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Saturday, February 04, 2012
Regional Focus: November 2008
Wheeling and Dealing
Car dealers look for a new road
Story by Mark Larson
Auto dealers are taking part in creating new developments on the Florin Road corridor where car dealerships once dominated.
Times have changed, and auto dealers have scaled down their presence along the south Sacramento thoroughfare. But collectively they own a lot of land that will eventually give Florin Road a new look when it’s folded in with broader development planned for the area.
Four Florin Road dealers are talking with the city of Sacramento about how to best develop the 64-acre swath along a half-mile of Florin Road from Franklin Boulevard to Luther Burbank High School.
The landowners include Senator Auto Group; Winter Volvo Lincoln Mercury; Blake Snider, owner of Florin Road Kia and Florin Road Toyota; and Paul Blanco, owner of the shuttered Capitol City Chevrolet.
Economic developers for the city of Sacramento say they appreciate the cooperative spirit of the dealers. The ties will help bring a more cohesive plan for the area instead of a hodgepodge of parcels developed separately.
The new look for the corridor has been spurred by tough times in the auto industry. Florin Road was once the home of 13 dealerships, the highest concentration in the region. But 10 years ago, with the development of automalls in Roseville and Elk Grove, the number of dealerships on Florin Road began a slow decline. And these days, the car buying public has pulled back in the sluggish economy.
On Florin Road, dealer buyouts aimed at consolidation in a slumped market have already triggered closures of Winter Volvo Lincoln Mercury, Senator Ford Inc. and Capitol City Chevrolet.
Remaining Florin Road dealers include Senator Auto Group, Florin Road Kia, Florin Road Toyota and Golden State Mitsubishi-Suzuki. These four are committed to staying put, says Ron Miller, the consultant hired by dealers to help craft a plan to develop the vacated land.
“We’re exploring all options that may relate to the auto business. There are a whole bunch of moving parts,” says Miller, who notes the car sales industry in Sacramento, and on Florin Road in particular, is in transition. Figuring out the post-automall market for new generations of car buyers is the big challenge, he says. Good gas mileage and green options for cars are growing priorities among buyers.
“We don’t have a firm position of what we’re going to be, but there are multiple options,” Miller says. “We plan on being successful but don’t know what form that will take. This is a long-term commitment.”
Miller says his experience leads him to believe that planning for this project would evolve into a mix of housing, retail and commercial development. “We’ve got to be innovative, imaginative and creative,” he says. “We’ve got transportation, which is one of the key components. Do we integrate the auto industry into that or not? We’ll make a concerted effort to retain it in the city, but it’s not a foregone conclusion that it’s dead.”
One option, he says, would be to move dealers to another part of the city. Auto dealers contribute sales tax and high-paying jobs to a city, so Sacramento doesn’t want to see those contributions evaporate.
The dealers have to want to move before any relocations can be pondered, says David Spaur, the city’s economic development director. If so, finding them a location in the city that works for them will be no easy trick. And because of auto-buying trends, dealerships based around eco-friendly vehicles could become the necessary format.
One hurdle to minimize sales tax losses from moving dealerships is a new agreement between Sacramento city and county, Spaur says. If a dealership moves out of the city but remains in the county, or moves from elsewhere in the county to the city of Sacramento, the two will split sales tax revenue. No such sharing will take place, however, if either entity recruits a new dealership into its boundaries.
Now, Spaur says, the city is crossing its fingers that the dealerships’ land is free from any petroleum-based pollution. After figuring out that issue, it will assess water supplies and other infrastructural services. Once all those questions are answered — expected by year’s end — the city will ask developers for project proposals, a process expected to last through mid-2009.
Spaur says he’s already fielded inquiries about the property from developers, but any mixed-use development formulas will be left up to whichever developer gets the project, says Spaur, adding, “Our goal would be to have some retail on that property.”
On a broader scale, Sacramento development consultant Seann Rooney has been working with the Florin Road Partnership and the city and county of Sacramento on a Florin Road Corridor plan since the beginning of the year.
The Florin Road Partnership was established by property and business owners 11 years ago. Renewed last year for another 10-year term, it is funded by property assessments and oversees streetscape improvements, economic development projects and security services for business owners.
The dealership development area will be folded into the land-use part of the corridor. It extends three miles west from Tamoshanter Way to the 65th Street loop. Housing, public transit, infrastructure, safety and security elements would also be included in a master plan update.
Because this is infill development planning, infrastructure is a big issue. As was discovered in the development of the Florin Towne Centre, which replaced the outmoded Florin Mall, infrastructure for things like electrical power, sewer, water supply, storm drainage and internal roads can add massive additional costs — an estimated $10 million in the case of Towne Centre.
But those are expected costs with infill development in an older commercial corridor such as Florin Road, Rooney says. Franklin, Freeport and Auburn boulevards all face similar upgrade costs, he adds.
The Florin Road Partnership has garnered funding to clean up and landscape public rights of way and will work with property owners on the corridor to keep their sites clean. Next summer, an environmental assessment of land-use scenarios in the corridor will be released, Rooney says.
“Ideally there will be an influx of homes to generate a 24/7 presence in that corridor,” he says. So far there are 2,000 dwelling units penciled in the plan. “We have to see if the market is willing to build it.” While he says he doesn’t expect a high density of 40 units per acre, 18 units per acre might be more suitable.
Affordable housing hasn’t caught on in south Sacramento, Rooney says. “We want quality projects,” he says. “We need development and design guidelines in place.”
Troy Givans, Sacramento County project manager for the Florin corridor upgrade, says a housing plan will depend on “what the local market will support and what the community wants to see.”
The corridor doesn’t have many vacant commercial buildings, but there are a number of vacant properties, Givans says. Low vacancy rates show a big improvement in the area from 10 to 15 years ago when vacancies were more than 30 percent, he says.
Once guidelines are in place for infrastructure, land-use planning and design, he says, commercial and residential development can move ahead in a coordinated fashion.
Transportation is another key component of the development of the Florin Road corridor, and Sacramento Regional Transit has plans to foster commercial and residential projects around its Florin Road light-rail station. It’s the second-to-last southbound station on the Meadowview line connecting to downtown Sacramento.
Fred Arnold, Regional Transit’s director of real estate, says the district plans by late summer to take development proposals for the 22-acre site at Indian Lane and Florin Road.
A joint report on the area by Regional Transit and the city, he says, is a land-use and design reference for interested developers. Once the community signs off on the proposal it likes best, Regional Transit will be on its way to contributing to the new look of the Florin Road corridor.
The city of Sacramento and Regional Transit both envision mixed-use development for the site, such as high-density senior town homes, retail offerings fronting Florin Road as well as parks and plazas. Regional Transit is still studying just how much housing can be accommodated on its property, thought estimates point to a zone that could eventually grow to 1,500 dwelling units, Arnold estimates.
“Our property,” Arnold says, “can act as a kick-start for development on the corridor.”
On the road again
by Christine Stanley
While a number of auto dealers on Florin Road are facing the pains of a declining economy and changing consumer demands, Rick Niello is experiencing a decidedly different side of the market.
As the owner of Smart Car Sacramento and Niello Mini, the auto franchisee has seen the demand for his trendy, eco-friendly cars far outpacing supply. In fact, at his Smart Car lot on the corner of Arden Way and Fulton Avenue, which has only been open since Jan. 2, more than 330 of the Mercedes-Benz products have rolled off the lot, and the list of awaited pre-sold vehicles is nearly 1,200 deep.
“Naturally, we have people who change their minds, but to say the car has been successful is an understatement,” says Niello, who also made happy mention of his Mini Cooper sales at his lot located down the street.
“The Mini situation is every bit as robust as the Smart Car’s; we’ve just been doing it for a bit longer,” he says of the dealership that opened in 2002. “We are up close to 40 percent over the prior year for obvious reasons — it’s a compelling product that is economical to operate.”
September proved Niello Mini’s best month to date, according to Sales Manager Dave Bashaw, who says the company sold 74 cars at prices ranging from under $20,000 to more than $40,000.
Such remarkable sales coinciding with the closure of neighboring dealerships could prove beneficial to Niello, who says his franchises are looking at various opportunities to expand or relocate into vacant lots on Fulton Avenue.
“We have impacted the piece of property where the (Niello) BMW dealership is because Mini is becoming so popular that it’s taking away some of our BMW space, so we are weighing putting Mini in its own facility,” he says. “We are one of the few companies looking to expand in this market, and we feel very lucky to have these franchises. It’s good news, and we all need some of that.”
Florin corridor racial mix chart
demographic breakdown
