S&L; Quits N. Hollywood Redevelopment Deal More Delays Seen
A northern California savings and loan that had been considered the front-runner to become the principal lender for the $83-million North Hollywood Redevelopment Project has backed out of the deal.
The failure of Homestead Savings & Loan of Burlingame to reach an agreement with the developers, Beverly Hills-based Kensley Corp. and Birtcher Pacific II, will not kill the redevelopment project, however, project officials said Tuesday.
But they said there will be more delays in the proposed hotel, office, retail and entertainment complex, which is projected to become the centerpiece of commercial revitalization in North Hollywood. The project is already several months behind schedule.
Project officials had hoped to complete acquisition of the land for the project by Dec. 1, and construction had been scheduled to be finished by early 1987.
“This means we’ve just lost a whole lot of time, and we have to start all over again looking for a lender,” said Jerry Belcher, manager of the project, which is being sponsored by the Community Redevelopment Agency of Los Angeles.
‘Not a Surprise’
But Kenneth Adkins, an executive representing the developers, said the pullout by Homestead was “not a surprise,” and that he had begun looking for an backup lender two months ago when negotiations with the savings and loan began to deteriorate.
Adkins, whose company had been talking with Homestead for 10 months, said he hopes to announce another principal backer for the project within the next two weeks.
“The North Hollywood project is complex,” Adkins said. “We are in the process now of negotiating with a couple of lenders.”
The development is planned for a 7.8-acre site at the northeast corner of Lankershim and Magnolia boulevards. It is part of a 750-acre North Hollywood redevelopment zone--bordered by Tujunga Avenue, Cahuenga Boulevard and Hatteras and Camarillo streets--that is the second-largest such zone in Los Angeles, ranking only behind the downtown business district.
The project is the only redevelopment project in the Los Angeles part of the San Fernando Valley.
Homestead officials informed Belcher and Adkins last week of their decision not to participate in the project. Jerry Amspaugh, senior vice president of commercial lending for the savings and loan, refused to give details of the problems in the negotiations.
“All we want to say is that the discussions were terminated, and that we were unable to reach an agreement with the developer,” Amspaugh said.
‘Afraid to Say No’
Belcher said Homestead officials became “picky about a number of things in the lending agreement during the last few months. They kept insisting all along that they wanted to do the deal. They were afraid to say no.”
He said a request for $38 million in pre-construction financing may have been the main problem in completing the deal. “We were looking for a lender to advance money to us so we could acquire the property,” Belcher said.
He said the partnership of the developer and lender will not gain title to the land until all the tenants now occupying the site are relocated and their properties cleared.
Belcher said the latest snag has caused problems for owners of several businesses occupying the project site. He said the owners “have been sitting on the edge of their seats,” waiting for word on the negotiations so they can plan their closings and relocations.
Belcher said the business owners have been calling him to ask whether they should reorder supplies to last a year.
“I just give them my best estimate and tell them that we will not be making any offers to purchase their properties for the next 90 days,” Belcher said.