COMPTON — City administrators and a partnership that includes prominent automobile dealer Pete Ellis are hammering out a plan that could put a $1.6-million car brokerage lot in the Compton Auto Plaza.
Officials of the Community Redevelopment Agency are expected to present the proposal to the City Council in a closed session on Tuesday.
The brokerage lot would operate much like a swap meet: One or two weekends a month, new car dealers from throughout the area would gather hundreds of vehicles on the proposed 10-acre site and offer them at about 10% below retail price, but only to buyers with preapproved credit union financing.
Ellis and his partner, Autoland Inc. of North Hollywood, would collect a fee from each dealer who participates.
City's Take Guaranteed
Ellis predicted that more than $70 million worth of autos would be sold annually at the Compton site. And the partnership is so confident that it has guaranteed to pay the city $700,000 in yearly taxes from the project, even if sales fall short of projections.
In return, the partners want the city to spend $1.6 million to pave the vacant 10 acres and construct one or two small buildings that would serve as business offices.
Michael Nuby, an assistant for the Redevelopment Agency, said Ellis approached the city with the plan about five weeks ago. Nuby said it might take several months for all of the details to be worked out. The plan would then have to be approved by the council, which doubles as the city's Redevelopment Commission.
Ellis said that after considering several locations, Compton's auto mall was chosen because of its proximity to the 91 Freeway and because it has enough undeveloped land.
17 Years of Experience
"If you wait one year, you are going to see an incredible baby over there," Ellis said in a recent interview. "This is going to be a winning situation for the whole town."
Ellis, who owns four auto dealerships in the Los Angeles area, said he is also considering placing a permanent outlet in the mall.
Autoland has been conducting such sales for 17 years, Ellis said, using stadium and arena parking lots throughout Southern California. Ellis said this would be the company's first permanent site for its swap meet sale.
Autoland President Michael Malamute did not return several telephone calls for comment.
Built eight years ago as a major city redevelopment project, the auto mall has fallen short of initial projections despite its freeway location.
In recent months the city has made emergency loans to two of the plaza's four dealerships. After four private lenders turned down requests from Winners Pontiac / Toyota, for example, the dealership received a $1.9-million loan from the city last month to pay off its mortgage. A spokesman for one of the banks said at the time that the auto mall has a weak financial outlook.
Under Ellis' plan, the permanent dealers--offering Buicks, Chevrolets, Volvos, Pontiacs, GMC trucks and Toyotas--would be the only ones allowed to sell those models on the brokerage lot, as long as they supply enough cars.
But at least two council members said they have concerns about the proposed development.
Councilman Maxcy D. Filer said he is afraid that outside dealers selling other models will take sales away from the permanent auto mall businesses, which also pay the city a tax based on the number of sales they make.
"(Ellis and Autoland) are going to have to prove a lot to me if they are going to get my vote," Filer said.
Infrequent Use Cited
Councilman Robert L. Adams said he is unsure whether he wants to see 10 acres of the mall tied up for something that is going to occur only once or twice a month.
But Councilwoman Jane D. Robbins said her family was quite satisfied when it bought a car through a credit union broker, so she believes Autoland's proposal would work.
Mayor Walter R. Tucker and Councilman Floyd A. James did not return several calls for comment.
The permanent auto mall dealers also have mixed opinions.
"I think this is going to be an asset for us and a very positive thing for the auto plaza," said Gary Dee, manager of Winners. "The one thing that I have liked about (the plan) since the beginning is the exposure aspect, which is something we have been lacking for the last seven or eight years."
Dee says he sells about 30 cars a month through the various sales Autoland now conducts elsewhere.
But John Fonteno, the owner of Arrow Volvo and Harry C. Clark Buick, said he is apprehensive of the plan. He said he is unsure if it is legal for Ellis to keep other Volvo and Buick dealers out of the brokerage sales.
"I don't want another Volvo dealer setting up shop right under my nose," Fonteno said.
Brett Mitchell, whose Brett Mitchell Chevrolet received a $175,000 loan from the city last year, did not return calls for comment.