"Burbank airport parking lot purchase a lemon?"

Saturday, August 7, 2004

Parking purchase a lemon?
Critics say airport overcharged for lot 
By Alex Dobuzinskis
The Los Angeles (CA) Daily News


BURBANK -- Bob Hope Airport officials contend their pending $41.5
million purchase of an adjacent parking lot is a good deal, but critics
argue the property should have been assessed before the sale agreement. 

Star Park is owned by Los Angeles-based Zelman Development Co., and the
airport's parking operation has been in a price war with Zelman since
the private lot opened in January 2003. The airport plans to buy 27
acres of the Zelman-owned property and use it for valet and rental car
parking.

In coming to a purchase price, the authority took into consideration the
$24 million Zelman originally paid to buy the property, plus $8 million
in improvements and a $7 million investment by an equity partner, said
Charles Lombardo, president of the airport commission.

Zelman, which is owned by Ben Reiling, negotiated the final purchase
price up to $41.5 million for the lot at Thornton Avenue and Hollywood
Way. 

"I think it was a fair amount, and for us as well as for Ben," Lombardo
said.

But Howard Rothenbach, chairman of the citizens group Restore Our
Airport Rights, said the airport should have had the Star Park property
assessed before agreeing to buy it.

"They're paying twice as much as it's worth; it's just unreasonable,"
Rothenbach said, adding that he expects the airport's parking rates to
double after it eliminates the competition from Star Park.

The Los Angeles County Assessor's Office has the Zelman-owned property
assessed at $28 million, said Robert Knowles, a spokesman for the
office. That includes both the 27 acres the airport is buying and four
acres that Zelman will retain.

But the assessed value is not what the property is worth on the open
market. After a sale, the Assessor's Office normally changes a
property's assessed value to the price it goes for, Knowles said.

The airport announced its plans to buy the Star Park lot in late June.
The purchase is part of a proposed agreement with the city that would
keep the airport from building a new terminal for 10 years. Among the
other terms of the agreement is a provision that would have the city
approve the Star Park purchase.

Zelman plans to put four restaurants and a food court on the four acres
it would retain under the deal.

Airport Commissioner Chris Holden said one of the advantages of the
purchase is that it would settle litigation between the airport and
Zelman. And in considering the purchase price, the airport had to
consider the improvements that went into it.

"They had created a parking business ... so it wasn't just simply a
straight land value calculation," Holden said.

The proposed sale of the property is subject to a year of escrow. The
airport is planning to issue bonds to pay for the purchase.


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