HomeMy WebLinkAbout65C - VIP INCENTIVES PROGREQUEST FOR
COUNCIL ACTION
CITY COUNCIL MEETING DATE:
NOVEMBER 20, 2018
TITLE:
APPROVAL OF TERMS FOR RESIDENT
VEHICLE INCENTIVE PROGRAM (VIP)
(STRATEGIC PLAN NO. 3,3C)
CITY MANAGER
RECOMMENDED ACTION
CLERK OF COUNCIL USE ONLY:
APPROVED
❑ As Recommended
❑ As Amended
❑ Ordinance on 151 Reading
❑ Ordinance on 2ntl Reading
❑ Implementing Resolution
❑ Set Public Hearing For
CONTINUED TO
FILE NUMBER
Approve Terms of Resident Vehicle Incentive Program as recommended by Staff or;
alternatively,
2. Approve Terms of Resident Vehicle Incentive Program as agreed upon after deliberation of
the City Council, and
3. Direct Staff to draft terms into an Agreement for consideration at the December 4, 2018 City
Council meeting.
DISCUSSION
As a means to spur growth of the local tax base and to encourage Santa Ana residents "buy local",
is to create specific incentive programs aimed to entice residents to buy their products in Santa
Ana. With that in mind, the City of Santa Ana is introducing the Resident Vehicle Incentive Program
(VIP). The Resident Vehicle Incentive Program will incentivize Santa Ana residents to purchase a
car and/or truck from a Santa Ana Auto Dealer.
During the July 17, 2018 City Council Meeting, the City Council directed staff to further develop the
Shop Santa Ana Program by adding incentives for the Santa Ana residents to purchase a carwithin
Santa Ana. At the August 20, 2018, Economic Development, Infrastructure, Budget and
Technology Council Committee (EDIBT) meeting, the Committee further defined the incentive
program and directed staff to bring a proposed program to the City Council for discussion and
approval.
Program
The Resident Vehicle Incentive Program (VIP) program is designed to provide a rebate to a Santa
Ana resident who purchases a car or truck from a franchised Santa Ana Auto dealership. The
Resident VIP program will become a new component of the City's existing "Shop Santa Ana"
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Santa Ana Resident VIP Program
November 20, 2018
Page 2
initiative by encouraging residents to continue to buy locally. The Resident VIP Program has been
developed to avoid leakage of local automotive purchases to outside jurisdictions. This program
would ensure that future revenue generated by this sector will be available to provide vital City
services.
An increase in the number of vehicles purchased at franchised Santa Ana Auto dealerships by
Santa Ana residents bolsters the local economy and would also provide opportunity and
encouragement for an expansion of the number of automotive dealerships located within the City.
This also would have a positive effect on the number of jobs created and available locally, resulting
in a net benefit to the community at large.
Program Terms
The Orange County Auto Dealers Association (OCADA) has outlined the parameters of their
requested program represented below (shaded). Per the Auto Dealers request, totals for the
number of new, leased and used autos sold are estimated at 25% above last year's totals. Staff
has prepared recommendations for a slightly different program. This includes incentives for new
cars only as leases and used car sales may impact revenue potential and bring about program
processing and administration issues.
Term
Rebate Amount New Cars
Rebate Amount Leased Cars
Rebate Amount Used Cars
Effective
Council to Take Action
Structure
Rebate Budget
Administration Budget
Marketing/Advertising Budget
Total
Participating Dealers
Min 5 Years
$500.00
$500.00
$500.00
Monday, April 1, 2019
Tuesday, November 20, 2018
Resident Choice' Dealer
reimbursed for rebate or City
issues Check to Resident
$1,857,500.00
$25,000.00
$25,000.00
91.907.500
Staff Recommended
2 Years
$500.00
$0.00
$0.00
Monday, April 1, 2019
Tuesday, November 20, 2018
City Issues Check to Resident
Audi South Coast j Same
Crevier Mini
Freeway
Subaru Oran
Tom's Truck
Volvo Cars Orange County
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$1,000,000.00
$25,000.00
$25.000.00
Santa Ana Resident VIP Program
November 20, 2018
Page 3
Exclusion of leases and used vehicles
Staff is recommending that leased vehicles are not included in the incentive program as sales tax
is not paid up front rather over the time of the lease. By allowing leased vehicles, the initial
economic impact of the incentive to the City would be reduced as more residents would be inclined
to pursue a lease instead of a new purchase.
As the City of Santa Ana has numerous used car dealerships (outside of the participating dealers
list), Staff is also recommending that used cars are not included in the incentive program. This
would create significant processing, auditing and an administrative burden to manage such a
program. Additionally, defining which used vehicle dealerships are accepted into such a program
may create inequities for dealers and buyers.
Marketing
With marketing of the program, city staff is expecting that the number of new cars sold to local
residents and entitled to the incentive could reach up to 2,000 vehicles. With a rebate amount of
$500 per resident, the anticipated first year budget for the program would be $1 million dollars.
The marketing and administration of the Program is expected to be up to $50,000.
STRATEGIC PLAN ALIGNMENT
Approval of this item supports the City's efforts to meet Goal #3 Economic Development, Objective
#3, (Promote a solutions -based customer focus in all efforts to facilitate development and
investment in the community), Strategy C (Explore opportunities to encourage a business friendly
environment within the city through the reduction of non-essential regulatory requirements,
improved coordination between agencies for development review and addition of monetary
incentives).
FISCAL IMPACT
There is no fiscal impact associated with this action
Steven A. Mendoza
Executive Director
Community Development Agency
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