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GLENDALE—Developer Swaps Parcels as Way to End Fight With City

The developers of a proposed housing project and the city of Glendale have reached an unusual agreement to settle a long-running dispute. Under terms of the deal, Gangi Development Co. will give up most of its plan to build a housing subdivision on 21 acres of hillside land in exchange for the right to build a townhouse development on a two-acre parcel near the Foothill (210) Freeway. Land swaps are always difficult to execute, but this one is especially unusual, the two parties point out, because it gives the city so much more property than the developer will retain. But the settlement makes sense, Gangi officials said, because it allows the company to meet its financial objectives and retains the goodwill of the community, which has opposed the original project. “We wind up with essentially the same profit at the end of the day and alleviate all the controversy,” said Robert Gangi, in-house counsel for the company. Gangi purchased the 21-acre site at Deer Pass Road in the early 1990s with plans to build a nine-unit residential subdivision. Years later, when Gangi began preparing a final tract map for the development, the company found that it would have to grade more of the hillside than was originally thought. Running afoul of city ordinance The expense of the additional grading was only part of the problem. In the early 1990s, Glendale passed an ordinance that required developers to obtain separate approval if they wanted to build on the city’s hillsides. And Glendale turned down Gangi’s request for the additional grading. “The City Council felt that with the differential in the amount of dirt (being moved) that there might be other environmental consequences,” said Scott Howard, Glendale’s city attorney. The community dug its heels in, too. Homeowners had fought for the hillside ordinance in an attempt to put a stop a development called Oakmont View, a 572-home project proposed for the Verdugo Mountains. Although Gangi’s project was much smaller, allowing the development to go forward could have set a dangerous precedent, residents believed. (The battle over the Oakmont continues, and the developers are currently preparing a second environmental impact report.) “This was one of the first tests of the hillside ordinance,” said Dennis Brumm, president of the Whiting Woods Homeowners Association. “Even though Deer Pass was small relative to Oakmont, it would set a standard.” Gangi disagreed with the city’s decision to block the project and in 1998, the developer filed a lawsuit against Glendale. But ultimately, Gangi chose to take another tack. “You can either get into ugly litigation or find a deal where everybody comes out better,” Gangi said. Frank Gangi, the senior member of the family-owned company and father to Robert and Mark Gangi (the latter is managing the project), came up with the idea of a land swap. A city-owned, two-acre parcel near the Foothill Freeway at Pennsylvania and Encinal avenues was vacant, and it was zoned for multifamily housing. But the problem of working out the details in a way that would pencil out comparably to the larger hillside site remained. Although land exchanges have been proposed in the past, the parties rarely reach agreement on a deal, and few of these transactions are ever closed. “It’s somewhat unique for us to actually go through with a land exchange,” Howard said. “One property owner believes the land is far more valuable than the other, so you can’t usually come to agreement on the relative value of the exchange.” For this deal, both parties began with their own appraisers and then evaluated the other’s report. For Gangi, getting a fair deal meant comparing the revenue the company would earn from selling the lots on the hillside property versus the cost of developing that land, against the revenue building condos on the smaller lot would yield versus the cost of that development. The company ran the numbers and found that it could recoup its investment in the 21-acre site if it built 18 townhomes on the smaller lot and retained two lots of the hillside property for development. Although Gangi and Glendale have reached tentative agreement on the swap, some details remain. The developer and the city have to firm up the exact number of townhomes to be built, and the city has to approve a design for the housing project. The two lots Gangi would retain on the hillside also must be approved by the city, which is awaiting details on precisely where those lots would be located. But city officials say they are confident that a final agreement will be reached in coming months. “I’m optimistic that we’re going to be able to work something out,” Howard said. “It’s a tribute to the Gangis and also the City Council and city management for keeping an open mind.”

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