Toyota of Olympia will move economic power to Tumwater

Olympia will lose its largest sales-tax contributor next spring when Toyota of Olympia closes shop — then re-opens as Tumwater’s largest sales-tax contributor.

After 50 years in Olympia, including 30 years at the Auto Mall on the city’s west side, the dealership has outgrown its 5-acre home. A new site is under construction on nearly 28 acres of highly visible land that faces Interstate 5 on Tyee Drive between Trosper and Israel roads in Tumwater.

At 93,500 square feet, the new dealership will be nearly double the size of the Auto Mall site and bring 160 jobs to Tumwater with room for hiring more auto technicians.

Principal owner Dustin Rotter expects to open the location in March. The dealership will still be called Toyota of Olympia, he said, because of decades of local recognition, as well as the cost of changing the name.

The new site will allow Toyota of Olympia to keep its entire operation — showroom, services and inventory — at one location instead of spreading it out across three properties. This efficiency will create a better experience for customers and employees, Rotter said, especially when it comes to parking. The new site will provide valet parking for customers, while eliminating the parking shortage and related ticket hassles at the Olympia Auto Mall.

Rotter said he expects the dealership will net a 30 percent increase in business at the Tumwater location.

“If you’re not striving to move forward,” he said, “you’ll get swallowed up.”

Olympia’s loss, Tumwater’s gain

Olympia, however, must figure out how to fill the future financial void.

Toyota of Olympia’s annual retail sales-tax contribution to the city is about $1.5 million, said Joe McCorkle, general manager. Tax figures are withheld from public disclosure, but the city has previously estimated a loss of $1 million a year in sales tax from the dealership’s move.

This means Toyota of Olympia has contributed between 6 percent and 8.7 percent of the city’s annual sales tax revenue, which was about $17.1 million in 2015. The dealership has been responsible for as much as 30 percent of total sales tax just from motor vehicles, according to city budget numbers.

Olympia’s loss will be Tumwater’s gain. With the expected 30 percent sales increase at the new location, the dealership could generate between $1.3 million and $1.95 million in sales-tax revenue annually for Tumwater.

According to Tumwater’s budget, the city will bring in about $4.36 million in total sales tax revenue in 2016, a slight increase over the $4.26 million in 2014 and $4.28 million in 2015. Toyota will join major retailers such as Fred Meyer, Walmart, Home Depot and Costco, all of which are located near the future dealership along Tyee Drive between Interstate 5 and Littlerock Road.

Retail sales tax already represents about 21 percent of Tumwater’s $46 million general operating fund and helps pay for services such as police, fire, court, roads and city planning.

Tumwater City Administrator John Doan said the arrival of the city’s first major auto dealership will help diversify the tax base, create more development opportunities along the freeway, and turn Tyee Drive into a premium business location.

Doan downplayed the potential economic effect in Tumwater, noting that the tax revenue will help pay for the site’s new infrastructure. But he said the new dealership is still another essential tool for moving the city forward.

“It’s wonderful that they’re here and it’s great to have them,” Doan said of Toyota of Olympia. “It’s important to keep them in Thurston County.”

Did Toyota slip through Olympia’s fingers?

Dustin Rotter and his brother Shane Rotter represent the third generation of owners of the family business that started with their grandfather.

Jim Rotter had operated a Studebaker dealership for a few years before founding Toyota of Olympia in 1965 at 620 Plum St. Seven years later, the franchise moved to the corner of Legion Way and Plum Street. In 1985, the dealership opened at its present location at 2225 Carriage Drive SW in the then-new Olympia Auto Mall.

Aside from needing more room, Dustin Rotter said another reason for the move to Tumwater is the opportunity to establish a more mutually beneficial partnership.

Despite Toyota’s economic contributions to Olympia, Rotter and McCorkle said a relationship with Olympia city officials was virtually nonexistent until the dealership announced a plan to relocate.

“Up until that point, I don’t think anyone had any type of relationship with the city,” Rotter said of business ties with Olympia. “Let’s hope it’s a lesson for the city to be more plugged in with the business community.”

One of the dealership manager’s biggest complaints was the process involved to get any assistance from Olympia, such as parking and traffic relief.

“When you call the city of Olympia, you have to go through layer upon layer upon layer of people,” McCorkle said. “In Tumwater, you know exactly who to call.”

Olympia City Manager Steve Hall said his staff had looked at several properties in and around the Auto Mall, but were unable to help Toyota meet its goals for a bigger space. In the meantime, the city and Toyota will work together to lease the soon-to-be-vacant Auto Mall property, he said.

“It’s a significant hit, but it’s not the end of the world,” Hall said about the financial effect of Toyota’s departure. “We’re hopeful that we’ll be able to get a good tenant in the Auto Mall and make a good fit.”

The Tumwater development includes a $3 million extension of Tyee Drive, which runs north-south along I-5 and will connect Trosper Road to a new roundabout at Israel Road. The finished site will feature “pocket parks” and landscaped buffers, and a trail will run along the property’s perimeter.

As for any opposition to the dealership in Tumwater, it has been the proposed trail and not the car dealership that initially concerned some residents.

Marc Bowens, who lives in the adjacent neighborhood on Odegard Road, said his main gripe has been with the effectiveness of a proposed fence and whether it can stop the potential invasion of privacy caused by trail users.

But Bowens praised the Rotter family for bringing their business — and its economic power — to Tumwater.

“I think the dealership is a great idea,” said Bowens, whose house has been in his family for 76 years. “I drive a Toyota, so I won’t have to drive far to get service.”

This story was originally published September 16, 2016 at 1:45 PM with the headline "Toyota of Olympia will move economic power to Tumwater."