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Crenshaw District Project Hits New Pothole on Rocky Road

The housing elements are in order, but the shopping center developer pulls out.

October 08, 2006|Patrick McGreevy | Times Staff Writer

Marlton Square, a long-troubled cornerstone redevelopment project for the Crenshaw area, has suffered another setback after a partner ended its agreement to build a new shopping center on the property, city officials have acknowledged.

Touted by the Los Angeles Community Redevelopment Agency as one of the most important economic development projects in the Crenshaw district, the effort has received $38 million in government loans and subsidies and includes a shopping center, apartments for the elderly and single-family homes.

The two residential components are on track, with the first apartments already built. But retail partner LNR Marlton Square Associates missed its Sept. 15 deadline to provide a financial guarantee that the shopping center would be built.

After trying unsuccessfully to get an extension from the CRA, the firm pulled out, citing uncertainties about the project, including land availability.

"We were not granted an extension," said Ricard Kern, first vice president at LNR. "We were unable to proceed with the project."

That means lead developer Christopher Hammond must find another retail partner or win CRA concessions that would allow the return of LNR, which would like to play a role.

"We're talking to other retail developers. We'll get someone in there," Hammond said last week. "I think we're going to get it back on track."

Hammond said he has acquired about 80% of the land needed to replace the dilapidated Santa Barbara Plaza with a new shopping center and added that other developers have shown an interest. He said his development agreement with the agency gives him until June to complete the purchase of land for the shopping center.

CRA administrator Cecilia Estolano said she decided not to grant an extension because there was no sign that Hammond's group would purchase the remaining property within an additional 90 days so LNR could meet its commitments.

"Nobody ever provided us any concrete evidence that things would change in 90 days," she said, adding that the Hammond group did not demonstrate that it had the financial means to take control of the site.

Still, Estolano said that other retail developers appear interested and that the CRA is open to a new deal.

"We remain committed to seeing a quality retail development at this site," she said.

Hammond said he has brought in homebuilding partner Lee Homes as a "co-master" developer, which, he added, improves his financial position as he works to acquire the remaining land and complete the project.

"They have a deeper wallet than I do," he said.

The loss of the shopping center developer is the latest of many problems surrounding the 21.8-acre project.

Hammond, a former city parks commissioner, received the city subsidies despite reports in The Times that he had had tax liens placed against some of his properties. The liens have since been cleared.

The project, which won CRA funding in 2002, has been hit with delays and cost increases.

In a letter to the redevelopment agency explaining why it could not meet the deadline for guaranteeing the shopping center, LNR cited the project's history as a problem.

LNR could not get tenants to commit to the shopping center in part because Hammond had not completed purchase of all the land required, which would have provided assurances to potential tenants that the project could be completed on a firm timeline, Kern of LNR wrote to the CRA.

"Due to the Marlton Square project's long history of false starts, prospective tenants are highly skeptical that the retail project will go forward until we can assure them that the entire retail parcel is under control," he wrote.

patrick.mcgreevy@latimes.com

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