Superstores No Bargain for Burbank, Officials Say

Many cities wouldn’t hesitate at the deal offered by developers here last week: a simple zone change to allow a dozen or so retail superstores to ring up millions of dollars in sales tax each year. If that were not enough, the new stores would be built on the site of the old Lockheed plant, now closed.

But in Burbank, the reaction so far is tepid.

“We are not as desperate as some cities,” said City Manager Robert R. Ovrom. While the so-called big-box stores--warehouse-style discounters--would fatten the city’s sales tax base, he said, they would employ many part-time, low-wage workers.

Rather than succumb to the “immediate gratification” of new sales tax at the expense of high-wage jobs, Councilman Ted McConkey said the city should “resist the temptation to overbuild and bring in the wrong industry.”

Burbank, which is carving out a niche as an international media center, can afford to be picky. Sales tax revenues have ballooned 32% in the past five years.

McConkey said city officials were hoping the Lockheed property--by far the largest piece of vacant land in the central city--would be used by entertainment-related businesses offering high-paying jobs, with a smaller portion devoted to retail uses.

That vision will make the current plans of Vestar Development Co. more difficult than anticipated. The Phoenix-based company is expected this week to sign an agreement with Lockheed Martin to buy the 103-acre property, which is located between Empire and Victory boulevards.

Vestar wants to build about 800,000 square feet of big-box stores on the site. The development would also include about the same square footage of offices, as well as restaurants, movie theaters and two hotels.

To do that, Vestar, which has built similar centers in Cerritos and Scottsdale, Ariz., must persuade the city to change the property’s zoning.

Senior Vice President Rick Kuhle said his company’s proposal meets an unmet need. “There is a lack of retail in that whole Burbank-Glendale area.”

But according to Ovrom, “Cities have made fools of themselves chasing these kinds of users.”

Burbank is not the only place where stores the size of airplane hangars have met resistance in recent years.

The outlets promise jobs, convenience and tax dollars to communities. But in the last two years, homeowners in Woodland Hills, Granada Hills and Atwater Village have joined ranks to keep them out.

As tools of economic development, such stores have their limitations, economists say.

The backbone of a strong economy is export-producing industries that offer good jobs, not shelves of merchandise and sprawling parking lots, said Jack Kyser, chief economist for the Economic Development Corp. of Los Angeles County.

Without good-paying jobs, he said, “no one is going to be shopping in those stores.”

As the U.S. economy evolves, the decision to rezone manufacturing properties for retail uses has become a burning issue for local government, said Ovrom. He said cities recognize that such retailers, while providing local tax revenues, offer residents chiefly low-wage service jobs--a Faustian bargain at best.

In Burbank, city officials are also concerned that the proposed development would compete with retail businesses and cinemas downtown. Through its redevelopment agency, the city has spent more than $50 million in property tax funds to create an attractive shopping area downtown.

City officials had envisioned a “Media District North” for the Lockheed site, an adjunct to Burbank’s existing Media District, now bursting at the seams.

Especially appealing to the city would be using the land for entertainment subcontractors who cannot afford the princely rents charged farther south in the Media District, Ovrom said. Editing, pre- and post-production, sound and set companies are examples, he said.

Instead, Vestar plans to use 70% of the site for the big boxes, and only the remaining 30% for offices--the inverse of what city officials had in mind, said Ovrom.

Vestar’s proposal “is fairly contradictory with what we told them we wanted,” he said.

Kuhle responds that the 750,000 square feet of offices in the development is significant. Besides, he said, other new entertainment-related office buildings are also underway in Burbank--including nearly 600,000 square feet to be built by the J.H. Snyder Co.

But using more of the Lockheed site for show business would amount to overkill, Kuhle said.

Vestar is a highly regarded developer with a successful record of similar retail projects, said William R. Boyd, senior vice president of CB Commercial in Glendale.

But Seth Dudley, of the real estate investment firm Julien J. Studley, was skeptical. “As a retail area, Burbank has always been iffy.”

Big-box stores are cheap to build and likely to generate higher rents than mid-level office, warehouse and production space, say experts. Moreover, Vestar’s expertise is in building retail stores, not offices, Kuhle conceded.

All this is likely to make a compromise between what the city wants and what Vestar wants more difficult, though both sides are optimistic that an agreement will be reached.

The use of the old Lockheed site has symbolic weight in Burbank. The city lost thousands of high-paying aerospace jobs in the early 1990s when Lockheed, long the leading employer, departed. The company practically was the city’s economy. When it left, all that remained were darkened buildings and pollution.

Lockheed’s land is still zoned for manufacturing--as it has been for half a century--and must be rezoned to permit retail uses. Hence, the rezone has historic overtones. “They are asking us to change the fundamental urban design of the city,” Ovrom said.

But Vestar’s Kuhle asks how long the city intends to wait for just the right developer to come along. Vestar took six years to negotiate its purchase agreement with Lockheed.

Besides, he said, “the property creates no jobs right now.”

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