The owners of Santa Anita Park have notified Caruso Affiliated that the company has withdrawn its interest in the proposed mammoth $500 million, 830,000 square-foot Shops at Santa Anita upscale open-air retail/restaurant development with a giant water feature on the south parking lot.
The news sent shockwaves through Arcadia city leaders gathered Tuesday evening to swear in the newly-elected Peter Amundson as Mayor and offer numerous ceremonial tributes to outgoing Mayor John Wuo who is termed out.
According to a story in The Wall Street Journal, the unit of track owner Magna Entertainment Corp. that struck the joint venture deal with Caruso in 2005 notified Caruso earlier this month that it was backing out, according to court papers. An entity controlled by Caruso has protested the move in a court filing.
Magna Entertainment, a publicly-traded company, only recently found a resolution to the bankruptcy protection under which Santa Anita has been operating for more than a year. That resolution would have the track come under the ownership of Magna’s largest shareholder and lender MI Developments (the real estate arm of Magna International). MI Developments is presently battling with creditors to assume most of the company’s prime assets, including Santa Anita Park.
Speculation amongst Arcadia officials Tuesday was that perhaps Magna is using the bankruptcy situation to strike a more favorable deal with Caruso Affiliated. No one with Caruso or Santa Anita could be reached for comment late Tuesday but Caruso Affiliated owner Rick Caruso was quoted in The Wall Street Journal saying he was optimistic the project can be salvaged. “We’re in discussions and negotiations,” he said. “I’m confident we’re going to work something out.”
Santa Anita’s bankruptcy filing in March 2009 put on hold the legal proceedings in the lawsuits filed against the City of Arcadia three years ago by Santa Anita neighboring mall Westfield Santa Anita and a community group backed by Westfield called Arcadia First! The lawsuits challenged the unanimous approval of the Shops at Santa Anita by the City Council in April 2007, specifically the massive environmental impact report that Councilmen and city staff have said is by far the most extensive in the history of the city and perhaps the San Gabriel Valley.
An initial court ruling upheld the lawsuit challenges on some of the issues. Westfield has appealed the court’s rejection of most of its other challenges. In the meantime, Westfield has opened its own upscale outdoor retail extension to the mall called the Promenade and has informed the City that it will soon submit a proposal for yet another addition to the mall as well as a tenant for most of the long-vacated two-story space on the east side of the building that was formerly the Robinsons-May anchor tenant.
While the City addresses the EIR issues the court deemed noteworthy, the City Council was obliged to rescind its initial approval pending the resolution of the lawsuit, at which time the matter would be brought before the Council again for a new vote.
There have been two City Council elections and two new City Councils and four different Mayors since the original approval but the new Council seated Tuesday includes four of the same five Councilmen who approved the Shops at Santa Anita — Mayor Amundson, Mickey Segal, Bob Harbicht, and Roger Chandler. Only newly-appointed Mayor Pro Tem Gary Kovacic was not among the Councilmen who approved the project in 2007, though it took a last-minute concession by Caruso and Santa Anita to withdraw the installation of new wagering technology at the track to extract a reluctant approval out of Amundson.
Newly re-elected Councilman Bob Harbicht told the audience Tuesday that he and the Council would be looking into Magna’s withdraw from the Shops at Santa Anita and do their best to get the project back on track. The project, which will take two years to open from the time it would finally be allowed to begin construction, is projected to bring more than $2 million in sales tax revenue to the city each year, and potentially much more in ancillary benefits.
Even before this latest hurdle, the most optimistic proponents said it would be at least another year before construction could begin, assuming the bankruptcy resolution is accepted and officially adopted, the lawsuit proceedings continue without further challenge and yield results in favor of the project, and the new Council again approves the project.
— By Scott Hettrick