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Trump's Ambassador Gambit 

Mired on Wilshire, tycoon scrambles to dodge school deal

Wednesday, Mar 11 1998
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For eight years, mega-builder Donald Trump, the poster boy of the get-richer-quick set, has quietly endured a $50 million beating out West. Worse yet, the drubbing has come at the hands of the L.A. school district, which has fought him tooth and nail over the site of the defunct Ambassador Hotel, which he owns with a consortium of investors.

But now Trump has launched one last bid to outflank the school district and recoup his losses with a massive commercial development at the Wilshire Boulevard site - a project that would torch the school district's hopes of building a high school there.

City staff and City Councilman Nate Holden immediately hailed the proposal. "The area needs jobs, it needs retail sales, and it needs services for the residents of the area," said Edward Saulet, a project manager with the city's Community Redevelopment Agency. "And it can use an entertainment complex."

As quickly, school-district officials denounced Trump's move as a political tactic that would almost certainly fail. "Clearly they'd like to generate political opposition to using this site as a school," school board member Jeff Horton said of the development proposal. "We're all for economic development and things that provide jobs, but we also need a school for the kids."

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Mayor Richard Riordan, caught between competing claims as L.A.'s "education mayor" and chief business booster, is standing for now with hands in pockets. "The development of the Ambassador site is a matter between the parties involved," he said Tuesday in response to queries from the Weekly.

The development proposal, floated by Trump Wilshire Associates, an international consortium anchored by the New York tycoon, is the first in years for the Ambassador site. Trump and his partners would raze the storied but long-shuttered Ambassador Hotel and replace it with a 23.5 acres of movie theaters, restaurants and so-called power retail outlets, such as electronics stores, office-supply outlets and home-products warehouses.

But there's more to this proposal than meets the eye. This plan is the child of desperation, a last-ditch bid by hard-pressed developers to turn a profit in Los Angeles and fight off school officials who have long wanted to build a high school. It's a battle that has dragged on for close to a decade, but also one that is reaching an almost unnoticed crescendo. If this current development proposal gains steam, the Trump partners could hold onto the land; if they fail, the school district could well take over through foreclosure, and perhaps even build a school.

L.A. Unified's trump card is a $48 million deposit placed on the land in 1990 as part of condemnation proceedings. Originally, these funds were intended as only preliminary compensation for the land, but after the real estate market crashed, the school district refused to pay more, and finally abandoned the condemnation proceedings. Trump Wilshire sued, asserting that the school district was acting unfairly and illegally. During years of litigation, however, courts sided mainly with the school district. Eventually, L.A. Unified issued an ultimatum: Hand over the land - or return the money.

Trump Wilshire Associates, meanwhile, already had spent the deposit - to retire its own mortgage on the land. This didn't matter during years of litigation, when the only people who had to be paid were teams of warring attorneys. But now time is running out for Trump Wilshire.

To date, the Trump partnership has hemorrhaged an estimated $50 million on costs ranging from attorney fees to insurance, security and property maintenance. But everyone has turned out a loser in this tale. The school district has nothing to show for years of litigation and millions of its own dollars, and a generation of children began and finished their public schooling without ever seeing construction started on the promised high school.

"I can't say I want to see a school at the Ambassador site because we legally abandoned that property," said Horton. "What they owe us is the money. We're not actively trying to acquire that land, but we still have this problem to solve. We still need a school somewhere in that neighborhood."

In the waning days of the 1980s real estate boom, Trump - long a force on the East Coast - let word circulate that he intended to build the world's tallest building, 125 stories, on the Ambassador site, and to put his name on it. The aging hostelry was effusively described as the most valuable real estate on earth.

Trump's plans did not include saving the historic and once-grand resort hotel, site of the famous Cocoanut Grove nightclub and the place where an assassin killed Robert F. Kennedy.

All the while, the school district had big plans of its own. Officials once estimated they could fill an Ambassador high school just with students from the nine blocks around the hotel site. Some of this crowding pressure will be relieved with the 1999 completion of the Belmont Learning Complex near downtown, but the Ambassador site remains pivotal. Its central location would allow the school district flexibility to relieve overcrowding at several nearby high schools. In addition, the land is basically flat and ready to build on.

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