L.A. presses Coast Fed into staying within city limits.

Officials with the City of Los Angeles have convinced Coast Federal Bank to relocate its administrative offices within the city, partly by threatening to tie up the sale of Coast's Granada Hills property if the thrift moves elsewhere, sources have told the Business Journal. Coast needs to sell the property to finance its move to a larger building.

Coast had been talking for the past year with officials of the City of Burbank about developing a 300,000-square-foot administration/operations center on seven acres owned by the city near the Burbank Airport Hilton hotel. Adjacent land would also be reserved for a 150,000-square-foot expansion facility.

Coast decided in December 1992 that it had outgrown its 200,000-square-foot facility in Granada Hills.

Last month, Coast officially notified Burbank Mayor William Wiggins that the thrift would not be going through with the Burbank move, due to "significant and compelling internal business factors."

"We trust you can appreciate Coast's decision, which was not made lightly," wrote Coast Chief Executive Ray Martin.

According to a memo from Burbank Community Development Director Bob Tague to City Manager Bud Ovrom, Tague was told by Coast Senior Vice President Mike Pierce "that the principal reason for (Coast) not making their move is pressure from Los Angeles to locate in Los Angeles or not get the rezoning at their present location approved."

"The rezoning issue was a principal point in the deal since it provided the financial resources for the move," Tague wrote.

Tague and others said Coast is trying to sell the Granada Hills property to a "big-box" retail user. However, only about three acres on the 16-acre site are zoned for commercial uses, with the rest zoned for parking, making any build-out difficult.

"The current zoning prohibits future expansion or development by ourselves or anyone else," said Coast spokesman David Porges.

Tague said, "L.A. was not interested in rezoning that property and losing a major employer at the same time."

Another source noted that, in addition to the zoning, the City of Los Angeles could hold up the sale by denying building permits and other permissions.

"They (city officials) made it clear that unless they (Coast) really try to play ball, they would make it (the sale) difficult," said the source.

Sources said Councilman Hal Bernson, who represents Granada Hills, was particularly involved in these discussions. Bernson's press aides did not return phone calls.

Porges said Coast "did not know for a fact" that the rezoning would be denied if the thrift moved its operations center to Burbank. He said Coast is "moving ahead" with the rezoning request.

He declined further comment, and he said he was the only person at Coast authorized to speak to the media about the issue. Pierce and other Coast executives did not return phone calls seeking comment.

George Mihlsten, an attorney with Latham & Watkins representing Coast in negotiations, said rezoning denial threats were only "one small piece" of a package of motivating factors used by the City of L.A. to convince Coast to stay in town. Many of the incentives provided by L.A. were "positive," he said.

"They (Coast executives) now believe the opportunities in L.A. better serve their long-term interest," said Mihlsten. "There are other issues at stake."

Noelia Rodriguez, spokeswoman for L.A. Mayor Richard Riordan, would say only that Los Angeles "is still in negotiations with Coast Federal Bank regarding them staying in the City of Los Angeles, and we are encouraged" by what has happened so far.

Ovrom sent copies of Tague's memo to members of the Burbank City Council, with a note saying he felt as if there was a "hex" on the property. However, Ovrom said he's not bothered by the tactics he's been told were used by the City of L.A.

"It's about time L.A. stood up and saved some of these things for themselves," said Ovrom. "The name of the game is you do what you have to do. Competition is healthy, and L.A. hasn't been that competitive.

"All's fair when you're fighting for your life, and L.A. is fighting for its life. If they had to do it through rezoning stuff, so be it. It's a tough world out there."

However, Ovrom said he is bothered that Burbank wasted most of 1992 and early 1993 negotiating with Altium (formerly CADAM Inc.), a computer software firm, on development of a three-story, 120,000-square-foot office building and parking garage on the property.

In August 1992, there was a news conference to officially announce that the CADAM building would be the first phase of a four-building office complex called the Airport Center Project to be built by developer Lew Wolff. When Altium pulled out of the deal, Wolff volunteered to "step aside" and surrender his development agreement with the city to allow for the Coast project.

"The one I regret is CADAM. We spent way too much time talking to CADAM/Altium," said Ovrom.

Tague has recommended going back to Wolff as the site developer, but Ovrom said the city will likely issue a Request For Proposals to purchase and develop the site.

"It's a pretty nice piece of land," he said. "Right now, we have more would-be users than we have room for. We are not a desperate seller at this point. ... We feel good about things in Burbank. Vacancy rates are low. We can afford to lose Coast."

The one thorn in Ovrom's side, however, is the slow pace at which Lockheed Corp. is choosing a retail power center developer/buyer for its property near the Burbank-Glendale-Pasadena Airport.

Ovrom said the city is losing retail tenants to Glendale, some of whom are tired of waiting for construction to begin on what is now planned to be a 600,000-square-foot mall in Burbank. Additionally, Glendale is planning a new $50 million, 200,000-square-foot Glendale Marketplace mall, to be developed by JMB/Urban Development Co. at Brand Boulevard and Broadway.

"We did not take it gracefully when (Burbank-based) Disney and Warner Bros. opened stores in the Glendale Galleria and not in Burbank," Ovrom noted. "Home Depot opened in Glendale, and Glendale's new center could take some more prospective tenants.

"But Circuit City and Office Depot went into downtown Burbank, and Ross (Dress for Less) is going downtown. We still have interest (in the power center) from the anchor stores. Wal-Mart and Sam's Club still want in.

"If you ask Rick Kuhle (of Vestar Development in Phoenix, one of the finalist to develop the power center), he'll still tell you he has 1 million square feet of tenants."