Auto Dealer’s Plans to Move May be Up in Air

By Erica Williams
Staff Writer

April 29 -- It might be a little harder now for Mike Sullivan, one of Santa Monica’s top tax generators, to move his Volkswagen, Lexus and Toyota dealerships out of town.

Sullivan, who was negotiating for a 12-acre site just outside the city’s border, may have to look elsewhere after the property went into escrow this month with a developer who is eyeing the site for a hospital, The Lookout has learned.

And while Sullivan hopes he can still land the property near the corner of Bundy Avenue and Olympic Boulevard, his strained relationship with the City, which he has sued twice, may be on the upswing.

After The Lookout reported Sullivan’s potential move last month, City officials have “improved communication” in an effort to persuade him keep his dealerships -- and the estimated $1.5 million a year in tax revenues they pump into the City’s coffers -- in Santa Monica.

“It was absolutely a start that was not previously there," Sullivan said. "It’s absolutely more positive than it was."

On another positive note, the City last week settled a dispute with Sullivan over operating permits for an auto repair facility his Volkswagen dealership expanded into two years ago.

The settlement requires Sullivan to apply for a new Conditional Use Permit to operate the shop across the street from his Volkswagen and Lexus dealerships on the 2400 block of Santa Monica Boulevard.

“I think we’ve reached a fairly logical agreement on how to proceed across the street at our little north shop,” Sullivan said, calling the pact more of an “agreement” than a settlement.

Sullivan must still go before the Planning Commission -- which he has called “arbitrary and capricious” -- to obtain the necessary CUP, said Deputy City Attorney Barry Rosenbaum. If the Planning Commission turns down the CUP, he added, Sullivan could appeal the decision to the City Council.

“If the CUP is denied we’re essentially in the position we are now,” Rosenbaum said.

Sullivan said the settlement allows him to complete the service advisors’ area for the repair shop and put the finishing touches on the remodeling project to update the Volkswagen store, projects delayed four months by the dispute.

Despite the agreement, Sullivan said he is still frustrated by a slow-moving municipal bureaucracy and plans to pursue plans to relocate the three dealerships outside Santa Monica, including the West LA property that recently went into escrow.

“I am very comfortable with (the developer’s) participation with me,” Sullivan said. “It wouldn’t make good sense to stop.”

He added that he has spent “a great deal of time” clearing a potential move with the auto manufacturers -- one has already given its approval -- and would continue moving forward on his plans to relocate.

Sullivan said he would ultimately rather stay in Santa Monica, but is frustrated with the City’s restrictions on auto dealerships and with an onerous planning approval process.

City officials fear that his move would be a blow to the slumping local economy at a time when Santa Monica is scrambling to fill a looming budget shortfall that could reach as much as $16 million in the next fiscal year.

The City is currently working with the chamber’s Auto Dealer Taskforce that Sullivan chairs in order to come up with some solutions.