City Council

7.5 Auto Dealers Sales Tax Sharing Agreement\nRecommendations:\n1. Direct staff to draft a Memorandum of Understanding between the City of\nPalmdale and the City of Lancaster based on the deal points outlined within\nthis staff report; and,\n2. Authorize the City Managers, or their designees, to execute the Memorandum\nof Understanding.\nOver the past 40 years, the cities of Palmdale and Lancaster have competed to\nattract new business and investment to each respective city. This type of\ncompetition is not unique to the Antelope Valley. Local, regional, and state\ngovernments routinely offer financial incentives including sales tax rebates,\nreduced land costs, and tax credits to entice businesses to locate in their\njurisdiction. Vehicle dealerships are major sales tax generators for California\ncities. As a result, jurisdictions often go to great lengths, including offering sales\ntax rebates and other incentives, to attract and retain dealerships. In order to\navoid these negative impacts, it would be beneficial for the cities of Palmdale\nand Lancaster to work together on creating policies to prevent this practice from\noccurring in the future.