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Taking L.A. in a New Direction

Richard Meruelo, a developer with a major stake in the city, believes the future of downtown lies east of Broadway.

September 20, 2006|Jeffrey L. Rabin | Times Staff Writer

For the last three decades, through riots, recessions, building booms and busts, Richard Meruelo and his parents have held an irrepressible faith in the potential of downtown Los Angeles.

Beginning with the dress shop Meruelo's mother owned at 3rd Street and Broadway, the family quietly bought up parcel after parcel, and Meruelo managed the portfolio.

Now, with the central city on the cusp of a development renaissance, Meruelo is the biggest owner of downtown acreage, with more than 100 properties in or just beyond the urban core. And that empire -- built partly on an innovative and controversial use of public pension money -- has made him a new force in Los Angeles politics.

Yet, some in the city's traditional business community don't quite know what to make of Meruelo; a few are remarkably disdainful of his development aspirations -- although none would speak on the record.

That may be because Meruelo's vision for downtown is "not the view from the California Club or Disney Hall," said Sam Hall Kaplan, a retired design critic for The Times who is Meruelo's planning director. Instead of clinging to the proven Figueroa corridor, Meruelo is gambling on land east of Broadway, the grittier part of downtown marked by railroad tracks, worn industrial buildings and loading docks that come alive when most of the city still sleeps.

Meruelo is convinced that the development wave will soon sweep in that direction.

"We take ... risks that other developers won't," Meruelo said. "I see tremendous opportunity here.... It goes all the way to the [Los Angeles] River and beyond. To the extent that everybody else doesn't see it yet, it gives me an opportunity."

"As the city grows and prospers," Meruelo said, "I grow and prosper."

But his critics still have plenty of questions:

Sure, the 41-year-old businessman has a team of architects drawing bold plans for glitzy skyscrapers, but so far he has built only a few warehouse and cold-storage structures. Will he be able to follow through?

Does Meruelo have an edge at City Hall, they ask, because he spent more money than anyone else to elect Mayor Antonio Villaraigosa?

Did his political contributions in Sacramento help him win financial backing from the nation's largest public pension fund? Because pension loans allowed him to buy land that the Los Angeles Unified School District is now fighting to get, critics wonder if Meruelo will wind up using money from one public entity to leverage profit from another.

And if he is really committed to "socially responsible" development, as his business website declares, why did he recently tear down four old buildings near Union Station without getting the required city permits?

Daniel D. Villanueva, a friend and longtime business associate, said all anyone needs to understand is that Meruelo is "absolutely fair, absolutely straight" and driven to succeed.

But a prototypical Los Angeles developer Meruelo is not: They tend to be button-down establishment types who labor to smooth even frivolous controversies, knowing every delay costs money.

Meruelo is open-collared, Latino and unafraid to sue anyone who stands in his way. "If I get attacked," Meruelo acknowledged in one of a series of interviews, "I will fight back."

In the demolition near the station, for example, Meruelo admitted making "a mistake" but immediately appealed to lift what city inspectors call their "scorched earth" penalty, a five-year ban against building on the property. City building inspectors had warned that the structures were a haven for drug users and prostitutes and, Meruelo said, he wanted to take care of those problems "quickly." So he did.

If Meruelo has a fault, Villanueva said, it is an occasional "impatience" and a "rambunctiousness" that can rapidly propel him from one big idea to the next without slowing to weigh the trickier details of execution.

At times, he displays a bravado that makes people wonder how seriously to take him, as when he spoke recently about pressing ahead with a high-rise condominium project even if interest rates rise.

"I cannot retreat," Meruelo said. "I am going forward no matter what the interest rate environment is, no matter what the construction cost environment is."

Most of the downtown buzz focuses on the proposed Frank Gehry-designed Grand Avenue project on Bunker Hill and billionaire Philip Anschutz's L.A. Live hotel and entertainment complex next to Staples Center.

But Meruelo holds some prime sites too. In the hot South Park district near Staples Center, he and John Charles Maddux, a longtime Southern California real estate attorney who is president of MerueloMaddux Properties, plan to break ground soon on a 34-story residential building -- across from a coming Ralphs supermarket. Three other high-rises are planned near the former Transamerica Center.

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