Magic Johnson, City Finalize Mall Project Deal

After months of hardball politics, developers for former basketball star Magic Johnson and city officials are expected to announce today that they have reached agreement on a $100-million shopping center in the Crenshaw district, which is badly in need of development.

Under nonbinding terms approved by the developers and the Community Redevelopment Agency, the city will offer developers a nearly $20-million subsidy to rebuild the crumbling Santa Barbara Plaza shopping center. The subsidy, to be generated by the revitalized plaza, includes sales, utility and other taxes typically turned over to the city’s general fund.

The developers say they were “faxing around” the terms of the deal to be signed late Monday, the final step in the negotiating process.

While city officials and Johnson’s developers say they are pleased to have reached this point in the deal, getting there has been anything but easy.

The developers have come under intense scrutiny by City Councilman Mark Ridley-Thomas, who represents the area and who charged them with creating lengthy delays in the project. The developers, in turn, have had their own criticisms of the city and Ridley-Thomas’ office.

Swirling around the Santa Barbara Plaza deal, and rarely spoken about publicly, has been Ridley-Thomas’ anger at Johnson for his support for a plan to bring a football team to a proposed football stadium in Carson. Ridley-Thomas has championed a rival effort intended to return professional football to the Los Angeles Memorial Coliseum.

As a result, sources close to the negotiations said the council office created unusual and unnecessary demands on the project. The councilman, however, said he only wanted to ensure the best project for the numerous business and property owners.

“It’s been difficult because of politics--no other reason,” said a source closely linked to the negotiations. “But at the end of the day, I think it will be a great project.”

Both the city’s redevelopment agency officials and the developers say the project is challenging for financial and other reasons. There are about 40 property owners and about 200 tenants in the plaza who will be relocated and given financial assistance and business advice.

Under the deal, the developers have until July 19 to provide final details on the guarantor of repayment of the city funds. CRA officials say they expect Johnson’s partnership to cover that guarantee.

For their part, the developers say the project is challenging.

“We’ve stepped up to a commitment that most developers could not or would not get close to,” said Victor Macfarlane, an investor in the project along with the Johnson Development Corp. and the Arba Group, led by local developer Ira Smedra. Santa Barbara Plaza business and property owners have been at odds over the development, with most seeking the best deal for the plaza that has fallen into disrepair with dwindling customers and little foot traffic.

The plaza, which is next to the Baldwin Hills Crenshaw Plaza and the Magic Johnson Theatres, would have several “big box” retailers, possibly including a home construction supply store and a Bed, Bath and Beyond. Grubb & Ellis have been hired to negotiate those deals.

“People have not been exactly breaking down the door looking to redevelop this site,” said Joyce Perkins, chairwoman of the Community Action Committee in the Crenshaw area, which advises the CRA.

Because Johnson, the former Lakers’ superstar and current American Express ad man and night-time talk show host, built his movie complex there (he also attends church in the area), some say he will be committed to the project.

Still, the politics of this deal were not lost on most close observers.

“Unfortunately, it took some negative publicity to get the wheels turning much quicker,” said Sheila Jones, who owns a women’s clothing store in the plaza and is the president of the Santa Barbara Plaza Action Committee.

Other owners still are not convinced that the Johnson group will be the best developer for the plaza. Bob Schwartz, who owns a home construction store on Exposition Boulevard near the plaza, said he has identified 37 business owners who would be “negatively impacted” if a Home Depot store or similar business was built at the site.