Redevelopment Bonanza : Carson’s Timely Loan Reaps an Expanded Auto Complex

A $750,000 loan made by the Carson Redevelopment Agency in 1985 to avert decay of the city’s retail auto sales has become a redevelopment success story.

The city’s ambitious redevelopment plans have included the Carson Mall, City Hall, the community center, a new hotel and office complex near City Hall, and the eventual use of 180 acres of former landfill at a prime site just southeast of the Harbor and San Diego freeways.

But while Carson still has to pay off expenses from earlier projects and construction is under way on the hotel and office complex, the more humble retail auto business has crossed the redevelopment finish line first--paying off the loan, plus $66,000 in interest, more than seven years ahead of schedule.

The developer, Don Kott, has tripled the size of his operation, added new auto and truck dealerships, and expects to finish the year with $150 million in auto sales. An ocean of spanking new cars visible from the San Diego Freeway draws car shoppers like bears to a honeycomb. This year, they will enrich city coffers with $1.5 million in sales tax. And city officials say the auto center adds to Carson’s image.

“It was a very good investment,” said Mayor Kay Calas. “We got our money back, and we are going to make revenue off it--quite a bit of revenue. We have growth by the freeway. It has improved everything.”

Almost a Disaster

“This is a success,” said Community Development Director Patrick Brown.

It was almost a disaster. Two and a half years ago, the Dean Corbett Chrysler dealership had opened a new facility in Buena Park in Orange County and was proposing to close the one in Carson.

Kott, whose Ford dealership on Avalon Boulevard is adjacent to it, said the Chrysler dealership was going to move because its lease on the land was expiring and the purchase price for it was too high for the dealer to afford.

“The city was going to lose sales tax,” he said. “Roughly 50 employees were going to be out of work.”

And, he acknowledged, it would hurt his business, as well, in a ripple effect. “A closed agency creates a bad situation,” he said.

Kott and some partners jumped in.

They approached city officials, offering to run two dealerships on the former Corbett site if Carson would lend part of the purchase price. Kott would continue to operate his Ford franchise next door.

“With the city’s assistance, I was able to purchase the property for $3.6 million,” he said.

The city required Kott to repay the $750,000 in 10 years with interest adjusted annually according to the Consumer Price Index. He and his partners opened Chrysler and Lincoln-Mercury dealerships on the redevelopment land they bought.

Kott said the deal was “very scary, . . . very chancy. We had to close on the real estate, the dealership and the City Council deal all at one time. If anything would have happened, the Chrysler store would have closed and gone forever, and that would have taken out the Lincoln Mercury. . . . None of us had a lot of money to invest in this. It took a lot of money to make the deal go around.

Jobs Created

“We were able to keep the Chrysler-Plymouth store open, and with Chrysler’s assistance, it is doing very well.” He was also able to bring in a Lincoln-Mercury franchise, with a payroll of 40 employees and anticipated gross sales of $25 million.

In addition, he said, “since we started this thing two years ago, we have added to our franchises, the Hino diesel truck franchise . . . the Isuzu truck franchise . . . the Nissan Diesel truck franchise. We are in fact the largest import truck dealer in the United States as far as commercial trucks are concerned. We got a nice little auto center.”

Kott, who typically has 1,500 cars and trucks on sale at his various operations, said he believes the different lines reinforce one another.

“The total is bigger (than the sum of the parts). What we have done has beefed up the Ford deal because people come and look. The total sum has really jumped. The (different makes) compete with each other, but . . . in reality, they appeal to different markets. The Lincoln buyer is certainly not a Ford (buyer) and vice versa.”