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Home My WebLink About65C - RESIDENT VEHICLE INCENTIVE PROGREQUEST FOR COUNCIL ACTION CITY COUNCIL MEETING DATE: JANUARY 15, 2019 TITLE: APPROVAL OF TERMS FOR RESIDENT VEHICLE INCENTIVE PROGRAM (VIP) (STRATEGIC PLAN NO. 3,3C) CITY MA AGER RECOMMENDED ACTION CLERK OF COUNCIL USE ONLY: APPROVED ❑ As Recommended ❑ As Amended ❑ Ordinance on 1 s Reading ❑ Ordinance on 21d Reading ❑ Implementing Resolution ❑ Set Public Hearing For CONTINUED TO FILE NUMBER Approve Terms of Resident Vehicle Incentive Program as agreed upon after deliberation of the City Council. 2. Direct Staff to draft terms into an Agreement for consideration at the February 5, 2019 City Council meeting. DISCUSSION As a means to spur growth of the local tax base and to encourage Santa Ana residents to "buy local", the City is working closely with the Orange County Auto Dealers Association (OCADA) to. develop a specific incentive program aimed to entice residents to buy their vehicles in Santa Ana. With that in mind, the City of Santa Ana is introducing the Resident Vehicle Incentive Program (VIP) that will incentivize Santa Ana residents to purchase a car and/or truck from one of 10 franchised Santa Ana auto dealers who are members of OCADA. - On July 17, 2018, the City Council directed staff to further develop the "Shop Santa Ana Program" by adding incentives for the Santa Ana residents to purchase a car within Santa Ana. On August 20, 2018, the Economic Development, Infrastructure, Budget and Technology (EDIBT) Council Committee further defined the Vehicle Incentive Program and directed staff to bring proposed terms to the City Council for discussion and approval. The terms were introduced at the December 18, 2018 City Council Meeting, but continued at the request of OCADA. Staff has since continued to work with OCADA and has further refined the terms of the Program. As designed, the VIP provides a rebate to a Santa Ana resident who purchases a car or truck from a franchised Santa Ana auto dealer. The Program will become a new component of the City's existing "Shop Santa Ana" initiative by encouraging residents to continue to buy locally. The VIP has been developed to avoid leakage of local automotive purchases to outside jurisdictions and would ensure that future revenue generated by this sector will be available to provide vital City services. 65C-1 Santa Ana Resident Vehicle Incentive Program January 15, 2019 Page 2 Sales In 2017, Santa Ana residents purchased 1,688 of 6,220 (27%) new vehicles, leased 687 of 8,348 (8%) vehicles, and purchased 597 of 5,382 (11%) used vehicles from the franchised Santa Ana auto dealers who are members of OCADA. The concern from the franchised Santa Ana auto dealers is that the recently voter approved sales tax increase would drive sales away from Santa Ana auto dealers. It is in the best interest of the City of Santa Ana and the dealers to retain and increase sales levels at their dealerships. 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 auto 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 OCADA has outlined the parameters of their requested program represented below. Totals for the number of new, leased and used autos sold are estimated at 25% above last year's totals. OCADA Pro ram Terms Term Min 2 Years with two 1- ear extensions Rebate Amount New Cars $500 Rebate Amount Leased Cars $500 Rebate Amount Used Cars() $500 Effective Monday, April 1, 2019 Structure Resident Choice: Dealer reimbursed for rebate or City issues check to resident Rebate Budget $1,700,000 City Administration Budget $25,000 Dealer Marketing Budget $25,000 per dealer $250,000 TOTAL BUDGET $1,975,000 Participating Dealers • Audi South Coast • Crevier BMW Crevier Mini Freeway Honda • Guaranty Chevrolet Lincoln South Coast Subaru Orange Coast • Tom's Truck Center Volkswagen South Coast • Volvo of Orange County (1) Minimum Used Car Purchase price of $15,000 65C-2 Santa Ana Resident Vehicle Incentive Program January 15, 2019 Page 3 Marketing and Administration Bud -gets With marketing of the program, 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 over $1.7 million dollars. The marketing and administration of the program is expected to be up to $25,000 of City funds, which will be used by the Community Development Agency and the Finance and Management Services Agency to effectively administer the program. Additionally, each participating dealer has committed to spend $25,000 for marketing the program. As part the marketing efforts, digital reader boards would also be placed in center medians throughout the City to inform Santa Ana residents of the incentive. 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, however after terms are approved an Agreement with a Fiscal Impact will be presented. �- Steven A. Mendoza Executive Director Community Development Agency 65C-3 65C-4