ECONOMIC DEVELOPMENT SUBSIDY REPORT
PURSUANT TO GOVERNMENT CODE SECTION 53083
FOR AUTO INCENTIVE BEACH PARKING PASS PROGRAM
BY AND BETWEEN
THE CITY OF HUNTINGTON BEACH
AND THE
HUNTINGTON BEACH AUTO DEALERS ASSOCIATION
Pursuant to Government Code Section 53083, the City Council of Huntington Beach must hold a noticed public hearing and, prior to the public hearing, provide all of the following information in written form and available to the public through the City’s website regarding a proposed economic development subsidy provided by the City pursuant to a Memorandum of Understanding between the City of Huntington Beach and the Huntington Beach Auto Dealers Association, in connection with the Auto Incentive Beach Parking Program. Notice was published on the City’s website for a public hearing to be held on March 15, 2022.
The purpose of this report is to provide the information required pursuant to Government Code Section 53083 in regards to the City’s Auto Incentive Beach Parking Pass Program. This report shall remain available to the public and posted on the City’s website until the end of date of the economic development subsidy, as further described in number two below.
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.
Norm Reeves Honda Superstore Toyota of Huntington Beach 19131 Beach Blvd. 18881 Beach Blvd.
Huntington Beach, CA 92648 Huntington Beach, CA 92648 Car Pros KIA Huntington Beach McKenna Subaru
18835 Beach Blvd. 18801 Beach Blvd.
Huntington Beach, CA 92648 Huntington Beach, CA 92648 Huntington Beach Ford DeLillo Chevrolet
18255 Beach Blvd. 18211 Beach Blvd.
Huntington Beach, CA 92648 Huntington Beach, CA 92648 Surf City Nissan Huntington Beach Mazda
17331 Beach Blvd. 16800 Beach Blvd.
Huntington Beach, CA 92647 Huntington Beach, CA 92647 Huntington Beach Hyundai Huntington Beach Chrysler, Dodge, Ram 16751 Beach Blvd. 16701 Beach Blvd.
Huntington Beach, CA 92647 Huntington Beach, CA 92647 McKenna Volkswagen Huntington Beach Jeep
18711 Beach Blvd. 16701 Beach Blvd.
Huntington Beach, CA 92648 Huntington Beach, CA 92647 The start and end dates and schedule, if applicable, for the economic development subsidy.
Upon City Council approval, the proposed agreement is expected to commence on March 15, 2022 and end on March 14, 2027.
A description of the economic development subsidy, including the estimated total amount of the expenditures of public funds by, or of revenue lost to, the local agency as a result of the economic development subsidy.
The economic development subsidy will provide an incentive to car buyers, lessees, and participating members of the Huntington Beach Auto Dealers Association by providing a voucher to obtain a free annual beach parking pass ($150 per vehicle) with the purchase of new, used ($20,000 or more), or leased vehicles. Data from the on-going program suggests that the City redeems about 2,750 vouchers each year. Therefore, the City estimates that a subsidy of approximately $412,500 will be provided annually which equates to the cost of the beach parking passes provided, with a total expenditure of approximately $2,062,500 throughout the 5-year duration of the program. Additionally, 250 hours of City staff will be devoted to oversee the program.
A statement of the public purposes for the economic development subsidy.
Car dealerships are the largest sales tax generators in Huntington Beach with annual sales tax revenue estimated to be between $8-9 million. Maintaining sales tax revenue from the City’s auto dealerships is needed to fund vital City services. The program helps to spur sales tax revenue growth, encourages local residents and regional visitors to purchase and lease vehicles in the City of Huntington Beach, and prevents leakage of automotive purchases and leases to outside jurisdictions.
Projected tax revenue to the local agency as a result of the economic subsidy.
The average number of vehicles sold (new and used) and leased by the Huntington Beach Auto Dealers Association between 2018 and 2020 was roughly 24,600 annually. Approximately, 2,750 vouchers were redeemed each year between 2018 and 2021, which equates to an 11% voucher redemption rate. The projected total gross sales for vehicles within the City is roughly $800-900 million of which the City will retain 1% in sales tax totaling $8-9 million. Using the 11% voucher redemption rate as a way to determine the impact of extending the subsidy and keeping the program active, the City will retain almost $1 million in sales tax annually and $5 million throughout the 5-year duration of the program. Increased marketing of the economic subsidy will allow the City to receive additional sales tax from purchases or leases made under the program, which also provide increased sales tax generation on parts and service.
Promotion of this program will allow the City’s auto dealers to stay competitive with other dealerships throughout the region. The program also encourages car buyers and lessees to frequent the City’s beach, downtown shops, and restaurants when utilizing the beach parking pass, expanding support to other local businesses and increasing overall sales tax to the City.
Estimated number of jobs created by the economic development subsidy, broken down by full-time, part-time, and temporary positions.
The proposed subsidy will assist in retaining approximately 1,100 auto dealer jobs.