Study Finds Auto Dealerships Need More Room, Parking to Stay Competitive

By Jorge Casuso

If auto dealerships are expected to continue fueling Santa Monica's economy, the City must overhaul its zoning laws to alleviate a severe space and parking crunch plaguing the industry, according to a report released this week.

Commissioned by the city's Chamber of Commerce and Auto Dealers Association, the report lists a number of zoning changes needed to eliminate an on-site parking shortfall and expand the dealerships' unusually cramped lots and facilities, which cover an average of 1.4 acres each, compared to 10 acres nationwide.

"Our industry is really up against it in this town," said Dan Sheridan, president of Sheridan Toyota. "We're at a disadvantage in that we don't have the space that a dealership requires. We're not only short of space, but we're paying more with Santa Monica's real estate prices.

"Yet they (the City) won't allow us to build facilities," said Sheridan, whose dealership occupies a little more than two acres. "We're losing revenues, and the City's losing tax revenues. We're stuck. We're in a Catch 22."

To alleviate the parking crunch, the report calls for zoning changes that would pave the way for new parking structures as an alternate solution to the permit parking zones routinely approved by the City Council, which created two large zones on Tuesday night.

It also calls for easing restrictions that make it difficult to expand dealerships (which often abut residential property), fine-tuning a cumbersome building approval process and creating a new zoning overlay district to address the special needs of auto dealerships.

"This study is the first step in a public process that, hopefully, will lead to long-range solutions for the dealers while protecting the interests of the local residents," said Dan Ehrler, the chamber's executive vice president.

The City's 18 auto dealerships -- many of them family businesses that have been major fixtures along Santa Monica Boulevard for decades -- comprise one of the city's key economic engines.

According to the report, they account for about $1 billion in total sales and generate $3.2 million in annual tax revenues for the City. A recent case study of ten dealerships found that they accounted for more than 800 employees earning "above average" wages.

In addition, the ten dealerships "purchased $1.7 million worth of goods and services from other Santa Monica businesses last year, primarily for auto parts, supplies and gasoline." According to the report, "auto dealerships and parts and repair businesses account for the largest share of taxable sales in the City."

The report also noted that the dealerships are major contributors to local charities, service clubs and youth organizations.

"The dealerships, therefore, represent not only a valuable service to Santa Monica and Westside customers, but a very important source of tax revenue, employment and civic involvement for the City," the report concluded.

But at a time when dealerships are under "intense business pressures" Santa Monica dealers face zoning regulations that make it extremely difficult for then to expand, according to the report, which was produced by Hamilton, Rabinovitz & Alschuler, a consulting firm often hired by the City.

Residents who live near the dealerships along Santa Monica Boulevard "have been vocal and effective in making their concerns about dealership-related noise, vehicle inventory off-loading, test drive routes and off-site employee parking known to City decision makers," the report said.

"The City has responded to neighborhood concerns with a variety of land use regulations intended to reduce these impacts, but in so doing, it has made the regulatory regime applicable to auto dealerships unusually complex," the report said.

One of the effects outlined in the report is an on-site parking shortfall of about 1,200 spaces -- 136 per dealership -- for the ten dealerships participating in the case study.

"Employees are out trying to find spaces in the street, which is making a problem for our neighbors," Sheridan said.

One of the key recommendations in the report calls for the City change zoning to allow on-site parking structures of between two and three levels above grade and one level below grade. Another proposed solution is for the dealerships and the City to jointly develop new parking structures on underutilized land, particularly along Santa Monica Boulevard.

"Many dealerships have indicated that they would seriously consider an investment in new parking if the City's development standards would permit," said Sheridan. "But these structures would require an increase in building heights along Santa Boulevard and incentives to put at least one below grade level."

Confined to cramped quarters, Santa Monica's auto dealers are finding it hard to compete with competitors outside the city who have larger lots, many of them visible from the freeways, according to the report.

"We're limited as to where we can store excess inventory," Sheridan said. "Customers want to be able to see the cars they're buying."

The auto dealers intend that staff and residents who live around the dealerships review the recommendations before any consideration by the Planning Commission and City Council.

"Maybe they don't understand our problem, that they've tied our hands," Sheridan said, referring to the City. "Maybe they don't want us here."