Officials here have tentatively agreed to use California redevelopment law and $750,000 to help expand an auto dealership.
In a unanimous decision Monday that followed almost two hours of discussion over how to best use limited city funds within the legal constraints of the state law, the Carson Redevelopment Agency (which is made up of City Council) backed the expansion project proposed by Don Kott Ford and Alpha Omega Development Corp.
The city support comes after three meetings during the last 10 days with proponents of the project. Although officials have been backing the project in concept, they have been unable to locate funding sources within their redevelopment budget for that area. That account would have been "wiped out" if the major loan were drawn from it, city staff said.
However, officials were told Monday night that they may have funds that were not previously considered. City Treasurer Mary Louise Custer said that available money may exist in a redevelopment bond-sale account. Finance Director William Parrott said another option may be that the redevelopment account could borrow money from the city's general fund.
And while the loan approval is contingent upon the identification of excess city funds and the negotiation of a satisfactory contract, many city officials say they hope a final agreement can be reached because the project would generate significant tax revenue.
The $5.4-million expansion project, for which proponents said they have already obtained financing for all but the $750,000 loan plus interest, would convert an existing Dean Corbett Chrysler facility into two new car dealerships. The Corbett site is being vacated in May.
"I feel it will be a good revenue generator for the city," said Councilman Walter J. Egan. "I think it's a viable redevelopment project for Carson."
However, while all city officials agreed that the project would make a significant contribution to city coffers--a projected $400,000 a year--some expressed concern about whether the city's role in the project is an appropriate use of redevelopment law.
California redevelopment law was intended to assist cities in battling urban decay. Through a complex tax arrangement, the law enables cities to subsidize developments that would have not occurred on their own.
"I want a clarification of general redevelopment agency purposes," said Councilman Thomas Mills. "The question that I'm perhaps addressing relates to a piece of property that's of a reasonable state of development and where the use may not be significantly changed."
He later explained, "I had a concern about whether you can reasonably say that participation in this agreement would constitute redevelopment."
Will Inquire at Meeting
City Atty. Glenn Watson said that when he meets with the project proponents this week, he will examine the nature of capital improvements on the 4.67-acre dealership site.
"The (Redevelopment) Agency really hasn't been informed as to exactly what's going to be done when the (developers) buy the property, but (the developers) did indicate that they intend to put several hundred thousand dollars into improvements of the property," Watson said at Monday night's meeting.
'Now whether that is sufficient to constitute redevelopment of a property already being utilized for automobile agency purposes is a question," he said. "I wouldn't say that we can close our eyes to that question--it's something we should probably look at. But right now I'm not prepared to say that that would be an invalid expenditure."
Officials also expressed concerns about the financing of the project. As originally proposed, the city's expected tax revenues from the project would be used in part to repay much of the loan and interest money. However, under tentative conditions discussed at the meeting, tax revenue would only pay off the interest, which, as proposed by the dealership, could amount to $603,480.
"I have a problem with taking what would be the city's (tax revenue) to pay off the city (loan)," said Councilwoman Sylvia Muise.
Fear of Vacant Site
The momentum to support the project, which was first proposed to the Redevelopment Agency just 10 days ago, comes from the expected tax revenue the dealership will generate and the fear that the site near the Civic Center may lie vacant for too long, some officials said. The Corbett facility, which is moving to Orange County, generated an average of $270,000 a month during the last three years, officials said.
"We've been primarily looking at this from a fiscal viewpoint," Mills said. "We wanted to keep the revenue coming in at the rate it is. And if the property sat vacant, there is some concern as to whether we'd have a larger redevelopment problem in the future."
The project proponents say that they are in a unique position to open the new dealerships because they have financing in hand and plan to combine at least part of their operations with Kott's existing dealership at 21212 S. Avalon Blvd.
But unless they obtain redevelopment assistance, the project backers say, they cannot afford to open the new dealerships.
"There is no other solution to retaining the automobile business in this city," said Kott, president of Don Kott Ford. "The start-up costs for automobile dealerships are enormous . . . we could not do it without the assistance of redevelopment. We need this money now to make the deal come through."
A final decision on the matter is expected at the Redevelopment Agency's meeting Monday.