Toyota Expansion: Economic Boon Despite Criticism?

As Poway's Redevelopment Agency and Toyota of Poway explore the possibility of moving the dealership to a vacant lot across the street, resident cooncerns about noise, air and light pollution and unfair business competition have overshadowed the positive economic impact, city officials say.

"We hope that by purchasing this property and moving Toyota across the street this will help revitalize both sides of Poway Road," said Poway City Manager Penny Riley.

According to an August 2010 report by Keyser Marston Associates Inc., the economic consultant for Poway's Redevelopment Agency, the new Toyota site would serve as a "catalyst to eliminate blighting conditions, spur economic activity, and attract private investment."

Though the proposed expansion of Poway of Toyota has gained support, a large group of residents–mainly from independent auto repair companies–have vocalized their opposition to the project. At the Aug. 17 City Council meeting, a number of speakers asked the City Council to reject the proposal.

Dirk Jones, owner of Precision Tune Auto Care, said that while the expansion will not directly affect his business, he objects to the process and the way Toyota of Poway will benefit.

 "The city gave them a free lease, and that's a pretty sweet deal," he said. "But you can't fight big business. It's like Walmart."

The expansion, approved by the City Council in August, comes with what some consider a hefty price tag for a city with a general fund budget of $32.1 million. The city will make an initial investment of $3 million to purchase a lot owned by Chrysler Realty. Then Toyota of Poway will spend more than $13 million to purchase two adjacent lots which formerly housed a Dodge and Jeep dealership. 

Under the terms of the agreement, Toyota would develop the site into a high-quality automobile sales and full-service auto repair facility through the rehabilitation of 45,000 square feet of existing building space, landscaping and other site improvements, and the addition of up to 10,000 square feet of new building area.

Toyota will lease the city-owned portion of the property for $3 million plus interest for 15 years, with an agreement to maintain car sales operations for at least 12 years.  According to the city, any new net sales tax above the 2008 base year will be credited toward the lease payment.  If Toyota can generate $3 million of new net sales tax plus accrued interest and operate for a minimum of 12 years, they will have the option to purchase the property for $1.

If all the necessary conditional use permits are obtained, the dealership could open at its new location in 2012.

Dena Fuentes, director of Poway's Redevelopment Services Department, feels the move will provide both aesthetic and economic benefits to the city.

"We started losing car dealerships in 2007, and now we have two vacant auto sites and a vacant auto body site," Fuentes said."And with the nature of these sites, it's difficult to attract other private reinvestment. The move will allow us to renovate all the vacant auto related sites on the south side of Poway Road."

Lowes Home Improvement Warehouse has already put in a bid to build on the lot currently occupied by Toyota. The approval of that project is still pending.

Vincent Castro, who has owned Toyota of Poway since 1998, said the expansion will create jobs and increase business.

"We will not only be able to secure two properties that are presently vacant and not very pretty, but we'll be able to create a scenario where we will be able to add jobs," Castro said. 

"From the Toyota standpoint, any time a dealership converts to a new image, it equates to a 10 percent to 15 percent increase in business, so if this expansion follows that norm, from a facilities standpoint, we'll be better suited to sell more cars."

At current, Toyota of Poway is among the top three sales tax revenue producers in the city.

More car sales, note city officials, equates to increased sales tax revenue.

"I think we've lost close to 45 percent in sales taxes that had previously been generated due to business closures and lowered sales due to the economy," Fuentes said.  "The expansion will help retain and grow sales tax revenue from Toyota, as well as generate additional revenue from Lowes."

Members of the City Council feel the financial benefit of the expansion will have multiple levels of positive financial impact.

"When we were putting this together and working on the deal, we realized it was to our advantage to keep the car dealers in town because of not only the sales tax impact, but the ripple effect of business it brings," said Poway City Councilwoman Merrilee Boyack.  "It's well worth the investment."

Riley also points out that once the expansion is complete, other local businesses are also poised to experience an increase to their bottom line.

"New businesses mean new employees, and those people shop on their lunch hour and eat at local restaurants," she said.  "This is good for everyone."

Alex DeNoble, professor and chairman for the Management Department of the College of Business at San Diego State University, agreed.

"You've got to look at employment and you've also got to look at the employment taxes they pay to the city, which can provide an economic boon from that perspective," DeNoble said, further noting that new businesses are also citizens of the community.

"They're going to sponsor little league teams, they're going to add to the community," he said. "And considering that so many local cities and local jurisdictions are hurting budget wise, to turn that away based on resident opposition could be foolish."

Castro said he is committed to minimizing any of the inconvenience issues that residents bring to the table.

"We want to be a good neighbor, he said.  "We're taking our neighbor's concerns very seriously and will be addressing those from both an operational standpoint as well as a design standpoint."

Toyota of Poway has indicated they are currently looking into ways to reduce noise as well as to solutions which will address various lighting issues and minimize glare.

Opposition, said DeNoble, may be more deeply rooted in the lack of cultural impact that major retail chains would provide to the community.

"National chains don't add anything by way of uniqueness to a community, which could be an underlying reason as to why residents are resisting," he said.  "But the economic impact they could provide could be significant."