Pasadena May Offer Rebates to Hold Car Dealers

The automobile advertisements are aggressive. The slogans are simple: “Buy a car and get cash back.” The image is effective: a shower of money.

Now, city officials are considering using the same ploy--a cash rebate--to keep the city’s 16 auto dealers from deserting Pasadena’s Colorado Boulevard.

The city, which receives $3 million in annual sales-tax revenues from its car dealers, faces stiff competition. Outlying areas such as Lancaster and Glendora lure dealers with their lower real estate prices. Shiny new auto malls, such as the 210 Freeway Autoplex in Duarte and Monrovia, provide cheap land through redevelopment agencies.

Pasadena already has felt the impact. Since last December, three of the city’s auto dealerships have left the city. Meanwhile, planners in Duarte are talking with some Pasadena dealers about a spot in the Autoplex.

The proposed rebate is the latest attempt by Pasadena to keep the trickle from turning into a flood.

Cities ‘Whipsawed’

Competition among dealers is to blame, according to Don Hopper, community development director in Duarte, who helped put together the Autoplex.

“Unfortunately, cities are getting whipsawed,” Hopper said. “In many cases, they’re playing cities against each other.”

On Tuesday the Board of Directors will be asked to discuss a rebate concept approved by a subcommittee composed of board members Bill Paparian, Kathryn Nack and Chris Holden. If approved, the city staff will be directed to prepare a specific proposal.

The subcommittee, the city’s auto dealers and the Chamber of Commerce will meet Wednesday for further discussion of the rebate concept.

50% Tax Break

Under the tentative plan, dealers wishing to build or expand could be eligible for a return of up to 50% of the sales taxes they would customarily send to the city. The amount of money returned would be negotiated based on the dealer’s financial need, said project manager Yvonne Walkup, but the aim would be to lower land prices to about $15 per square foot.

Only dealers generating $100,000 or more annually in sales taxes would be eligible. In addition, dealers facing increased land prices and the prospect of moving could also take advantage of the rebate, Walkup said.

Pasadena is particularly vulnerable to the exodus of dealerships. The city’s commercial real estate prices average $30 a square foot, compared to land as low as $5 a square foot offered in the Autoplex.

The city had considered building its own auto center in years past, but residents objected to sites in the northwest and in east Pasadena along the flood-control channel. Last year’s proposal for a center on the east side between Foothill Boulevard and the 210 Freeway was rejected as economically risky because of the high cost of land, Walkup said.

So the city has had to watch as Monrovia--with undeveloped land for which it paid $12 to $20 per square foot--forged ahead with its part of the Autoplex project. Now it has space for nine auto franchises. Five are already operating, and an announcement that two more franchises will open there is expected within a month, Hopper said.

Five Dealers

Meanwhile, Duarte, the other partner in the Autoplex, used redevelopment powers to buy land, also at $12 a square foot. Five dealers operate there; another five are expected, and negotiations are under way for the remaining space, said Duarte planner Steve Sizemore.

The cities divide more than $2.1 million a year in sales-tax revenue from the dealers.

In Pasadena, the high cost of land means that dealers are hard pressed to acquire land for expansion. If they lease, they are at the mercy of the property owners. The three dealers who left last year were on leased land. Seven of the city’s remaining 16 auto dealers are also leasing land.

The situation has prompted the city development department and the Board of Directors subcommittee to propose a variety of solutions. They include swapping land among Colorado Boulevard property owners to place the dealers closer together, constructing storage garages, sponsoring a direct-mail promotion campaign like that conducted for Alhambra’s auto dealers, and building vertically, Walkup said.

Mall Concept

“It would be about like a mall concept,” Walkup said of the vertical development. “For example, Floor 1 would be the Nissans, Floor 2 whatever.”

The continued presence of the dealers is also tied to the future of supportive services, such as tire shops, car repair shops, auto accessory stores and stereo and alarm installation companies, which generate more than $300 million worth of sales in Pasadena and employ about 1,000 people.

“I hope they will be supportive,” said Paparian of the dealers. “They really are the backbone of the economy in Pasadena.”