HomeMy WebLinkAboutReso 2022-035RESOLUTION NO. 2022-035
RESOLUTION OF THE CITY COUNCIL OF THE CITY OF
CHULA VISTA ACCEPTING AND FILING AN ECONOMIC
DEVELOPMENT SUBSIDY REPORT PURSUANT TO
GOVERNMENT CODE SECTION 53083 FOR SUNROAD BCV,
HOLDINGS, INC. TO CONSTRUCT A BMW AUTO
DEALERSHIP
WHEREAS, on December 15, 2015, the City Council of the City of Chula Vista approved
an Owner Participation Agreement (“Agreement”) with Sunroad BCV Holding, Inc. (the
“Participant”); and
WHEREAS, the Agreement establishes an economic development subsidy authorized by
Government Code Section 52200, et seq. and the Charter of the City of Chula Vista; and
WHEREAS, on May 17, 2018, the City Manager of the City of Chula Vista (“City
Manager”) agreed to extend the outside opening date of the Agreement to December 31, 2019; and
WHEREAS, on December 7, 2021, the City Manager agreed to extend the outside opening
date of the Agreement to July 1, 2023; and
WHEREAS, the Agreement provides for the Participant’s operation of a BMW
Automobile Dealership (“Approved Dealership”) on approximately 3.85 acres of vacant real
property currently owned by Participant; and
WHEREAS, the property is located along the southerly side of Main Street, east of
Brandywine Avenue and west of Maxwell Road in the City of Chula Vista (the “Site”), and
WHEREAS, the Agreement provides for the operation of the Approved Dealership for a
period of no fewer than twenty (20) years; and
WHEREAS, in exchange for the Participant’s operation of the Approved Dealership during
each year in accordance with the various requirements of the Agreement, the Agreement requires
the City to reimburse the Participant for fifty percent (50%) of the sales and use tax (excluding
Measure A and Measure P revenues) generated by the operation of the Approved Dealership at the
Site for a period of twenty (20) years, net of any third party costs incurred by the City to calculate
the sales and use tax generated by the Approved Dealership and up to a maximum cumulative
payment to the Participant of three million, three-hundred thousand dollars ($3,300,000); and
WHEREAS, pursuant to Government Code Section 53083(d), the City is required to
prepare a report within the term of the economic development subsidy containing various
information regarding the Agreement and the economic development subsidy set forth in the
Agreement; and
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Resolution No. 2022-035
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WHEREAS, the City (i) made the information required by Government Code Section
53083 available to the public in written form and on the City’s website, and (ii) held a noticed
public hearing regarding the report.
BE IT FURTHER RESOLVED by the City Council of the City of Chula Vista, that it
accepts and files the economic development subsidy report in substantially the form presented in
Exhibit A attached hereto and incorporated herein and on file in the City Clerk’s Office pursuant
to Government Code Section 53083(d) for Sunroad BCV Holdings, Inc. to construct a BMW Auto
Dealership.
[SIGNATURES ON THE FOLLOWING PAGE]
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Resolution No. 2022-035
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Presented by Approved as to form by
Eric C. Crockett Glen R. Googins
Deputy City Manager/Director of Economic City Attorney
Development
PASSED, APPROVED, and ADOPTED by the City Council of the City of Chula Vista,
California, this 8th day of February 2022 by the following vote:
AYES: Councilmembers: Cardenas, Galvez, McCann, and Casillas Salas
NAYS: Councilmembers: None
ABSENT: Councilmembers: Padilla
Mary Casillas Salas, Mayor
ATTEST:
Kerry K. Bigelow, MMC, City Clerk
STATE OF CALIFORNIA )
COUNTY OF SAN DIEGO )
CITY OF CHULA VISTA )
I, Kerry K. Bigelow, City Clerk of Chula Vista, California, do hereby certify that the foregoing
Resolution No. 2022-035 was duly passed, approved, and adopted by the City Council at a regular
meeting of the Chula Vista City Council held on the 8th day of February 2022.
Executed this 8th day of February 2022.
Kerry K. Bigelow, MMC, City Clerk
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Attachment 1
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Government Code 53083(d) Report
December 15, 2015 City and Sunroad BCV Holding, Inc. Owner Participation Agreement
January 11, 2022
REPORT REQUIRED PURSUANT TO
GOVERNMENT CODE SECTION 53083(d)
OWNER PARTICIPATION AGREEMENT
BETWEEN THE CITY OF CHULA VISTA AND
SUNROAD BCV HOLDING, INC.
DATED DECEMBER 15, 2015
Background
On December 15, 2015, the City Council of the City of Chula Vista (the “City”) approved an Owner
Participation Agreement (“Agreement”) between the City and Sunroad BCV Holding, Inc. (the
“Participant”), relating to the operation of an automobile dealership for the sale of new BMW vehicles
(the “Dealership”). The Dealership will be located on approximately 3.85 acres of vacant real property
currently owned by Participant, which is located along the southerly side of Main Street, east of
Brandywine Avenue and west of Maxwell Road, in the City of Chula Vista (the “Site”). The Site is
located within the Chula Vista Auto Mall East, which was planned as an auto mall in the ea rly 1990s
and at the time was anticipated to be a fully developed and operating auto mall within 10 years. Various
environmental conditions and economic obstacles prevented the development of portions of the Chula
Vista Auto Mall East, including the Site, for many years. The Participant (or its affiliate) acquired the
Site as part of a larger 29 acre parcel in 2004. A portion of that larger parcel was developed with a
Toyota dealership in 2006; the Toyota dealership continues to operate in the City.
The Agreement provides for the Participant’s operation of the Dealership at the Site for a period of not
fewer than 20 years. In exchange for the Participant’s operation of the Dealership during each year in
accordance with the various requirements of the Agreement, the Agreement requires the City to
reimburse the Participant for 50% of the sales and use tax generated by the operation of the Dealership
at the Site for a period of 20 years, net of any third party costs incurred by the City to calculate the
sales and use tax generated by the Dealership and up to a maximum cumulative payment to the
Participant of $3,300,000.
Legal Authority
The Agreement is authorized by Government Code Section 52200, et seq. and the Charter of the City
of Chula Vista. Pursuant to Government Code Section 53083(d), the City is required to prepare a
report within the term of the economic development subsidy containing various information regarding
the Agreement and the economic development subsidy set forth in the Agreement. Such information
is set forth below.
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Government Code 53083(d) Report
December 15, 2015 City and Sunroad BCV Holding, Inc. Owner Participation Agreement
Information Required By Government Code Section 53083 (AB 562)
(1) Name and Address of all corporations or any other business entities, except for sole
proprietorships, that are the beneficiary of the economic development subsidy.
The City’s payments under the Agreement will be made to Sunroad BCV Holding, Inc., or an affiliate.
The Participant’s address is Sunroad BCV Holding, Inc., 8620 Spectrum Center Blvd, Suite 1100, San
Diego, CA 92123.
(2) The start and end dates and schedule, if applicable, for the economic development subsidy.
The payments required by the Agreement will be made on a quarterly basis, subject to the satisfaction
of certain conditions precedent set forth in the Agreement, for a term of 20 years commencing from
the date the Dealership opens for business or until the cumulative amount of $3,300,000 has been paid
to the Participant under the Agreement. The Agreement originally required the Dealership to open for
business on or before December 31, 2017. Pursuant to the mutual agreement of City and Participant,
the Dealership is now required to open for business on or before July 1, 2023.
(3) A description of the economic development subsidy, including the estimated total amount of
the expenditure of public funds by, or of revenue lost to, the local agency as a result of the
economic development subsidy.
Subject to certain conditions set forth in the Agreement, including development and operation of the
Dealership, the Agreement requires the City to pay the Participant an amount equal to 50% of the sales
and use tax generated by the operation of the Dealership at the Site, less the amount of any third party
costs incurred by the City to calculate such payments, and limited to a cumulative maximum amount
of $3,300,000.
(4) A statement of the public purposes for the economic development subsidy.
The Agreement is expected to provide the following benefits to the community and the City:
a. The development of a BMW dealership is estimated to increase the assessed valuation
of the site by approximately $10.2 million over the current value of approximately $1.4
million increasing property tax revenues to the City and other loc al taxing agencies by
approximately 739 percent at full implementation of the project;
b. The operation of the BMW dealership will provide 40 full-time (temporary)
construction jobs, 80 permanent full-time operational positions and 3 part-time
operational positions;
c. The operation of the BMW dealership over the 20 year period of the operating covenant
is estimated to generate approximately $1.17 billion in taxable sales;
d. The net sales tax to the city over the 20 year period of the operating coven ant is
estimated to be approximately $8.4 million in new revenue to the general fund;
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Government Code 53083(d) Report
December 15, 2015 City and Sunroad BCV Holding, Inc. Owner Participation Agreement
e. The renovation of the Improvements at the Site and the operation of the Approved
Dealership at the Site are anticipated to increase the property values and revitaliz e the
neighborhood surrounding the Site, by drawing consumers and employees to the area,
thereby stimulating the local economy; and
f. The City anticipates that the operation of the Approved Dealership at the Site will help
to foster a business and civic environment that will attract additional businesses and
investment in the community due to the increased public and private services resulting
from the generation of jobs, tax revenues, and consumers in the City and the area
surrounding the Site.
(5) Net tax revenue accruing to the local agency as a result of the economic development subsidy.
The Agreement is anticipated to result in inc reased property tax revenues to the City and other taxing
agencies, and increased sales tax revenues to the City, as described above in section (4) of this Report.
To date, no net tax revenue has accrued to the local agency as a result of the economic development
subsidy, as the Dealership has not yet been constructed or opened for business.
(6) Net number of jobs created by the economic development subsidy, broken down by full-time,
part-time, and temporary positions.
The Participant has represented to the City that, at full capacity and implementation, operation of the
Dealership will result in 40 full time (temporary) construction jobs, 80 permanent full-time operational
positions and 3 part-time operational positions. No net jobs have yet been created by the economic
development subsidy, as the Dealership has not yet been constructed or opened for business.
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