City, ‘Magic’ Johnson Partnership at Impasse Over Project

Contending that a development partnership that includes ex-basketball star Earvin “Magic” Johnson has yet to meet basic criteria for city subsidies, City Councilman Mark Ridley-Thomas and Community Redevelopment Agency chief John Molloy on Thursday defended the city’s hesitance in negotiations with the group over a proposed Crenshaw district shopping center.

Further talks planned for today may bring a resolution, they said--provided that Johnson’s group is ready to compromise.

The developers “have to demonstrate they want to do it by closing the deal. It’s on them,” said Ridley-Thomas.

But a spokesman for Johnson’s group said the opposite, indicating the developers presented the city with a counteroffer late Thursday.

One roadblock, Ridley-Thomas said, is that the development partnership has not guaranteed the city’s general-fund contribution.

He would not give figures, saying earlier reports that the government had offered to contribute $21 million to the project were incorrect. The total project cost is estimated to be about $80 million.

The city is looking for a lender to guarantee subsidies for the Santa Barbara Plaza development, similar to what a development group provided to the city recently for subsidies on a much larger redevelopment project in Hollywood, Molloy said.

Johnson’s group has not provided a letter from such a creditor, Molloy said. Ron Deaton, chief legislative analyst for the city, also said the city needs such a guarantee at a minimum to close a deal.

Eufaula Garrett, a spokeswoman for Johnson Development Corp., denied this allegation outright, saying that they have given the city a guarantee through CUIP Partners, owned by Johnson and CalPERS. Johnson Development Corp. is working with MacFarlane Group and Arba Group on the project.

Ridley-Thomas denied that the problems with closing the deal have anything to do with Johnson’s backing of a proposed new football stadium in Carson. Six weeks ago, Johnson announced his support for a plan by talent agent and entrepreneur Mike Ovitz to bring a football team to Carson.

Ridley-Thomas has championed another plan for a National Football League team to return to the Los Angeles Coliseum.

Johnson, the former Lakers superstar, has developed a mega-movie house across the street from what would be the Santa Barbara Plaza.

Tenants and property owners at the crumbling shopping centers in the neighborhood say the development is desperately needed. Foot traffic in the neighborhood is not sufficient to keep shops open, they say.

But Molloy said the city wants to be cautious because public funds are involved. He said only recently has the Community Redevelopment Agency began tapping the city’s general fund to kick-start redevelopment projects. The city has asked for a dollar back in sales tax revenues over the life of the project for every 50 cents the city puts in, at a minimum.

Both Molloy and Garrett, of Johnson’s group, confirmed that Johnson’s team is looking for a higher proportional city contribution. But Garrett said the higher contribution is justified because the area is depressed: “The Santa Barbara Plaza neighborhood is startlingly different from the [Hollywood] neighborhood,” she said.