Carson City auto dealer Dick Campagni will receive $3.6 million in redevelopment funds to buy six acres for an expanded Toyota dealership, but if his sales tax revenue doesn't generate $360,000 annually plus the interest, he'll have to reimburse the city out of his own pocket.
Carson City Finance Director Tom Minton said this incentive is based on up to 20 percent of what the expanded Toyota dealership will generate in sales tax. The promissory note is similar to a term loan with a 5 percent interest rate payable over 10 years. The clock starts ticking in January.
But even if Campagni's business doesn't shine, the city is still covered.
"If business falls below his annual obligation, plus the accrued interest, he must pay the difference in cash or the city can foreclose on him," Minton said. "We got a guarantee that he's going to continue to do what he's doing."
Minton said it breaks down like this: At the end of each year the city will examine Campagni's sales tax returns, take 20 percent of the city's portion and put it toward reducing the $3.6 million owed.
Campagni's four dealerships generate about $2 million in sales tax revenue annually. Minton declined to say how much tax revenue an expanded Toyota dealership would generate.
The first year of the incentive, Campagni will pay $360,000 on the principle plus the accrued interest, which would be $180,000. Like any other loan, as it's paid off the interest amount will decrease.
"If his business stays the same, we still have the provision that he's going to continue his business in Carson City," Minton said. "And what he's doing right now is pretty damn good. He couldn't pick up and move to an auto mall in Douglas County. We're hoping that his sales will go up. They've consistently gone up year after year."
If Campagni pays it off in less than 10 years, he'll receive a 10 percent rebate in sales tax to put toward additional business growth.
City officials hope other car dealerships will seek similar redevelopment incentives. The owner of Carson Jeep Nissan declined to comment for this story. Owners of the two other major dealerships in the city did not return calls seeking comment.
But at Thursday's Carson City Board of Supervisors meeting, Supervisor Richard Staub said two auto dealers contacted him with interest in the program.
If these auto dealers choose to expand, or build from the ground up, they have space. According to the assessor's role, there are nine vacant parcels on auto row, from the 2000 block to the 5000 block of South Carson Street.
These parcels range in size from about one-fifth of an acre to two acres. The six-acre parcel that Campagni is waiting to close on is the largest.
n Contact reporter Becky Bosshart at email@example.com or 881-1212.