Fearful the new, soon-to-be-built Salinas Auto Mall will cut into one of its biggest sources of revenue, the city of Seaside is dumping a half-million dollars into improvements to the 27-year-old Seaside Motor City.
The action comes after regular meetings between city officials and Seaside car dealers over the last few years, and was effectively approved by the City Council in July when it transferred $500,000 in redevelopment funds into the city''s capital improvement fund as part of its annual budget approval.
"You spend a little money and hopefully recover more out of it," says Rich Guillen, Seaside''s community services director. "That''s the idea."
With more than half of Seaside''s $3.5 million in annual sales tax revenue coming from new car sales, the city is trying to make the aging auto mall more open and attractive to customers, and to get it done before the much-ballyhooed Salinas Auto Mall opens at the end of the year. The Salinas City Council gave its approval to the new mall last month, and already seven dealers--including one from Seaside--have signed on as tenants.
Monterey landscape architect Larry Foster was hired by Seaside last month to prepare designs that will include tearing down many of the stone walls that surround the mall, improving the signage, and turning a friendlier face to Fremont Street and other access points.
Guillen expects the plans to be completed soon, with the city seeking construction bids by the end of the month, and work beginning in late October and being completed by year''s end.
"We want to have it done before the Salinas Auto Mall comes on line," Guillen said. "The work has become more urgent as a result of the Salinas Auto Mall opening."
While the taxpayer-funded improvements will obviously have a direct financial benefit for the car dealers, city officials justify the expenses as a way of bolstering city revenues that provide a wide array of general services.
"The auto dealers are very important to us," Guillen says.
The auto dealers in Seaside object to insinuations that public funds are being used to fatten their bottom lines. Redevelopment money of the type being used by Seaside can''t be used for general purposes, and is generally used to stimulate private sector activity.
"These are city streets in here," says Peter Blackstock, who owns Victory Toyota and Lexus Monterey Peninsula. "It''s a public thoroughfare, and it''s the city''s responsibility to maintain it."
Most of the city''s work will be done in public right-of-ways, although city crews will also do work on the property of car dealerships like Victory Toyota, costs for which the owners by law must reimburse the city.
Many of the auto dealers are also planning their own changes to go along with those being done by the city. The most drastic of those remodels is the one planned by Central Coast Nissan, which will remodel its building to essentially flip it around so it faces Fremont Street instead of away from it, Guillen says.
While the city has provided basic maintenance to the area since the auto mall opened in 1971, city officials say the area was long overdue for more intensive attention, especially given its economic importance to city coffers.
"We have spent hardly any money on it, so the idea was to spruce it up," says Linda Downing, Seaside''s finance director.
She points out that sales tax is the biggest source of revenue into the city''s $10.8 million general fund--which pays for almost all basic city services--and that auto sales generate the lion''s share of sales tax revenue.
In the last fiscal year, new car sales comprised 51 percent of sales tax revenue, with auto parts and repair (also provided at the auto mall) contributing another 9 percent.
The city''s single biggest sales tax generator is Advantage Monterey Jaguar, and five of the top 10 sales tax generators in the city are auto dealerships.
Indeed, most view the projected improvements as a win-win situation for Seaside businesses and residents, even those involved in the Salinas Auto Mall project, who stand to be affected most by this outlay of public funds.
"I think the revenue is extremely important to the city of Seaside or they wouldn''t be doing this," says Ron Frieberg, owner of Salinas Valley Ford and one of two principals in the Salinas Auto Mall project. "I''m impressed that they responded. It''s a city that is being very alert to what''s going on in their market area, and recognizing the need to make some changes."
Nonetheless, Frieberg notes that the city of Salinas is not giving the same financial backing to his project.
"The city is not participating in any of the financing," says John Copeland, Salinas'' finance director.
Salinas is paying to extend North Davis Road out to the new auto mall, but they expect to get reimbursements for that $1.5 million project from businesses that move to the project area once it''s completed.
Back in the late ''60s, when the Seaside auto center was being designed, it was a new concept, without the benefit of learning from three decades worth of auto marketing experience.
Auto malls of today no longer exist in a vacuum, with current conventional wisdom dictating that auto malls should be located near other shopping centers. Blackstock said Seaside Motor City has tried to capitalize on the emergence of shopping meccas in nearby Sand City. Now, they are hoping the new changes will update the effectiveness of the auto mall even more.
"We just need to bring the auto center up to what the business climate is today, rather than how it was set up," Blackstock says.
Still, competing with an auto mall in Salinas designed from scratch in a good location will be difficult for Seaside auto dealers.
"Our facility will be newer, our lots will be larger and parking will be much easier," Frieberg says of his project. But he believes there will be enough business to keep both auto malls financially viable.
"Competition is healthy," he says.
Blackstock also doesn''t express much concern that the new Salinas Auto Mall will cut into his business much, saying the two centers carry some different products and will draw customers from different areas. And taken together, the two auto malls will help keep car buyers local, instead of heading to the San Jose area.
"You have two different beasts," Blackstock says of the two auto malls. "And there''s plenty of business for both places."cw