County Awards $25 Million to Help Developer Reopen Stores

Reversing an earlier action, the Los Angeles County Board of Supervisors voted Tuesday to award shopping center developer Alexander Haagen a low-interest $25-million loan to help reopen seven abandoned Gemco stores and hire about 1,000 low-income workers.

Satisfied that it was not giving special treatment to Haagen, president of the Los Angeles Coliseum Commission, the board voted unanimously to provide the 18-month loan from a $35-million block of federal funds to be used by the county to help economically depressed areas. Under the loan arrangement, Haagen will pay the county about $2.5 million in interest at a rate less than banks charge.

On June 9, the board balked at the loan because of concern that it would appear that Haagen, a major campaign contributor to several supervisors, was receiving a special favor. Supervisor Deane Dana, particularly, was nervous about the proposed deal, having received nearly $19,000 in political contributions from Haagen since 1981.

At the time, David Lund, executive director of the county’s Community Development Commission, said that a number of cities had been notified that the loan funds were available but that there had been no attempt at soliciting interest from other private developers. It was the lack of widespread advertising of the availability of the loan funds that made supervisors nervous.

Letters to Developers

Since then, Lund said Tuesday, letters were sent to 228 developers, and only about eight responses were received. Lund said, however, that none of the respondents was willing to borrow the entire $25 million available for this type of project and none could meet certain loan requirements established by the county.

Among those requirements were the securing of leaseholds on the seven former Gemco stores, efforts to hire low-income or moderate-income workers at prevailing wages and willingness to return the money if the county recalled the loan.

Included in the hiring agreement is Haagen’s pledge to spend about $390 in recruiting for each job.

“Only the Haagen project has emerged as both a willing applicant and an eligible and qualified loan,” Lund told supervisors.

Although voting for the loan, Supervisor Ed Edelman continued to voice concern that it might appear that Haagen is receiving favorable treatment. He asked that in the future a stronger effort be made to advertise the availability of funds to avoid the appearance of political favoritism.

Under the loan agreement, Haagen, who has developed several shopping centers in Southern California, will receive the $25 million at 2 1/2% less than the prime rate, the rate banks offer their largest customers.

The seven stores Haagen is interested in reopening as retail outlets similar to Gemco are in Pomona, Downey, Glendora, Culver City, Bellflower, Torrance and Lancaster.