Business expansion met with mixed emotions

CEDAR PARK, TX — Depending on which side one talks to, imminent construction of a 15-acre auto dealership in Cedar Park is either a milestone achievement or a somewhat lackluster development. For the auto franchise, the project represents expansion outside its home base into a high-growth corridor; for Cedar Park, the venture is not the economic boon it may appear to be.

San Antonio-based Cavender Auto Family—a venerable, family-owned enterprise dating to the late 1930s—this week revealed details on its plans to build a massive auto dealership in Cedar Park, a city experiencing brisk growth given its proximity to bustling Austin. Plans call for a 58,000-square-foot dealership dubbed Toyota of Cedar Park to be situated on 15 acres of land along the Texas 183 tollway. Some 90 jobs are expected to be created, a level expected to double by 2022.

“It’s going to be pretty fantastic,” said Julie Herrera, a partner in the business venture who is the first investor that is not a family member of the closely held firm to be granted a financial stake by the company. Herrera said the flagship Cavender Toyota in San Antonio ranks 14th in the nation in terms of sales from 1,650 Toyota dealerships nationwide, and the company plans to capitalize on that momentum in Cedar Park: “We think big,” she said in a telephone interview. “It’s a very hot product, and the product sells itself.”

But Cedar Park officials are somewhat less enthusiastic. The industry’s powerful lobbying group has helped ensure municipalities aren’t able to derive sales tax revenue from auto sales, noted Phil Brewer, the city’s economic development director. What’s more, city leaders had envisioned the prized land that’s home to the future dealership for a tenant in a higher-growth industry such as high-tech—which is fueling phenomenal growth in the Austin area.

While a milestone for expansion-minded Cavender, the venture was not something city officials leaders actively pursued: “The reason why is we have the economic development sales tax for our community, and in order to incentive industry, businesses have to create primary jobs,” Brewer said. ”First, it has to create a product or service exported out of the community that brings revenue into the community.”

Texas passed economic development sales tax legislation in 1989 to provide smaller cities the resources to create and fund local economic development programs. Given those tools, the city in 2000 created a pair of economic development corporations with voter approval.

“These projects, in terms of sales tax revenue for the city through the sale of new cars, do not generate new sales tax,” he said, while noting there would be some property tax revenue derived from the land. The city’s pursuit of business is guided by the North American Industry Class Code—a collection of prime industries worth aggressively pursuing—he said. Auto dealerships don’t meet the outlined criteria, he added.

The city would derive some sales tax revenue if the new auto dealership included a body shop/parts unit as part of its business model, but Brewer said he was unaware if it would. In a subsequent email, Herrera said the the dealership will have a service and parts department but no body shop.

Brewer acknowledged he had eyed the prime real estate—a healthy stone’s throw away from the Scottsdale Crossing business park—as a possible high-tech hub. He said the land sale enabling the project was handled privately with the landowner, and the city had no role in the transaction.

Still, he said the city would welcome the new tenant given other areas of economic impact through job creation, such as future employees’ patronizing of local restaurants.

“Some of them might live in the community,” he added, noting the potential for new home sales among some of the workforce.

The move to Cedar Park represents the company’s entry into the Austin market. All told, the auto dealership firm operates six dealerships in San Antonio and one in Boerne, according to its website. Groundbreaking on the new site is expected in the coming days, with completion scheduled by April 2017, Herrera said.