The CRA selected Regency as the developer in early 2000 and seized the property in 2005 from Kramer Metals Inc. and M&A Gabaee through eminent domain for about $4 million.
In 2008, Stanley Kramer, the owner of Kramer Metals, filed the first of several lawsuits against the agency to prevent the land from being taken, arguing the process was unfair, compensation wasn’t adequate, among other issues. He even offered to develop the properties himself. (The dispute was covered in August 2008 by the Business Journal in a front-page article headlined “A Big Scrap.”)
In September, the successor agency of the CRA (which was disbanded this year) and the former owners settled the suits. The terms remain confidential, but sources said most of the claims were settled in favor of the CRA. However, the agency did agree to pay an additional undisclosed amount to Kramer for the land.
Reached by phone, Kramer said he was restricted by the settlement agreement from commenting on the details of the deal.
The CRA, meanwhile, was pleased to be able to move forward after lengthy delays.
“We are very grateful to have such a great public-private partnership with Regency,” said Jenny Scanlin, the CRA’s point person on the project. “It definitely took some perseverance on both sides and willingness to look at what we can do to keep it alive.”
Regency will be able to purchase the property for $1.1 million once the environmental cleanup is deemed complete by the Environmental Protection Agency. The company expects that could be as soon as next month.
It had been cleaning up the site since 2011 for an expected total of $1.6 million, which will be reimbursed by the CRA. In total, the agency and the city committed at least $7 million to the project, including environmental cleanup costs and the purchase price of the land.
Because Regency will buy the property for much less than the CRA and the city spent, taxpayers stand to lose money on the deal. But redeveloping blighted areas was a central part of the agency’s mission.
And the city will likely enjoy higher tax revenues from the shopping center. Analysts said the development will likely be a boon for the area and a financial success for the retailers that have stuck with the project through the lengthy delays.
“Grocers like 10,000 people in a mile radius,” said Ken Hira, Southern California state director for the International Council of Shopping Centers. “Here you have probably three or four times that in a one-mile radius and it tells you there’s a void.”