In 2009, Goldman Sachs had a very good year. The bank, bailed out to the tune of $10 billion in 2008 by American taxpayers, reaped a record $13.4 billion profit. While many Los Angelenos lost their houses, the bank's chairman, Lloyd C. Blankfein, took home $68 million in salary and a $9 million bonus.
PHOTO BY TED SOQUI
Luxury housing marches to the edge of land Playa Vista was forced to revive.
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On Friday, March 26, the Los Angeles City Council sweetened Goldman Sachs' pot — substantially. In a vote of 12 to 2, with Westside council members Bill Rosendahl and Paul Koretz opposed, the council handed the big firm significant additional development rights on 111 acres of property it co-owns at Playa Vista.
The vote allows Playa Vista's final build-out phase to dispense with land-use rules that permitted just 100,000 square feet of commercial space — about the size of a single Costco warehouse — to allow about 2.6 million square feet of luxury housing, a smattering of senior housing and about 341,000 square feet of retail, offices and public buildings — significantly more square footage than is contained in Chicago's 92-story Trump International Hotel and Tower.
In pure dollar terms, the new rights substantially boost the value of Goldman Sachs' property — by $145.6 million, according to land-use consultant Bill Christopher.
Because of city-government rules, the council must reconfirm its vote on April 6. Rex Frankel, an environmentalist who played a key role in protecting a large area of the nearby Ballona Wetlands from Playa Vista developers, calls it a "massive upzoning" and "giveaway to the wealthiest Wall Street 'banksters,' who, a year ago, wrecked the economy."
The dollar figure was determined by Christopher, who has consulted for Bear Stearns & Co. Inc. and developers Legacy Partners and Trammell Crow Company, and is a principal at Urban Concepts. He was commissioned in 2009 by environmental opponents to evaluate the additional development rights the City Council was weighing. He determined that without the bump in square footage, the land was worth about $5 million but would jump in value to $151.5 million with the new rights.
The agreement approved Friday goes far beyond what zoning and the city's Community Plan allow at Playa Vista, located between the federally recognized wetlands and the 405. Charles Rausch, a city planner, says the City Council's actions essentially "reenact" 2004 actions that were overturned by courts. In 2008, a Los Angeles County Superior Court judge tossed out the council's planned expansion due to an inadequate Environmental Impact Report, which has since been updated.
Before the vote, Koretz asked about mitigation being undertaken to deal with the property's methane-seepage issues, and wanted to know whether simple extra measures could be taken to protect the area's extensive wildlife from being harmed by Playa Vista's traffic. "I couldn't get a straightforward, thoughtful answer," he says, "because it was so much of a done deal. They knew they had the votes."
The crowd at last week's hearing included Playa Vista opponents furious about the construction that will cover a major portion of the Ballona Creek floodplain, as well as Playa Vista supporters who live in or near the first phase — a dense, upscale development in which Playa Vista failed to provide a grocery store and other amenities that had been widely expected. The supporters living in that first phase hope the developer will finally include in the second phase services such as a grocery store.
Playa Vista President Steve Soboroff seemed less than pleased, even though he won the right to erect one of the largest mixed-use projects contemplated on the West Coast. He complained to the Los Angeles Times that Rosendahl changed his mind in voting against the expansion. In fact, the surprise switch by Rosendahl altered nothing.
Emotions on both sides point up the continuing controversy over how land speculators drive up the value of their investments by persuading the City Council to toss out land-use rules and grant major upzoning — a process that Los Angeles City Planner Gail Goldberg has publicly denounced as rendering L.A. zoning protections meaningless.
Community activist Jack Humphreville says that, setting aside the debate over whether Playa Vista is good for Los Angeles, taxpayers should get a piece of the pie when the City Council grants investors like Goldman Sachs such huge boosts in property values through upzoning. Humphreville equates such sweetening of land rights to a direct investment by City Hall.
He argues that in the business world, investments are rewarded with financial dividends. "We're giving [the developer] something, and in return we want 20 percent of the increase in value."
Playa Vista's politically connected president, Soboroff, who participated in a "kitchen cabinet" that recommended Austin Beutner as Mayor Antonio Villaraigosa's new jobs czar, would not take calls, referring inquiries to Playa Vista spokesman Steve Sugerman. Sugerman says he does not know the dollar value of Friday's decision to Goldman Sachs and its partners, Morgan Stanley Real Estate Funds and union pension funds.
But, he says, "I don't believe there is an estimate, because it's not the way land-use planning" is done. Cities "don't look at land-use requests in terms of what they bring to the property owner."
Sugerman says elected leaders look at whether the land use and development fit within the general plan and provide tax benefits to the community. According to Sugerman, "Playa is generating millions of dollars for the city, jobs for local people and $100 million in transportation improvements in the area. It's a significant stimulus for the area and the entire city."
