Laserfiche WebLink
REQUEST FOR <br />COUNCIL ACTION <br />CITY COUNCIL MEETING DATE: <br />MARCH 3, 2020 <br />TITLE <br />PUBLIC HEARING: APPROVE SALES <br />TAX SHARING AGREEMENT WITH <br />TACENERGY <br />/s/Kristine <br />CITY MANAGER <br />CLERK OF COUNCIL USE ONLY: <br />APPROVED <br />❑ As Recommended <br />❑ As Amended <br />❑ Ordinance on 11' Reading <br />❑ Ordinance on 2ntl Reading <br />❑ Implementing Resolution <br />❑ Set Public Hearing For_ <br />CONTINUED TO <br />�1��►1�1�1:3q:7 <br />RECOMMENDED ACTION <br />Conduct a public hearing and authorize City Manager to execute the Sales Tax Sharing Agreement <br />with TACenergy for continued operation of the company's sales office in Santa Ana, for the period <br />of April 1, 2020 through December 31, 2045, subject to non -substantive changes approved by the <br />City Manager and City Attorney. <br />DISCUSSION <br />Sales tax rebate assistance is an economic development tool used to encourage the development, <br />expansion, and retention of businesses that create additional sales tax for a city. On August 5, <br />2013, the City Council approved the execution of a sales tax sharing agreement with IPC, Inc. <br />("IPC agreement"), an independent wholesale distributor of gasoline, diesel, jet fuel, and other <br />refined petroleum products throughout the United States. The agreement provided for a 50 percent <br />sharing of local sales tax generation, increasing to 70 percent when more than $1.4 million of sales <br />tax is generated in a single year. The term of this agreement was to expire in January 2028. Since <br />the agreement's execution, IPC has been one of the top ten sales tax producers for the City. <br />On November 1, 2019, IPC (USA), Inc. was acquired by TACenergy, one of the largest national <br />wholesale fuel suppliers in the country, with annual sales exceeding 2.7 billion gallons and more <br />than $5 billion in revenue. Since the acquisition, TACenergy has been evaluating all of its newly <br />acquired assets and have made the determination that they would like to remain in the city of Santa <br />Ana due to its local employment base and centralized proximity to an airport and major freeways. <br />Due to the acquisition, the City's current agreement with IPC has become invalid. <br />On January 9, 2020, representatives from TACenergy met with the City Manager and Executive <br />Director of the Community Development Agency to discuss the opportunity to enter into a new <br />sales tax sharing agreement for 25 years at the same terms as the IPC agreement. Santa Ana <br />operations are limited to a sales office, with no significant infrastructure investment. <br />75B-1 <br />