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Questions Shadow Failure of CSUN Plan

July 10, 1992|SAM ENRIQUEZ | TIMES STAFF WRITER

Cal State Northridge's $200-million University Park development was probably doomed by a little-noticed action in the final days of the 1988 session of the state Legislature, but its full impact and cost to the university may not be clear for some time to come.

Top university officials again declined comment Thursday on the collapse of the decade-old CSUN plan, a pioneering venture in which the school would have joined forces with Watt Industries Inc. to build commercial facilities and school improvements without state tax money--using its campus land to go into the real estate development business to help support itself.

Their reticence annoys many faculty members, especially because CSUN administrators waited five weeks after they knew the project was dead to announce the fact.

"There are a lot of people affected and they are angry there are no answers," CSUN Faculty Senate President Louise Lewis said. "There are a lot of questions, like, 'Does anybody owe anybody any money?' "

The announcement came on the heels of warnings that CSUN may have to lay off more than one-third of its teaching staff because of state budget cuts, which set off faculty agitation for a greater voice in campus financial decisions.

Blenda J. Wilson, the newly appointed CSUN president, declined to comment Thursday on either the school's financial problems or the failed development plan.

Cal State system officials said Thursday that they are concerned about the future of the Northridge school's University Park student housing, a $35-million project built in anticipation that a host of commercial amenities would be constructed nearby to attract students. The project--which at one point was owed $2.8 million in back rent--now requires a $2-million annual subsidy from other Cal State housing divisions because 40% of its rooms are empty.

"The development would have created demand for the apartments, like a Westwood," said George Pardon, financial management specialist with the CSU system, referring to the popular shopping and entertainment strip next to UCLA.

Watt had agreed to give back its profits on the housing--which it built--to a campus-controlled fund to be used for the University Park development, Pardon said. He estimated that the fund had accumulated more than $1 million, but he did not know whether CSUN is obligated to return the money to Watt now that the development has been canceled.

Looking back, it appears the project was doomed on Sept. 3, 1988. That is when former Republican Assemblywoman Marian La Follette--at the request of Los Angeles City Councilman Hal Bernson, who represents the area around the Northridge campus--dropped her support of a bill to exempt the massive campus development from the control of Los Angeles city planners. Consequently, the bill died. La Follette's bill--introduced at the urging of Watt Investment Properties, CSUN's development partner--would have cleared the way for construction of 360,000 square feet of office space, a 225-room hotel, 20,000-seat athletic stadium, restaurants and campus theaters.

In exchange for leasing its state-owned land to Watt, CSUN was to have earned 20% of the profits from the commercial portions of the project, the largest such partnership ever undertaken in the 20-campus Cal State University system. CSUN planned to use its profits--estimated at $600,000 a year--to pay for campus improvements that the state could not afford.

Instead, the plans ran into the question of whether the 100-acre development was a commercial project subject to city regulation or a state activity that would be exempt. The question was left unanswered during three years of intermittent negotiations by CSUN and Watt with Los Angeles city planners and attorneys, delaying construction until the economy plunged and the deal crumbled.

"The Watt people came to Marian and asked her to look at the problem," recalled Rob Wilcox, who at the time worked as an aide to La Follette, who represented the northwest San Fernando Valley. "CSUN had also asked for help, and out of that came this legislation."

Watt sought her help after discovering three weeks earlier--in August, 1988--that without clearing up the jurisdiction question, it could not obtain title insurance for the project. Title insurance is required by bank lenders to show that the project complies with zoning regulations and is legally clear for development, a company spokesman said at the time.

But Bernson, under pressure from campus neighbors worried by the size of the project, mounted an eleventh-hour campaign against the bill, reversing his earlier support. He instead asked that the city maintain jurisdiction over traffic, noise and other issues after hearing complaints from neighbors.

La Follette, who represented most of those same Northridge residents, said at the time that she would not press forward with the legislation without Bernson's support.

And without state action on the jurisdiction issue, Watt faced a near impossible task to obtain financing for the project, the company said at the time.

Bernson said through a spokesman that he was surprised to learn this week that Watt had pulled out of the deal.

"Councilman Bernson just wanted the city to have a say in it, as well as mitigate some of the problems like traffic on local neighborhoods," Bernson spokesman Ali Sar said.

Sar said an agreement on the project's status had been reached between CSUN, Watt and the city and was waiting for the city attorney's office to complete work on a final draft.

Frank Eberhard, Los Angeles deputy director of planning, said the agreement allowed for city control over the commercial portions of University Park but not over campus portions of the development.

"My guess is the financial incentive to put up commercial buildings is no longer there," Eberhard said.

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