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BUSINESS NEWS : Lack of Financing Stalls Marengo Development

February 21, 1991|VICKI TORRES | TIMES STAFF WRITER

PASADENA — The ambitious $50.5-million Marengo Block development, planned as a residential showcase downtown, is stalled for lack of financing, its developer said.

To get it back on track, developer Janss Corp. of Santa Monica on Tuesday asked the Pasadena Board of Directors to either guarantee $8.8 million in tax-exempt bonds for the project or scale back the number of affordable housing units from 44 to 30.

Directors voted 5 to 0 to instruct city staff members to investigate both options and begin negotiating a new development agreement while Janss seeks new financing. Director John C. Crowley abstained and Director William Paparian was absent.

"We have tried to structure it in such a way that if the project goes well, there's no call on the (city bond) money," said Max Nardoni of Janss.

But Bill Reynolds, city director of housing and development, said the $8.8-million guarantee would come on top of a $2.9-million debt already owed to the city for the land purchase. With the addition, Reynolds said, the city's investment would be too much.

City Development Operations Adminstrator Marsha Rood said the negotiations could give the city a share of the project's profits in return for its greater risk.

Janss began planning the project in 1988. Under the first development agreement with Janss in January, 1990, the city was to receive $4 million in cash from Janss and a $2.9-million note for a four-acre parcel of land bounded by Holly and Walnut streets, Marengo Avenue and the Santa Fe Railway tracks next to Memorial Park.

The city has yet to receive any money because of the financing difficulty.

Janss planned to convert the historic Hall of Justice building--the former police headquarters--into 44 low-income senior housing units. Another 350 apartments would be built in nine separate buildings, along with 9,000 square feet of retail space and a 350-car underground garage.

But that plan changed last year, Nardoni said. "We were unsuccessful in getting a state loan for the Hall of Justice part of the financing for the project," Nardoni said. "And many lenders are now on the sidelines."

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