Effort to steer Lexus to Newport nears

Lolita Harper

City officials will consider a plan Tuesday meant to woo a

long-sought-after Lexus dealership to the city with a proposal to

split sales-tax revenue with the car dealer.

The City Council will review a plan on Tuesday to share 50% of the

sales-tax revenue generated from a Lexus dealership that David Wilson

plans to build on 8 acres off Jamboree Road, providing he gets the

proper permits, City Manager Homer Bludau said.

Mayor Tod Ridgeway, who has long wanted Wilson to do business in

Newport Beach, said he hopes the proposed agreement will garner

majority support.

“My preliminary understanding of the economics is that this is a

win-win for both the city and the dealership,” Ridgeway said.

Bludau, who has recommended that the City Council approve the

deal, said the sales-tax incentive was necessary to get the high-end

dealership.

“There are certainly other locations and other cities that would

be interested in such a dealership, and some of those cities have

been in talks,” Bludau said.

Wilson said he is in the process of buying two lots on the

southwest corner of Jamboree Road and MacArthur Boulevard, owned by

Tony Watson, which currently houses an Avis storage site and office

buildings.

The entire project, including purchasing the property, demolishing

the current buildings and developing a car dealership, will total

about $50 million to $55 million, Bludau said.

Finding a piece of property has always been a problem in Newport

Beach, Wilson said, dating back to 1987 when other Lexus dealers

scouted the city.

“Newport Beach is essentially built-out,” Wilson said. “There are

very few parcels that would match the requirements of a high-volume,

high-dollar, luxury automobile dealership.”

Wilson was lucky to find Watson willing to sell for its highest

market value but still must assume a great risk in doing so, he said.

Wilson is betting the sales-tax incentive will make up some of those

costs.

“God, I hope so,” he said.

The proposed plan calls for the city to pay Wilson 50% of the

local sales tax generated at the site, considering he continues to

operate a Lexus dealership and it continues to generate sales tax,

according to a staff report. The city’s return to Wilson would be

capped at $9.5 million, plus interest of 5% per year. A financial

analysis by Keyser Martin Associates projected the city will complete

its payments in 11 years, after which time the city will receive 100%

of the sales tax.

City officials pointed to the success in a similar incentive

program with Fletcher Jones Motorcars, also located on Jamboree Road,

that is exceeding all expectations in terms of revenue. In 1995, the

city gave an 8-acre parcel to Fletcher Jones Motorcars, betting the

investment would pay off. The city has made about $11.8 million over the life of that project, according to a staff report.

In March 2001, Wilson backed out of preliminary talks for a

Newport Beach dealership because he didn’t want to be negatively

affected by the Greenlight initiative, which had not yet been

approved.

The Greenlight law requires a citywide vote on any development

that allows an increase of more than 100 peak-hour car trips or

dwelling units, or 40,000 square feet more than the general plan

allowance.

Ridgeway said the land Wilson plans to build on has both square

footage and traffic guarantees and would not trigger a Greenlight

vote. Plans for the dealership, however, would require a general plan

amendment to change the north parcel from office to retail use.

Phil Arst, spokesman for Greenlight, said he has not seen any

plans for the project and reserved any comments until after he had a

chance to review them.

The City Council will review the sales-tax incentive proposal at 7

p.m. Tuesday at Newport Beach City Hall.

* LOLITA HARPER is a reporter for the Daily Pilot. She may be

reached at (949) 574-4275 or by e-mail at lolita.harper@latimes.com.