Loading...

Buying Time at Playa Vista 

Is purchase option a gift horse or Trojan horse?

Wednesday, Aug 15 2001
Comments

A proposal to set aside half of the Playa Vista property for wetlands is a mixed victory for environmentalists and a shrewd connivance by developers desperate to stay in business. In the deal, announced last week with great fanfare, Playa Capital would hand over land west of Lincoln Boulevard, acreage on which the company originally planned to put businesses and homes.

But this is no gift.

Playa Capital is seeking top dollar for the land, considerably more than it paid in the first place. And the sought-after money would probably be used to finance the remainder of the project, which is currently on life support because of unflagging opposition by environmentalists seeking to stop the development entirely.

Related Stories

  • Marry, People 2

    After the U.S. Supreme Court cleared the way for same-sex marriage to resume in California last summer, people started getting their vows on pretty much right away. See also: Gay Marriage in California: What Happens Next? But California law still contained antiquated language that defined marriage as "a personal relation arising out of...
  • Glove Law Repealed

    Remember six months ago or so when it looked like everyone from your friendly neighborhood barman to your favorite sushi chef was going to remind you more of a surgeon than someone providing hospitality? That's because on Jan. 1, a law went into effect requiring plastic gloves for all hospitality...
  • Californians Like Teachers But Hate Teachers' Lifelong Tenure and Seniority: Poll 2

    If California teachers felt a shadow pass over today, it was the fairly stunning PACE/USC Rossier Poll showing California residents are sick of "last hired, first fired" teacher union rules and oppose the nearly automatic tenure system that makes it all but impossible to fire crappy teachers. Polls show that...
  • Whole Foods Fined for Overcharging California Customers 5

    Just last week we went into Whole Foods for quinoa and came out with one $150 grocery bag of God-knows-what (we think Parmesan crisps, an organic T-shirt and beer made by Franciscan friars was in there). We are used to, but puzzled by, this phenomenon. So we were more than a little...
  • Porn Delegation

    If a bunch of porn stars showed up at your place of work and begged you to do something, we bet you would. A contingent of adult performers visited the office of L.A.-based state Assemblyman Isadore Hall to personally ask him to back off of his bill to make condom...

The latest financial drag on Playa Capital is a lawsuit claiming that the developer needs to update and expand its environmental review of the 1,087-acre site. Although the case is not expected to go to trial until early next year, it‘s already had a profound consequence. Playa Capital was on the verge of receiving the first installment of $135 million in city-approved, tax-exempt Mello-Roos bonds to build Playa Vista’s streets, sidewalks, and other infrastructure. But the Weekly has learned that, because of the pending litigation, the money won‘t be immediately forthcoming. ”The city has decided we’re not going to proceed with the sale of Mello-Roos bonds at this time,“ said William T. Fujioka, director of the City Administrative Office, in an interview. ”We‘re going to take a cautious approach.“

Playa Capital spokespersons downplayed the significance of the city’s stance, but the company could use the first installment of that $135 million right now. For one thing, it‘s money that costs the developers virtually nothing and carries no legal risk -- the burden of repayment falls upon whoever buys Playa Vista’s homes, offices and stores. Moreover, sources in the financial world report that the New York investors behind Playa Capital are growing weary of putting money into the project and expect paying tenants by January 2002.

That timetable for opening Playa Vista‘s first units, the Fountain Park Apartments, could be difficult to meet unless another funding source is located, and that’s no sure thing. Playa Capital, however, downplays such issues. ”Any delay in the issuance of the bonds would not affect [Fountain Park‘s] opening,“ the company said in a statement. ”Nor has the fact that the bonds have not been issued affected our ability to obtain construction or bridge financing.“

Still, California’s simmering recession makes financing more difficult. The failure of dot-coms has already contributed to an 11 percent office vacancy rate in West Los Angeles, making such projects less attractive to investors; financing for speculative retail projects has reportedly dried up unless tenants have signed on for 60 percent of the space.

In the current financial climate, a funding delay could imperil any commercial project. And Playa Vista opponents hope to accomplish at least that much with their latest legal joust.

The lawsuit, filed July 26 by Santa Monica Baykeeper, raises familiar but unresolved issues, namely that the city‘s March 2001 environmental review of the first 169 acres scheduled for development failed to account properly for toxic chemicals at the site, fault zones that might become active in an earthquake and extensive pockets of potentially explosive methane gas. The suit also questions the adequacy of the city’s original 1993 Playa Vista Environmental Impact Report, done before any work began. Baykeeper‘s suit argues that the 1993 report is now outdated based on new regulations and a better understanding of the site’s characteristics. These shortcomings and others violate the California Environmental Quality Act (CEQA), according to court documents.

Playa Capital‘s financial vise helps explain last Thursday’s announcement that the Trust for Public Land has obtained an option to purchase approximately 193 acres of land along Ballona Creek for a sum to be determined later. The land will be appraised in the fall, and the Trust for Public Land, acting as a go-between, will then seek money for the purchase from the state Legislature and various federal agencies.

Attorney George Mihlsten, a senior partner at Latham & Watkins and a Playa Capital lobbyist, has reportedly told several environmental leaders in Los Angeles that the developer wants $200 million for the land, even though the property in question does not yet have necessary legal entitlements for development. (Playa Capital paid $101 million for the entire 1,087 acres in 1997.)

Environmentalists face the uncomfortable knowledge that paying to save part of the land could undermine efforts to save all of it. Profits from any land sale west of Lincoln could finance development to the east.

That‘s one possibility members of the Citizens United To Save All of Ballona coalition would prefer to avoid, in part by keeping the purchase cost down. ”We will be watching to insure the public receives a fair bargain for land that cannot be developed as the developer originally intended,“ said Baykeeper executive director Steve Fleishli.

The state paid roughly $26,000 to $28,400 an acre for coastal land in Malibu earlier this year and at Bolsa Chica in 1997, said Sabrina Venskus, executive director of the Ballona Wetlands Land Trust. Using those figures, she contends that ”no legitimate appraiser could value these 193 acres at more than $6 million.“

The distance between $6 million and $200 million is a solid indication of the gulf that remains between developers and activists.

Related Content

Now Trending

Los Angeles Concert Tickets

Slideshows

  • The World Cup Celebrated And Mourned By Angelenos
    The World Cup has taken Los Angeles by storm. With viewings beginning at 9 a.m., soccer fans have congregated at some of the best bars in the city including The Village Idiot, Goal, The Parlour on Melrose, Big Wang's and more. Whether they're cheering for their native country, favorite players or mourning the USA's loss, Angelenos have paid close attention to the Cup, showing that soccer is becoming more than a fad. All photos by Daniel Kohn.
  • La Brea Tar Pits "Pit 91" Re-Opening
    Starting June 28th, The Page Museum once again proudly unveils the museum's Observation Pit, which originally opened in 1952 but has spent most of the last half century closed. Now visitors can get an up-close look at Pit 91, which is currently under excavation. The La Brea Tar Pits, home of the Page Museum, is one of the world's most famous ice age fossil locations, known for range of fossils from saber-toothed cats and mammoths to microscopic plants, seeds and insects. The new "Excavator Tour" is free with museum admission if purchased online at tarpits.org . All photos by Nanette Gonzales.
  • Scenes from the O.J. Simpson Circus
    In the months after O.J. Simpson's arrest for the murder of Nicole Brown Simpson and Ronald Goldman in the summer of 1994, the drama inside the courthouse riveted the masses. But almost as much mayhem was happening right outside the building, as well as near Simpson's Brentwood home. Dissenters and supporters alike showed up to showcase art inspired by the case, sell merchandise, and either rally for, or against, the accused football star. Here is a gallery of the madness, captured by a photojournalist who saw it all. All photos by Ted Soqui.