CARUSO GETS PACT EXTENDED GALLERIA OWNERS TO PURSUE RIVAL REDEVELOPMENT PLAN.

Byline: Naush Boghossian Staff Writer

GLENDALE - The Glendale redevelopment agency board voted 4-1 on Tuesday to extend its exclusive negotiation agreement with developer Rick Caruso after a four-hour confrontation in which owners of the Glendale Galleria argued that they could develop the $172 million project with millions less in city subsidies.

The eight-month extension until June 1, 2004, allows Caruso - who has been the sole developer working on the project for the past 2 1/2 years - to move forward with the environmental impact study and fine-tune his plans for the 16-acre retail and housing complex next to the mall. The Glendale City Council doubles as the redevelopment board, but final approval for the project will still be required by the council in its primary role.

``It validates what we've done. They stood up for the right thing,'' said Caruso, who also battled against the owners of the Beverly Center over his project at The Grove. ``It sends a message that large mall owners are going to have difficulty keeping competition out.''

The decision left the door open for consideration of mall giant General Growth Properties' unsolicited counterproposal, and Councilmen Bob Yousefian and Frank Quintero asked the Galleria owners to submit financial projections to be evaluated by an outside firm.

``I'm a very bottom-line kind of person. I just want to know what it costs. I may go with Caruso. I don't know. But, I want to know where this other one is coming from,'' said Yousefian. ``This doesn't mean you (Caruso) get the project. There's no guarantee. But I'm not going to say I'm not going to sit here and listen to General Growth.''

General Growth, the country's second largest mall owner and operator, is the city's largest landowner, and its mall is the city's second highest tax- revenue generator - a presence that the two agency members felt would be unfair to overlook.

``Let's at least listen to them (General Growth),'' said Quintero, who cast the only vote against extending the exclusive negotiation agreement. ``I think we have a fiscal responsibility to our taxpayers. We'll see who the winner is.''

General Growth officials said that while the decision disappointed them, they will move forward and meet with community groups for input on their proposal, which they maintain is an environmentally superior design, calling for less retail and more housing.

``We're disappointed. We're going to move forward, but at the end of the day it's what's best for the city of Glendale,'' said Robert Michaels, president and chief operating officer for General Growth Properties, who flew in from Chicago for the meeting. ``We said millions of dollars less in subsidies, but apparently the City Council doesn't care.''

Councilmen Dave Weaver and Rafi Manoukian said they believed General Growth would file a lawsuit in light of its officials' recent requests for extensive documents relating to the Galleria and the Town Center.

The extension of the exclusive agreement with Caruso Affiliated Holdings would not definitively stifle any lawsuit General Growth might file if its attempts to build the Town Center are quashed.

Michaels would not comment about whether he is contemplating litigation.

The majority of speakers supported Caruso, urging city officials not to renege on a verbal agreement with the developer.

``Why would any developer want to come to Glendale when this is how we treat them 2 1/2 years into the process?'' asked resident Carole Sussman. ``We urge you to maintain the integrity of our city. We have an agreement, and I believe integrity has no price.''