Garden Grove council members Tuesday evening approved a lease agreement for a proposed downtown commercial project by the developer behind trendy Orange County eating and shopping centers such as the Anaheim Packing House and Costa Mesa’s The Lab.

The development is part of an effort by city leaders to turn Garden Grove’s downtown – a patchwork of city-owned facilities, single family homes, big box stores and local businesses – into a walkable hub that preserves the city’s history by renovating, rather than bulldozing, existing structures.

Under the agreement, the developer, Costa Mesa-based LAB Holdings LLC, would purchase twelve single-family home properties for $3.38 million and convert them for commercial use. Five other properties will be leased and subleased to the company for just $1 a year for fifteen years, with the company being the first in line to purchase the properties should they go up for sale in the future.

Once the sale is finalized, the developer estimates the project would take three years to complete, according to a city staff report.

The properties, now owned by Garden Grove’s Housing Authority, were originally purchased by the city’s former redevelopment agency with the hope of consolidating them for a large development project. With the dissolution of redevelopment by Gov. Jerry Brown in 2012, the city transferred the properties to the Housing Authority, which has been using the homes for affordable housing.

Eleven homes have been used as month-to-month temporary rental housing for low-income families, who were notified of the development before renting. One of the homes has been unoccupied because of poor conditions, and the city does not have the money to maintain or renovate the homes, said city attorney Omar Sandoval.

Although the deal received a unanimous vote of the City Council, councilman Phat Bui expressed some reservations about the deal and the lack of public notice about the proposal.

“This [comes] as such a surprise. I thought we would have public hearings involving residents to get their input before rushing forward,” said Bui, who also expressed concerns that the development opportunity was not advertised to other developers.

In an email to the city council, resident Josh McIntosh also chided officials about the lack of public input.

“My concerns are that the public, nearly 180,000 residents, most likely do not know that this is about to happen. I have a lot of questions and concerns for this project, which has remained in back room discussions, with almost no public outreach done,” said McIntosh. “At the only public meeting, nearly two years ago, we had a lot of opposition to the project. Why has the city not brought this back for public discussion?”

The last time the city discussed the potential development at length was in April 2015, during a series of Planning Commission meetings about a zoning amendment to expand the types of commercial uses allowed in the neighborhoods around Garden Grove’s civic center.

At that time, several residents within the Civic Center zone had concerns about increased traffic, parking issues and unruly bar patrons seen in other downtowns, such as downtown Orange, which is near Chapman University, and downtown Santa Ana.

Others rave about the potential for revitalizing the city’s downtown and creating a space for residents who might otherwise go to Orange, Santa Ana or Fullerton to shop and eat.

LAB Holdings is owned by Shaheen Sadeghi and is known for converting vacant properties into retail spaces. In 1993, the company converted an abandoned factory in Costa Mesa into The Lab, a shopping center aimed at trendy youth and billed as an “anti-mall.” A complementary development, The Camp, was later added.

Sadeghi’s company also purchased a long-vacant Sunkist fruit packing house and in 2010 began converting it into the Anaheim Packing House, a gourmet food hall.

“We got really excited about the opportunity to preserve these homes and reuse them into something that’s more localization and personalization as opposed to the traditional retail commercial project,” Sadeghi said at the council meeting.

Contact Thy Vo at or follow her on Twitter @thyanhvo.

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