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Home My WebLink AboutR30-Economic Development '. CITY OF SAN BERNARDINO ECONOMIC DEVELOPMENT AGENCY ORIGINAL FROM: Emil A. Marzullo Interim Executive Director SUBJECT: San Bernardino new car automobile dealership - Special sales promotion DATE: February 23, 2009 --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- Svnopsis of Previous Commission/Council/Committee Action(s): On February 19, 2009, Redevelopment Committee Members Johnson, Baxter and Brinker unanimously voted to recommend that the Community Development Commission consider this action for approval. --------------------------------------------------------------- --------------------- ----------------------- ------------------------------------------------------------------------------------------- Recommended Motiop(s): (Communitv Development Commission) MOTION: That the Community Development Commission of the City of San Bernardino approve and authorize the Interim Executive Director of the Redevelopment Agency of the City of San Bernardino ("Agency") to undertake an advertising and special incentive automobile sales event for all new-vehicle automobile dealers in the City of San Bernardino for a cost not to exceed $150,000 ---------------------------------------------------------------------------------------------- ----------------------------- --~-~-~----------------- --------------------------------------------------------- Contact Person(s): Project Area(s): Supporting Data Attached: Colin Strange Ciry Wide Phone: (909) 663-1044 Ward(s): 1 S\ 3rd and 6th [;'] Staff Report 0 Resolution(s) 0 Agreement(s)/Contract(s) 0 Map(s) 0 Letter(s) FUNDING REQUIREMENTS: Amount: $ $150,000 Source: Tax Increment Budget Authority: Agency Marketing Budget Signature: Emi Fiscal Review: !t ("," J~/L/-;;7 Barbara Lindseth, Administrative Services Director --------------------------------------~-----------------------------------------------------------------------------------------------------------------------------------------------------~~----------------- Commission/Council Notes: ------------~-~------------------------------------------~------------------_.~--------------------~-----------------------~--~--~----------------~------------------------------------ P:\Agendas\Comm Dev Commission\CDC 2009\03-02-09 Car Dealership Association - Special Incentive Sales Eventdoc COMMISSION MEETING AGENDA Meeting Date: 03/02/2009 Agenda Item Number: ~ ~O , ECONOMIC DEVELOPMENT AGENCY STAFF REPORT SAN BERNARDINO NEW CAR AUTOMOBILE DEALERSHIP - SPECIAL SALES PROMOTION BACKGROUND: The current economic difficulties being experienced nationally and internationally have been particularly prevalent in the automobile industry with all major brands suffering substantial downfalls in sales numbers. According to Bloomberg.com (January 6, 2009), United States auto sales plunged 36% in December dragging the industry's volume in 2008 down to a 26-year low. Toyota reported a downfall of 35%, Chrysler 53%, General Motors and Nissan 31% and Ford 32%. On a local level, the City of San Bernardino ("City") has seen the closure of Center Chevrolet, Kennedy Cadillac, Freeway Lincoln and Shaver Jeep, Chrysler and Kia in the last six months. In an effort to take action and stem the negative tide, the remaining auto dealers in the City's Auto Center (Toyota, Nissan, Scion, Mazda and Mitsubishi) have organized into a cohesive group and are now in the process of participating in the formation of a Property and Business Improvement District ("PBID") which will make additional funds available for marketing and maintenance activities through a self- imposed assessment on their properties. One of the requirements of a PBID, however, is that all members must be geographically contiguous. This has precluded the remaining automobile dealerships on the 1- 215 Freeway from joining the PBID. CURRENT ISSUE: The dealerships along the 1-215 Freeway who are not included in the PBID formation process (Moss Bros. Dodge, Subaru, Fairview Ford and Crest Chevrolet) are also desirous of taking action to mitigate their poor sales figures. Accordingly, the City and the Redevelopment Agency of the City of San Bernardino ("Agency") have proposed a promotional activity which would include all new-car automobile dealerships in the City with the idea of reinforcing the notion throughout the Inland Empire that San Bernardino is still a regional center for new automobile purchases. The promotion will essentially revolve around the equivalent of a rebate of the local portion of the sales tax to consumers, currently at 1.25% of the purchase price. The promotion will consist of the following: . Participation by all new-car dealers during the last ten days of March 2009. . Publicity campaign coordinated by the car dealers in conjunction with the Convention and Visitors Bureau to include radio, Time Warner cable and print advertisements. . Target area to include the high desert, mountain regions, east as far as Banning, south and west to the 91 Freeway. P:\Agendas\Comm Dev Commission\CDC 2009\03-02-09 Car Dealership Association - Special Incentive Sales Event.doc COMMISSION MEETING AGENDA Meeting Date: 03/02/2009 Agenda Item Number: 2..3L> Economic Development Agency Staff Report Car Dealership - Special Incentive Sales Event Page 2 . Discount off the sales price to consumer's equivalent to the amount of the local portion of the sales tax to be reimbursed to the dealership out of Agency marketing funds. . Various special events and entertainment, give-a-ways, food and beverage. . Tent sales and quality pre-owned vehicles may be included in the promotion. While it is hoped that this special event will boost sales in March, a month renowned for tax-refund checks, the primary reason for the event is to attract attention to the numerous automobile dealerships still operating in the City along the 1-215 Freeway and the wide variety of domestic and foreign vehicles available for sale in the City. A secondary reason is to show commitment by the City and its Redevelopment Agency to its all important automobile dealers who are a major contributor to the sales tax revenues of the City. ENVIRONMENTAL IMP ACT: The recommendation contained in this Staff Report is for approval of a promotion only. As such, it is exempt from the California Environmental Quality Act ("CEQA") pursuant to Chapter 2.6, Section 21080 of the public Resources Code, CEQA Statutes and Section 15061(b)(3). FISCAL IMPACT: The Agency proposes a budget of $50,000 for the publicity and media campaign and an additional $50,000 to $100,000 representing the marketing portion related to an amount equivalent to the local portion of the sales tax (1.25% of the total sales price) for a total cost not to exceed $150,000. This second $100,000 is predicated on the number of automobiles sold and could be a greater or lesser dollar amount than anticipated. A greater amount represented by the rebate figure demonstrates a more successful promotion and marketing campaign for the auto dealers. RECOMMENDATION: That the Community Development Commission adopt the Motion. EmilA-~,"~m (tLDlR<W __________________~~____________________n__~______________________________________________________________________----------------------------~----------------------------------------- P\Agendas\Comm Dev Commission\CDC 2009\03-02-09 Car Dealership Association - Special Incentive Sales Event,doc COMMISSION MEETING AGENDA Meeting Date: 03/0212009 Agenda Item Number: J2..W