Torrance OKs Deal So Honda Can Expand U.S. Headquarters

Despite complaints from property owners that the small businessman is being squeezed out of the city, the City Council has unanimously approved a $27-million agreement with American Honda Motor Co. that will allow the Japanese auto maker to add 25 acres to its 76-acre U.S. headquarters.

Council members said the agreement, in which Honda will lend the city more than $21 million to buy the property and make relocation payments to displaced businesses, is the only way the city could redevelop what it considers its oldest and most blighted area. The city designated the site for redevelopment two years ago.

But representatives of the 42 businesses that will be removed from the triangular downtown area bounded by Santa Clara Street, Van Ness Avenue and Torrance Boulevard complained that the deal approved at Tuesday’s council meeting had already been decided and was made to accommodate big business.

‘Smoke Screen’

“This was a well-planned maneuver to acquire private property, not for a public use, but for private use,” said Donald Cucci, owner of a boat-building business and an unsuccessful City Council candidate last year. “This is nothing more than a smoke screen for Honda to get the property at the lowest possible price.”

An angry Mayor Jim Armstrong responded, “This council has done more to enhance the downtown area than any other previous council. If anyone feels that any member of this council has done anything illegal, you call the district attorney’s office and you file a complaint.”

Councilman Bill Applegate also chided some owners who hinted that the city was making special concessions to allow Japanese nationals into the city over American businessmen.

“Those allegations have no place, they have no relevancy to this matter,” Applegate said. “In fact, the city’s single largest minority is Oriental, and 20% of our schoolchildren are Oriental.”

Councilwoman Katy Geissert said it was not Honda who approached the city, but rather city officials who sought the company expansion to help revitalize the city’s east-side industrial area.

Money Invested

“We’ve all heard the stories of other areas where a plant has shut down and the land is abandoned, creating rust valleys,” Geissert said. “Here we have a company that has come in and invested a lot of money to clean up a piece of property. That is something that most cities would give a lot for.”

What Honda is giving the city is a $13.1-million advance and an $8-million loan to buy the property. The city will use the money to acquire the land--through eminent domain if necessary--and resell the 25 acres to Honda at about $12 a square foot, or nearly $13 million. Honda will spend another $3 million to $4 million for demolition and for grading of the site.

The city will spend nearly $6 million for relocation and administrative costs, bringing the total cost of the deal to $27 million. The loan will be paid back to Honda with 10% interest with taxes from the project.

In 1981, Honda paid less than $9 a square foot for its 76 acres, formerly owned by U.S. Steel, and spent $3 million to clear it.

Honda will eventually build 1.2 million square feet of office and warehouse space, including a service and parts center and research and development offices. The agreement calls for all buildings to be completed by 1989, and for employment of more than 3,000 people.

Payments to Businesses

In addition to paying relocation costs and providing assistance in finding new sites, the city will make a one-time payment to businesses equal to the difference in annual rent between the old location and their new sites. The city will also pay some businesses for physical improvements needed at new sites to meet code requirements.

But the business owners complained that the assistance was not enough and that the offers made for their property and business were too low.

Thomas Eadie, who owns Eden National Steel Co., said the city’ offer for his property--which he did not disclose--would “hardly replace the buildings I’m in, let alone the land.” He called the offer “unfair, unjust and completely unacceptable.”

“Do we have to go to court?” asked Joseph Weiss, an owner of property on Torrance Boulevard with 12 tenants. “Why can’t you just appraise the property to what it is really worth?” Weiss said the city offered him $625,000 for 30,000 square feet of land.

“I couldn’t buy that much land or build buildings with that money.”

One Business Unchanged

One business that the city is apparently bending backwards for--after numerous letters and phone calls and a small demonstration in front of city hall Tuesday night--is the Harbor Animal Hospital on Torrance Boulevard.

The owner, Dr. Rollin Smith, and many of his clients complained that the community would suffer if the hospital could not relocate nearby.

The council members said the city will try to keep the hospital near its present location.

One businessman who escaped inclusion in the Honda land acquisition was Walter (Jake) Egan, owner of Aable Muffler at Torrance Boulevard and Van Ness Avenue. He is also a Carson City councilman familiar with redevelopment laws.

Egan was the only one of the 42 businesses in the affected area to file a lawsuit to keep his property from being acquired by the city. Rather than hold up the project with a court battle, the city omitted his property from the plans.

Egan said he was surprised that he was the only one to file a suit. “I don’t think there is anyone who cannot afford to legally defend themselves,” he said.

“I can understand what the council is doing. But I have to look at it from a business standpoint. They were basically trying to put me out of business.”