Up Against the Mall
A mall brawl of epic proportions is nearing a climax in Glendale.
Voters in Los Angeles County’s third-most-populous city will decide next month whether developer Rick Caruso can build one of his open-air shopping centers smack-dab next to the enclosed Glendale Galleria, whose owners are leading the opposition.
The battle between Caruso and the Galleria has all the features of a heated political campaign, including a flood of dueling newspaper ads, direct-mail appeals, cable television commercials and signs on lawns and in storefront windows. The police chief weighed in and unleashed a mini-squall of outrage for publicly supporting Caruso’s shopping center concept.
The clash between old and new retail in Glendale carries national implications as so-called lifestyle centers, the development style favored by Caruso, appear poised to eclipse their covered counterparts.
Only two of the three large shopping centers scheduled to open this year around the country are enclosed, according to the International Council of Shopping Centers. But plans are underway for about two dozen lifestyle centers, which typically combine dining, entertainment, specialty stores -- and sometimes housing -- in relatively small, outdoor settings.
Events unfolding in Glendale could help dictate whether open-air is the future of retail development.
“It’s one of the key battles in determining how U.S. shopping centers” evolve, said Burt P. Flickinger III, who runs Strategic Resource Group, a New York retail consulting firm.
Glendale voters will consider Caruso’s proposed $264-million retail and residential development in a special election Sept. 14. They will cast ballots on three ordinances -- known as A-B-C -- that concern the project’s planning and zoning and the development agreement between Caruso and the city. Both sides say they expect the vote to be close.
The project bears the name Americana at Brand but is more casually referred to by friends and foes as the Town Center.
The Town Center plan was approved by City Hall; the referendum was forced by opponents led by the Galleria’s owners, General Growth Properties Inc., the second-largest U.S. shopping mall proprietor.
General Growth, a publicly traded company based in Chicago, has spent more than $1 million trying to block the Town Center, portraying it as a multimillion-dollar public giveaway and conjuring images of traffic nightmares.
For his part, Caruso, president of privately held Caruso Affiliated of Los Angeles, has written checks for more than $940,000 to defend his proposal as an opportunity to create nearly 4,300 permanent and temporary jobs and transform a blighted section of downtown Glendale into a community gathering spot.
To promote his message, Caruso tapped Don Sipple, a political advisor to Gov. Arnold Schwarzenegger, and Joe Zago, who managed the successful 2000 campaign of Assemblyman Dario Frommer, a Los Angeles Democrat whose district includes Glendale.
General Growth signed up Paul Arney, who this year resigned as a field representative from Frommer’s office, and longtime Los Angeles political strategist Harvey Englander.
“This is not about competition, it’s about compatibility,” Englander said during an interview at his office in the downtown financial district of Los Angeles. General Growth’s concerns about the Town Center, he said, include parking for special events, the complex’s layout and the closure of portions of two nearby streets.
Caruso brushed aside Englander’s contentions, suggesting that what General Growth executives really feared was that Galleria rents may drop if tenants have a competing landlord with whom to negotiate. He insisted that adequate parking existed in nearby lots to handle special events at the Town Center and that the street closures were necessary to avoid a catastrophe similar to the fatal July 2003 crash at the Santa Monica Farmers’ Market.
“You don’t go to the great piazzas of the world and fight traffic,” Caruso said in an interview at his offices at the Grove, the outdoor shopping center he developed in Los Angeles’ Fairfax District. “They’re all about pedestrians.”
For General Growth, the prospect of a new shopping center rising next door is all about business, said Aubie Goldenberg, a retail analyst at Ernst & Young in Los Angeles.
“They have very little to gain by having a new development that’s going to take traffic out of their mall and place it elsewhere,” he said.
The 1.5-million-square-foot Galleria, according to its representatives, is one of the top five malls in Southern California, based on gross sales of more than $500 million annually, and generates about $6.3 million a year in sales and property tax revenue for Glendale.
As envisioned by Caruso, the 15.5-acre Town Center would consist of 100 condominiums, 238 rental units, a 16-screen movie theater and 407,000 square feet of retail and restaurant space surrounding a 2-acre park flanked by water fountains.
Negotiations are underway, Caruso said, with P.F. Chang’s China Bistro, Pottery Barn, Williams-Sonoma and Wood Ranch BBQ & Grill. He said deals had been inked with Anthropologie, Cheesecake Factory, Chico’s, Fox Sports Grill, Pacific Theatres and Urban Outfitters.
Caruso sued General Growth this year, alleging that the company threatened the Cheesecake Factory with exclusion from other malls managed by General Growth if the restaurant chain leased space in the Town Center -- a charge Englander denied. A Cheesecake Factory spokesman did not return phone calls.
General Growth in turn challenged the Town Center’s environmental review in a lawsuit against the city, taking issue with the document’s assumptions about traffic and parking in addition to its treatment of an existing fire station on the proposed site.
The public remains divided over the project.
In a letter to residents, Police Chief Randy Adams said it was his personal opinion that the project would not cause traffic or parking problems, was well designed from a public safety perspective and could help lower crime by creating jobs. Adams immediately came under fire for taking sides and penning his endorsement on stationery designed to look like his official letterhead.
Some people in Glendale believe that the Town Center would revitalize the city by attracting new visitors and keeping local dollars from being spent in Pasadena, Burbank and other neighboring communities. Others contend that the project would merely squeeze existing shops, particularly those that line the downtown Brand Boulevard business district.
“I think the Town Center is the best thing to invigorate our city in forever,” said Gerri Cragnotti, a 33-year resident of Glendale who has been active in a campaign to get the Town Center built. “The people will spill out onto Brand Boulevard. This is a regional attraction.”
Said Douglas Johnson, a two-year resident of Glendale who has been working with a competing group to oppose the Town Center: “We want something that will add to the city and enrich the city, not that takes our money for one guy’s benefit.”
A key issue for critics of the Town Center is the $77.1 million in public money earmarked to acquire the land and pay for sidewalks, traffic lights, a portion of the park and other improvements.
An analysis of the project by Keyser Marston Associates, a real estate advisory firm, and the Glendale Redevelopment Agency said the city would be $6.7 million ahead on its investment after 30 years, based in part on anticipated sales and property tax revenue and the value of the city’s share of the land and improvements.
Not surprisingly, Caruso and General Growth have offered widely divergent calculations. Caruso says the project would generate $109 million in gross tax revenue for the city over 30 years, not adjusting for inflation. General Growth says the city will end up at least $30 million in the hole, adjusting for inflation and not counting the improvements or the value of the city-retained land, which it says is exaggerated.
City officials estimate that when the Galleria was developed it received more than $22 million in public money, or $63 million in today’s dollars.
Both sides have conducted opinion polls leading up to next month’s election, though neither will disclose the results.
“We’re in a very strong position,” Caruso said. “With that said, we face a formidable opponent.”
Englander says the more the public learns about the Town Center’s environmental review and Caruso’s financial arrangement with the city, the more concerns it has.
“The more we’re able to point out the record, the more chances are people are going to vote no,” Englander said.
At a recent debate between Caruso and Arthur Sohikian, a colleague of Englander’s, it was Caruso -- aided by a video that touched on Glendale’s history and the Town Center’s role in its future -- who wound up swaying a previously undecided Clara Tronowsky, a resident of Glendale for 83 of her 85 years.
Glendale residents, she said, “need some place besides Pasadena, Burbank and the Grove to go to.”