Squeezed by Red Tape

A massive downtown redevelopment project that crumbled in the early 1990s was singled out Thursday for dragging down a several-block area nearby. The owners of the 81-year-old Brockman building, which used to house clothier Brooks Brothers, and the adjacent buildings on a block-long dilapidated stretch of Seventh Street between Grand Avenue and Olive Street received the annual zinger in the Downtown Breakfast Club’s 18th annual Roses and Lemon Awards.

“It’s a blight on our city,” said presenter Howard Reback. “Empty buildings don’t have to be ugly, but on this one they’ve outdone themselves.”

The awards, given by a group of almost 30 business leaders concerned with the aesthetics and quality of life downtown, were held at the Biltmore Hotel.

The Seventh Street site, which decades ago was a high-rent shopping district, is now owned by an affiliate of All Nippon Airways called Grand Avenue Hotel Partnership. The Brockman building was emptied of tenants, gutted and then abandoned in the early 1990s after a $400-million hotel, office and retail development went south during the real estate slump.

Since then, it has sat vacant, boarded up with peeling plywood and covered in graffiti, depressing the value and marketability of nearby office buildings and restaurant sites, the club said.

But a representative of the buildings’ owners says they are stuck in a bureaucratic Catch 22. The parking lots along the back have been sold by one of the former owners to a Denver developer. That sale meant the buildings’ owners can’t develop the site because they’re unable to build the parking structure spelled out in the development agreement. They need the parking lots and their development rights to do that.

Furthermore, if the partnership wants to demolish the buildings, they must pay the city a $5 million fee to restore other historic buildings--more than the current owners think the site is worth, said Ted McGonagle, of Property Solutions in Granada Hills, a consultant to the buildings’ owners. The fee, which the previous developer negotiated with the city as mitigation for tearing down old buildings, is spelled out in the development agreement and the environmental impact report.

“The people who have the buildings can’t do the project and they can’t demolish the buildings. The lemon should not be going to us, but a combination of the CRA [Community Redevelopment Agency] and the [Los Angeles] Conservancy [a historic preservation group]. Nothing can happen on the property unless we get rid of the existing entitlements,” McGonagle said. He pegs the cost of redeveloping the property at almost $22 million.

Don Spivack, CRA deputy administrator, acknowledges that the owners are trapped in a difficult situation, but says he is working with them to dissolve the development agreement. The hard part, he says, will be for a developer to spend the time necessary to compile a new environmental impact report and come up with the money to mitigate the effects of any new construction.

“Whether [this project] will pencil depends on the sale price you attach to it. How much of their investment are they willing to write off?” he said. Sources say the original development group had sunk about $60 million into the development before calling it quits. Until someone steps in to develop the project, Spivack said, he is hoping his agency and the owners can come to terms on a cleanup.

“We have to come to some agreement about making it look presentable,” Spivack said.

Winners of the breakfast club’s Rose awards included: The California Science Center, a museum and education center that opened earlier this year in Exposition Park; Traxx, a new restaurant in Union Station inspired by classic railroad dining cars; and Colburn School of Performing Arts.

The club also bestowed honors on several other public programs that enhance life downtown, including the $3.2 million Downtown Center Business Improvement District, a group launched last month to spruce up the city’s core, the Shakespeare Festival/LA and an Metropolitan Transportation Authority photo essay that profiled MTA workers on bus advertisements.