A monthlong campaign by L.A. Council woman Ruth Galanter and a team of lobbyists failed to persuade state legislators to offer 70 acres of prime state land to Playa Vista.

To avoid paying $115 million, developers sought to trade less-desirable land for the state property, which fell to the state in 1984 as part of a settlement with the estate of Howard Hughes. In 1990, then–State Controller Gray Davis gave developers an option to buy the land for $115 million if the deal closed by February 1996. Before Davis left the Controller’s Office to become lieutenant governor, in 1991, he extended the option to December 31, 2000. The state land is east of Lincoln Boulevard, the main thoroughfare that cuts through the sprawling project near Playa del Rey.

Just how much any of the land might be worth is a matter of some guesswork. A Weekly investigation of the proposed land swap found that Playa Capital, the company building Playa Vista, got its holdings reappraised by the county this spring. The new value: $135 million, a 69 percent reduction over the previous value of $445 million. Annual taxes fell from nearly $5 million to $1.5 million.

The savings could bring a needed boost to Playa Capital‘s cash flow. Financial documents show the firm owes $93 million, and lost $11 million in 1999, a situation that would have been helped by the land swap. To help pull it off, Galanter, acting on Playa’s behalf, asked the staff of a senior Democratic state legislator to find a sponsor for a bill to swap the 336 acres west of Lincoln Boulevard. State Senator Debra Bowen, a Democrat whose district encompasses Playa Vista, agreed to do it.

Bowen then tried to weave wording for the swap into an unrelated bill that had been introduced by fellow Democratic Senator Byron Sher, who has a reputation as an environmentalist in the Bay Area. But Bowen said she later had reservations about the bill. ”I wanted to know if community and environmental groups had signed off on this bill,“ she said. ”As my staff got into this thing, a lot of questions emerged. It wasn‘t a good idea to rock and roll through the last three weeks of the session.“

As word of the proposed swap became known, long-standing Playa opponents such as the Sierra Club, the Wetlands Action Network and the Ballona Wetlands Land Trust cranked up their fax machines to register protests. The California Coastal Commission, State Controller’s Office and State Lands Commission all posted letters to Senate and Assembly members objecting to last-minute changes in a bill without public hearings.

Former state Assemblyman Richard Katz, a Democrat who represented the northern San Fernando Valley, said that Galanter and Playa lobbyists then upped the ante, offering to exchange all their land west of Lincoln, some 475 acres, in return for the prime land — plus a payment of $25 million from Proposition 12, the recently approved parks bond measure. That money had been designated to serve as a down payment for the state to buy all of Ballona. But even with the new sweetener, no legislator wanted to touch Galanter‘s proposal.

”No one knew what the land was worth,“ Katz explained. He noted that the discovery of methane contamination at Playa Vista this past spring made legislators question the swap. Katz said people were thinking, ”Maybe the developer is trying to get a maximum price before more bad news about the methane is uncovered.“ (Additional studies are under way, with reports due this October.)

Playa Capital says it has not decided whether to try to engineer a land swap when the Legislature reconvenes in January. Galanter did not return phone calls from the Weekly.

In 1997, the Los Angeles County tax assessor sent out three teams to appraise various sections of Playa Vista. They came up with a total value of $445 million. Playa Capital called for a new assessment. Robert Quon of the Appraisal Department said that the original appraisers did not understand that Playa Vista was one single project. Nor did they appreciate the ”environmental and legal constraints on the land“ that the developer brought to the county’s attention. The new assessment reduced Playa Capital‘s annual property-tax bill from around $4.9 million to $1.5 million — and, since it’s retroactive, a savings of roughly $10 million over three years.

Playa Capital also has lobbied for massive public subsidies: $35 million in transportation projects from Caltrans; $35 million in reduced rates for water, power and sewers, and tax credits from Los Angeles; and $448 million in city-backed tax-exempt municipal bonds. Playa Vista would be the city‘s largest residential and commercial development, with 13,000 residences for 29,000 people and 5 million square feet of commercial space to employ 20,000.

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