California Apparel News

Caruso Affiliated, the developer of The Grove and The Americana at Brand upscale lifestyle centers, could be facing another fight over its latest project in Arcadia, Calif.

The developer intends to start building The Shops at Santa Anita, a new luxury center, next year in Arcadia, located 13 miles east of Glendale, but a lawsuit filed by retail-center developer Westfield LLC could set Caruso’s plans back.

Westfield filed the suit on the Caruso development’s environmental-impact report (EIR). Construction cannot begin without a green light on the environmental-impact report.

Westfield’s suit alleges that Caruso’s EIR, which was approved by Arcadia’s City Council on April 17, 2007, did not tell the public the entire story of what Caruso plans to do with The Shops at Santa Anita.

The suit’s first hearing was scheduled for May 23 in Los Angeles Superior Court. Westfield runs retail center Westfield Shoppingtown Santa Anita, which is adjacent to the site of the Caruso project.

The suit states the EIR misrepresented the Caruso project as providing “complementary” retail to the Westfield center. Westfield’s lawyers fear that the new development will “duplicate” the uses already available at Westfield’s mall, which features an AMC 16 Theatres and specialty retailers including Ann Taylor, Bebe and Abercrombie & Fitch.

The suit alleges the EIR did not fully discuss the environmental impacts that will be caused by the Caruso project, including increased noise and traffic. It also stated the EIR ignored the plans of the developer and its partners, which could include tearing down historic buildings at the Santa Anita Racetrack and possibly building residences at its retail project.

Westfield has its own plans to build more retail in Arcadia. By 2009, Westfield will open a 115,000-square-foot outdoor retail center called The Promenade, which will offer 30 retailers, including Ruehl, Active, Banana Republic and Chico’s.

The Promenade also is adjacent to the unused parking lot where Caruso plans to build The Shops at Santa Anita. The Caruso project will feature a 3.5-acre lake surrounded by restaurants and quaint architecture inspired by a shopping district in neighboring Monrovia, Calif.

Caruso Affiliated developer Rick Caruso and his lawyers declined to be interviewed for this story. But one of his Arcadia-based supporters, a real estate agent named Jeff Bowen, said he does not believe the Westfield suit was filed to protect Arcadia residents.

“They’re trying to stall,” said Bowen, a 50-year resident of Arcadia. “They’re trying to stall long enough to get their project opened before Caruso gets the chance to open his project.”

Westfield lawyers did not answer requests for an interview. A representative for Arcadia First!, a residents’ group funded by Westfield, deferred comment until after the May 23 hearing.

In 2007, the Caruso project was threatened with political action when Arcadia Now! began a petition drive to place the Caruso development on a municipal ballot. The matter was never put on a ballot.

EIR lawsuits, also called CEQA suits, were once intended to be a method where a municipality’s residents could gain detailed information on incoming developments. But they are frequently used as a weapon by developers, according to Larry Kosmont. He was a director of community development for the city of Burbank, Calif., from 1983 to 1986 and now is president of real estate consultants The Kosmont Companies, based in Encino, Calif.

“It’s like a hit to the solar plexus,” Kosmont said of the CEQA suits. “It creates an immediate reaction in time and money.”

Lawsuits and political fights are familiar to Caruso. According to the developer, he spent $20 million to fight lawsuits and political measures so he could build The Americana at Brand.

General Growth Properties Inc., which operates the nearby Glendale Galleria retail center, sued Caruso and also waged a political campaign to stop The Americana with a popular vote in Glendale.

In 2004, General Growth supported a Glendale municipal referendum to halt development of The Americana. The referendum was defeated.

In November 2007, a Superior Court jury ordered the owner of the Glendale Galleria to pay $15 million in punitive damages to Caruso. Caruso accused General Growth of illegally threatening to shut out the Cheesecake Factory from other General Growth properties after the restaurant chain showed interest in opening at The Americana.

In a May 15 speech given at the Los Angeles Athletic Club in downtown Los Angeles, Caruso said more than 1 million people visited The Americana during its first week of business. He also a quoted a Morgan Stanley study stating that his retail centers do $727 in sales per square foot, while an average shopping center does $414 in sales per square foot. A separate lawsuit is holding up another Caruso Affiliated development, according to Caruso. The Village at Playa Vista, planned for Los Angeles, will not be built until a lawsuit against the landowners, Maguire Properties Inc., is resolved.