There may be new life coming to an old business on Lake Shore Drive.
A letter to the Dunkirk Local Development Corporation from Larry Spacc brought a request for financial assistance with a plan to reuse the former Spacc auto sales facility at 87 Lake Shore Drive East. According to Spacc, the plan is to convert the building into an internet sales office along with setting up a vehicle detailing operation to service vehicles Spacc buys for resale.
Director of Planning and Development Kory Ahlstrom explained the request to the DLDC board at its meeting Tuesday morning.
OBSERVER Photo by Matt Panebianco
The Dunkirk Local Development Corporation will be providing financial assistance for the reopening of the former Larry Spacc dealership on Lake Shore Drive as an internet sales center along with making the site the company’s detailing and refurbishing center for all its operations.
"They are in an expansion mode at Spacc's, they're looking at property in the south end of the county to potentially open up another dealership and they're looking for a home to prep cars for sale," he said. " ... In addition to that, they would like to open up an internet sales office and get that out of their dealerships and do just internet sales, to kind of compete with some of the bigger local dealerships."
Ahlstrom added the discussion concerned the use of HUD funds, "a per employee incentive in the form of a forgivable loan, a grant but indexed to x number of dollars per employee."
Ahlstrom said the HUD maximum per employee under the program is $5,000 but he was looking at a $3,000 per employee loan, spread out over three years to cover some of the capital expenses. Ahlstrom said the company would also look to hire qualified city residents and the DLDC's attorneys would draw up the contract, including a loan application if that was the way the board wanted to go.
Ahlstrom said the DLDC does have the money available to cover a grant-type funding of the request.
The grant would be given in total if the hiring provisions are met by Spacc. He added the contract would be written to allow for a change in the grant allocation if hiring levels are not met and kept.
"It's exactly similar to what we did with Remtronics about a year ago," he stated. "If they don't maintain 55 employees ... then what was a grant converts to a loan."
Ahlstrom said the loan would be set up with a maximum number of employees that could be counted toward the grant funding, thus not allowing the grant to grow if the company's employment numbers increased.
"HUD"s guidelines say do not exceed $5,000 normally, but I was thinking of somewhere less than that because it's a significant, but not obscene capital investment," he explained. "If you get to $5,000 per employee it almost gets it to where we're paying for most of the investment."
DLDC board member Aisling Heenan asked what made the project eligible for a grant.
"The creation of, these are totally new jobs, not transferring," Ahlstrom replied. "We did clarify, none of these positions are on the payroll any place else. They are new positions, not transferring from a different area. They would be on that site."
A concern was raised about any future transfer of employees from the waterfront site to other company locations.
"He's looking to centralize where, whenever he buys used cars, he brings them to Dunkirk, he preps them for sale and then he distributes them to the lots," Ahlstrom explained. "Right now he uses his standard service department to do that and it takes away from the time he's able to do service for people that want to pay for it."
Ahlstrom added it would be a completely new operation.
"(Mayor Richard Frey) can't be here today but he has seen this and he's exceptionally in favor of bringing a new development down there," Ahlstrom stated. "We spoke about it about an hour ago just to make sure we're all on the same page."
The price tag for the project would be about $112,000, according to Ahlstrom.
"Actually, the way we talked, annually we would outlay based on the number of employees that he has. So in year one, if he hires three, we give him $9,000. At the end of year two if he's up to six, we give him another $9,000. At the end of year three, whatever he is, we give him the difference or nothing. At the end of each year we would outlay only for the employees he's added."
Ahlstrom said if the employment goals were met in the first year, he would get $3,000 per employee. He gave an example of a 10-person hiring goal.
"At the end of year three, we take a look and if he still has 10 people, it's forgiven. If he has 10 or more it's forgiven, if he has less than 10, whatever the pro-rated version that he has less than, it becomes a loan. He actually signs a note up front. ... It's actually a loan for the first three years but if he has 10 employees it's forgiven."
Ahlstrom said every loan applicant gets a HUD form to fill out each year which requires the listing of employees, their pay, job class and location.
"It's a HUD form that we get and they review, so not only if you're lying to us you're lying to them, not something that I would want to do," he explained.
Ahlstrom recommended giving no more than half the project cost.
"There should be an investment the company makes to do this," he said. "Having said that, we are quasi-competing here. He's in the process of negotiating land to do a second dealership and his B plan is to buy more land there. Having said that I think his Vineyard Drive location will always be the primary location."
A concern was expressed about the future appearance of the site given the emphasis on development in the harborfront.
"It's going to look like a new-car lot with the activities of the employees," Ahlstrom replied. "It's not the type of thing where you're going to have beat-up cars to service."
He said the cars bought at auction would be detailed and readied for sale at other Spacc dealerships.
"It's just that we're spending so much and trying so hard to improve the waterfront it's like, 'Oh boy, here we go, used cars,'" board member Rosemary Banach said.
Second Ward Councilman Kevin Muldowney pointed out there are people working on the waterfront but he understood Banach's concern.
Member Truman Bradley asked about sales tax revenue from internet sales.
"It would be a decent amount of sales tax revenue potentially associated with them," Ahlstrom explained.
Muldowney said it was OK by him.
"I don't have a problem with it, I mean I see it as new jobs on the waterfront, I see activity," he explained. "They own the building. They've made improvements."
He asked if it would be licensed as a city business.
"According to what they said, it had to be licensed in order for them to sell cars out of it," Ahlstrom replied.
Banach wanted that included as a stipulation in the contract.
"If it grows that's potentially a significant amount of sales tax revenues," Ahlstrom said. " ... I think that's kind of what you're competing for, the sales end of things."
It was decided to allow $3,000 per employee hired, based on 16 employees, distributed over three years as employees are hired along with the licensing stipulation.
Muldowney made the motion, which was seconded by Bradley and approved unanimously.
In other business Ahlstrom said two proposals were received on the former Dutch Bertges dealership site located on the waterfront.
"Our plan is to invite the two respondents to a meeting to be held in a couple weeks ... and give a brief presentation. That will give everybody a couple weeks to digest what's in there and at that point in time we'll deal with these specifically," he said. "There's a little bit of, like I said, legal wranglings around the real estate transaction, the potential underlying real estate transaction that we have to chat about today."
With that the board moved to go into executive session to discuss the potential real estate deals.
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