HomeMy WebLinkAbout08/19/2003, BUS 2 - STANLEY MOTORS (COLE MOTORS) RELOCATION AND RETENTION councilWei,Da«
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CITY OF SAN LUIS OBISPO
FROM: Wendy George,Assistant CAO V U�,[
Prepared By: Shelly Stanwyck, Economic Development Manager
SUBJECT: STANLEY MOTORS(COLE MOTORS)RELOCATION AND RETENTION
CAO RECOMMENDATION
Consistent with General Plan policies and a Major Council Goal for 2003-05, support the relocation and
retention of Stanley Motors by:
(a) Waiving the City's Inclusionary Housing Fee for the Cole Motors Project;and
(b) Approving the calculation of the Cole Motors Project's Building Permit fees at the rates
applicable on July 7, 2003, the date the Project application was deemed complete by the
Community Development.Department.
DISCUSSION
Introduction
Sales tax revenue is critical to the health of the City's general fund, and the sales of new and used
automobiles is critical to the health of our sales tax. To illustrate this point, consider that:
• Sales tax composes about 20% of the City's general fund, and auto sales compose about 20% of
our sales tax;
• Of our top 10 sales tax generators, six are auto dealers;
• Autos and related products recently overtook, by a small margin, general consumer goods as the
number one business group for the City, and autos and transportation experienced over 5%
growth in revenues for the first quarter 2003 compared to the first quarter 2002.
Therefore, our auto dealers play a significant role 'in the overall economy of the City. Although the
City's sales tax revenues have been off for several quarters, they would have been even lower were it
not for the continued record sales of new automobiles in the City. For these reasons, over the years —
and most recently with the adoption of the 2003-05 Financial Plan — the San Luis Obispo City Council
has adopted policies and goals to retain and attract auto dealers.
In addition to fiscal goals, the City also has many goals and hopes for the continued enhancement of the
downtown area. Included among these are land use goals that encourage the relocation of auto dealers
to locations in the community more suitable for auto sales. Such relocations would not only benefit the
downtown auto dealerships, but would advance City goals for the downtown area because of the reuse
potential of the former dealership sites.
The relocation of Stanley Motors (to be known as Cole Motors in the new location) offers the City the
opportunity to enhance both our sales tax goals and downtown land use goals. However, the relocation
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Council Agenda Report—Cole Motors
Page 2
will require significant capital outlay and investment on the part of Stanley Motors in a major
commercial project. To assist in relocating and retaining this critically important business, staff is
recommending Council support for two actions that will help make the relocation less financially
burdensome. Staff is making this recommendation based on existing City policies and goals contained
in the General Plan Land Use Element and Major Council Goals 2003-05, as discussed later in this
report.
Stanley Motors
1. Brief History
In 1950, Stanley Cole opened a Dodge dealership in San Luis Obispo. Stanley decided to use his first
name rather than his surname for the dealership. Along the way, his son Jeff and Jeff's wife Carla
became involved in the business. Today, their sons and about 40 employees work for the company on
upper Monterey Street (See Attachment 1). They have long since outgrown their present location and
have a proposal to construct a new facility on Broad Street. Upon their relocation to Broad Street,
Stanley Motors will be renamed Cole Motors.
2. General Project Overview
Cole Motors has proposed an approximately 40,000 square foot facility for automotive sales and
services at 3550 Broad Street (See Attachment 2). The total project area is a little over 5.63 acres on
what is now vacant land, but what was for many years a grocery store, beginning with Giant Food. The
project.incorporates a variety of energy saving features both in the building's design and through the use
of locally available building materials. A landscaped area along Broad Street will separate the proposed
vehicle display area from Broad Street.
3.After 53 Years Why Move?
As uses in downtown have changed, auto sales in the Monterey Street area have become increasingly
difficult. Because of the size of their lots, and their preexisting layouts, downtown auto dealers face
many constraints. As a result, encroachment issues have arisen along with functional challenges in day-
to-day operations, such as the loading and unloading of vehicles. The current site is just a little over
one-acre in size and very constrained by adjacent properties and the functional challenges of fitting in
sales and services on such a small site. The dealers also suffer significant property damage from various
sources, including tree "droppings" and vandalism related to nighttime activities in downtown. These
challenges are not only frustrating to the dealers but they limit their business operations and prevent
future expansion and increased sales.
For many years (over 12), the dealership has sought to relocate from their present location to a more
conducive location within the community. They have attempted to do so in a way desired by the City
and they have been remarkably patient. Thus far, they have resisted many efforts to attract them to other
communities and they have remained loyal to their "hometown roots". However, they have simply
reached a point where another site must be secured without further delay.
4. Why Broad Street?
In their many efforts to find an acceptable site, their fust choice would have been to a new site in an
expanded Auto Park Way area. At this time, there is no room for expansion within the City limits in the
Council Agenda Report—Cole Motors
Page 3
Auto Park Way area. The owners of two properties adjacent to the Auto Park Way area, both of which
the City's General Plan encourages to be used for automotive sales and open space, have not expressed
an interest in developing them for such uses. The attempt, by local developers and auto dealers to
develop one of these properties, the McBride Property, stalled several years ago when the costs far
exceed the monies available for development due in part to open space requirements. The other
property, the "Gap Property" owned by Alex Madonna, is not being contemplated for automotive sales
(by Mr. Madonna).. Although not identified as a location for automotive sales, staff has been advised by
legal counsel for the owner, that the parcels in front of Home Depot and the proposed Costco are also
not available for development for automotive sales.
Staff has worked with the Coles for years on various other locations within the City and believe that the
Coles have found the best alternative location. At this time Broad Street is home to another auto
dealership (Mazda), several used car outlets and one rental car outlet. In the City's Auto Dealership
Location Study adopted by Council in May 2000, several alternative sites for auto dealerships were
identified, including the Broad Street Area. The Council determined that the "former Von's site" was
among the best alternative locations to the Auto Park Way. Therefore, after many years of searching
and failing to find an acceptable and feasible site, with some direction from this Council decision — and
with added encouragement from City staff—the Coles zeroed in on the Broad Street site.
General Plan Policies for Auto Dealers
The General Plan contains goals and policies with respect to automotive sales in the City. The following
key General Plan (Land Use Element "LUE") policies relate to the location of auto dealerships in the
City, achievement of goals related to auto sales and land use for the downtown area.
1. The City intends to create around Auto Park Way an easily accessible and attractive auto sales
and service center(LUE 3.5.7A).
2. Auto sales in the areas of the City other than Auto Park Way should be minimized, in order to
reinforce the auto sales center and to maximize space for other uses in other locations (LUE 3.5.7
B).
3. The City will provide incentives to encourage relocation of vehicle sales to the Auto Park Way
area(LUE 3.7.8).
4. The City will reserve about 50 acres total for vehicle sales. (This amount is expected to be
sufficient for relocation of dealerships located elsewhere in the City, plus expansion of
dealerships in proportion to projected County population growth) (LUE 3.5.7A).
5. The City should emphasize more productive uses of existing commercial buildings and land uses
already committed to urban development (LUE Community Goals (12)).
Although the City has intended to create and expand upon the Auto Park Way area, various factors have
created obstacles to achieving these policy goals. Those factors include:. no available land within the
City limits, no interested developers, open space policies opposed by the land owner(in this particular
Council Agenda Report—Cole Motors
Page 4
location) and a lack of defined incentives. Despite the strong language in the Land Use Element
regarding the Auto Park Way area, the reality is that the Broad Street site is the only realistic location for
an auto dealership at this time. The relocation of Stanley Motors also presents an excellent
redevelopment opportunity for the mid-Monterey Street area with a use that is compatible with the
area's uses today and with a use that advances the objectives of the Council approved Downtown
Strategic Plan prepared by the Downtown Association. Therefore, staff believes that it is appropriate for
the City, consistent with existing policies, to provide some limited incentives to the dealer for this
relocation, which will be discussed further in this report.
Project Relationship to Major City Goal to Increase Sales Tax
One of the Major City Goals for 2003-05 is to encourage and promote retail projects that will increase
sales tax revenues. As mentioned previously, sales tax revenues from the sales of new and used
automobiles is critical to the health of the City' general fund. Of our top 10 sales tax generators, six are
auto dealers. The relocation of Stanley Motors from mid-Monterey Street to Broad Street will assist in
accomplishing this goal as they anticipate their sales to increase significantly under much improved
operating conditions.
Proposed Approach to Supporting This Relocation and Retention
In the adopted Work Plan for the major goal to increase sales tax, Council approved staff's continued
work with auto dealers in the City. Council also approved the following:
Consider broadening the program of incentives to auto dealers who relocate out of
downtown to Auto Park Way to include those who relocate out of downtown to other
acceptable sites in the City and continue to assist Stanley Motors (Cole) in its efforts to
relocate to a larger, new facility.
Staff is not proposing — and the Coles' are not asking for — a package of "classic" economic
development incentives. Such incentives, offered by many cities, include such things as land cost write-
downs, low interest loans, total fee waivers, infrastructure grants, and revenue reimbursement. Instead,
staff is proposing to "incent" the relocation in two ways that will offer meaningful financial assistance
without imposing a high cost on the City either financially or in terms of creating a broad precedent.
This approach is consistent with earlier City action. For example, when Toyota relocated from Higuera
Street to one of the last remaining Auto Park Way area parcels, the City did provide fee waivers for their
impact fees relating to water and sewer in the amount of approximately$15,000.
The City has never developed a standard "incentive package" for auto dealers to relocate from the
downtown area. In some ways, approaching each situation based on the needs of the individual
dealerships may be the best. In this case, two relatively modest "incentives" to assist this long time San
Luis Obispo business are being proposed. The first, is that the Inclusionary Housing Fee be waived and
second is that the Project's fees be calculated based on the date its application was complete rather than
the date a building permit is pulled, which is the normal policy.
Inclusionary Housing Fee Waiver
Staff is proposing a waiver of the Cole Motor Project's Inclusionary Housing Fee. The relocation of this
a^ 4
Council Agenda Report—Cole Motors
Page 5
business is not expected to create increased demand for housing because the business does not anticipate
significant staff changes as a result of increased facilities. Instead, they expect their new facilities to
present more operationally efficient work conditions for their employees (split shifts and other creative
work schedules are presently used). When Stanley Motors has job openings, they are filled locally
because a local employee is much more likely to stay with the organization and be a more productive
member of the organization than have been the rare out of the area hires. Staff does not recommend
waiving this fee for other relocating businesses because the proposed waiver is intended to be an
incentive in the very narrowly defined circumstances that the Cole Motors Project presents, including
that Stanley Motors is a downtown dealership-proposing to move to "another acceptable site in the city"
— and the Project is specifically mentioned in the work program of a Council major City goal as a
candidate for assistance.
Project Fees Calculation
On August 4, 2003 the Project was before the City's Architectural Review Commission (its only
discretionary hearing). The Architectural Review Commission unanimously approved the Project. The
Building Permit process has now begun and it is likely that the permit can be finalized in the very near
tenn. Because the Project will pull a Building Permit so shortly after the new planning fees become
effective, staff recommends deeming the project "in the pipeline" and calculating the fees based on the
rates that were in effect on July 7, 2003, when the Project's application was deemed complete.
Although a significant portion of Council's adopted budget balancing strategy included increasing fees
to improve the City's cost recovery, the majority of staff work associated with this Project will have
been completed prior to the effective date of the new fees.
FISCAL IMPACT
The estimated permit fees for the project if the fees are calculated as of July 7, 2003, and if the Inclusionary
Housing Fee is waived are $205,349.88. Included in this fee.calculation are traffic impact fees
($68,633:31), water impact fees ($66,072.00), and even public art ($9,634.21). In addition to fees, the
Project has various conditions that result in additional costs including significant design costs for medians
and other roadway improvements including the undergrounding of utilities along Highway 227. The
Inclusionary Housing Fee under the July 7, 2003 rate would be $40,536.82. If the fees were to be
calculated at the September 1,2003 rate(including the Inclusionary Housing Fee)the permit fee estimate at
that rate is $260,522.32. By approving the staff recommendations, the total cost of the estimated permit
fees to the Coles will be reduced by$55,172.44.
ALTERNATIVES
No or Reduced Incentives. Council could decide to provide no incentives or reduced incentives. Staff
believes the incentives proposed are consistent within existing policy and will not have a significant impact
on the General Fund, especially when compared to the potential loss of sales tax should Stanley Motors
move to another City. Staff has worked very hard to come up with a reasonable incentive proposal for
Council's consideration and feels this is a modest gesture of goodwill that is consistent with existing
policies and for little or no impact will provide long term benefit to the City through increased sales tax
revenues.
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Council Agenda Report—Cole Motors
Page 6
ATTACHMENTS
1. Map of current location.
2. Map of proposed location.
Elsmmic File Path:a&=%taffiaL do lcatcole agcm&rtpw
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GEODATA SERVICES
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CITY OF SAN LUIS OBISPO
GEODATA SERVICES
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SAN LUIS OBISPO,CA 93401
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council MCMORAnc� niE, D
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city of san Luis osispo, ac5mmistnation aEpaiztment_ gri0 CITY CLERK
DATE: August 19, 2003
TO: Council Members RED FILE _
VIA: Ken Hampian, CAOO�'%"/ DATMEED' NCS AGENDA _
�J Et3lid ITEM C
FROM: Shelly Stanwyck,Economic Development Manager
SUBJECT: Stanley Motors (Cole Motors) Relocation and Retention
Concerns have been raised about the proposed recommendation to provide Stanley Motors (Cole
Motors) with an incentive in the form of a waiver of the City's Inclusionary Housing Fee. The original
recommendation in the staff report on Stanley Motors' Relocation and Retention represented a
balancing of existing General Plan Polices, a consideration of the Council's Work Plan for a Major
City Goal for 2003-05, and the interpretation of existing policies regarding downtown. The two-part
recommendation was therefore to (a) base permit fees on the fees in effect when the project application
was complete and(b) waive the Inclusionary Housing Fee.
The proposed waiver of the Inclusionary Housing Fee was not a lighthearted consideration. Rather it
was seen as a reasonable concession, given the nature of the project, the underlying city goals related
to downtown auto dealers, and the overall modest "incentive package" in comparison to what other
cities offer. However, as has been pointed out, given the sensitivity of the affordable housing issue,
there may be better alternatives to the staff recommendation. If Council prefers an alternative, staff
believes that the first option is the best one.
1. The City Pays Stanley Motor's Inclusionary Housing Fee Through CDBG Economic
Development Funds (staff suggested alternative).
The City could fund the Inclusionary Housing Fee through the reallocation of unused CDBG Funds
earmarked for the Economic Development Revolving Loan Fund Program managed by the Economic
Vitality Corporation. Funds are presently available (well in excess of$200,000) and are not earmarked
for any particular economic development use. Rather, they await qualified applicants for low-interest
loans. CDBG funds may be used to retain community owned businesses that create or retain low-
income jobs (approximately $30,000 per year for a single person). As described in the staff report,
Stanley Motors is a multi-generational locally owned business that we are trying to retain. The owners
have indicated that we are retaining many, as defined, low-income jobs. Economic development
projects have been established by the Council as being among our approved CDBG priorities. In this
case, funds already set aside for economic development would be more effectively used and,
ultimately, would also benefit our housing goals. (Staff is intending to present Council with alternative
uses for the funds presently with the EVC with the 2004 CDBG program, if the pace of loans remains
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2. Sales Tax Reimbursement Agreement.
Another alternative incentive is that the City could enter into a sales tax reimbursement agreement with
Stanley Motors and agree to share in net new sales taxes derived from the new location (up to the
amount necessary to repay the Inclusionary Housing Fee). In the past, Council has provided direction
to negotiate sales tax sharing reimbursement agreements. We have yet to have such an agreement take
effect. In this case, it is likely the costs to enter into such an agreement will exceed the amount of the
fee to be repaid. Specifically, the cost to conduct an economic analysis (to determine the baseline sales
tax and transfer effects) and legal fees necessary to negotiate such an agreement would likely exceed
the amount to be reimbursed.
3.Waive Other Fees.
Precedent for "waiving" water and sewer impact fees for the relocation of Spring Toyota was
mentioned in the staff report and this is the final alternative incentive proposed. At its April 6, 1993
meeting, Council authorized a fee contribution from Economic Development Funds, in an amount not
to exceed $14,500, for auto dealerships that relocated to the existing City designated Auto Center on
Los Osos Valley Road. At the time, the City had a budgetary item for Economic Development and it
was used to help offset some of Spring Toyota's fees. No such funds are presently available.
OConnor Re Meeting Date 8/19/ 'tem #Bus
2,
Stanley Motors
Julie '
From: Richard Schmidt<rrschmid @polymail.cpunix.cal poly.edu>
To: Cydney Holcomb<cholcomb@charter.net>
Date: 8/19/03 9:20AM RECEIVED
Subject: Re: Meeting Date 8/19/03; Item#Bus 2; Stanley Motors
AlU6 i 01 2003
Dear Council Members:
SLO CIN CLERK
I am shocked and dismayed to see that the city administration is proposing
to exempt this commercial development from the affordable housing fee.
Why an exemption from this fee, among all the fees the city charges?
One assumes that this proposal stems from administration's feeling this
fee is unimportant--or at least less important than others.
If so, administration is on a very different page from the rest of the
community.
It is widely acknowledged that SLO needs all the affordable housing it can
get. Clearly, the only way it can get a body of long-term affordable
housing is to have funds available to create it. (The"market"will simply
not meet this need.) Clearly, also, it is entirely equitable to charge
commercial development an affordable housing fee since commercial
expansion grows the demand for housing, including affordable housing,
which is that segment mostdifficultto provide. Therefore, it boggles the
mind that the administration comes up with this proposed forgiveness of
the affordable housing fee.
(And if you make an exemption for this project, why not for every other RED FILE
project as well?)
ME ING AGENDA
You may or may not be aware of the position of the very-business-stacked DAT liq ITEM
Housing Task Force on the subject of commercial affordable housing impact
fees; our recommendation will be forthcoming officially in the near
future. However, I can relay to you at this time that this very
pro-business group of citizens has concluded that the commercial
development affordable housing impact fees are at present too low, and
should be substantially increased.
Please recognize that the recommendation from administration on Stanley
Motors is simply not a good one and is out of step with the community's
sentiments on affordable housing, and collect this fee from Stanley as itCOUNCI (1CDD DIR
should be collected. L'ICAO 0 FIN DIR
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CC: Ken Schwartz<kschwartz@slocity.org>, John Ewan <jewan@slocity.org>, Christine
Mulholland <cmulholland@slocity.org>, Allen Settle<asettle@slocity.org>, Dave Romero
<dromero@slocity.org>, Lee Price <Iprice@slocity.org>
[Lee Pnce-MeetingDate 8/19/03; Item V -.2; Stanley Motors Relocation & Retentior- _ _.. ____
-� RECEIVED
A,Ub 16 2003
From: "Cydney Holcomb" <cholcomb@charter.net> LERK
To: "Ken Schwartz" <kschwartz@slocity.org>, "John Ewan" <jewan@sloci
Mulholland" <cmulholland@slocity.org>, "Allen Settle" <asettle@slocity.org>, "Dave Romero"
<dromero@slocity.org>
Date: 8/18/03 11:10AM
Subject: Meeting Date 8/19/03; Item#Bus 2; Stanley Motors Relocation & Retention
DATE: August 18, 2003
TO: San Luis Obispo City Council
RE: Item Bus 2, Meeting Date 8/19/03
STANLEY MOTORS (COLE MOTORS) RELOCATION & RETENTION
Dear Mr. Mayor and Members of the City Council,
I am very concerned with the proposal to waive the City's Inclusionary Housing Fee for this project
At the Council goal setting workshop in February, you ranked "adopting a housing element that expands
housing opportunities for very-low, low and moderate income households ..."as your"number one" Major
City Goal for the 2003-05 budget cycle.
Recently, an article appeared in the Tribune under the caption: "SLO to add new housing advocate". It
stated that the primary purpose for creating this position was to"attract money"for housing and to
"shepherd"the City's existing affordable housing programs. According to long-range planning manager,
Mike Draze: "if we can bring money in, we can actually get some housing done".
Despite your clear direction regarding the need for more affordable housing and despite the need to
aggressively attract money to build affordable housing, you have been asked to consider waiving an in lieu
contribution specifically earmarked for affordable housing.
I appreciate the City's desire to provide incentives to Stanley Motors, but please do not use the
Inclusionary Housing Fee as your gesture of Goodwill.
Sincerely,
Cydney Holcomb
Member of the Housing Element Update Task Force
CC: "Lee Price" <Iprice@slocity.org>
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