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City Will Aid Car Dealer

Santa Ana OKs millions for Honda expansion and could give more. Some say that's unfair.

January 17, 2006|Jennifer Delson | Times Staff Writer

The city of Santa Ana has approved spending $5 million to help expand a Honda dealership at the Santa Ana Auto Mall and demolish a closed strip club that long annoyed city officials.

Now, a divided City Council today will consider whether to allocate an additional $1 million for the dealer's legal fees incurred in a fight with the landlord of the strip club, which was known as Mr. J's.

The council majority thinks expanding the dealership is "beneficial to the entire auto mall," said City Manager David N. Ream. "Honda will expand, bring in more tax revenue, and there will be more jobs." But two council members and several other dealerships in the mall say that for the city to help one dealership to such an extent smacks of favoritism.

Demolishing the club will also be asset, said Councilman Jose Solorio. "Mr. J's was more than an eyesore," he said. "It was not the best use of the land." Numerous city officials have said the club gave a negative impression at an entry point to the city and was a magnet for crime.

As for the complaint of favoritism, Solorio said, it was important to help Honda -- and Crevier BMW in a similar arrangement a year ago -- because, unlike other dealerships, it is at the foot of the auto mall next to land where it could expand.

The Santa Ana Auto Mall is home to 10 dealerships that generated $3.9 million for the city in fiscal 2005.

On Jan. 5, the council, sitting as the board of the city redevelopment agency, voted 5 to 2 to pay $5 million to take over the 42-year lease of the strip club -- a lease Honda had acquired -- pay for the club's demolition and sublet the land to Honda.

Within two years after Honda expands, Solorio said, the city will gain 200 jobs and $675,000 more annual sales tax revenue.

Despite this, Councilwomen Claudia Alvarez and Lisa Bist opposed the $5-million expenditure.

"Why are we doing so much to push through this transaction?" said Alvarez, who opposes the expenditure of public funds for a private business.

Alvarez questioned buying the strip club lease from Honda and then subleasing it back. She also questioned the need to pay the dealership's legal fees.

Some dealers in the auto mall also object. "I keep asking myself, 'Why don't they give me $5 million to expand my business?' " said Adolph Ohmann, owner of Commonwealth Audi.

Mike Stout, vice president of Saturn of Santa Ana, called the plan "grossly unfair. If they want to spend millions of dollars, it shouldn't be to help one dealer."

Honda Santa Ana attorney Michael Vivoli counters that the dealership was the only one next to a strip club, for decades. "That has caused problems for that business," he said.

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