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Burbank scrambles for IKEA deal

Retailer wants a bigger store but the deal to move gets complicated.

November 03, 2012|By Alene Tchekmedyian, alene.tchekmedyian@latimes.com
  • A shopper goes into the IKEA store on San Fernando Road store in Burbank.
A shopper goes into the IKEA store on San Fernando Road… (Raul Roa / Staff…)

Burbank has initiated a series of funding deals to keep IKEA — a top sales-tax revenue generator — within city limits.

The Swedish furniture retailer — a retail powerhouse in Burbank for more than two decades — has outgrown its current building has been looking for about a decade to expand its operations, said IKEA spokesman Joseph Roth.

“Parking is challenging, the loading zone is challenging, the store itself is too small,” he said.

The retailer already has its eye on a property — located at 805 South San Fernando Boulevard — that is twice the size of its current location, but it’s occupied by Western Studio Service and a number of office tenants.

The owners of Crown Realty and Development are willing to sell the property to the retailer provided it can acquire the current IKEA building.

“We are very excited about this opportunity and are optimistic about staying in Burbank for the long term,” Roth said, adding, “At this point, we haven’t committed to anything yet.”

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But here’s where it gets tricky.

After redevelopment agencies were dissolved statewide, Burbank was left holding the bag for roughly $42.7 million in unpaid redevelopment-related loans and obligations.

In March 2011, the Redevelopment Agency transferred the current IKEA building, along with 20 other agency-owned properties, to the city as part of a debt pay-down plan. The 21 property transfers reduced the agency’s debt by $15.6 million.

The transfer of the IKEA building to Burbank would appear to leave city officials in a prime position to make the deal for the larger property happen, but last year the state invalidated all property transfers between redevelopment agencies and their respective cities made after Jan. 1, 2011.

The California Department of Finance isn’t slated to determine the validity of the property transfers until mid-2013, leaving the IKEA building deal in flux. But city officials say the potential damage from the loss of IKEA is too great to wait, so they’re taking a different approach.

The Burbank City Council this week voted unanimously to transfer the $1.3-million property to the so-called Successor Agency — a sort of middle-man agency set up to wind down redevelopment-related obligations and assets — while also increasing the debt owed to the city by the same amount.

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