City trying to protect its auto-dealer assets
July 18, 2005
Dick Campagni becomes the first auto dealer to take advantage of an incentive plan laid out by Carson City supervisors in March which would provide him a significant investment to grow his business.
But is it also a good deal for Carson City taxpayers? While there’s not much upside in the short term, the idea is to eliminate the potential downside.
The agreement, if approved by supervisors, would protect one of the city’s biggest tax-generating assets. It would ensure Campagni keeps his dealerships in Carson for at least 15 years by buying five-plus acres for $3.6 million.
The investment would be paid back over 10 years by increases in sales tax over the amount the auto dealerships generate now – similar to the basic concept of the downtown redevelopment district.
So the dealership must continue to grow, or Campagni is in default on the agreement. That’s the potential downside for his business. If it grows faster than expected and sales taxes pay off the $3.6 million earlier than 10 years, then he gets 10 percent of the sales-tax increment.
This is the situation created for Carson City when so many sales-tax dollars fled south to Douglas County. Carson has come to rely too heavily on the auto dealers, which account for about 33 percent of annual sales-tax revenues.
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Whether Campagni or any other auto dealer would actually move out of town is rather beside the point. The mere possibility forced supervisors to take the initiative and create an incentive plan attractive enough to persuade dealership owners to make a long-term commitment here.
Supervisors should approve the agreement on Thursday, just as they did the incentive plan in March. They’ve left themselves without much wiggle room.
Perhaps in two years or five years or 10, a more balanced sales-tax base will mean Carson City doesn’t need to offer such attractive incentives. Until then, though, supervisors must protect the base they have.
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