WHITTIER — An aging industrial area near the city's main shopping district may be developed into a shopping center, depending on the outcome of negotiations between Santa Fe Realty Corp. and the city's Redevelopment Agency.
If the plan goes through, the shopping center--which would extend east from Whittier Boulevard and Hadley Street--would be the city's most ambitious redevelopment project, City Manager Thomas G. Mauk said.
City officials warn, though, that the deal is likely to be costly and complicated. Development of a shopping center may require an infusion of city money, a loan from the developer to the Redevelopment Agency, an owner-participation agreement with an existing business, closing a city street, and relocating several manufacturing businesses that employ more than 500 people.
Moreover, city officials say they will hold out for commitments from "high-volume retail-wholesale" users, before agreeing to the development. A business such as the Price Club was named as the type the city would want.
Importance of Tax Revenue
"What we're saying is that we're willing to look at commercial revitalization, but we want enough (sales tax) revenue to make it worthwhile to the city," said Susan F. Moeller, project manager.
The city intends to do a cost-benefit analysis, which will weigh potential negative effects, like loss of manufacturing jobs and additional requirements for police and fire protection, against the benefits of a new shopping center, she said.
An engineering study must also be done, she said, because Santa Fe Realty proposes closing Magnolia Avenue between Hadley Street and Whittier Boulevard, the width of the project site.
The City Council last week agreed to negotiate exclusively for six months with Santa Fe Realty, one of the nation's largest publicly held developers of real estate. Santa Fe is a subsidiary of the San Francisco-based Southern Pacific Transportation Co., which owns eight acres of vacated railway right-of-way in the project area.
Under terms of the negotiating agreement, Santa Fe must negotiate with Hal and Margaret Blonstein, owners of two other parcels in the project area. The Blonsteins submitted a competing development proposal, which was not recommended by city staff. However, because the Blonsteins already own land in the redevelopment area, the city is requiring Santa Fe to give them "every feasible opportunity to participate" in the project.
Two Shopping Center Plans
The Blonsteins own a car wash in the redevelopment area and are landlords to a automotive tuneup shop there. Other businesses that may be displaced include a company that builds airplane parts, a container manufacturing company, a pipe bending company, a rubber fabrication plant, and half dozen small retail businesses.
Two shopping center configurations are expected to be considered in the negotiations between the city and Santa Fe Realty. The more ambitious would cost $32 million and extend 25 acres east of Whittier Boulevard and Hadley Street. South of Bailey Street, it would take in everything as far east as Gregory Avenue. North of Bailey, the project would extend to the western boundary of the city yard.
A scaled-down version will be considered if Santa Fe Realty has trouble attracting enough high-volume merchants to anchor the center, Moeller said. The smaller configuration would cost $20 million and cover only 15 acres. It would stop short of Cal-Cor Facility Inc. on the southern side of Bailey Street.
City officials advertised their own city yard, where city vehicles are parked and city equipment is repaired, as part of the project area but withdrew it when they learned how expensive it would be to move, Moeller said.
Wendell E. Hindley, project manager for Santa Fe Realty, said the company would be interested in either of the proposed projects. "They are all equally attractive to us," he said. "There just aren't that many 15- or 20-acre parcels available."
Hindley said "several" potential anchor stores are studying the feasibility of locating in the center. Studies by Santa Fe Realty show "a very good market" for high-volume retail, he said.
Depending on which plan is implemented, the cost of buying the land and relocating the tenants is estimated at $8 million or $18 million--more than the city expects Santa Fe to pay. The city would buy the land, and sell it to Santa Fe at a discount.
To make up the difference, city officials are considering contributing up to $1.5 million outright to the project, and borrowing another $4 million to $7.7 million from Santa Fe Realty.
The Redevelopment Agency's $1.5-million contribution would probably be composed of a $1-million general fund loan from the City, and $500,000 in property tax that has accumulated since the Whittier Boulevard Redevelopment Project was created in 1978.