Hemet Council introduces sales tax sharing for automobile dealerships to boost economic growth

The Hemet City Council meeting on April 1, 2025, focused on the introduction of a new ordinance aimed at boosting economic development through a sales tax sharing agreement specifically for automobile dealerships. City Attorney Stephen Graham Pacifico presented the proposal, highlighting its potential to stimulate local business and enhance infrastructure around the Hemet Auto Mall.

The ordinance is designed to encourage existing dealerships to expand their operations and improve facilities, which in turn is expected to increase sales tax revenue for the city. The initiative follows a similar program previously implemented for the hotel industry, demonstrating the city's ongoing commitment to fostering economic growth.

Key components of the proposed ordinance include provisions for financial incentives that would allow dealerships to share a portion of their sales tax revenue with the city, contingent upon meeting specific performance benchmarks. The city aims to ensure that investments made by dealerships lead to increased employment and economic activity within Hemet.

During discussions, council members expressed interest in expanding the definition of eligible businesses to include not only automobile dealerships but also other related sectors such as RV and motorcycle sales. The council also considered adding travel trailers and marine craft to the list of eligible vehicles, recognizing the potential for synergy between these businesses and existing dealerships.

The ordinance includes a "clawback" provision, which would require dealerships to repay shared sales tax revenue if they cease operations or relocate outside Hemet. This measure aims to solidify a long-term partnership between the city and its dealerships, ensuring mutual investment in the community.

The council emphasized the importance of maintaining existing businesses while also attracting new ones, with the understanding that new dealerships would generate fresh sales tax revenue. The ordinance is set to be reviewed again for a second reading, with potential adjustments based on feedback from the council and the community.

Overall, the proposed sales tax sharing agreement represents a strategic effort by the Hemet City Council to enhance local economic development, support existing businesses, and create a more vibrant commercial environment in the city.