Economic Reality Alters Dream of Burbank Mall : Development: Four years after unveiling ambitious plans for the Media City Center, the city and builder are scaling back.
Back in 1989, the vision was simple and clear:
First, construct a first-class mall in Burbank, complete with traditional shops, restaurants and a four-plex movie theater.
Next, add a first-class business hotel, bustling with out-of-town travelers with time and money to spend.
Then, for good measure, build four high-rise office towers near the mall, full of workers in need of a place to spend their lunch break, and their paychecks.
The result: what the city had always wanted, a vibrant, thriving mall, infusing activity and money into downtown Burbank.
But four years after the agreement for just such a center was crafted, city officials and the developer of the Media City Center say the vision needs to be refocused, and the Burbank City Council has given the developers the go-ahead to do just that.
Citing a faltering economy, the council last month agreed to allow developers to substitute low-rise retail outlets and a drive-through fast-food restaurant for the planned high-rise office towers, a hotel and a “sit-down restaurant” initially proposed.
“Office and hotel development has come to a virtual standstill due to overbuilding in most markets and lack of available financing,” Robert M. Tague, assistant executive director of the Burbank Redevelopment Agency, stated in a memo. “The Agency’s vision for the Media City Center now needs to be revised to reflect the changes in the economy.”
City officials and the developer, the Alexander Haagen Co., say the changes are only temporary. By allowing these alternative uses, the land will at least generate some revenue while the city waits for the market to improve, city officials said. Under the plan, which would bring a Circuit City and an Office Depot to land designated for office towers, the city has the option of ending the agreement with the retail stores after 10 years. It could then use the land instead for office development if the market permits.
“When the office market comes back, I think Burbank will be one of the areas it comes back to,” said Fred Bruning, a partner with Haagen. “Right now there’s no one with a good enough crystal ball to predict when that comeback will be.” Although the proposal was approved unanimously by the City Council, not everyone is completely sold on the idea.
Jef Vander Borght, chairman of the planning board, said the fast-food restaurant takes the city too far from its goal of a high-quality mall center, and might also open the door for other business to develop on land originally intended for other uses.
“You set a tone,” Vander Borght said. “You set a pattern that we didn’t set out to embark on when we invested millions and millions of dollars” in the Media City Center.
Vander Borght said a fast-food restaurant would lessen the quality of the mall.
“I think everyone in Burbank is extremely proud of the mall,” he said. “I think everyone recognizes the mall is struggling. The question is, is the short-term solution going to solve the problem, or is it going to create a long-term problem down the road?”
But others on the planning board, which approved the changes by a 3-2 vote, said retail stores may not be an ideal use, but the changes are preferable to leaving the land vacant.
“There was a lot of disappointment, but this was something none of us had any control over,” Edward Hill said. “This is a stopgap measure to make the land productive temporarily until we can move ahead with our master plan.”
The amendment is the latest development in the long and sometimes disappointing history of the area in downtown Burbank known as “41 acres.”
Over the years, massive projects were designed and discussed, only to fizzle while the land sat idle. In 1989, the Alexander Haagen Co. proposed a plan “reflective of a very strong office, hotel and restaurant market,” Tague said.
Homart Development Co., one of the nation’s largest shopping center and office building developers, planned to develop the office towers, but withdrew its option because it could not “attract the necessary tenants or the financing for the project,” Bruning said.
Plans to find a developer for the hotel have been equally unsuccessful. The hotel was initially scheduled to be completed last year, said Tom McCarty, a consultant to the city’s Redevelopment Agency. Now the date has been changed to 2001.
City officials said the following changes will allow the land to generate some revenue, while the city and developers wait for the market to return:
* On Parcel 13, at Magnolia Boulevard and First Street across from Sears, the original plan was to build a 330,000-square-foot office tower that would have totaled an assessed value of about $33 million. It would have generated $330,000 in tax-increment revenue, which is new real estate property tax income from the development of property in a redevelopment project area. Tax increments are returned to the city for use by the Redevelopment Agency.
Instead, the Circuit City plan is expected to generate new real estate and sales taxes of about $600,000, McCarty said. That figure is larger than the original proposal because the new plan incorporates a larger portion of the land on the parcel.
* On Parcel 17, at the southwest corner of Burbank Boulevard and Third Street, a 320,000-square-foot office tower was planned that would have totaled $32 million in assessed value and would have generated $320,000 in new real estate taxes. The Haagen company has received a letter of intent from Office Depot to build there, and produce sales and property taxes are projected at $320,000.
* On Parcel 14, also at Magnolia and First, a fast-food restaurant will be substituted for the sit-down restaurant that was planned.
* At Burbank Boulevard and San Fernando Road, where a hotel and an office tower were originally planned, a maximum of 50,000 square feet of retail space has been approved instead. No announcement has been made about which businesses would occupy the space.
City officials projected that Circuit City, Office Depot and the fast-food restaurant would generate about $2.4 million in sales tax and tax increments over the next 15 years. Under the proposal passed by the City Council, Haagen receives the sales tax generated from the stores for the first 10 years and 50% of the sales tax for the next five years.
The money would be used to pay off debt, Tague said.
In exchange for approving the amendments, the city has acquired an option to buy one office site, at San Fernando Road and First Street, for $1, and an easement for 517 parking spaces in the IKEA parking structure for not more than $4 million, or “20% less than what it would cost us to construct it today,” Tague said.
In addition, Haagen has agreed to pay $100,000 toward a marketing program to find developers for the officer towers, he said. The company will also deposit $5.5 million into the project’s tenant-improvement and leasing program. The mall is only about 70% occupied, he said.
