As developers scurry to cash in on the renaissance taking place in Hollywood, the L.A. Community Redevelopment Agency is looking for a piece of the action.
The CRA in the next couple of weeks expects to issue $45 million of parking revenue bonds for construction of a 1,700-space structure adjacent to a retail-entertainment center being built at the site of the Cinerama Dome on Sunset Boulevard.
The facility will be owned and operated as a public parking garage, and although it will likely get the heaviest use from patrons of the theater, health club and stores in the project, it will be open to the general public.
The debt service will be repaid from the operating revenues of the garage, leaving about $1 million a year for the agency to use as it chooses for redevelopment.
"It's the first time the agency has done something quite like this," said Mark Johnson, senior finance officer with the CRA.
The gross revenue of the parking lot is projected at $5 million a year, with the debt service at $3.1 million a year over a 30-year period.
Usually, the city not the agency issues bonds for parking structures and the debt is repaid by parking revenues collected citywide, from all meters and garages, Johnson said.
"It's unusual for the parking garage to be financed where it's secured simply by future revenues from the project alone," Johnson said.
The garage's public financing was key to making the project pencil out for Pacific Theatres, developer of the Cinerama Dome project. But it also may prove a boon for the beleaguered CRA, whose budget problems are the subject of continuing discussion by the City Council.
"The agency has broadened the way it looks at projects from tax-increment-only form of financing, partly due to necessity and being smart with how they finance projects," said Cal Hollis, a real estate consultant with Keyser Marston Associates.
While the model could benefit the CRA, it's not necessarily one that could be applied anywhere in its jurisdiction.
"It has to be a special situation where there's strong parking demand," Hollis said. "It works in Hollywood or downtown, where people are used to paying for parking."
Johnson said the income generated by the structure will be discretionary and can be appropriated to "any legitimate redevelopment purpose. It doesn't have to stay in Hollywood or be used for parking." But both uses are possibilities.
"It creates dollars that can be directed back to the area to produce additional parking, which is needed," said Jerold Neuman, a land-use attorney at Allen, Matkins, Leck, Gamble & Mallory.
Pacific Theatres plans to close the Cinerama Dome movie theater late this month and to break ground on the $90 million project in August, said Neil Haltrecht, vice president of real estate and development. Construction will take about 18 months.
The company will upgrade the theater with new sound, projection and lighting and add 12 large auditoriums with stadium seating. The famed geodesic dome built in 1963 entirely out of concrete will be preserved.
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