO. 969- A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF NEWPORT BEACH ESTABLISHING AN AUTOMOBILE DEALERSHIP SALES TAX INCENTIVE PROGRAM and WHEREAS, lin 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. OC. 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; ! -1- 1 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: (1) 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- 5 D. "California Sales and Use Tax Law" shall mean 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), 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: (1) 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. "GovernmenW 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. -3- 1 J. The term "Qualified business" shall mean any business which 41 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 -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 0 to confirm receipt of the taxes from the State Board of Equalization. -4- 1 1 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: u A.0 Information regarding the experience, expertise and financial capability of the business and its contractors, consultants and agents in completing and operating similar projects; l4-. ii Basic concept plans for the proposed project; G iii The status of agreements with manufacturers for the sale of new motor vehicles on the project site; and 4DL.-Lvl 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. 3. PROCESSING AND ACCEPTANCE OF APPLICATIONS/ 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 -6- 1 q 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. -7- 1 la 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. ADOPTED, this day of 19969. ATTEST: CITY CLERK fAcat\datreso1Avautodtax.d0c 10 -23.96 • • H MAYOR (Draft) CITY OF NEWPORT BEACH ECONOMIC DEVELOPMENT COMMITTEE MINUTES Minutes of the Economic Development Committee held at the City Council Chambers, City of Newport Beach, on Wednesday May 26, 1999. Members present: Edward Selich, Chairperson John Noyes,Council Member Tod Ridgeway, Council Member Kim Barone- Scherer Craig Batley Seymour Beek Bob Dunham Roy Freeman Carol Hoffman Staff representatives: Sharon Wood, Assistant City Manager Christy Teague, Senior Planner Dan Trimble, Associate Planner Others present: Roll Call and Introductions Richard Luehrs Earl McDaniel Lisa Reedy Gregg Schwenk Lee Sutherland Rosalind Williams Dan Rogers, Ford Motor Land Larry Williams, South Coast Motorcars Chairman Ed Selich called the meeting to order at 7:35 a.m. CONSENT CALENDAR The Consent Calendar was approved, including the following items: 1. The May 26, 1999 minutes were approved as written. 2. Active Projects Progress Report (Attachment) r • EDC Minutes 06/30/99 Page 1 la • L� (Draft) DISCUSSION ITEMS 3. Newport Coast Marriott Presentation The presentation was continued to a later meeting. 4. Review of Auto Dealer Sales Tax Policv Sharon Wood reported the background of the policy. She noted the policy is general in nature, including basic guidelines to make auto dealer expansion feasible. Specific percentages and amounts of assistance are not spelled out in the contract. Sharon Wood noted the City Council has been generally supportive of the policy. She stated it was expected other types of businesses could be developed later. Lee Sutherland asked about guidelines other cities follow. Sharon Wood replied that most cities have redevelopment agencies, which provide similar types of assistance. Tod Ridgeway noted other cities have been creative using sales tax rebates, especially those without the benefits of redevelopment assistance. He added the City Council has discussed if it is appropriate to assist any type of business. Bob Dunham asked about Fletcher Jones assistance. Sharon Wood replied it had a different kind of assistance for the site, but the value is not clear due to the extensive grading required on the site. Bob Dunham suggested if assistance was made to Jaguar, it should be viewed as a business decision and the economic investment should have a reasonable return. Sharon Wood noted Jaguar may choose to come to Newport Beach anyway. Tod Ridgeway asked if they need assistance, if they can prove the need, and how much is actually needed. Craig Batley noted this would be a new income stream for the City. He suggested the amount of revenue should be determined, then evaluate the net revenue to determine if assistance should be made by the City. Earl McDaniel suggested consideration should include the property's highest and best use. He noted the value of the property is higher as an auto dealer than a lesser retail use. Craig Batley noted this would be an investment in business to continue far into the future. Chairman Selich reminded the committee that Jaguar may choose to locate in the City without any financial assistance from the City. Dan Rogers from Ford Motor Land introduced himself and Larry Williams from South Coast Motorcars. He noted they anticipate high sales number in a Newport Beach store. He stated he hopes the City will make an investment to help them recapture costs of building a new sales facility. He stated if the City would choose to assist with sales tax sharing it would help finalize decision to locate in Corona del Mar. Larry Williams noted this would replace the Jaguar sales formerly at Newport Imports. He stated Jaguar has been seeking a Newport Beach location since 1994, and always intended to open a smaller second showroom after the new Mission Viejo facility opened. Larry Williams explained South Coast Motor Cars has a different concept for Mission Viejo and Newport Beach. They hope to open both showrooms in March of 2000. He noted if there is no assistance from Newport Beach, then Jaguar will not come to Newport Beach according to Jaguar Corporate headquarters. He stated there is a window of opportunity, 'and noted the option expires July 4, 1999. In response to a committee member question, Mr. Williams noted the average transaction is $55,000, with an expected 300 transactions per year at the two stores. He noted 1% goes to the City in sales tax. He stated there will be additional parts and lease transactions. He also noted the totals are expected to increase in future years. Preliminary estimates are that 40% of sales will be in the Newport Beach store and 60% in the Mission Viejo store. EDC Minutes 06/30/99 Page 2 13 (Draft) Carol Hoffman noted Fletcher Jones offers services including car wash and putting greens. Larry Williams stated relationships with customers are important to a boutique dealership. He noted marketing and personnel must be of high quality. Larry Williams noted there have been sob . opening events with 5,000 couples invited, follow up mail thanking them for their input into the design alternatives and watching for announcement of Newport Beach boutique sales facility. He noted they may need an exit strategy if the Newport Beach store does not happen. Seymour Beek questioned if Jaguar was flexible on the $600,000 assistance needed. Larry Williams replied the projections showed a $640,000 operating loss that needs to be addressed. John Noyes asked if the territorial disputes have been resolved. Larry Williams replied that they have not, and that Bauer Jaguar in Santa Ana has a scheduled hearing August 11, 1999. Bob Dunham asked if payment to Bauer is a possibility to resolve the issue. Lary Williams stated Bauer has taken the position of no Jaguar dealership in Newport Beach. Tod Ridgeway noted his observations have been that when the economy is bad, cities frscalizing land use become aggressive. He suggested if the economy was not as good as it is, we would probably be begging them to come and share sales tax. Chairman Selich stated in bad times and in good times, it is important to be consistent. Lisa Reedy asked about the point of purchase. She asked where the sales taxes will go if a car in Mission Viejo purchased by a Newport Beach customer. Gregg Schwenk noted there is a move to de- fiscalize land use in Sacramento. He also noted we need to take steps to bring quality businesses to the City. Richard Luehrs made a motion to support Jaguar with sales tax sharing up to $600,000. The motion was seconded. Chairman Selich stated it was an inappropriate motion, especially with the dollar amount and error in policy of not including an application time limit. He suggested a motion on the policy, then a second motion for Jaguar support in concept. Sharon Wood noted the City Council has asked for EDC feedback on the policy. Richard Luehrs • noted that, from an economic development perspective, it is wise to address these issues as they come forward. Carol Hoffman made a motion for the EDC to endorse the resolution establishing the sales tax incentive program, with a modification of an added application time frame. The motion was seconded and approved, with Council Members Noyes and Ridgeway abstaining. Earl McDaniel asked why auto sales are specifically addressed in the policy. Carol Hoffman stated the sales tax generated is significant, and that this one type of use warrants special treatment. Council Member Noyes inquired about the fairness issue. He asked how it would be handled if a major department store asks for assistance to open in Newport Beach. Sharon Wood replied if other uses are desirable to the City, we can draft similar types of resolutions. Craig Batley noted an incentive is important for auto dealers because we do not have many of them. He noted this would be new money to the City, noted Jaguar wants to come, and stated he did not believe it was a fairness issue. Tod Ridgeway noted restaurants are the number one tax generator due to the high number of them. He stated a need for better balance in the community. Craig Batley agreed that if there were more auto dealerships, auto dealers could be the number one`tax generator in the City. Lee Sutherland stated he would like to give Ford and Jaguar the indication that we would like to encourage them to open in Newport Beach. 0 EDC Minutes 0630199 Pale 3 t` (Draft) Richard Luehrs suggested we move forward with encouragement for this dealer. He noted today we are receiving no sales tax from Jaguar. Tod Ridgeway noted sometimes dealers play cities against each other, but believed this dealership would rather be in Newport Beach. Gregg Schwenk stated it is alarming to think the City Council may not be open to this type of partnering with business. Craig Batley noted this approval would be fast if these were bad times. He suggested if this is a good concept, then we should consider it; and ten years from now, when we need them, they will be here. He added the City will be making money on a deal with Jaguar, and a resolution is already in place. Chairman Selich stated a policy allows the City to become a partner and attract revenue producing uses and service uses desired. He stated a modem economy requires an ongoing policy. Gregg Schwenk suggested we find Cities similar to Newport Beach to use as a sounding board and to understand what the competition is doing. Carol Hoffman made a motion to support the City Council consideration of assistance to Jaguar and to encourage them to locate in Newport Beach. The motion was seconded and approved, with Council Members Noyes and Ridgeway abstaining. Craig Batley suggested since the purpose is to provide assurance to the applicant, we should include $600,000 in the motion. Dan Rogers requested a statement of support would be helpful since they anticipate a $640,000 start up loss. Chairman Selich suggested EDC does not have enough information to determine any amounts of money. He noted the EDC would support them in concept to the point the project is economically feasible. Sharon Wood noted a Use Permit will be required. Carol Hoffman stated the committee desires to send a message of encouragement. Chairman Selich asked if there are any feelings on the Committee of expansion of the resolution. Carol Hoffman suggested a hotel incentive be considered. Lee Sutherland noted public transportation is an area to consider. Rosalind Williams noted it is difficult to anticipate needs without applicants. Richard Luehrs agreed, and suggested the City wait until applicants come forth. 5: Conference and Visitors Bureau Proerams Rosalind Williams reported on the Newport Beach Conference and Visitors Bureau program and tools used to sell the City. She distributed an overview sheet including the Bureau Mission Statement. Rosalind Williams explained Newport Beach is not known throughout the world, therefore it requires an aggressive sales and marketing program. She reviewed sales kits, trade show tools, meeting planner, and showed the latest Newport Beach promotional video. Rosalind Williams reviewed other promotional pieces including the Visitors Guide, Restaurant Guide, rack/lure brochures which are designed to paint a quaint picture of the City focusing on the Inns, Villages and Golf of Newport Beach. She also discussed the destination planner with hotel and ballroom layouts and planned tour destinations to assist tour planners. She noted these tools are included in sales kits. She also noted the Bureau has a comprehensive website. Rosalind Williams reported a sales plan for the 1999 -2000 fiscal year goes to the City Council on July 12, 1999. 6. Restaurant Promotions , The presentation was continued to the July meeting. EDC Minutes 06/30/99 Page 4 ) (Draft) 7. EDC Vacancies Chairman Selich announced the appointment of Royal Radtke by the City Council. 8. Sub - Committee Meeting Schedule /Assignments 0 Chairman Selich discussed new sub - committee assignments due to the resignation of Michael Porter. Richard Luehrs will be Chairman of the Strategic Planning Sub - committee. Rosalind Williams will be Chairman the Image Enhancement and Marketing Sub - committee. Carol Hoffman will move to the Airport Sub - committee. . 9. EOAC Report Earl McDaniel reported EQAC is working on image enhancement issues. The Committee has been having related discussions and presentations. ITEMS FOR A FUTURE AGENDA • Newport Coast Marriott Presentation • Restaurant Promotions PUBLIC COMMENTS Chairman Selich noted airport funding was approved by the City Council. He also noted the Traffic Phasing Ordinance was approved by the City Council with the nexus issue strengthened. . There was a question on the status of the Resident Survey discussed at the April meeting. Tod Ridgeway noted it is being revised, and will include added questions about the Bay. ADJOURNMENT Chairman Selich adjourned the meeting at 9:15 a.m. S EDC Minutes 06/30/99 Pace 5 (y RECEIVED BY PLANNING DEPARTMENT CITY OF WmVp%�cT ° =ACH JUL `L 0 1999 / AM PM 71819i101111121112i31415i6 Ford Motor Land Services Corporation 2099 State College Blvd. Suit 330 Anaheim, CA 92808 Tel. (714) 748.8777 Fel@ jJUly1�dtf;4V Ms. Sharon Wood Assistant City Manager City of Newport Beach 3300 Newport Blvd. Newport Beach, CA 92663 Dear Ms. Wood: On behalf of South Coast Motorcars and Ford Leasing Development Company, please let this letter serve as a formal request for financial assistance for the development of a Jaguar and Aston Martin retail dealership to be constructed at East Coast Highway in Corona del Mar. As you know, an option on the land has been acquired and is currently in force. The costs of construction and operation to begin this project are well above what can be allocated by the company. The shortfall is in excess of $600,000. Therefore, that $600,000 amount is formally requested to be returned to the dealership via the taxes generated by the actual retail sales. Mr: Larry Williams, Project Manager, has previously presented the operating budget to you, which shows both the need and the means of recapturing the sales tax revenues. We propose a 50150 split on the taxes returned to the city until the requested $600,000 is earned. We would like to see this issue placed on the City Council agenda as soon as possible because the outcome of this request weighs heavily on the corporate decision regarding the franchise. Please give me a call at (714)748 -6777 if you need Ai Cher information. Very truly yours, 4WJ44'�- Dan S. Rogers, 05nsultant Ford Motor Land Services Corporation cc: L. A. Williams, South Coast Motorcars B. Weiner, Jaguar Cars W. W. McNair, Ford Motor Land Development R. J. Lynn, Ford Motor Land Services EXPERIENCE MANAGEMENT GROUP 6 Journey, Suite 170 Aliso Viejo, California 92656 August 31, 1999 Ms. Sharon Wood City of Newport Beach P.O. Box 1768 Newport Beach, CA 92658 -8915 RE: South Coast Motorcars — Newport Beach Dear Sharon: RECEIVED BY PLANNING DEPARTA1E CITY OP N;:14'D -Pr rEA H AM SEP 0 2 1999 PM 7181911011 1112111213141516 In support of our request for financial assistance from the City of Newport Beach and per your request for more specific South Coast Motorcars ( "SCM ") operating cost detail, the following information is submitted. As you know, Experience Management Group has conducted extensive studies of the "SCM Retail Luxury Experience" desired by residents of Newport Beach. The research has led to two conclusions. First, the residents of Newport Beach prefer to stay in your community and purchase their luxury automotive products there. Second, the residents of Newport Beach value, above all else, high quality, personalized treatment from a staff in a non - traditional automotive environment, similar to that of non- automotive luxury goods. Examples of the SCM Retail Luxury Experience costs include, but are not limited to, the following: ® Upgraded graded Showroom Interior Design and Finish - The interior design and finish of SCM will be upgraded to reflect a retail luxury environment, similar to non-automotive luxury goods. As an example, we are currently negotiating with Alfred Dunhill regarding the incorporation of an Alfred Dunhill retail store within the SCM Newport Beach Boutique facility. The estimated incremental investment cost associated with upgrading the design and finish of the Newport Beach boutique, including the incorporation of an Alfred Dunhill retail store is $750,000. ® Non - Traditional Staffing and Attributes — A non - traditional automotive staff will be required to deliver the SCM Retail Luxury Experience. In order to attract a SCM staff who will meet the high expectations of Newport Beach residents, a compensation premium of approximately 25% to 30% will be necessary to fund alternative compensation (ie. Salary vs. Commission) and an enhanced benefit package. In addition, it will be necessary to hire an incremental. SCM General Manager who will be exclusively dedicated to the Newport Beach satellite boutique facility. The estimated incremental annual cost of these actions and associated training to deliver the SCM Retail Experience is $500,000. I trust the above examples will meet your immediate needs. e�s,�% L.r1/ � ence E. Williams roject Manager— South Coast Motorcars %a