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City Officials Hoping For Legislative Help In Auto Dealership Prohibition

Jan 23, 2015 09:35AM ● Published by Tom Haraldsen

New car dealerships line the street on Sandy’s Auto Mall Drive. Such dealerships are not an option in West Jordan under current state law.

West Jordan City is the largest city in Utah, and one of the largest in the nation, without a car dealership. Unless the current state law governing new auto dealerships is modified or changed by legislative action, it might never get one.

That’s the predicament caused by the New Automobile Franchise Act, created more than a decade ago. It mandates a barrier between new automobile dealerships with similar makes and models—a 15-mile barrier that leaves West Jordan in no man’s land regarding acquiring a dealership of most popular brands.

“The act imposes specific conditions and stipulations related to the establishment of new car dealerships within the state,” said Jeremy Olsen, assistant to the city manager. “It says that any party interested in establishing or expanding a new car dealership within 15 miles of an existing new car dealership must have state approval. With so many dealerships in the communities that surround us, it really limits our options.”

As an example, if the city was approached by someone wanting to open a new car dealership with Ford, Chevrolet, Chrysler, Nissan, Honda or Toyota, they wouldn’t get permission because dealerships of those brands already exist within 15 miles of the city. The exception would be if a current dealership of one of those brands wanted to expand into a second location in the city.

“We’re pretty much hemmed in on all sides,” Olsen said. “We’re hoping we can at least get the current statute modified, but we’d really like to get it repealed.”

Olsen said the city has been approached by an interested dealer who “would like to locate here. But the statute would require them to provide a lot of information and divulge a business plan, and they just don’t want the hassle.”

West Jordan isn’t the only city fighting the law. Herriman and Riverton face similar challenges, as do Spanish Fork and Saratoga Springs, he said. The city has hired lobbyist Frank Pignanelli to take its case to the state legislature once it begins later this month.

“The mayor, city council and administration have taken a position in opposition to the continued imposition to the law,” Olsen said, quoting from a position paper the mayor and council created. “It’s the city’s position that it is inappropriate for the State of Utah to involve itself in the violation of free market principles by legislatively imposing protectionism of a single sector of our economy.”

The Salt Lake Valley has many auto dealerships that are spaced no more than seven miles apart. Those were created before the New Automobile Franchise Act was added to the Utah Code.

“We’d really like to see this change,” Olsen said. “We’d like to at least get into the game.”    
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