A big thank you to Dr. David Gordon for all his years of service on the City Council. Bob Frutos and Sharon Springer have won the top two council seats as a pathetic 17% of registered voters participated in the general election. Their new four year terms begin on May 1st. I am extremely concerned about this city now that Dr. Gordon won’t be on the Council. He was our only real ally against unchecked development and misuse of public funds. What we’ll have now is 5-0 votes on literally everything that comes before the council and no meaningful discussion on the things that matter to residents. In ten years you won’t be able to tell where Glendale ends and Burbank begins. Such a shame, unless… well unless you get involved and make your voices heard. The silver lining to this election is that Burbank Viewpoints is still here and we’re working to get the word out on a number of issues. Stay tuned for more!
During the primary in February, both MyBurbank.com and The City of Burbank Facebook page (run by the Mayor’s family) reported erroneous election results. I’m hoping it was an honest mistake due to some new election laws that went into effect. The City Clerk will continue to receive ballots that were mailed in today and there could still be quite a large number that come in before the official deadline of Friday April 14th at noon. So if tonight’s results are close don’t get too excited (or upset) hold off and wait for the official tally later this week. Good luck to Dr. Gordon, Juan Guillen, Sharon Springer and Bob Frutos tonight. Whoever wins will have plenty of challenges in the months to come.
This endorsement (of sorts) on the Semichorus blog is spot on. I agree with everything said here about Gordon, Guillen and Springer. If you want REAL change in this city, Juan Guillen alongside Dr. Gordon would help keep this town fiscally sane, which in the years to come is going to be our top priority. They will also demand proper parking and neighborhood compatibility of large developments. Here’s a snippet:
[Gordon’s] also a good guy who likes to ask challenging questions and talk and think things out. That makes many people bored or uncomfortable yes, especially in places like mediocrityville Burbank, but who cares. We need more of that here, not less.
While you’re voting for Gordon, go for Guillen as well. They’ll work well together. Gordon’s only problem really is that he’s never had an actual ally up there, just some pretty nasty enemies who are often up to no good. So let’s rid ourselves of as many of them as we can, ok? It’ll make for a better Burbank.
- The way he keeps telling you he cares about Burbank residents but you keep catching him in bed with big developers.
- How he won’t stop texting during Orals.
- That time he insisted they “weren’t necessarily minors” when you called him out for soliciting high school students.
- He’s too broke to pay for your library, firehouse or police force but somehow manages to give his buddies a raise?
- That time he went behind your back and used public money to write a $50,000 check to a political campaign.
- The way he keeps promising he’ll hold the hearing. He’s just waiting for the right time.
- Did he mention his IKEA is the biggest in North America?
- How he was fiscally fit when you met him but now his budget deficit keeps ballooning.
- That time he stood you up when you asked for a report on the new Target Express on Hollywood Way at the next council meeting — and wasn’t even sorry about it.
- The way he swears he’d never keep secrets from you but blocks you from his private “City of Burbank” Facebook page.
- Yes, all the construction he green-lighted has slowed traffic in Burbank to a crawl. But, hey, didn’t he tell you he wanted to take things slow?
If you believe what Sharon Springer tells you, she is an environmentalist — a promoter of bike paths, recycling and community gardens. But her City Council campaign in being funded by a pro-development political group that’s been at the center of efforts to roll back regulations on big polluters for the last decade.
Strange bedfellows indeed.
According to public records, BizFed, a self-described “pro-business” PAC, which helped defeat a ballot measure aimed at curbing development in Los Angeles last month — and whose efforts to block clean air and water protections have been widely-criticized by environmental groups — gave Sharon Springer’s campaign the maximum donation allowed by law on March 15th.
Ms. Springer, a member of the Sustainable Burbank Commission, claimed in a recent interview that “improving our air quality, managing scarce water, using energy responsibly, enhancing public and diverse transportation options and moving forward on our zero waste goal” are among her central concerns.
Judging from its efforts to block clean air and water protections, BizFed does not share those concerns.
According to the LA Times, environmentalists “expressed outrage” over the group’s successful campaign to keep the Southern California Air Quality Management Board from tightening restrictions on trucks and other “mobile polluters” in February of this year. The PAC lobbied to make compliance by polluters voluntary instead of mandatory.
Environmentalists told the Times, the rollback on proposed anti-pollution laws would “hurt millions of people, including many suffering from asthma, lung, and heart disease and other pollution-related illnesses.”
The PAC also lobbied the LA County Board of Supervisors to reject the “Clean Water, Clean Beaches” parcel tax measure in 2013. “This is a big victory for the business community,” its website declares.
The wave of proposals for mega-development — not just in Burbank but around Southern California –have increasingly put environmentalists and developers (and their supporters in city government) at odds.
For example, according to a report by the LA Times, which was released just last week, city officials throughout Southern California have “flouted” warnings from health experts and allowed “a surge in home building near traffic pollution with little regard to the health implications for future residents.
According to the Times, “for more than a decade, California air quality officials have warned against building homes within 500 feet of freeways. And with good reason: People there suffer higher rates of asthma, heart attacks, strokes, lung cancer and pre-term births. Recent research has added more health risks to the list, including childhood obesity, autism and dementia.”
And yet, in Los Angeles alone, the Times found that “thousands” of projects within the pollution zone have been green-lighted recently, The newspaper based its analysis on census data, building permits and other government records.
In Burbank, all of the mega-developments awaiting approval, and many projects like the Talaria, which have already earned the City Council’s approval, are within the “pollution zone.”
Springer, whose campaign has spent lavishly on multiple campaign mailers, has yet to address or disavow the donation from Biz Fed, despite the obvious inconsistencies between the positions she’s taken to win the support of voters and this organization’s aggressive efforts to uproot environmental regulation and forward a pro-development agenda.
In the primary race, Ms. Springer was quick to criticize two of her Council race opponents for receiving an unsolicited campaign donation from a local developer, calling it hypocritical. In that case both candidates refused to accept the monies, citing a potential conflict of interest — and issued public statements explaining their positions. As of this writing, Ms. Springer has not issued a similar statement to the public.
The American shopping mall may be dead — or at the very least on life support — but a handful of real estate investment companies aren’t ready to sing a requiem just yet. Instead, they’re bucking the trend — snatching up shopping malls around the country at bargain basement prices and trying to turn them around.
Dallas, TX-based Cypress Equities — which bought a majority stake in Burbank Town Center from the mall’s current owner, Irvine-based Crown Realty and Development, for a reported $250 million last April — is one such company.
Cypress CEO’s Chris Maguire explained his strategy of buying failing shopping malls around the country for dimes-on-the-dollar to Bloomberg News: “They need capital, but there’s cash flowing, so you just sit and wait.”
The purchase of the Town Center mall wasn’t Cypress’s first foray into the Burbank area. The company bought Glendale’s Marketplace in 2013 and, in 2016, it added Pasadena’s Paseo to its roster. It’s been on a cross-country buying spree since 2014, when their private equity arm — Cypress Acquisition Partners Retail Fund — held a private equity offering.
Investors were invited to buy shares in the fund in return for a stake in Cypress’s future profits. The offering was a success. CAPRF collected $400 million from backers described in the fund’s SEC filings as “a diverse group of investors including public and corporate pensions; sovereign wealth funds; endowments; foundations; family offices; and fund of funds investors.”
One hundred sixty million dollars of the investor money — 40 percent — was specifically earmarked for shopping mall acquisitions. Cypress Equities currently owns 28 retail centers in 14 states.
What does Cypress’s ownership of the mall mean for Burbank?
In the short term, if you believe the company’s press, it means “a thriving, sustainable community in the heart of Burbank.” Not to mention a much, much fancier mall.
At the moment, Cypress Equities Real Estate Management (the retail management and property development wing of Cypress Equities, which was formerly known as Arrow Retail), is waiting for Burbank’s Planning Department to okay plans for a $55-million dollar facelift aimed at transforming the mall from a drab retail mausoleum to an airy, light-filled indoor/outdoor restaurant, shopping and family entertainment space.
The company is also partnering with Crown to re-purpose the abandoned IKEA space and the property around it into a mega-complex of apartments, condos, stores, offices, a hotel, a farmers market space and even a skating rink (maybe).
According to “I Heart Burbank,” the PR website for the project, plans include:
Extensive remodeling and renovation of the mall and “opening” of the Magnolia Street entrance
765 apartments on the former IKEA site
70 condo units where the Corner Bakery is now
An open-air pedestrian plaza
An additional 259 rental units at the current Office Depot site.
A hotel and additional retail spaces
These last two, it notes, are “subject to future market conditions.”
On the City of Burbank Planning Board’s website, plans submitted by the owners give us a few more details.
The 259 unit apartment building on the Office Depot site will be seven stories high.
A 15 story building will house house 70 condo units where Corner Bakery sits now.
That 7-story mixed use building will also include 37,420 sq. ft. of retail/restaurant space and the old IKEA parking lot will make way for a pedestrian walk that will connect the two sides of the street.
From the architectural drawings it appears as if that 7-story, 200 room hotel with 10,000 sq. ft. of restaurant space will sit where the Chevy’s and Barnes and Noble are now.
The developers are asking for permission to “make Improvements” to N. San Fernando Boulevard (which presumably means closing it to traffic for the pedestrian mall)
The project’s construction has been designed to take place in a series of “phases,” with the Office Depot site “maintain(ing) its current retail use for some time to come” because it has a long-term lease on the site.
Like the other developments pending in Burbank, even if this one is approved by the Planning Department, the Burbank City Council would still need to give it the green light.
And after that?
There’s no reason to believe the mall’s out-of-state owners are in Burbank for the long haul. If history — not to mention their own business model — is any judge, Cypress will stick around just long enough for market forces to make the mall and the adjacent mega-development attractive to suitors. Then they’ll sell it off to the highest bidder for a sizable profit and get out.
Clues can be found by examining their 2014 private equity offering. Commercial Real Estate Direct noted, “(Cypress Equities is) expected to complete its acquisition phase in about three years and hold its assets until about four years afterwards.”
Presumably, then, if all goes according to plan, Cypress will complete the Burbank Town Center project (or whichever elements of it still make financial sense by the time it’s approved) and then they’ll dump it. It’s what they did with The Streets of Woodfield, the mall they bought in suburban Chicago.
In 2012, using a $100 million dollar loan, Cypress paid $118 million for The Streets of Woodfield, in Schaumburg, Illinois. The mall is one of the biggest retail centers in Chicago’s Northwest suburbs. Cypress made a few minor improvements to the mall (the property had been completely renovated a decade earlier), repainting the parking garage and asking the city of Schaumburg for permission to add some additional signage. And then, in 2015, they sold it to New York-based Blackstone Group.
The flip netted Cypress more than $60 million, a 53 percent profit in return for its investment three years earlier. Not too shabby.
In the case of Burbank, provided the commercial real estate market remains strong, there’s no reason to believe the scenario would be any different. Cypress would take its profits and get out — which wouldn’t necessarily be bad for Burbank. Putting the multi-use development component aside for a moment, many residents would look at the mall renovation as a win for our city.
But as we examine this project in its entirety, and other development projects currently in the pipeline — but especially those ambitious enough to promise a complete re-invention of our downtown — we must do so while keeping in mind what might happen in a worst-case scenario.
Many experts warn that Los Angeles real estate, both residential and commercial, is experiencing another bubble. If investing in our downtown starts to become a losing proposition, can we count on an investment company, beholden to Wall Street, to take the project to completion, even if that means throwing good money after bad?
Who knows? And, frankly, Burbank might be willing to take such a risk. But we shouldn’t do so blindly. Thoughtful development means looking at all the options and weighing the good and the bad before making decisions that will change our city for a long time to come.
Back in late February Leadership Burbank posted their candidates forum on YouTube. I am still catching up with many of the more current campaign videos and articles. I thought I’d share Dr. Gordon’s intro here for people who are taking a look at the candidates. Juan Guillen follows Gordon. I’m a strong supporter of both candidates.
Thanks to a 30-year-old California law which imposes a so-called “developer’s tax” on new construction in the state — money that’s earmarked to pay for school construction and facility upgrades and maintenance — Burbank’s schools will reap additional funds from the city’s development boom. But will it be enough to offset the impact of all those new students that will result from the new development?
An April 2016 analysis prepared for the school district suggests maybe not.
“The School Fee Justification Study,” prepared for the district by the consulting firm Koppel & Gruber Public Finance, examined what impact an increase in new residential housing might have on the city’s schools, which serve more than 15,000 students in grades K-12. It determined that each additional square foot of construction would cost Burbank schools $4.10. However, developers of residential housing in Burbank will only have to pay $3.48 per square foot — the maximum set by the state.
As a result, Burbank schools could be left with a shortfall of $.62 for each square foot of new residential construction. And the district could be left high and dry when it comes to commercial development too, according to the study.
State law caps the tax on new commercial construction at $.56 per square foot. With the exception of hotels, the bulk of the commercial construction projects proposed for Burbank also fell short of covering projected costs, sometimes by more than 150 percent, according to the school fee study, which set the impact construction of a standard commercial office space at $2.07 per square foot, a large high-rise commercial office space at $1.97 a square foot, and shopping center at $.85 a square foot.
The school district says it plans to use the money it collects on new development to cover roughly $124 million in facilities costs over the next decade, including an almost $40 million-dollar renovation project which would “include modernization of existing classrooms and the replacement of portable classrooms with permanent classrooms,” the report said.
A rudimentary review of five projects currently in development in Burbank — Burbank Town Center/I Heart Burbank, Premiere on First, 115 N. Screenland, First Street Village, and The Avion (airport adjacent property) — indicates that the discrepancy between how much tax the schools can force developers to pay and how much the district says it needs to blunt the impact of new construction could rob Burbank of almost $2.3 million dollars.
How we got the numbers:
We obtained estimates of the potential square footage and use of each project from City of Burbank Planning Board’s website. For residential units, unless a more accurate figure was provided in the developer’s plan, we used 1,173 square feet as the weighted average square footage of the proposed units (an estimate based on information obtained from LA County, according to the district study). We determined the cost impact of each project on school facilities using the BUSD report’s numbers ($4.10), and then compared this to the total revenues the school fees would generate as a result of the developers tax at a rate of $3.48 per square foot.
Because the impact on schools by commercial development varied according to the type of development (shopping centers compared to banks compared to commercial offices, etc.) we relied on the BUSD’s numbers to determine an average commercial cost impact ($1.40 per square foot) and compared it to the maximum school fee assessed on commercial properties ($.56).
Since the BUSD report determined the impact from hotels would be $.49 (below the minimum), and the district can not assess more fees than the cost of impact — we determined each square foot of hotel space should be taxed at a rate of $.49 per square foot. We used 300 square feet (slightly less than the average US hotel room size according to USA Today) to determine the overall square footage of hotel projects proposed.
Burbank Town Center/I Heart Burbank
70,000 square feet of new commercial square footage, approximately 200 hotel rooms and approximately 1,100 housing units
Total square footage: 1,290,300
BUSD impact ($4.10): $5,290,230
School Fee ($3.48): $4,490,244
Total square footage 70,000
BUSD impact ($1.40) $98,000
School Fee ($.56) $39,200
Total square footage 60,000
School Fee ($.49) $29,400
TOTAL SHORTFALL – $888,186
Premiere on First
Two options have been proposed. Both would include 154 residential units. One would include 181,517 square feet of commercial space; the other proposes 126,000 square feet in hotel space and 15,589 square feet of commercial space.
Total square footage: 180,642
BUSD impact ($4.10) $740,632
School fee ($3.48) $628,634
Option One – Commercial/No Hotel
Total square footage 181,517
BUSD impact ($1.40) $254,124
School Fee ($.56) $101,646
Option Two – Commercial & 230 room hotel
Commercial sq. footage 15,589
BUSD impact ($1.40) $21,825
School Fee ($.56) $8,730
Hotel square footage 126,000
School Fee/impact ($.49) $61,740
TOTAL SHORTFALL $165,573
115 N. Screenland
40 residential units with an average size of 1,284. 3000 square feet of commercial use.
Total square footage 51,360
BUSD impact ($4.10) $210,576
School Fee ($3.48) $178,732
Total square footage 3,000
BUSD impact ($1.40) $4,200
School Fee ($.56) $1,680
TOTAL SHORTFALL: $34,364
First Street Village
261 residential units and 21,265 square feet of commercial space
Total square footage 306,153
BUSD impact ($4.10) $1,255,227
School Fee ($3.48) $1,065,412
Total square footage 21,265
BUSD impact ($1.40) $29,771
School Fee ($.56) $11,908
TOTAL SHORTFALL: $207,678
1,177,489 in commercial construction. 150 room hotel.
Total square footage 1,177,489
BUSD impact ($1.40) $1,648,485
School Fee ($.56) $659,394
Hotel sq. footage 45,000
School Fee/impact ($.49) $22,050
TOTAL SHORTFALL: $989,091
COMBINED SHORTFALL FOR ALL PROJECTS CONSIDERED: $2,284,892
It’s important to note that the analysis prepared for the district was a cost projection — the actual cost impact on schools could, in fact, turn out to be much less (or much more).
Also, the school district must meet certain legal requirements before imposing the fee on new construction in the first place. They must:
1. Determine the purpose of the fee;
2. Identify the use to which the fee is to be put;
3. Determine how there is a reasonable relationship between the fee’s use and the type of development project on which the fee is imposed;
4. Determine that there is a reasonable relationship between the need for the public facilities and the type of development project on which the fee is imposed;
5. Determine that there is a reasonable relationship between the amount of the fee and the cost, or portion of the cost of the public facility attributable to the development on which the fee is imposed; and
6. Provide an annual accounting of any portion of the fee remaining unspent or held for projects for more than five (5) years after collection.
So, in fairness, the report prepared for the district should be read in light of the fact that the school district has an impetus to, perhaps, provide the “worst case scenario” in calculating, the potential impact of the new development on schools. After all, it may only assess the developer’s fee if it can show that its needs are equal to or greater than the amount of revenue it would collect from the tax.
But the potential impact of building residences for thousands more families whose children may use the district’s 19 schools should not be discounted either. It is one other important factor residents need to examine as we head to the polls next month. We need a city council that thinks before acting and considers all the ramifications of its decisions. We need a council that puts Burbank families first and won’t greenlight projects that allow outside developers to turn a quick profit and stick Burbank schools with the bill.
The general election is on April 11th. Take a look at these interviews and share with your friends and family who may not have voted in the primary. We need more people to vote or nothing is going to change in this town.