Josh Dulaney, Staff Writer
Created: 10/28/2009 03:40:03 PM PDT
RIALTO – Officials here hope an injection of taxpayer dollars can help prevent the city’s biggest redevelopment bet from going bust.
The City Council, acting as the Redevelopment Agency, has approved a $10.9 million interim agreement with developers while they renegotiate the price of land critical to Renaissance Rialto, a proposed mixed-use project along the 210 Freeway.
It’s a move that could eliminate funding for new projects in the foreseeable future, said Robb Steel, economic development director for the city.
“We’re buying a little bit of breathing room,” Steel said. “It’s not a situation we want to be in, obviously.”
The agreement with Lewis-Hillwood LLC, a partnership of Upland-based Lewis Operating Corp. and Ross Perot Jr.’s Texas-based Hillwood Development Corp., calls for the agency to pay up to $10.9 million to six Rialto Municipal Airport tenants to help offset the costs of relocating from the 437-acre site.
The agency will assume control of the tenants’ leases, which will produce a net income of about $150,000 a year, Steel said.
The agency is funded primarily through property taxes.
The agency and the developers are renegotiating the price of the land, plus an adjacent 60 acres. Each cut of land is part of 1,445 acres where the city hopes to build 1,700 homes, a 600,000- square-foot shopping center and 3.5 million feet of commercial space.
“We are finding that projects of this scale take a long time to get planned and started,” said David R. Lewis, vice president for Lewis Corp. “We are committed to the project and seeing it through.”
Officials earlier this decade billed Renaissance as an economic savior worth about $2.5 billion that would bring in between $2.5 million and $5 million to the General Fund annually.
Previous plans called for more than twice as many homes, two schools and more office space.
The recession and accompanying drop in land values has caused the developers to seek a new agreement.
Lewis-Hillwood said it already has invested $32 million into Renaissance, including land-use entitlements, property acquisitions and other site investigations.
Roughly $15 million of that was put toward tenant relocation, demolition and remediation costs, of which $11.7 million went to leasehold agreements with the six tenants at the heart of the compromise.
The developers were obligated to pay more than $21 million for the relocation of the tenants, and want to recover the $11.7 million it has invested if a permanent restructured contract is not approved.
Under the interim agreement, Lewis-Hillwood will be reimbursed $12.5 million from future sales of the airport portion of the site to any new developer.
The agency and the developers have agreed to negotiate on a permanent restructured contract until Sept. 30, 2010, at which time each party can walk away from the deal.
The agreement means taxpayers take on some of the financial responsibility of the project, which at one time rested solely with the developers, Steel said.
“In 2003, when we struck the original deal, the agency had no money to put into the project, and (Lewis-Hillwood) advanced the money,” Steel said. “And then we came into money and deployed the money to projects around town. We don’t have a lot of money left to offer.”
To come up with the $10.9 million, Steel reallocated money from tax-exempt bonds to taxable bond funds and used surplus dollars from other projects that came in under budget.
“At the end of the day, it was scraping money out of the side of the honey jar,” he said. “The well is dry.”
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