Council Releases Westfield Tax Break for Review

Supporters of Westfield Group LLC’s proposed Village at Topanga project cheered last month at the news the City Council advanced a tax break plan to help the Australian mall developer speed construction. But the celebrations might be premature. A tax break of up to $59 million to help speed completion of the estimated $450 million project isn’t a done deal. The vote sends the plan to the Budget and Finance Committee for review and city attorneys must actually write the language for the tax break. It will then come back before a new City Council that took office last week, a body that will lack Valley Councilman Dennis Zine, the main proponent of the tax break, who has been termed out of office. Westfield also has other complications to worry about. The Australian mall developer may still have to deal with a lawsuit brought by the Woodland Hills Homeowners Organization, which alleges the addition of a Costco store and adjoining gas station violates the Woodland Hills Specific Plan. The suit was dismissed by a Superior Court judge last week, but the homeowners group has said it will appeal. Any appeal may take up to a year, and could stall construction on the sprawling project at the corner of Topanga Canyon Boulevard and Victory Boulevard. “There are going to be more meetings on this, there are going to be public hearings,” said Jeremy Oberstein, a spokesman for Councilman Paul Krekorian, who voted for the tax break. Moving target The lawsuit and the tax break are just the latest controversies surrounding the project, first proposed a decade ago. Originally, the company, which owns and operates more than 100 malls internationally, planned to merge its Westfield at Topanga and Westfield Promenade malls. But the recession and a series of challenges forced it to scale back its ambitions. Plans to add apartments were shelved, as was a bridge that would cross over Victory Boulevard to join the properties. The project will now have shops, office space, a Hyatt House hotel and be anchored by a Costco store and gas station. The desire by Westfield for a tax break only surfaced when the current plan was finally approved by the City Council in May 2012. Westfield said it was going to take much longer to construct the project than originally expected because of an estimated $91.4 million shortfall if built all at once before any revenues come in. Zine, who until July 1 represented the district that includes Warner Center, asked for the city staff to prepare a report looking at a potential tax break. According to the report, prepared by the Chief Legislative Analyst’s office with assistance from L.A. consulting firms Rosenow Spevacek Group Inc. and PKF Consulting USA, concluded the project has a feasibility gap of $48.9 million. The gap is the difference between construction costs and the project’s value at completion – though the report does not take into account the land value, which is significant. The tax break allows the company to keep 42 percent of net new tax revenue generated by the project, an amount that could total $59 million. The Valley Industry and Commerce Association, the Valley Economic Alliance and other local business groups support the tax break given the 1,600 permanent jobs and $140 million in tax revenue the project is expected to generate over the next 25 years, according to the city staff report. In exchange for the tax break, Westfield is offering a community benefits package that could include a $100,000 contribution to the local police division, free use of the hotel meeting space for community non-profits and a promise to hire locals for the construction and permanent jobs. Westfield spokeswoman Katy Dickey in an email said the agreement is key to expediting the project. “It’s essentially reimbursement for a front-loaded investment in infrastructure work,” she said. “No cuts, no delays. It incentivizes us to move much faster (with) off-site work, public improvements and other community benefits that otherwise would not have occurred for many, many years.” Still, much needs to happen before the project moves forward. The June 28 vote moved the plan to the Budget and Finance Committee to negotiate and hammer out details, including the exact terms of Westfield’s community benefits. What’s more, opponents of the tax break were given just five minutes to speak during the Council meeting and could be quite vocal at future meetings.