Norco's $500,000 auto dealer loan may be a loss.
10:00 PM PST on Monday, December 20, 2010
Norco no longer expects to recover much of the $500,000 loaned to a car dealer, City Attorney John Harper said.
In December 2008, the city Redevelopment Agency loaned $500,000 each to the owners of Norco Mazda and Frahm Chrysler Jeep Dodge. The dealerships were in peril of going out of business, which would have cost the city sales-tax revenue that helps pay for public safety and other services.
Frahm Dodge is current on its payments, but the Mazda dealership stopped writing its $7,000 monthly checks in November 2009 after closing that May.
The Redevelopment Agency has sued Mazda owner Jeff Wilhelm, who had operated the business since 2005, in an attempt to recoup its money. The dealership first opened in 2001.
Harper updated the City Council on the collection efforts in a closed session Wednesday.
The city had been hopeful that payments could be worked out, but in an interview Friday, Harper said it is clear now that much of the millions of dollars of Wilhelm's personal assets that were used as collateral are gone and that he also owes almost $2 million to others.
Wilhelm had investments, property and business holdings, Harper said, but as the economy fizzled, those assets dwindled.
Wilhelm owes Ford Motor Credit $1.1 million and the state Board of Equalization, which collects sales tax, $800,000, Harper said.
The city at one point grew concerned that Wilhelm had spent the money on personal uses, but he has since proved that he spent it on the dealership, Harper said.
Wilhelm's attorney at the Irvine-based Horizon Law Group could not immediately be reached for comment.
The City Council members present on Dec. 3, 2008 -- Kathy Azevedo, Frank Hall, Richard MacGregor and Malcolm Miller -- approved the loans after a public hearing.
Even the late Lois "Granny" Loock, the noted critic of city spending, encouraged the deal, according to minutes of the meeting.
Redevelopment Agency dollars typically are used to help businesses expand or locate within the city.
Azevedo said Friday that she is still hopeful that Wilhelm will repay the city.
"I know he's trying really hard not to file bankruptcy," she said. "The decision in the past was made at a different time in the economy. We had no idea it was going to be of the magnitude that it is now."
Azevedo added that a similar agreement in the 1980s saved a dealership then.
More than a dozen Inland dealerships closed between March 2008 and May 2009.
Reach Brian Rokos at 951-368-9660 or brokos@PE.com