For the second time in three months, a dealership in the Compton Auto Plaza has closed its doors, leaving the city with unpaid debts--in this case $1.9 million--and a nearly empty auto mall that has been unable to compete with those in surrounding cities.
Compton officials now say they have all but abandoned their dream of expanding the mall into a thriving 66-acre element of the city’s redevelopment plan.
The latest dealership to fold, Winners Pontiac, went out of business about two weeks ago, according to Compton officials who said they learned about it when a city representative went to collect an unpaid business license fee.
Closed Up Tight
The collector, said Councilwoman Jane D. Robbins, was told by a Winners employee to come back the next day. “But when they went back it was closed--lock, stock and barrel,” Robbins said.
In December, Brett Mitchell Chevrolet was closed by the state and slapped with administrative charges of tax and licensing irregularities. Mitchell’s business license was subsequently revoked by the state Division of Motor Vehicles, which is also contending that he defrauded a Long Beach finance company.
Volvo and Buick dealerships owned by John Fonteno are the only sales firms left in the auto mall, designed by Redevelopment Agency officials to house as many as 14. However, City Manager James Goins says he received inquiries from about 12 business groups interested in opening dealerships on the Winners and Mitchell sites.
Unable to Compete
Goins said those two sites will probably go to new dealerships but that Compton has abandoned the idea of bringing in more auto dealers because it cannot compete with already thriving malls in other cities such as Cerritos and South Gate.
“I went to auto dealers (in other malls) and they said they felt Compton didn’t present to them a market where they thought they would make a good profit,” Goins said this week.
So the city, he said, has begun to consider other kinds of development. On April 4, the City Council is to vote on a joint proposal by Newport Beach developer Stephen C. Hopkins and Westland Industries of Long Beach. They are asking for exclusive rights for 90 days to sign up retail firms willing to fill 26 acres on an undeveloped portion of the auto mall site, which contains streets but no buildings.
Goins said the developers are promising to bring in a large concern, such as a Home Club or Price Club, to anchor the shopping area. Carol Crosswell, who along with Allen Alevy, is a principal in Westland Industries, said the developers have already gotten agreements from two retailers. She would not disclose the names of the retailers.
There are questions, however, about whether the auto mall land can easily be turned over for other uses, according to auto dealer Fonteno. He said the Development and Disposition Agreement with the city, which he signed about 10 years ago, prohibits other kinds of businesses.
Fonteno also said the city can make a go of the auto mall. “We’ve had chances of having other dealers,” he said. "(An) Oldsmobile dealer was ready to break ground and at the last minute he dropped out. I think there’s just too much red tape in City Hall,” Fonteno said.
He attributes his success as an auto dealer to good management. “You build a business . . . you retain your customers. You treat them right,” he said.
Owes $1.9-Million Loan
Both Winners and Mitchell closed owing the city money. Winners’ debt consists of a $1.9-million loan that the city extended in February, 1988, after four commercial lenders refused to extend credit. One lender questioned whether the auto mall was a viable investment.
The dealership occupied by Winners had changed hands four times in eight years. The owner who secured the city loan last year was a Michigan businessman named Michael P. Howell.
Under the terms of the city loan, Winners was to repay the money at 10% interest within six months. But city officials acknowledged this week that only $45,000 has been paid.
However, he said, the auto dealer has agreed to deed his land over to the city as payment for the debt. Goins said that the city is willing to do that because the land and the showroom on it are worth more than $2 million.
Robbins said the city is preparing to go to court on the Brett Mitchell debts. At the time his dealership closed, Mitchell owed the city $115,887 on a $175,000 loan given him in 1987, and $12,000 in back rent for the building, which the city owns.