fbpx
28
Sat, May

Katersky Flushed: Cesspool on Vine No Longer Shovel Ready

LA WATCHDOG - We will not have the undercapitalized, inexperienced, and litigious Hal Katersky and his Pacifica Ventures to “kick around” anymore.

Apparently, Chicago based New Vista Investment Group and Workers Realty Trust II (collectively, “Workers Realty”), the unfortunate equity investors in Katersky’s bankrupt Albuquerque Studios deal, purchased Pacifica Ventures’ interest in the Vine Street Tower, the $57 million development of an eight story, 108,000 square foot Class A office building located at 1601 North Vine, in the heart of Hollywood, one block north of Sunset Boulevard.



More than likely, this transaction is connected to the settlement of the bankruptcy of Katersky’s Albuquerque Studios where Workers Realty lost its entire $25 million equity investment when the construction lender, Amalgamated Bank’s LongView ULTRA Construction Loan Investment Fund, foreclosed on its loan.

As a side note, it is rumored that Amalgamated Bank, wholly owned by the Service Employees International Union, is trying to sell Albuquerque Studios to cut the losses of the Investment Fund.

Workers Realty is now looking for a new development partner since they are investors, not developers.  This makes sense since the Vine Street Tower is the only office building in their portfolio and their only investment in California.

So what is the future role of the Community Redevelopment Agency with the Cesspool on Vine?

Subsequent to the City Council’s ill advised, politically motivated approval of the Disposition and Development Agreement with Katersky, at least two new projects totaling over $1.5 billion were announced for the Hollywood and Vine area.  The Millennium Project is a $1 billion mixed use development on 4.5 acres adjacent to the Capital Records Tower while Blvd6200 is a $500 million development consisting of 1,000 apartments on Hollywood Boulevard. (Link)

Coupled with the $600 million investment in the W Hotel, why does any developer or investor of the Class A Vine Street Tower need any financial assistance given the demonstrated strength of this highly desirable market?

Rather, the CRA should just sell the property and cut its losses.

But the real issue surrounding the Cesspool on Vine is the City Council and its utter failure to scrutinize the character and financial capability of its proposed partner.

Why did the City Council, local Councilmember Eric Garcetti, and Herb Wesson, the then chair of the Housing, Community, and Economic Development Committee (the “HCED”), fail to investigate the character, credentials, and finances of Hal Katersky, despite many smoking guns, beginning with Ron Kaye’s initial news breaking post on August 10, 2010 and many subsequent articles in The Los Angeles Times, CityWatch, and LA Weekly.  

On February 23, 2011, Herb Wesson’s orchestrated farce at HCED Committee essentially ignored all the unfavorable information on Katersky, his tenuous finances, his bankrupt Albuquerque Studios and the allegations by the owners of Culver Studios of “fraud and embezzlement.”

And why did the HCED Committee brush over the allegations that Katersky’s cost estimates for the development were overstated by $5 to $7 million as part of his efforts to enrich himself?  

And why did the HCED Committee fail to investigate in detail the CRA’s purchase price from Ullman Investments (“Ullman”) that was 35% higher than its own appraisal?  And why does Ullman, who wanted nothing to do with the CRA because it was the subject of a previous CRA investigation, have the right to manage the proposed 200 car underground parking garage? (Link)

This farce was continued on March 9 at the City Council when Eric Garcetti defended for over 40 minutes this ‘shovel ready” development, Katersky, his character and finances, and the above market purchase price from his friends, the Ullman family.  The City Council then approved the Disposition and Development Agreement with only one dissenting vote, that of Paul Krekorian. (Link)

The Cesspool on Vine, its economics, the shady above market purchase price, and the whole decision making process from the CRA to the City council needs to be thoroughly investigated, preferably by an independent third party.  

And this blotch on the already tarnished reputation of the City Council should serve notice to all the Council Members that they need to be very cautious of the “shovel ready” CRA and its own Council leadership, especially when there are so many warning signs of hanky panky.

(Jack Humphreville writes LA Watchdog for CityWatch He is the President of the DWP Advocacy Committee and the Ratepayer Advocate for the Greater Wilshire Neighborhood Council. Humphreville is the publisher of the Recycler -- www.recycler.com. He can be reached at:   [email protected] )
–cw

Tags: Hal Katersky, 1601 N Vine, City Council, W Hotel, CRA, Eric Garcetti, Herb Wesson, Jack Humphreville





CityWatch
Vol 9 Issue 85
Pub: Oct 25, 2011