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Thursday, Jun 30, 2022

Westfield Topanga Cited in City Report on Tax Breaks for Developers

After scrutinizing five major deals made between the city of Los Angeles and prominent hotel developers citywide – including one in the San Fernando Valley – Los Angeles City Controller Ron Galperin has concluded that the city needs to improve on evaluating and negotiating such deals in which the city awards tax breaks and incentives. In a 29-page report released last week, Galperin called for more transparency, noting that since the mid-2000s, the city had approved such projects without exercising a broader and more comprehensive economic development strategy. “We need a clear road map to ensure consistency, fairness and value for those we serve,” Galperin said. The controller’s report looked at a quintet of deals brokered between 2005 and 2015 that totaled $654 million in tax breaks; among them, the Village at Westfield Topanga shopping mall in Woodland Hills. In his report, Galperin broke down the arrangement on the Westfield mall. “The Village at Westfield Topanga had a reported feasibility gap of $35.7 million based on an estimated value of $300 million and estimated development costs of $335.7 million. The city approved financial assistance of up to $47.7 million ($25 million NPV) over 25 years. … Initially, a hotel was planned as part of the development project although that idea was later abandoned. The new Village at Westfield Topanga opened in Sept. 2015,” the report states. The city will negotiate tax incentive deals when developers face a funding or feasibility gap that could curtail progress on a development deemed valuable to the city’s long-term economic benefit. However, citing a failure by the city to negotiate the best possible deal in these cases, Galperin’s report concludes that the city should bring in an expert on salary or a consultant who can help determine if a project needs financial assistance from the city. Other projects examined in the controller’s study included the Courtyard Marriott and Residence Inn north of L.A. Live; the Hotel Indigo in Metropolis; the J.W. Marriott and Ritz Carlton at L.A. Live; and the InterContinental Hotel in the Wilshire Grand.

Michael Aushenker
Michael Aushenker
A graduate of Cornell University, Michael covers commercial real estate for the San Fernando Valley Business Journal. Prior to the Business Journal, Michael covered the community and entertainment beats as a staff writer for various newspapers, including the Jewish Journal of Greater Los Angeles, The Palisadian-Post, The Argonaut and Acorn Newspapers. He has also freelanced for the Santa Barbara Independent, VC Reporter, Malibu Times and Los Feliz Ledger.

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