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PALMDALE — The City Council on Wednesday approved spending $500,000 on marketing in a joint venture with the Palmdale Auto Mall in hopes of boosting sales for the city’s largest sales tax generator.
The city’s contributions have already been budgeted from the Measure AV sales tax fund, matched by matching contributions from auto mall dealerships.
The joint $1 million marketing program is scheduled to continue through the end of this year and will include a variety of promotional strategies to increase attention and awareness of the auto mall and boost sales, which have been sluggish in recent months, said the Economic Development Director. Roberto Ramirez said.
Some of the proposed initiatives include advertising campaigns, holding special events such as the return of the popular Food Truck Fridays and holiday lights, and other initiatives used during the COVID-19 pandemic to boost sales. This includes similar gift card programs.
He said the marketing plan would also help promote other local businesses, as part of the existing ‘Shop Local’ program that promotes support for local businesses.
He said additional small business promotion activities are also planned for later this year.
City funds for the program will not go directly to auto dealers, but will be used for the marketing program itself, such as covering the cost of gift cards, Mayor Austin Bishop said.
Ramirez said the program is to encourage local vehicle purchases as a way to increase sales tax revenue, which is then invested in the city and its services.
For example, if you purchase a $30,000 car, the city receives $525 in sales tax.
On average over the past three years, the city has generated about $2.5 million in sales tax revenue annually from auto malls, he said.
Councilmember Andrea Alarcon, the lone vote against the marketing program, said the city is funding this single program at an exorbitant amount while other efforts to support local small businesses argued that there was not much funding available.
That money could instead be used to provide direct grants to small businesses and food distribution programs, she said.
“There’s got to be a better way to use this economic development money,” Alarcón said.
Mayor Pro Tem Richard Lore countered that the marketing program is aimed at maximizing sales tax revenue. There’s no way to know whether providing direct subsidies to small businesses will increase sales tax revenue, he said.
The program is expected to generate an additional $225,000 in sales tax revenue, according to a staff report.
“I don’t think it’s the best investment in terms of dollar returns,” Alarcón said.
That prediction was modest, Ramirez said.
City Councilwoman Laura Bettencourt said the eight dealerships in the auto mall also provide many jobs that could be at risk without the sales.
Councilman Eric Olson said funding the program doesn’t mean the city can’t support programs that help local businesses.
“We can do both,” he said.
Bishop also pointed out that the small business program is not solely funded by the Major AV Fund, but also from the Department of Economic and Regional Development’s budget.
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