Fashion Plaza Expansion Starts Gaining Ground

Saying a controversial $117-million shopping center expansion is vital to this city’s financial well-being, Mayor Robert L. Bacon predicted Wednesday that the work will proceed now that a pivotal city councilman has given his support.

At a press conference to rally support for the expansion of Fashion Plaza, Bacon said: “My belief is that this project will be approved” at a joint City Council-Redevelopment Agency meeting Monday.

Bacon said one of two councilmen previously opposed to the expansion plan, Bradley J. McFadden, now favors the deal after extracting further financial concessions from the developers, mall owner Sylvan S. Shulman and developer May Centers Inc.

McFadden, asserting that the recently modified deal was probably the best the city could expect, acknowledged that he conditionally favors the expansion. In an interview, McFadden said he still wants assurances from May Centers that it will not abandon the city’s other shopping mall, Eastland Shopping Center, which the developer owns.

The Redevelopment Agency and May Centers this week are negotiating a separate revitalization agreement for Eastland that also will be presented Monday. McFadden said that the company has agreed to $3.5 million in improvements of the mall’s exterior and that tax revenues will not drop.

The developers have also guaranteed that the city will receive $2.2 million dollars over the next 10 years in addition to its portion of the tax revenues generated by the Fashion Plaza expansion. The developers had originally offered $1.6 million.

“If everything goes favorably between now and Monday and if we come to a suitable compromise (on Eastland) . . . I will be more in favor,” McFadden said, referring to the Fashion Plaza proposal. “If we don’t approve (the agreement), even with the terms being offered, what will happen is there will be a dilapidated Eastland and an old Fashion Plaza.

“To me, it’s clear that we’ll be better off with it than without it.”

Last month, May Centers officials said they were reconsidering their participation because of the apparent 3-2 split on the City Council over the terms of Fashion Plaza’s expansion. The proposal calls for the city to buy and clear developed land near the Fashion Plaza for the expansion.

If the current owners are not willing to sell, the agency might have to condemn the land. Condemnation proceedings by the agency board, made up of the five council members, requires four votes.

Until recently, McFadden and Councilman William Tarozzi had expressed reservations over the city’s financial role in the project. Tarozzi has said the city is giving away too much in anticipated tax revenues pledged to the developers.

In March, the agency gave preliminary approval to the plan, instructing its staff to negotiate a development agreement with the Shulman-May Centers partnership. May Centers is a subsidiary of St. Louis-based May Department Stores.

The plan for Fashion Plaza calls for adding a 140,000-square-foot May Co. store, 100,000 square feet of new mall space and up to 82,000 square feet of small shops near the plaza. The plaza now has 1 million square feet. The May Co. store in the Eastland mall would be closed.

A large portion of the existing mall would be rehabilitated, including adding a restaurant area and skylights and upgrading the entrance and interior. The proposal calls for the city’s acquiring--possibly through condemnation--26 acres of existing developed land east of the mall.

Lawrence M. Costello, May Centers associate development director, said the company views the fourth vote as crucial. “If we don’t get the four votes needed, we will have to sit down with our partners and possibly reconsider,” he said.

Under the terms of the proposed agreement, the city would rebate to the developers up to $100 million in anticipated revenues over the 30-year life of the agreement. Most of that would go to pay off the construction bonds, redevelopment officials said.

The proposal calls for the city to give up all the new property tax revenues created for 30 years. For the first 15 years, the city would give up 85% of the new sales taxes created by the expansion, and 70% of it in the following 15 years.

“These payments will come solely from additional tax revenues that we don’t have today,” Bacon said, adding that the city will net $35 million in new sales and property taxes over the life of the agreement.

The mall now generates an estimated $1.2 million annually in sales tax, which the city would retain. That is 15% of the city’s annual sales tax revenue.

The agency would issue $42 million in tax-exempt bonds to acquire and clear land, relocate existing businesses and install public improvements. The developers would have to pay off the bonds, which would be secured by the mall property. The city will maintain ownership of the land.

Shulman-May Centers will pay the city about $7 million for the property in the expansion area. The developers are responsible for the $40-million mall expansion, the addition of small shops near the plaza and new retail space, the $17.5-million renovation of the existing mall, and the $13-million construction of the new May Co. store.

The revitalization is intended to transform the 14-year-old center into a “super regional mall” better able to compete with the Puente Hills Mall, Santa Anita Fashion Park in Arcadia, and the Montclair Plaza, which has four major department stores. The mall has a Broadway, J. C. Penney and a Bullock’s department store. The mall “is perceived as a mediocre center” by today’s standards, Costello said.

According to city studies, the Fashion Plaza has experienced a 7% decline in sales and a 19% drop in foot traffic from last year.

Ben Wong, president of the Chamber of Commerce, and Gary Enderle, president of the Fashion Plaza Merchants Assn., said the expansion is vital to the mall’s survival, and chided critics for not being realistic.

“It is clear that those individuals who are opposed to the deal have simply not looked at the facts or do not understand them,” Wong said.