In Developer We Trust? : Burbank risks taxpayers’ money to get building projects off the ground
Over the years, the city of Burbank has had a great deal of faith in developer Lew Wolff. But the city probably never intended to have to bank on it.
In 1992, for example, the City Council agreed to sell a 10-acre, city-owned parcel to a developer at a loss of $2.3 million (forfeiting $1.25 million in property taxes in the process). The deal was part of a larger effort to subsidize a high-tech firm and keep it located in Burbank. The developer who bought the land was Lew Wolff.
For the record:
12:00 a.m. March 26, 1995 For the Record
Los Angeles Times Sunday March 26, 1995 Valley Edition Metro Part B Page 18 No Desk 2 inches; 51 words Type of Material: Correction
Burbank--A March 12 editorial mischaracterized the outcome of a 1992 transaction between the city of Burbank and developer Lew Wolff. As the editorial reported, the Burbank City Council in 1992 agreed to sell Wolff a 10-acre parcel. The deal was designed to help keep a high-tech firm in the city. In September, 1993, however, the contract for the sale was rescinded.
In that same year, the city awarded exclusive rights to a developer for three years to negotiate for construction of an indoor arena. There would be an additional goal here as well: trying to get the hapless Los Angeles Clippers to move to Burbank. The developer, again, was Lew Wolff.
But by far the biggest demonstration of faith in Wolff came much earlier, in the contentious 1988 vote (after five hours of debate) that approved a huge, city-subsidized expansion of the Burbank Airport Hilton. As part of that deal, the city agreed to provide up to $6 million in loans to Wolff if he had trouble meeting operating expenses.
Well, it’s that same loan that is causing jitters in 1995, according to Times reporter Vivien Lou Chen. As part of a complex legal arrangement, it seems that Wolff and his general-partnership group have the right to borrow up to half of that $6 million and would not have to repay it (!!), as long as they give up the right to borrow the other half.
Wolff says: “Our intent is to pay it back.” Well, that’s good news. We have no quarrel with Wolff at this point. Indeed, when developers are willing to take big risks, who can blame them for negotiating that risk on the best possible terms?
Rather, we cite it as an example of the potential risk to taxpayers (sometimes years down the line) when elected officials are willing to bet the farm and take one too many chances to get a promising project under way. The last thing you want to have to depend on, when as much as $3 million in taxpayer money could be on the line, is faith.
