Grand Avenue Drenched in Misdirection

The Luxe Grand Avenue Project, if ever built on a hunk of taxpayer-owned land downtown, will feature a glittery five-star hotel and the curious involvement of the wealthy royal family of Dubai, who control a tiny Gulf oil nation cited by the U.S. State Department for human rights abuses.

One thing the public project does not feature, however, is transparency.

In a series of moves unusual even for the cloaked deals that precede official rubber-stamping of controversial projects in Los Angeles, key politicians in City Hall and the County Hall of Administration will not — or maybe cannot — answer basic questions about a project that will receive up to $158 million in taxpayer subsidies.

In recent days, City Councilwoman Jan Perry and County Supervisor Gloria Molina, two main drivers behind the Grand who sit on the obscure Grand Avenue Authority, which oversees the $3.1 billion project, refused to answer a fundamental question posed by the Weekly: Had these two powerful women actually read the existing deal with the private developers before they both agreed to delay the groundbreaking yet again?

The developer, the nationwide Related Companies, says it needs more time because the construction loan market is virtually frozen. That sounded logical — at first. Loans are so hard to get right now that Related Companies is being required to produce significantly more project-cost information to the banks. In the past, the “construction documents” required by banks had to be 50 percent completed. But now, Related is being required to provide far more detailed information and submit documents that are 80 percent complete.

The spin from Molina, Perry and other politicos sounds simple — Related just needs several extra months to do the unexpected paperwork. But the truth is, the existing agreement clearly shows that in 2007 the developer promised it could provide all this documentation within a six-month time frame. Now it has been granted 10 months.

Why? Bill Witte, president of Related Companies, told L.A. Weekly that the delay is being caused by something else — challenges they face over how to build the Frank Gehry–designed complex of shops, condos and a hotel adjacent to Disney Hall. It’s the “most complicated design ... L.A. has ever seen,” Witte says.

In addition, he says, they needed more time to deal with the unexpected soaring costs of materials. But an expert familiar with such large projects says that the costs of materials “has been off the charts” since late 2005 or early 2006. It’s not a recent phenomenon, as Witte claims.

Supervisor Molina and Councilwoman Perry, who have voted repeatedly for taxpayer funding for the project, initially ducked the Weekly’s queries on the obvious discrepancies in explanations offered about the lagging groundbreaking, now more than two years late. A Perry aide eventually e-mailed the Weekly to insist that Perry had read the existing contract with Related before giving the company an extra four months, but the aide could not explain why Perry thought the developer should have more time to complete long-expected work.

Perry and Molina insist that the project’s smattering of affordable housing units and its “Civic Park” plan — actually just a heavily paved retooling of the County Mall — are extra goodies that justify the public help being poured in. But in fact, the affordable housing and the retooled square are not extra public “benefits” arising from a private project. Both are being extensively paid for by the taxpayers.

In a bizarre recent move, $30 million from a housing fund created by California voters to help house the poor and battered women was diverted to help cover the price of the 16-acre “Civic Park” that’s recently emerged as little more than a square with a few trees and is clearly designed for commercial uses.

In a government e-mail obtained by the Weekly, one city expert on housing subsidies also sharply questioned the taxpayer help pouring into the Grand’s affordable housing component. The private e-mail from a staffer at the Community Redevelopment Agency, dated August 1, 2007, notes that Related Companies got a hefty $10 million in taxpayer funds to subsidize 100 affordable units at the Grand. By comparison, a developer in an unrelated project got $8 million to subsidize 259 affordable units.

But from the beginning, the numbers on the Grand never penciled out.

“Nothing would give me more pleasure than to say that this thing’s a crock and it’s going to die, but I don’t think it’s true,” says one real estate expert familiar with the Grand. Because Related strikes so many public/private deals with other city halls across the country, it can’t be seen as abandoning a flagship project. “They can’t be perceived to be ‘walking away,’” the expert notes.

“What does strike me,” he warns, “is that the pattern of this project has been to ask for progressively more public support and assistance.”


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