Hd,Not So Magic Deal
It took months of intricate negotiating and perhaps a dash of local politics but city officials and basketball star turned inner-city developer Magic Johnson have reached an agreement on rebuilding the Santa Barbara Plaza shopping center in the Crenshaw district.
There are a number of questions to consider about the agreement, such as why it took so long to work out (small-business owners in the area have been in limbo for several years); whether the $20 million subsidy being offered to Johnson’s company makes economic sense for the city (similar handouts have only a mixed track record); and whether the political interests of Councilman Mark Ridley-Thomas got in the way of the negotiations (despite press reports to the contrary, all the parties say they did not).
Certainly, the shopping center has been in bad shape and long overdue for an overhaul. Once a bustling retail area, the complex has fallen on hard times bad news for an area that’s been desperate for so-called big-box retailers. This being an inner-city neighborhood, however, developers have come to expect the involvement of the city’s Community Redevelopment Agency. It was the CRA that worked out this deal, which includes a federal grant and numerous short-term exemptions covering local sales and utility taxes.
Both sides say the subsidy was a critical component of the $100 million development effort. Without it, they insist, there would be no deal not by Johnson or any other developer.
Perhaps. But we wonder whether there may be a chicken-and-egg aspect to this and similar projects. Do developers insist on CRA participation because it’s economically necessary or because it’s simply there for the taking? If CRA funds were not available, would an otherwise promising commercial district simply crumble and die?
At a time when capital continues to chase after deals, we wonder whether the old, familiar redevelopment models could stand some tinkering.
