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Santa Fe Springs Pushes to Lure Business : But Its Success in Recruiting Is Bad News for Other Cities

May 15, 1988|MARY LOU FULTON | Times Staff Writer

SANTA FE SPRINGS — In one radio advertisement, a young man talks about why he is moving his worm farm to this mostly industrial city.

In between jokes, the man reminds listeners that Santa Fe Springs is a place where "favorable zoning regulations . . . and supportive local government" contribute to making the city "a preferred business location."

For the past two years, ads promoting Santa Fe Springs have been airing on Los Angeles area news-radio stations. The campaign also has included ads in the Wall Street Journal and other newspapers, and a slick four-color brochure the city has mailed to tens of thousands of businesses regionally and nationally.

The goal: Forget that Santa Fe Springs is dotted with oil derricks and huge factories whose operations sometimes make the air smell bad. Think of the city as a center of business opportunity where nearly 90% of its 9 square miles is zoned for industrial use, where there is good freeway and rail access and where there are more than 3,000 companies.

The cost: $325,000 in Redevelopment Agency money.

Difficult to Measure

The results have been difficult to measure, city officials say, because businesses had been steadily flowing into Santa Fe Springs before the ad campaign. But since the marketing program started three years ago, annual sales tax revenues in this city of 15,000 have gone from $10.4 million in 1984-85 to $12.2 million in 1986-87. Business licenses have gone from 2,584 in 1984 to 3,115 last year.

The city "has always had a good attitude toward industry," said George Schumacher, an owner of Penta Pacific Properties, an industrial real estate broker. "It's probably one of the most enlightened cities I've ever bumped into in that respect."

But while the recruitment of businesses is good news for Santa Fe Springs, it is bad news for other cities where the defection of just one company can mean the loss of hundreds of thousands of dollars in annual city sales tax revenue.

That is especially true in the case of auto dealerships, which can generate substantial city sales taxes. Santa Fe Springs, traditionally a haven for industry, is starting to use its strong revenue base to offer sales tax rebates and free land to lure dealers from Norwalk and Huntington Park. The city also is close to sealing a pact with Carmen Koosa, owner of Nissan of Downey.

Downey redevelopment officials are trying to acquire another parcel of land for Koosa, but have been unable to produce a deal, said Jim Cutts, community development director.

Cutts said that Downey learned about Koosa's possible defection from Don Powell, city manager of Santa Fe Springs, and that the two cities "have the highest respect for each other."

'Understand Each Other'

"I don't think they're picking on us and I'm not picking on them," Cutts said. "We all just understand each other because this is big business."

Santa Fe Springs offered Koosa--essentially for free--6.2 acres with freeway visibility for his dealership, the second-biggest seller of Nissans in the country. Koosa would commit to producing at least $3.5 million in sales tax revenue over seven years, and stay in the city for at least 12 years.

Some city officials who have lost dealerships to Santa Fe Springs appear to be more frustrated than angry. Cutts said Santa Fe Springs has the advantage of offering undeveloped land, while Downey has to buy parcels and demolish buildings to acquire open land.

"The consequence is it drives up the cost" for Downey's redevelopment projects, Cutts said.

Cities such as financially strapped Huntington Park, which will lose more than $200,000 a year when the GMC Truck Center moves Jan. 1, cannot compete with the incentives Santa Fe Springs offers.

GMC already owned 10 acres there, and Santa Fe Springs agreed to rebate $1.16 million in sales taxes that the dealership would otherwise have to pay over the next five years. The city will also pay 7.5% interest on the unpaid balance of tax revenues yet to be rebated, said Planning Director Bob Orpin. GMC agreed to stay in the city for at least 10 years.

"Naturally, we would like to keep any auto or truck dealership we have and we make the best effort we can," said Huntington Park City Manager Don Jeffers, "but it's much easier when the land is available and vacant."

He added that Santa Fe Springs was up front about the impending deal. "We're on good terms with them," Jeffers said.

A similar deal was made in 1986 with Dial Chevrolet of Norwalk, which next year will become Merit Chevrolet of Santa Fe Springs. The city will rebate the first $1.5 million in sales tax revenue paid by the dealer in 6 1/2 years. In exchange, the dealer has agreed to stay in Santa Fe Springs for at least 10 years.

Notify Competing Cities

Santa Fe Springs makes a practice of notifying competing cities whenever they start negotiating with a major sales tax producer, Powell said.

"I'm sure they're not pleased about it," Powell said, "but I'm not aware of any knives being thrown our way."

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