IKEA land deal tabled as Burbank awaits fate of state decision
State finance officials have temporarily squashed a series of land deals put in motion by the Burbank City Council last month to keep IKEA within city limits, officials reported this week.
The Swedish furniture retailer has outgrown its current digs and has its eyes on a much larger property at 805 South San Fernando Boulevard. The owner of that property, Crown Realty and Development, was willing to sell the land to the retailer provided it can acquire the current IKEA building.
“Right now, nothing is happening with that sale,” City Atty. Amy Albano said Tuesday.
Complicating the deal is the fact that state finance officials have yet to determine whether the transfer of the $1.3-million IKEA building from the now-defunct Redevelopment Agency to the city is legal since it occurred three months after property transfers were banned by the legislature.
A decision on the legality of the property transfers — and others like it that took place in cities across the state — isn’t expected until mid-2013.
But saying the risk of losing such an important sales tax generator required “immediate action,” city officials last month went ahead with a series of agreements to keep IKEA in Burbank.
On Oct. 30, the City Council transferred the IKEA building to the Successor Agency — the interim body set up to oversee the local wind down of redevelopment obligations — which was then scheduled to consider selling the property to the owners of Crown Realty, moving IKEA one step closer to the larger parcel.
That’s until the state Department of Finance froze the deal, said Ruth Davidson-Guerra, Burbank’s assistant community development director.
City officials had thought the Successor Agency could move forward with the transaction, she said, calling the redevelopment dissolution law “less than clear.”
“Obviously, we don’t read the law the same way that the Department of Finance reads it,” Davidson-Guerra said.
Officials discovered last week that before the Successor Agency can decide on the sale, the property transfers need to be validated by the state and a long-term asset management plan must be submitted, Davidson-Guerra said.
“Nobody’s really gone through this process before, so we’re all kind of navigating through unchartered waters,” Davidson-Guerra said.
So for now, the potential sale of the property has been tabled. An IKEA spokesman, meanwhile, said the retailer still has its sights on Burbank.
“We believe it’s in our interest to keep a new store as close to the existing store as possible,” said IKEA spokesman Joseph Roth, adding that the store has an established customer base in Burbank and prefers to keep its locations 30 to 40 miles apart from one another.
Still, he added, the retailer will continue to evaluate its options.
“We’re always in discussions with the city, developers, brokers about potential opportunities,” Roth said.
-- Alene Tchekmedyian, Times Community News
Follow Alene Tchekmedyian on Google+ and on Twitter: @atchek.