CITY OF SOUTH GATE RECEIVES $5.1 MILLION FROM SHOPPING CENTER DEVELOPER IN SUCCESSFUL P3 DEAL

City of South Gate and Kosmont Companies negotiations
result in major financial benefit for City Hall
The City of South Gate has received $5.1 million from Primestor Development, Inc., developer of the highly successful azalea Regional Shopping Center, located on Atlantic Avenue and Firestone Boulevard in South Gate; with a 95% Latino population base.

Kosmont Companies represented the City as its real estate and financial advisor, from the initial land acquisition stage to entitlements to the Project Agreement valued at around $100 million. Included in the Project Agreement between the City and Primestor was a "participation formula" Kosmont helped structure, whereby the City was eligible for a one-time performance-based share of profits if azalea exceeded valuation targets upon sale or recapitalization. As part of a recapitalization, the City received $5.1 million from Primestor.
THE PROJECT
The South Gate City Council and City Staff demonstrated their strategic leadership by approving the conversion of a former pipe manufacturing facility into the largest revitalization project in the City’s history. azalea Regional Shopping Center showcases nationally known tenants such as Walmart, CVS, Petco, Marshall’s, Ross, Michael’s, Forever 21, and In-N-Out. It encompasses 385,000 square feet on 32-acres, with 38 retailers and restaurants.
Commentary from City of South Gate Vice Mayor
Jorge Morales and Kosmont Companies
President Larry J. Kosmont, CRE
THE VALUE
azalea delivered major benefits to the community of South Gate including railroad safety crossing, City Hall annex, communal spaces, fountains, local hiring and apprenticeship program, 900 square feet of green “living walls,” and a one acre outdoor plaza for community events..
THE RESULTS
Since its opening, azalea has generated $18M in revenues including the unique, one-time $5.1M participation payment as well as sales tax revenues that exceed $3M annually.

The effort began over seven years ago after a Kosmont Companies study identified a $200+ million sales tax leakage to other communities and guided the City on its use of a $34.2 million water utility bond financing issuance. This enabled the City to provide key infrastructure improvements needed for a financially successful development.
NEWS FLASH: APPROPRIATION OF FUNDS
On June 12, 2018, the City of South Gate City Council approved the appropriation of the $5.1 million. The funds were distributed for an Emergency Reserve to provide long term financial security in the event of a disaster, for the development of a new Employment Resource Center to provide residents critical job training and workforce development, for a revolving loan program to continue future economic development, and for the pre-payment of Other Post Employment Benefits (OPEB) to invest now and save millions later. Additionally as made possible from the succ ess of azalea and the unprecedented sales tax growth, the City has been able to add 3 additional Police Officers for increased public safety; which they haven't been able to do for over a decade!

This is what successful economic development is all about,
community prosperity and expanded safety services for the City South Gate.  
south gate azalea
Kosmont Companies delivers a future... not just a plan.
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Larry J. Kosmont, CRE ®
President & CEO
(213) 507-9000
Ken Hira
Executive Vice President
(949) 226-0288
Wil Soholt
Senior vice President
(310) 740-5681
Dan Massiello
Senior Vice President
(858) 220-3445
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