Orange residents could get a $500 rebate for buying new cars, but there’s a catch

Drivers in the city of Orange could receive a $500 rebate for new vehicles, or $250 for used models, under a program approved by the City Council. But there’s a catch: the rebate would only go into effect if voters approve a one-cent sales tax in November.

Councilmembers John Gyllenhammer and Arianna Barrios opposed the agreement at Tuesday’s City Council meeting.

They argued that the rebate benefits a handful of dealerships and uses public money to promote those dealers.

City Manager Jarad Hildenbrand said the goal is to incentivize Orange residents to shop locally and offset revenue pains that may be felt by the auto businesses as a result of the proposed sales tax.

What car buyers should know

Orange residents and businesses qualify for the rebate only on new or used vehicles purchased from the city’s five major dealerships — Mazda, Selman Chevrolet, Nissan, Toyota and Villa Ford of Orange.

The purchase price for the vehicle must be more than $15,000. The program would last for 13 years, mirroring the timeline for the sales tax.

Where is the rebate coming from?

Rebates are paid with the city’s general funds. This agreement is expected to cost the city $1.6 million annually — about $1.5 million earmarked for rebates and an additional $50,000 for marketing. More than $20 million is earmarked for the rebates throughout the 13-year deal.

It will be the city’s responsibility to market the program to residents, Hildenbrand said.

“The whole premise of the program is to influence purchasing behavior,” Hildenbrand added. “So if Orange residents don’t know the program exists, they might go shopping elsewhere.”

The city anticipates earning more than $118,000 annually from car sales, according to a staff presentation.

“This provides a very unique incentive to give taxpayers in Orange their money back for shopping in the city of Orange,” Councilmember Denis Bilodeau said. “I think it’s an important incentive to give our Orange residents to live and shop in Orange.”

What do opponents say? 

Opponents of the deal took issue with the focus on just the five big car dealers and the use of tax dollars to essentially market for these businesses.

The deal helps a certain group of residents, Barrios said, “It doesn’t hit the people who are going to be hardest hit by paying extra in the city.”

Gyllenhammer took issue with using public funds to benefit only a concentrated number of residents and car dealers.

“In this case, we’d redistribute tax money that everyone will pay, at every income level within the city,” Gyllenhammer said.

He added that those tax dollars under the rebate would go to five dealers, and if “we don't apply it to any other dealers within the city, there will be impact.”

And car buyers who purchase a used vehicle for less than the $15,000 threshold are also left out of the deal, he added.

“There’s absolutely no rebate for anyone else that’s buying any other car outside of these five dealerships,” Gyllenhammer said. “So it truly does create a situation where we are subsidizing and picking a specific industry that we have just created duress because of a sales tax increase.”

Gyllenhammer previously opposed a rebate program with the same five businesses back in 2024, when voters were considering a sales tax measure that ultimately failed.

Orange resident Chip O’Neal told the council the agreement doesn’t benefit taxpayers.

“I would like the City Council to explain why they would ask the citizens of Orange to approve a 1% sales tax and then use city funds to subsidize the very industry most affected by said tax?” O’Neal said. “The same industry that previously helped defeat the last sales-increase measure, which I imagine is why we’re looking at this measure now.”

What’s next? 

The deal will only go through if residents approve the sales tax hike in November. In recent years, the city of Orange has faced increasingly dire budget constraints.