MARTINEZ -- The Martinez City Council has approved an economic stimulus program for "business to business" firms locating in Martinez.
The council instructed the staff to offer 50 percent tax cut for the first 18 months for those qualifying companies. There are other reduced tax benefits extending for the entire five-year program.
Anna Gwen Simpson, interim city manager, said the purpose of the program is to attract businesses in order to increase and diversify the city's tax base.
Currently one-third of city revenue comes from a small handful of firms, according to Simpson. The loss of one of those firms could impact city budgeting, as was the case in the past when Costco moved to Concord.
Business to business firms are defined as over-the-counter suppliers and manufacturers of equipment and supplies for construction, high-tech equipment for medical, optical, robotic operations, restaurants or retailers and others, but not retail.
These businesses constitute 30 percent of California sales tax revenue, and nearby refineries utilize these kinds of products, according to Simpson.
"And the program enhances the viability of the economic development of the northern waterfront," said.
The program is written to include qualifying existing businesses, if they commit to expansion that creates a number of new jobs and new revenue levels, but Simpson said there are just two such firms, which are unlikely to do so.
To qualify, a company's point of sale must be in Martinez, it must hire 10 new full-time employees, produce a minimum annual tax revenue of $200,000, own or lease property in Martinez for a minimum of five years, and agree to operate continuously in Martinez for five years.
The council was concerned about making sure that tax breaks did not cause a disproportionate loss of revenue and insisted that the council have final, public approval of any contract agreements.
Simpson said there is a safety measure in the program.
If at any point in the agreement, overall city sales and use tax revenues drop below certain levels, the tax breaks could be reduced and/or stopped.
Mayor Rob Schroder said the plan is modeled on one passed by Fairfield, and that other cities, including Livermore, Tracy and Benicia have similar programs.
Martinez is at a competitive disadvantage without such a program, he said.
Councilwoman Lara DeLaney said that Fairfield had attracted a large portion of S&S business with their program, but has elements in it, such as only a one-time 50 percent tax break, that are better for city purposes.
Vice Mayor Mike Menesini said he is generally opposed to tax incentive programs, but that the city has lost businesses as a result of this practice.
"We can't ignore the fact that we could be pristine and broke, but we have to do what we have to do," he said.
Only on the condition that the council will vet every contract publicly, "so the public can see what is happening" did Menesini vote in favor.
With Councilman Mark Ross absent, DeLaney's was the only dissenting vote.
She described it as "too generous" and suggested changes.
She noted that the city is barely getting by now and if anything else happens to reduce revenue, the city might have to reduce services and layoff personnel.
"We don't want to lose businesses, but we don't want to just give it all away," DeLaney said.
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