Mall Operator Wages Fight Against a Grove-Style Project

Call it Mall Brawl II, the inevitable sequel to the 12-round Glendale grudge match.

Once again, developer Rick Caruso is seeking to build one of his signature open-air shopping villages -- this time in Arcadia. And once again he wants to build it right next to an existing mall, whose owners are fighting him tooth and nail.

With negative ads, dueling polls and intense public lobbying, the dispute resembles a particularly nasty and personal election race.

“They’re attacking each other every day in the newspaper,� Arcadia City Manager William Kelly says. “I can’t tell you how many law firms are involved on both sides of this.�

The fight has roiled the small San Gabriel Valley bedroom community, but it has implications beyond there. Land-use experts and urban planners see it as a battle between two ways of shopping: large, old-fashioned enclosed malls versus newer, smaller, open-air shopping centers that have a Main Street feel.

Westfield Group, owner of the Westfield Santa Anita mall, has launched an all-out campaign to block approval of the Shops at Santa Anita, an outdoor “lifestyle center� similar to the Grove -- Caruso’s popular shopping village next to the Los Angeles Farmers Market.

Westfield, a Sydney, Australia-based company (which owns several other L.A.-area malls, including the Century City Shopping Center, Eagle Rock Mall and Fox Hills Mall) has helped fund anti-Caruso citizens groups and gathered thousands of signatures to fight the new development.

Caruso, who estimates the project would generate more than $5 million in new tax revenue, has courted the community by offering free office space to the local school district.

The debate dominates City Council proceedings and fills the pages of the local newspapers.

Westfield has taken out full-page ads warning that Caruso will flood the city with ugly billboards, charge for parking and overwhelm the city’s streets with 30,000 additional cars per day.

“We fundamentally don’t believe the market is big enough� to support both malls, said Peter Lowy, Westfield’s managing director. “It’s just bad urban planning.�

Caruso’s camp has countered with ads that state: “You can’t trust Westfield to play it straight.�

The level of acrimony has shocked area business leaders.

“I’m surprised it’s gone as deep as it has. It does look like we’re in for a long war,� said Beth Costanza, executive director of the Arcadia Chamber of Commerce -- which has both Westfield and Caruso representatives on its board of directors. “We’ve just been sitting in the middle watching the bullets fly.�

By all accounts, this is just the beginning.

Caruso, Westfield executives and Arcadia officials predict the dispute will eventually come down to a public referendum sometime next year. Until then, the trench warfare will continue.

“I can lay it out for you now, the whole legal and electoral timeline,� said Lowy, the Westfield executive. “The only thing I can’t tell you is who’s going to win.�

The Arcadia conflict almost exactly mirrors Caruso’s recent fight to build in Glendale, next door to the Glendale Galleria.

The Galleria’s owners, General Growth Properties, battled Caruso’s plan down to the wire, finally attempting to overturn the Glendale City Council’s approval with a public referendum in 2004.

Caruso won in a close vote and his project, dubbed Americana on Brand, is now under construction.

“Wherever I go, the mall people are going to try to fight me,� Caruso said in an interview. “They’ll resort to anything.... In the process, we’ll both spend a couple million dollars.�

Behind both the Glendale and Arcadia disputes is a generational question about the future of American shopping habits. Caruso and others argue that the traditional covered mall is becoming obsolete.

“There is a belief that this sort of model has run its course,� said professor Raphael Bostic of USC’s Lusk Center for Real Estate.

Both locally and nationwide, the new trend is toward smaller, more stylized outdoor centers. Caruso’s proposal for the new center, which would be built in an unused section of the Santa Anita racetrack parking lot, includes open-air plazas and a large lake at the center.

“What Caruso is doing is making a bet on his style of mall,� Bostic said.

In addition to the battle for customer dollars, a second mall in Arcadia would prompt an automatic competition for tenants, driving down the rent that Westfield can charge its store owners.

Even in the wake of his Glendale victory, Caruso already had his sights set on the coming Westfield fight.

“In Arcadia, they had a wake-up call this morning,� Caruso told The Times the day after the Glendale vote. “If they fight us, they’ll wind up losing, and all they’ll do is burn a lot of bridges.�

So far, that’s exactly what’s happened. The Westfield campaign has placed the company, which owns 128 malls on four continents, at odds with the Arcadia city government.

“The animosity is pretty high right now� between Arcadia and Westfield, said Kelly, the city manager.

In May, Arcadia Mayor Roger Chandler issued a statement denouncing Westfield’s “aggressive and divisive marketing campaign.�

Lowy counters that the city is “hellbent� on approving the Caruso plan and says that Westfield’s concerns about the project were “dismissed out of hand� from the start.

“We would argue that the city put us in this position,� Lowy said. “I don’t know why they turned their backs on us. It seems petulant.�

Each side has used the ballot box to harass and hinder the other. Citizens groups backed by Westfield gathered signatures for initiatives that would ban large billboards and outlaw paid parking in shopping centers -- both aspects of Caruso’s original model.

Caruso countered with an initiative that would ban big-box retailers such as Target and Wal-Mart from the city -- a shot at Westfield’s ambition to attract such a store.

At the city’s request, Caruso dropped his initiative. Westfield continued with its effort, angering the mayor and the city government. The two Westfield-sponsored initiatives will be on the Nov. 7 ballot.

Westfield and Caruso expect the project to be approved next spring, at which point Westfield will probably start gathering signatures for a public referendum on the entire project.

“The minute the referendum qualifies, it will get nasty,� Caruso said.