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HomeMy WebLinkAboutResolution No. 15-7595-Approving an Operating Covenant Agreement w-Downey Import Cars, Inc.A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF DOWNEY, CALIFORNIA, APPROVING AN OPERATING COVENANT AGREEMENT WITH DOWNEY IMPORT CARS, INC. WHEREAS, the City of Downey ("City") is a municipal corporation and chartered city duly created and existing under the California Constitution; and, WHEREAS, the City wishes to support and encourage economic development and business development and retention in the community, including the generation of municipal revenues to provide necessary public services and facilities; and, WHEREAS, Downey Import Cars, Inc., a California corporation doing business as Downey Nissan ("Downey Nissan") owns and operates an existing automobile dealership located at 7550 Firestone Boulevard in the City of Downey, County of Los Angeles, California ("Property"); and, WHEREAS, Downey Nissan desires to expand its operations on property leased by Downey Nissan at 7321 Firestone Boulevard for the long-term operation of an expanded automobile dealership and service business within the City; and, WHEREAS, the City seeks to expand economic development opportunities in the City of Downey in an effort to increase jobs, property tax, sales tax and all of the other benefits associated with additional economic development activity and new projects. Further, promoting economic development within the City is a municipal affair and serves the public purposes of preserving and expanding opportunities for gainful employment and preventing deterioration of the urban landscape; and, WHEREAS, the expansion and continued operation of the dealership will provide significant public benefits to the City, as the continued receipt of local sales tax revenues by the City from such activities represents a significant source of public revenue for the City that may be used for the funding of necessary public services and facilities, including public safety services and facilities; and, WHEREAS, the contractual obligations to continuously operate the expanded dealership within the City serves the additional public purpose of fostering a business and civic environment that may attract additional businesses and investment into the community, due to the availability of increased public and private services and economic activity resulting therefrom; and, WHEREAS, the City, in consideration of the local sales tax revenues, property taxes, employment benefits, and other tangible and intangible benefits that are expected to be received by the City arising from the continued operation of the expanded dealership within the City, desires to provide certain payments to Downey Nissan (including a grant payment and a loan to be repaid with increased sales tax revenue) as an incentive for expanding and continuing to operate the dealership within the City; and, WHEREAS, City staff and Downey Nissan have negotiated an Operating Covenant Agreement, attached hereto as Exhibit "A" and incorporated herein by reference ("Agreement"), a copy of which is on file with the City Clerk and available to the public for inspection during regular business hours of the City, to, among other things, provide for the expansion and continued operation of the expanded dealership within the City; and, RESOLUTION NO. 15 -7595 PAGE 2 WHEREAS, City conducted an analysis in accordance with the requirements of Government Code section 53083. The results of that analysis are presented in a report entitled "Downey Nissan Section 53083 Report" (the "Report"), which sets forth the details of the economic development subsidy contained within the Agreement, as well as the net tax revenue expected to accrue to the City and the net number of jobs to be created as a result of the economic development subsidy. A copy of the Report is available in the Office of the City Clerk of the City and on the City's website at w .downeyca.or under the "City News" tab; and, WHEREAS, City participates in the Section 108 loan guarantee component of the Community Development Block Grant (CDBG) Program. Section 108 provides communities with a source of financing for economic development, housing rehabilitation,_ public facilities, and large -scale physical development projects. This flexibility makes it one of the most potent and important public investment tools that the U.S. Department of Housing and Urban Development ( "HUD ") offers to local governments. The Section 108 loan guarantee program allows local governments to transform a portion of their CDBG funds into federally guaranteed loans large enough to pursue physical and economic revitalization projects capable of renewing entire neighborhoods. Local governments borrowing funds guaranteed by HUD through the Section 108 program must pledge their current and future CDBG allocations as security for the loan. Regulations governing the Section 108 program may be found at 24 CFR 570, Subpart M, Loan Guarantees; and, WHEREAS, Downey Nissan acknowledges City's intended use of Section 108 loan funds for the Covenant Payment set forth in the Agreement, and Downey Nissan intends to satisfy the jobs creation requirements of the Agreement and in compliance with the applicable federal regulations and requirements. NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF DOWNEY DOES HEREBY RESOLVE AS FOLLOWS: SECTION 1. Recitals. The City Council finds and determines that the foregoing recitals of facture true and correct. SECTION 2. CEQA Compliance. City Staff has reviewed the proposed Site Plan Review associated with the Agreement for compliance with the California Environmental Quality Act (CEQA). Upon completion of this review, Staff have determined that the project is categorically exempt from CEQA, pursuant to Guideline Section No. 15302 (Class 2, Replacement or Reconstruction). Categorical Exemptions apply to projects that have been determined not to have a significant effect on the environment and have been exempted from the requirements of the California Environmental Quality Act. Class 2 exemptions apply to the replacement of a commercial structure on the same site, - provided the new structure has substantially the same size, purpose, and capacity. Previous uses on the Property included car dealerships with several buildings that totaled 58,900 square feet of floor area. The new proposal is for a single car dealership with less than 46,000 square feet of floor area. Because the proposed project has a smaller building and the same purpose and capacity of former uses on the site, the project provided for in the Agreement qualifies for the Class 2 exemption under CEQA Guideline Section No. 15302. Therefore, no environmental analysis is required, and staff is authorized and directed to file a Notice of Exemption with the County of Los Angeles. RESOLUTION NO. PAGE 3 SECTION 3. Findings. The City Council finds and determines that: (a) there are identifiable public purposes fulfilled by the Agreement, as set forth in the recitals; (b) the public purposes set forth in the recitals outweigh any private benefit to private persons; (c) the findings set forth in this Resolution are based upon substantial written and oral evidence presented to the City Council; and (d) the Agreement is authorized by law and constitutes a valid and binding agreement between the City and Downey Nissan. SECTION 4. Approval. The City Council hereby approves the Agreement and authorizes the Mayor to execute the Agreement together with such non - substantive changes and amendments as may be approved by the City Manager and the City Attorney. The City Manager is further authorized to take any action and execute any and all necessary documents to implement the Agreement. SECTION 5. Effective Date. The Mayor shall sign this Resolution and the City Clerk shall attest thereto, and this Resolution shall thereafter take effect immediately in accordance with applicable law. APPROVED AND ADOPTED this 13th day of October 2015. LUIS H. MARQUEZ, ay I HEREBY CERTIFY that the foregoing Resolution was adopted by the City Council of the City of Downey at a regular meeting held on the 13th day of October 2015, by the following vote, to wit: AYES: C Council Members: B Brossmer, V A9KIA M. JIMENE CM City Clerk , I Is 11 limmi'm - # # 0 t LEGAL DESCRIPTION F•R-LEASE PURPOSES ON] THAT PORTION OF LOT III OF ANDREWS AND MUS8ACRIR LAND, IN THE CITY 0 DOWNEY, COUNTY • LOS ANGELES, STATE OF CALIFORNIA, AS SHOWN ON MAP RECORDED IN BOOK 12, PAGE 138 OF MAPS, IN THE OFFICE OF THE COUNTY RECORDER OF SAID COUNTY DESCRIBED AS FOLLOWS: I CONTAINS 6.57 ACRES, MORE OR LESS ):J iR 1 1,111113 11 �15 Exhibit A Property Descri ption