Developer Gets OK to Downsize Retail Project

The Los Angeles redevelopment board agreed Thursday to allow developer Christopher Hammond to scale back a shopping center project in the Crenshaw district a year after the city approved $38 million in subsidies for the commercial and residential complex.

Citing major cost increases, Hammond won permission to cut 20,000 square feet from the proposed 140,000-square-foot shopping center and instead add 150 condominiums.

“The increased cost [of] materials over the last year has been substantial,” Hammond told the Community Redevelopment Agency board, adding that expenses were also higher than anticipated because construction crews needed to dig 30 feet down to provide a stable foundation in what was once swampland.

In all, the cost of the project has risen $50 million above the original projected amount of $123 million, city officials said.

Hammond, a city parks commissioner who has close political ties to Mayor James K. Hahn, is developing the 21.8-acre Marlton Square project in a partnership with professional football player Keyshawn Johnson.

Last year, the City Council approved the $38 million in subsidies to help pay for development of the new shopping center, 140 detached homes and 180 apartments for senior citizens on the site of the old and deteriorated Santa Barbara Plaza shopping center.

CRA board President Paul Hudson said the project still deserved the city’s support, even in its changed form.

“We’re not going to give them any more money, so they have got to provide another way to finance that,” he said of the cost increase. “So they do more housing on part of the property. It’s still a valuable project to the community.”

However, Glenn Hoiby, an attorney and redevelopment watchdog, said the revised project smacked of insider dealing that would cost taxpayers.

“I am concerned that the city, as short of money as it is, would be willing to put that much taxpayer money into a private commercial development that will compete with other private businesses,” Hoiby said. “And then to allow the developer to negotiate to get the same subsidy for a smaller project -- it just smacks of poor judgment.”

Hahn and Councilman Bernard C. Parks endorsed the revised deal, which also brings in three new developers to build the shopping center, condos and single-family homes.

The agreement allows Hammond to sell his interest in the project once the shopping center is completed, but any profits above 12% from that sale must be shared with the city agency. The city would get 25% of the excess profits.

Joyce Perkins, who heads a Crenshaw-area citizens advisory committee set up by the CRA, said the project would help address blight.

“It will answer the need for senior housing and for entry-level family homeownership, as well as the urgent need for the kind of retail services that have bypassed our community for many, many years,” she told the board.

The project at Crenshaw and Martin Luther King Jr. boulevards has been years in the making, and in danger at times of falling apart. Some residents and business owners complained to the board Thursday that the delays were hurting their community.

Hammond hopes the project will vault him into the ranks of major commercial builders, despite a recent history of tax liens and bounced checks.

CRA administrator Robert Ovrom said Hammond had made good on recent payments after the agency demanded that they be made with cashier’s checks.

Hammond’s wife is a deputy administrator for the CRA, although officials said she had not played a role in decisions regarding her husband’s development.

Redevelopment officials said the revised agreement contained some new protections for the city and its investment, which includes $7 million that the CRA is borrowing from Fannie Mae.

Parcels within the old Santa Barbara Plaza were individually owned, and Hammond’s company has not yet purchased all of them. The $7 million from Fannie Mae will not be disbursed to the firm, Capital Vision Equities, until most of the more than 30 parcels are in escrow, said Jonathan Kevles, another CRA deputy administrator.

Other city funds will not be available until leases are signed for at least half of the space in the shopping center. “It brings a definite level of certainty that there will be a retail center,” Kevles told the board.