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NEW HOPE FOR FORMER DUMPSITE SUN VALLEY: LATEST OWNER IS RESURRECTING PLANS TO DEVELOP LANDFILL AFTER FALSE STARTS.

Byline: Kerry Cavanaugh

Staff Writer

Nearly five years ago, Los Angeles city officials sold 21 acres in Sun Valley at a rock-bottom price to a developer that pledged to turn the former dumpsite into the largest new industrial project in the Northeast Valley.

But despite promises of hundreds of good jobs and a youth center, the massive development failed to materialize, and after several years the developer became mired in trouble and filed for bankruptcy.

Last year, Trammell Crow Co. bought the land in a court-ordered sale for $18.75 million -- seven times higher than the city sale price -- and now has resurrected plans to develop the former landfill, this time as a light manufacturing, research and development complex.

"The last developers were not very sophisticated," said Brad Cox, managing director of Trammell Crow Co. "We saw an opportunity to take a site that had a checkered past and add Trammell Crow's experience to the property, and put an unproductive brown field into productive use."

Trammell Crow is now evaluating how much of the 33 acres is landfill and off limits to building, with the goal of starting construction on 350,000 to 400,000 square feet of light industrial space in early 2009.

Councilman Tony Cardenas has met with the developers and is hopeful they can make the project a reality after previous false starts.

"I asked them, 'Do you know what you're getting into? This site is like a dog with fleas,'" he said. "But they said they're confident they have what it takes."

As the land remained weed-covered, some Sun Valley residents began eyeing the property for community use. A report released early last year by the Economic Alliance of the San Fernando Valley and the American Institute of Architects envisioned the site as an ideal outdoor-event venue and home to the San Fernando Valley Fair and Railroad Museum.

Welcoming jobs

But Sun Valley Neighborhood Council member Mary Benson said that while she'd like to see an outdoor venue on the property, she thinks the community would also welcome the jobs and investment.

"We're happy to have a well-financed entity that is willing to invest in Sun Valley," said Benson, who heads the council's land-use committee. "If Trammell Crow is going to build that square-footage facility, it's going to be a boon, too."

When it was originally conceived in 2000 and 2001, the SunQuest project was envisioned as transforming the old Branford Landfill to attract $50 million in investment and generate up to 500 quality jobs.

At the time, former Mayor Richard Riordan had made a goal of revitalizing downtrodden properties, and he launched Genesis L.A. Economic Growth Corp., a nonprofit corporation to help finance economic development projects in low-income communities.

Developer Randall Roth made the pitch to the mayor's business team -- which included now City Attorney Rocky Delgadillo -- and the city sold the 21 acres to SunQuest Development in 2003 for $2.55 million in a no-bid sale.

The land included the old Branford Landfill and a sanitation storage yard. Roth already owned 12 adjacent acres.

As part of the deal, Roth and SunQuest signed one of the city's first community-benefits agreements and pledged to include resident oversight of construction, local jobs and a 4,000-square-foot youth center.

Never got off ground

But the development never got off the ground, despite millions of dollars in loans and grants designated for the project.

And even before the sale was complete, there were signs of trouble.

Genesis L.A. threatened to foreclose on SunQuest, and the nonprofit fund's $1.6 million loan was bought out by other SunQuest investors in late 2002.

"The project wasn't moving forward as we anticipated so we were looking for a way to recover our investment," said Mark Schaffer with Shamrock Holdings, which managed Genesis Fund's investments.

Shortly after, Roth was ousted as manager and he declared bankruptcy. New management came in but the environmental problems at the site were too complicated.

The developers discovered trash was buried beyond the outlines of Branford Landfill, which reduced the amount of buildable land.

"What turned this thing in the wrong direction was the fact that it was not feasible from a contamination standpoint," said Ernest Tidwell, who oversaw a $9 million loan for the project from the Community Development Department and a $750,000 federal grant that were approved for the project but never awarded because of the problems.

"More money was needed to finish the project than what the developer had and the city wanted to provide. We looked at fiscal and managerial issues. We were never able to get the answers we need to justify us going further."

Bankruptcy proceedings

In 2006, the property owner (renamed Branford Partners LLC) entered bankruptcy proceedings. Creditors lined up to claim millions of dollars in liens, despite the fact that virtually no physical work was done on site.

Filings by creditors charge Branford Partners with money mismanagement and borrowing against the value of the land for personal gain. One filing shows that the Security and Exchange Commission served a subpoena in May 2006 for records involving the site and various affiliates as part of an investigation into a hedge fund.

SEC officials said they do not comment or acknowledge investigations.

Trammell Crow bought the property free and clear of any financial problems and the bankruptcy sale also canceled the community-benefits agreement, which had promised the local input, new sidewalks and a youth center.

The Los Angeles Alliance for a New Economy helped negotiate the agreement, and Deputy Director Roxana Tynan said her group had given up hope the project would move forward.

Still, she hopes Trammell Crow will work with the community for an environmentally safe and attractive project.

"This was a neighborhood that for many, many years was L.A.'s dumping ground," Tynan said. "It's a community that wants development. They're not NIMBYs, but they want things done safely."

kerry.cavanaugh(at)dailynews.com

213-978-0390

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Publication:Daily News (Los Angeles, CA)
Date:Jan 2, 2008
Words:997
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