LOS ANGELES BUSINESS JOURNAL

September 24, 1990.

CRA CUTS $50 MILLON DEAL WITH DEVELOPER OF HOLLYWOOD PROJECT

By CHIP JACOBS

Staff Reporter

The Los Angeles Community Redevelopment Agency will funnel up to $50 million to a private developer who is on the verge of bailing out of a $300 million project viewed as the cornerstone of Hollywood's economic revitalization, the Business Journal has learned.

Under a deal being negotiated between the CRA and Hollywood Promenade developer Melvin Simon & Associates, the city would take an equity stake in the project or simply give Simon a grant or low-interest loan, according to knowledgeable city sources. The amount of public money will be in the tens of millions of dollars and $50 million was deemed a ballpark figure. It is unclear when the Promenade would get the money or how the CRA would fund it, sources said.

Politically, CRA funding of the Promenade could become a major source of controversy for the agency when the City Council reviews it.

Council members Zev Yaroslavsky and Gloria Molina, both of whom sit on the council's Community Redevelopment and Housing Committee, have assailed the CRA and its leadership for spending too much money on lavish commercial projects at the expense of affordable housing, homeless shelters and economic development.

Attempts to reach Council members Zev Yaroslavsky and Gloria Molina were unsuccessful. CRA board chairman Jim Wood did not return Business Journal phone calls.

"When the project comes to Community Redevelopment & Housing committee it will get a very thorough review, as every CRA-sponsored project does," said Gerry Hertzberg, legislative aide to Gloria Molina. "I am sure the committee will want to examine if this money would provide the greatest redevelopment bang for the buck."

The 1.1-million-square-foot Promenade, slated to wrap around Mann's Chinese Theatre on Hollywood Boulevard, is directly across the street from the now bankrupt Roosevelt Hotel. First proposed five years ago, the project had a ground-breaking ceremony earlier in the year, but no construction has taken place since then. According to plans, the Promenade will consist of a 350-room hotel, a 400,000-square-foot-office building and 275,000-square-feet of retail space.

"Here is a project that was approved by the city when the economic times and real estate development climate was much stronger," said one city source, who spoke on the condition of anonymity. "In the intervening years the Promenade did not go forward and we don't know why."

The Promenade has been called one of the most critical commercial developments proposed in Hollywood in the last decade. Reportedly, the fate of a 1.7-million-square-foot "urban village" backed by the wealthy Bass family of Texas hangs on the outcome of the Promenade.

To date, however, the Promenade has foundered because of its inability to secure financial backing, commercial tenants or a major hotel operator. Now, with the Southland real estate market slumping and the economy on the brink of recession, Simon may be considering folding up his Hollywood tent without CRA money.

"The Promenade is very, very important to the future of Hollywood, though its renaissance could take a different tact if it didn't go through," said Cooke Sunoo, CRA project manager for Hollywood. "It is important to understand, though, that the Promenade will add tremendous vitality to the area."

Sunoo said negotiations with Simon were "fluid" and could be completed within the next 30 days. Before the funds are approved, the project still requires approval by the CRA's board of commissioners and the Los Angeles City Council.

If the $50 million in public money was approved, it would represent nearly 19 percent of the CRA's $267.5 million budget for 1990-91 and half what the agency spent on Convention Center improvements.

Michael Marr, vice president in Simon's West Los Angeles office, would not comment on the status of the negotiations. "We have been dealing with the agency for a number of years for an owner participation agreement and don't think it's appropriate to discuss the state of negotiations," Marr said.

Robert Tague, CRA chief of operations, emphasized that nothing has been finalized. "There is no deal consummated on this project and no dollars agreed upon," Tague said.

Originally, Simon agreed to give the city $1 million for social service programs in Hollywood and $9 million in improvements for computerized stop lights and street widening projects. The future of those public improvements, part of the project's environmental impact reports, may now be up in the air. In addition to the improvements, Simon agreed to anchor the Promenade with two entertainment-oriented museums, the American Cinematheque and the Hollywood Exposition.

Hollywood Chamber of Commerce President Larry Kaplan said the collapse of the Promenade would strike a temporary blow to attempts to restore economic vitality to the once-booming area.

"Psychologically, it would have a negative impact in the short run," Kaplan said. "In reality, it wouldn't be as severe." For the CRA to give Simon a $50 million subsidy, "it would mean a lot of money not going to other redevelopment projects," he added.

The CRA's Sunoo noted that there is some commercial activity being undertaken in Hollywood. The company that owns the Guiness Book of World Records is planning a museum on Hollywood Boulevard near its intersection with Highland Avenue, Disney is renovating the El Capitan Theater west of Highland and United Artists is refurbishing the Egyptian Theater, east of Highland. Meanwhile, a three-level, $36 million shopping complex called the Hollywood Galaxy, is being developed near the Promenade by Los Angeles-based Kornwasser & Friedman Commercial Properties.

"In general, there is more optimism in Hollywood, from a real estate point of view, than virtually any other Los Angeles area," said Robert Waller, a sales consultant with Coldwell Banker's commercial division. "It's ready for a major project like Simon's."

Still, the CRA's $922 million plan for revitalizing Hollywood remains tied up in court, the object of community fears that the agency would gentrify the area. The CRA earmarked roughly $10 million to spend in Hollywood this year, using money from its successful Bunker Hill redevelopment project. No tax increment money generated by Hollywood projects can be spent there until an appeal, filed by a community group called Save Hollywood Our Town, is heard in March.

Money Train, published in Los Angeles City Beat. Why would U.S. Congressman Ernest Istook from Oklahoma come to Los Angeles to raise money? Perhaps because he holds the purse strings to critical federal transportation dollars.
March 10, 2005

MOVING DOWN THE ROAD, Pasadena Weekly
http://chipjacobs.com/a_movingdown.html
Moving Down the Road, published in the Pasadena Weekly. The Caltrans 700,000 square-foot tower owes its existence to the 1994 Northridge earthquake, union muscle, and a tincture of politics.
July 10, 2003

TUNNEL VISIONS, Pasadena Weekly, Caltrans Tenants Association
http://www.caltranstenants.com/tunnel.html
Tunnel Visions, published in Pasadena Weekly. Caltrans may dig deep to find a way out of its 710 Freeway debacle.
(Part III of Corridor of Shame series)
May 22, 2003

THE UNTOUCHABLES, Pasadena Weekly, Caltrans Tenants Association
http://www.caltranstenants.com/slumlord.html
The Untouchables, published in Pasadena Weekly. Slumlord Caltrans uses legal immunity to hold tenants and the cities of Los Angeles, Pasadena, and South Pasadena at bay, as long-needed repairs to homes the agency owns along the proposed 710 Freeway route fester. (Part II of Corridor of Shame series)
May 15, 2003

NO EXIT, Pasadena Weekly
http://chipjacobs.com/a_noexit.html
No Exit, published in Pasadena Weekly. Once stately properties that Caltrans bought 30 years ago to complete the still unfinished Long Beach 710 Freeway stand as a testament of neglect by one of the most powerful agencies in California. (Part I of Corridor of Shame series)
May 8, 2003

SOME MTA DRIVERS GET PHYSICAL, Daily News of Los Angeles
http://chipjacobs.com/a_mtadriversphys.html
Some MTA Drivers Get Physical, published in Daily News Los Angeles. Attacks on Metropolitan Transportation Agency riders not always punished and nearly 20 cases remain unsolved or lost due to poor record keeping.
June 24, 1996

SUBWAY TUNNEL WALLS AT RISK, REPORT WARNS, Daily News of Los Angeles
http://chipjacobs.com/pdfs/subwaytunnelwallsatrsk1.pdf
Subway Tunnel Walls at Risk, Report Warns, published in Daily News Los Angeles. Just three years after the first segment of the Metro Red Line was opened at a cost of $1.45 billion, the Army Corps of Engineers says the subway’s concrete walls are at risk of being eaten away by chemical-laced ground water.  MTA officials say water-damage threat small. 
April 11, 1996

MTA SPENT BIG TO SUGARCOAT TUNNELING, Daily News of Los Angeles
http://chipjacobs.com/pdfs/mtaspentbig1.pdf
MTA Spent Big to Sugarcoat Tunneling, published in Daily News Los Angeles. During the 1994 holiday season, the Metropolitan Transportation Agency spent about $400,000 in public funds to bring a Yule-tide bonanza to Hollywood boulevard. Opponents say humbug to mitigation efforts, labeling it as pork barrel or misguided.
September 24, 1995

HOMES OWNED BY CALTRANS NOT KEPT UP, RECORDS SHOW, The Los Angeles Times
http://chipjacobs.com/a_homesowned.html
Homes Owned by CalTrans Not Kept Up, Records Show, published in The Los Angeles Times. Dozens of homes the state acquired along the un-built Long Beach (710) Freeway pathway sit in such disrepair they either can’t be leased or whip up renters’ complaints about slumlord practices. Twenty-seven homes still part of the holdings are not even needed to construct the long-delayed project. Caltrans defends maintenance.
April 26, 1995

CALTRANS MISSED SAFETY DEADLINE, San Gabriel Valley Tribune
http://chipjacobs.com/pdfs/caltransmissed1.pdf
CalTrans Missed Safety Deadline, published in  the San Gabriel Valley Tribune. Despite a legally etched state deadline, Caltrans missed a key deadline to strengthen more than 1000 freeway bridges, including most of the structures crippled in the Northridge earthquake. Bridge contracts overdue.
February 4, 1994

PROBLEMS PILE UP ALONG METRO LINE, San Gabriel Valley Tribune
http://chipjacobs.com/pdfs/problemspileupmetro1.pdf
Problems Pile up Along Metro Line, published in San Gabriel Valley Tribune. First came the charges of shoddy construction. Then the claims of massive cost overruns.  Now more troubles are brewing for Los Angeles’ new subway:  wage violations against workers actually building the Metro Red Line.
October 16, 1993

FREEWAY WORK: A PERILOUS PAYCHECK, San Gabriel Valley Tribune
http://chipjacobs.com/pdfs/freewayworkperilouspaycheck1.pdf
Freeway Work: A Perilous Paycheck, published in San Gabriel Valley Tribune. Caltrans workers face death everyday and Caltrans needs to further protect its exposed maintenance crew.
Sept. 4, 1993

TRANSIT COMMISSION AUDITORS CAST EAGLE EYE ON TUTOR’S COSTS, Los Angeles Business Journal
http://chipjacobs.com/a_transit.html
Transit commission Auditors Cast Eagle Eye on Tutor’s Costs, published in Los Angeles Business Journal. Los Angeles County Transportation Commission auditors are questioning tens of thousands of dollars in overhead expenses that powerhouse Metro Rail contractor Tutor-Saliba Corp. submitted two years ago, according to a preliminary audit obtained by the Business Journal.
September 28, 1992

METRO RAIL COST-OVERRUN TAB ADDS TO CITY HALL FISCAL WOES, Los Angeles Business Journal
http://chipjacobs.com/a_metrorail.htm
Metro Rail Cost-Overrun Tab adds to the City Hall Fiscal Woes, published in Los Angeles Business Journal. The City of Los Angeles is on the hook to pay $100 million in Metro Rail Red Line construction overruns under a little-known cost-sharing deal with the Los Angeles County Transportation Commission.
March 16, 1992

Title: The man
URL: http://www.chipjacobs.com/wd_theman.html

Almost broke, living on handouts with his mom in a shabby apartment outside post-war Los Angeles, Gordon Zahler, a paralyzed kid in his mid-twenties got an idea. He'd re-sell the music of a dead man -- the music his father, Lee Zahler, composed during his workhorse career in early Hollywood. Within a few years, mother and son would be working for MGM on a Doris-Day romp and for Hollywood's most beloved hack, Ed Wood Jr., on Plan Nine from Outer Space. A decade later they had a house above the Sunset Strip in a comeback story too farfetched for any screenplay.