Kudos to the city staff and city council for coming up with and
passing the creative idea of giving the Ford Store tax breaks to
keep them in Morgan Hill.
1. A pat on back for city staff, council
Kudos to the city staff and city council for coming up with and passing the creative idea of giving the Ford Store tax breaks to keep them in Morgan Hill. With an economy in the doldrums, Mervyns, Circuit City and Ross shutting their doors, it’s imperative the city’s Business Assistance and Housing Services department does all it can to retain and attract business. And, with automakers and auto dealers showing record losses, it’s even more important.
2. Revamped agreement helps
When the Ford Store opened in 2004, Morgan Hill officials approved a maximum of $1.2 million in sales tax rebates over a 10-year period. And, for every dollar over $25 million Ford earned, the city would split the 1 percent sales tax with the store.
Under the revamped agreement, the city will collect half of one cent for every dollar earned over $10 million through 2012. After that, though, the city will keep the entire penny. That way, Ford doesn’t have to earn as much money to get sales tax revenue back. Under the new terms and based on revised sales estimates, the Ford Store will receive about $1 million in sales tax rebates from the city over eight years. Based on the updated sales estimate, the store would have received just $850,000 in rebates over 10 years, based on the old model. Still, since sales are so low and the tax rebate plan is performance-based, the city will pay about $220,000 less than it originally planned.
3. Move leverages city’s tools
It’s a small price to pay to keep the dealership open. Ford Store President Tim Paulus said he’s been in the auto sales business for 35 years and these are the most difficult times he’s ever seen.
When the economy does turn around, and most experts are confident it will later this year or in 2010, it’s vital the city has a dealer in town.
Councilman Greg Sellers told reporter Natalie Everett that the restructured package is a “triple win for the city,” since keeping the dealership alive means long term sales tax revenues for the city; Morgan Hill is likely to keep more sales tax since the rebate term was cut by two years; and when Morgan Hill again looks at expanding the number of dealerships in Morgan Hill, the Ford Store will encourage others to open here.
It is a shining example of how the city can leverage some of the tools at its disposal to help local businesses stay here.
