Commission to Consider Rezoning Nissan Site

By Martin Henderson

A change in the landscape along Rancho Santa Margarita's main drag will be the focus of a special meeting tonight at City Hall when the Planning Commission considers rezoning the site formerly occupied by Nissan. 

The Family Nissan dealership closed without notice in May 2008, and the site became available for purchase in June 2010. Purchased by Theory R Properties for $4 million in May, 2012, the site—named Rancho Canyon by its owner—has been unable to put an auto dealer into the 38,616 square foot building on the 4.75-acre property. Theory R knew what the property was zoned for at the time of the purchase.

Theory R is founded Gary Daichendt, former Cisco Systems executive vice president of worldwide operations, and his son, Joe Daichendt, is the CEO of Rancho Canyon.

The City says the most recent proposal by the younger Daichendt includes a fitness center in the main structure, and conversion of the dealer-operated carwash to an appointment-based carwash and detailing establishment, as well as construction of three buildings totaling 17,400 square feet for commercial retail and restaurant space, including a stand-alone drive-thru restaurant.

Under the current Auto Center zoning, the carwash is good to go, but the other proposed uses are not.   

The commission won't be deciding on the merits of the proposal, which has been sent back to Daichendt three times because of incomplete information, but whether the City should change the zoning from auto-only—which includes businesses such as Kragen, Earl Scheib, CarMax, Winnebago, Evinrude or Harley-Davidson—to commercial.

The commission's decision will be advisory in nature. The zoning will eventually land before the City Council. However, the shift from auto to commercial could reduce the potential tax base the City receives from a business' sales tax by about 90 percent. 

The City receives about 1 percent of sales tax, so the future economics of the City could be affected severely by receiving an estimated $600,000 annually on $60 million in sales from an auto dealership, or $60,000 from a commercial center with $600,000 in sales. 

The City staff's recommendation is that that the request for a zoning change be denied, that the master plan for the community be adhered to going forward. 

“Zoning was not meant to be changed willy-nilly or on a whim,” said City Manager Jennifer Cervantez. “If we were to change the zoning for one of those parcels, conceivably down the road we would be under the belief we would have to change for the other parcels. One parcel now could eventually be the entire auto center area and the overlay, which would be a significant departure from our general plan and the vision for the community.”

Additionally, the decision by the four men and one woman who make up Rancho Santa Margarita’s Planning Commission—Mark McQuaid, Michael Vaughn, Kent Hayden, Peter Whittingham and April Josephson—could do with economics and how much faith they have in the property owner, who has threatened to sue the City if he doesn't get the zone change, and how much faith they have in the auto industry.

Daichendt has indicated a dealer won't touch the site, and that he has been unsuccessful attracting businesses to the site that fit within the zoning requirement outside of the U-Haul there now. 

Yet convincing the commission that a dealership can't succeed at the location could be a tough sell. Next door neighbor RSM Honda is Orange County's most successful Honda dealership, and Honda neighbor Santa Margarita Ford has been at the location since 1997. Clustered dealerships do better than standalone dealerships, so a zoning change in which only one dealer was left standing could have a significant impact on the City's income.

RSM Honda general manager and partner Bob Carmendy, after being contacted by Daichendt, made an offer to purchase the Rancho Canyon site from Theory R with a starting offer of $4 million. He said Daichendt never responded. Carmendy also says it’s just a matter of time before a dealer returns to the site under the right circumstances.

Cervantez also made the point that the auto industry and its impact on the site hasn't fully played out.

"When the zoning was put in place” in late 2010 and mid-2011, “we were in the throes of the economic recession," Cervantez said. "The auto industry is making a comeback. It's still not at pre-recession levels, but I think it's premature to change the zoning at this point in time."