By Hillel Aron
By Joseph Tsidulko
By Patrick Range McDonald
By David Futch
By Hillel Aron
By Dennis Romero
By Jill Stewart
By Dennis Romero
The eminent domain takings in the area of what is now Staples and L.A. Live in the 1990s left many private landowners deeply embittered over being forced off their property at “market/fair value.” City Hall’s recent decision to let AEG sell seized lands means “they ‘flipped’ the property,” declares Marko Mlikotin, president of the California Alliance to Protect Private Property Rights. He calls the resale by private developers of lands taken via eminent domain “egregious.”
“The CRA was using public dollars to seize private properties. Shouldn’t that property revert to the original owner?” he asks.
It is almost impossible to tabulate how much money Anschutz made off the resale. Eminent domain was used in some form to take 107 of 152 lots around Figueroa, which were then consolidated into a huge property.
Today, the Villaraigosa administration and redevelopment officials are unable to tell L.A. Weekly such basics as which seized lots were involved in the private resale (which was allowed during Villaraigosa’s reign), and how much profit Anschutz may have realized. Do AEG’s leading political allies, Villaraigosa and Councilwoman Perry, owe the owners of properties seized under eminent domain — and bought with taxpayer help — an accounting? Perry, who represents the area, declined to comment on that issue.
The Weekly’s queries resulted in confused and conflicting answers, with Deputy Mayor Bud Ovrom, through a spokeswoman, saying that the Villaraigosa administration is not responsible for keeping track of how much profit Anschutz has made; he’s referring questions to the Redevelopment Agency. But the CRA does not keep track of this issue. Apparently, nobody does. Moreover, although the Chief Legislative Analyst’s office generated the original, highly detailed figures claiming that giving the bed tax to Anschutz was a good deal, the current Chief Legislative Analyst, Gerry Miller, did not return calls made by the Weekly.
Advocates of the L.A. Live redevelopment argue that Anschutz, AEG and its related companies took a financial risk by building in a blighted area and should be rewarded. AEG, asked to comment on whether they made a profit reselling the land, declined to comment.
But Mlikotin dismissively notes, “Taxpayers are subsidizing these projects, but then developers and brokers are making huge profits.”
Many political insiders see AEG, its president and CEO Tim Leiweke, and Anschutz as comprising a shadow government that continually persuades City Hall’s leaders to funnel public money to downtown, at the expense of South Los Angeles, the Eastside, the Valley and several other areas.
In fact, although the Los Angeles public is not aware of them, huge, additional subsidies are about to flow to the L.A. Live/Staples area. With a push from Villaraigosa and Perry, $50 million is being taken from the state Housing and Emergency Shelter Trust Fund of 2006, bonds approved by California voters to finance housing for battered women and the poor — or so voters thought. But in Los Angeles City Hall, the pols sought $50 million from the bond, a large chunk of which they plan to spend on sidewalk and street amenities to dress up Figueroa Boulevard downtown — which feeds directly into AEG’s publicly subsidized lands.
Mlikotin believes that “sound redevelopment projects don’t require developers to feed at the public trough or require eminent domain to create profitable business ventures. When public agencies continue to offer subsidies, why would any developer want to pay full market price, when they know that the local CRAs will provide taxpayer funding?”
Jim Suhr, a veteran developer who has worked both in large-scale and small development companies, tells the Weekly that the breaks AEG got, as well as the diversion of the bed tax “are not uncommon for major deals” in the U.S.
But, Suhr notes, rather than being a forward-thinking venture, the L.A. Live project actually looks backward.
“The pattern of redevelopment over the past 50 years has been about land assemblage and large-scale projects,” he explains. The Staples Center required a large developer — “you can’t do a small-scale sports arena,” he says, with a laugh — but “you can do small-scale urban-center buildings, as Pasadena and the Third Street Promenade proved.”
Instead of amassing one privatized corporate block of land, Suhr argues, “The city could have worked with 30 small development projects, which could have accomplished the same mix.”
That more forward-looking kind of redevelopment often increases revenues for smaller landlords and businesses. It generally does not concentrate huge profits, or tremendous political power, in the hands of one developer, like Anschutz — or the New York–based Related Companies, the chosen megadevelopers for the currently stalled luxury Grand Avenue hotel and shopping project.
Culver City is reaping the success of a redevelopment strategy that spreads the wealth rather than concentrates it. According to Todd Tipton, redevelopment administrator with the Culver City Redevelopment Agency, it financed about 20 smaller loans to restaurateurs, tenants and existing landlords in order to rehab building facades and complete several other upgrades near the intersections of Culver and Washington boulevards.