L.A. redevelopment board moves to limit public subsidy for Chinatown project
Los Angeles redevelopment officials took the unusual step Thursday of limiting taxpayer subsidies to a real estate project after learning that the developer had told another city agency it expected the work to deliver a sizable profit to investors.
Last year, the Community Redevelopment Agency agreed to provide millions of dollars in subsidies to Bond Cos. to develop Blossom Plaza, a seven-story residential and retail building planned next to an MTA Gold Line station in Chinatown.
Redevelopment officials said at the time that the $41 million in public assistance would allow the project to make an 11% return on its investment -- and that without the city's help, the project would not happen at all.
Last month, Bond officials offered a far more upbeat message about the project, telling a different city board that Blossom Plaza would probably give investors a return of 42.3%.
On Thursday, one redevelopment commissioner complained about that disparity, calling for greater restrictions on the amount of financial return Bond should earn from the project. Commissioner Madeline Janis also grilled the firm's lobbyist on its sales pitch for Blossom Plaza, saying she was "disturbed and distressed" by the company's marketing literature.
"It made me question not only the integrity of this developer, who I supported, but it also made me question other projects that are brought before us," said Janis, who sought the changes after The Times asked questions about the project and provided her with the firm's marketing booklet.
The redevelopment commission voted 4-0 to seek an agreement that will reduce the size of the city's subsidy to Bond if Blossom Plaza delivers a return of more than 10% to the company.
Bond lobbyist Jerold Neuman said the investment return calculation contained in the company's sales book, which was submitted to the city's primary pension board, was incorrect. Neuman said the 42.3% figure only applied to a small portion of the project's financing -- and that it would be closer to the low teens over a five- to seven-month investment period.
One city pension board voted to invest up to $10 million in Bond Cos. after receiving the higher profit projection for Blossom Plaza. A second city pension board voted to commit up to $20 million. Neuman said the latter board received the lower figure.
