Burbank’s Hollow Boast About Its Mall : Getting out of the Media City Center deal wasn’t a coup, but more like a salvage job

Quite a few superlatives are being tossed about by Burbank city officials in describing the deal they recently announced with the developer of the Media City Center mall. Under the terms, which are supposed to become effective later this week, the developer has agreed to pay the city a total of $10 million in 1995 and 1996. “Great,” some say. “A phenomenal success . . . an absolute coup,” says City Manager Bud Ovrom.

Our reporter, Vivien Lou Chen, used quite a different term to describe the situation: The city is “salvaging $10 million,” and that seems very much closer to the mark.

For years, the city of Burbank had tried desperately to build a major shopping center in the downtown area (emphasis on desperately). To do so, city officials eventually invested $120.7 million as part of a 1990 deal that seemed much too good to be true (emphasis on too good to be true).

Within 25 years, nearly $229 million in sales taxes, property taxes and hotel taxes were to be collected from the mall. The developer had even agreed to split 50-50, with the city, the mall’s net operating profits.

The economy soured. Business is up a bit at the mall mainly because the Northridge earthquake knocked out several other malls around the Valley. But Media City Center doesn’t figure to produce as much as a dime in profit in the foreseeable future. The mall’s losses in 1992 and 1993, in fact, amounted to $9.4 million. And in the course of this disastrous sojourn through the recession, whenever the developer needed a major concession from the city, he got it. The city has even surrendered the taxpayers’ rights to half of any future profits.

Much of the property tax revenue money that the city counted on to make good on its investment was diverted to the developer. The city also agreed, last year, to give the developer all of its share of sales taxes from three Media City Center establishments.

The salvaging points here include the fact that there is a mall in downtown Burbank. It has helped a bit to revitalize the downtown area. Weekend crowds at the mall are fairly strong and may hold up even as the quake-damaged competition in the San Fernando Valley continues to recover old business. Some new jobs have also been generated, and that’s certainly a plus.

But Burbank officials clearly need to stop crowing about the great deal they supposedly have made in finally getting out of the mall business; it ought to be good enough that the city’s taxpayers aren’t demanding that they eat one.