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The Baldwin Hills Crenshaw Plaza has long roots in the historically Black community of South Los Angeles. Paul Yelder and his family moved to the area in 1963, when Paul was 4, and the plaza was the only shopping center for miles. It remained a community gathering spot for decades. The plaza was one of the first regional shopping centers in the U.S. when it opened just after World War II, and it retained its iconic Streamline Moderne anchor buildings even as the 42-acre property expanded to include an indoor mall and a multiplex over the decades. When the property went up for sale three years ago, Yelder and hundreds of community members sprung into action to take control, redevelop and reinvigorate it as a community hub.

“All of us said we have to get this or otherwise a developer will come in doing something we don’t need and doesn’t fit, and annihilate this crossroads, our downtown, if done incorrectly,” said Yelder.

Yelder’s fears may come to pass, however, now that a large developer known for building high end housing developments in L.A. has bought the property, leaving Yelder and a community coalition that competed to purchase the complex fearing unwanted gentrification. They’re saying racism played a role in why their higher bid was rejected, and they plan to file lawsuits to stop the project from going forward.

Like many malls around the country, the plaza has been in a slump for years. In 2006 Chicago private equity group Capri Capital Investments bought the property for $136 million and spent $35 million on upgrades over the years. After the improvements failed to boost foot traffic — the last blow was the loss of Sears in 2019 — Capri turned to Deutsche Bank subsidiary DWS to liquidate the property and award the development contract. Yelder’s local consortium, Downtown Crenshaw, hoped to develop the property and create worker owned co-ops, small businesses and green space. The group also vowed that 80% of the housing would be priced below market rate. The group has $60 million in the bank and the support, both moral and financial, of community groups and local clergy.

In July, Downtown Crenshaw submitted its own offer — $115 million and a business plan — to buy the property. But last month a lower bid of $111 million by the Harridge Development Group, a Los Angeles-based developer of “urban infill” projects, was accepted by the deal’s broker, DWS. In a separate deal, Harridge also bought a Macy’s department store next door for $30 million. That gives Harridge control of a 42-acre site straddling Martin Luther King Jr. Boulevard and Crenshaw Boulevard. The entire project is estimated to cost $1 billion, Harridge CEO David Schwartman told the Los Angeles Times, and will take seven years to complete. In contrast to Downtown Crenshaw’s plans for community co-ops and lower income housing, Schwartzman said Harridge’s redevelopment plans include office space, retail and restaurants and 961 housing units — a mix of condos and apartments, with 10% of condos to be sold at below-market rates and 10% of apartments to be rented below market to low income or very low income tenants.

Niki Okuk, the board chair of Downtown Crenshaw, said that in addition to having the higher bid, her group offered more cash upfront for closing, a shorter closing period and was completely financed. “A lot of developers would make an offer, be awarded a sales contract, and then raise the money,” she said. “We did the reverse. We raised all of the money, and secured all of the financing before making our offer, which in my mind makes us quite credible.”

In an email a spokesman for DWS said the winning bidder “was selected based upon a number of factors which include both purchase price and proof of adequate financing, as well as development expertise.”

Downtown Crenshaw members dispute that DWS chose the group with more experience, saying their team, including SmithGroup, which was one of the firms that designed the National Museum of African American History and Culture in Washington, D.C., has more collective experience than Schwartzman in building similar projects, although this team has not previously worked together on a large project.

“Bottom line you have a corrupt bank that took a lower offer from a failed developer,” said Damien Goodmon, a Downtown Crenshaw board member, whose activism also includes the Crenshaw Subway Coalition. “Schwartzman doesn’t build things. He entitles things to be built, and then sells it off in pieces or whole. He has never been involved in building a project like this.”

In 2009, a Hollywood redevelopment company in which Schwartzman was the majority stakeholder had to reorganize after he personally filed for bankruptcy. Since then his projects have come under harsh criticism, one for squeezing Korean businesses out of a Koreatown mall. Another deal was the resale of the historic L.A. Times building rather than redevelopment. The Harridge group was sued for violating the rights of tenants and displacing communities of color, both in 2019. In 2017 it announced with fanfare the intent to build a gated community near the Inglewood NFL stadium. To date, that project hasn’t been completed.

Neither Schwartzman nor Capri responded to multiple requests to comment.

Downtown Crenshaw has been shut out of the sale of the Baldwin Hills Crenshaw Plaza property more than once. Last year CIM, a development company with allegedly strong ties to Jared Kushner, also won its bid but pulled out when Downtown Crenshaw and other neighborhood activists protested. Then the project was awarded to LivWrk, a New York-based developer that eventually pulled out, leaving DCR still standing, and still rejected.

Okuk speculates that there could be a racial aspect to the sale, saying DWS wouldn’t take calls from Downtown Crenshaw but responded when a white development partner called on Downtown Crenshaw’s behalf.

“We know that there’s been other credible Black teams that have made offers on this mall,” Okuk said. “And it’s interesting that in three or four rounds of bidding it has never been awarded to any of the incredibly credible, professional, well-capitalized Black teams.” She added that Downtown Crenshaw never got a direct response from DWS about its bid.

Another local Black developer who lost out on the bid for the property has also made accusations of racial bias and an unfair bidding process.

Downtown Crenshaw has said it is evaluating legal options against Harridge, and will also file suit against DWS for violation of fiduciary responsibility by not selling to the highest bidder.

Downtown Crenshaw has led protests against Schwartzman and the Harridge Group, including one in front of Schwartzman’s Beverlywood mansion. But local activists say neither their tactics nor their plans for remaking the property should matter to the sellers. “If I’m selling my house I don’t care if you’re turning it into a multifamily building. I want to get the best price for it,” Yelder said.

Downtown Crenshaw members stress the most important issues are community control and preventing gentrification that could displace long-term tenants in the area. Although L.A. County Supervisor Holly Mitchell and City Councilmember Mark Ridley-Thomas advocated for community involvement in the redevelopment of Baldwin Hills Crenshaw Plaza , the latter using the hashtag #40acresandamall, neither body has intervened to stop the sale of the property to outside developers.

L.A. Mayor Eric Garcetti has said only that the city has no stake in a private transaction but stressed that he hoped whoever redevelops the property is concerned with “affordable housing, not gentrifying the community.”

Goodmon said city leaders should have stepped in. “This is a large asset that will deeply impact the future of the community, and you say you don’t have a say? City Hall could have made clear that community ownership was imperative.”

Members of Downtown Crenshaw note that the pension funds making up the Capri Urban Investors portfolio include the Los Angeles Board of Fire and Police Pension Commissioners and the University of California Board of Regents.

“These were funds whose money was given through the public sector, and a large majority of (the money) was from people of color,” Goodmon said. Goodmon said Downtown Crenshaw is using the $60 million it raised, and plans to raise even more with a goal of using every means, including lawsuits, to push Harridge out of the project. Using the example of a community coalition’s seven-year struggle in San Francisco to wrest a project from a developer, Goodmon says Downtown Crenshaw is prepared for the long fight: “We will be ready to buy the mall when we are able to do so. This is more than a mall, though. It’s a movement, rooted in community.”

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