How much is Lakewood really shelling out to developers?

PHOTO by SUSAN SABO

Long Beach has taken a pretty good pounding over the years for a development strategy that shortchanges residents by giving sales-tax rebates to mega-retailers—especially since neighboring Lakewood has been able to attract more of those big stores without resorting to such tactics.

“Lakewood has never given away sales-tax revenue to induce businesses to come here or to keep them here,” the city’s longtime spokesman D.J. Waldie told The District in June—a few days after the Long Beach City Council voted to kick back nearly $1 million in sales tax to Best Buy in hopes of luring the electronics store to the Marina Pacifica Mall.

The problem with that strategy, Waldie explained, is that big retailers come to expect it.

“The truth is that because cities with redevelopment agencies have been extraordinarily accommodating, some large corporations calculate sales-tax rebates in their business plans,” he said. “So it goes from an inducement to a calculated income. That methodology is difficult to defend.”

But Lakewood’s aversion to sales-tax rebates doesn’t mean that its city officials aren’t using other methods to channel millions of dollars from public coffers to private pockets—all in the name of a claim (similar to Long Beach’s) that it will ultimately improve the city’s economy.

An investigation by The District reveals that the Lakewood Redevelopment Agency has paid the Macerich Company—the gigantic shopping center development outfit that owns the Lakewood Center Mall—approximately $7.9 million during the past seven years. The money has been laid out in a couple of shocking multi-million-dollar lump sums and a curious long-term arrangement to lease some of the mall’s parking spaces.

Who are the members of the Lakewood Redevelopment Agency? The same five people who make up the Lakewood City Council. Two current members of both panels—Joseph Esquivel and Larry Van Nostran—were also in office on Sept. 14, 1999, when the City Council and Redevelopment Agency each took quick, unanimous votes to approve a two-pronged strategy designed to financially entice the Macerich Company to expand the Lakewood Center Mall.

First, a pair of $2 million payments to Macerich were authorized—one which was paid when building permits were issued for the mall’s expansion, and the other paid when the mall’s new wing actually opened in 2000.

Second, a 15-year contract committed the Lakewood Redevelopment Agency to pay Macerich between $450,000 and $750,000 per year to “lease” 1,900 parking spaces at the mall. Since 2002, those lease payments have totaled some $3.9 million. That’s an average of $650,000 per year, although for the past three years—including the most-recent payment in mid September—the outlay has been the maximum $750,000. That’s $390 per space.

It should also be noted that Mace Siegel, chairman of the Macerich Company’s board of directors, contributed several thousand dollars to the re-election campaigns of Esquivel and Van Nostran. Lakewood resident Jerry Cleveland first noticed this in 2003 when he ran—and lost—a race for City Council against those longtime incumbents.

“What the hell is that? That’s crooked,” contends Cleveland, who currently serves on the Bellflower Unified School District board. “The city pays Macerich huge money to lease parking places for no reason. It’s not like they are designated for city employees or residents or maintenance vehicles. It’s just an expensive gift of public money to a multi-million-dollar corporation.”

Despite the size of the monetary outlay, Waldie doesn’t flinch when asked to explain how it jibes with Lakewood’s oft-espoused policy against incentives.

“Our policy is against using sales-tax rebates to attract retailers to a development site,” he specifies. “Lakewood doesn’t do that—never has—because it reduces the amount of money that would go to the general fund to pay for services all over the city.

“But this situation is a redevelopment agency spending property tax increment revenue—an increase in property tax revenue within the redevelopment district—which can only be spent within that district. It doesn’t take money away from the general fund.”

According to Waldie, the redevelopment agency’s decision to use these millions of dollars to entice Macerich to refurbish and expand Lakewood Center Mall has paid off in new stores, more customers and more sales tax for the city’s general fund.

“Maybe you believe that any assistance to private enterprise by city government is a bad thing,” he said. “But the point I’m making is that there are lots of tools that can be used, and some tools are better than others. We believe we are using a good tool.”

Tags: big-box, d.j. waldie, lakewood, Long Beach, sales tax rebates