LA WATCHDOG-The seven year saga involving the Cesspool on Vine, the 18,200 square foot parking lot at 1601 North Vine, appears to coming to a close, but not before we Angelenos have been fleeced for at least $8 million as a result of the City Hall’s close working relationship between our elected officials and campaign funding real estate developers.
Unfortunately, this is not the last time that we are going to be victimized, whether it is by subsidizing big time developers, granting zoning changes that result in clogged streets and gridlocked intersections, or relying on the City’s incompetent planning and transportation bureaucrats.
On August 1, the CRA/LA, the successor agency to the now defunct Community Redevelopment Agency (the “CRA”), approved the transfer of the Disposition and Development Agreement (the “Development Agreement”) from Workers Realty Trust, a Chicago based real estate investment vehicle, to SnyderVine, LLC, a single purpose entity controlled by mid-Wilshire based JH Snyder Company, an experienced, well capitalized developer with strong political connections to Herb Wesson and numerous other members of the City Council.
It is anticipated that construction on this proposed 8 story, 108,000 square foot Class A, LEED certified office building will begin by April 24, 2014, almost eight years after the CRA purchased the parking lot from the politically wired Ullman family for $5.5 million, a 34%, $1.4 million premium to the appraised value of the property.
The overpayment for this parking lot was just the beginning of the squandering of our money as the CRA partnered with the ethically challenged Hal Katersky, a severely undercapitalized real estate developer with no experience with the development, leasing, and management of office buildings in Hollywood or anywhere else for that matter.
Nevertheless, despite Katersky’s checkered past that was disclosed in The Los Angeles Times by Richard Verrier, the City Council approved the Development Agreement with Katersky in March of 2011, in large part because of unwavering support of then Councilman Eric Garcetti.
However, in August of 2011, financially strapped Katersky was forced out of this troubled development as part of his settlement with Workers Realty Trust in connection with the bankruptcy of Katersky’s Albuquerque Studios.
To date, the City has sunk about $9 to $10 million into this parking lot on the northwest corner of Selma and Vine that is in the heart of Hollywood, just south of the iconic intersection of Hollywood and Vine. This includes not only the $5.5 million purchase price, but the $1.1 million buyout of Molly’s Hamburgers, the cost of to carry this investment since 2006, and all the legal, consulting, and administrative costs.
Yet under the convoluted terms of the Development Agreement, SnyderVine now has the right to buy this shovel ready property for only $825,000, a substantial discount from the City’s cost of at least $9 million.
The newly formed CRA/LA also failed to recoup at least $4 million of this $8 million loss because of its abject failure to amend the purchase price to the fair market value of at least $5 million. This opportunity was available on at least two occasions when the CRA/LA unilaterally lifted the tenancy restrictions (60% of the tenants were to be in the entertainment industry) of the Development Agreement and extended the time frame of this agreement from its original deadline of June 12, 2012. \
he CRA/LA also failed to extract any concessions from SnyderVine when it approved the transfer of the Development Agreement. And to add insult to injury, we do not even know the terms of the agreement between SnyderVine and Workers Realty Trust.
While the Cesspool on Vine will always have a scent of scandal, the residents of Hollywood and the surrounding areas will continue to be under siege by the campaign financing real estate developers who will continue to use their cash to influence City Hall.
On Tuesday, October 8, there will be a hearing before a City Zoning Administrator regarding the February 2012 “midnight demolition” of the historic Old Spaghetti Factory on Sunset Boulevard, about a half mile east of Vine, by the CIM Group. This multibillion dollar developer is looking to extract millions from the City while, at the same time, further increase the density of this twenty plus story high end residential development and decrease its parking requirements.
Residents of Hollywood and the surrounding community also have to contend with the Millennium Hollywood development and its adverse impact on traffic. But City Hall and the Department of Transportation have ignored the warnings of the California Department of Transportation that the associated traffic will have an adverse impact not only on surface streets, but the already congested Hollywood Freeway, creating conditions that endanger the lives of motorists and pedestrians.
City Hall and the Department of City Planning have has also ignored the warnings of the State’s Geologist that the Millennium’s two planned monster towers are sitting on the Hollywood Fault, a clear violation of state law.
However, the New York City moguls of the $664 million Millennium Hollywood development may have hit a road block as a result of two law suits that have been launched challenging the Environmental Impact Review because of the City’s flawed geological and traffic studies.
Overall, Hollywood is going through unprecedented development with over 60 projects being developed within a two mile radius of Hollywood and Vine. And yet, there is not a comprehensive and independent analysis of the impact on traffic of all of these high rise developments which have the potential to turn the streets of Hollywood into New York City like canyons and to create absolute gridlock.
Before all of Hollywood turns into a complete cesspool, ripe with dirty money, it is time for the City to analyze in an open and transparent manner the impact of this extraordinary level of development on Hollywood, its streets, its residents, and the surrounding community. Otherwise, overdevelopment and gridlock will kill the golden goose.
(Jack Humphreville writes LA Watchdog for CityWatch. He is the President of the DWP Advocacy Committee, the Ratepayer Advocate for the Greater Wilshire Neighborhood Council, and a Neighborhood Council Budget Advocate. Humphreville is the publisher of the Recycler Classifieds -- www.recycler.com. He can be reached at: [email protected]. Hear Jack every Tuesday morning at 6:20 on McIntyre in the Morning, KABC Radio 790.)
-cw
CityWatch
Vol 11 Issue 81
Pub: Oct 8, 2013
