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The Value of Auto Mall Plan

November 24, 1985

The rhetoric relative to the Santa Monica Auto Mall during the last few weeks has been enlightening. The concept of locating dealerships in an "auto park" is gaining favor in many communities. Typically, a city provides inexpensive land to attract the following dealerships: (1) those located within the city limits; (2) those from other areas, and (3) new agencies. Obviously, the latter two are the most attractive to the city as the opportunity for increased sales tax revenues is greatly enhanced.

A dealership usually requires land priced at approximately $5 to $10 per square foot. The city will subsidize any differential between the sales or asking price and the required price through below market rate financing, sales tax rebates, or contribution of land at the required price. In the case of the 43-acre Santa Monica airport property, the value to the city for commercial uses could be as high as $30 per square foot. Through Santa Monica already owns this property, the city would be subsidizing the auto mall use through lost opportunity costs of approximately $20 to $25 per square foot of value, or $37 million to $47 million with little or no increase in sales tax revenue as the dealerships in question are already located in the city.

As a Santa Monica resident and taxpayer, I completely support Mayor (Christine E.) Reed's position. In essence, the Santa Monicans for Reasonable Growth are willing to exchange the commercial land value for residential/retail land value by relocating the dealerships. Apparently, they feel the loss of the airport property for commercial uses is offset by the redevelopment of the existing dealership properties into residential and low-density commercial/retail. The land use plan that was recently implemented projected Santa Monica Boulevard as the "automobile row" and supposedly eliminated the guesswork associated with development in our city. (Robert) Kramer, who has probably contributed as many tax dollars to the city as anyone over the past 10 years, was immediately shot down on his expansion plans. Why should anyone think the redevelopment of the existing dealership properties into retail/commercial use would be any more acceptable to the Reasonable Growthers?

Another consideration is the delicate balance between the Santa Monica Mall and its redevelopment and other retail areas (existing dealerships) popping up all over the city. If the mall is ever to be successful, the city must channel retail development in its direction. Development of "auto row" for retail and related uses could spell disaster for the mall. The land use plan will work if the citizenry of Santa Monica will let it.

I think Mayor Reed has clearly focused on the key issues and is consistent with her past statements. The bottom line is the dealerships in question are already located in Santa Monica and the city has 43 acres of contiguous single-owner property--a far more valuable asset than (should be) utilized for a use for which the city already reaps the economic benefits.

NYAL LESLIE

Los Angeles

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