When It Comes to Mall, City Runs Up a Big Bill : Pasadena: The city tried to make Hen’s Teeth Square a success. It failed. Now the mall may be sold to pay off a $2-million loan.

With its nail salon, grocery store, coffee shop and variety of stores and offices, Hen’s Teeth Square in Northwest Pasadena looks like any of the thousands of mini-malls dotting Southern California.

But the shopping center carries a symbolic weight that belies its modest Spanish-style buildings.

For Pasadena preservationists, the 60-year-old structure represents one of the first auto-oriented shopping centers built in the West, a precursor to today’s ubiquitous mini-malls.

For owner Jeanette Henderson, it symbolizes her belief in the economic opportunities not available in her native Jamaica.

But for the Pasadena Board of Directors, the mall represents a frustrating attempt by the city to put a minority-owned business in Northwest Pasadena on its feet.

“It’s like a fish-or-cut-bait situation and we can’t do either one because of our involvement,” Director Kathryn Nack said.

Director John Crowley called the mall an example of one of his theories about government participation: the doctrine of increasing compulsion.

“Once you start something, you have an increasing compulsion to stay with it, even though the decision at the end may not be the one you would have made at the beginning,” he said.

The city, which has already loaned Henderson $376,000 and leases office space for $10,920 monthly at the mall, is considering more aid to stop an Oct. 25 foreclosure auction. Heartland Savings & Loan of El Cajon in San Diego County scheduled the auction after Henderson failed to make payments on a $2-million loan.

If city directors on Oct. 16 approve an arrangement worked out by the city, Henderson and Heartland, the city will extend its lease to 1994 and pay Henderson an advance of $130,000 on that lease, she said. The $130,000 will be turned over to Heartland, along with $45,000 Henderson said she has raised.

In addition, the city is considering altering a median on a nearby street to improve access to the mall, installing an elevator or leasing more space there.

Directors readily admit such measures are unusual, but they say the commitment to Northwest Pasadena’s economic development may require them.

“We want so bad a success story that we’re bending over backward a couple of times to make this work,” Director Chris Holden said.

Bill Reynolds, the city’s director of Housing and Development, said the project is part of an effort to spur economic development in Northwest Pasadena. The city’s participation in Hen’s Teeth is not unique, he added. In 1986, the city loaned $235,000 to Walt Jackson Development Partners for the Lake/Washington Neighborhood Commercial Convenience Center on North Lake Avenue in Northwest Pasadena.

That same year, the city assembled land costing $1.1 million for another Northwest project, the Fair Oaks Business Park. The land was sold to a developer who received a $100,000 city loan for leasehold improvements.

“We’ve had our share of successes,” Reynolds said of city participation. “They’re hard projects. Some of the economic conditions that have existed in the Northwest have made economic development projects difficult.”

The Hen’s Teeth project has been, for Henderson, a 12-year venture in difficulty. She and her husband, Winston, bought it in 1978 for $140,000 by mortgaging their home, using personal savings and later acquiring a partner. Although it was structurally sound when the Hendersons bought it, the small shopping center had declined from the 1930s when it opened as one of the first buildings constructed to accommodate autos.

After a 1981 city loan of $200,000 for a study on how to expand the center, the couple in 1986 finally secured a $1.6-million construction loan from a private lender. They added a wing behind the original building, obtained designation of the mall as a Pasadena Cultural Heritage Landmark and reopened it in 1986.

In 1987, the Hendersons obtained a $2-million loan from Heartland to pay off the construction loan and other debts and a city loan of $176,000 to cover back taxes and delinquencies, an amount still owing.

But it has persisted as a shaky financial venture with a 40% vacancy rate since it reopened.

In May, 1989, Winston Henderson died of a brain tumor, leaving his wife with five children under 18. In addition, three tenants were evicted after they failed to pay rent. Those problems plunged Henderson into deeper economic uncertainty and forced her to return to the city for help.

Although city directors turned down a proposal to pay Henderson $440,000 and become a partner in the project, they appear willing to help Henderson out yet another time.

“If we were to be hard line, fiscally conservative . . . we could take that position and let the whole thing go down the tubes,” Holden said. “But it has a lot to offer the whole community and that’s where the public good is.”

Director Rick Cole said the city has invested millions of dollars in downtown redevelopment and outright grants of millions of dollars to corporations such as Parsons Co. and Bank of America.