Temecula approves agreement to reimburse portion of sales tax for new Lexus dealership

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The Temecula City Council at its Dec. 10 meeting approved an agreement with the owners of the planned Temecula Valley Lexus to reimburse the dealership for a portion of its sales tax revenue, a part of an incentive the city council passed last year to attract new automotive dealers to town.

In May 2018, the city approved the Automotive Fee Reimbursement Policy, which allows the city to give up to 75 percent of new sales tax revenue, at an amount not to exceed $250,000, to a new dealership after its first year.

The city has been in talks with Lexus since June 2018 to build a new dealer in town, according to city staff. Right now, local auto buyers have to drive to Escondido or Riverside to find a Lexus dealership.

In September, a formal development plan was submitted for construction of a 54,383-square-foot dealership, to be called Temecula Valley Lexus, on a vacant lot along Ynez Road, city staff said.

The project meets the eligibility requirements for the fee reimbursement policy, Temecula Economic Development Manager Christine Damko told the city council, and councilmembers voted unanimously to agree to allow the dealership owners to be paid the sales tax reimbursement.

The new dealership is expected to create 55 new full-time jobs and generate an estimated $730,000 per year in tax revenue for the city, Temecula Economic Development Manager Christine Damko told the city council, meaning the revenue generated would greatly exceed the tax reimbursement incentive in the dealership’s first year.

The new Lexus dealership is expected to be completed in October 2020. It would be eligible to receive its reimbursement after being in operation for four whole quarters, according to city staff.

Damko said the city will work to verify the dealership’s revenue once it opens and before the tax funds are actually paid back.

Will Fritz can be reached by email at wfritz@reedermedia.com.