Online retail giants like Apple and Walmart gain the most from tax-sharing deals with California cities, but a closer look at the data shows that car dealers and other local businesses end up with the bulk of the contracts.
A Bloomberg Tax analysis shows the vast diversity of the businesses that enter into these agreements, which send local sales tax revenue to California cities in exchange for a share of that money. The data was disclosed to the California Department of Tax and Fee Administration under a new state law, which was created in response to a series of Bloomberg Tax articles exposing the deals.
Out of 171 contracts that cities reported, 144 went to car dealers, fleet fuel companies, industry suppliers, construction materials companies, a few brick and mortar shopping malls, hotels and restaurants, and other entities. The total value of the deals to this group is $669 million, compared to $303 million for 27 contracts with e-commerce retailers.
This first close look at the breadth of the deals and the amount of money flowing through them informs lawmakers who may want to change outdated rules that make the deals possible, said Annette Nellen, professor at San Jose State University and director of its Master’s in State Taxation program. It also informs local businesses when their competitors have an edge.
“Competitors could go to cities and say ‘How can I get a deal like that?” Nellen said in an interview.
The disclosures are required under the 2024 law (A.B. 2854), which is meant to shed more light on the deals that concentrate revenue in cities with the agreements at the expense of other that don’t. Lawmakers enacted the measure because they’ve said they need the information before they can consider changing the rules.
The deals at issue leverage a feature in California’s tax system that sends a 1 percentage point increment of the statewide 7.25% sales tax to the jurisdiction where a transaction takes place. Online retailers assign in-state online sales to their locations based on the presence of an office or warehouse, rather than where the customer lives and orders are delivered. Products that consumers buy aren’t always packed and shipped from the jurisdiction that gets the tax.
For businesses like car dealers and shopping centers with physical stores in specific locations, the deals more clearly hinge on tax revenue flowing to cities because sales take place within their borders.
The localities then share part of the tax revenue with the companies as an incentive to lure them into their borders or keep existing businesses from moving elsewhere.
Cities around the state have given a total of nearly $59 million to 47 car, truck, bus, RV, and motorcycle dealers, the oldest one being a 44-year agreement beginning in 1997 between Mark Christopher Chevrolet Inc. and the city of Ontario, in San Bernardino County. Ontario gives the dealer half of the revenue, and has paid out nearly $8 million since the start of the deal.
Less common, but more lucrative, than vehicle dealerships, are agreements 14 cities have with fleet fuel companies. The fuel companies offer trucking companies and others with vehicle fleets card-key access to networks of private fueling stations around the state. Cities have paid the fuel companies a total of nearly $144 million.
As an example, Flyers LLC has an agreement with Auburn, in Placer County, that sends the local portion of sales tax revenue on fuel purchases from around the state to its headquarters city. Auburn gives Flyers 46% of the revenue, and reported that it has paid Flyers $14.7 million since 2017, although the agreement dates back to 1985.
The City of Long Beach, in Los Angeles County, has paid out $95.6 million—more than any other city—through eight agreements, according to the disclosures. Its agreement with Edison Materials Supply LLC is one of the most lucrative, with $73.5 million going to the building materials manufacturer since 1999. Edison Materials Supply is a subsidiary of electric utility Southern California Edison.
The city also has agreements with four car dealers, two fleet fuel companies, and the headquarters for energy company California Resources Corp.
Long Beach and other cities began using the agreements decades ago, when state officials had the authority to take local revenues without warning to balance the state budget, City Manager Tom Modica wrote in an email. Cities found creative ways to generate revenue and prepare for state takeaways within a complex tax system that limits use of property tax revenue for economic development incentives.
Long Beach’s agreements with car dealerships helped them expand their showrooms, leading to more revenue for the city, Modica said. The agreement with Edison Material Supply and others concentrate the buying power of one company within the city, to be shared between the city and the company. Overall, the Long Beach has kept 59% of the revenue and given 41% to the companies.
“While the city recognizes the public policy argument that agreements like these are beneficial to some cities and disadvantageous to others, we also need to recognize that cities have different tools and limitations to fund the municipal services all our residents deserve and each city needs to work within those to support their residents the best they can,” he said.
California’s sales tax system is complex and outdated, and the data offers new transparency into its shortcomings, Nellen said. Cities are using the tools that they can in a “failed system” with a tax base and allocation system that doesn’t reflect today’s products and business models, she said.
“Until the tax law gets updated there’s going to be this desperation for cities to do this,” Nellen said.
How we did it:
This analysis utilized data on revenue sharing agreements published by the California Department of Tax and Fee Administration. The data was downloaded on June 17, 2025. Only the amount of local tax shared with private entities was considered for this analysis. In instances where records included the amount of local tax paid both to local jurisdictions and private entities, only money paid to private entities was utilized.
Eleven contracts have no stated end date, which was indicated in the database with a contract expiration date of 12/31/9999. These contracts were excluded from the analysis of contract length and excluded from the scatter plot graphic. Only contracts between California jurisdictions and businesses, companies, nonprofit organizations and similar entities were included. One contract between a city and a county was excluded.
Industries and sub-industries were manually assigned by the reporters based on reporting and research into the specific location of businesses and their contracts. The reporters identified seven main categories and 43 subcategories. Many of these businesses are highly specialized, leading to a significant number of subcategories with only one business.
Description of Main Industry Categories
Automotive: All businesses in this category sell some type of vehicle. Most automotive businesses are car dealerships, but a few fall under an “other vehicles” category and sell buses, RVs, or dirt bikes.
Construction and Building Materials: These businesses produce building materials, including cement, asphalt, concrete, steel, and wood. One company in this category makes windows and doors.
Fuels: All but one fuel company in the dataset fell into the “truck fleet fuels” subcategory. Trucking businesses that have fleets of vehicles have a network of private gas stations where employees transporting goods throughout the state can fill their vehicles. These trucking companies strike deals with local jurisdictions to open fueling stations or, in some cases, open an office where transactions from across the state get assigned to, generating sales tax revenue for the jurisdiction which the company gets a portion of.
Hospitality: This category includes restaurants and hotels.
Industry Suppliers: Industry suppliers are businesses that create products for other businesses, including lab supplies, medical supplies, oil industry equipment, metalwork supplies, and auto parts.
Retail: Retail businesses were broken into two categories, e-commerce and brick-and-mortar. Brick-and-mortar includes physical stores selling products. Most of the brick-and-mortar stores in this dataset were shopping malls or shopping centers, but a few individual companies were included, such as Costco and Living Spaces Furniture. E-commerce includes retailers designating a specific warehouse or office as the point of sale for items sold online to customers anywhere in California.
Other: The “Other” category includes businesses where it isn’t immediately clear what product they are selling or what service they provide. These details could not be determined based on the information disclosed. This category includes a handful of warehouses rented out to unknown entities that may use them as distribution centers. Contracts with multiple businesses, such as a deal with Costco and AutoNation, were also categorized as “Other.” Miscellaneous entities are also in this category. Examples of miscellaneous entities include a consultant who receives a percentage of the revenue sharing deals he brokers, a water supply company, a fire district, and a healthcare system.
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