Hawthorne Regroups After Loss of Watt Development

Hawthorne officials are looking for fresh redevelopment ideas as the city digests the news that the $200-million Watt redevelopment project fell through because the developer could not obtain financing.

Mayor Betty J. Ainsworth Monday announced the abandonment of the 20-acre office and hotel project after a closed-door session of the Hawthorne Community Redevelopment Agency. The developer, Watt Investment Properties Inc., said its problems with financing stemmed from an oversupply of office space in the South Bay.

The city has no other development plans for the site at Rosecrans Avenue and the San Diego Freeway, said Ainsworth.

The loss of the project, which was to have generated an estimated $800,000 a year in hotel and sales tax revenues for the city, was “a big disappointment,” Ainsworth said Tuesday.

Property Owners Relieved

While city officials and the developer expressed regrets, those who own business and residential parcels in the redevelopment area said they are relieved that they can proceed with their own plans for their properties.

Those plans have been in limbo since the area was named a redevelopment area in December, 1984. No building permits have been granted since the area was designated for redevelopment.

Beth Garrow, administrative assistant to the redevelopment agency, said she received about 25 phone calls Tuesday from area property owners asking about the mayor’s announcement the previous night. She said letters will be sent to area landowners telling them they now can file for building permits to develop their properties.

“At least we can start making plans again,” said Mark Slawinski, who owns a typesetting business in the redevelopment area. He has repeatedly asked the Redevelopment Agency to resolve the fate of the 20-acre site, which includes about 70 parcels.

Mark Phillips, a spokesman for Watt, said Tuesday that the company has given up on the Hawthorne project mainly because of the soft office market with vacancies of 20% or more in the South Bay. Lenders are unwilling to finance office development here as a result, he said. Watt’s plans called for two hotels, six office towers, at least three restaurants and some retail development, he said.

Phillips said that while the office market was strong when the project was envisioned by Watt 2 1/2 years ago, today there is an oversupply of offices. Some buildings are offering rent reductions of 20% to 35% to attract tenants.

He said that while indecision on the part of the City Council played a role in the lenders’ wariness about the project, the main problem is the high vacancy rate.

The project has been subject to numerous troubles and delays since it started more than 3 1/2 years ago.

The first developer chosen to build on the site, Andrex Development Co., backed out after about a year because it found its lower-density development plan would not generate enough profits.

Councilman Steven Andersen, a lawyer whose firm once represented Andrex, declared a conflict of interest that kept him from voting on the 20-acre site until a few months ago.

Crucial Vote Lost

While Andersen was ineligible to vote, Councilwoman Ginny M. Lambert threw the project into confusion in March when she said that she could not support the Watt project, citing its traffic impact on the neighboring Holly Glen residential area. Her vote was crucial because four council votes was needed to condemn properties for redevelopment.

Andersen announced in May that sufficient time had elapsed since his firm’s involvement with the former developer, that he was free of conflict and could vote on the redevelopment plan.

But the Watt project never came to a council vote because the developer could not put the package together to submit for council approval.

In interviews Tuesday, city officials said that they will now concentrate on other redevelopment projects that would bring in much-needed revenues.

Councilman Andersen said Tuesday that the city has several sites in mind other than the 20 acres Watt planned to develop. These include a 35-acre Mattel Toys Division site on Rosecrans Avenue east of the San Diego Freeway, he said.