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City-Backed Real Estate Promotion Assailed : Development: Task force is condemned for advertising commercial property offered by a broker on the panel. But members say the committee is just doing its job.

August 19, 1993|KEN ELLINGWOOD | TIMES STAFF WRITER

WEST HOLLYWOOD — A city-sponsored task force that helps market key real estate parcels in West Hollywood for commercial development has drawn charges of favoritism for advertising a $4.4-million property offered by a broker who is on the committee.

A rival broker who does business in the city is protesting the city mailing, sent last week to 60 developers and area brokers, charging it was unfair to other brokers and an inappropriate use of the $17 the city spent on mailing costs.

"I think it's horrible. How can a city promote listings?" said Rick Hechtman, president of Amric Realty in Westwood. He criticized the arrangement as a conflict of interest. "I see everything in the world wrong with this," he said.

The mailing advertised an acre-sized property on Santa Monica Boulevard offered by Ted Stafford, a real estate agent for Ronald S. Kates & Co. in West Hollywood. Stafford and Kates, the firm's owner, are among 15 volunteer members of the Business Retention and Expansion Program, a task force run by the city and the Chamber of Commerce to draw business.

City officials and Kates vehemently denied any conflict of interest in having the committee advertise the property, though the sale could mean a commission of 1% to 5% on $4.4 million--or $44,000 to $220,000, according to Kates. Stafford did not return calls.

Task force leaders defended the mailing as exactly the type of job it is set up to do--lure coveted entertainment businesses to town by actively helping brokers.

"It's the kind of service we would make available to anyone with a quality property or a quality tenant," said Debbie Potter, the city's housing and economic development manager. The property, the site of a cloth-dying plant, is one the city has long eyed for redevelopment and would like to see sold for entertainment industry use, she said.

"We're not advertising. We're just saying FYI--here's a piece of property that we think has a lot of potential," Potter said.

The incident illustrates the tricky balancing act when the city clasps hands with business for mutual gain. While past restrictiveness spawned an anti-business reputation West Hollywood is now trying to shake, close cooperation can breed suspicions of cronyism.

"With every city panicked about revenue, business retention and expansion and privatization has become a major area," said former City Council candidate Robert Pierson, a USC urban-studies specialist who has criticized "bedfellowing" between the city's officials and business leaders. "To what degree are cities compromising the rights of citizens to be informed and participating? I think that's one of the big issues of the '90s."

Christi Hogin, an attorney for the city, said state laws governing conflict of interest on public boards do not apply to an informal volunteer body such as the business-retention committee, which has an open membership of lawyers, developers, bankers, a studio executive, a homeless activist and business people.

The committee did not put the property up for sale, choose the broker or the price, Hogin said; it merely sought to affect the fate of an important commercial property.

"This is a classic public-private partnership," Hogin said. "If the group does something that one person is going to economically benefit from--that doesn't bother me."

Potter worried that a controversy might shatter the delicate alliance that city officials have helped forge among commercial brokers who historically have guarded information jealously.

"Everything about this has been done aboveboard and for longer-term objectives than helping Ted Stafford sell a piece of property," Potter said. She said the task force also has regular get-togethers where brokers swap leads and help connect sellers to potential buyers.

The property is the first that the task force has publicized by mail, Potter said. The group did an earlier mailing to help a tenant broker--who was not on the task force--find homes for two big entertainment-industry tenants, she said.

Potter said Stafford won the listing last month for the Western Dye House property, which is bounded by Santa Monica Boulevard, Almont and La Peer drives. Officials had studied the lot for possible redevelopment over the years and designated it as one of a handful of sites that could be exempted from normal height and density restrictions.

The group decided to send out a "setup sheet" detailing the property's features to 10 major developers and 50 brokers who do business in West Hollywood, Potter said. The mailer, bearing the business program logo and sent from City Hall, listed Stafford's telephone number at the Kates company.

Hechtman, who does business in the city but has not attended task force meetings, said he was outraged Friday when he received a city mailer that appeared to offer a publicly funded push for Stafford's listing. "I just hit the ceiling," he said. "I wish I could get somebody to pay for the promotion of my listings."

Hechtman protested to City Hall and to Kates and was contacting other brokers this week. "It's unfair competition," he said.

Kates, a longtime civic activist who serves on the board of directors of the city's marketing corporation, said Hechtman does not know how the networking program works and said future mailings likely would help other brokers.

Kates said it would be impossible for the task force and other city panels to work without members who do business in the city.

"You'd have to have most of the people who serve on the boards and commissions stay home," Kates said. "It would be criminal for me to have to resign from the committee."

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