Towne Automotive Group has renewed its push for tax breaks from the Clarence Industrial Development Agency for a planned Mini car dealership, saying the auto group cannot guarantee that the project will happen without them.
Towne has received development plan approval from the town for the $1.9 million project and acquired land for the dealership at Main Street and Woodward Road, across from where Towne Mini shares space with a BMW dealership.
The Clarence IDA last month informally decided not to consider Towne’s request for tax breaks for the Mini dealership, believing that the project was moving forward, anyway. But David M. Downing, vice president of Towne Automotive Group, and Horace A. Gioia, an attorney for Towne, presented a much different picture at the Clarence IDA’s meeting Thursday.
Gioia said Towne had factored Clarence IDA tax breaks into its budget for a new Mini facility, while acknowledging that such benefits had not been promised. “Without trying to be arrogant or maybe assuming anything, we did contemplate IDA benefits,” he said. And Downing called tax breaks “very significant for the project.”
Towne is essentially landlocked at its joint BMW/Mini location, just east of Transit Road, so the dealer group has looked across the street to expand, Downing said. The project would enable Towne to sell more Minis and free up more space for its BMW operations, he said.
Towne has the sole Mini franchise in the Buffalo market, and until more Mini dealerships opened in New York State, Towne used to sell them all the way to Albany. A Dorschel Mini dealership recently opened in Rochester, which Downing said will cut into Towne Mini’s revenues from that market.
“The current 37 percent of our sales for service, parts and the autos, we expect to lose to Rochester over time,” Downing said. On an annualized basis, he said, that amounts to losing $290,000 in parts sales and $2.4 million in vehicle sales.
A new Clarence dealership, he said, “is a way to lure more inventory out of Mini.” Towne’s allocation of Minis could increase to 600 vehicles, from the current 300 vehicles, but Towne’s overhead expenses will also rise with a new dealership, he said. “When we put up a facility like this,” he said, “we don’t get any assistance from Mini. What they’ll do is offer us more cars.”
Selling an additional 300 Minis would generate $650,000 more in sales tax revenues, “and that’s a repeating benefit,” Downing said. The new facility would also generate more property tax revenues and create 11 new jobs, nine at the Mini dealership and two at the BMW location.
Mini has projected that its North American sales will increase by 40 percent over the next five years, but Downing said Towne is at a crossroads. “This is the point at which we say go. Or if we pull back and stay put, we’ve got strong competition in Rochester – the Dorschel Group is very good; we’re giving up a lot of our business there – and we’re facing the option: Do we stick our neck out and take on the additional expenditures on the potential gain that could be had there? Or do we take the safe route in this economy and say, ‘You know what? What we [already] have is just fine.’?”
Clarence IDA board members made no commitments to Towne. Copies of Towne’s application are being distributed to board members. “We can certainly talk about it over the next month and get back to you,” David C. Hartzell Jr., the Clarence IDA’s chairman, told Downing.
Based on how the board decides to proceed, Towne’s request could appear on the agenda for the IDA’s Dec. 20 meeting.