Burbank May Take 40% Loss on Former Lockheed Site : Real estate: Redevelopment agency is trying to sell 10-acre parcel near airport where building plans have failed. Five potential buyers show interest.
The Burbank Redevelopment Agency is negotiating the sale of a prime piece of real estate at about half the price it paid to acquire the land seven years ago.
At least five potential buyers are interested in the 10-acre parcel near Burbank Airport that has seen four prior development proposals sour since it was acquired by the agency in 1988 from Lockheed Corp. for $10.3 million.
The agency’s investment reached $12.1 million after the Lockheed building was razed, an environmental impact report was commissioned and soil studies were completed, according to an agency report.
But because of the decline in the real estate market, the agency will have to sell the site for approximately 60% of its investment, sources said.
“There is no set price,” said Burbank City Councilman Ted McConkey. “But we will get substantially less than what we paid.”
Last week, the agency staff was directed to negotiate a sale with M. David Paul & Associates, but no deal has been finalized, sources said. No city subsidies are planned to be offered, sources said.
There are four other groups still interested in the 10-acre parcel, located at the corner of Empire Avenue and Ontario Street. They are the Lewis MacLeod Partnership, Prudential Real Estate Investor/Hewson Development, Trammell Crow Co. and KABC Channel 7.
M. David Paul plans to build 600,000 square feet of a campus-like office project with a guarantee that the entire site be acquired over a three-year period or sooner. Calls to the firm were not returned.
An informal proposal by a broker representing KABC Channel 7 was received by the agency in a closed session last week.
Bill Burton, director of creative services for Channel 7, confirmed that a letter had been sent to the agency but said the Lockheed site is one of several the station is considering for building a studio.
“There have been no formal offers,” Burton said. “We are simply narrowing our choices.”
KABC is a local affiliate of New York-based Capital Cities/ABC Inc., which has agreed to merge with Burbank-based Walt Disney Co.
Redevelopment officials are trying to interest KABC in other sites around the city and are expected to meet with KABC representatives this week.
The Lockheed site is considered a prime location in Burbank because of its close proximity to the Burbank-Glendale-Pasadena Airport.
After the agency began vigorously marketing the parcel last year, many responses were received with proposals including a school, airport parking, manufacturing, and industrial and office space, according to officials.
But the agency wants to make sure that any future project at the site is financially secure because four other proposals to develop the site in the past six years failed.
The land originally was acquired from Lockheed as part of 21 acres expected to be used for expansion of the Burbank Airport Hilton, along with proposed construction of a convention center on about nine acres of the site, according to James M. O’Neil, special assistant to the community development director.
A small portion of the site was sold to the 1928 Jewelry Co. in 1988 and was subsequently developed as its corporate headquarters. Apart from the land set aside for a convention center, the remaining 10.37 acres has been held by the agency since its acquisition, according to O’Neil.
In 1989, the agency entered into an exclusive agreement with the Chandler Group to construct a business park on the site, but financial problems led the group to sign over their exclusive agreement to CMS Development Co.
When that deal met with financial problems, developer Lew Wolff, who built the nearby Airport Hilton, and his partners stepped in during March, 1992, and assumed the development rights. They planned to build office space on the site and the city agreed to sell Wolff the 10-acre parcel at a loss of $2.3 million (forfeiting $1.25 million in property taxes in the process). But the deal fell through.
In June, 1993, the agency began negotiations with Coast Federal Bank to construct office space in a phased development. In September of that year, Wolff terminated his development agreement with the agency so it could pursue negotiations with Coast Federal.
But Coast Federal withdrew from the project in June, 1994, after newly elected Los Angeles Mayor Richard Riordan stepped in with an offer to keep the bank in Los Angeles.
McConkey said that any new development deal will have to be different from those in the past.
“Anyone who gets the site will have to prove they are financially capable of providing what they say they can provide,” he said. “We don’t want another failed development.”
