City Gives Auto Dealership Up To $750,000 to Expand

The City Council approved a business development agreement with a local car dealership Tuesday that would annually give up to $750,000 in sales tax revenue back to the dealership over the life of the 10-year deal.

Sierra Autocars, which currently operates Chevrolet, Honda, Acura, Mazda, Subaru and Fiat dealerships in Monrovia, wants to expand its operations to a lot it owns at 1305 S. Mountain Avenue.

That lot, which is currently being used as a truck showroom, will be converted into a Dodge, Ram, Jeep, and Chrysler dealership under the agreement. Half of the sales tax revenue generated by the new dealership--up to $75,000 for 10 years--would be given back to Sierra under the arrangement.

The council voted 4-1 to approve the agreement, with Councilman Tom Adams casting the lone dissenting vote. Adams said he was concerned that the agreement might not be a good deal for the city if Sierra's sales don't increase substantially.

"I just don’t feel that we've done an adequate job of protecting the public funds on this," Adams said in explaining his vote.

Adams said in an interview that his concerns center around how Sierra's revenue will be calculated under the agreement. If the new dealership just winds up taking away business from Monrovia's other dealerships, then any sales tax revenue it generates would only offset what the others lose, he said.

"If Sierra sells more Dodges but less Chevys and Hondas, then maybe the city really hasn't received any additional revenue--it just came from a different brand," Adams said. "Then basically we're gifting, in my opinion, public funds to a private company."

Peter Hoffman, President of Sierra Autocars, addressed the council Tuesday and said that while he understood Adams' concerns, he believes the agreeement will ultimately result in increased sales across all the dealerships by adding an additional attraction to the auto mall.

"If that ends up being the circumstance--that we steal business from ourselves in order to get reimbursed for money we’ve already spent--then we’re kind of stupid," Hoffman said. "The synergy of having them adjacent to each other will make sure that they probably both sell more."

The new Chrysler dealership will open on a lot that was previously used for 15 years as a dealership location until Sierra closed it in 2006. That lot brought in 50 jobs to the city and about $125,000 per year in sales tax revenue to the city before it was shuttered, according to a council agenda report.

"The proposed agreement will ensure that this vacant site is quickly returned to a productive use in a very challenging economic climate," the agenda report, which was prepared by city project manager Darlene Sanchez, states. "The Chrysler dealership will provide new jobs that will replace the nearly 50 jobs lost and substantial sales tax revenue is expected to be generated from the site."

Chrysler currently has three dealerships in the San Gabriel Valley, according to Sanchez. Those are located in Puente Hills, Alhambra and Glendora, she said.

Sierra must build $1 million in tenant improvements on the site in order to open the dealership, Adams said.