STAFF REPORT
City of Lancaster
CC 7
8/27/2024
TN
Date: August 27, 2024
To: Mayor Parris and City Council Members
From: Chenin Dow, Assistant Director – Community Development Michael Flores, Coordinator II – Economic Development
Subject: Assignment and Assumption Agreement Regarding Subaru Antelope Valley and Honda Lancaster
Recommendations:
1. Approve an Assignment and Assumption Agreement with Trust Automotive.
2. Authorize the City Manager, or his designee, to negotiate, finalize, and execute the agreement in a form to be approved by the City Attorney.
G.C. Section 84308: No
Fiscal Impact:
This Assignment and Assumption Agreement will remain in effect through 2039. Throughout this time, the site will continue to operate as an automotive dealership, ensuring the ongoing generation of sales tax revenue for the City.
Background:
The Lancaster Auto Mall serves as a key generator of sales tax revenue and jobs for the City of Lancaster. As such, the City has proactively engaged in a variety of efforts to support the Auto Mall, as well as attract and retain auto dealerships.
One such initiative was the 2009 acquisition of operating and restrictive covenants from Clutter Motors for the auto dealerships now known as Antelope Valley Subaru and Honda Lancaster. Through this effort, the City secured significant upgrades to both facilities, along with a thirty (30)-year commitment for the operation and maintenance of the dealerships at these locations.
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In 2017, with the City’s consent, Clutter Motors assigned its obligations under these covenants to Sully III AVP, LLC (“Sully”). Sully has continued to operate the two (2) dealerships since that time.
Today, Sully is seeking to sell the dealerships to another experienced auto group, Trust Automotive. This sale requires the consent of the City and the transfer of the obligations associated with the covenants via the proposed Assignment and Assumption Agreement.
The covenants set forth in 2009 will remain in effect for thirty (30) years, through 2039. During this time, the sites must be occupied and used solely for automotive uses relating to new automobile and truck dealership activities, including automobile and truck servicing, used automobile and truck sales, and repair of vehicles and ancillary uses reasonably related and connected to new automobile and truck dealerships.
By entering into the proposed agreement, the City will aid in preserving local jobs and tax revenues, while also securing the continued operation of a Honda and a Subaru dealership well into the future.
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