An unusual deal is in the process of being struck between developer Oliver McMillan, the Culver City Redevelopment Agency and Pacific Theatres Corp.
The three parties have worked out an arrangement through which the redevelopment agency would spend $11.6 million to have OliverMcMillan build a multiplex for Pacific to operate. The multiplex, which would be owned by the redevelopment agency, would serve as the anchor of OliverMcMillan's Town Plaza project.
In addition, the redevelopment agency has pledged $15 million to build and operate an 800-space parking structure elsewhere on the site. OliverMcMillan would own the remainder of the Town Plaza project.
If the redevelopment agency approves the scheme, Oliver McMillan would get its theater anchor, the agency would get a revitalized downtown (as well as ownership of a theater building and parking structure) and Pacific would get, well, it would get to run another theater operation.
Deputy Community Development Director Mark Wardlaw said the redevelopment agency's role in Town Plaza has evolved quite a bit since the agency approved the project in September 1999. At that point, the agency performed its traditional redevelopment role and selected OliverMcMillan to build the project. Now, the agency is playing a quasi-developer role.
Unusual, perhaps, but no big deal to Wardlaw.
"Cities own parking structures, convention centers, city halls," he said. "What's different in this particular case is the city's redevelopment organization is owning the (theater) building."
Paul Buss, executive vice president of OliverMcMillan, said the developer's agreement with Pacific provides the theater chain with a management fee equal to 6 percent of gross sales. Theater operators generally get a larger cut as much as 50 percent of gross sales when they own and operate theaters.
After the redevelopment agency has fully recouped its investment in the property, theater profits would be split 75-25 between the redevelopment agency and OliverMcMillan, which would serve as property manager of the theater.
With bankers wary of providing funding for projects anchored by movie theaters, especially with several national movie theater chains having declared bankruptcy in recent months, the agency's role essentially saves the project for OliverMcMillan, which had lost its initial tenant, AMC Entertainment Inc., in November. The proposed theater would feature between eight and 12 screens and 1,700 seats.
The remainder of the project, to be owned by OliverMcMillan, is designed to include 72,500 square feet of office space, 30,000 square feet of restaurant space and 10,000 square feet for a Trader Joe's market.
Wardlaw said the redevelopment agency has little choice but to build the theater.
"We're trying to create a drawing power to support the restaurants," he said. "The restaurants animate the space."
The agency has scheduled a public hearing on March 28 to consider the new plan.
If approved, Buss said, OliverMcMillan could break ground on the project by November. Build-out would take a year, he said. Officials at Robertson Properties Group, Pacific's real estate arm, declined to comment.Westside Conversion
Taking a cue from the success of nearby warehouse-to-office conversions, DMC Investment Co. has undertaken a $2 million rehab of 80,000 square feet of largely vacant Culver City industrial space.
Joshua Green, manager of the family-operated DMC, said the six-building, 1950s-vintage industrial development built by his father can better address the market by being converted into trendy "creative" office space.
The property, on four acres at 10119 Jefferson Blvd. along the Ballona Creek, is following an example set by Conjunctive Points a collection of warehouses converted to office space by entrepreneurs Frederick and Laurie Samitaur Smith, located just north along the creek.
The resulting project, which DMC has dubbed The Colony Office Campus, will have less rentable square footage and more parking than the pre-existing industrial complex, Green said. "If you tear down some square footage, you can generate parking. If you get more parking, you can generate a more interesting project."
There will be 68,435 square feet available in the finished project, according to Mark Berman, executive vice president of Coldwell Banker Westmac. Berman is targeting single occupants for each of the remaining buildings, which range in size from 16,000 to 37,000 square feet, with asking rents between $2 and $2.50 per square foot.
Once on line, The Colony's office space will join a Westside market that, by some estimates, has 2 million square feet of sublease space available, a prospect that concerns Berman.
"There are a lot of tenants who have built out their space, spent a lot of money on it and now have it up for sublease," Berman acknowledged. "The difference is that (The Colony) gives the tenant unparalleled expansion and parking (opportunities)."
One draw, claimed Green, is the surrounding landscape.
"We see the Ballona Creek as interesting, and we're trying to take advantage of the open space the creek provides," he said.
Staff reporter Christopher Keough can be reached at (323) 549-5225 ext. 235 or via e-mail at firstname.lastname@example.org.
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