MasterPlanning!: Why Is It So Hard to Put Together Developments in Los Angeles?
by Tony Chavira
Warning: Only read this article if you are filthy rich.
If you’ve never put together a development with a budget of $300 million dollars or more, you probably won’t enjoy this article or relate to it in any way. But if you still want to read it, be prepared to think that I’m a total jackass. But hey, man, it’s all about perception, and I can’t always play the bleeding-heart liberal. Anyway, don’t say I didn’t warn you ...
I was working with a developer who was interested in redeveloping a row of buildings on Main Street in downtown L.A., and I thought it was a great idea. That whole area is exploding right now, despite the fact that the economy is down. It’s a great long-term investment, especially since there are so many tax incentives to renovate old buildings. So the aforementioned developer and I went to the CRA and told them about our idea, what we wanted to do and how we wanted to do it.
We were immediately halted in our tracks. You’d think that the city would want to help us to develop and revitalize downtown, especially in the slummy historic areas. But, of course, there was the issue of displacement involved. It’s almost like punishing the developer: I want to revitalize a whole section, increase the property value, and bring in more tax money to the city. But what they want me to do? Pay to move 100 families to some other complex, then practically give them my finished luxury lofts and apartments for a year afterward at the rate they’ve been paying? How is that going to get new buyers interested? How exactly are developers supposed to make a return on that kind of investment, seriously?
I’m not here to play class wars, just speak the truth. No matter how many neighborhood organizations try and halt a projecr by claiming that residents will have nowhere to go or will be forced to move further and further from their jobs, ultimately those people do not own the land. One time, we were putting together a proposal for a developer who owned three huge lots just south of downtown Los Angeles on Grand Avenue, and we couldn’t get past the neighborhood development council. As the architect, we saw it as our job to sway the council by taking our plan right to the public, but the developer felt like going instead to the city councilmember’s office in City Hall and doing whatever it took to get approval from the top. Needless to say, it was a bad idea, and the developer made a lot of enemies really quickly. But here’s the kicker: it ended up killing the project. It wasn’t budget or a zoning issue or anything. Someone in some organization out there somewhere stood in our way and bam, shot us down.
Did they have any idea how much money it takes to put together these developments? Did they know how much investment it takes in terms of both money and time, or how many people you need to sway just to get the ball rolling in the first place? Hell, knowing that we were so easily shot down for a single building on three lots, I have absolutely no idea how something like L.A. Live can get built without getting steamrolled by a ton of citizen organizations, city officials starving for re-election, or local councils who want to know how their palms will be greased before (and after) we go ahead with the physical building of the space.
No wonder it takes forever to build things. Everyone loves development once it’s built, but when you stick your neck (and your wallet) out there, no one helps you out unless they can get credit for something or other. I know, I know ... “developments are a team effort.” But how fair is it when 50% of the team is putting zero money into the pot, but still get a say in the process? It’s one thing if it’s the city, like the Community Redevelopment Agency or the Building Department. The CRA can help give some cash for landscaping or guide you through the process of working with local government. The Building Department’s just codes for the building, to make sure it can physically stand. They more like tools you use to get the job done.
But when you have a politician or a community group blocking development on a space you own or have the rights to, even if you planned on following all of the rules, you still end up having to jump over hurdles in order to complete each basic stage of the development, from programming to budgeting to design to construction. Something always stands in your way. You want to develop where the city provides incentives, but, surprise, now you’ve got CEQA issues you can’t get around. You want to provide shops at the street level in an area that’s ripe for development, but, surprise, you’ve got a local organization demanding to know everything about those jobs, or else they’ll lobby to shut down your development. You want to work with a redevelopment agency project, but, surprise , now you’ve got to deal with brownfields on the land (or some other deterring reason why the redevelopment agency has control of the land). You want to renovate a historical building, but, surprise, now you’ve got to add affordable housing to your project (and you know they pick and choose when they want to enforce that code). Heck, you want to add affordable housing, but, surprise, now you need to provide parking at zero cost to residents.
Editor’s note: While searching for clipart to illustrate this article, I typed in development, and got this. It seems appropriate.
You’re forced to negotiate at every turn, and all the while the money that’s running out is yours and your investors’, not the city’s, not the redevelopment agency’s, and not a non-profit’s. What started as a good idea, an investment that would potentially pay off both right away by providing new development for the city and in the long-run financially as you and your investors reap the benefits of your endeavor, has become a drawn-out, constraining, and financially draining ordeal that you’ll never want to contend with again.
With this much political negotiation involved, what’s the incentive? Even if you had the cash and investors lined up to put together projects at the scale of Caruso’s company, or Related Cos., or G.H. Palmer Associates, why would you want to deal with the hassle? Those guys end up having to hire a small army of lawyers, mediators, expediters, negotiators and spokespeople to get through all of the hoops involved. Everywhere you turn there’s someone who needs to get paid off, someone who’s got a problem with what you’re doing, or someone who just can’t get over the fact that they don’t have a say in the process.
Why is it so tough to develop in Los Angeles County? Because somehow everyone thinks they’re in charge of overseeing the development, especially when they aren’t the ones forking over the cash to build it.
Now that this rant is out of my system, let’s be honest: Developers who use their cash to abrasively steamroll their way through the city and build monolithic architectural gobbledygook under the guise of “redevelopment” don’t give a crap about anything except for money. Surprise.
www.racaia.com | tony@fourstory.org
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