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Proposed L.A. tax deal would help fund new Westfield mall

The L.A. City Council votes Wednesday on whether to move ahead with as much as $59 million in financial help over 25 years. Westfield helped put on a gala at LAX last week.

June 24, 2013|By David Zahniser and Dan Weikel

The Los Angeles City Council is weighing a major package of financial assistance for shopping mall developer Westfield just days after the company helped stage a black-tie gala attended by city leaders at Los Angeles International Airport.

Westfield is asking the city to help its Village at Westfield Topanga project, a west San Fernando Valley development that would house a 158-room hotel, a Costco, new office space, and an array of stores and restaurants.

The proposal, which comes up for a City Council vote Wednesday, calls for Westfield to keep up to 42% of the net new tax revenue generated by the project, or nearly $59 million over a 25-year period, according to city officials.

Backers of the deal describe it as a "reimbursement" that would allow Westfield to speed up completion of the project and provide community benefits, including a promise to hire unionized workers at its planned Hyatt House hotel.

The proposal's financial details were released Friday, one day after Westfield Concession Management, a unit of the Westfield Group that is developing food and retail outlets at LAX, helped Los Angeles World Airports stage a nighttime preview party for the Tom Bradley International Terminal, which is now undergoing a $2-billion renovation and expansion.

The party invitation listed Westfield, the airport agency and Mayor Antonio Villaraigosa's office as the hosts. The project is not scheduled for completion until later this year but Villaraigosa, who attended the party, steps down June 30.

Airport spokeswoman Nancy Castles would not provide a cost estimate for the party but said Westfield paid for the event's food, entertainment, equipment, custodial services and transportation of guests to the airport from their parking places.

Villaraigosa spokeswoman Vicki Curry referred questions about the party's cost to Westfield. She said in an e-mail that Los Angeles World Airports provided Westfield with $215 — the per-person cost of the evening's festivities — for each city official who attended.

Westfield officials would not disclose their share of event costs. But company spokeswoman Katy Dickey said the party has "nothing to do with" the financial assistance being proposed for the Village at Westfield Topanga. The city's proposal, Dickey said, will help Westfield build the mall and hotel project over three years instead of 25.

"It's about expediting off-site transportation, infrastructure and other capital improvements, as well as generating more jobs," she said in a statement.

The period for the public to weigh in on the city's tax deal with Westfield could be brief. Ed Johnson, spokesman for Council President Herb Wesson, said the proposal won't be reviewed by any of the council's committees. Instead, it will head straight to the council five days after the financial details were released — a rapid timeline compared to many of the city's other major financial decisions.

Jack Humphreville, a neighborhood council member who has frequently criticized the city's practice of providing taxpayer subsidies to private companies, said the approval process should be slowed down so that the public can examine the proposal more carefully.

"Why does this company, one of the largest owners of shopping centers in the world, need a tax break from the city of Los Angeles, which can't even fix our streets?" he asked.

Gerry Miller, the city's chief legislative analyst who advises the council on policy matters, said the project would generate an estimated $140.1 million in net new tax revenue over 25 years, 1,287 construction jobs and nearly 1,600 other jobs. Westfield is seeking the same type of financial help that was granted to other hotel projects in downtown Los Angeles, Miller said in his memo to the council.

"Without this assistance, they contend that construction of the project is not feasible," he wrote.

Westfield has a funding gap of $48.9 million, according to Miller's report. The city's financial assistance, when calculated in present-day dollars, would be valued at $25 million, or 42% of the net new taxes generated by the project over 25 years, officials said. The final mix of taxes that Westfield would get to keep still needs to be negotiated, but could include hotel taxes, property taxes or other revenue, Miller said.

Miller said he recommended the financial help partly on the grounds that Westfield would provide $100,000 worth of equipment for a nearby police station, creation of a $500,000 scholarship program for high school seniors and a promise to run a hotel that allows workers to join a union.

The council originally approved a development agreement for the Warner Center mall project, at Victory and Topanga Canyon boulevards, in February 2012. One month later, Councilman Dennis Zine — whose district includes the mall property — called for city officials to examine whether the city could speed up the project by providing financial help.

Zine, who steps down June 30 and did not attend the airport party, would not say Monday whether Westfield should receive the financial help outlined in Miller's report. "I will hold any comments until Wednesday," he said.

Curry, the mayoral spokeswoman, said she did not know Villaraigosa's position on the financial help for Westfield..

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