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Grand Avenue: Is L.A. City Hall's Pet Project Foundering? 

Not a stick of the posh project is up, but a taxpayer subsidy could hit $123 million

Wednesday, Jun 11 2008
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WITH ESTIMATES OF TAXPAYER subsidies for the luxurious Grand Avenue project skyrocketing by tens of millions of dollars, and the wealthy developer unable to secure a construction loan to get started, county Supervisor Michael D. Antonovich last week publicly chastised the Grand Avenue Authority — a little-known government agency that continually operates behind closed doors while overseeing the troubled, $3 billion endeavor that promises to revitalize downtown L.A.

The unusually obscure board, made up of elected and appointed officials from the city and the county — and including well-known names like Los Angeles County Supervisor Gloria Molina and Los Angeles City Councilwoman Jan Perry — held a 50-minute, closed-door “executive session” on June 9, just three days after a fed-up Antonovich declared that a decision to delay the project “should not be made by a joint-powers authority — one that cancels many of its meetings — without an open and full debate in front of the elected city and county decision makers and the public.” In the end, the Authority refused to grant another delay to Related Companies, the project’s developer.

Antonovich is the second elected official to express doubts about the project in recent weeks, after years of its near-unanimous touting by Mayor Antonio Villaraigosa, billionaire Eli Broad and others who say it will usher in a major public park for the Civic Center and enliven downtown with a five-star hotel and luxury shopping — all nearly at the doorsteps of City Hall and Disney Hall.

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On May 21, City Councilman Bill Rosendahl became the first council member to vote against public subsidies for the project. Neither Antonovich nor Rosendahl has had much impact on their colleagues, however. In the scant 10 minutes on June 9 given to proceedings once they were finally opened to the public, nobody in charge of overseeing Grand Avenue — not Molina, not Perry and not Los Angeles County CEO William T. Fujioka — publicly commented on the growing problems.

Even so, the 10 minutes they alloted to public comment was significantly longer than the group’s lightning-speed review of the Grand Avenue Authority budget, another controversial issue. They unanimously approved the budget — in two minutes — and the only serious question came from Cecilia V. Estolano, an Authority board member who represents the powerful Community Redevelopment Agency.

Estolano asked for a more “detailed” accounting of how the budget is to be spent to oversee one of the most complicated, multigovernment, multi-investor — and mostly private — developments ever in Los Angeles. Yet the budget Estolano was staring at was less than a page long and peppered with vague items, such as $6 million for the developer and consultants for “park design and management.”

Unlike other Los Angeles government budget documents, this one did not disclose the public salary of its managing director, Martha Welborne. (The committee is funded by city and county monies, coupled with some contributions by the developer.) Nor could Welborne tell the L.A. Weekly how long it would take to create a detailed budget, or if those spending details would be made public.


THIS IS THE THIRD time the developer, the Related Companies, has sought a postponement, but the first time it has heard “no.” The firm is scrambling for a construction loan, even after a $100 million investment from a fund controlled by Sheik Mohammed bin Rashid Al Maktoum, the ruler of Dubai, which has been cited by the U.S. for human-rights violations. Bin Rashid Al Maktoum was welcomed with open arms — and almost without public discussion — by the politicians on the Grand Avenue Authority this year. He and his family now control 45 percent of the project.

“The Grand,” as it has been dubbed, was peddled to the media and taxpayers as a shining example of a public-private partnership. Yet not a stick of it has been built, and taxpayers have continued to see their contribution skyrocket. No private-sector lenders, thus far, are willing to cough up a construction loan, but Bill Witte, president of the Related Companies, says he was told that state officials will recommend approval for yet another taxpayer subsidy for it — this time, $30 million in state grants for a proposed Civic Center park, on top of the more than $50 million that has already been designated for the park.

Los Angeles taxpayers are already on the hook for a $60.5 million subsidy to the entire project — or so they thought, until Rosendahl dug into the fine print last month and determined that the subsidy could actually reach $123 million. (This is because the public funds are being paid to the developer over time rather than up-front. These monies will come from guest-paid hotel taxes diverted to the developer; these taxes would normally flow into city coffers.)

Rosendahl and Antonovich are from different ends of the political spectrum, but both now say taxpayers are not getting the full picture on the controversial and problem-plagued deal.

Reach the writer at tibbyrothman@verizon.net

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