It's A Hard Rain's A-Gonna Fall

A reader sent this in concerning the dramatic drop in auto sales in California as a result of the twin fuel and housing market crunches:

Subject: storm heads for claremont....
To: claremontbuzzatyahoo.com

http://www.signonsandiego.com/uniontrib/20080424/news_1b24cars.html
Hammered by rising fuel prices and declining home prices, sales of new cars and trucks plummeted throughout California in the first quarter, according to data released yesterday.

About 400,000 new cars and trucks were registered between January and March - a 19 percent drop from the same period last year, the California New Car Dealers Association said.

That was the sharpest drop in decades, said Peter Welch, president of the association.

Claremont, which receives about 57% of its sales tax revenue from auto sales, has its income wagon firmly hitched to this falling star. Coupled with the state's budget crisis, the fall in car sales doesn't bode well for Claremont's future. In fact, at the last City Council meeting on April 22nd, Claremont City Manager Jeff Parker acknowledged that the city was looking at a potential $1 million budget shortfall if the state cuts back in some of the ways that are currently being discussed in Sacramento. Consequently, the City is having make contingency plans for a variety of departmental cost-cutting measures.

You can just file this one under "downhill rolling."

Odd that this financial storm wasn't one of Claremont Mayor Ellen Taylor's priorities when she was appointed mayor last month. As the City's website indicates, after being named mayor on March 25th, Taylor (seen at right) gave a shopping list of all the things she hopes to achieve:

Mayor Taylor has several goals that she would like to see the City Council accomplish during her tenure as mayor, including finding more locations for affordable housing complexes; an ordinance on "mansionization;" finding funding and a new location for the police station; adding more lighted sports fields; repairing and enlarging senior centers; acquiring more hillside land; solving the Village parking problem; continuing to work on economic development programs; redeveloping the Peppertree Square shopping center; and, attracting a food market for south Claremont.

Apparently, figuring out how to pay for her "want list" wasn't in Taylor's narrow little mind at all. Well, that job's just gotten a little harder now. Can you say, "Schadenfreude?"

Auto Sales Down

More bad news facing Claremont's coffers. Car sales in the Southern California region were down eight percent in 2007, according to an article by Dan Abendschein in the Whittier Daily News.

Abendschein's article talked about Ford Co. closing dealerships nationwide, including Claremont Ford and five others in Los Angeles County.

With 57 percent of Claremont's sales tax revenue coming from the Auto Center, this downturn is certain to affect city budget discussions. Sales tax revenues in turn accounted for 24.9 percent of all Claremont city revenues in the 2004-2006 budget cycle.

Remember, the city will be holding the following citizen budget workshops:

• Thursday, January 24th, 7pm
  Alexander Hughes Community Center - Padua Room
  1700 Danbury Rd.
  
  
• Thursday, January 31st, 7pm
  Blaisdell Community Center
  440 S. College Ave.

Call (909) 399-5460 for more information.

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.