Hyundai Proposes to Move Its U.S. Headquarters to Fountain Valley

In a bid to accommodate growth and find a permanent headquarters for its U.S. operations, Hyundai Motor America said Tuesday that it plans to move from Garden Grove to Fountain Valley.

The subsidiary of South Korea’s largest automobile maker submitted a proposal Monday to Fountain Valley to buy 18 acres next to the San Diego Freeway, remodel a two-story building and build a new five-story building and other facilities.

The company now leases six buildings in Garden Grove.

A move is needed to handle the company’s planned expansion, Hyundai spokesman Ted Kade said. Since 1985, when the company opened its first U.S. offices in Garden Grove, Hyundai’s staff has grown to 500 people.

The headquarters work force will probably grow to about 750 by 1992, Kade said.

“The proposal is still subject to negotiation, but we have a very strong interest in the location, and we feel it could suit our needs,” he said. “We have been searching for the last 3 years for a permanent home.”

Fountain Valley City Manager Judy L. Kelsey said the freeway property, owned by QB Properties, is carried on city tax rolls at a value of $10 million but is worth “significantly more than that.” She said Hyundai has agreed to pay “a competitive price” for the property.

The existing building, formerly the offices of ITT Cannon, will be remodeled for $8 million to $12 million, Kade said.

Kelsey said a public hearing is scheduled Jan. 11, when the proposal will be submitted to the city Planning Commission.

“I know of no reason it would not be approved,” Fountain Valley Councilman James E. Neal said.

Although the company will not generate a great deal of local sales or tax revenue, community leaders have expressed an interest in the prestige associated with having Hyundai’s U.S. headquarters in Fountain Valley.

Fountain Valley Mayor pro tem Fred Voss acknowledged that only sales of cars to Hyundai employees will yield tax revenue to the city, “but they are a national firm, and it would be prestigious to have them headquartered here.”

Voss noted that Hyundai would generate indirect economic benefits for the city by providing employment.

He said that for the last 2 weeks, Hyundai and city officials have been discussing possible incentives, including tax breaks, to attract the firm.

Since entering the U.S. market 3 years ago, Hyundai has grown to become the fourth-largest foreign car importer, behind Toyota, Honda and Nissan. Domestic sales of autos has grown from 168,882 in 1986 to 263,610 in 1987.