75B - TAX SHARING TACENERGY - Laserfiche WebLink

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(4) A statement of the public purposes for the economic development subsidy. On August 5, 2013, the City Council approved the execution of a sales tax sharing agreement with IPC (USA), Inc., an independent wholesale distributor of gasoline, diesel, jet fuel, and other refined petroleum products throughout the United States. The Agreement provided for a 50 percent sharing of local sales tax generation, plus a 70 percent (IPC) and 30 percent (City) sharing of additional sales tax generation above $1.4 million dollars. On November 1, 2019, IPC (USA), Inc. was acquired by TACenergy, one of the largest national wholesale fuel suppliers in the county, with annual sales exceeding 2.7 billion gallons and more than $5 billion in revenue. Since the agreements execution, IPC has been a top ten sales tax producer for the City. This sales tax generated is directly deposited into the City's General Fund which is primarily used to fund police, fire, homeless reduction, and parks and recreational services for the City's residents. Without this agreement, several of the City's general services may be cut or reduced for its residents. (5) Projected tax revenue to the local agency as a result of the economic development subsidy. Based on current projections, the cumulative total of sales tax generated during the term of the Agreement is estimated to be in excess of $50 million dollars. Of this amount, half will be paid to TAC Energy, while the City will retain the remainder. This Agreement will keep 40 jobs in the City of Santa Ana. TACenergy is projecting that they will generate more than $1.25 million in sales tax the first year, with a 6% annual increase in sales during years 3-7. This will equate to an average of $1.5 million per year in local sales tax. (6) Estimated number of jobs created by the economic development subsidy, broken down by full-time, part-time, and temporary positions. The proposed Agreement will assist in retaining approximately 30 jobs, with the expectation that the number of jobs would increase by an additional 15-20 jobs within the next five years. 75B-15