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Draper • The City Council approved a tax-incentive plan Tuesday night to entice two Larry H. Miller car dealerships, with council members saying the deal would benefit the city.
The dealerships would fill out a vacant parcel adjacent to a Karl Malone Toyota dealership.
Keith Morey, community development director, said as the city began conversations with potential dealerships, it became clear that the owners would be hard-pressed financially to relocate without some assistance.
The city-approved agreement that officially will be presented to the Larry H. Miller company calls for the city to turn over to the business half of the sales-tax revenue generated by the dealerships.
Larry H. Miller has estimated sales of between $50 million and $180 million per year when both dealerships are up and running. But Morey said projections of what the actual sales-tax revenue numbers might be over the 10-year term of the contract are "rough."
Morey said he is "not exactly sure yet" which Larry H. Miller dealerships would relocate to Draper. But Councilmen Bill Colbert and William Rappleye said it's natural for cities to compete for businesses in attempts to keep taxes low for residents.
During the public comment portion of the meeting, concern was expressed that rapid growth in the city was taking away from the quality of life of residents. But Rappleye later countered that sales-tax revenue from businesses like dealerships pay for "a substantial amount of the amenities within the city."
"I don't think we have to apologize for making these kinds of sales," said Councilman Jeff Stenquist. "I think it's good for the city."
City Manager David Dobbins also pointed out that sales tax is the only kind of tax mentioned in the agreement — nothing about property tax.
"The only tax dollars going into this will be what the dealership generates," Dobbins said.
Mayor Troy Walker said the deal benefits Draper residents.
"In this instance, it's certainly clear. We're getting nothing from this property now, and we're going to get a significant increase in our budget, going forward with it, all hinging on what they sell. So don't be confused that the city is writing a check out of any general fund or revenue source," Walker said. "It's a sharing of the revenue they generate, so the risk is really on the development and the retail."
Morey said he plans to put together a more detailed plan but wanted to ensure the support of the City Council first.