The city of Inglewood has sold a nearly 16-acre Century Boulevard parcel to Haagen Co. LLC, a politically influential shopping mall developer, at a fraction of what land is trading for nearby a deal that is raising concerns among some city officials.
While towns sell land cheaply to developers as a means of subsidizing projects, a large section of the property Inglewood sold to Haagen was originally purchased with federal funds that prohibit its resale at below-market rates.
To devalue the land, the city’s redevelopment agency discarded an original appraisal that valued the 16 acres as one parcel. That appraisal was never released publicly.
In a second appraisal, the land was split into two less-valuable tracts. That enabled Inglewood to sell the entire site at 3250-3502 W. Century Blvd. to Haagen for $3.7 million, or $5.30 a foot, when parcels across the street are selling for nearly four times that amount.
Inglewood Mayor Roosevelt Dorn defended the methods as legal, insisting that if the end result is a development the city wants and the project brings in more tax dollars, then devaluing public land is acceptable.
“I’ve said it before and I’ll say it again. If the city owns the land, I have no problem writing down the value to bring in the type of development we want,” Dorn said.
Andrew Natker, a Haagen senior vice president, said the developer wasn’t involved in setting the price and he referred questions to the city’s redevelopment agency, which didn’t return calls. “This land was appraised by the city redevelopment agency and we paid their appraised value,” Natker said.
Others, however, have questioned the deal. “To manipulate appraisals of taxpayer-owned real property for the benefit of private developers is immoral, if not illegal,” Inglewood City Councilwoman Judy Dunlap said in a written statement. (Councilmen Curren Price and Ralph Franklin did not return calls.)
Dorn said that Inglewood officials initially had trouble finding a developer until Haagen stepped forward with an unsolicited offer. He said only two other developers responded to a formal request for proposals, and both proposals were inadequate.
But Dunlap says there was never a request for proposals in the first place, and Haagen was recruited into the project. “Mayor Dorn entertaining developers in his private office is not an RFP process,” she said.
The site, just east of Hollywood Park racetrack, is in an area of Inglewood that has seen a rush of retail and housing projects, with several more in the planning stages. Inglewood has seen little construction in decades and is encouraging growth.
The project area, which used to contain small retailers and apartments, is part of the Darby-Dixon neighborhood, locally dubbed “The Bottoms.” The area had been one of the more violent sections of Inglewood, but within the last few years crime has fallen sharply.
Dorn said city officials were excited when Haagen proposed a $27 million big-box shopping center and lined up tenants such as Bed Bath & Beyond Inc., Ross Stores Inc. and Marshalls Inc. and restaurants Red Lobster and Chili’s Grill & Bar.
“We’ve been trying to get some major restaurants in here and we weren’t able to do it,” he said. “We’re one of the only cities with more than 120,000 residents without major restaurants and a movie theater.”
Splitting up
Dorn said he was surprised when he first saw how low the appraised price was, but noted that the city council was only following the advice of its consultants when it approved the sale.
The Inglewood Redevelopment Agency first received an appraisal for the land from Pomona-based appraisal firm PCV/Murcor in January 2003. But four months later, at the behest of the redevelopment agency, PCV/Murcor abandoned the unreleased valuation of the 16-acre site and split the parcel into two. (Dorn, who is on the redevelopment agency board, said he didn’t have specific information about the first appraisal.)
In the second appraisal, a 10.8-acre tract purchased by the city of Inglewood with Federal Aviation Administration funds was split from a 5-acre patch purchased with Inglewood redevelopment money.
The FAA funds, administered through Los Angeles World Airports, are given to municipalities in LAX’s flight path to help reduce exposure to jet noise. Patricia V. Tubert, LAWA’s executive director, said restrictions on how the funds can be used are made by the FAA. (Inglewood received 20 percent of the funding from LAWA, and the other 80 percent was from the FAA.)
The appraisers found that the larger site, when broken away, was inaccessible from a main thoroughfare and unsuitable for commercial development. Meanwhile, the 5-acre band that fronted Century Boulevard was too narrow for a large commercial development. Separately, the sites were appraised at an average of $5.30 a foot, significantly lower than amounts developers have paid nearby.
The redevelopment agency also hired consultants Keyser Marston Associates Inc., which affirmed the second appraisal price after studying publicly imposed constraints on the proposed development and the possible rents that could be charged.
Keyser Marston principal Jim Rabe, speaking generally and not specifically about the Inglewood project, said redevelopment projects are expensive for developers because they require public amenities like paying construction workers prevailing wages.
But one appraiser who didn’t want to be identified because he sometimes does business with the city called the price Haagen paid “completely out of whack” with a realistic valuation. What matters, this appraiser said, is what they’re worth together.
The appraisal also didn’t compare the redevelopment property to nearby land sold to retail developers. Instead, the appraisal used sales in the City of Industry, Pico Rivera and other towns to establish a price for the land.
Last year, Rothbart Development Corp. paid $36 million, or about $23 a foot, for a 60-acre plot at the southeast corner of Prairie Avenue and 90th Street for a future shopping center to be possibly anchored by a Wal-Mart Stores Inc. location.
And two months ago, Stockbridge Capital Partners LLC struck a deal to buy the 238-acre Hollywood Park from Churchill Downs Inc. for $265 million, or nearly $25.60 a foot.
Dunlap points out that a shopping center across the street from the Haagen site contains successful Target and Home Depot locations. The developers of that project paid $19.75 a foot for the land five years ago, she said, before real estate prices took off.
“Inglewood property is hot,” Dunlap said. “The city could have sold the land at market rate and worked with a developer to bring in a high-end retail project like the Grove or Howard Hughes Center. When the Haagen Co. walks away from Inglewood, they’ll make millions on our land and we’ll be left with a strip mall.”
Keith Murray, an official with PCV/Murcor, said the company couldn’t discuss its work for the Inglewood redevelopment agency unless the firm was given permission by the city. Calls to redevelopment agency staff members seeking permission weren’t returned.
Problematic project
In addition to the valuation, there have been complaints that Haagen isn’t fulfilling its pledge to hire 30 percent minority contractors, of which 50 percent are supposed to be locally based. Members of the Nation of Islam and Young Black Contractors began picketing the entrance last week.
A report filed with the city by Haagen last week shows several minority contractors have been hired. A sign on the construction site encourages applicants to apply at Inglewood’s One Stop Center, a job placement center run by the South Bay Workforce Investment Board.
Natker said Haagen is exceeding its hiring pledges. “We’ve hired minority contractors and we are continuing to do so,” he said. “I haven’t seen any picketing but it’s common at all these sites.”
Haagen was founded by Alexander Haagen, one of the few builders that have developed shopping centers in South Los Angeles. The company built the Martin Luther King shopping center in Watts, the Kenneth Hahn Plaza in Willowbrook and the Baldwin Hills Crenshaw Mall.
Haagen is also politically influential, and has been a major donor to former Gov. Gray Davis. The developer, his sons, and their spouses cumulatively gave $30,000 to Davis from 1986 to 1992. The Inglewood City Clerk’s office didn’t respond to requests whether Haagen, his sons and his company have contributed to local elected officials.
Like the other projects, the Inglewood center will have a police substation and a heavy security presence but the project won’t have fences or gates. “This will become the center of what I call the new retail node for central Los Angeles,” Natker said.
