Rick Caruso's Greedy Land Grab | News | Los Angeles | Los Angeles News and Events | LA Weekly
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Rick Caruso's Greedy Land Grab 

A Glendale family must sell him its motel near Americana at Brand or face eminent domain

Thursday, Dec 30 2010
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Sometimes you've got to go with the word "resplendent." That's the only adjective that works for the Americana at Brand.

The Americana is an environment of faux-gold sculpture, piped-in music, nostalgia architecture and a main street named not for some hero but for a deliverer of mass consumption, billionaire developer Rick Caruso.

Standing in its "town square," a Tiffany & Co is only a heartbeat plus a $1,000 bill away from the middle class, circa 2010. The Americana's feeling of security and town square programming, including fireworks and concerts, draw visitors from all over.

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The mall has helped put Glendale back on the map, a return on investment after the city used eminent domain to obtain much of the land. The city ended up with 15.5 acres downtown — then handed them over for no charge to Caruso.

Before the new shops arrived, real estate broker Gerri Craignotti took neighbors to another Caruso retail enclave, the Grove in the Fairfax district. "We would be giddy, standing there by the fountain, going, 'Can you believe this is coming to Glendale!' " she effused.

Craignotti said this to Glendale City Council members in their role as the city's redevelopment agency at a Nov. 30 meeting. The council and mayor were considering Caruso's proposal to expand Americana at Brand with another 60,000 to 140,000 square feet of retail space, more landscaping and another plaza.

But standing in Caruso's way are two private properties that stick like a finger into the Americana's large footprint.

Because the Golden Key Motel and the second building, a 1920s brick structure, are within Glendale's redevelopment area, they can be taken through eminent domain at "fair market value" — in the midst of a historic property-value collapse.

The Golden Key Motel is not blighted. It is a landscaped, tidy place owned by Ray Patel and his father, serving primarily businesspeople.

Patel says his father bought the 55-room motel in 2001 for its nearness to Brand Avenue. It offers basics such as wireless Internet, in-room coffee and snacks, free bottles of water and a breakfast room.

"We do a great job here," Patel says.

But Matt Middlebrook, a Caruso executive and political insider who was an L.A. deputy mayor and a top aide to Sen. Dianne Feinstein, critized Patel, saying he failed to spiff up his motel after Americana at Brand arrived: "He has not invested at all in the two years since we opened."

Caruso — whose worth the Los Angeles Business Journal pegs at $1.9 billion — offered Patel $6 million, which Middlebrook says is 22 percent above market value.

Patel told the City Council he's open to selling but just doesn't want to be bullied into a price. But Patel told L.A. Weekly that selling is not an option for his family.

The Golden Key Motel and a tenant in the second building targeted by Caruso suffered through Americana's construction. Henry David, who owns the other building, said at the Nov. 30 meeting, "Our tenant was basically put out of business for three years."

But as Glendale civic leaders and real estate interests supporting Caruso make clear, the city wants them gone.

"They're really quite underwhelming when you look at them," Tim Conroy, a Realtor, said at the meeting.

"The dated hotel, in my opinion, certainly doesn't fit in with the ... Americana," agreed Realtor Leanne Reynolds.

Former Glendale Mayor Larry Zarian declared, "Those two pieces of property do not belong in the Americana."

Mayor Ara Najarian concurred: "I don't think we're losing much, with all due respect to Mr. Patel. ... If we have to forgo the use of a mid-, how do you put it, a midpriced motel. It just don't fit."

Najarian later told the Weekly, "There are places for those types of establishments."

The City Council gave David and Patel several choices: sell to the city in a bargain-basement real estate market; propose, within 45 days, their own Americana-friendly development plan; sell to Caruso; or face eminent domain.

Only one council member, John Drayman, made a real effort to find out how Patel and David saw things. He asked the city's redevelopment director, Philip Lanzafame, why a 45-day deadline was forced on them. Lanzafame dodged a response as Drayman pressed on: "What would be the advantage of a mid-January [deadline] versus December or versus June? What's the burning issue here?"

Drayman tells the Weekly: "It must be related in some way to the timing of [Rick Caruso's] future plans."

But business owner David complains, "December is not a month when anything is going to get accomplished, and to put a real project together. ... I think Mr. Caruso certainly has designed what he wants to do. So [my] putting something to compete with that in very short order is not a possibility."

The Los Angeles Daily News and Glendale News-Press published editorials condemning the Glendale City Council's behavior, which Marko Mlikotin, president of the California Alliance to Protect Private Property Rights, says is "clearly a case of the eminent domain abuse and outright theft."

Government taking of private property for transfer to other private owners was upheld in 2005 by the Supreme Court in Kelo v. New London. In her dissent, Justice Sandra Day O'Connor warned that the ruling could let people who are politically connected acquire private property by eminent domain.

"Glendale demonstrates the point," Mlikotin says. "Someone who is not politically connected or does not have wealth could not do this. It's only because of who this developer is." Caruso spokesman Middlebrook denies that Caruso's getting special treatment, and Lanzafame insists to the Weekly that eminent domain is not yet being used. But by phone, Mayor Najarian says if Patel and David can't reach a price with Caruso or the city, a "jury of 12 people would decide what fair value is."

To Mlikotin, Glendale "is putting a gun to the private property owner's head and saying, 'Sell your property to this developer.' "

Most "private property owners have a price" that few developers want to pay, he says. So "eminent domain allows [developers to] often acquire property on the cheap."

Henry Gonzalez, former mayor of Southgate and now a council member, handled redevelopment projects after industries vacated longtime factories in Southgate. Gonzalez says Glendale's actions allow Caruso to lowball the Patels and David: "Why does [Caruso] have to jack his price up when he knows the city is going to come and condemn the thing?"

William Fulton, the mayor of Ventura, says Najarian might not yet have enough City Council votes to take the two businesses. Fulton says that when Najaria publicly cites the city's eminent domain powers, he may be "thinking he can go back into executive session and get the votes."

Drayman, who is leery of using eminent domain, says the Golden Key Motel and the other building are not "blighted," and he supports the rights of small businesses. Yet he backs Americana's expansion, and tells the Weekly, "I see how important [the Americana] is to other businesses that are thinking of investing in Glendale."

Caruso's Middlebrook says Patel knew a decade ago that he was buying a business inside a redevelopment zone. By that time, the city had already used eminent domain to push out small Glendale property owners and make way for other private owners.

Some never recovered.

Hovsep "Joe" Kaprielian of the Great Carpet Company opened in 1980 and "built my family around it, I built my friendships around it. All of a sudden the city comes in and says you're out."

His son Shahan says the carpet business had to move twice. It has struggled ever since, with the family forced to lay off employees. "It's unfair to blame everything on" the city, Karprielian says. "It's probably 50 percent the move and 50 percent the bad economy."

But he warns that Caruso and Glendale's pols will do whatever it takes to grab the finger of land Caruso desires. "If Caruso's got his eye [on it], the city will do backflips to get it."

Before he gets off the phone, Kaprielian asks: "Have you been to the Americana? It's really nice, but people should know that people paid a price for it to be there."

Reach the writer at tibbyrothman@gmail.com.

Reach the writer at tibbyrothman@verizon.net

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