UPDATE: The Mayor just announced he has stage 4 liver cancer but curiously, will not step down as a member of the council. This news was leaked already and it’s been a poorly kept secret around town for months. None of us really knew for sure though. I’m sure the Mayor feels a bit better now that he’s revealed his illness. I sincerely wish him and his family the best but that will not change anything I have to post here on the blog regarding the 50k.
If you’ve been following this story you know I’ve always contended that the architects of this illegal donation were the “buddies” of the City Council. Burbank luminaries, mostly from the Chamber of Commerce. But I was wrong about who the City Council have been protecting this whole time. Public records I received last April suggest that City Manager Ron Davis,Community Development Director Patrick Prescott and Vice-Mayor (at the time) Will Rogers all knew about and discussed this illegal activity BEFORE the November Election.On December 6th when i brought our team’s research to the Council, Will Rogers was insulting and dismissive about the whole affair and confirmed he had known about this and was “disappointed” in the donation. He wasn’t sorry in the slightest. The following week he apologized for “missing” the violation of the Brown Act when reviewing the BHA’s minutes. You have to assume someone (the City Attorney?) told him to change his tone and he certainly did.
Why didn’t the Mayor call out this illegal activity ahead of the election? He clearly knew a violation of the Brown Act had occurred from the very beginning. (see #1 below)
The Semichorus blog broke part of the story back in June but I’ve been patiently waiting for the Fair Political Practices Commission and the Los Angeles District Attorney to rule on the case. At this point, I’m deeply concerned the Los Angeles District Attorney will not take legal action against a sitting city government, even though they did find the BHA had violated the Brown Act. (See #5 below) The FPPC investigation is still ongoing but I have no idea when a ruling will be made.
I wonder what Patrick told Will in order to calm him down? (see #5 below) For now, I want the public to know what’s going on in City Hall. That’s my motivation. There’s much more to the story and I hope to do a complete video that explains where we are and how we got here. People need to know this stuff or it will just continue. If you or I broke the law we’d have to pay for our actions. You can use the contact page and I’d be happy to answer any questions you may have in the meantime. Or just post a comment below.
You can read more about this illegal use of public funds here and here. Here are additional videos:
Date: 08/30/2017 6:00 PM – 8:00 PM
Location: Community Services Building
150 N Third St, Community Room #104
Burbank, California 91502
On Wednesday, August 30, 2017, the City will be holding a community meeting to discuss proposed amendment to Title VII of the Burbank Municipal Code regarding the regulation of wireless telecommunications facilities proposed in the public right-of-way. The meeting will held at the Community Services Building located at 150 N. Third Street in Burbank in room 104 from 6:00 PM to 8:00 PM.
I wish I could have made this event at the old Ikea. I didn’t get home from work until 7:15 that evening. So hopeful they will do something similar again. But here’s an interesting viewpoint from Burbankmom.com. This is the blog that always seems to be in lockstep with the development class in our city. This time she’s a bit “sad.” Which is telling. I’m neutral on this project but very concerned for the congestion it WILL bring. I already avoid the Empire Center and downtown is already pretty bad. You can justify this massive development any way you want but the fact remains: I HEART BURBANK will further transform the downtown area into the congested, zoo-like atmosphere of the Santa Monica 3rd Street promenade when it’s completed. No one can argue against that. But of course Burbank Mom makes it sound like any dissent would be akin to “panic”. Do we want all this for a measly one-time 2.5 million increase to the city’s coffers? Remember the sales taxes go to the region not directly to our city. And the idea that Macy’s “owns” San Fernando Blvd. That one sounds pretty fishy to me. Will have to check that out and report back. The best course is to pay attention to the project and keep getting the word out so the people who live in the area can weigh in.
If you live, work or do business downtown OR if your kids go to Burbank High you need to attend this open house for the new I Heart Burbank development at the Old Ikea site on San Fernando. It’s this Thursday from 6pm-8pm. More info here. Be advised they are asking to email or text you news etc. Not singling out these I Heart Burbank people specifically, but you should always be cautious online.
I’m posting this Jack Sprat video because the election is over. Now that we have more information about what really occurred and who knew about it ahead of time, I’ll be stoking the fires again and demanding the City Council call for a disestablishment hearing for the BHA. You can read more about this illegal use of public funds here and here. I fully intend on briefing the public and the newest member of the City Council, Ms. Sharon Springer on our latest discoveries soon. I’d like to hear how she responds to our findings and if “trust” between “our city government and our community” is really something she values as she stated on her campaign website. Here are additional videos that explain this criminal activity in a bit more detail.
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.
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.
“This purchase is a gateway to entering the multimedia and entertainment industry,”
That’s what Lucy Lu, the chief executive of the Chinese investment group Creative International Investments, said in a press release back in 2014, when her company paid the Cusumanos $22 million for Burbank Civic Plaza — a four-story building for which the Burbank developer had paid the city a mere one hundred dollars 11 years earlier.
She was referring to the Chinese company’s plan to use the building as an incubator space for Chinese media companies as that country seeks to raise its entertainment industry profile. But, looking now at the slate of mega-developments jockeying for a green light from the Burbank City Council, perhaps residents should ask if the Cusumano sale was actually the gateway for something else — namely a wholesale campaign by Burbank developers to cash in on a Chinese real estate buying spree.
Experts say that Chinese investment in US real estate — and in Southern California in particular — has gone from a mere trickle to a flood, and indeed, from 2009 to 2014, Chinese investment in Los Angeles County doubled, according to the Los Angeles County Economic Development Corporation. Last year, the country’s investment in foreign commercial and residential property broke new records, with an increase of almost 53% over 2015, according to JLL Global Capital, a leading real estate investment bank.
While the Chinese spent their yuan all around the world, the United States was the most popular destination for their cash, drawing in $14.3 billion. West Coast cities — particularly San Francisco and Los Angeles — collected the bulk of those Chinese dollars, continuing a multi-year trend that has transformed the Southern California real estate market, and which experts say will continue, despite recent efforts by the Chinese government to stem the flow of money out of China.
Developers in Southern California have not been shy about tapping the Chinese investor market. The website for downtown LA’s megalith “The Metropolis, the biggest multi-use development on the West Coast, for example, is in both English and Mandarin.
So, what does all this mean for Burbank? Is there reason to think our local development boom is linked to this larger trend?
Well, we can’t ignore the fact that many of Burbank’s more savvy real estate brokers are already tapping potential buyers in China for their commercial, multifamily and single-family listings. China’s popular online real estate site Juwai.com is currently advertising more than a dozen Burbank properties, including:
By examining certain trends we see in previous efforts to attract Chinese investment, and noting similarities between those projects and what’s being proposed in Burbank, we might be able to better evaluate the developers’ intentions.
Too Many Apartments (And Too Few Parking Spaces)
The projects which will go before the Burbank City Council are for mixed-use developments, which combine housing with retail and commercial use. It is a relatively new land use for Burbank (the Talaria being a notable exception), although it is becoming more and more visible in DTLA, where shiny new super-towers dot the Los Angeles skyline with increasing frequency. It is worth noting that this kind of development — high-density, multi-use buildings located in urban centers — is the norm in China.
“Compared to the United States or other developed countries, mixed-use development is already common in China, where many neighborhoods feature all the services most people need within walking distance,” reports the China Business Review, a publication of the US-China Business Council.
The ability to house a lot of people who will presumably walk to the grocery store, ride their bikes and take public transportation to work, and rarely if ever get in their cars, is the major selling point for this type of development — and indeed, local boosters say it will obviate a need for additional parking and minimize the dwelling’s impact on local traffic patterns.
However, a significant difference between the Burbank projects and the Chinese variety is how the heavy hand of the Chinese government influences their city planning process. As Jennivine Kwan, vice-president of international operations at the US Green Building Council told the China Business Review that the Chinese government’s role in urban planning makes it easier to create sustainable communities. “China is one of the few places in the world that actually decides where a city is going to happen. They actually build the city,” Kwan said.
This difference is significant, and something Burbank residents might consider as they evaluate promises from our local developers to build green, self-contained communities. While all of these promises of sustainability are of course appealing on their face, the reality is that Burbank lacks the transportation infrastructure necessary to make a car-free lifestyle feasible. Post-war city planners went in a completely different direction with our town. For better or for worse, Burbank was built for car culture and to fulfill a postwar vision of a suburban utopia. Burbank residents would do well to consider that those decisions can’t be undone by simply building a handful of high-rises with low-flush toilets.
Don’t we have enough hotels in Burbank?
There may be a reason all these development projects include plans for new hotels. Consider this, from The Washington Post:
“Hotels, which often come with prime real estate, big-name brands and a promise of stable returns, have become an especially popular parking space for China’s billions.”
The interest by Chinese investors in the hotel market — and especially in multi-use projects that include hotel and office space — stems from a desire to capitalize on the relative stability of that sector, as well as in increase in Chinese tourism, especially by middle class Chinese, according to research analysts at HVS financial services. They report that according to the National Travel and Tourism Office, 2.19 million Chinese visitors traveled to the U.S. in 2014, a 21% increase over the prior year. These visitors contributed over $2.3 billion in travel spending. Moreover, the analysts continued, U.S. inbound travel from China is expected to continue to grow, and Chinese investors have been focusing on acquiring mid-scale hotels to capture the demand from the country’s middle-class.
That the projects awaiting approval in Burbank comply exactly with the needs of this particular investor group may not be a mere coincidence.
Who Can Afford to Live in These Apartments?
A major concern for cities that have seen a spike in Chinese investment – from Silicon Valley to Arcadia to downtown Los Angeles — is that the influx of foreign funds resets rents to a level that puts apartments out of reach for local residents. Yes, Burbank’s proposed projects would add thousands of rental units to our city’s housing supply, but with rents set at about the Los Angeles average (about $2,000 for a one-bedroom), the projects would do little to address the city’s shortage of affordable housing (the median household income in Burbank is about $66,000 a year).
So, why would developers build apartments most people in Burbank can’t afford?
While it’s true that for middle class and wealthy Chinese families, buying — not renting — is generally a more attractive option, the reluctance to rent might be overcome by one of our city’s noted strengths: the reputation of our local schools. A review of Burbank single-family home listings on Juwai.com indicates that sellers recognize the value in promoting their proximity to Burbank’s well-regarded schools. “Walk to award-winning Bret Harte Elementary,” says one listing. “Close to John Burroughs High School,” another notes. “Award-winning schools are within walking distance of the front porch,” yet another listing brags.
According to The New York Times, “education plays an outsized role” in the real estate decisions of Chinese families, and those middle class families who can’t afford to buy a home in a top school district like Palo Alto, for example (where prices have skyrocketed in recent years) will often rent an apartment to allow their children to attend American high schools and state universities. Some 23,500 Chinese students were enrolled in American high schools in 2013, the last year for which such numbers are available (the number is probably higher now), and according to the Institute on International Education, almost a third of international students at American Universities are Chinese.
If, in fact, the ultimate goal of our local developers is to sell these developments to Chinese investors, marketing these apartments to Chinese families makes perfect sense. The planned 12-story apartment building across the street from Burbank High School, for example, seems particularly well-located for families hoping to take advantage of educational opportunities in Burbank. And while Burbank would certainly be enriched by this addition to our culturally diverse community, it’s fair for us to consider the potential impact of a large influx of short-time residents who have an agenda other than making our city their home, and no stake in its future.
Why It Matters
As our city considers whether to give the go-ahead to a series of major development projects that will inarguably change the landscape of this city forever — whether one believes that change will be for better or for worse — it’s necessary to consider as many potential outcomes as possible.
An argument can be made, of course, that in a profit-driven global economy it’s completely unreasonable to expect a developer to consider a community’s wish that ownership of its prime real estate remain in the hands of those with a personal stake in its city. Capitalism dictates that decisions be based on profit margins alone.
And, of course, there is the gaping hole in Burbank’s budget that must be addressed. It might be true that development — even development intended to maximize profits at the expense of local ownership — is the price we must pay if we want to fund Burbank’s beautiful parks, libraries, and schools. Maybe the cost of living in beautiful downtown Burbank is selling off beautiful downtown Burbank piece by piece.
However, if this is the choice that must be made, residents should approach it with their eyes wide open. If our local developers are indeed operating with an eye on the Chinese market, we need to consider all the possible ramifications.
For example, we might ask:
Is the recent trend of Chinese investment a repeat of Japanese investment in U.S. real estate in the early 1990s? (That didn’t end well).
Is building developments tailored to Chinese investment a sound financial bet, given the recent slowing of the Chinese economy?
What if our local developers have overestimated the zeal of the Chinese investor, and later discover there are no great profits to be made off their building folly? Will they just walk away? And if so, what will become of our downtown?
Alternatively, what if our local developers’ bets pay off — are we, as a community, okay with selling off downtown Burbank like so many pieces of Monopoly property?
As residents we have a lot to consider, but it all comes down to this:
Fundamentally, do we think development in our city should be be aimed at creating spaces where we can live, work and raise our families? Or should building projects be tailored to make them attractive to buyers in the global marketplace, for whom our city is nothing more than another place to turn a profit?
We need to have a conversation where we consider the risks and benefits of both scenarios — with regard to our budget, certainly, but also in terms of what kind of future we, collectively, envision for our city. Most importantly, we need to have this conversation now — before our City Council gives these projects the green light — and it’s too late.
I’m happy to update the story below with some great news. It looks like the All Amusement Fun Center may be staying in the Burbank Mall after all. The Leader has a recent article on this here and I will keep you up to date when I hear the final outcome of the negotiations!
Talks about the arcade leaving the Burbank Town Center popped up this past fall, but Rowton said that he had been stressing about his lease agreement since last June, when CAPREF presented him with a short-term lease agreement that would have quadrupled his rent.
“It was a deal that was impossible,” Rowton said. “There was no discussion. It was like that was it — take it or leave it.”
Lance Taylor, a director at CAPREF, said that he and the company received numerous calls and emails from residents who pleaded with them to keep the All Amusement Fun Center at the mall.
Taylor said that the overwhelming support for Rowton and the arcade was something that could not be ignored. Additionally, he said that he could not ignore the rumors about CAPREF not willing to work with local businesses.
“We didn’t want that impression of us out there because that’s not who we are,” Taylor said.
We should not allow this in Burbank. We need to stand up for our mom and pops against outside corporate interests who are forcing these folks out of business. Take a listen to Jim Rowton’s story recorded last month at the Burbank Community Summit. There are more small businesses in the mall who are experiencing the same issue.