Tracy will dip into its savings in a big way to help beleaguered auto dealers and give a spark to other corners of the local economy by giving anyone who buys a new vehicle in town a $500 gift card — starting today.

The City Council voted to spend $608,000 on 800 gift cards and advertising, to hire a consultant to make the city’s name more enticing to consumers, to make new signs and to get a head start on Tracy’s centennial celebration in 2010.

For the first couple of weeks, gift cards will be mailed to car buyers here because the city doesn’t yet have them in its possession, said Ursula Luna-Reynosa, head of the Economic Development Department. Once the gift cards come in, car buyers here can get a gift card the same day from the Finance Department at City Hall, 333 Civic Center Drive.

Auto dealers, whose sales are off by 50 percent, seem to view the gift cards as a godsend, but it won’t come in time to save the Pontiac, GMC and Cadillac dealership, which will close at the end of the month unless General Motors can find a buyer.

The dealership in April told the city it will close June 21, but Pontiac sales manager David Rodriguez said Tuesday the auto business will cease at the end of May. Business was down more than 50 percent from a year ago, and Pontiac owner Martyn Strong just couldn’t make it, Rodriguez said. The city estimates 28 jobs will be lost.

That dealership would be the second in Tracy to shutter its doors in the past year. Volkswagen went out of business last winter, and if Pontiac comes to an end, Tracy will be left with eight auto dealers in town.

Those who remain in business are thrilled about the gift cards, which many believe will draw customers from miles away.

“Even your well-off businessman can say, I can do something with $500,” said Tracy Toyota General Manager W. David Cauthen Jr. “It’s a pretty progressive move on the city’s part.”

Car dealers are hugely important to the city’s sales tax base, the biggest reason the council got around a law that otherwise bars the gift of public money to private businesses.

The council in one of three resolutions passed declared spending the money that came from developer fees a "public benefit" that overrode the law that bans giving away public money.

"...It is necessary to educate the residents of the importance of shopping locally and how sales tax generated from local sales is of benefit to Tracy residents."

At one time, car sales churned more than 20 percent of all Tracy’s sales tax revenue, a figure that dipped to about 15 percent at the end of last year, when people stopped buying cars. Sales taxes typically make up 30 percent of the city’s $45 million general fund, which is used to pay police officers, firefighters and nearly all other city workers.

The city estimates the $400,000 expenditure on the gift card perk could generate $296,000 in car and other sales taxes. The city had hoped to craft gift cards that can only be spent in town — in fact, they can be used anywhere.

Tracy’s Nappic Communications Inc. will be paid no more than $200,000 to manage the town’s marketing campaign and to design a city flag and banners that will be used to enlarge Tracy’s public profile.

Nappic will also launch a Web site and guide a television advertising campaign that will begin sometime next week, he said.

The council saw the move as an investment in the city’s future.

“This is a classic example of spending money to make money,” said Councilman Mike Maciel.