Gilroy Mayor Don Gage is bullish about the new car business. He’s optimistic that if the city chips in for traffic improvements, new signs and beautification at and around the local auto mall, the city will get a bigger cut in sales tax revenue as the dealerships prosper from a boost in customers.
On Nov. 17, the City Council voted to spend up to $130,000, authorizing the first phase of a multi-pronged approach to spruce up the entryways to the dealerships on Chestnut Street and their signage—including the Auto Mall’s signs on U.S. 101.
“This will allow signs all the way from Salinas to San Jose recognizing that there is an auto mall here so they (the dealers) can benefit and produce more sales tax for us,” Gage said, noting that the Chestnut Street Auto Mall generates roughly $1 million annually in revenue.
The dealerships and 25 other businesses with addresses on 10th Street are also slated to get a new street name—Auto Mall Parkway. As soon as summer of 2015, freeway exit signs in Gilroy could mirror those in neighboring cities that promote new car dealers, similar to signs on U.S. 101 in San Jose for the Capitol Expressway Auto Mall.
City staff is exploring potentially renaming the northbound and southbound exits on U.S. 101 for 10th Street in Gilroy to Auto Mall parkway. If Caltrans agrees to the change, the city would be on the hook for all sign manufacturing and installation costs—estimated between $45,000 and $60,000, according to City Transportation Engineer Henry Servin. The cost includes four overhead signs, eight pole-mounted advance exit signs and four off-ramp signs, he said.
Before Caltrans can approve a name change, the city must first change the street name locally. A public hearing on the name change is scheduled for Jan. 9 before the city’s Street Naming Committee.
But not everyone shares Gage’s optimism—including Susan Mister, who spoke out against the city’s half-cent sales tax measure. During public comment on the item, she pointed out that car dealers contributed thousands of dollars to Gage’s committee supporting Measure F.
“I’m a little apprehensive about this coming up to their benefit,” Mister said. “I’m concerned that our taxpayer money could be going to this to benefit a small section of town. I just want to be on record as being cynical and asking questions.”
In response, Gage said the concept was first proposed well over a year ago as a way to up the amount of sales tax dollars in the city’s coffers generated specifically at the dealerships.
“The whole premise is the same; we’re trying to improve the downtown and get the unreinforced masonry buildings fixed and increase our sales tax base,” he said. “I don’t care what store it is, we’re trying to protect the local business we have here. We already lost two car dealers to Morgan Hill—Ford and Honda—and we can’t afford to lose any more.”
Though at one point manufacturers encouraged Gilroy’s new car dealers to move out of town, according to Gage, they’ve sold more vehicles in the past six months than they have at any point in time. During the second quarter of 2014, the auto dealers on Chestnut Street brought in $362,588 in sales tax—up from $225,377 during the same quarter of 2013, city sales tax records show.
“We’ve shown the traffic is there and we have more traffic going by our auto mall than they do at the Ford Dealership up in Morgan Hill. That’s changed the mind of the manufacturers and what they want them to do is sell vehicles,” he said.
Sales tax on vehicles in California is based on the buyer’s home address—not where they actually buy the car. If the upward trend on new car sales continues, Gage hinted that two additional dealerships could move to Gilroy.
“That’ll increase our tax base and allow us to do things we haven’t been able to do,” he added.
On the other hand, Council Member Peter Arellano remarked he thought the plan “seemed a bit overdone” when questioning why the city needs to replace exit signs on U.S. 101 to reflect a future change from 10th Street to Auto Mall Parkway. He asked Servin why not simply put up a sign that says “auto mall next right” and eschew having to swap the exit signs out.
Servin replied that guide signage like that is always available to the city, and it’s currently used to promote Gilroy Gardens from the freeway. He reiterated that if the city wants the name “Auto Mall Parkway” on freeway signs anywhere in the Bay Area, Caltrans policy requires the city make internal changes first.
The Council’s action Nov. 17 also authorized the first phase of work improving the accessibility of the dealerships. There isn’t easy access to the dealerships off the freeway, Servin pointed out, especially for southbound traffic on U.S. 101 via the 10th Street exit.
In an effort to improve access to the dealerships, the city is moving forward with a variety of improvements.
The first proposed phase of work, including construction and oversight, could cost an estimated $350,000, Servin added. Phase one would entail modifying the traffic signals at 10th and Chestnut streets to facilitate easier southbound movement, changes to municipal street name signs and repaving and re-striping along Chestnut Street to accommodate vehicles turning left into the dealerships—including the trucks that deliver new vehicles and returning and potential customers.
The Council voted to approved spending $70,000 for engineering support and construction documents on fleshing out those changes. City staff members expected to bring the package back to Council for further consideration after the Jan. 9 public hearing on the name change.
