SOUTH L.A. PROJECT RAISING EYEBROWS.

Byline: Harrison Sheppard Staff Writer

Mayor James Hahn has championed a $43 million subsidy for a South Los Angeles housing/retail project despite ethical and financial questions raised about the politically connected developer.

Hahn's office has made the $123 million Marlton Square project a top priority, helping it win preliminary City Council approval last fall. Now the deal is coming back to the Community Redevelopment Agency board on Thursday.

Whistle-blower complaints to the city Ethics Commission have led to an audit of the role played by developer Christopher Hammond's wife,

a top CRA official, in getting agency funds for his firm, Capital Vision Equities.

Capital Vision, which intends to do the project in partnership with football star Keyshawn Johnson's company, bounced a $100,000 check to the city in connection with the Marlton Square project and Hammond's businesses have been hit with at least five federal tax liens.

City Hall sources said the deal, which involved an unprecedented allocation of federal community development funds, has moved forward because of Hammond's political connections and the mayor's desire to get political capital from redeveloping the long-blighted Santa Barbara Plaza.

``This is a perfect example of politics over policy,'' said one source involved in the City Council discussions. ``The financing scheme seems less than desirable and it puts millions of dollars at risk for decades.''

The public financing involves a complex set of grants, including some unprecedented deals that tie up federal funds for years. For example, the city usually commits Community Development Block Grant funds for only a year or two because the amount it gets from the federal government varies from year to year. But in this case, the financing calls for the city to earmark $23 million over the next 20 years.

Unlike most CRA deals, negotiations were handled directly by the Mayor's Office, which argues that the massive public subsidy is necessary to make the project work. The financing involved $38 million in grants plus a bond issue to raise $5 million in higher taxes from area property owners.

``This $38 million is inducing $80 million of private equity and debt into the deal that will be privately serviced,'' said Deputy Mayor Jonathan Kevles, who has handled the negotiations. ``That's an extraordinary amount of money to be invested in a 22-acre project in South L.A.''

He said it is not political concerns but the economic needs of the community driving the project. He described the blighted property as a ``cancer'' that could spread throughout the neighborhood and said the project would boost the whole community, providing needed jobs, retail services and housing.

He said the Mayor's Office took the lead role because the project involves funds from several city departments, not just the CRA.

Hammond has given thousands of dollars to city political campaigns and was appointed by Hahn to the Recreation and Parks Commission.

Ethics Commission records show Hammond, his wife, Ayahlushim, and Capital Vision officials gave at least $60,000 to city candidates in the past five years, including Hahn and nine current council members. They gave at least $25,500 to Hahn's anti-secession campaign last year, but the mayor returned the $15,000 given directly by Hammond and the firm, keeping the amounts given by its other employees.

Hammond and his wife are friends with Councilwoman Jan Perry and former Councilman Mark Ridley-Thomas, who pushed hard for the project. Also, he has hired the former director of the CRA, John Molloy, to help him with the project and enlisted former Mayor Richard Riordan's law firm.

City officials insist there is strict separation between Ayahlushim Hammond, who is manager of the CRA's Bunker Hill project, and her husband's project. But at least $5 million from the CRA's Bunker Hill accounts is being loaned to the Marlton Square project. Kevles said the idea was his and not hers, and that the money will be returned later this year.

Ayahlushim Hammond also handles appointment recommendations for Assembly Speaker Herb Wesson, D-Los Angeles, who testified before the City Council on behalf of the Marlton Square project last year. She also heads the union unit representing CRA management employees.

CRA officials have turned anonymous complaints about Ayahlushim Hammond's potential conflict of interest over to the Ethics Commission and City Attorney's Office.

``Whistle-blowers within the organization have made allegations of improprieties and a conflict of interest,'' said one high-ranking CRA source. ``We are currently conducting an internal audit with respect to those charges. Those charges have been brought to the attention of the City Attorney's Office and the city Ethics Commission.''

The audit, recommended by the Ethics Commission, is examining the money shifted from the Bunker Hill project.

Ayahlushim Hammond did not return phone calls seeking comment.

Christopher Hammond said he and his wife have been careful to disclose the situation and avoid conflicts.

``We've had the normal disclosures, and my wife has never been involved in those projects,'' Hammond said. ``What do you want me to do, not talk to her when I'm in bed?''

City officials and community members say there is a desperate need to redevelop the 23-acre property. Several developers in the past, including Magic Johnson, have tried to make deals work there but were unsuccessful. Johnson, the former Lakers basketball star, dropped out after being unable to entice large stores such as Costco.

The city's own economic consultant described the deal as one that originated with politics.

``To me, this deal was put together politically well before it was ever put together technically, and the documents reflect that,'' real estate consultant Larry Kosmont told the CRA commission at a recent meeting. He said the housing element seems to make sense but ``I'm less sanguine about retail on this site.''

Hammond calls the property ``the most compelling piece of urban real estate west of the Mississippi'' and envisions 180 senior housing units, 140 market-rate single-family homes and 140,000 square feet of retail and commercial space.

City officials said there are protections such as withholding public money until the developer of the property has been acquired and getting a share of profits for the city.

At a recent CRA meeting, several commissioners talked about the possibility of picking a new developer or reducing the project to only housing. Their frustration centered on the reluctance by some of the developer's other potential partners to sign documents committing to his effort.

``Quite frankly, for 23 years ... that site has been sitting there as somebody's pipe dream,'' CRA Chairman David Farrar said to Kevles at a recent commission meeting.

``And when it got down to brass tacks, your experience is not unlike that of the previous 23 years, which is that none of the real players are going to step up to the line and sign the piece of paper.''

CAPTION(S):

photo, map

Photo:

A $123 million redevelopment is planned for the Santa Barbara Plaza in South Los Angeles.

Evan Yee/Staff Photographer

Map:

Marlton Square