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Sunday, May 28, 2023


CHRISTOPHER WOODARD Staff Reporter A whopping $4 million a year in sales taxes flow into Glendale coffers from car dealerships, and Burbank wants a piece of the action. In a bold attempt to poach from Glendale’s auto row, Burbank is prepared to offer hefty tax incentives to lure Glendale auto dealers, including Guy Schmidt Automotive Group, to a new auto center being proposed for Burbank. With auto manufacturers consolidating dealerships and the supply of new franchises ever shrinking, Burbank has no choice but to go after Glendale dealers, said Burbank City Manager Bud Ovrom. “There’s only so many franchises to go around,” he said. “If we’re going to get them, they have to come from someplace. There have to be winners and losers.” Glendale City Councilwoman Ginger Bremberg described the tactic as “disappointing,” adding that the relationship between the two cities has deteriorated in recent years. “We used to be friendly rivals. It was a whole different attitude of collegiality,” she said. “A tad tense” is how she describes the relationship now. Glendale relies on its sales-tax revenue to help fund employee salaries and keep its streets, curbs and other infrastructure in good shape. “If we lost dealers, that would be a real blow,” Bremberg said. Burbank City Councilman Bob Kramer said Glendale can afford to be collegial because that city, with its auto row and the popular Glendale Galleria, has been luring away Burbank consumers, and their tax dollars, for years. “Don’t ask me to cry for Glendale. Glendale’s had all that sales-tax revenue all these years, now it’s time Burbank gets its share,” said Kramer. Talk of tax incentives has resurfaced now that plans for a 28-acre auto center off the Golden State (5) Freeway in Burbank appear back on track. Lockheed Martin Co. recently selected Los Angeles-based Zelman Development Co. to take over development of the auto center as part of a 103-acre office/retail project north of Burbank Boulevard. Zelman stepped in after Phoenix-based Vestar Development Co. pulled out of the deal in December. Zelman officials said they have been approached by several prospective dealers, but Ovrom said the most likely candidates are Guy Schmidt Automotive Group and Community Chevrolet, a small Burbank dealership that lacks freeway visibility. If both dealers moved to the site, Burbank would have a number of GM products, with Community bringing Chevrolet and Schmidt bringing Buick, Oldsmobile, Pontiac, Cadillac and GMC trucks, Ovrom said. “They could do $100 million in sales a year. We would get 1 percent of that (in sales taxes), or $1 million a year,” said Ovrom. Zelman has also been approached by CarMax, an auto superstore that wants to build a new-car dealership on eight acres adjacent to what Ovrom hopes will be the new GM dealership. The Brand Boulevard auto row in Glendale is vulnerable, said Ovrom, because it is old, is several blocks from local freeways and lacks convenient parking. Burbank, on the other hand, has a prime 28-acre parcel to offer right off the Golden State Freeway. “They’ve got to be sweating bullets,” said Ovrom of officials in neighboring Glendale. Unwilling to accept the crown of loser, the Glendale City Council has hired a consultant to recommend ways to beat back Burbank’s assault. Citygate Associates has recommended closing side streets along Brand Boulevard to allow dealers to expand their lots and provide more parking. “Brand Boulevard has been a destination (for car buyers) for 75 years,” said Jeanne Armstrong, Glendale’s director of development services. “We have 23 brands of automobiles. That’s a big variety to find in one location.” The consultants also recommend that the city allow the dealers to erect a huge electronic billboard along the Ventura (101) Freeway to promote their cars. However, homeowner groups are already putting up a fight over the sign, and Ovrom dismisses the idea as being too little, too late. “Frankly, we don’t lose any sleep about a big sign,” he said. Burbank officials are hoping that development of a new auto center will provide the push needed to convince Galpin Ford owner Bert Boeckmann to move forward with plans for a dealership on the south side of Burbank Boulevard. “It would provide synergy. All of a sudden Burbank becomes an auto center. That could start more defections from Glendale, because who wants to be the last man out?” asked Ovrom. The city offered Boeckmann $12 million in incentives to build the new dealership, including a $3 million loan to help with construction costs and a 50 percent rebate on sales-tax revenue, which would work out to $9 million over 10 years. But even with the rebate, the city would gain $50 million over the next 25 years. The deal fell apart when Boeckmann was unable to come to terms with Star Ford in Glendale. To proceed with the plan, Boeckmann would have to buy Star out because of restrictions in state law on placing same-make dealerships too close to one another. Nonetheless, the incentives for Boeckmann remain on the table in case something can still be worked out, said Ovrom. The city maintains that Boeckmann deserved the $12 million incentive package because, as Ovrom said, “Bert was the firstist with the mostist.” But Michael Hastings, a corporate consultant representing Schmidt Automotive Group and Community Chevrolet, said his clients deserve a commensurate package now that Boeckmann has pulled out of the deal. Hastings said Schmidt Automotive hasn’t yet decided whether to leave Glendale. In fact, the dealership is keeping its options open, waiting to see if the city of Glendale can come up with a marketing plan to give the auto row a boost. “I guarantee they’ll pull out all of the stops they can,” Hastings said of Glendale city officials. “They’re not asleep at the switch.” Still, he conceded that Burbank can offer something Glendale can’t significant tax incentives. “In this case, Glendale already has the taxes coming in and Burbank doesn’t. So it’s easier for Burbank to offer something they’re not getting,” said Hastings. Ovrom said without an offer of tax incentives from his city, it’s unlikely an auto dealer can locate at the former Lockheed site. As part of a request for bids on the property, Lockheed told developers it was looking for a minimum bid of $15 a square foot for its land. But that’s about the maximum dealers can pay for land and still make a new dealership viable, said Ovrom. The city manager said once a dealer secures an agreement with Zelman, the city will be ready to talk tax incentives. “Sure we’d have to prime the pump, but we’d make a lot more than we give,” he said. The majority of the council, said Kramer, would support offering incentives to auto dealers as a way of priming the pump on what could become a sales-tax bonanza.

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