Go Back   DealershipForum.com > Regional Forums > Southwest Region > Automotive Discussions

Notices

Reply
 
Thread Tools Display Modes
Old 06-09-2010, 04:07 PM   #1
XDCX
Administrator
 
Join Date: Nov 2007
Posts: 14,869
Default Champion Dodge gets $1 Million in Working Capital from City of Downey

News reports indicate that Champion Dodge will receive $1 Million in Working Capital from the City of Downey so the dealership can acquire the Chrysler/Jeep franchises. For the full report - click here

The dealership will receive $500K initially and the remaining $500K over a period of 10 years. As part of the agreement the dealership must create and keep 12 full time jobs and generate at least $275K in sales tax each year for the next 10 years. If the dealership generates sales tax in excess of $350K/year the overage will be split between the city and the dealership.

As I understand it, the $1 Million Working Capital infusion is not a loan and does not need to be repaid if the dealership meets the aforementioned terms.
XDCX is offline   Reply With Quote
Old 06-09-2010, 05:57 PM   #2
possum
Senior Member
 
Join Date: Jan 2009
Posts: 1,122
Default

I think the comments from the locals was better reading. If the Dealer can get it, he should, but I can't imagine the city getting involved. It's an interesting idea, and the idea of the Dealership keeping half the "tax" revenue is an interesting case for lawyers to anticipate.
possum is offline   Reply With Quote
Old 06-09-2010, 09:19 PM   #3
XDCX
Administrator
 
Join Date: Nov 2007
Posts: 14,869
Default

Quote:
Originally Posted by possum View Post
I think the comments from the locals was better reading. If the Dealer can get it, he should, but I can't imagine the city getting involved. It's an interesting idea, and the idea of the Dealership keeping half the "tax" revenue is an interesting case for lawyers to anticipate.
I feel the same way. I'm a "pro-dealer" guy and I want this to be a "pro-dealer" site but I think it's crazy that the tax payers are providing a $1 Million gift to a private business owner.

That said, the reason I keep posting threads like this is to make our members aware of what other communities are doing to keep dealerships open. It definitely goes in the category of "If you don't ask, you don't get."

Concerning the sales tax split, I've heard of a number of cases where dealers were able to negotiate that concession - mostly in Arizona and California. The smart dealers threaten to move to another city and then play the two cities against one another.
XDCX is offline   Reply With Quote
Old 06-10-2010, 07:57 AM   #4
DealerEx
Senior Member
 
Join Date: May 2009
Posts: 548
Default

I suspect it is probably a setup similar to an Economic Development Corporation in Texas. They are a governmental entity set up by state laws to levy and administer an additional local sales tax to be used to promote the city, attract new businesses, create new jobs, and enhance the local economy. I'm an officer and board member of an EDC here, and we have used tax funds for a wide variety of purposes ranging from "quality of life" projects such as museum expansion, new baseball complex, hospital expansion as well as providing start up capital for small businesses, tax abatements on a new hotel, real estate loans and remodeling capital for a winery. It all comes down to examining the project/proposal closely and determining "will the communtiy be better off economically if we do this or not". In the case of a car dealership, it depends on the sales tax structure in that state. In every state, car dealerships are the single largest source of sales tax revenue for the state, but they don't necessarily generate LOCAL tax revenue directly from sales, in all states. In Texas, car sales are exempt from local sales tax increments, so the benfit would have to be looked at on the basis of jobs retained and/or created and the impact the payroll had in the town, as well as additional revenues generated by customers from outside the town coming there to purchase a vehicle and spending additional money at other local businesses.
DealerEx is offline   Reply With Quote
Old 06-10-2010, 08:07 AM   #5
DealerEx
Senior Member
 
Join Date: May 2009
Posts: 548
Default

As Possum pointed out, the comments from the citizens tell the story of why nobody but the dealers care about what happened last year. The average consumer out there just flat out DOES NOT CARE about what the government and manufacturers did to the dealers. They think all dealers are a bunch of rich crooks that wake up each day planning how to rip them off. They have no idea what the dealers do for the local economies and all the other charitable and community activities they support and have no concept of the macro economics involved with a business that generates millions of dollars in tax revenues to the state each year.
DealerEx is offline   Reply With Quote
Old 06-10-2010, 08:56 AM   #6
Txflyer
Senior Member
 
Join Date: Jan 2009
Posts: 953
Default

Quote:
Originally Posted by DealerEx View Post
As Possum pointed out, the comments from the citizens tell the story of why nobody but the dealers care about what happened last year. The average consumer out there just flat out DOES NOT CARE about what the government and manufacturers did to the dealers. They think all dealers are a bunch of rich crooks that wake up each day planning how to rip them off. They have no idea what the dealers do for the local economies and all the other charitable and community activities they support and have no concept of the macro economics involved with a business that generates millions of dollars in tax revenues to the state each year.
Sad, but very very true.
Txflyer is offline   Reply With Quote
Reply

Thread Tools
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off

Forum Jump

Similar Threads
Thread Thread Starter Forum Replies Last Post
City extends $1 Million in Bridge Loans to Car Dealerships XDCX Automotive Discussions 1 12-08-2008 09:45 AM
Capital One drops Floorplan Dealers in NY and NJ XDCX Automotive Discussions 2 10-10-2008 12:05 PM
Credit Card used for Dealership Working Capital? XDCX Automotive Discussions 3 03-02-2008 03:11 PM
Dealership Closed - Neilsen Dodge City - Gary, IN XDCX Automotive Discussions 0 01-07-2008 08:13 PM


All times are GMT -7. The time now is 01:37 AM.


Powered by vBulletin® Version 3.8.5
Copyright ©2000 - 2024, Jelsoft Enterprises Ltd.
Copyright DealershipForum.com - 2008 - 2016