Pact Terminated : Towncenter Partners Part Ways

Developer Ernest Hahn and the Burbank City Council have agreed on terms to end their contract to build the Burbank Towncenter shopping mall, paving the way for the city to seek another developer for the much-delayed project.

Under the agreement, announced Tuesday at a council meeting, Hahn forfeited a $500,000 good-faith advance to the city and $100,000 for administrative costs. He also could lose another $500,000 advanced toward purchase of the land for the downtown shopping mall.

The city said it would return the advance on the land only if it can sell the property to another developer for more than the $1 million Hahn agreed to pay.

The council, acting as the city’s redevelopment agency, declared Ernest W. Hahn Inc. in default in February after Hahn said he was unable to complete the project.

Redevelopment Centerpiece

Termination of the contract leaves the city free to negotiate with other developers to build the shopping center, which city officials hoped would become the centerpiece of its downtown redevelopment project.

City Manager Bud Ovrom said the city will begin talks with several potential developers in the next two weeks, including the Walt Disney Co., which has expressed interest in a project on the property.

Hahn’s $158-million Towncenter plan, created in 1975, began to fall apart last year when May Co. merged with the parent company of Robinson’s, Associated Dry Goods. Robinson’s was pulled out of the mall project.

Hahn was unable to find a replacement, and the three other department stores that were committed to the center--The Broadway, Nordstrom and J.C. Penney--said they would drop out without a fourth “anchor” store.

City officials sought help from both the Federal Trade Commission and state Atty. Gen. John Van de Kamp to block the May Co.-Associated merger, but were unsuccessful.

City Atty. Douglas C. Holland advised the council that after it declared Hahn’s contract in default, the developer would have the option of taking 120 days to come up with a new proposal or negotiating to end his participation in the project within 30 days.

Ovrom said he was pleased that the two sides, under the second option, were able to sever their contract without threat of lawsuits.

“I think it’s quite remarkable that a business relationship of this magnitude that has dragged out over this period of time could end this gracefully,” the city manager said. “There was not a lot of name-calling or finger-pointing.”

Ovrom said city officials were satisfied that the Hahn company did everything it could to make the project work.