Burbank Divided in Fight Against Blight

The days of smokestacks and boxcars are fast becoming memory in Burbank. Thanks to a boom in the entertainment industry, this former manufacturing hub bristles with posh glass office towers.

But some Burbank city leaders aren’t satisfied. In an effort to spiff up some of the last tracts of lower-rent industrial land, they plan to redevelop 467 acres south of downtown.

The plan, which would result in the diversion of $88 million in property taxes over 45 years, is designed to overhaul one of the last, drab stretches of machine shops and warehouses in town.

“It’s a rundown part of town, and it certainly needs attention,” City Councilman Bob Kramer said.

Others question the continued need to battle blight in a city that is home to gleaming corporate campuses, three redevelopment projects that diverted $218 million in property taxes and land values that are increasing faster than in neighboring cities.

The redevelopment concept has been lambasted by some skeptical officials, who are trying to abolish the program as “corporate welfare.” Any change would have a major impact in Los Angeles County, where there are about 270 redevelopment project areas and 23 more in the works.

What’s more, some Burbank residents like the target area just as it is.

“We don’t have to be beautiful here. We are supplying a service,” argued Frank Navarro, owner of an aerospace machine shop in the neighborhood.

Such renters are already feeling pressure from what City Manager Bud Ovrom suggested is “gentrification on a business level.”

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For instance, Gary Robbins, owner of Bischoff’s Taxidermy, a company that supplies animal props to the entertainment industry, is reluctantly moving out of Burbank because the building he rents has been sold, and prices have jumped too high elsewhere in the city.

“I would love to pay $55 a square foot,” he said. “But you’re looking at $100 per square foot here. . . . We are just the little guys.”

Supporters of the so-called South San Fernando Redevelopment Project Area said the neighborhood could be Burbank’s next hot spot for retail and office development.

Retail trade in the area has languished since the 1950s, according to city planners. Construction of the Golden State Freeway usurped San Fernando Boulevard’s role as the main drag through town, and the neighborhoods to the south and east of the boulevard have never recovered, they said.

At the same time, the area has been a manufacturing powerhouse, said Mary Jane Strickland, president of the Burbank Historical Society.

It became home to machining shops, lumber yards and eventually huge aerospace conglomerates such as ITT. Burbank even had its own “cannery row” near the railroad tracks that run through the area, she said.

But in recent years, the canneries closed and many aerospace businesses followed suit. ITT Aerospace Controls, Monasco Aerosystems, Zero Industries and the Jergen beauty products factory are among the employers the city lost in the recent recession, taking hundreds of jobs with them.

Today the neighborhood represents the remaining odds and ends of the industrial world in Burbank.

Side streets are packed with businesses that make everything from sausages to special effects. Thread-rolling, printing, cabinetry and grinding businesses abound. The sound of clanking metal and machines fills the air.

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But there are empty lots and storefronts too. A city survey of 548 buildings in the area found that 32--just 6%--were vacant. But 90% needed some rehabilitation, including earthquake retrofits.

“We’ve seen that area lay fallow for many years now,” said Councilwoman-elect Stacey Murphy, a redevelopment supporter.

Redevelopment dollars could be used to bring buildings up to code, repair streets and sewers, improve facades and entice developers, according to city officials.

Supporters say the aim is to avoid some of the more controversial practices sometimes associated with redevelopment, such as wide-scale condemnation of property.

But Navarro, the machinist, fears even a slight upgrade of the area could drive rents up even further and put him out of business. His company has survived the aerospace downturn, only to find that it can barely keep a toehold in Burbank, he said.

Others “are running out of alternatives” in Burbank, said Jim Linn, associate vice president at Grubb & Ellis in Sherman Oaks.

Industrial vacancies are so low elsewhere in the city that the proposed redevelopment area is “the last island where it’s possible to pay [a leasing rate of] 50 cents per square foot,” he said.

Redevelopment supporters say it’s not their intention to drive manufacturers out. But Mike Davin, industrial real estate broker with Grubb & Ellis, said that could be a natural result since “Burbank is trying to upgrade its image as the media capital of the world--trying to overcome all the Johnny Carson jokes.”

Others question whether the city really needs to devote more tax money to redevelopment.

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Relative to its neighbors, the city’s economic health is enviable. Commercial real estate is booming. Office vacancy rates have squeezed down to about 3%. And total assessed valuations have increased by nearly $2 billion since 1990, representing a faster rate of growth then Glendale, Pasadena or Los Angeles.

The source of authority for municipal redevelopment, the state Community Redevelopment Act, is supposed to be used to combat blight. Critics contend it has been misused to include relatively prosperous areas.

Moreover, the law allows local redevelopment agencies to divert from other public services the increase--or increment--in property taxes generated by rising property values. Critics, such as Assemblyman Tom McClintock (R-Northridge), have lambasted redevelopment as a “corporate welfare” program that robs basic services.

McClintock is sponsoring a bill to abolish redevelopment. He calls redevelopment agencies “the rogue elements of local government.”

Backers of the bill say that with redevelopment agencies forming all over the state the hit on property tax rolls is excessive.

In Los Angeles County, staff members used to keep close track of redevelopment areas out of concern that too much tax money was being siphoned away. “But we don’t have those resources anymore,” said Martin Zimmerman of the county chief administrative office.

Burbank already has created three redevelopment project areas, and if the South San Fernando project is approved, 18% of the total acreage of the city would fall under redevelopment law.

Officials have been praised for the tangible results of redevelopment through such projects as the Media City Center mall and the AMC Theatres complex in the downtown shopping district.

“I knew Burbank before the redevelopment,” said Gordon Sanders of Washex Machinery of California Inc., a supplier of machines to commercial laundries. “What’s there now is much better than before.”

Others question the continued need to battle blight in a city where the assessed value of all real estate has jumped 26% since 1990, contrasted with 21% for Glendale and Santa Monica and 11% for Los Angeles.

“At some point you have to declare victory,” Councilman Ted McConkey said. “We have given away subsidies that are unbelievable.”

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In fact, private interests have not waited for tax incentives in one of the areas slated for redevelopment.

Today, new industrial buildings for the studios are springing up on the Jergen soap factory site in a pioneering speculative effort by the Anses Joseph Co.

Several buildings have already sold. The princely price of these buildings--$100 per square foot--qualifies the development as “the most expensive industrial buildings in the San Fernando Valley,” said Linn of Grubb & Ellis.

Still, it will take a long time for the market to eliminate all the substandard buildings, Linn said. Despite the new cachet of a Burbank address, the economics of redevelopment are such that it is still much cheaper to buy empty sites such as in Valencia than to tear down an old factory in Burbank and rebuild, he said.

Redevelopment dollars aren’t significant enough to rescue an area “unless the investment community is already excited about it,” said Davin, the broker. “But right now, this market is great, so it probably will work.”