Car dealerships driven to improve their conditions
The future of local car dealerships — the largest sales tax contributors in Santa Monica — is idling as officials test-drive a few ideas on how to keep them from leaving town.
One concept would have them relocate to Olympic Boulevard, creating Santa Monica’s own “auto dealer mall.” Another idea is to permit them to expand their operations, most of which are situated on Santa Monica Boulevard, by letting them build on top of their showroom floors, or below ground.
A slew of concepts were kicked around by consultants, City Hall staff and the Planning Commission on Wednesday in an effort to not only appease irritated residents who live near existing dealerships, but also the car companies who struggle in an increasingly competitive market.
Residents and car dealerships have been butting heads for years because most showrooms are located squarely within neighborhoods. Residents complain about noisy repair work, lighting, a lack of parking, the unloading of new cars and customer test-drives through their neighborhoods, to name a few.
Car dealership owners are similarly dissatisfied because they can’t expand, have little room to operate as it is and have no parking for their employees or customers, not to mention a place to put park their inventory.
The average size of a dealership in Santa Monica is 1.4 acres. However, the standard for the industry in other areas is between five and 10 acres, according to dealership owners.
Not having enough space to store the inventory creates a burden for the community as a whole because they are forced to store cars in garages and parking lots throughout the city. As a result, dealers must haul cars back and forth routinely, dealers say.
And customers expect new cars to be on the property — not elsewhere. Mike Sullivan, who owns four car dealerships in Santa Monica, said consumers buy cars that they see on the showroom floor.
“You wouldn’t put up with it as a consumer if you were expected to drive to Santa Monica Airport to look at a car,” he told the Planning Commission.
What to do with the automotive industry in Santa Monica has been on the minds of elected officials and dealership owners for years. In 2001, a group of dealers hired a consultant to outline their issues and present a plan to city leaders that would give them more freedom to operate their businesses. City Hall then hired two consultants — at a cost of $119,000 — to evaluate the feasibility of the dealerships’ study.
Based on numerous meetings with community groups, city staff and dealership owners, City Hall’s consultants determined much of the complaints the auto industry and the public had were valid. They also determined that while Santa Monica dealerships have increased revenue over the last few years, it has not increased at the rate experienced by larger auto mall dealerships.
“The report points to a pressing need for the city to revise its policies in some way in order to retain these businesses and their tax contributions in the coming years,” city staff wrote in a memo to the Planning Commission.
New car sales generated about $5 million in sales taxes for Santa Monica in 2003. Auto leases accounted for another $1.2 million, according to Dave Carr, assistant city treasurer. Auto dealerships are the largest tax generator in the city, he added.
Santa Monica dealerships are up against the consolidation of dealerships into large chains, which sell several brands of cars in one place, creating what’s known as “auto rows.” They can be found in Van Nuys and Glendale, and are used by dealerships to pool their advertising together and make it more convenient for consumers.
Local dealership owners also say the city’s regulations and codes are too complex to understand, making it difficult to do business here.
The only real solutions consultants came up with is to allow the auto dealerships to either redevelop or relocate their properties in Santa Monica. But there are problems with both scenarios, according to dealership representatives, neighbors and planning commission members.
It would be costly for dealerships to move to Olympic Boulevard and it’s unknown whether there is enough land to even create an “auto row.” Furthermore, enclosing the existing dealerships and building more stories also would be costly, particularly if they go below the ground.
“The idea to redevelop below grade is impossible,” Sullivan said. “The economics are just not going to happen in most cases... the smaller lots simply can’t afford it.”
“The idea to redevelop below grade is impossible.” — — MIKE SULLIVAN Auto dealership owner
And from some residents’ point of view, allowing neighboring dealerships to build two or three stories on top of their facilities would obstruct views and wipe out their privacy.
That’s how Brad Cooper, who lives on Ninth Street, feels living near Infinity of Santa Monica. He said he has gotten no response from management there on any of his complaints over the years.
“They could not care less about the residents,” he said, adding he’s lived in his neighborhood for 11 years. “I personally don’t trust what these people say.”
But Sullivan, who owns Toyota, Lexus and Volkswagen, said the biggest issue facing the auto dealers is the lack of parking.
“Until we get parking, we are not going to be good neighbors,” he said, adding the proposals don’t go far enough. “We have to address the problems for keeping us here functioning in the competitive market we’re in.”
Originally published in the Santa Monica Daily Press print edition on April 24, 2004. Read the original PDF.