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Automobile & Vehicle Dealership Tax Sharing & Economic Program
The City of Hemet has adopted a new ordinance to establish a Sales Tax Sharing and Economic Development Program, primarily aimed at supporting automobile and other vehicle dealerships. The City recognizes that these dealerships are crucial for local employment and generate significant sales tax revenue, which funds essential public services like police, fire, and street maintenance. To remain competitive and encourage investment, the City intends to offer legally compliant economic incentives that stimulate capital investment and job growth within its jurisdiction, ensuring the continued viability and modernization of these important businesses.
Under this program, the City Council can approve Sales Tax Sharing Agreements with qualifying dealerships to help reimburse a portion of their "Eligible Costs" for facility upgrades or new construction. These eligible expenses cover significant capital investments such as building renovations, site improvements, ADA compliance, and expansions, but exclude routine maintenance. Agreements are capped at a percentage of the sales tax generated by the dealership, with a maximum reimbursement of $7.5 million for existing dealerships and $10 million for new ones, over a term not exceeding 20 years. Importantly, these incentives are contingent upon verifiable public benefits and cannot be used to subsidize dealerships relocating from within the City's market area.
To ensure transparency and fiscal responsibility, the program includes a structured application process requiring detailed project descriptions, cost breakdowns, and financial impact analyses. All agreements must demonstrate a clear public benefit, support job creation, and prevent the misuse of public funds. They are subject to public hearings, annual reporting, and performance benchmarks. The City will closely monitor compliance, reserving the right to audit records and implement "clawback" provisions, which require dealerships to repay funds if they fail to meet obligations or significantly reduce operations within ten years of receiving reimbursement.