Westminster Adopts Taxpayer-Funded Car Rebate Program

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Westminster residents who buy a new car or recreational vehicle at a dealership inside city limits now can get a taxpayer-funded rebate of up to $500, after city council members Wednesday voted to pass a new residential rebate program.

The cash-strapped city, whose voters in November 2016 passed a one-cent sales tax increase that city leaders said would save the city from drastic cuts and potential bankruptcy, will set aside up to $3 million for the program from one-time property sales over the next five years.

The only resident who commented on the proposal at the May 10 council meeting, former city council candidate Mark Lawrence, called the program a “special carve out” for auto dealerships to counteract the effect of the one-cent sales tax increase.

“You almost beat us over the head with a cudgel, ‘if you don’t give us your money gang members are going to be eating dinner with you,’” Lawrence said, referencing the argument made by supporters of the tax increase that failing to pass it would result in public safety cuts.

During the campaign, Orange County auto dealers argued the sales tax increase could discourage potential buyers or drive dealers out of town. Sales taxes from car sales go to the city where a car is registered, not the city where the vehicle is purchased, meaning Westminster residents pay a higher sales tax no matter where they buy a car.

The Westminster Auto Dealers Association ultimately signed onto the official ballot argument in favor of the tax increase.

The rebate vote was 3-0, with council members Margie Rice and Sergio Contreras absent. Contreras was present for the start of the meeting, but left right before the vote on the rebate.

The three members who voted for the rebate program, Diep, Mayor Tri Ta and Councilwoman Kimberly Ho, all had opposed the sales tax increase.

Westminster Councilman Tyler Diep said the rebate, which is only available to Westminster residents who register their car to a city address, would keep tax dollars in city limits.

“…If you purchase a car from [a] particular dealership, you’re more likely to come back to that dealership for maintenance, tire balance, oil change,” Diep said. “That’s really where our car dealerships earn their revenue.”

Lawrence accused council members of being swayed by their campaign contributions from car dealerships. The city has eight dealerships, of which Elmore Toyota and Lexus of Westminster have been reliable contributors to council members.

In 2016, Diep received $4,000 from Elmore Toyota, $1000 from Dennis Dillon RV and $1000 from Lexus of Westminster. Ta received $1000 from both Dennis Dillon RV and Elmore Toyota that year. Ho received $1000 from Elmore Toyota and $500 from Lexus of Westminster.

Contreras, who did not vote on the item, received $500 from the Lexus of Westminster in 2016 and Rice last received a contribution of $500 from the dealership in 2014.

“Now look at the special carve-outs. That amounts to a discriminatory practice against the other retailers,” Lawrence said.

Diep said the situation is different for big box retailers, as shoppers can generally just go to another city if they don’t want to pay the extra sales tax at a Westminster Wal-Mart, Home Depot or Costco, he said.

“You cannot escape it if you go to purchase a new car,” Diep said, because the city sales tax on cars is applied to any purchase within the state.

City Manager Eddie Manfro said the program could be rolled out as early as Memorial Day on May 29, depending on how quickly car dealerships begin to participate.

There were no studies conducted to determine the size of the rebate. Manfro said city staff looked at similar rebate programs statewide and $500 “seemed like a number that would attract people.”

Other cities’ and a statewide auto rebate program, such as the one in Corona, tend to focus on encouraging consumers to buy electric or hybrid vehicles.

Westminster so far has appropriated $150,000 for the rebate program for the next fiscal year but has yet to identify funding for the entire five-year program.

Assistant City Manager Chet Simmons said the city is currently considering offers on 15172 Goldenwest Circle, a former redevelopment agency property that is used to house the city public works yard, and that the proceeds of the sale would go toward funding the rebate program.

The rebate is part of a larger economic development strategic plan approved by the city council in April.

In addition to the car rebate, the plan also includes new programs for business improvement loans and tax subsidies for new hotels.

Contact Thy Vo at tvo@voiceofoc.org or follow her on Twitter @thyanhvo.

  • LFOldTimer

    Are the Westminster council geniuses going to give rebates to customers who shop in their big-ticket item businesses like appliance or furniture stores too? Why just do favors for the auto dealerships? That’s discrimination of the free hand in commerce. The other retailers will have to reduce their price on items to compensate for the higher sales tax imposed by the city. If I owned such a store I would high-tail it out of town and relocate to another city that shows more respect for businesses that bring in revenue for the city.

    It’s just disgusting when the city mismanages it’s own finances then punishes businesses and consumers to compensate for it’s own screw-ups.

    When the Westminster government screws up it should be forced to downsize it’s own organization and deal with the fallout as opposed to causing problems in other people’s lives.

    But that’s government for ya. NO PERSONAL ACCOUNTABILITY!!!!!

  • Jack Milliken

    WTF? Another example of government-imposed winners (auto dealers) and losers (taxpayers)

    • LFOldTimer

      Yep.

      It’s incredibly easy to spend other people’s money.

      If you get the chance try it sometime. It’ll slip though your fingers like water.

  • kburgoyne

    Hmmm… well… against this. However, I have to admit from my own personal experience providing business services to some car dealers (among other businesses), Diep is actually right about one thing. (As much as I find it distasteful to admit.)

    “…If you purchase a car from [a] particular dealership, you’re more likely to come back to that dealership for maintenance, tire balance, oil change,” Diep said. “That’s really where our car dealerships earn their revenue.”

    That’s actually true. I’ve had that discussion with a few owners/managers of car dealerships in various OC cities from a purely business services standpoint. Nothing to do with politics. They were simply trying to explain their business priorities to me and not “sell” me on anything.

    I pretty much figure 98% (figuratively speaking) of the people shopping for cars wouldn’t even know if they were in Westminster, HB, etc, at the time. Besides, the price of a car at a dealership is such an incredibly nebulous thing. What the dealers are REALLY worried about is the 1% will come out of their profit when they’re trying to mislead and manipulate the buyer into buying from them instead of the other dealer who’s trying to mislead and manipulate the buyer into buying from them.

    • LFOldTimer

      Many citizens are becoming cognizant of higher taxes, especially with moonbeams SB1 that will gouge the California citizens by another $52 billion over 10 years. People are beginning to revolt. People resent city governments punishing consumers by raising their sales taxes to compensate for their own foolish financial miscalculations, shoddy judgment and poor financial management.

      You can be sure that there are many consumers who will refuse to buy big ticket items like refrigerators, washers, dryers, building materials, etc… in Westminster due to the added 1% sales tax. Why would anyone spend an extra 1% to bail out Westminster when they could travel 10 minutes to a neighboring city and save 1% or more on their purchase?

      So this is NOT just about cars. It’s about ALL consumer goods that are taxable. I would NEVER purchase a taxable item in Westminster again. Not even a pack of chewing gum. Why would I agree to bail out Westminster for their incompetent city government?

    • I for one never use dealers for any service unless it is warranty work or a recall. Especially not for tires, or oil changes.

  • westminster_guy

    I don’t see why this is being taken as a concession to the Westminster auto dealers because, as mentioned in the story, the tax on vehicle sales is based on where the vehicle is registered, not where it was purchased. So (for auto sales) only WTM residents were affected by the sales tax increase and only WTM residents will benefit from this rebate… regardless of whether they purchase their car in Westminster, Huntington Beach, or wherever.

  • LFOldTimer

    After Westminster raised their sales tax by 1% due to city financial mismanagement I wouldn’t buy a toaster in their town, let alone a new car. This might fake the residents into buying a new car in their city – but it won’t fool the rest of us. And most new car buyers in Westminster are historically most likely out-of-towners – not residents.

    The car dealers probably threatened to pack up their bags and leave Westminster after the sales tax hike. And I wouldn’t blame them. All big ticket items are going to get hit hard. The only product I’ll buy in Westminster is their fish. A non-taxable item. Otherwise why would I shop there with one of the highest sales taxes in OC?

    There are always unintended consequences to sales tax increases. The Westminster city government should have considered this before approving theirs. At some point they’ll have to downsize the fat cats who work for their city, like the overpaid public safety trough feeders.