The Los Angeles City Council has approved a major new Hollywood office tower after years of delay and controversy centering on dueling land appraisals, a hefty public subsidy for the developer and the future of a popular burger stand on the site.
With council President Eric Garcetti championing the plan, the council last week approved the 1601 N. Vine Office Project, at Vine Street and Selma Avenue, just south of the iconic intersection of Hollywood and Vine.
Supporters view the project — targeted for entertainment industry clients — as the latest upgrade for a historic district that had devolved from glamorous to seedy, but that in recent years has undergone a steady revival, especially in residential construction.
Critics, however, questioned whether the city followed proper procedures in fashioning the heavily subsidized project, while also expressing doubts that the designated developer could deliver.
Garcetti, decrying a lack of high-end office infrastructure, labeled the project the "best chance to build some Class A office space that Hollywood has seen in 25 years."
Hal Katersky, the Santa Monica-based developer, told the council that the eight-story project would cost $60 million.
He said he hoped to break ground later this year and predicted tens of millions in new taxes and other revenues for the city once the tower was open for business.
Union officials praised the blueprint for the hundreds of jobs it would create during the roughly two years of construction.
For many months, Katersky and his attorney, William Delvac, have defended the developer's ability to construct a quality structure amid reports of lawsuits, financial difficulties and runaway production surrounding his business, Pacifica Ventures. The firm specializes in building film studios and other entertainment-related projects.
In an unusual twist, Pacifica sold the parcel to the city's redevelopment agency for $5.45 million and, under the deal, is slated to buy it back for $825,000, or about $4.6 million less that the city paid for it. In the intervening years, Katersky said, he has invested more than $4 million in design work and other costs.
Garcetti, acknowledging considerable public skepticism about the long-delayed project, pledged that it would be "aggressively scrutinized."
The plan dates from 2006, when the city's redevelopment agency purchased the land for the $5.45-million price tag — despite a second, contemporaneous appraisal that put the value at $4.07 million. In a report, redevelopment officials conceded that "key documentation" from the project has gone "missing," obscuring the reasons why the higher appraisal was used.
On Wednesday, Garcetti said he was convinced that the city paid a "defensible" price for the land.
Currently, the site is mostly a vacant lot, but one tenant is Molly's Charbroiler, a 20-stool eatery that has become a neighborhood fixture. The burger joint would be demolished under project plans. The owner objected and hired a lawyer.
As part of the agreement, Molly's proprietor will receive about $1.1 million in compensation, including $700,000 from the developer and $400,000 from the city redevelopment authorities.