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Thursday, Jun 1, 2023

Stalled Project Has New Problem

The long-awaited redevelopment of a blighted 33-acre parcel in Sun Valley that once promised to provide an economic shot in the arm to the area, has hit yet another roadblock. Branford Partners LLP, the latest group to control the property, has filed for bankruptcy in a move to forestall foreclosure proceedings and allow the property to be sold. In coming months, a bankruptcy court in Woodland Hills is expected to review potential bidders and oversee a sale of the site, which the owners have valued at about $20 million. The deed on the property is currently held by California Environmental Redevelopment Fund, LLC, a lender that specializes in brownfield sites in California. In all, the Chap. 11 voluntary bankruptcy filing lists more than $80 million in claims, some going back to the original manager of the parcel, Randall Roth, who also filed bankruptcy (that filing was never resolved) and including a number of lawsuits filed against various parties, some of which date back to the earliest efforts to redevelop the property in the late 1990s. “The decision (to file Chap. 11) was a result of the desire to sell the property and hopefully facilitate it getting developed and also by the fact that there was a foreclosure in process,” said David Kupetz, a shareholder with SulmeyerKupetz APC, the attorney representing Branford in the proceedings. The property, on the site of a former landfill at Branford Street and San Fernando Road, was first earmarked for industrial redevelopment by Roth, who envisioned a 550,000-square-foot light industrial complex that would bring hundreds of jobs to the economically challenged area. By 2004, charges of improprieties in the management of the site surfaced, and Roth was dismissed as managing partner, although, at the time, he had denied that he was no longer involved in the development. Roth filed for bankruptcy soon after. The owners of the site hired a new management group, but that relationship turned out to be short lived, and by September 2004, a new consultant, Joanne Carras, was brought in to revive the project. Carras is listed as a creditor on the current filing with claims totaling nearly $1 million in consulting fees. Although the site totals some 33 acres, it is believed that only about 12 acres are developable due to remediation issues that date back to its original use as a landfill. “It’s the most difficult site I’ve ever worked on,” said John DeGrinis, senior vice president at Colliers International, who, with Brent Weirick and George Stavaris, is currently working with a developer who is exploring acquiring the property. DeGrinis declined to reveal the name of the developer. “It’s affected with every aspect of real estate challenges I can think of landfill, environmental law, entitlements that provided for some community things that would never make sense and a location that’s less than a plus,” DeGrinis said. The original entitlements included a stipulation that living wages be paid on the site and other requirements. The original purchase price for the property could not be determined, but the current management team has assigned a value of $20 million to the site. “The $20 million relates to a written proposal that just happened to come in at the time the case was filed,” said Kupetz. “The proposal had some contingencies, but it was from a solid, large development company. We felt it was better than an old appraisal. That being said, it’s obviously an estimate.” With the Chap. 11 proceeding, the bankruptcy court will oversee any sale. “We’re hoping the offers will come in somewhat higher, but I think that set what we perceive to be a cash floor.” Kupetz said he didn’t know why the redevelopment had not moved forward in recent years. He said that the latest efforts had focused on finding a developer for the site rather than selling the property. Branford’s current manager, Jonathan Brake, did not respond to a request for an interview.

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