LA WATCHDOG-Did you expect our City Council to act in our best interests earlier this week when it approved a 25 year, $48 million giveaway to the developer of The Village at Westfield Topanga, the $70 billion Westfield Group that is controlled by Frank Lowy, (see photo above) an 83 year old Australian entrepreneur who is one of the richest men in the world?
Dream on!
The Village at Westfield Topanga is a $336 million, 549,394 square foot retail development on a 31 acre site. It will be anchored by a relocated 165,759 square foot Costco, a very successful public company with over $100 billion in annual revenues. This project on Topanga Boulevard is synergistically located between two other Westfield developments, Westfield Topanga (1,637,088 square feet) to the north and Westfield Promenade (614,396 square feet) to the south.
The net result will be a one mile shopping corridor consisting of 2.8 million square feet of retail establishments which are expected to generate a very healthy $1.2 billion in sales a year.
According to Bob Blumenfield and Mitch Englander, the two Councilmen from The Valley, this “first class, mixed used development” will be a shopping destination and a “transformative” economic engine for the West Valley, creating thousands of construction and full time jobs.
But if this development is such a homerun for Westfield and the Valley, why does it need a $48 million subsidy from our cash strapped City?
According to Santa Ana based Rosenow Spevacek Group (“RSG”), an “independent” financial consultant hired by the City and paid for by Westfield, there is a $36 million “feasibility gap” that needs to be overcome to make this a worthwhile investment for the $70 billion Westfield Group. So over the past year, the City negotiated a “Subvention Agreement” with Westfield where City Hall would kick back 50% of the direct economic benefit of this transformative development to the City. This “rebate” (or to project a positive spin, “revenue sharing”) is expected to be $48 million over the next 25 years. This has a “net present value” of $21 million, representing 58% of the economic short shortfall of $36 million.
But hard working Angelenos are once again being taken to the cleaners by the City Council.
When this project was first conceived, we were told that it would be a first class, mixed use project. But with the elimination of 285,000 square feet of office space and the 275 room hotel that would have produced up to $2 million a year in hotel occupancy taxes for the City, we now have a first class retail juggernaut that will dominate the Valley.
We also have not had time to review and analyze the RSG study that was posted on Friday. However, it appears that RSG may have relied on low ball sales and rental projections and a flawed valuation methodology and failed to consider the very valuable synergistic benefits that will accrue to Westfield.
This once again lends credence to the time proven adage: “Figures never lie, but liars figure.”
Nor does RSG analyze the negative impact on retailers and other businesses within 5 to 10 miles of The Village at Westfield Topanga and how the great sucking sound of this massive shopping complex will severely damage these establishments, their neighborhoods, and employees.
Nor has there been an adequate analysis of this newly proposed deal and its development cost which is approximately the same as the transaction that the City Council approved last June despite the elimination of the proposed 113,000 square foot hotel.
Nor did the City provide any information about campaign contributions by Westfield and its affiliates, its relationships with the City, including its lucrative management agreements at LAX, or its investment in the highly profitable Century City Mall.
In a highly orchestrated farce, City Hall railroaded this deal through the Herb Wesson City Council, posting the RSG report on Friday and approving the giveaway on Tuesday morning after a hearing at Paul Krekorian’s Budget and Finance Committee on Monday afternoon.
While The Village at Westfield Topanga is a first class retail development that will benefit Woodland Hills and the surrounding area, although not to the extent advertised, Westfield does not need the City’s financial support. On the other hand, the world’s largest operator of shopping centers realizes that City Hall is an easy mark as witnessed by giveaways to AEG, the Wilshire Grand, and the Olympic North Hotels.
Once again, the fiscally irresponsible City Council is giving away the store for its own political gain. Yet our streets are the worst in the nation, our sidewalks are a mess, and the City is projecting a cumulative budget deficit of over $700 million over the next four years.
As the City is preparing to hit us up for a $7 billion tax increase on our homes and businesses to finance the repair of our streets and sidewalks, ask yourself, “Do you trust City Hall?”
(Jack Humphreville writes LA Watchdog for CityWatch. He is the President of the DWP Advocacy Committee, The Ratepayer Advocate for the Greater Wilshire Neighborhood Council, and a Neighborhood Council Budget Advocate. Humphreville is the publisher of the Recycler Classifieds -- www.recycler.com. He can be reached at: [email protected]. Hear Jack every Tuesday morning at 6:20 on McIntyre in the Morning, KABC Radio 790.)
-cw
CityWatch
Vol 12 Issue 20
Pub: Mar 7, 2014
