"Downtown has taken some of the lead efforts to deal with transit problems and get people out of their cars" by promoting ride-sharing and supporting transit projects such as the Metrorail system, Luddy said. He added that some of the traffic congestion stems from through-traffic generated by growth outside downtown.
Los Angeles traffic congestion already costs local businesses and commuters $500 million in lost time, according to the Highway Users Federation in Washington, D.C.
And Bob Rogers, executive director of the city Planning Commission, last year told the City Council's housing committee that the Harbor Freeway is within 90% of its capacity and will nearly double to 450,000 vehicles per day from the current 250,000 over the next 10 years.
The lack of housing near downtown jobs is one of the factors fueling traffic congestion, experts say.
Los Angeles has one of the nation's most severe shortages of low-cost housing, in part because several downtown residential hotels and inexpensive apartments have been razed in recent years to make way for high-rise office buildings. And the Southern California Assn. of Governments predicts that more than two times as many new jobs as new residents are anticipated in the downtown area between 1984 and 2010--a development that ALARM says will cause "very serious adverse impacts."
New office construction is expected to decline across the nation in coming years because banks and other financial institutions, under pressure from federal regulators, have curtailed lending to developers. But the firms building the four Los Angeles projects have deep pockets, and several have managed to secure the aid of foreign investors and U.S. joint venture partners to help finance their construction efforts.
But if office buildings in the Los Angeles area attract tenants at the pace they did during 1990, it will take 10 years until the current vacant space is fully occupied, predicted the consulting firm A. Gary Shilling & Co. Even at the brisker leasing pace Los Angeles experienced between 1985 and 1990, Shilling forecast that it will take five years before the area's more than 137 million square feet of office space is fully leased.
Because of the peculiar economics of commercial real estate development, many developers say they can't afford to delay projects. They say it is more cost-effective to maintain an empty building than to postpone construction and risk massive construction cost increases or the expiration of city permits.
Los Angeles Center developers Smith & Hricik Urban Development Inc. and Hillman Properties, one of the country's largest real estate developers, had hoped to quickly capitalize on the booming office market in Los Angeles in the 1980s. But the $1-billion Los Angeles Center project became bogged down in lengthy negotiations over the adoption of a comprehensive plan for the Central City West area.
As the months ticked by and the office market weakened, Hillman has been hemorrhaging money, according to real estate industry sources. It is now negotiating with three unidentified parties--including a U.S. bank and a pension fund--to secure more than $150 million in financing to build the first of its five office towers, which range in height from 35 to 65 stories tall. The developers have also been locked in critical talks with giant Unocal Corp., current occupant of the site, to remain as a tenant in the Los Angeles Center.
But Unocal, aware of the soft demand for office space, is said to be demanding huge leasing subsidies for the estimated 500,000 square feet of space it is seeking.
Unocal declined to comment, as did Michael R. Chase, who heads Hillman's Newport Beach offices. But John Best, principal in Smith & Hricik, said he is not deterred by the office glut and hopes to break ground on the Los Angeles Center "by the summer." The project is expected to be completed within the next 20 years.
Though its European backers are said to have deep pockets, financial hurdles face the $750-million Metropolis project, which includes three, 30-story office towers and a 500-room hotel.
The project's developers--a Swiss real estate group called Agenda Holding S.A. and a huge Luxembourg conglomerate called TAG Group S.A.--contend that they are losing $35,000 to $40,000 a day. The project was to have begun a year ago.
The developers, saying they are eager to start, are seeking $120 million in additional financing to complete their first office tower and an undisclosed amount from another partner to help build the hotel planned for the site. But Metropolis--as well as the Grand Avenue Plaza project scheduled to begin construction later this year--are being held up in court by ALARM's lawsuit against the city. Metropolis' Vallance said the lawsuit "is totally without merit."
ALARM's lawyer, Sabrina Schiller, responded that the group filed suit because "the city has been unwilling to deal with the problems of congestion and lack of housing downtown."