By Besha Rodell
By Patrick Range McDonald
By Michael Goldstein
By Dennis Romero
By Sarah Fenske
By Matthew Mullins
By Patrick Range McDonald
By LA Weekly
How did this extreme transformation — from a project involving a co-owner like CalPERS, one of the most transparent investors in the nation, to one with a co-owner like the Dubai royals, among the world’s most secretive investors — come to pass?
At least one well-known politician on the under-the-radar Grand Avenue Authority — Jan Perry, who represents much of downtown and voted to authorize Istithmar’s deal — appears not to have heard of the deal before approving it on March 17.
According to Eva Kandarpa, Perry’s communications director, the councilwoman learned of Istithmar’s proposed involvement at the Grand Avenue Authority meeting itself. Yet Related Companies’ Bill Witte some months ago helped throw a fund-raiser for Perry — a perfect time for her to have heard about the major ownership changes on the way. The media also played catch-up on March 17, with City News Service reporting that the meeting to decide co-ownership of the $3 billion project took less than five minutes.
According to City News, Molina, the Grand Avenue Authority’s chairperson, breezily stated of the process: “It’s all gone by so silently and so smoothly. You lawyers and accountants and financial guys must have done a great job.”
But if they haven’t done a great job, who would know, in what will be remembered by some development experts as one of the most hidden processes ever to usher in such a huge project in modern-day Los Angeles? Even the Grand Avenue Authority’s $4.4 million budget isn’t run through the city, county or redevelopment agency — but through a private nonprofit group.
Two Molina staffers verified to the Weekly that Molina did indeed comment on the silent, smooth nature of the goings-on. But in contrast to Perry’s claimed ignorance, Gerry Hertzberg, Molina’s policy and political director, stated, “The supervisor was aware of the change-in-ownership request quite some time prior to the March ... meeting,” and, “during that time, the request was subjected to financial and legal reviews.”
Illustrating the tangled relationships of those pushing Grand Avenue, Hertzberg is himself on the so-called Grand Avenue Committee of six people “implementing” the Grand Avenue Authority’s plan. This committee of insiders, which has the help of two pricey staffers, includes tycoons Broad and Nelson Rising and three others: a woman representing the land speculator and developer Thomas Properties Group; a politically connected downtown Latino-rights attorney; and a redevelopment-agency bureaucrat who works for Grand Avenue Authority member Estolano.
If Molina thought there should be more than five minutes of public review of the conditions placed upon Istithmar, she kept that to herself. Asked if Molina had spoken to CalPERS representatives to find out why they were abandoning the project, Roxanne Marquez, another spokesperson for Molina, said, “Not that I’m aware of.”
SUCH A LACK OF AWARENESS by elected politicians who have pushed hard for massive subsidies for the Grand appears to define the effort. In 2007, the Grand Avenue Authority canceled twice as many public meetings as it held: Six were canceled and three were held, according to county records.
As Mayor Villaraigosa pleads poverty at City Hall, pushing for numerous fee increases on residents, the city is outmatched in its negotiations over the Grand. In one of the major deals cut before Istithmar arrived on the scene, Related Companies, which developed Time Warner Center in New York, negotiated a 99-year lease of the public lands involved. The arrangement has allowed Related Companies to essentially make no payment on the land until the start of construction, costing the city and county — in other words, taxpayers — millions of dollars.
Taxpayers are also subsidizing the predevelopment work of those reporting to Rising and his co-chair Broad, both fantastically wealthy. Records show that Related Companies has paid only $600,000 into the Grand Avenue Authority’s $4.4 million budget.
And while the Los Angeles media were reporting that a $55 million “prepayment” for the land lease had been made by Related Companies, the fact is, no prepayment had been made. Local journalists almost certainly were misled by the cheery but false information from politicos, who eagerly back the Grand. (TheLos Angeles Timeson November 17, 2006, reported that the money had been paid.) In truth, the $55 million did not arrive until July 2007 — apparently costing taxpayers hundreds of thousands of dollars in interest.
Asked if taxpayers should be providing substantial subsidies to Dubai’s royal family, Hertzberg, Molina’s policy and political director, told the Weekly, “The public investment in the project is for special public benefits that bear no relationship to the ownership. We are providing investment in low- and very-low-income affordable housing, public open space and street-scape improvements.”
But how “special” are the benefits alluded to by Hertzberg?
Becky Dennison, co-director of the Los Angeles Community Action Network, which negotiated for greater community benefits, disagrees with Hertzberg. “They said there were benefits — but really it was ‘benefits’ that were required by law,” she says.
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