4.02 Public Hearing – Vehicle Incentive Program for Auto Rebate to Qualified Westminster Residents and Businesses
8200 Westminster
City of Westminster
Boulevard
Westminster,
California 92683
Staff Report
File #: 22-402, Item #: 4.2 Meeting Date: October 26, 2022
Westminster City Council
SUBJECT
..Title
Public Hearing Vehicle Incentive Program for Auto Rebate to Qualified Westminster
Residents and Businesses.
..End
From: Christine Cordon, City Manager
Prepared by: Christine Cordon, City Manager
____________________________________________________________
RECOMMENDED ACTION
..Recommendation
Staff recommends that the Mayor and City Council:
A. Consider the program terms and participation agreement and provide direction
regarding approval and implementation of the program; and
B. If approved, implement the Vehicle Incentive Program in an amount not to
exceed $600,000 annually for five (5) years;
C. Authorize a one-time budget adjustment of $10,000 for the administration of the
program and $82,000 for the rebates for the period of April 1 through June 30,
2023 from Account No. 11501-44020; and
D. Authorize the City Manager or her designee to execute Participation Agreements,
including any minor modifications as appropriate, and any other pertinent
documents as necessary.
..end
BACKGROUND
At the April 26, 2017 regular meeting, the City Council approved an Economic
Development Strategic Plan that addressed priorities for economic development.
Among the programs that were authorized was a program that provided a rebate to
City of Westminster Page 1 of 5
File #: 22-402, Item #: 4.2 Meeting Date: October 26, 2022
Westminster residents who purchased vehicles locally at Westminster dealerships. The
program, often
was approved at the May 10, 2017 City Council meeting and has since
expired as of May 31, 2022.
The intent of the original program was to encourage Westminster residents to buy
locally and grow the local tax base. The approved program allowed for a rebate in the
amount of $500 to be provided to Westminster residents for the purchase of a new or
used vehicle. The term of the program was five years or when $3 million of total rebates
had been issued. In total, the program provided $1,625,500 in rebates (Attachment 1).
Participating auto dealerships had contacted city staff and expressed interest in
restarting this program. At the September 28, 2022 meeting, the City Council provided
direction to move forward with an economic subsidy report and public hearing, pursuant
to Government Code Section 53083.
Program Terms
Based on evaluating the performance of the expired program, as well as similar
programs in nearby cities (Attachment 2), the program as presented includes the
following general terms and conditions as outlined in the subsidy report (Attachment 3)
and Dealership Participation Agreement (Attachment 4):
Program term is five (5) years, commencing April 1, 2023, and is based on
funding availability. If the program is extended pursuant to GC Section 53083,
the program will be reviewed and reconsidered to analyze the number of vehicles
sold or leased, total sum of rebates to Westminster residents and business
owners, and if both the vehicle rebate and total program cap are set at
appropriate levels for ensuing years.
A $500 rebate would be offered to qualified and verified Westminster residents or
businesses for the purchase of a new or used vehicle, or for the lease of a new
vehicle, from any participating franchised new vehicle dealer including: Elmore
Toyota, Lexus of Westminster, Orange Coast Infiniti, and Honda World.
Rebate is applied at the time of purchase/lease toward the final purchase/lease
of the vehicle. Individual rebates will not be issued directly to the resident or
business.
Qualifying new vehicles include all purchases of cars or trucks. Motorcycles, off-
road vehicles, watercraft, and fleet vehicles are not eligible purchases under this
program. Fleet vehicle sales are also excluded from the program.
Dealerships must collect and submit all required documentation as proof of
residency for qualified Westminster residents and businesses (a copy of one of
Page 2 of 5
City of Westminster
File #: 22-402, Item #: 4.2 Meeting Date: October 26, 2022
the following: valid operty tax bill, proof of
insurance, or bank statement for residents; or a valid business license for
business).
City will reimburse a participating dealership within 30 days of submittal of a
request for reimbursement and of all documentation required to verify the sale of
a new vehicle under the Program guidelines.
Noted differences between the previous program and the program as presented are the
addition of leased vehicles, businesses, and used vehicles. Leased vehicles were not
addressed in the previous program and therefore were not eligible for rebates. While the
agreement did not address used vehicles, rebates were provided for used vehicles.
Provided there are generally more than one driver in a single-family household, the
updated program provides a higher limit of rebates per household.
Performance and Market Impacts
In terms of revenue sources, the
approximately 29% of revenue.
dealers are ranked among the top overall revenue generators.
According to recent data provided by the Orange County Automobile Dealers
Association, the average price of a new vehicle in Orange County is $50,654, while the
average price of a used vehicle in Orange County is $30,265. The average lease value
is $29,820. Owners retain their vehicles on an average of 6.6 years and spend
approximately $1,186 annually on maintenance.
The Westminster auto dealerships have reported the following average sales numbers
for the past five years:
Type of Transaction Residents Non-Residents Total Percentage Sold
to Residents
New Vehicles Sold 678 5,286 5,964 11%
New Vehicles Leased 487 1,586 1,848 26%
Used Vehicles Sold 597 3,424 4,879 12%
Often times the owner of a new vehicle will return to the same dealership for
subsequent maintenance, repair and parts, which purchases are subject to sales tax. By
encouraging the original purchase to be made in the city, this helps to keep the tax
dollars for those subsequent purchases local as well. Furthermore, as a condition of
their participation in this program, the dealerships are required to maintain the façades
of their buildings and the general condition of their properties. This condition will help to
ensure improvements are being made and maintained along the c
commercial corridors where the dealerships are located. Maintaining and improving
those properties will also help to encourage other positive commercial development and
Page 3 of 5
City of Westminster
File #: 22-402, Item #: 4.2 Meeting Date: October 26, 2022
maintenance on other adjacent businesses. The goal is to generally improve the quality
and appearance of the commercial activity along these major commercial corridors of
the City, which will help provide additional tax revenues to the city.
Pursuant to State Government Code Section 53083, before a local agency is allowed to
approve an economic development subsidy of $100,000 or more, the agency must
provide a written report with specific details outlined in the statute, and hold a public
hearing to seek public input. A public notice and the subsidy report were published and
posted as of October 15, 2022. There are additional legal requirements to maintain
public access to the report and update the report periodically. Information about the
www.westminster-
ca.gov/vip.
If approved, upon implementation of the program, information such as the number of
rebates provided, rebates by dealership, and other financial data will be provided and
manner which is easy to understand. This was not
done with the previous program but will be for the new program to ensure transparency.
FISCAL IMPACT
The original auto rebate program was funded by the Economic Development Fund, and
the total cost of the program was $1,636,000 ($1,625,500 in rebates and $10,500 in
administrative costs). The cost of the new program as presented would not exceed
$3,000,000 over the five-year life of the program and would be allocated from the
Economic Development Fund Program Account No. 11501-44020. Fiscal year 2022-23
will require a budget adjustment of $92,000 for administration and rebates for the period
of April 1 June 30, 2023.
LEGAL REVIEW
The City Attorney has reviewed and approved as to form.
CONCLUSION
The auto rebate program will help to retain existing auto dealerships in the city, which
constitutes one of the largest sales tax generators for the city. Their continued viability is
important toward helping to ensure the c-term financial stability. The proposed
program will also promote economic development along major commercial corridors in
the city, while at the same time incentivizing residents and businesses to make these
large purchases locally. The program, if approved, would be a part of a larger effort to
encourage residents and businesses to do their shopping locally. Other efforts to
encourage local purchases will be presented in subsequent years as part of a larger
and refined Shop Westminster program.
Page 4 of 5
City of Westminster
File #: 22-402, Item #: 4.2 Meeting Date: October 26, 2022
The City Council is requested consider the program through the public hearing process
and approve, deny, or modify the terms of the program being presented.
ATTACHMENTS
1. Table of Rebates Provided Per Fiscal Year
2. Table of Rebates by Dealership
3. Economic Development Subsidy Report
4. Participation Agreement (Draft)
REVIEWED BY
Erin Backs, Finance Director
Christian Bettenhausen, City Attorney
Christine Cordon, City Manager
Page 5 of 5
City of Westminster
ATTACHMENT 1
$36,000
DEALER
$617,000$720,000$252,500
TOTAL BY
$1,625,500
2
$3,000
2022
$87,000$59,500
Fiscal
$251,000
$101,500
Year End
$5,500
$94,000$43,000
$251,500
$109,000
End 2021
Fiscal Year
$9,500
$63,500
$350,000
$116,500$160,500
End 2020
Fiscal Year
$38,500$12,500
$358,500
$142,500$165,000
End 2019
Fiscal Year
$5,500
$40,000
$369,000
$157,500$166,000
End 2018
Fiscal Year
1
$0
$8,000
$45,500
$19,500$18,000
End 2017
Fiscal Year
TOTAL BY YEAR:
Covers Period of May-June 2017Covers July 1, 2021-May 31, 2022
REBATES PAID THROUGH SHOP WESTMINSTER PROGRAM
Dealership Elmore ToyotaHonda WorldLexus of WestminsterOrange Coast Infiniti 1 2
YesYesYesYes
Businesses
ATTACHMENT 2
YesYesYesYes
Residents
No
YesYesYes
Lease
No
YesYesYes
Used
Purchase
YesYesYesYes
New
Purchase
NoneNone
Price
$15,000$15,000
Minimum
Final Sales
Term
5 Years5 Years5 Years
Program
= 5 Years
2 Years + 2-
Year Option +
1-Year Option
Program
Annual Maximum of
$400,000 for rebates + $25,000 for City marketing & administration annuallyAdjusted annually per budget, estimated at $567,000 per fiscal year$1,700,000 for rebates + $25,000 for program
administration annually$600,000 for rebates + $10,000 for one-time program administration
$500 $500
$500$500
Rebate
Purchase
Amount Per
64
Eligible
Number of
motorcycle)
Dealerships 3 (2 auto + 1
Participating
10 (1 auto + 1
Tom's Trucks)
COMPARISON TO SIMILAR LOCAL PROGRAMS
City FullertonGarden GroveSanta AnaWestminster (as presented)
ATTACHMENT 3
CITYOFWESTMINSTER
ECONOMIC DEVELOPMENT SUBSIDY REPORT
PURSUANTTOGOVERNMENTCODESECTION53803
(AB 562 REPORT)
WESTMINSTERCITYCOUNCIL
PUBLICHEARING
OCTOBER26,2022
LegislativeIntent
With the adoption of Assembly Bill 562 in 2013, now codified as California Government Code Section
53083, the California Legislature recognized the authority of local officials to use their regulatorypowers,
directspending,andtaxpoliciestoinfluencewhere,when,andhowtheprivate sector invests capital and
improves real property. The Legislature also intended to promote transparency and accountability in
economic development subsidies, similarto annual financial reporting and local fiscal decisions. The
legislation requires that subsidies to local businesses in the amount of $100,000 or more those intended
to increase employment, enhance the local tax base, and attract or retain desirable businesses be
detailed in a writtenreport and placed on an agenda for a public hearing at a regularly scheduled meeting.
The proposed agreement would resultinasubsidy/rebate tothe residents and businesses of Westminster
who purchase or lease new or used vehicles at a Westminster franchised new vehicle dealership,based
onarefundofaportionofthe3,000,000during
the five(5)-year period.Therefore, this report is intended to satisfy the requirements of Government Code
53083 and is being made available to the public prior to consideration of the proposed Agreement and
authorization of the economic development subsidy.
Legal Requirements
In accordance with Government Code Section 53083, the following elements must be addressed in written
the proposed economic development subsidy:
1.The name and address of all corporations or any other business entities, except for sole
proprietorships, that are the beneficiary of the economic development subsidy, if applicable.
2.The start and end dates and schedule, if applicable, for the economic development subsidy.
3.A description of the economic development subsidy, includingthe estimated total amount of the
expenditure of public funds by, or of revenue lost to, the local agency as a result of the economic
development subsidy.
4.A statement of the public purposes for the economic development subsidy.
5.Projected tax revenue to the local agency as a result of the economic development subsidy.
6.Estimated number of jobs created by the economic development subsidy, broken down by full-
time, part-time, and temporary positions.
ProposedProgram &Agreement
TheCity ofWestminster, inan effort to generate additional sales tax revenue, createadditional and retain
local jobs, and enhance economic vitality, proposed to provide the type of subsidy included in Government
CodeSection53083.TheCityofWestminsterintendsto enter into an Economic Development
with applicable participating dealersthat will provide Westminster
residents and businesses a $500 rebate when they purchase or lease a new or used vehicle from a
Westminster franchised new vehicle dealership.
Page1of3
1. The name and address of all corporations or any other business entities, except for sole
proprietorships, that are the beneficiary of the economic development subsidy.
The rebate would be offered to Westminster residents or businesses for the purchase of a vehicle
at any of the four (4) franchised new vehicle dealerships that opt to participate including:
Elmore Toyota, 15300 Beach Blvd., Westminster, CA 92683
Lexus of Westminster, 13590 Beach Blvd., Westminster, CA 92683
Orange Coast Infiniti, 15550 Beach Blvd, Westminster, CA 92683
Westminster Automotive Group, Inc., dba Honda World, 13600 Beach Blvd., Westminster
CA 92683
2. The start and end dates and schedule, if applicable, for the economic development
subsidy.
The program shall be in effect starting April 1, 2023 through April 1, 2028. Further, if the program
is extended pursuant to GC Section 53083, the program will be reviewed and reconsidered to
analyze the number of vehicles sold or leased, total sum of rebates to Westminster residents and
business owners, and if both the vehicle rebate and total program cap are set at appropriate levels
for the ensuing five years.
3. A description of the economic development subsidy, including the estimated total amount
of the expenditure of public funds by, or of revenue lost to, the local agency as a result of
the economic development subsidy.
The economic development subsidy shall be subsidy of $500.00 per new or used vehicle that is
purchased or leased by a verified resident or registered business of Westminster. The City
estimates that the total amount of the expenditure or loss of revenue of public funds as a result of
the economic development subsidy will be up to a maximum of Six Hundred Thousand Dollars
($600,000) per year for a total of Three Million Dollars ($3,000,000) for the five (5)-year duration
of this program.
Obligations of Participating Dealerships
A. Operate with inventory and sales personnel sufficient to satisfy and respond to customer
demand and, in compliance with Government Code Section 53084.5, shall designate said
property on its sales tax statements as the point-of-sale for all sales transactions generated
from or arising out of the business conducted on the subject property.
B. Maintain, or cause maintenance of said property to the standards and regulations of the
Westminster
C. Carry out the operation of the business of retail automobile sales in substantial conformity
with applicable laws, ordinances, statutes, codes, rules, regulations, orders and decrees of
the United States, the State of California, Orange County, and the City of Westminster.
D. Maintain continued possession of valid City of Westminster Business License, and Sales &
Use Tax Permit from the State of California.
4. A statement of the public purposes for the economic development subsidy.
The proposed agreement/program
objectives and is in the best interest of the general public. Specifically, the following public
purposes are achieved:
Page 2 of 3
Ensuring robust vehicle sales and increased sales tax revenue to the City of
Westminster, which ultimately funds essential City
long-term financial stability.
Create and retain jobs in the community, thereby stimulating further generation of sales
tax revenue and increased demand for local housing, goods, and services.
Provide enhanced and increased vitality to a highly visible property along major
commercial corridors of the city, making them more appealing, and economically vital
destinations for prospective car buyers.
69.7% of consumers state they would avoid making a vehicle purchase or lease in a city
that charges a higher sales tax rate. The proposed program would provide an incentive
for Westminster residents to buy/lease their next new or used vehicle from a
Westminster franchised new vehicle dealership, and would be an effective tool to retain
sales tax revenues in the city.
The proposed Agreement will encourage the long-- grossing
automobile businesses and one of its largest producers of sales tax revenue. The four
Westminster franchised new vehicle dealerships generate an economic impact estimated at
almost half a billion dollars ($472,681,760) annually. That revenue will support the General
Fund, from which the City funds essential services such as public safety, recreation,
infrastructure, etc. Since the dissolution of Redevelopment Agencies throughout the State of
California since 2012, the City has been forced to be increasingly creative in its attempts to
attract or expand new revenue-generating businesses to the community. The proposed
Agreement, through its generation of sales tax revenue, creation of additional on-site
employment, and the promotion of property maintenance and improvements along major
corridors,
public purpose.
5. The projected tax revenue to the local agency as a result of the economic development
subsidy.
The City anticipates that the retention of the four existing franchised new vehicle dealerships
within the City will result in an approximate retention of annual sales tax revenue in the amount of
$3,504,646, which is approximately 20% of the total sales tax revenues of the city.
In addition, the City expects to retain the property taxes from the current four franchised new
vehicle dealerships estimated to be $72,000 annually.
6. The estimated number of jobs created by the economic development subsidy, broken down
by full-time, part-time, and temporary positions.
The retention of the four franchised new vehicle dealerships within the City is anticipated to result
in the retention of 402 jobs currently at the dealership over the term of the agreement.
Page 3 of 3
ATTACHMENT 4
PARTICIPATION AGREEMENT
FOR THE CITY OF WESTMINSTER
VEHICLE INCENTIVE REBATE PROGRAM
This Participation Agreement for the City of Westminster Vehicle Incentive Program
______, 202_ by and between the City of
Westminster , a municipal corporation, and the City of Westminster Franchised New
Vehicle Dealer, ____________________________ , all collectively referred to
WHEREAS, the Parties desire to implement a City of Westminster Vehicle Incentive
Rebate Program whereby the City shall reimburse the amount of $500.00 to
Westminster residents and businesses for the purchase of a new or used car, or lease of a new
car, from a participating Westminster franchised new vehicle dealer. This agreement will govern
the process of reimbursement to participating dealerships that provide a corresponding discount
on the purchase price of any qualifying new or used vehicle purchased, or new vehicle leased,
in the City of Westminster by a resident or business of Westminster.
AGREEMENT
1. Rebate Program: The City of Westminster hereby agrees to provide to a participating
Dealership a rebate of $500.00 per qualifying vehicle purchased by a resident or business in the
City of Westminster, provided:
A. The Dealership documents the sale or lease of the vehicle to an eligible City of
Westminster resident or business under the Program guidelines. In order to qualify,
the vehicle must be registered to a Westminster Address upon purchase.
B. Dealership deducts the $500 rebate amount off the purchase price, or lease price, of
the qualifying vehicle, after taking into account all other discounts the purchaser
would have qualified for without taking the Westminster Program into account.
Under no circumstances shall Dealership use the Westminster Program to reduce or
eliminate factory discounts or incentives, or discounts the Dealership itself would
have offered to the Purchaser.
C. Dealership submits a rebate request to the City within 30 days of the final sale date,
providing proof of sale documents, and whatever other documents City may request,
under the Program guidelines established by the City from time to time for
administration of the Program.
D. The maximum amount of reimbursements by the City for the Program is $600,000
stst
per year, running from April 1 to March 31 of each year. The City will notify the
participating dealerships if Program funds have been exhausted.
2. Dealership Responsibilities: A Dealership eligible for participation shall meet all of the
following requirements:
A. The Dealership must be a franchised vehicle dealer located in the City of
Westminster and shall operate with inventory and sales personnel sufficient to
satisfy and respond to customer demand and, in compliance with Government
Code Section 53084.5. All dealership properties where sales take place in the
Page 1 of 5
City of Westminster Vehicle Incentive Rebate Program Dealership Participation Agreement
ATTACHMENT 4
City shall be designated on the sales tax statements as the point-of-sale for all
sales transactions generated from or arising out of the business conducted on
the subject property;
B. The Dealership must be in good standing with their parent corporation and
manufacturer;
C. The Dealership shall carry out the operation of the business of retail automobile
sales in substantial conformity with applicable laws, ordinances, statutes, codes,
rules, regulations, orders and decrees of the United States, the State of
California, Orange County, and the City of Westminster; and must Maintain their
Dealership properties to a high degree of care, and in accordance with the
own expense;
D. The Dealership shall have no current, outstanding, or unresolved City of
Westminster code violations or any legal or administrative proceedings with or
against the City of Westminster;
E. The Dealership must maintain continued possession of valid City of Westminster
Business License, and Sales & Use Tax Permit from the State of California;
F. The Dealership shall promote the Program in active marketing efforts; and
G. The Dealership shall meet the requirements of the City under the Program
guidelines.
3. Resident Responsibilities:
A. Applicant must be able to prove City of Westminster residency under the
established Program guidelines; and
B. The Program rebate is available only for the purchase of a new or used vehicle,
or lease of a new vehicle, from a participating and approved Westminster
Dealership; and is limited to two (2) per family/address or a limit of ten (10) per
business address annually.
4. Business Responsibilities:
A. Applicant must have its point-of-sales and a valid business license in the City of
Westminster under the Program guidelines established; and
B. The Program rebate is available only for the purchase of a new or used vehicle,
or lease of a new vehicle, from a participating and approved Westminster
Dealership. Fleet purchase transactions are not eligible for the Program.
C. In order to qualify, the purchased or leased vehicle must be registered to the
Westminster business, at an address located in the City of Westminster.
5. Term: This Agreement shall commence on April 1, 2023, contingent on availability of
funds, and shall continue for a five (5)-year period, unless extended or earlier terminated by
Page 2 of 5
City of Westminster Vehicle Incentive Rebate Program Dealership Participation Agreement
ATTACHMENT 4
action of the City Council. The Dealership may terminate its participating in the Program by
City of Westminster
Office of the City Manager
8200 Westminster Blvd.
Westminster, CA 92683
6. Reimbursement by City: The City will reimburse a participating dealership within 30
days of submittal of a request for reimbursement, including all documentation required by
the City, to verify the sale of a new vehicle under the Program guidelines. All purchases
shall be bundled and submitted to the City on a monthly basis in a group, and
reimbursements will be issued on a monthly basis by the City. Purchases submitted for the
month shall be processed the next month and payment made within 30 days.
7. Audit: The City may, from time to time, perform an audit of any purchases where a
rebate was given. Dealership shall pay for the audit if it is determined that rebates were given in
an improper manner or in violation of the Program requirements, and for each such violation the
Dealership shall reimburse the City twice the amount of the rebate given as part of that
transaction.
8. Administration: The City Manager is hereby appointed to administer this Agreement
and take all necessary actions to implement this Agreement on behalf of the City.
9. Interpretation of the Agreement:
A. This Agreement constitutes the entire agreement between the parties and
supersedes all prior discussions, negotiations, and agreements, whether oral or
written. Any amendment to this Agreement, including an oral modification
supported by new consideration, must be reduced to writing and signed by both
Parties before it will be effective.
B. This Agreement and all amendments and supplements to it may be executed in
counterparts, and all counterparts together shall be construed as one document.
C. This Agreement is to the benefit of, and is binding on, the Parties, their
respective heirs, personal representatives' successors and assigns.
D. The captions heading the various paragraphs of this Agreement are for
convenience and shall not be considered to limit, expand, or define the contents
of the respective paragraphs. Masculine, feminine, or neutral gender and the
singular and the plural number, shall each be considered to include the other
whenever the context so requires. If either party consists of more than one
person, each such person shall be jointly and severally liable. This Agreement
shall be interpreted under California law and according to its fair meaning, and
not in favor of or against any party.
10. Governing Law: This Agreement is executed and intended to be performed in the State
of California, and the laws of that State shall govern its interpretation and effect. Any legal
proceedings on this Agreement shall be brought under the jurisdiction of the Superior Court of
the County of Orange, State of California.
Page 3 of 5
City of Westminster Vehicle Incentive Rebate Program Dealership Participation Agreement
ATTACHMENT 4
\[SIGNATURES ON FOLLOWING PAGE\]
Page 4 of 5
City of Westminster Vehicle Incentive Rebate Program Dealership Participation Agreement
ATTACHMENT 4
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by and through their respective authorized officers, as of the date first above written.
CITY OF WESTMINSTER
__________________________________ Date: __________________________
Christine Cordon
City Manager
APPROVED AS TO FORM:
__________________________________ Date: ________________________
Christian L. Bettenhausen
City Attorney
ATTEST:
________________________________
Lucie Colombo
Interim City Clerk
DEALERSHIP
__________________________________
\[NAME OF DEALERSHIP\]
__________________________________ Date: __________________________
\[Name of Authorized Signer\]
\[Title\]
__________________________________
Taxpayer ID Number
Page 5 of 5
City of Westminster Vehicle Incentive Rebate Program Dealership Participation Agreement