Local auto mall shifting into high gear

0 Comments | Oakland Tribune, Dec 8, 2006 | by Cecily Burt

OAKLAND -- Oakland city leaders may not have envisioned a string of auto dealerships when they dreamed about future development at the now-defunct Oakland Army Base. But faced with the prospect of losing one of its most substantial tax bases and hundreds of good- paying jobs, an auto mall looks good right now.

On Tuesday, the Oakland City Council approved development and sales agreements with three pioneering auto dealers who want to be first to build new showrooms on the deserted northern portion of the former Oakland Army Base near the East Bay Municipal Utility District wastewater treatment facility.

The council also approved a supplemental environmental report that studied the impacts of building an auto mall at the base.

Several dealerships on Broadway Auto Row are in danger of losing their leases when they expire in the next few years. Despite the city's efforts to spruce up landscaping and signage to distinctively identify Broadway's Auto Row, dealers complain their historic showrooms and display lots there are too small and outdated to compete with freeway-style auto malls.

"Our lease expires soon," said Inder Dosanjh, president of the Oakland Auto Center, one of the combined dealerships that will move to the Army base. "Our sales this year are $50 million; we're forecasting $100 million at the new location. Our average (sales) salary is $45,000. The army base is the ideal location."

The deal approved Tuesday with Simi Management Corp. and Argonaut Holdings Inc., both Oakland dealers, will result in a Chrysler, Jeep, Dodge dealershipand a Chevrolet, Buick, Pontiac, GMC, Cadillac dealership moving from Broadway Auto Row to the Army base and saving hundreds of jobs and substantial sales tax revenue for the city.

The deal with Sojitz Motors Inc. will bring a brand-new BMW dealership and hundreds of new jobs to Oakland.

The dealers are paying a combined fair market value of $17.4 million for 16.2 acres of land that is ready for development. About

$13 million of that will be used to construct new roadways in the area.

The businesses are expected to generate about $735,000 per year in tax increments to the Redevelopment Agency, and about $1.7 million a year in sales tax revenues for the city's General Fund.

The city also is negotiating with two other dealers who will complete the planned auto mall for the North Gateway portion of the base. Those two dealers will pay $7.4 million for

6.4 acres, increasing the total land sales to

$24.8 million.

Other car dealerships at risk of losing their leases on Broadway Auto Row also are interested in moving to the Army base to create a larger auto mall spanning both sides of Interstate 880.

The council has not yet decided whether to allow that, given the uncertainty of other developments proposed for the Army base. The Wayans Brothers' Fulton Group has an exclusive negotiating agreement with the city to develop 70 acres for a movie production studio, but few details are known at this point.

The city and the Port of Oakland also are required to provide a combined 30 acres on the former base for truck parking and trucking- related businesses that are currently spread around West Oakland neighborhoods.

Councilmember Larry Reid (Elmhurst-East Oakland) asked the dealers to ensure they would commit to hiring Oakland residents and local small contractors to build their new showrooms and sell their cars. The council's motion was amended to state the dealers must use their "best efforts" to hire 50 percent Oakland residents and businesses.

"If you can present me with local contractors who are qualified, I'm in," said Steve Simi, owner of Connell Auto Center and one of the dealers moving to the Army base.