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South Gate's Stumbling on Auto Mall Puts Plans by Car Dealers in Limbo

July 20, 1986|RITA PYRILLIS | Times Staff Writer

It seemed like plans for a South Gate auto mall were off to a smooth start last summer.

City officials found a 35-acre site along the Long Beach Freeway and had no problem attracting auto dealers who were eager to move to a prime freeway location.

But more than a year later, the proposed South Gate auto mall appears even further away, and a string of Southeast area auto dealers say they are uncertain where their dealerships will ultimately land.

What happens could be important to not only South Gate but also to Downey and other Southeast-area cities that have been eagerly trying to attract car dealerships because of sales taxes that they pump into city coffers.

In June, 1985, South Gate accepted $10,000 deposits from Downey Toyota, Downey Datsun, Pete Ellis Dodge of South Gate and Randy Sopp Chevrolet of Huntington Park, who signed agreements to negotiate exclusively with the city's redevelopment agency.

Claim by Property Owners

But plans went awry after three property owners on the prime site claimed the city "jumped the gun" by accepting deposits before notifying the property owners of the plan.

"Whether we were premature with our (auto mall) plans, I don't know," said Ruben Lopez, deputy director of the redevelopment agency. "But at the time, it seemed like the way to go."

Since then the city has refunded the deposits, rescinded the agreements, and Pete Ellis--whom city officials described as the mall's "drawing power"--has dropped out of the plans.

"Their attitude through all of this has been 'we're going ahead with this anyway' regardless of the problems they have caused," said Melvin Small, owner of United Container and Display, one of 14 businesses on the industrial site.

Small, the owners of J. B. Hunt Transport Inc., and Guardsman Chemical Inc. say they want to develop a 31-acre industrial park on the site where the city wants an auto mall. The plan they have submitted to the city's redevelopment agency calls for a $23.7-million investment on the property that the city declared "blighted" in a 1974 redevelopment plan.

The Goal Is Revenue

The city, while saying it will consider that proposal, still has its heart set on an auto mall.

"Our goal is to generate revenue, and we are determined to rid this city of blight," Mayor John F. Sheehy said. "We are looking for the highest and best use for that land, and that use seems to be commercial."

While an industrial park would generate jobs and some revenue for the city, auto malls and the sales taxes that they generate have become big money-makers for cities. Since the passage of Proposition 13 in 1978, which slashed property taxes, cities have been eager to attract business that sell high-priced items like automobiles.

Auto dealers say they like the auto mall concept, believing that it improves their competitive position in attracting potential customers to their showrooms.

City Atty. Bruce Boogaard said South Gate is being fair to the owners of the site where the city has planned its auto mall.

"We gave the $10,000 deposits back when United Container expressed interest in presenting an owner-participation plan," Boogaard said. "We had to rescind the agreements (with the dealers) so we could negotiate with the owners in good faith."

Murray O. Kane, an attorney for the owners, tells a different story. He said the city agency returned the deposits only after he threatened to sue it for violating state redevelopment law, which requires the agency to study the owners' plan before displacing them.

Boogaard said the redevelopment agency will work with the owners on their proposal while an environmental impact report for the auto mall is being prepared.

But while the agency studies both plans, the auto dealers say that they are wondering if the project will ever get off the ground.

Described as 'Standstill'

"They are, at best, at a standstill," said Carmen Koosa, owner of Downey Datsun. Koosa added that he needs to expand his showroom and lot to accommodate increasing sales. "I don't think they are going to make it, and as a result we are in dead limbo. I don't know whether to expand or get out."

About four months ago, Downey Toyota and Downey Datsun each gave the South Gate Redevelopment agency $50,000 "good-faith" deposits, according to Richard Watts, an attorney for the dealerships. Watts said the dealers are eager to negotiate with the agency when the project is ready and the deposits indicate their interest in the project.

According to Lopez, Randy Sopp Chevrolet also submitted a $50,000 deposit, but Sopp could not be reached for comment.

Lopez said the dealers offered to submit the deposits, which the city is holding uncashed. If the auto mall plans fall through, the deposits will be returned to the dealers, Lopez said.

In the past year, the city has hired traffic engineers and appraisers to evaluate the site for the feasibility of an auto mall. The city has also issued an $18-million municipal bond to help finance various redevelopment projects, including the proposed auto mall.

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