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Cities Racing to Cash In With Auto Malls : Downey, South Gate, Norwalk Sharpen Pens, Sweeten Pot In Car Wars

June 16, 1985|RALPH CIPRIANO | Times Staff Writer

It's becoming known as the auto mall wars.

In Downey, South Gate and Norwalk, municipal officials are vying to build auto malls to compete with Cerritos' successful Auto Square.

In the past three weeks, officials in South Gate and Downey have announced that they are conducting auto mall studies, while Norwalk officials are already at work on their own plans for a concentration of auto dealers along Firestone Boulevard.

Officials in all three cities say they do not believe that the Southeast area can accommodate three more auto malls. But, individually, officials from each city insist that their particular mall would have the best chance for success.

The competition among the three cities is not even. Downey now has more car dealers and more sales tax revenue than South Gate, Norwalk and Cerritos. But because of political and legal battles at City Hall that have delayed plans for a Downey auto mall, Downey auto dealers are threatening to move to the proposed malls in South Gate and Norwalk.

Much of the fight has been going on behind the scenes in private negotiations where municipal officials are competing with each other to attract auto dealers, but the competition broke out in the open Wednesday.

Downey officials appeared at a county Transportation Commission meeting in Los Angeles to oppose an off-ramp on the Long Beach Freeway that would lead to South Gate's proposed auto mall site. The county commission voted to approve the $500,000 ramp, pending an environmental impact study and approval by Caltrans.

Although South Gate officials claimed the northbound off-ramp on Southern Avenue is needed to correct a hazardous intersection, Downey Mayor Randy Barb said he told county officials that South Gate officials were using the safety issue as a "ruse" to help build an auto mall.

"It's very disappointing that a neighboring community would meddle in the internal affairs of one of their neighbors," South Gate Mayor Bill De Witt said later, charging that Downey officials were "trying to hold the city of South Gate hostage economically and that just won't fly."

Downey Councilman Robert Cormack replied that the city's only concern was additional traffic that might be brought into Downey's residential neighborhoods. He added he was suspicious of why South Gate officials were pushing so hard for the off-ramp, adding that he suspected it was because South Gate and other surrounding cities are "anxious to have our auto dealers."

De Witt warned that if Downey officials continue to oppose the off-ramp at the state level, "there will be bad blood between the cities because there will come a time when we will be able to hold up one of their projects."

There is a good reason why city officials are so interested in auto malls. Since Proposition 13 slashed property taxes, cities have become increasingly dependent on their 1% share of the state sales tax. In Downey, a city with a $22-million general fund, sales tax revenues amounted to $8 million for the current fiscal year while property tax revenues were only $3 million. Of that $8 million in sales tax, $3 million was generated by the city's 13 auto dealers, city officials said.

All sides agree that the first shot in the auto mall wars was fired in March, when Louis Frahm Honda Inc. of Downey signed a contract with the Norwalk Redevelopment Agency that gives the agency the exclusive right to seek a new location for Frahm in Norwalk. Frahm has run an auto dealership in Downey for more than half a century.

In an interview, Louis Frahm succinctly explained why auto dealers like himself want to be positioned close to other dealers.

"When a guy wants to buy a car, he goes to some place where they have 10 dealers in a row," Frahm said. "He won't go driving 10 miles down the street to go from dealer to dealer."

In Cerritos, the Auto Square has grown from one dealer in 1980 to nine dealers this year. In the 1984-85 fiscal year, the Auto Square contributed $1.5 million in sales tax revenues to Cerritos, which took in $11 million in overall sales tax revenues to help fund a $14-million general fund. The city does not levy a property tax.

The growing success of the Cerritos Auto Square has prompted one municipal official to warn that unless Southeast cities scramble to compete with Cerritos, they may end up with no auto dealers at all.

"If the cities don't do something, everybody's going to be relegated to a second cousin" to Cerritos, said former Downey City Manager Robert (Bud) Ovrom. Ovrom resigned last month, saying he was frustrated over delays in Downey's redevelopment plans. Now Burbank's city manager, Ovrom predicted that if Downey fails to build an auto mall within five years, it may lose all its auto dealers to other malls in the area.

Of prospects for another auto mall in the future, Doug Corrigan, president of the Cerritos Auto Dealers Assn., said "I wouldn't be real happy to have another auto mall pop up five miles up the freeway."

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