GLENDALE — Calling it "a major step" toward the rebirth of downtown Glendale, officials Tuesday approved plans to convert a run-down area into a $30-million open-air mall, the city's largest retail development since the Glendale Galleria.
The City Council, acting in its role as directors of the Glendale Redevelopment Agency, unanimously approved the deal with Beverly Hills-based developer Regent Properties Inc. to construct the mall, dubbed Glendale Marketplace.
The project includes a hefty investment of public funds: about $11 million to build a nine-level, 1,100-space parking garage, and up to $4.2 million in land subsidies and other costs.
"We did have to participate heavily to buy down the land," said Councilwoman Mary Ann Plumley, chair of the redevelopment agency, who predicted the investment would be quickly recovered in new sales and property taxes. "This project is very important to the city--it's a different type of retail than we've had before and it's a major step toward revitalizing the downtown."
The high cost was noted by other council members.
Council member Larry Zarian, who is also chairman of the Metropolitan Transportation Authority, called the expenditure of public funds "tremendous" and said he had reservations before voting in favor.
"I look at this project positively, but this is one of the highest-subsidized projects in the city, and we should say that going in," Zarian said.
The city had been trying since 1991 to spur a redevelopment project on the 1 1/2-block site in the heart of downtown--bounded by Brand Boulevard, Broadway, Maryland Avenue and Harvard Street--that is dotted with ramshackle buildings and several boarded-up businesses, including a cinema.
Officials with Regent, which took over the project last year after another developer failed to raise capital to buy the land, said construction will begin in early 1997 and the 185,000-square-foot mall will open in 1998.
"It's going to be a pedestrian-oriented, downtown urban village, with smackings of Universal CityWalk," said Douglas Brown, a partner in the development firm. "It's just what the city of Glendale always wanted--it tears down blighted buildings and replaces them with a modern urban shopping experience."
Plans for the mall include a major electronics "superstore," a Mann Theaters cinema with five screens, a department store and a home furnishings store, plus numerous restaurants and boutique-style stores. Brown declined to divulge the names of the mall's major stores until all leasing negotiations are final, but sources close to the project said privately the electronics store will probably be a Circuit City.
The Marketplace will be next to a Borders Books store at the corner of Brand and Broadway, which was approved in 1995 and is now under construction.
In planning the project, city officials said they tried to avoid repeating the troubles that have plagued the Exchange, another open-air mall located immediately to the north, which was beset with low patronage, vacant storefronts and financially troubled landowners after it opened in the late 1980s.
Unlike the enclosed design of the Exchange, the Marketplace will front along Brand, the city's main thoroughfare, with a cinema marquee and box office to attract attention. Also different is the emphasis on larger, mass-market retailers instead of small, upscale clothing stores.
"This project will have more benefits than just the new stores," said Jeanne Armstrong, the city's director of development services. "We hope it will complement the Exchange and provide a link to the Galleria and the other shops on Brand."
The agreement between the redevelopment agency and Regent Properties calls for no sales taxes or other revenues or additional incentives to be paid to the developer, Armstrong said. However, the developer may end up paying a percentage of its profits back to agency.
Regent officials said they are in final negotiations for the 12 land parcels needed to build the project that are estimated to cost more than $7 million. But the maximum loan that can be obtained for the land is roughly between $4 million and $5.5 million. Therefore, the agency has agreed to step in with a subsidy of at least $2.3 million to bridge the gap, said Armstrong.
If a subsidy of more than $2.3 million is needed, the developer has agreed to funnel 10% of its profits back to the agency after two years. The maximum land subsidy will be $3.3. million, Armstrong said.
Councilman Sheldon Baker abstained from the vote, citing a potential conflict because his law firm once represented several landowners involved in the deal.