In their effort to bring a Bloomingdale's to Beverly Hills, city officials this week unveiled a plan under which Bloomingdale's would build a 240,000-square-foot flagship store on Beverly Drive and the city would develop retail space on the north and south sides of the department store.
Before signing the non-binding agreement late Tuesday, Beverly Hills City Council members said the city could earn $3 million to $5 million a year in sales tax revenues and rent on the deal, a major infusion for a city whose annual operating budget is $75 million.
Several members of the arts community objected to the agreement because it would mean the demolition of the 382-seat Canon Theatre, one of the few professional mid-size theaters in the Los Angeles area. The Canon Theatre land was sold recently to the parent company of Bloomingdale's, Federated Department Stores. Under the agreement endorsed Tuesday, the property would be leased to the city for retail development.
City leaders promised to take the concerns about the theater into account. But they also appeared committed to seeing the Bloomingdale's deal through, citing the economic boost a major department store would bring to the city.
Under the agreement, Bloomingdale's would lease six parcels from the city--three facing Canon Drive and three fronting Beverly Drive--for $40,000 a year plus 0.25% of the department store's annual gross sales above $150 million.
Recently, Federated purchased nine privately owned parcels on either side of the city property. It will use four of these parcels and the six city lots to build the proposed four-story Bloomingdale's store, which will have underground parking.
In turn, Federated will lease its five remaining parcels to the city for $39,000 a year. City officials hope to build 75,000 square feet of retail space on the lots--three on the north side and two on the south side of the proposed Bloomingdale's site. The two lots on the south side are now home to the Canon Theatre.
"The twist to this deal is that it works for the city and it works for Federated," Beverly Hills City Councilman Allan Alexander said.
He said the city could earn more than $1 million in sales tax revenue from Bloomingdale's, in addition to an estimated $3.8 million in leases and sales tax revenue from the city retail space.
He said the city could pay for the retail buildings in less than five years and place future income in an endowment fund that in 15 years could grow to $100 million. A fund of that size, he said, could generate annual interest of $5 million to $6 million, making the city "financially bulletproof."
Objecting to the Bloomingdale's deal at Tuesday night's council meeting were Gordon Davidson, artistic director of the Mark Taper Forum, Canon Theatre executive director Joan Stein and theater producer John Clark.