More than two years after Magic Johnson began negotiations with the city to redevelop the crumbling, 44-year-old Santa Barbara Plaza, sources say a final agreement could be announced as soon as this week and presented to the City Council for approval by the end of May.
If developers and the city can come to terms on the $120 million project, it might finally be the catalyst toward a revitalization of the Crenshaw district that has been envisioned since the early ’80s.
Under the proposal, a 540,000-square-foot mall anchored by two “big-box” retailers, each occupying over 100,000 square feet, would be built, accommodating more than 40 stores and restaurants and creating more than 1,000 full-time jobs, sources said. There would almost certainly be a Starbucks coffee shop, given that Johnson has a deal with the Seattle-based chain to locate new outlets in inner-city neighborhoods. Construction is expected to begin sometime late next year, with the new plaza opening by 2001.
Johnson Development Corp., with partners Victor MacFarlane and Ira Smedra’s Arba Group, are in final negotiations with the Community Redevelopment Agency over funding, and several people familiar with the discussions said the end is in sight.
“I think a deal is imminent,” said CRA Deputy Administrator Don Spivack. “We hope to wrap up negotiations in the near future.”
That would no doubt come as a huge relief to the CRA, which has been dogged by problems on its nearby 45-acre Crenshaw Redevelopment Project, which includes the Baldwin Hills Crenshaw Plaza and the adjacent Magic Johnson Theatres. The theory goes that if Santa Barbara Plaza becomes a success, business will spill over to the troubled mall next door.
Since the inception of the Crenshaw Redevelopment Project in 1984, it has been plagued by cost overruns and lawsuits, mostly in relation to the renovation of the Baldwin Hills Crenshaw Plaza.
Manhattan Beach developer Alexander Haagen and the CRA entered into an agreement to rehabilitate Crenshaw Plaza, under which the city would provide $51 million in public financing in exchange for 50 percent of any profits from the mall.
The project soon met with resistance from local business owners, who sued Haagen for not providing construction, ownership and leasing opportunities. Then cost overruns forced the CRA to forgo some of its expected profits and to pay an additional $26 million in costs. After the mall had a hard time leasing space when it opened in 1988, the CRA agreed to forgo more expected profits.
Several national chains, including The Gap and a Macy’s department store, eventually settled there. The Magic Johnson Theatres opened in 1995 next door and became one of the top-grossing theaters in the nation.
Along the way, however, the CRA sued Haagen for breach of contract, eventually getting a $1.3 million settlement from the developer, and both The Gap and Macy’s left. Despite receiving $70 million in CRA subsidies, the mall has failed to provide either revenue for the city or much economic benefit for the community, argues a recent study by the UCLA Center for Labor Research and Education.
But while the CRA is expected to provide a subsidy of around $20 million in federal grants and tax-exempt bonds, most of the Santa Barbara Plaza project is being funded by the developers, who say they are prepared to spend what it takes.
“I don’t think anyone else would have stayed around to do this,” said MacFarlane, adding that he and his partners have spent over $1 million on the project so far, with the final cost likely to be about $40 million more than originally expected.
While declining to identify which large retailers will move into the renovated shopping center, he said the object is to create a shopping hub that will draw customers away from more established malls elsewhere.
“If we put in a Wal-Mart or a Home Depot, for example, people will drive 10 miles to shop here, and then stay and shop at the other stores rather than going elsewhere, be it Fox Hills or the Westside,” MacFarlane said.
Talks on the project seemed to falter at one point after Councilman Mark Ridley-Thomas got angry at Johnson for supporting a plan to build a stadium proposal for an expansion football team in Carson. Ridley-Thomas has backed a rival effort to put a team in the Memorial Coliseum.
But Johnson recently made amends with the councilman, who is now “100 percent behind the project, as long as it’s viable,” according to Ridley-Thomas aide Dora Gallo. “We have to be optimistic about this although we’re not pleased with the way it has been played in the press.”
Joyce Perkins, who heads the Crenshaw district’s Community Advisory Committee, expressed satisfaction with the project.
“Everybody is now moving in the same direction,” she said. “You could say it’s taken longer than I had hoped, but when you consider everything that has to be taken care of, it’s hard to say it has taken longer than it should. ”