Lenders for the controversial and long-stalled Village Center Westwood project were preparing to initiate foreclosure proceedings late last week, apparently because a recent sale of the site violated terms of the mortgage and the developer has fallen behind on mortgage payments, according to sources.
Beverly Hills-based apartment developer Casden Properties recently purchased the project site from retail developer Ira Smedra, but lenders have not been paid, sources said.
Representatives of the lenders declined to confirm or deny that they were preparing to file a notice of default, which initiates foreclosure proceedings.
But a routine review of the deed of trust reveals that the note is due upon sale of the property. Yet Casden has purchased the site without paying the lenders.
A representative of Casden said the existing loans are being refinanced.
“Casden Glendon LLC took title to the property subject to the existing loans and those are in the process of being refinanced,” said Andrew Starrels, senior vice president and general counsel at Casden Properties. “We’ve had conversations with the lender and expect the refinancing to happen in a timely manner.”
Smedra, who is president of the Arba Group, declined comment.
Redesign in the works
It remains unclear how involved Smedra will be in the project now that Casden has purchased the site.
Smedra obtained approval two years ago from the Los Angeles Planning Commission for his envisioned 450,000-square-foot retail/entertainment center. But fierce neighborhood opposition stalled the project. Now Casden is said to be in the process of redesigning the project to be primarily a residential complex, which would likely be more acceptable to nearby residents.
“He’s looking to do primarily residential apartments with some retail component on the ground floor,” said Jane Blumenfeld, chief of staff for Councilman Mike Feuer, whose district includes Westwood.
A letter was submitted last week to the City Council asking for a further continuance of all proceedings with respect to the property. It is signed by Alan Casden of Casden Glendon LLC and “agreed and acknowledged” by Ira Smedra, partner in Village Center Westwood.
“As you may know, ownership of the above-referenced land which has been known as Village Center Westwood has changed and we are in the process of evaluating how to proceed,” the letter states. “It is our belief that until our internal analysis has concluded, it would be premature to conduct such hearings.”
Casden said recently that, contrary to reports in the Business Journal and elsewhere, he is not in partnership with Smedra.
“We own the property outright and are planning our own project, and we’re not proceeding with the plans Ira Smedra has done,” said Casden, who is one of the largest private owners of apartments in the nation.
Presuming Casden succeeds in refinancing the project’s debt, he still needs to garner neighborhood support to obtain City Council approval. And initial indications are that a scaled-down approach would receive support.
“All I want to see is a lawful development, so I have no personal animosity toward any of these people,” said Laura Lake, a neighborhood activist and opponent of Smedra’s original project. “I’d like to see it developed by someone willing to play by the rules. We welcome good-quality development.”
Such sentiment is a far cry from residents’ heated reaction to Smedra’s original plan.
In response to the opposition, Smedra had been asking to postpone public hearings while conducting a final project analysis. And now, with Casden substantially redesigning the project, some steps in the approval process likely will need to be repeated.
Smedra’s originally proposed 450,000-square-foot project was designed as a Mediterranean-style, open-air plaza and would have included a Ralphs supermarket, Long’s Drug Store, a multiplex cinema, shops and restaurants.
But last spring, after residents cried foul, Smedra scaled down his plans and redesigned the development to be more oriented to the surrounding streets. The revision called for apartments on the second floor, with retail below and underground parking under the entire five-acre site, which is bordered by Glendon, Weyburn and Tiverton avenues, near UCLA.
Also under the revised plan, Glendon would remain open rather than becoming a pedestrian mall, which had been a major point of contention with opponents.
An assembly bill was introduced to aid the street-closure process, but it was later dropped amid fierce opposition. Some local homeowners also had concerns about the scale of the original project, along with the number of theater seats and its sunken courtyard design.
Now that scenario is dramatically changed, with Casden being cautiously welcomed by residents, while his lenders threaten to foreclose.
Meanwhile, several other retail projects are in the works in Westwood, including Regent Properties’ Westwood Marketplace on the west side of the Westwood Village. Also, Madison Marquette has been working to lease shop space on Westwood Boulevard and in the now-closed Macy’s department store across the street from Casden’s project site.