DEVELOPMENT:

February Hearing Expected After Numerous Delays

Waiting game continues at former Laguna Hills Mall site

Next year will mark the 10-year anniversary that Merlone Geier Partners paid nearly $110 million to buy most of the Laguna Hills Mall from Indianapolis-based Simon Property Group Inc., with plans to revamp and redevelop the struggling retail center just off the San Diego (5) Freeway and El Toro Road.

The future of the 68-acre project—likely to hold apartments and with far less retail space than before—remains unclear after several about-faces in plans.

More recently, there’s been accusations of bad-faith bargaining and unnecessary delays by the city from the San Diego-based developer of retail properties.

Laguna Hills city records indicate that discussions over Merlone Geier’s redevelopment plans for the site, once called Five Lagunas but now rebranded as the Village at Laguna Hills, are scheduled to take place in early February.

A December city council hearing was postponed, as the developer requested more time “to modify the previously approved Five Lagunas project,” according to city filings.

Apartment Focus

The last version of the Village at Laguna Hills that made its way to the city proposed construction of up to 250,000 square feet of new retail space, another 465,000 square feet of offices, a hotel with as many as 150 rooms, and 1,500 residential units, plus other amenities.

Altogether, the new development would run about 2.6 million square feet, according to a city presentation in March.

The mall site previously held almost 1 million square feet of retail space. Its base of retail now is significantly smaller in size, with the main enclosed area of the mall long shuttered and big-box department stores that Merlone Geier bought in separate deals razed over the past several years.

Annual tax revenue from the mall, around $1.5 million a decade ago, is less than a third of that now, according to city officials.

Who’s Stalling?

The December request for a delay in negotiation proceedings contradicts prior correspondence between the city and Merlone Geier earlier in 2021, which indicated the developer was eager to renegotiate certain terms of its development agreement, but that the city was “unable or unwilling to commence” that process over much of the course of 2021.

Litigation was suggested as a possibility if the city didn’t “timely engage” in such efforts, according to an October letter from the developer’s representatives.

Some members of Laguna Hills’ city council assert that it’s the developer that’s dawdled, not the other way around.

“This property was purchased in the year 2013 and was supposed to be finished in 2018,” Mayor Dave Wheeler said in a presentation last summer pertaining to the project.

A 20-year development timeline negotiated for the site early last year would mean the project’s completion could be stretched out to 2041, when “I will be 91,” he said at the time. “Most seniors who shopped at the Laguna Hills Mall will never see it finished at all.”

Merlone Geier representatives dispute Wheeler’s assertion that the project was supposed to be completed three years ago.

“This statement reflects a fundamental misunderstanding of land use entitlements,” they said.

Merlone Geier Partners, which was founded in 1993, says it has raised $4.3 billion in capital from institutional investors and has acquired 173 West Coast properties totaling 28.5 million square feet. ■