From
Marty Wieder
Title
Resolution granting 380 Incentive Agreement with U.S. Auto Parts Network, Inc. to rebate 50% of the $.01 documented general sales tax revenues up to $50 million and an additional 25% on sales above $50 million for 7 years
Presenter
Marty Wieder, Director of Economic Development
Recommended Action
Approve
Analysis
U.S. Auto Parts Network, Inc., a publicly traded (NASDAQ) company with a corporate headquarters in Torrance, California, has been evaluating locations to add a sales and distribution facility in the Texas market.
A leading “pure play” internet retailer of automotive aftermarket parts, U.S. Auto Parts Network’s offerings include collision, engine and performance parts and accessories. U.S. Auto Parts offers more than one million high-quality private label and branded aftermarket products. Through a well-established network of websites, U.S. Auto Parts reaches roughly 10 million online customers per month - while also providing do-it-yourself (DIY) customers with a broad selection of competitively priced products, all mapped by a proprietary database based on vehicle makes, models and years.
Moreover, U.S. Auto Parts’ on-line websites provide customers with a broad selection of stock keeping units ("SKUs"), with detailed product descriptions and photographs, and principally sells products to individual consumers through their network of websites and online marketplaces. Through <https://www.automd.com/>, the Company educates consumers on the maintenance and service of vehicles. Flagship consumer websites are located at <https://www.carparts.com/>, <https://www.jcwhitney.com/>,
<https://www.automd.com/> and the corporate website can be found at <https://www.usautoparts.com/>.
Economic Development staff has been in negotiations with U.S. Auto Parts’ Corporate California executives to locate its new Texas operations in Grand Prairie. Company officials made it clear they were considering fulfillment center spaces greater than 200,000 square feet-and that they plan to eventually employ 140 people on a full-time basis.
On Friday, May 9, 2020, U.S. Auto Parts reduced its focus to two sites (one in Arlington and one in Grand Prairie) and requested incentive options from each City. Consultants working on behalf of the company have confirmed that the operation of this facility falls within the scope of Comptroller’s Place of Business designation, since it will have on-site Will Call Counter Sales and on-site telephone agents handling sales. U.S. Auto Parts estimates 90% of sales are to consumers who pick up their orders at the facility and 10% of the parts are shipped.
As an incentive to locate its retail and distribution in Grand Prairie, staff is recommending a seven-year sharing of U.S. Auto Parts’ qualifying $.01 General Fund sales as follows: Taxable Sales Sourced to Grand Prairie: $0 - $50,000,000 = 50% rebate; Taxable Sales Sourced to Grand Prairie: $50,000,001 + Over = 75% rebate.
Financial Consideration
Projected Base Taxable Sales - $350,000,000 ($50,000,000 per year for 7 years)
Projected Base Sales Tax Revenue - $7,000,000 ($1,000,000 per year for 7 years)
Projected Base Sales Tax Rebate - $1,750,000 ($250,000 per year for 7 years)
Projected Added Taxable Sales Tax Revenues Should U.S. Auto Parts Reach $60M - $1,400,000
($200,000 per year)
Projected Added Taxable Sales Tax Rebate Should U.S. Auto Parts Reach $60M - $525,000 ($75,000 per year)
Body
A RESOLUTION OF THE CITY OF GRAND PRAIRIE, TEXAS, TO ENTER INTO A CHAPTER 380 PROGRAM AGREEMENT WITH U.S. AUTO PARTS NETWORK INC. GRANTING A PARTIAL REBATE
WHEREAS, U.S. Auto Parts Network, Inc., a publicly traded (NASDAQ) company with corporate headquarters in Torrance, California, has been evaluating locations to add a sales and distribution facility in the Texas market and is contemplating a lease of 210,000 square feet at 1301 Avenue T; and
WHEREAS, U.S. Auto Parts Network’s offerings include collision, engine, and performance parts and accessories; U.S. Auto Parts offers more than one million high-quality private label and branded aftermarket products. Through a well-established network of websites, U.S. Auto Parts reaches roughly 10 million online customers per month-while also providing do-it-yourself (DIY) customers with a broad selection of competitively priced products, all mapped by a proprietary database based on vehicle makes, models and years; and
WHEREAS, U.S. Auto Parts’ on-line websites provide customers with a broad selection of stock keeping units ("SKUs"), with detailed product descriptions and photographs, and principally sells products to individual consumers through their network of websites and online marketplaces.
WHEREAS, Economic Development staff has been in negotiations with U.S. Auto Parts’ Corporate California executives to locate its new Texas operations in Grand Prairie. Company officials made it clear they were considering fulfillment center spaces greater than 200,000 square feet-and that they plan to eventually employ 140 people on a full-time basis; and
WHEREAS, a seven-year, 50% rebate of U.S. Auto Part’s qualifying $.01 General Fund sales tax revenues-and an additional seven-year, 25% rebate of all of U.S. Auto Part’s $.01 General Fund sales tax revenues above $50 million-will induce U.S. Auto Parts to locate it’s Texas operations in Grand Prairie, Texas, maximizing its second generation space in the Great Southwest Industrial District.
NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF GRAND PRAIRIE, TEXAS
SECTION 1: THAT the granting of an incentive through a Chapter 380 incentive agreement is approved and the City Manager is hereby authorized to execute contracts to effectuate this approval.
PASSED AND APPROVED BY THE CITY COUNCIL OF THE CITY OF GRAND PRAIRIE, TEXAS. ON THIS THE 19ND DAY OF MAY, 2020.