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Board denies Grand Avenue delay

Local officials refuse developer's request to postpone construction of the downtown L.A. project until February.

June 10, 2008|Cara Mia DiMassa | Times Staff Writer

The government board overseeing the $3-billion Grand Avenue project on Monday unexpectedly rejected the developer's request for an eight-month delay to begin construction on the development across from the Walt Disney Concert Hall.

While both sides said they remain optimistic that the sprawling downtown Los Angeles development is on track, the vote is the strongest sign yet that government officials are growing concerned over repeated delays and hope to keep a tight rein on the developer they handpicked for the project almost four years ago.

Instead of approving developer Related Cos.' requested delay until February, the joint powers authority approved a motion by Los Angeles County Chief Executive William T. Fujioka giving the developer until Aug. 15. That's a much shorter period than expected, though one that could be extended when the authority -- made up of city and county officials -- meets in July.

"We have a number of questions we want to ask," Fujioka said. "This is the second extension. We are going to ask questions regarding that."

Fujioka and other officials would not provide details on the concerns they have about the requested delay, saying specifics would be discussed in closed-door negotiations.

Gerry Hertzberg, a spokesman for county Supervisor Gloria Molina, who chairs the joint powers authority, said there were still details about the delay that need to be worked out.

"Everybody wants the project to go forward," he said. "It's just how it happens is yet to be determined."

Still, one county supervisor, Michael Antonovich, suggested that the Frank Gehry-designed project be scaled back because of real estate market conditions.

"Given the stark economic climate," said Paul Novak, a planning deputy for Antonovich, "our best approach may be less of a 'grand' vision than the plan previously approved by the county and the city."

Novak suggested that the joint powers authority should revisit various components of the project, including the high-end retail stores and the five-star hotel.

Grand Avenue is the linchpin in the effort to revitalize downtown L.A. and to bring in more affluent residents and retailers.

The development would rise around some of the city's landmark cultural institutions, including Disney Hall, the Museum of Contemporary Art and the Music Center.

Related California President Bill Witte said after the meeting that his company would "just continue to work with the committee."

The Grand Avenue project's first phase -- which includes a shopping center, hotel and two residential towers -- was once slated to be completed in 2009. But that date was shifted to 2011. Now, Related wants to push the opening to 2012.

Witte has said the delay in beginning construction would allow Related to finalize thousands of pages of construction documents before work begins. Because nearly 70% of building costs for the project would be for concrete and steel, completion of those documents may allow the developer to avoid overruns later.

Related has struggled to find the funding to get the project off the ground. The California Public Employees' Retirement System pulled out of Grand Avenue last year, saying it had too much investment in downtown. But a fund controlled by Dubai's royal family has invested $100 million in Grand Avenue, and Related is seeking an additional equity partner for the project.

Grand Avenue is one of several major developments around the nation that have been delayed because of the credit crunch. In Seattle, developers recently shelved plans for a $7-billion development downtown, citing the poor economy. Huge projects in Las Vegas, Phoenix and New York City have also been scaled back or delayed, including part of the Gehry-designed Atlantic Yards in Brooklyn and a $14-billion development of the area around Penn Station on Manhattan.

Several high-profile projects in downtown Los Angeles have suffered as well, including the Mill Street Lofts in the industrial district and the conversion of the former Herald-Examiner building, both of which have been put on hold. Park Fifth, which would rise above Pershing Square and be the tallest residential complex west of Chicago, has also seen delays.

Downtown resident Brady Westwater questioned Antonovich's suggestion that the scale of Grand Avenue be reconsidered or that the project be rebid, a move the supervisor called for last week. Related, he said, had negotiated a contract with the city and county, and had paid them $50 million for a ground lease on the property.

"To try and cancel a contract now would be the most foolish thing you could do," he said.

Part of the meeting Monday focused on the 16-acre civic park that is part of the first phase of the Grand Avenue plan and must be completed before Related can receive a certificate of occupancy for the rest of the development. There is about $57 million allocated for the park, much of which would be used for infrastructure work on the garage beneath the property.

Related, in cooperation with the county, has applied for state bond funds to finance additional improvements on the site. Witte told the joint powers authority that it was likely that the company would be receiving $30 million in state funds. With the extra money, Witte said, the developer would be able to enhance the project's schematic design.

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cara.dimassa@latimes.com

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