HomeMy WebLinkAboutITEM 10-DEVELOPMENT AGREEMENT 2024-0007Development Agreement
24-0007
Tustin Auto Center
City Council Meeting
February 4, 2025
Summary of Request
Consider Development Agreement 2024-0007, the First Amendment to DA 2020-0001
Extend the Term of Development Agreement 2020-0001, which expires on December 31, 2024
Establish a methodology for negotiating the annual Sponsorship Contribution, a Public Benefit
Project Site
General Plan
PCCB (Planned Community, CommerciaVBusiness)
Zoning
PC COMM (Planned Community Commercial)
Surrounding Land Uses
West & Northwest: Residential
Northeast: CommerciaVBusiness
East & Southeast: Commercial/Business
Southwest: Industrial
DA Background
June 16, 2020: City Council approves Ordinance No. 1507 for
Development Agreement (DA) 2020-0001
Authorizes the Tustin Auto Center freeway sign to provide offsite advertising
Public Benefits
Public service announcements for City events/activities
$25,000 annual sponsorship to support Parks and Rec events
Term was through December 2024 unless mutually extended
Issues
Term too short with no automatic renewals
2. For $25,000 sponsorship, no basis was established for determining adjustments
Proposed DA 24-0007
Term too short (December 2024) with no automatic renewals
Renewable 5-year term
Automatically extended unless terminated by either party
For $25,000 annual sponsorship, no basis was established for determining any adjustments
Contribution will increase or decrease every 5 years based on car sales tax data and is then divided by 5
EXAMPLE: 25% net increase in car sales tax data over 5 years/5 = 5% increase
Current sponsorship ($25,000) x 5% = $1,250
$25,000 + $1,250 = $26,250 (new annual Sponsorship contribution for next 5 years)
In no instance will contribution fall below $25,000
Auto Dealers/City Partnership
Auto Center generates approximately $8M in sales tax to the City's general fund
23% of anticipated revenues for FY 24/25
Annual sponsorship DA public benefit is an additional contribution to the City by Auto Dealers
City messaging on Auto Dealer billboard ($2,500 per month value)
Contributions to other events and nonprofit groups in the City
City will receive increased sales tax and the sponsorship will increase as the Auto Center grows (new Kia dealer!)
Increase in car sales taxdoes not mean an increase in profitsfor Auto Dealers
Any CPI/inflation indexes would not reflect the unique nature of the Auto Dealer industry
DA 2024-0007 addresses the need for financial predictability while ensuring contributions remain equitable and
proportional to the economic growth of the Auto Center, and subsequent fiscal health of the City
Recommendation
Conduct first reading by title only for Ordinance No. 1560, approving DA 2024-0007 to
amend the term and sponsorship contribution previously established by DA 2020-0001
Set the second reading for the next available Council meeting
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Remembering what connects us.
Thank You'.
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