Loading...
CC - Item 4F - Baldwin Park Laidlaw Harley DavidsonE O S 4 'M B • • ROSEMEAD CITY COUNCIL STAFF REPORT 0, TO: THE HONORABLE MAYOR AND CITY COUNCIL FROM: OLIVER CHI, CITY MANAGER DATE: SEPTEMBER 25, 2007 SUBJECT: CITY OF BALDWIN PARK - LAIDLAW HARLEY DAVIDSON SUMMARY The current Baldwin Park litigation is the second lawsuit against that City relating to Laidlaw's Harley Davidson being lured from the City of Rosemead to Baldwin Park. The result of the first lawsuit was that Baldwin Park and Rosemead entered into a tax- sharing agreement whereby we were to receive one-half of the sales tax received by Baldwin Park from Laidlaw's sales (to be calculated after Baldwin Park paid Laidlaw's its share of sales tax). After the first two payments were received, the Finance staff realized that it was only being paid on vehicle sales and not on parts and accessories. Informal settlement discussions took place on an administrative level, but no settlement was reached, thus necessitating the filing of the second lawsuit. The Settlement In reviewing the settlement offer, Baldwin Park provided the following information relating to the November 2006 payment. Actual payment - motorcycle sales only $31,307.02 Correct payment - motorcycle sales only $44,524.11 Payment if based on motorcycle sales and parts $52,816.05 Payment if based on all sales, inc. accessories $58,472.33 The cities have agreed to settle the matter as follows: • The City of Baldwin Park will pay the City of Rosemead an additional $21,509.03 for the 2006 payment, which is the difference between a payment based on motorcycle sales and parts and the actual payment that was made. Payment will not be made on the accessories for the 2006 payment. • Commencing with the 2007 payment, which will cover the last two quarters of 2006 and the first two quarters of 2007, payments will be calculated on all taxable sales. APPROVED FOR CITY COUNCIL AGENDA: City Council Meeting September 25, 2007 Page 2 of 2 • Each side will bear its own attorney's fees. The terms of the settlement are further detailed in the attached Settlement Agreement and First Amended and Restated Tax Sharing Agreement (Attachment A). Resolution No. 2007-40 is also attached to this report (Attachment B) approving these agreements. It should be noted that the resolution must be passed by a supermajority of the City Council (four-fifths vote). Staff Recommendation Staff recommends that the City Council approve Resolution No. 2007-40 approving the Settlement Agreement and First Amended and Restated Tax Sharing Agreement between the City of Rosemead and the City of Baldwin. LEGAL REVIEW This staff report has been reviewed and approved by the City Attorney. Submitted by: Oliver Chi City Manager Attachment A: First Amended and Restated Tax Sharing Agreement Attachment B: Resolution No. 2007-40 0 0 FIRST AMENDED AND RESTATED AGREEMENT BETWEEN THE CITY OF BALDWIN PARK AND THE CITY OF ROSEMEAD FOR THE SHARING OF SALES TAX REVENUE GENERATED BY LAIDLAW'S HARLEY DAVIDSON SALES, INC. MOTORCYCLE DEALERSHIP THIS FIRST AMENDED AND RESTATED AGREEMENT BETWEEN THE CITY OF BALDWIN PARK AND THE CITY OF ROSEMEAD FOR THE SHARING OF SALES TAX REVENUE GENERATED BY LAIDLAW' S HARLEY DAVIDSON SALES, INC. MOTORCYCLE DEALERSHIP (this "Agreement") is made and entered into by and between the City of Baldwin Park, a California municipal corporation ("Baldwin Park"), and the City of Rosemead, a California municipal corporation ("Rosemead"), and is dated for purposes ofreference only this day of September, 2007. Baldwin Park and Rosemead are each a "party" and are collectively the "Parties" hereto. RECITALS A. On March 1, 2000, the Baldwin Park Redevelopment Agency (the "Agency") entered into an agreement with Laidlaw B.P. Realty Associates, LLC (the "Developer") entitled "Owner Participation Agreement Laidlaw B.P. Realty Associates, LLC, Doing Business as Laidlaw's Harley Davidson's Sales, Inc." (the "OPA"). B. Under the terms of the OPA, the Agency agreed to provide certain financial assistance to the Developer as described therein, in consideration of Developer's development of a new facility for dre business operated by Laidlaw's Harley Davidson's Sales, Inc. ("Laidlaw's Sales") on property at 1919 Puente Avenue, Baldwin Park, California (the "Baldwin Park Site"). At that time, Laidlaw's Sales operated a business selling motorcycles (the "Motorcycle Dealership") on property located at 8351 E. Garvey Blvd., Rosemead, California (the "Rosemead Property"). C. Pursuant to the OPA, the Developer purchased and developed the Baldwin Park Site, and developed it with facilities required for the Motorcycle Dealership. The Developer then leased the Baldwin Park Site to Laidlaw's Sales. D. On or about June 17, 2002, Laidlaw's Sales closed the operation of the Motorcycle Dealership at the Rosemead Property and opened operation of the Motorcycle Dealership at the Baldwin Park Site. E. In 2000, Health & Safety Code § 33426.7 ("Section 33426.7") prohibited a redevelopment agency fi-om providing financial assistance to a business entity that sells or leases land to an "automobile dealership," unless a report describing the market area of the automobile dealership was first prepared. Section 33426.7 further provided that if the report concluded that the automobile dealership was relocating within the same market area (as defined in said Section), an agreement was required which would apportion the sales tax generated by that automobile dealership at its new location between the city of the new location and that of the old location. ATTACHMENT A • • F. The Agency did not undertake the actions required by Section 33426.7, believing that because of the type of vehicles sold at the Motorcycle Dealership, the aid to the Developer under the OPA was not within the scope of that Section. Rosemead subsequently filed suit against Baldwin Park, the Agency, and their legislative bodies to challenge that determination (Cio, of Rosemead v. City of Baldwin Part:, LASC No. BS 081365). Following trial, Rosemead obtained a judgment and writ of mandate requiring the provisions of Section 33426.7 to be followed with respect to the preparation of a report regarding the market area for Laidlaw's Sales Motorcycle Dealership and the subsequent adoption of an apportionment agreement, if the Rosemead Property and Baldwin Park Site were within the same market area. G. Pursuant to said writ, the Agency prepared the report required by Section 33426.7, and determined that the Rosemead Property and the Baldwin Park Site are within the same market area. On January 21, 2004 the Parties entered into a Tax Sharing Agreement to effectuate the requirement for an apportionment agreement pursuant to subsection (c) of Section 33426.7, as mandated by said writ. H. Subsequent to entering into the Tax Sharing Agreement, Rosemead discovered that sales tax had only been paid on the sale of motorcycle vehicles and not on the sale of any parts or accessories from the Laidlaw's Motorcycle Dealership. When the Parties were not able to informally resolve the matter, Rosemead filed a second lawsuit against Baldwin Park and its officials on or about February 28, 2007 (Los Angeles Superior Court Case No. BC367064); a first amended complaint was filed on or about April 17, 2007. 1. A settlement was reached between the parties and has been incorporated into this First Amended and Restated Tax Sharing Agreement. NOW, THEREFORE, the Parties hereto hereby agree as follows: 1. Baldwin Park hereby agrees to apportion sales tax which it receives from Laidlaw's Sales Motorcycle Dealership (the "Sales Tax") between itself and Rosemead for each fiscal year from fiscal year 2003-2004 to 2012-2013 pursuant to the provisions of this Agreement. Commcncingwith the payment for fiscal year 2006-2007, Sales Tax shall be paid on all sales fTom Laidlaw's Sales Motorcycle Dealership, including all motorcycles, parts, and accessories. No later than the date on which Baldwin Park makes payment to Rosemead for the 2006-2007 fiscal year in accordance with Section 2 below, Baldwin Park shall also pay Rosemead the additional amount of $21,509.03. 2. Baldwin Park shall complete the apportionment process and pay the amounts, if any, thereby determined to be due to Rosemead within thirty (30) days following the receipt by Baldwin Park from the State of California of the Sales Tax generated for the final quarter of the subject fiscal year. The amount due Rosemead shall be determined as follows: A. Baldwin Park shall determine: (i) the total amount of Sales Tax it has received during such fiscal year (the "Aruiual Sales Tax"); and (ii) the amount of assistance which the Agency has paid to the Developer for such fiscal year under the OPA (the "Assistance Amount"). • • B. The Assistance Amount shall be subtracted from the Annual Sales Tax. C. The difference shall be divided equally between Baldwin Park and Rosemead, subject to the provisions of Section 3 of this Agreement. 3. The fiscal year prior to the fiscal year in which Laidlaw's Sales relocated to Baldwin Park was 2000-2001. In that fiscal year, sales tax revenues received by Rosemead from Laidlaw's Sales totaled $100,611. Pursuant to Section 33426.7, in no event shall Rosemead receive from Baldwin Park more than $100,611 for its share of Sales Tax due for any one fiscal year. 4. Formal notices, demands, and communications between Baldwin Park and Rosemead shall be sufficiently given if dispatched by registered or certified mail, postage prepaid, return receipt requested, to the following addresses: TO BALDWIN PARK: City of Baldwin Park 14403 East Pacific Avenue Baldwin Park, CA 91706 Attention: Chief Executive Officer TO ROSEMEAD: City of Rosemead 8838 E. Valley Blvd. Rosemead, CA 91776 Attention: City Manager Such written notices, demands and communications may be sent in the same manner to such other addresses as citlier Party may from time to time designate by mail as provided in this Section 4. 5. Performance by Baldwin Park hereunder shall not be deemed to be in default where delays or defaults are due to war, insurrection, strikes, lock-outs, riots, floods, earthquakes; fires, casualties, acts of God, acts of the public enemy, epidemics, quarantine restrictions, governmental restrictions or priority (other than those established by Baldwin Park), inability to secure necessary labor, materials or tools, delays of any contractor, subcontractor or suppliers, acts or failure to act of Rosemead or of any public or goverrunental agency or entity (other than that acts or failure to act of Baldwin Park shall not excuse perfonnance by Baldwin Park), or any other causes beyond the control or without the fault of Baldwin Park. An extension of time for any such cause shall be for the period of the enforced delay and shall commence to run from the time of the commencement of the cause, if notice by Baldwin Park is sent to Rosemead within thirty (30) days of knowledge of the commencement of the cause. 6. The Parties hereto hereby agt•ce to execute such other documents and to take such other action as may be reasonably necessary to further the purposes of this Agreement. In furtlierance of this provision, the Parties agree that Sales Tax subject to apportionment pursuant to the terms of this Agreement shall be deemed "collected for" Rosemead as well as for Baldwin Park within the meaning of Revenue and Taxation Code § 7056, so as to permit persons authorized by resolution of the City Council of Rosemead under Revenue and Taxation Code § 7056 to examine records pertaining to sales taxes collected for Rosemead to review records received by Baldwin Park pertaining to such Sales Tax. 7. This Agreement may be executed in two duplicate originals each of which is deetned to be an original. This Agreement includes five (5) pages (including signatures) which constitute the entire understanding and agreement of the Parties as to the subject matter of this Agreement. 8. All waivers of the provisions of this Agreement must be in writing and signed by the appropriate authorities of the Parties, and all amendments hereto must be in writing and signed by the appropriate authorities of the Parties. 9. This Agreement, shall be executed by Baldwin Park and delivered to Rosemead no later than September 25, 2007, shall be authorized by the City Council of Rosemead by adoption of a resolution approved by a two-thirds vote and shall be executed by Rosemead within thirty (30) days after receipt, or this Agreement may be terminated by Baldwin Park on written notice to Rosemead, 10. This Agreement shall be effective upon execution hereof by Rosemead and delivery of an executed original to the City of Baldwin Park, together with a certified copy of the resolution of ordinance authorizing its approval. This Agreement shall terminate and be of no further force or effect following payment of the amount, if any, due under this Agnreement to Rosemead for the fiscal year ending June 30, 2013. 11. The Parties agree that although this Agreement was not entered into prior to the effective date of Assembly Bill No. 1766 (Chapter 162 of Statutes 2003; hereafter, "A.B. 1766"), it shall be deemed an existing revenue sharing agreement within the meaning of Section 2 of A.B. 1766. Therefore, this Agreement shall be deemed temporarily modified to account for any reduction in Sales Tax received by Baldwin Park as a result of the temporary reduction in the local sales and use tax rate effected by A.B. 1766, to the extent such reduced revenues are replaced in kind by property tax revenue from a Sales and Use Tax Compensation Fund or an Educational Revenue Augmentation Funds established by the State of California pursuant to A.B. 1766. 12. The Parties agree that although this Agreement was entered into after the effective date of Senate Bill 114 (Chapter 781 of Statutes 2003), it pertains to relocation that took place prior to the effective date. 13. If any Party brings an action to enforce the terms hereof or declare its rights hereunder, the prevailing Party in any such action shall be entitled to its reasonable costs and attorneys' fees to be paid by the losing Party as fixed by the court. Executed on the dates set forth hereafter. [Signatures on next page] • • CITY OF BALDWIN PARK Date: ATTEST: City Clerk, City of Baldwin Park Manuel Lozano, Mayor CITY OF ROSEMEAD Date: ATTEST: John Tran, Mayor City Clerk, City of Rosemead RESOLUTION: 2007- 40 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF ROSEMEAD APPROVING THE FIRST AMENDED AND RESTATED TAX SHARING AGREEMENT WITH THE CITY OF BALDWIN PARK AND AUTHORIZING THE MAYOR TO EXECUTE THE TAX SHARING AGREEMENT AND THE SETTLEMENT AGREEMENT (LAIDLAW'S HARLEY DAVIDSON) WHEREAS, in response to a writ of mandate issued in an action entitled City of Rosemead v. City of Baldwin Park, LASC No. BS 081365, the cities of Rosemead and Baldwin Park entered into an AGREEMENT BETWEEN THE CITY OF BALDWIN PARK AND THE CITY OF ROSEMEAD FOR THE SHARING OF SALES TAX REVENUE GENERATED BY LAIDLAW'S HARLEY DAVIDSON SALES, INC. MOTORCYCLE DEALERSHIP; WHEREAS, subsequent to entering into the Agreement, a dispute arose between the cities regarding the interpretation of the Agreement and the City of Rosemead filed a subsequent lawsuit against the City of Baldwin Park, LASC No. BC 367064; WHEREAS, the cities have decided to settle the Agreement by executing the Settlement Agreement attached hereto as Exhibit A and the First Amended and Restated Tax Sharing Agreement ("Amended Agreement") attached hereto as Exhibit B; WHEREAS, the City Council of the City of Baldwin Park have authorized execution of these agreements; WHEREAS, the Amended Agreement is designed to effectuate the tax sharing formula dictated by the provisions of Health and Safety Code Section 33426.7 as it existed at the time that Laidlaw's Harley Davidson relocated from the City of Rosemead to the City of Baldwin Park with assistance from the Baldwin Park Redevelopment Agency. NOW THEREFORE, THE CITY COUNCIL OF THE CITY OF ROSEMEAD HEREBY RESOLVES AS FOLLOWS: Section 1. The Amended Agreement and the Settlement Agreement are hereby approved and the Mayor is authorized to execute the agreements on behalf of the City of Rosemead. Section 2. This Resolution shall take effect immediately. ATTACHMENT B 0 0 PASSED, APPROVED AND ADOPTED by no less than a two-thirds vote this 25th day of September 2007. John Tran MAYOR Nina Castruita City Clerk