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Eli Broad's Grand Illusion

IT’S CALLED THE GRAND AVENUEPROJECT, downtown’s $2 billion dream come true for Eli Broad, New York developer Related Companies, four eager members of the Los Angeles County Board of Supervisors, a unanimous Los Angeles City Council, the city’s Community Redevelopment Agency — and everyone else who imagines the photo ops when the much-ballyhooed first phase is done in 2011.

On paper and in architectural renderings, Grand Avenue is a sparkling new “destination” development, including in its $775 million phase-one two skyscrapers and a series of lower buildings that together include a five-star Mandarin Oriental Hotel, several hundred luxury units, 100 below-market apartment units, restaurants, upscale shops — and a 16-acre park owned by Los Angeles taxpayers that officials are handing to a private leaser.

Backers say the project puts the final polish on a booming downtown and is so critical that it’s worth $95 million in taxpayer subsidies and $30 million in public improvements, all ushered through by a “Grand Avenue Committee” controlled by two of the region’s richest men — megadeveloper Nelson Rising and billionaire Broad. The committee, operating with almost no media coverage, has acted as real estate negotiator for the city, county and redevelopment agency. Beneath the luxury project’s glittering surface is the sheer complexity of the deal cut between government and private interests, raising questions about the financial risk to taxpayers — and the legitimacy of allowing public park space to be planned and developed by private entities.

Sharon Gi, assistant project manager for a key partner, the Community Redevelopment Agency — an unelected body separate from City Hall itself — describes the Grand Avenue Project as a joint-powers authority between the county, city and CRA that is nothing less than “the most complicated deal, in most every respect.”

If the deal is complicated, the purpose of the three-square-block project on Bunker Hill was supposed to be clear-cut. After all, the city is pouring in tens of millions of dollars in street improvements, has agreed to forgive the hotel and parking-lot owners about $60 million in future taxes, and has quietly expended thousands of person-hours by CRA and city workers to push the glitzy project through.

This at a time when newspapers are filled with stories of Los Angeles city coffers so empty, and city employees and agencies so overworked, that many neighborhoods — those not located in the booming downtown, for example — have seen city services and promised projects cut back or canceled.

To name just a few: City fathers this month closed the boat-rental service at MacArthur Park’s pond, popular with low-income Latino families who live in the tattered urban district. The reason: no money in city coffers.

And in May, after pouring in $9.5 million in public bonds, city leaders had to provide emergency funds to avert the embarrassing closure of the unfinished Children’s Museum at Hansen Dam Park in working-class Lake View Terrace — long promised as the first major museum in the 1.4 million–population San Fernando Valley. The reason for the current scramble: City Hall expected a private group to drum up the remaining $30 million or so. In Highland Park, Villaraigosa pledged to save the nonprofit Southwest Museum, the city’s oldest, at the foot of Mount Washington. He didn’t. Instead, a rich collection of the city’s historic and Native American treasures were transferred to the Gene Autry museum on the city’s outskirts near Glendale. The reason: The Autry, which now owns the Southwest Museum, had the dough. The city didn’t. Van Nuy’s business district along Van Nuys Boulevard still looks like a filthy, litter-filled south-of-the-border town — four years after City Hall officials dismantled a special task force that was designed to, at long last, fix it up.

Why? Again, no money.

IN A CITY THAT SPENDS $500,000 per year on calligraphers to draw up “whereas” declarations in honor of obscure civic leaders, there’s just no money. Yet the Grand Avenue Project sailed through, described recently by the Daily News as a “world class civic heart for downtown.”

The accolades might be more understandable if the need for it were as clear-cut as its chief proponents, billionaire Eli Broad and Related Companies, have insisted. But in interviews conducted by the L.A. Weekly, and in public statements, the chief backers and beneficiaries of the Grand Avenue Project do not agree on the fundamental purpose for the project — or on the core justifications for its big, controversial public subsidies.

Broad has declared Grand Avenue to be a regional — or even national — destination point and a “win-win for everybody.” During a six-minute speech to the Los Angeles City Council on February 7, the founder of SunAmerica, dubbed “the Broadfather” by his detractors, read off a long list of labor unions and ethnic- and race-based organizations who back his dream.

But, aside from the list of special-interest groups he named, the drone-voiced tycoon never suggested that Grand Avenue is actually supported by everyday Angelenos — the very people paying to make it happen. (A spokeswoman for Broad said he would not discuss the project.)

So why, exactly, are Los Angeles taxpayers on the hook for a mostly private development so extravagant that even Frank Gehry’s street paving on Grand Avenue will be subtly multicolored to create “ambience”? Broad’s justification — that it’s for tourists and the whole region — is in sharp contrast to the justification claimed by Bill Witte, president of Related Companies of California.

Witte insists that Grand Avenue, with its tiny allotment of just 1,500 new parking spaces, was not intended as a destination — and contains no plans for substantial traffic coming into already congested Bunker Hill.

“It’s not an attraction itself,” Witte declares. “It’s for people who might be going to Disney Hall for a concert, then can stop by Grand Avenue for something to eat afterward. It’s for residents in the area, and people who work in the area. No one’s going to come downtown to shop.”

Given the stark divergence of purpose, even between Witte and Broad, many insiders were not surprised when word recently leaked out that key architect Gehry probably won’t stick around for phases two and three. (Related Companies insists to the Weekly that Gehry is still involved but refused to comment further.)

While local media have fawned over Grand Avenue, covering its upcoming construction and huge subsidies as almost a given, critics say the county and city government — both struggling with big deficits — have lavished public workers’ time, and public money, on what is little more than a luxury neighborhood with a high-end shopping strip. New York Times architectural critic Nicolai Ouroussoff slammed the project this year as “among the most misguided” efforts ever undertaken to make downtown relevant, noting that Related Companies has “forced Mr. Gehry to remove the cascading staircase that was the project’s main link to the life at the bottom” of isolated Bunker Hill.

The Bonaventure Hotel is suing over alleged unfair practices, arguing that City Hall is handing wads of public assistance to a directly competing luxury hotel corporation.

Meanwhile, Paul Novack, planning deputy for Los Angeles County Supervisor Mike Antonovich — the only sitting politician in L.A. to vote against Grand Avenue — says, “You got $4.5 million in subsidies from the county and $90 million in subsidies from the city of Los Angeles. Yes, some of this includes money to be spent on affordable housing — but that would be spent on affordable housing anyway!”

Novack calls the county supervisors’ $4.5 million giveaway “a subsidy not going to health systems, new schools, new parks. Not keeping libraries open. Not going to ease overcrowding in jails — or any other basic county service.”

WHILE MANY L.A. NEIGHBORHOODS STRUGGLE with official neglect, downtown can seem to suck air out of the room.

The unsuccessful San Fernando Valley secession movement, in which half of the Valley’s residents voted in 2002 for a new Valley city to break off from Los Angeles, was driven in large part by fury over City Hall’s chronic fascination with dressing up downtown.

David Hernandez, a leader of Valley secession, says that nobody in City Hall has the spine to oppose Villaraigosa, Broad or their developer friends. Nobody, in fact, has filled the shoes of former City Councilman Joel Wachs, the thrifty maverick who successfully attacked a similar major public subsidy for, of all things, Staples Center.

“Grand Avenue is just that type of project,” says Hernandez, referring to City Hall’s attempt to hand fat subsidies to Staples Center. “All the tax breaks [are] for the developers, instead of money [going] into the general fund. Remember that when the Staples Center was being developed, people were so outraged that the Valley went down the secession path.”

During that dustup, Wachs taunted fellow council members who insisted that Staples Center could not succeed without public money. As Wachs predicted, Staples became an incredibly lucrative venture without “substantial corporate welfare” from L.A. taxpayers.

In neighborhoods near downtown, some residents are miffed that Grand Avenue uses their money, but seems to be conceived for anybody but them. Cynthia Ramirez, an elected member of the Community Redevelopment Agency’s East Adelante Project Committee for Boyle Heights, says, “I don’t think we need any more hotels downtown. I am always downtown — my doctor, gym, dry cleaner. I live on the edge of downtown. I don’t think we need this project. What we need is a Trader Joe’s or Costco.”

Yet inside City Hall, virtually no one utters a peep against Grand Avenue. Even city councilman and former police chief Bernard Parks, an often lone council voice demanding fiscal responsibility, joined a unanimous 13-0 vote for phase one.

Broad and his Related Companies allies managed to mute criticism from city leaders by offering them a public park. The park will wipe out an existing treasure: the airy El Paseo de los Pobladores de Los Angeles, a plaza with a court of flags, a fountain and manicured tropical gardens that are filled each day with downtown workers enjoying bag lunches.

Some residents downtown believe the promised 16-acre park makes the subsidies worth it. Russell Brown, president of the Downtown L.A. Neighborhood Council and chairman of the Residents Association of Downtown L.A., says the project exemplifies “how downtown can be a place for everybody.” He envisions the 16-acre park being used for “signature events that people will see .?.?. all over the world.”

But the park plan is fraught with questions. Because the public already owns the land, including the popular open-air plaza that is to be razed, Novack explains, “what it boils down to is the developers will make the improvements and pay the city and county rent for the park space.”

Some critics say the new park’s design process, although it has included public workshops, could stick Los Angeles with another ugly and uninviting public space like greenery-stripped and concrete-heavy Pershing Square, an embarrassing flop designed by Mexico City architect Ricardo Legorreta.

Scott Johnson of the Sierra Club calls the park deal troubling, noting that “it’s still public land that will have the restrictions imposed by a for-profit project.”

Even if the park is embraced as a public square, as hoped, taxpayers are at risk if the five-star hotel and luxury condos run into trouble. At the public hearing in February, Gerry Miller, the city’s chief legislative analyst, assured the City Council that without the massive taxpayer subsidies “it is infeasible for this project to exist.”

But Doug Kaplan, a Northern California developer and expert on the proliferation statewide of these taxpayer-subsidized private projects, says that’s hogwash — and political cover.

Says Kaplan of the Grand Avenue plan, “Here’s the truth: Developers don’t demand subsidies they need. They demand and they get subsidies because local politicians provide subsidies for the taking” — in this case, a Los Angeles City Council whose members have almost no private experience in land development.

Novack, the aide to fiscal conservative Antonovich, who opposed the project, says the public-private deal contains no safeguards to protect taxpayers if the Related Companies come back for “more subsidies for phase two and phase three. So that’s when they’ll come back and ask for more money.”

Gi, of the Community Redevelopment Agency, one of the public partners, claims cost overruns will be avoided because “they passed an oversight ordinance where CRA has to get City Council’s approval on budgetary and other items. Any amount over $25,000 goes to the CRA Board of Commissioners, then City Council.”

Despite Gi’s enthusiasm, government oversight plans have a disastrous history in Los Angeles, home of the $320 million–per-mile subway and the $400 million Belmont Learning Complex debacle — a school placed atop a toxic site. In fact, Witte does not dispute that Related Companies might seek further subsidies to complete the three phases, conceding, “There’s always a possibility that may occur.”

Whether Grand Avenue becomes yet another plastic CityWalk, or draws in monied out-of-town crowds à la Rodeo Drive, one thing seems certain: The project is rolling forward to its expected fall groundbreaking, even if its most ardent supporters can’t agree on why.


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