Carson Woos and Wins Ikea With $13.5-Million Deal

In what is being heralded as a coup for Carson, home furnishings giant Ikea will open a warehouse store at Carson Mall as early as next November.

The project is expected to generate more than $20 million in sales tax revenue for the city over the next 30 years.

The City Council on Tuesday approved a $13.5-million financing package that secures Ikea as a replacement for the Broadway department store, which is to close this month. The council voted to give Ikea $5 million toward acquiring the Broadway site and loan $8.5 million to Carson Mall Partners to help finance a massive mall renovation.

The 963,000-square-foot center, which was built 18 years ago, has struggled to remain profitable and would have closed without the loan, said John Winthrop, managing partner of the mall. With the Broadway’s impending departure, other mall stores were also considering leaving.

“There are 1,500 jobs in the mall,” Winthrop said. “Those jobs would not exist but for the actions of the City Council (Tuesday) night. There’s no doubt, if it didn’t go through, the mall would have gone under.”

The council voted 4 to 0 to approve the project, with Councilwoman Vera Robles DeWitt absent.

“This is probably the biggest decision this council will make over the next 10 years,” Mayor Michael Mitoma said Wednesday.

Ikea, a Swedish-based retailing powerhouse, was being wooed by several South Bay cities and developers. Ikea’s agreement to open a store at Carson Mall was contingent upon the renovation, which the mall owners said they were unable to finance alone.

Ikea is rapidly expanding its West Coast operations and was looking for a South Bay location for its next store, spokeswoman Cynthia Nieman said.

“The Carson site has a lot of what we’re looking for,” Nieman said. “The freeway access is excellent and provides visibility from the freeway. That’s something that’s way up on the importance scale for us.”

Ikea opened a store in Burbank last year and plans to open another next spring in Fontana. Ikea would also like to open an Orange County store, Nieman said.

“We think the (Carson) site is important toward our overall strategy in Southern California,” Nieman said. “All along, we’ve wanted four stores in Southern California. With the South Bay site settled, we’re three-quarters of the way there.”

Nieman said Ikea estimates more than 20,000 shoppers a week will visit the Carson store. “Given the demographics in the area, we have pretty high hopes for that site,” she said.

Councilwoman Juanita McDonald said the store would generate almost as much revenue through its spinoff effect on other businesses.

“I feel very good about it,” McDonald said of the project.

However, not all residents are as optimistic about the deal. The project is being harshly criticized by a homeowners group, which said the loan is too big a financial risk for the city.

James Whitmore, treasurer of the Del Amo Homeowners Assn., said Mitoma negotiated a more favorable deal than necessary with the mall ownership group. Mitoma denied that he had been influenced by a $1,000 campaign contribution he received in February from Carson Mall Partners.

The $8.5-million loan to Carson Mall Partners will be repaid through increased property tax revenues to be generated by the redevelopment project.

In addition to the loan, the city will give Ikea $5 million toward buying the Broadway site and acquiring the store’s lease of the property. Ikea will use the money toward the $20-million cost of renovating the Broadway building. Including the costs of refurbishing the mall, the entire project is estimated at more than $34 million, according to mall officials.

“I think you’ll see a totally new mall,” Winthrop said. “It’s almost as if it’s being destroyed and built from the ground up. Residents will have the first-class mall that they deserve, which hasn’t been the case in years past.”