Handful of companies own big portfolios of Burbank property

During Burbank’s Veterans Day ceremony this week, the flyover by the Condor Squadron was sponsored by the Cusumano Real Estate Group. When the city held its tech summit last week, the event was hosted in the Tower, one of many commercial properties owned by Worthe Real Estate Group.

The two companies, like other major businesses in Burbank, including Walt Disney Co. and Warner Bros., are frequent sponsors of community events and donors to local causes. But, as owners of two of the largest portfolios of real property in Burbank, they also bear the brunt of public criticism that they receive favor from the city or wield too much influence.

“What a loaded question that is,” said Gary Olson, president and chief executive of the Burbank Chamber of Commerce, when asked if the developers and land owners control the city.

“Whether it’s the major studios ... or the developers ... they don’t want to run Burbank,” Olson said, calling the idea an “old bromide” that people have been declaiming for years.

Olson said the last thing the developers want to do is “run roughshod” over the city government, but instead seek to make the most of business opportunities.

Among those who own significant properties in Burbank, according to analysis of data from the Los Angeles County Office of the Assessor obtained by the Los Angeles Times, are Warner Bros., Walt Disney Co. and the Roman Catholic church — both through the Archdiocese of Los Angeles and Providence Health Systems.

At the top of the list of commercial and multifamily landlords are the Worthe and Cusumano real estate groups.

Founded by M. David Paul in 1967, and part of a trio of related companies, Worthe boasts nearly 70% of the class A office space in the city and has a portfolio of properties that includes the Pointe, the Pinnacle and the Burbank Studios.

The company has more than 4 million square feet of rentable square footage in Burbank with another 2.1 million planned or entitled, according to its website.

Cusumano Real Estate Group, founded by Chuck and Roger Cusumano in 1959, has grown to become one of the largest real estate owners in Burbank, with more than 100 properties in the city, including more than 1,500 housing units, according to assessor data.

Chuck’s sons Michael and Charles Cusumano are now co-owners of the business, which has investments from San Diego County to Kern County.

“We started developing in Burbank because this is where we live,” said Michael Cusumano. “It was natural.”

He said the real estate firm owns the largest share of multifamily property in Burbank, but has a diversified portfolio that includes ownership stakes in commercial and industrial properties as well. For example, the company owns the former Elephant Bar at 110 N. First St., a property Michael Cusumano said he’s excited to have attracted Wood Ranch into.

One of the highlights of its 56-year history, he said, was the development of the company’s headquarters, located at 101 S. First St., along with what is now BJ’s Restaurant and Brewhouse, then a Bobby McGee’s. The city’s downtown was not as vibrant as it is today when the building was developed in the mid-1980s.

“At the time, it was a fairly untested market that required a lot of faith in the city of Burbank as a destination,” Michael Cusumano said. “It was a big investment for us.”

Another of the family’s downtown investments, however, has been a source of “lingering backlash” — the Civic Plaza at 250 E. Olive Ave., across from City Hall and formerly the city of Burbank Police station. After several false-starts, the Redevelopment Agency sold the property to the Cusumanos for $100 in March 2003.

The property had sat vacant for several years and the city had made several attempts to find a developer for the 3.4-acre project — bordered by Olive Avenue, San Fernando Boulevard and Angeleno Avenue — since May 1997, including attempts to build a luxury apartment, retail and office space project on the site, according to news reports from that time.

Part of the reason for the deal was to make what officials said was a risky investment attractive to the developer. The city had tried and failed twice to attract other projects, said David Laurell, a council member at the time who now writes a column for the Burbank Leader. The other firms couldn’t make their plans “pencil out” financially, he said.

“It was a significantly better deal for the city than was on the table ... at the time,” Michael Cusumano said, adding that in retrospect the company could have done a better job of explaining to the public that the agreement offered a better economic value to the city than other proposals.

Work on the roughly $18-million, 80,000-square-foot building was completed in 2005. Last year, it was sold to a Chinese investment group for $22 million.

In the “grand scheme of things,” Laurell said, the development the Cusumano group built was better for the city than “an empty barren lot.”

A few opponents of a more recent Cusumano project invoked the $100 land deal in criticizing what they said was more special treatment, when the City Council last year approved the “Talaria at Burbank” project, a proposed 241-unit luxury apartment complex on top of a 43,000-square-foot Whole Foods in the city’s Media District.

A four-member majority agreed to sell several remnant parcels of city-owned land at the site for $1.2 million. An appraiser had valued the parcels at between just under $1 million and $3.7 million.

Then-Mayor David Gordon, now a councilman, as well as some members of the public present at that meeting last October, called the sale of the patches of land, which were sections of streets and alleys on the roughly 4 acres where the company already owned all of the other land, a “giveaway.”

In a letter to the editor, Burbank resident Molly Shore claimed that the council had given away the land and “chosen to ignore” problems with the proposed development, such as a density “bonus” that conditionally allows for 18 more apartments than would be authorized without council approval, because the Cusumano company was a “favored developer.”

It was tricky property to appraise, said City Manager Mark Scott this week, because the parcels were of such odd shapes and sizes that nothing could be done with them on their own and there was really only one potential buyer on the market — the Cusumano group — because they already owned the surrounding properties necessary to package together for a development.

Michael Cusumano said that the $1.2-million price was above fair market value and doesn’t include the cost his company will bear in relocating utilities on those parcels, which is in the millions, he said.

Critics have said the city more or less had Cusumano over a barrel and could have gotten an additional $2.5 million, which could have benefited the city. But Michael Cusumano said if the deal were structured another way, where his firm paid more for the land, it would have looked better for him, but the city would have spent much of the proceeds on relocating the utilities.

He also noted that the city was going to give the property to the prior developer, Rick Platt, whose $200-million project at the site was killed in 2009 after a decadelong battle over the plans.

“Why is it Platt got them for free?” Michael Cusumano said. “We had to pay $1.2 million.”

Scott said that the fact that the city owned the remnants was an “accident of history,” and was not even discovered until Cusumano was deep into the planning process.

In the end, Michael Cusumano said, he’s satisfied with the price and he’s confident the city benefited from it. He said he believes the community will also benefit from the effect that Whole Foods will have on property values. Whole Foods executives who were recently in Los Angeles for the opening of a store there were also excited about the Burbank project, he said.

The Worthe group isn’t without controversy, either. In the summer of 2001, the city spent $3.4 million on a 1.5-acre site bordered by Ontario Street, Thornton Avenue and Fairview Street, with plans to turn around and sell it to M. David Paul and Associates for what the Burbank Leader in an editorial at the time called a “sweetheart deal” — a whopping $1.

The proposal called for construction of 20 “small-lot” homes and a children’s day-care facility, with half of the homes set as affordable housing that would be reserved for middle-income families at a price of $190,000. The other 10 homes were to be sold at fair market value, with any profits above $240,000 to be split by the developer and the city.

The editorial contrasted “that exclusive club out there in which members are big-time developers through whose hands pass millions” and who get such favors with the plight of the wage slave who is never offered a home for a buck. The homes were built in 2003 and are currently assessed at a collective $7.6 million in taxable value, according to the Assessor’s data.

Jeff Worthe of Worthe Real Estate Group could not be reached for comment.

Bud Ovrom, who was Burbank’s city manager for 18 years before he left in 2003, said that’s the way the anti-blight Redevelopment Agency worked, before it was dismantled by Gov. Jerry Brown in 2011. It packaged properties, cleared them of blight, then sold them to developers based on the value the development would bring in, rather than the value of the land.

The discounts were an “inducement to build there rather than someplace else,” Ovrom said, and Burbank managed to win several developments that were a boon to the city using such methods. He said much of the retail and other amenities, such as the AMC Burbank 16, wouldn’t be around if not for redevelopment.

So, do developers in Burbank enjoy an unfair advantage?

“I know they don’t with me,” said Councilman Will Rogers this week.

But, Rogers said he was bothered by the fact that the Cusumano family’s good works and long standing in the community were discussed during City Council discussions of the Talaria project, which was before he was elected to council. Those issues shouldn’t have a role in the city’s decisions over land use, he said, and they shouldn’t even be mentioned.

The Cusumano family members “have been very supportive” of the community, Councilman Jess Talamantes said. “They’ve stayed in the community, they’re involved in the community.”

However, Talamantes said that doesn’t curry extra favor with him.

“My doors are open to everybody,” Talamantes said. “I don’t judge by influence, by dollar signs.”

Scott said he has heard from members of the public claiming that developers get sweetheart deals.

“I’d like somebody to show me what they (the deals) were,” Scott said.

But that would be difficult, he said, because there’s such little development in Burbank, particularly in housing. He and other officials have said that Burbank is in dire need of more housing. When developers build in North Hollywood and Glendale, “we get the traffic” as people drive into Burbank for work, Scott said.

“I’m just so happy somebody is building housing in Burbank,” Scott said of the Talaria project. “We’re deficient in every category [of housing].”

Ovrom, who still lives in Burbank, said large developers and property owners are “major players” in the city, but he said that’s not unique to the Media City.

“As a major property owner, you have a seat at the table,” Ovrom said. “You have a voice to be heard.”

The Worthe and Cusumano groups, as well as the studios, are all “good corporate residents,” he said, and he is less worried about their influence than he is about the slowing of development in the city, which began around the time NBC left for Universal City, he said.

“I don’t worry about ... influence,” Ovrom said. “But, I do worry that Burbank doesn’t have the economic momentum that it had before.”

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Chad Garland, chad.garland@latimes.com

Twitter: @chadgarland