On Tuesday, the Antioch City Council approved a tax sharing agreement of $3 million with “Nokes Dealerships” which will cost the city $100,000 in revenue in an effort to allow the dealerships to expand.
The agreement was approved in a split 3-2 vote with councilmembers Tony Tiscareno and Monica Wilson dissenting.
Editors Note – in October of 2014, the Antioch City Council blocked Contra Costa Career College from purchasing the AAA building after Nokes petitioned the City Council against the deal saying the zoning was for auto dealerships and not a college. The property has since sat vacant. It was argued at the time if Nokes wanted the building then, he could have bought it but it had sat empty for a year
Kwame Reed, Economic Development Director, stated Tuesday this proposed agreement would help business expansion, thus increase economic development in the city which the city has to now get creative to help business already here expand.
Under the 10-year agreement, Reed says Nokes Dealership would relocate its Nissan Dealership to former AAA building on Auto Center. Once moved, the Toyota Dealership would then be expanded to take over the entire lot on Auto Center Drive—creating up to 60 jobs or increase of 20-25 new employees.
According to Reed, the fiscal impact would result in a loss of $100,000 to the City of Antioch General Fund. Under the agreement, the City would receive 75% of the sales tax generated while the Nokes Dealership receives 25%.
Reed did note that while the city would lose $100,000, it could be offset by with anticipated revenue from Measure W and increase in property taxes with improvements to vacant land and former AAA site.
Councilman Tony Tiscareno stated he was in favor of job creation and help incentivize business but did have a concern with this deal.
“There is a piece of property that Mr. Nokes is planning to place a Nissan dealership. To me, that is something new even though he has an existing business, but in 2002, he had similar incentives for the rest of his business which included the Dodge, Chrysler and Toyota,” explained Tiscareno. “My biggest concern right now is that is being included as a whole package. The new sharing would include his entire dealership.”
Tisacreno argued this was not just expansion, but his entire operation of multiple lots which puts the City at a $100,000 loss while the business benefits.
“There was a 10-year incentive program in 2002 so my mind-set right now is kind of like double-dipping and I have a major issue with that,” said Tiscareno. “Now if you would have came in and said I have a brand new business that I want to come in and bring into the city of Antioch and I need some help to make it successful, I wouldn’t be having these types of questions. But as it stands right now, I am particular disturbed by this.”
Reed explained that the 2002 agreement ended in 2009 and was fully paid back and the current AAA building has been boarded up and have had homeless breaking into it so this would assist in making sure that blight is removed.
Councilwoman Lori Ogorchock stated that Mr. Nokes at the time provided $100,000 to the police department which showed he was willing to work with eh city during the downtown.
“The flip-side of what Councilman Tiscareno is saying is think of it this way, with those vehicles being over there and selling more, we are going to reduce that debt on a quicker scale, if there was a higher-end vehicle it would go even quicker,” said Ogorchock.
Ogorchock stated her concern with the deal was that it wouldn’t begin until the first car sold on Nissan or Toyota, she requested this be on any lot.
Reed stated the agreement would not begin until the new dealership has been realized. Legal stated they didn’t include it during the construction because it would trigger potential prevailing wage be paid because it was tax revenue that was too be collected.
Tom Nokes explained you can’t sell a car until a dealership is completed because you wouldn’t yet have a license to sell vehicles. He also replied to Councilman Tiscareno.
“I am actually trying to do what you guys are trying to accomplish. I am spending millions of dollars to bring business here. I have done it and I think we are the highest sales tax generator in the city so I think the money was well spent. We have the highest paid jobs probably in the city,” said Nokes. “The costs to build now are triple what they were in 2002. I am looking to spend more on that lot than the others… it will probably be between $8 and $12 million.”
Councilwoman Monica Wilson questioned the 2002 deal where the city paid $2.4 million. She questioned the City’s return on that investment was the Toyota Dealership being there.
City Manager Ron Bernal did not have the numbers, but said the return on investment was “significant”.
“Now we are going to do a payout of $3 million in hopes that we are going to get a dealership is going to bring in that revenue. I am just having a hard time wrapping my mind about giving that revenue,” said Wilson.
Nokes replied “It’s really no hopes, we’re a proven factor. We’re going to do it.”
Wilson again explained her position.
“I just have a really hard time with this and justifying it,” said Wilson. “I get the agreement and I get for $2.4 million we got this Toyota dealership and we got right of some blight but for me I am having a hard time wrapping my mind giving $3 million.”
Nokes responded that the City could spend $200k in advertising in hopes that they might get a building or they can have one under his deal.
Mayor Sean Wright stated there was no risk in this deal.
“All the money is going to be laid out by Mr. Nokes up front and there is going to be an $8 to $12 million investment,” said Wright. “He then gets a percentage of the sales tax increase. The only issue that Councilman Tiscareno bought up which is a fair argument however it goes, is that it is a sales tax agreement on the entire dealership and not just on the new dealership. I think that is a fair argument.”
Wright again stated either way this goes there was no risk from a city standpoint.
Nokes also stated the Nissan dealership will be rehabbed which is another $3 million that was separate from this agreement. He further highlighted how they draw 50-55% of their business from people in Antioch while they draw people from outside areas to Antioch.
“At the end of the day, this is taxpayer’s money. So we are asking taxpayers to subsidize part of your business,” stated Mayor Pro Tem Lamar Thorpe.
Nokes agreed but highlighted his business generates the most sales tax in the City.
“If you hadn’t of done the first one you wouldn’t have had that. The second one will probably generate more tax dollars,” said Nokes. “It might even draw the businesses into Antioch that you are looking for because the entrance to Antioch will be cleaned up and looking sharp.”
Tiscareno countered by saying he wouldn’t deny how much revenue he brings to the city, but his concern was including all his dealerships in this agreement. If he proposed only the new business, he would support him 100%.
“I want you to be successful, but I do not want the citizens of Antioch to pay on something that they have been paying for 10-years prior,” said Tiscareno. “It is revenue sources that the city could have had at the time. You stated at the time you are one of the largest revenue sources in Antioch because of your success so in my mind, you can afford to build this thing on your own.”
Tiscareno accused Nokes of including businesses where he already had a benefit for 10-years.
“I am not trying to be a bad guy here, I am just trying to grasp in my head here this is just something that had been done already and you are just trying to expand it a little bit further and use a new business to try and share into your existing business. I am having major issues with that,” said Tiscareno. “Right now, I am a no vote on this.”
Nokes suggested that the City could put a church on the lot instead which would generate no dollars for the city.
Mayor Wright explained they used to have redevelopment funds that would do this sort of thing which worked with existing business—taking blighted properties and bring them up.
“It is now time for us to look for and work with no just businesses like yours that are existing, but new businesses as well. All businesses to expand to be able to grow, we need to be able to have that kind of flexibility to work for the benefit of the community,” said Wright. “My belief of your investment of $8 to $12 million into that street is will benefit that entire street.”
Wright highlighted this would not only help the Auto Dealerships, but businesses behind them and across the street and the entire area would be better off including less blight.
“I think this is a huge opportunity for Antioch to be able to partner with you to bring about the opportunity to bring more money to Antioch. In the short-term, there is going to be probably a 5-6 year tax sharing agreement… then in perpetuity Antioch has more revenue coming in. Ultimately, this is a win for Antioch.”
Ogorchock stated she was for this and in support of this because it would beautify the area and bring more people to the downtown area. Ogorchock then made the motion to approve the agreement.
Prior to the vote, Thorpe asked Nokes for the reason why the current dealerships who already benefited from the 2002 deal are being included.
Nokes replied that they would be expanding and spending about $15 million which is three-times the amount spent the first time.
Thorpe asked Tiscareno if he was okay knowing the difference between now and then is expansion.
“I could be wrong, but this appears to be a double-dipping thing,” said Tiscareno who stated Nokes could be expanding anyway. “He benefited for 10-years before, very successful, one of the highest revenue generating business in Antioch… but he is asking again to readdress the same car lot that has been successful for many years. So I am having a problem with that.”
The council then approved the agreement with a 3-2 vote with Wright, Thorpe and Ogorchock in support with Councilmembers Tiscareno and Wilson voting against.
Fiscal Impact Per Staff Report
With the expansion of the Toyota dealership and the relocation of the Nissan dealership, it is anticipated that a minimum increase of 25% in sales taxes could be generated by the Nokes Dealerships. With the proposed agreement in place, the City’s annual base sales tax revenue is projected to be at a loss of approximately $100,000. Staff is projecting the full payment of $3,000,000 to be realized between the fifth and sixth year of the agreement. If the Nokes Dealerships adds other vehicle manufacturers to the Antioch Auto Center, the sales taxes generated could potentially increase as well as decrease the timing of sharing.