By Martin Henderson
Is it do or die time for Theory R Properties? The owner of the former Family Nissan auto dealership site in Rancho Santa Margarita will go before the City Council Wednesday night hoping to convince at least three of the five members that it is in the City's best interest to rezone the 4.75-acre property to allow a retail center—anchored by 24 Hour Fitness—to go onto the land.
- City Council, Wednesday, 7 p.m., City Hall
- Patch: Free local news
Theory R, which has called the renamed Rancho Canyon property "the gateway to Rancho Santa Margarita," failed to convince more than one planning commissioner three weeks ago during a similar presentation. That commissioner, Peter Whittingham, called the site "an eyesore."
Yet the battle Theory R is fighting is the eyesore that could appear on the City's bottom line when comparing the sales tax revenue a retail center would provide compared to that of an auto dealer.
City staff has recommended against rezoning the property from Auto Center Zone/Auto Center Overlay to Commercial-General.
Joe Daichendt, principal of Theory R, figures a retail center that includes the fitness center, carwash and a few eateries or coffee houses could bring in $60,000 annually to the City through sales tax. The City receives 1 percent of the sales tax generated within its boundaries. However, it would take a decade for such a center to provide the City with the revenue a dealership could provide in one year.
In other words, the site—as part of the Auto Center Zone—could sit empty for 10 years, and the first year a dealership is on the site could make up the difference of 10 years of revenue generated by the proposed retail site.
Another obstacle facing Theory R is that Rancho Canyon is next door to RSM Honda, Orange County's most successful Honda dealership.
General manager and partner Bob Carmendy three weeks ago estimated RSM Honda would do about $70 million in sales in 2013 that would provide $700,000 to the City in sales tax. He told the planning commission during public comments he expects sales of $75-$80 million in 2014.
Carmendy has made an offer to Theory R Properties to purchase the site, which Theory R purchased in 2012 for $4 million.
The City's market expert, The London Group, recommended that the City allow the economic recovery to play out because of the disparity in revenue between what a retail center brings to the City compared to an auto dealership.
Theory R's team will show that even though there are more car sales in the U.S., the trend has steadily been toward fewer car dealerships.
Theory R's contention is there are no dealers willing to lease the site and is therefore unusable as a dealership, which necessitates the need for a rezoning that includes retail.
Daichendt also conceded to planning commissioners Theory R originally purchased the property without having any background in the auto industry and with the intention of having it rezoned for a retail center; he also said having a dealership on the site would be his first choice.
TELL US IN THE COMMENTS: Should the City hold out for an auto dealer, as the land was zoned for, or change the zoning to allow the property owner to put a handful of businesses on the site?