Hard Times?

CLAREMONT FORD CLOSING

The Daily Bulletin reports today that the Claremont Ford auto dealership will be closing at the end of the year.

Claremont Auto Center owner Roger Hogan plans on using the Ford dealership space for his own Claremont Toyota business. He indicated Claremont Toyota will expand into the space now occupied by Claremont Ford. Hogan was quoted in the article:

"We're very sorry that a fellow business operator is going to go away. That's concerning," Hogan said. "Knowing that, knowing we're going to get the property back, we're going to make the best of it."

Hogan said the Claremont Ford dealership is one of about five in Southern California that will be closed by the end of the year.

"The car market ... is having a very difficult time right now," Hogan said.

All of which should be troubling news for the City of Claremont, which thanks to former City Manager Glenn Southard, is very heavily dependent on sales tax revenue from the Auto Center.

According to the city's website, from 1986 through the end of June, 2004, Claremont invested over $2.6 million in the Auto Center and received over $16 million in revenue from car sales.

A downturn in car sales and a loss of a dealership could represent a big blow for the city coffers at a time when revenues from other sources may be headed down and during a period when the city is planning on a number of other large expenditures: $25 million for a police station, $10-12 million for Padua Sports Park, $100-150 million to buy the water company.

In recent years the city has recognized the danger of placing too many of its fiscal eggs in the Auto Center basket. The city's been consciously trying to diversify its revenue stream. Back in a July, 2005, City Council retreat, Councilmember Peter Yao indicated he wanted to "reduce potential liability in the event [the] auto center goes 'sour'...."

Click on Image to Enlarge

At that time, in 2005, the city had indicated that over 50-percent of it's sales tax revenue came from the Auto Center, and it's still by far the largest source of sales tax money for the city.

So, if auto sales really are headed down, that could represent fiscal storm clouds on Claremont's horizon.