Compton Auto Dealer Makes Urgent Plea for $175,000 in City Loans

Three weeks after being accused of falling behind on lease payments to the city, a car dealership in the Alameda Auto Plaza has applied to the City Council for $175,000 in loans to meet what records describe as “an urgent working-capital need.”

Brett Mitchell Chevrolet Inc., which has held a city-subsidized lease in the auto plaza since 1985, wants three years to pay the money back at 7% interest--1.25% below the current prime rate that banks charge their best commercial customers.

Dealership President Brett E. Mitchell declined this week to say why he needed the money: “Let me leave it alone until the City Council deals with it.”

And Michael Nuby, project manager for the city’s Redevelopment Agency, also declined to be specific. Nuby said the money would be “just a short-term type of loan” to cover “general operating expenses.”

Nuby said Mitchell’s request for money doesn’t mean that “he’s going to be closing the doors” if the loans aren’t approved. But he declined to further discuss Mitchell’s “personal finances without his permission.”

On Tuesday, the council was poised to consider making the loans by taking:

$100,000 from a revolving loan fund fueled by grants from the federal Economic Development Administration and the Department of Housing and Urban Development.

$75,000 from a business assistance program financed by a federal Community Development Block Grant.

But at the last minute, City Manager James C. Goins removed the loan requests from the council meeting agenda, saying later that officials were still awaiting receipt of the collateral that the dealership intends to offer as security.

“Once the material is received, Goins said, the loan requests will be submitted to the council.”

According to the proposed loan resolutions, Mitchell intends to “personally guarantee” the loans and also secure them with a deed of trust against unidentified personal real estate holdings.

At 28, Mitchell is often described as one of Compton’s more successful businessmen. He often helps raise money for worthy causes. And over the past two years, his firm has been one of the council’s largest campaign contributors, giving $7,000 to Mayor Walter R. Tucker and Councilmen Robert L. Adams and Floyd A. James.

After a previous Chevrolet dealership encountered financial trouble and failed, Mitchell moved into the city-owned auto plaza with money that he raised by selling two parcels of downtown property to the city’s Redevelopment Agency. Based on a property appraisal, the council paid Mitchell $725,000 for the parcels even though the businessman had purchased the land less than a year before for about $335,000, records and interviews indicate.

“The council also gave Mitchell a five-year subsidized lease that required him to pay $200 a month rent for the first year and $3,000 (a month) thereafter, still about $2,000 month less than what another dealer in the auto plaza was required to pay.”

In May, Mitchell’s firm was one of five businesses accused of owing the city thousands of dollars on redevelopment loans or lease payments. Councilman Maxcy D. Filer quoted a city memorandum that claimed Mitchell was $6,000 behind in his lease payments.

But Mitchell denied being tardy in any payments.