The city has hired a consultant to help it determine whether to accept an offer from the Galleria at South Bay to pay off early an $8-million loan from the city.
Forest City Enterprises of Cleveland, which owns the 2-year-old Redondo Beach shopping mall, began making $48,000 monthly payments on the loan in February. The payments are scheduled to continue for 18 years, when the developer will make a final balloon payment of $5 million, bringing the total, with interest, to more than $15.3 million.
Forest City Enterprises last fall offered to pay off the loan, but a specific price has never been discussed, according to Paula Burrier, the city's director of housing and community development.
The city obtained the money to provide the loan from a federal Department of Housing and Urban Development grant. As a condition of the loan, the Galleria agreed to hire Lawndale residents for at least half of the available jobs at the mall.
Burrier said the consultant, Datelson Lavander Whitney of Los Angeles, will help determine whether the city would gain more by cashing in the loan now or by continuing to accept payments over the next 18 years.
Complicating the calculations is a clause in the loan agreement giving Lawndale a share of the mall's profits if they exceed 14%. City officials do not expect that provision to pay off for at least a few years.
The consultant's report, which will be paid for by the developer, is expected in 90 days.