Recommendation to receive supporting documentation into the record, conclude the public hearing regarding an economic subsidy in connection with a Location Agreement with CRC Services, LLC, pursuant to California Government Code Section 53083; and Authorize City Manager to execute all documents necessary to enter into a 30-year Location Agreement with CRC Services, LLC, located at 111 West Ocean Boulevard, for the establishment of a material and supply procurement company for California Resources Corporation (CRC). (Citywide)
And we have one last hearing before we get to public comment. Hearing item two. This hearing requires an oath. Thank you. And each of you do solemnly state that the testimony you may give in the cause now and pending before this body shall be the truth, the whole truth, and nothing but the truth, so help you God. Thank you. Assistant City Manager Modica. Vice Mayor Lowenthal and members of the City Council. The staff report today will be given by Lia Eriksen, deputy director of the Financial Management. Good evening, Vice Mayor and members of City Council. We are requesting City Council approval of a 30 year location agreement with CRC Services LLC. CRC Services is a material and supply purchasing company which will purchase materials and supplies for resale to affiliates of California Resources Corporation. CRC CRC spun off from Occidental Petroleum Corp. on December 1st, 2014. CRC is the parent company of a consolidated group of corporations that primarily explore, develop and produce crude oil, natural gas and natural gas liquids in the State of California. CRC has a significant presence in Long Beach, with approximately 475 employees and 175 contractors. CRC is an economic engine for California. In order to achieve administrative and cost efficiencies, CRC services will centralize the procurement function for its larger material vendors in Long Beach. The centralization of procurement is expected to result in significant new sales tax revenue to the city. Under the proposed agreement, CRC services would receive 80% of the sales tax received by the city, and the city would retain 20% for the 30 year term. However, the split of sales tax would not occur in any year until the city receives a minimum base of sales tax revenue equivalent to 425,000. If an end of year CRC services receives less than 80% of the total sales tax revenue received by the city, that shortfall would be rebated in the next year in which enough revenue is generated to both meet the base and the shortfall. This is within a two year catch up period. The city currently receives minimal sales tax revenue from CRC services or its affiliated companies, since it is not currently located in Long Beach. While the volatile nature of the oil production industry makes it difficult to predict the exact amount of sales and use tax revenue that will be generated as a result of this agreement. Based on recent expenditures and the size and stature of the organization, the city anticipates receiving sales tax of at least 1.5 million and a low year , of which 425,000 would be retained by the city. As market conditions improve, estimated sales tax received by city may grow to 4 million or higher in a good year, of which of which at least 800,000 would be retained by the city in order to stimulate growth in this key industry in the city, enhance additional business to business sales tax revenue, retain and grow jobs, and support the city's efforts to fund critical services to our residents. City staff is pleased to recommend that Council conclude a public hearing, authorize the city manager to enter into a 30 year location agreement with CRC Services LLC. Thank you, Councilmember Richardson. Okay. And Councilwoman Price, did you have any comments on this matter? Thank you. Is there any member of the public that wishes to address the council on here? Am I hearing item two? Seeing none. Members Cast your. Vote. Motion carries. Thank you. And I want to thank our speakers for their patience. I'd like to call up. A few folks from who team speaker cards. We have Evan Prouty from the Historical Society. Subject Matter Historical Society Cemetery. Cemetery Tour.