Commission Denies Zone Change on Nissan Site

After hearing arguments from the City and a local land owner, the Planning Commission of Rancho Santa Margarita voted Thursday night to keep things the way they are.

With commissioners expressing reticence over changing the vision of Richard Reese’s planned community and an unwillingness to pull the trigger before the auto industry recovery played out fully, commissioners voted 4-1 to deny a change in the zoning for the site previously occupied by Family Nissan.

Now owned by Theory R Properties and called Rancho Canyon, the 4.75-acre lot will remain zoned for auto-related uses rather than general commercial uses envisioned by principal Joe Daichendt, who hopes to house a 24-Hour Fitness, carwash/detailing business, and other retail businesses including a drive-thru restaurant.

Daichendt’s lone support from the commission came from Peter Whittingham, who afterward called the site “an eyesore” and said it was clear the community wanted something there, anything but a large empty building.

"The thought, the forethought and the foresight that went into making Rancho Santa Margarita can't be understated," Whittingham told the audience in his final remarks. "That being said, to be so inflexible as to never allow for circumstances that develop (over) 20, 25 years, that's why general plans are amended ... to allow for re-framing those initial visions."

Whittingham made a motion the City begin the more laborious process of creating an ordinance that would rezone the site to commercial general, but it was never seconded. 

Yet chairman Mark McQuaid and vice chair Michael Vaughn, and commissioners Kent Hayden and April Josephson, indicated the long-term benefits of an auto dealer on the site outweighed the shift to a retail center; the City would benefit from hundreds of thousands of dollars in sales tax income annually from a dealer against tens of thousands from a center anchored by a fitness club.

"I have great respect for someone who cuts a check and invests in our community," Vaughn said, looking at Daichendt. "That’s not to be taken lightly and I applaud you for that. I also have great respect for past and present civic leaders of this city ... for the inordinately careful planning decisions that we’ve made and the planning we’ve implemented in the city. That process has largely resulted in the  benefits we enjoy in this city. So I’m not prepared to change those quickly or easily. ... I am not convinced the benefits of a change made now would outweigh the potential risks of the benefits we have created and enjoy in our city."

• Patch: Free local news
• Follow RSM Patch on Facebook and Twitter.
• Read other stories on RSM Patch.

Daichendt, who threatened to sue the city if he didn’t get the zoning, told the commission he was willing to hit the reset button on the fitness anchor retail model for the site if he got the zone change.

"I think it's an example of government interfering with the free market," Daichendt said. "The facts speak for themselves. Six years of vacancy, 2 1/2 years well into the recovery and there's no dealership. Everyone has different speculation on what the solution is ... speculation about where the dealer's going to come from, but it's all handle and no candle. Where is this manufacturer?"

The commission's decision was advisory; it will next appear before the city council. 

The Auto Center Zone, which includes the sites occupied by Nissan, Honda, Ford and Toyota, was a safeguard for city coffers. Rancho Santa Margarita receives 1 percent of the sales tax from businesses, so losing a dealership that could generate $500,000 on $50 million in sales would have considerable impact if it was replaced by a center that didn’t do even $10 million in sales that generated $100,000 in income for the city.

Daichendt estimated the site with a fitness studio as the anchor would generate about $60,000 for the city. Bob Carmendy, general manager and principal of RSM Honda—the neighbor to the Nissan site—said his business should do about $70 million in sales this year and would be $75-80 million in 2014. He spoke out in support of keeping the zoning change, though Theory R produced responses from other auto principals, including Jim Graham from the Ford dealership, who were in favor of the change.

The City’s hired market expert, the London Group, shared that the automotive recovery was underway and that Rancho Santa Margarita had shown a recovery that was better than auto clusters in Irvine and Mission Viejo/Laguna Niguel, which have similar demographics.

“There’s no analytical basis to change the zoning,” said Nathan Moeder of the London Group. “From our experience, you need the economic recovery to play out. The reason it’s important is because it takes 5-7 years for a retail center to make up one year of taxable income from an auto center.” 

Theory R’s experts agreed there had been a recovery, the trend showed there were fewer dealers leading the recovery and a new dealer interested in RSM seemed unlikely given personal experience and there’s a 10-mile radius in which the same manufacturers don’t overlap.

Nationwide, there were about 25,000 auto dealers in 1990 which trended down to about 20,000 dealers in 2008 and 2009, to 17,540 in 2012.

Daichendt said his preferred choice was to have a dealer at the site, but his efforts to reach out to manufacturers and dealers were unsuccessful. He also admitted he had no background in the auto industry when he purchased the site with some risk knowing its zoning restrictions.