The City Council authorized the city manager to approve a contract with a consulting firm to attract new businesses to Seal Beach at the agency’s Tuesday, May 27, meeting. The vote was 4-0.
Representatives of the the Chamber of Commerce had asked to take a closer look at the proposal before the council voted. The matter was originally a Consent Calendar item. Consent items are voted on without discussion. Consent items are approved without discussion. However, this item was pulled by City Manager Jill Ingram for presentation to the council.
Seth Eaker, representing the Chamber of Commerce, told the council he did not understand why it was not brought to the attention of the business community first. He also said he did not know the company.
City Attorney Quinn Barrow said that this was a professional service contract and no bidding was required.
There was limited discussion among council members.
Eaker was not the only Chamber member who was concerned.
“The Chamber is supportive of bringing new businesses to Seal Beach,” said Chamber President Diane Brujes. “However, the Chamber had no prior knowledge of this plan and is unfamiliar with this specific service business nor the city’s intentions to enter a contract of this nature. At this time, the Chamber is investigating this proposal further and would ask the city to supply more detailed information to the public for review prior to voting.”
But according to Mayor Ellery Deaton, the city has worked with this consultant before and Seal Beach has a good track record with the company.
According to the city treasurer, the fiscal impact of the agreement is not yet known.
The cost will be based on a percentage of sales tax revenue plus a fee for each individual business the consultant brings to Seal Beach.
For every $100 of sales tax collected by the State of California, $1 goes back to Seal Beach, according to the staff report by Victoria L. Beatley, Finance director and city treasurer. Beatley presented the report to the council Tuesday night.
“The City has on past occasions determined that sharing a portion of this 1% sales tax with businesses that agree to relocate or remain in the City serves a public purpose by promoting the long-term fiscal health, safety, and welfare of the City’s residents and enhancing the overall economic vitality of the City,” said Beatley in the staff report.
“To further enhance the City’s economic growth, staff recommends entering into an agreement with a consultant to more purposefully attract new business to the City,” Beatley said.
According to her report, staff has negotiated a consulting agreement with Strategic Economic Development.
The report said that Seal Beach will pay 7 percent of the 1 percent of sales tax that the newly recruited businesses will bring in.
The report said that SED will also get a one-time fee for each business that comes to Seal Beach.
That fee will be equal to 5 percent of the sales tax that each new business made during the year before the business came to Seal Beach. “The ongoing contingent payments would be offset by tax revenues generated by the new businesses,” Beatley wrote.
