Embattled developer Arman Gabay’s long-stalled South LA complex may get redesign

A decade in the making, the retail project has $6M in federal loans in default

May.May 10, 2019 09:22 AM
From left: City Council President Herb Wesson, an aerial of the lot at 3660 Crenshaw Boulevard, and Arman Gabay (inset) (Credit: Getty Images, Google Maps, and Twitter)
From left: City Council President Herb Wesson, an aerial of the lot at 3660 Crenshaw Boulevard, and Arman Gabay (inset) (Credit: Getty Images, Google Maps, and Twitter)

A vision to transform a blighted vacant lot in South Los Angeles into a glitzy retail complex with a Target has yet to become reality a decade later. Now, with the project developer facing bribery charges, the city is opting for another plan.

The Los Angeles planning department is expected to approve the redesigned District Square project by month’s end, potentially setting the stage for 573 units to rise on Crenshaw Boulevard, according to the Los Angeles Times.

A Times investigation revealed the original project fueled a deep divide in City Hall, as officials argued over whether the massive development was worthy of the bountiful tax benefits it had received.

Embattled developer Arman Gabay, co-founder of Charles Co., originally wanted to build a two-story, 300,000-square-foot retail center. Target, Ross and Marshalls were all expected to open stores at the site. Last May, federal prosecutors charged Gabay with bribing an L.A. County official in exchange for business from county departments. The West Hollywood developer was arrested at his Beverly Hills home.

Because nothing came of Gabay’s original plan, a city official pushed to foreclose on the property. That prompted pushback from Mayor Eric Garcetti and City Council President Herb Wesson. In 2010, Wesson had approved the project, along with $26 million in federal grants and loans to build it. Two years later, he signed off on an additional $6 million “float loan” that would help the developers stay on track while they found private financing.

And in July 2015, after the loans were close to being in default, Wesson secured Council approval to pay off some of that debt with federal money. The unbuilt project now has $6.3 million in federal loans in default. Campaign contribution records reveal Gabay had donated to Wesson’s campaigns. [LAT] — Natalie Hoberman

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