The Anaheim City Council on Tuesday gave final approval for a huge office and commercial complex in the Anaheim Stadium business district, in an agreement that requires the developer to pay increased fees for public improvements needed for the project.
But even with increased fees, the city is facing a shortfall of several million dollars to pay for improvements in the area, the council was told.
The $170-million Hanover-Katella project--which will include 1.2 million square feet of retail and office space, five buildings and two multilevel parking garages on 17 acres--is scheduled to be built over 10 years, beginning in 1990.
The city and developers have been negotiating for years, and many city officials are already touting the complex as the "gateway" to the stadium business district, which is targeted for intensive expansion in the next 20 years.
Under current provisions of the city's general plan, nearly 6.5 million square feet of office space may be approved in the area. But city officials estimate the area needs about $110 million in improvements, including new sewer and storm drain systems and major road projects to support planned development.
Several funding sources, including existing development fees and state and federal funds, were expected to provide most of the money for improvements. But a sizeable portion--$36 million--was to have been generated by the Katella area redevelopment project, which the council rejected after protests by angry residents.
City officials have not come up with a long-term solution to the funding shortfall, so they imposed a development fee increase for the Hanover project.
The complex fee arrangement, called a "fair share contribution," requires the developer to pay the established fee, set at $4.12 per square foot, plus an additional average of $2.65 per square foot.
City officials compute the recommended fee contribution over the five phases of the project at nearly $4.5 million. A portion of the fees would be due at the beginning of each phase of the project, unless an alternative funding method is found.
'Moment of Truth'
"Our feeling is that we will accept this agreement as a means of moving forward with the project," said Dennis Abramson, a general partner in the Hanover project. "We would have to reconsider, at the moment of truth when we file for the building permit, whether we can afford this fee, which is far higher than anything else in the area."
But Abramson conceded that developers are not likely to back out of the project: "We are committed to this project. But we're also hoping that by the time our project is set to begin, the fees will have gone away. Our commitment does not mean our acceptance of these fees."
Even if all planned development in the area were assessed the additional fees, an estimated 40% of the shortfall--about $15 million--would remain, city traffic engineer Paul Singer said.
"There will still need to be a financial mechanism established to generate additional funding for overall cumulative areawide growth," he said.
City Planning Director Joel Fick said both public and private efforts at finding a solution to the shortfall are under way, but he declined to elaborate.
"It's really premature to give any details away right now, but we're looking at a number of ideas," Fick said.
Some solutions mentioned in the past include creating an assessment district, in which businesses in the area would be assessed a special tax to pay for public improvements or establishing another redevelopment project.
Fick also said the city is examining several proposals included in a study of options that was commissioned by the Hanover group. One such option would have the city consider letting a nonprofit corporation make the public improvements, then lease them over 20 to 25 years, after which they would become city property.