L.A. Pinnacle : Politics Also Undergird Skyscraper

A special construction crew will show up for work Tuesday morning 1,017 feet above downtown Los Angeles.

Following a tradition begun by builders during the Renaissance, a small evergreen tree--riding atop a 1,600-pound beam bearing workers’ signatures--will be hoisted to the peak of the steel skeleton that recently has become the pinnacle of the downtown skyline.

There, ironworkers will bolt and weld the beam into place and top off the frame of the tallest tower on the West Coast--the 73-story First Interstate World Center.

Decade-Long Struggle

The ceremony is a dramatic milestone in the decade-long struggle to build the $350-million spire--a struggle that pitted profit, politics, ego and civic duty in a high-wire act almost as breathtaking as the view from the tower’s top floors. Long before the first hard-hat worker showed up at the site, the ambitions of developers, civic leaders and internationally famous architects had been at work for years in shaping the tower’s outcome.

Indeed, so many are the interests these days and so high the financial stakes in putting up a building of this size that the actual construction at times can seem only an incidental part of the making of a major downtown skyscraper.

“You have a lot of political issues,” said Stephen E. Roulac, a real estate consultant. “Development is a much harder game than it used to be.”

The fate of the tower on 5th Street was determined in grueling late-night meetings and sometimes heated negotiations. It was the object of high-stakes deal-making and maneuvering between the city officials who control the downtown skyline and a group of shrewd businessmen led by developer Robert F. Maguire III.

Expensive Gamble

For Maguire, the skyscraper represented a multimillion-dollar gamble that could have ruined him and his partners if it had failed. “We had much debate,” said James A. Thomas, Maguire’s longtime partner. “You can break the firm by making the wrong judgment, by taking on more than you can pull off.”

City officials, for their part, were not about to let a developer erect a tower that would alter Los Angeles’ skyline without winning major concessions. It was their chance to finally see the renovation and expansion of the old Los Angeles Central Library--a civic cause for nearly two decades--and they wanted to make sure that the city did not end up with empty promises and a vacant construction site.

The project at times seemed ready to overwhelm its frustrated creators. Instead of just one high-rise, Library Tower--as the skyscraper is more commonly known--became part of a billion-dollar project that includes a second 54-story building, a sweeping staircase of water and stone that will link Bunker Hill and the rest of the financial district below, along with the long-awaited work on the Central Library itself.

“We thought it would take about two years to start the project--it took us seven,” said Maguire. “There were certainly times when we were wondering what we were doing.”

Maguire is the founder of Maguire Thomas Partners of Santa Monica, which now reigns as the nation’s largest developer with projects in Dallas, Minneapolis and Philadelphia. Locally, the firm built the twin-tower Wells Fargo Center in downtown Los Angeles.

Although run by a group of seven partners, Maguire Thomas embodies the personality of Rob Maguire, a patrician, 53-year-old who often totes a trademark battered and worn leather briefcase.

“I think much of the firm’s reputation has to do with the aura of Rob Maguire himself,” said landscape architect Lawrence Halprin, who designed the steps that will curl along one side of the tower.

In an industry that measures success based on occupancy rates, Maguire wins praise for his attention to design and aesthetics--as well as a keen business sense. Library Tower’s shape, green-tinted windows and terrazzo on the lobby floor bear the Maguire imprint.

Bigger Payoff

Good taste is also good business. The payoff for investors from a distinctive building is often 15% to 20% higher than from a regular structure, real estate experts say. “It will cost you, but you will have a better return,” Halprin said.

Maguire mixes an interest in design with political savvy. The firm and its partners often placate potential opponents by approaching civic groups before begining projects and, since 1982, have contributed more than $100,000 to Los Angeles city and county officials. Partner Nelson C. Rising worked on Tom Bradley’s first bid for mayor in 1972 and managed his failed campaigns for governor.

“It’s a critical part of building these days,” USC real estate and urban affairs professor Rocky Tarantello said of developers’ political connections and contributions. “You have to be aware of what the political climate will tolerate.”

Attention to aesthetics and politics, however, does not guarantee success. In 1980, Maguire Thomas suffered a blow when it lost a competition to build a billion-dollar project along Grand Avenue atop Bunker Hill.

“We were both irritated and unhappy as hell,” said Maguire, whose critically acclaimed entry was created by an international team of architects. “So, we were looking for something else that would keep growing with downtown.”

That project would be Library Tower.

The project’s origins go back to several lunch meetings at Arco headquarters between Maguire and his friend Robert O. Anderson, then the chairman of Arco. Anderson would often gaze down from his 51st-floor office and grouse about his shabby neighbor across the street--the Los Angeles Central Library.

Designed by architect Bertram G. Goodhue in the 1920s, the Moorish-style building topped by a blue and gold pyramid had become cramped and dilapidated. By the late 1970s, the city was considering demolishing it and selling the five-acre lot.

Maguire and Anderson decided to fund a $300,000 study that eventually proposed a plan preserving and enlarging the Central Library. But to avoid the wastebasket where so many other proposals had wound up, Maguire devised a plan to finance the expansion and set out to win the blessing of numerous government bodies, including the City Council, the library board and the Community Redevelopment Agency, which has overseen most of downtown Los Angeles’s massive growth.

The firm organized a roadshow complete with models and slides designed to win support for his plan from civic and business leaders. But before long, around Christmas in 1980, Maguire Thomas decided to mix its apparent civic-mindedness with financial self-interest. It began to quietly buy up property around the library in hopes of turning the project into a big, private development.

Although his firm stood to reap huge profits from a successful downtown development, Maguire insists he did not undertake the initial effort to renovate the Central Library to push his own agenda. “We thought we could come up with a plan to save the library,” Maguire said. “We thought it was important to keep the open space and keep the library.”

Rival Outbid

Meanwhile, acting through third parties, Maguire Thomas purchased the Engstrum apartments across from the library, outbidding and angering a rival in the process: a developer controlled by the wealthy New York clan headed by David Rockefeller.

“They were very upset at us because they had intended to buy Engstrum (for their own development) but had let it slip through their fingers,” Thomas said.

Maguire and the Rockefeller firm then locked horns over a nearby parcel that was crucial for the skyscraper site. The Rockefeller firm owned it and refused to sell to Maguire for several years until the firm began cutting back on its real estate holdings, Thomas says.

The Rockefeller property along with others put Maguire way ahead of any potential competitor for the city’s blessing to develop the Library Tower site. “Nobody could touch it,” said downtown developer Raffi Cohen. “He (Maguire) was the only one that close to the site.”

While the property was being purchased, Maguire hired one of the nation’s most influential architectural firms, headed by I.M. Pei, who designed the East Wing of the National Gallery of Art in Washington and the expansion of the Louvre art museum in Paris. Like designer clothing, a Pei building has a cachet that attracts attention and, in this case, wealthy tenants.

One fall morning in 1982, Maguire and Thomas arrived at Pei’s Madison Avenue offices to view six designs created by competing teams at the firm. Maguire drew numbers from a hat to determine in what order the entries would be seen.

Distinctive Design

Maguire had asked for a distinctive building and Pei’s architects did not disappoint. The ideas presented ranged from towers topped with onion-shaped domes to ones that were stepped back like a spiral staircase. “There were some strange ones,” Thomas said.

But the entry that stood out was a less flashy yet attention-getting spire that grew thinner like a wine bottle as it neared the top. “The form of the building was very compelling,” said Maguire of the initial design by architect Harold Fredenburgh. “It’s the building that’s going to be on the 10 o’clock news every night when the cameras pan downtown Los Angeles.”

The designs were in hand and most of the property in place, but Maguire was far from breaking ground. Negotiations with the Community Redevelopment Agency, which was charged by the City Council to find a way to finance the library renovation, stretched on for years.

Maguire at one point threatened to walk out, complaining about delays and agency plans to ask other developers to compete. “You can propose it to other people but it doesn’t make sense because we have the property,” said Maguire, whose firm was the only one to respond to a city request for proposals.

The city had reason to be cautious--it had been burned before by developers with ambitious proposals. In fact, the developers that beat Maguire on the Bunker Hill project are still years behind schedule in completing the project.

Paying for Renovation

By the time Maguire officially made his proposal to the CRA, the agency had received its marching orders: “Our game plan was to come up with enough money to pay for the entire Central Library renovation,” said Don Spivack, the agency point man on the project.

Negotiations boiled down to nitty-gritty financial details. For example, if Maguire Thomas deposited money intended for the city in a bank on a Friday, who would be entitled to the interest earned over the weekend? Who would pay the tax on the interest?

“There were a lot of heated moments,” Spivack said. “We would all go back to sulk for a while and then get back together.”

Meanwhile, the cost of renovating the city library soared. Inflation and finally a disastrous fire pushed the price tag far above $100 million, way beyond earlier estimates.

But as the cost of repairing Central Library rose into the stratosphere, so did the skyscraper. To generate more revenue to cover the escalating costs, Maguire Thomas jacked up the size of the Library Tower beyond an initial 50 floors to make it the highest building in Los Angeles by 159 feet. In fact, the price kept ballooning, giving Maguire Thomas the bargaining leverage it needed to win approval for a second tower of 54 stories as part of the project.

Traffic Concerns Dismissed

Although expensive, the plan to renovate the library proved fateful for Maguire. For instance, the City Council, eager to restore the library, dismissed concerns about potential traffic congestion and permitted Maguire to get around certain restrictions that would have made it impossible to build the 1.3-million-square-foot skyscraper.

Without government motivation to save the library, former Los Angeles Planning Commission Chairman Dan Garcia says, the skyscraper “would not have been built.”

Months of negotiations with the city--and simultaneous talks with potential tenants and bankers--proved grueling for the partners. “We would be on the telephone at 5:30 or 6 in the morning getting the day planned,” Rising said. “We once went 79 days without taking a day off.”

But by early 1985, Maguire Thomas overcame a major obstacle by striking a deal with the city. Under the deal, the firm agreed to pay about $50 million for the Central Library renovation. Another $60 million would come from property taxes generated by the project, and Maguire Thomas agreed to pay a portion of those taxes even if the skyscraper was not completed on schedule.

Despite the accord, Maguire faced yet another major challenge: finding tenants. It was no easy task with Library Tower competing against other high-rise rivals, such as Citicorp Plaza, in a battle to fill millions of square feet of office space.

All of the projects have set their sights on so-called blue-chip tenants, the top law and accounting firms and investment bankers. “They have the money and image,” Maguire Thomas partner Ned Fox said.

Library Tower’s stunning views and ample window space were an important selling point. “We would have not looked at a building if it meant putting partners and associates in windowless offices,” said David Vena, head of the real estate department at the law firm of Latham & Watkins, which will move into the 38th through 45th floors.

The selling of the skyscraper called for showmanship. To wow potential clients, Maguire’s firm would roll out a 6-foot-high model of the tower and samples of the granite that would sheathe the building. The show made quite an impact at Latham & Watkins, whose employees voted overwhelmingly to move into Library Tower after viewing the presentation.

For some tenants, the prestige inherent in calling the city’s tallest tower home proved an irresistible draw.

In fact, First Interstate Bancorp will jump ship from its own First Interstate Tower--the city’s tallest building until Library Tower surpassed it 1 1/2 months ago--to the new top spot in Los Angeles.

The 72nd-floor office of First Interstate Chairman Joseph J. Pinola will, on clear days, offer stunning views of the San Gabriel Mountains. One hundred feet above Pinola’s office, four 18-foot-high copies of the company logo covered in gold-leaf will crown the skyscraper.

Maguire Thomas initially tried to persuade Union Bank to become the building’s “name” tenant, but after failing, it successfully wooed First Interstate. Pinola “could see that he was going to become the second kingfish,” Thomas said. “If we wanted to stay on top of the mountain, he had to move.”

“It’s safe to say he (Pinola) wanted our name to be on top of that building,” added Stuart Laff, senior vice president at First Interstate Bank of California.

Maguire had to use even bigger bait to attract some tenants. The firm reportedly sold a 50% stake in Library Tower to get Pacific Enterprises to sign up in 1987.

At that point, Maguire was confident that he was not building an empty corporate cathedral and gave the go-ahead to start construction. In June, 1987, the firm broke ground and handed over a check for $28.2 million for the Central Library renovation--nine months behind schedule.

But a few months before tenants move into the skyscraper, Maguire Thomas has fallen short of one goal. Library Tower and its sister skyscraper will contribute about $110 million toward the library expansion. But since that agreement was made two years ago, the cost of the Central Library renovation has soared to about $150 million, and it could take tax dollars to make up the gap.

Maguire said he has no inclination to boost his contributions to the library. He said his firm already made “a substantial investment” in it.

At the same time, the leasing of Library Tower has exceeded expectations. The skyscraper is about 60% leased and, according to Maguire Thomas, should become profitable once it is 90% full.

Developers estimate that Maguire Thomas could turn around and sell Library Tower for at least $450 million--a $100-million profit. The second tower, a shorter but wider building that will house Southern California Gas, could also fetch as much.

With Library Tower already well along, Maguire Thomas is parlaying its growing clout and reputation as a major league developer to win support for other complex projects, such as its proposed 1,000-acre development near Marina del Rey and an office complex near the planned Disney Opera Hall on Bunker Hill. “People believe that we can pull these off because we have been able to do it in the past,” Thomas said.

Maguire, like many developers, gambled on his instincts and the rewards should be sweet. “Developers roll the big dice,” commercial real estate broker Todd Anderson said. “Maguire did and he won.”