A controversial proposed partner in an office and retail project to be built directly across from Los Angeles City Hall has been replaced by Melvin Simon Associates, a shopping-center developer that also has had run-ins with the public.
Construction of the complex, which its developers predict will generate $2.5 billion for government coffers over the next 66 years, has also been delayed. Although plans originally called for ground breaking in January, 1989, construction probably will not start until next summer.
The 20-story complex will be built on government-owned land north of 1st Street between Broadway and Spring Street, across from City Hall and Times Mirror Square. The former site of the State Building, it is jointly owned by the city, county and state.
Indianapolis-based Melvin Simon has replaced Westinghouse Credit Corp., which previously indicated it would take a 50% interest in the property. The other 50% will be owned by RCI of Los Angeles, a firm headed by developer Raffi Cohen.
Westinghouse Credit's proposed involvement with the project had concerned some public officials and activist groups because the firm's parent company--Westinghouse Electric Corp.--has filed forms with the city indicating that it has investments in South Africa.
Los Angeles has a law barring companies that do business in South Africa from involvement in city projects.
The apartheid issue, however, apparently did not play a role in Westinghouse's decision to bow out of the development.
Although Westinghouse spokeswoman Michelle Gray declined to comment on the decision, a source familiar with the negotiations said the partnership was called off over a dispute between the role Westinghouse would play in the project. The source said Westinghouse simply wanted to loan money on the building, while RCI wanted a partner that would also take an active role in the development process.
Construction of the 600,000-square-foot complex, to be called One Civic Center, was originally slated to start next January. But longer-than-expected lease negotiations between the developer and the various government entities that own the land will likely prevent construction from beginning until July, said William Wise, chief analyst for County Chief Administrative Officer Richard Dixon.
Estimate Higher Income
The RCI/Westinghouse team's development proposal was chosen over four other finalists last fall. The companies predicted that their version of the project would generate a total of $2.5 billion in income for the city, county and state over the next 66 years, which topped projections made by the other competitors.
The substitution of Melvin Simon for Westinghouse does not alter those projections, Wise said.
Melvin Simon is one of the nation's biggest developers of mixed-use projects and has been involved in more than 200 shopping complexes. George Farmer, RCI's director of marketing and leasing, said the two companies "are a perfect match" because Melvin Simon's experience "will complement" RCI's strengths in the office construction business.
But Melvin Simon has had its share of controversy, too. Its plans to build large developments in Hollywood and Culver City have drawn protests from some homeowners living in those areas, who complain that the projects will cause too much traffic and raise noise levels.
Melvin Simon and RCI are also considering additional joint ventures for the RCI-owned Figueroa Plaza at 201 N. Figueroa St. and the planned RCI Tower at 9th and Figueroa streets, industry sources said.
Construction of the second of two office buildings at Figueroa Plaza, in the northwest portion of downtown, is expected to begin this fall. The proposed RCI Tower--a 55-story spire providing office and retail space, as well as condominiums--would be a key component of South Park, an area at the southern end of downtown, which the city Community Redevelopment Agency is attempting to revitalize.