Amid Slowdown, Grand Avenue Plans Change
Officials Look at New, Short-Term Project for Part of Bunker Hill Site
by Anna Scott, Staff Writer
Los Angeles Downtown News
Published: Friday, December 4, 2009 3:24 PM PST
DOWNTOWN LOS ANGELES - Although the glitzy $3 billion plan to erect condominiums and retail on Grand Avenue on Bunker Hill remains stalled, a city official said last week that a new, smaller development on part of the site is moving forward.
“I’m looking at one of the parcels for a short-term project,” said City Councilwoman Jan Perry, whose Ninth District includes the Grand Avenue site. “It is a more immediate project.”
Perry would not divulge any details about what the new project would encompass or even who would develop it. More information will likely be revealed at a meeting of the Grand Avenue Authority (the city-county agency overseeing the Grand Avenue development), tentatively scheduled for Dec. 14, Perry said.
Perry also indicated that there might be other changes to the multi-phase mega project, formally titled The Grand, being developed by the New York-based Related Companies.
“It’s impossible to predict the future, but I’m guessing they may have to rethink their plan for [phasing] it in, while preserving the elements we agreed upon,” Perry said. “Whether it’s condos or apartments remains to be seen.”
Related West Coast President Bill Witte, when asked about potential changes to the timeline or other aspects of the project, said, “There’s a lot of stuff being talked about right now. I can only say it wasn’t Related that precipitated this discussion.”
Witte confirmed that a new, short-term project is in the works for part of the Grand Avenue site, but also would not reveal any details or say whether Related will develop it.
Changing Times
The Frank Gehry-designed Grand Avenue project was originally expected to break ground in October 2007.
The $1 billion, 1.3 million-square-foot first phase of The Grand would bring a 48-story Mandarin Oriental Hotel & Residences with 295 hotel rooms and 266 condominiums, a 19-story tower with 126 market-rate apartments and 98 affordable residences, a 250,000-square-foot retail pavilion and a 16-acre Civic Park.
Subsequent phases would bring more than 2,000 additional housing units, a grocery store and health club, and would nearly double the amount of retail in the project. The entire development is slated to occupy 3.6 million square feet of space across from Walt Disney Concert Hall.
The project was initiated by the Grand Avenue Committee, a public-private partnership formed in 2000 and chaired by Maguire Properties CEO Nelson Rising and philanthropist Eli Broad. The Grand Avenue Authority, which includes city, county and Community Redevelopment Agency officials, oversees the project.
The Civic Park, budgeted for the $56 million that Related has already paid the county for its ground lease on the site, is expected to break ground next summer, Witte said. The rest of the project is on hold as the developer waits out the frozen lending markets to obtain a $700 million construction loan.
That could still be a long wait, experts say, as projects based on selling high-priced condominiums have been largely derailed by the crash of the housing market.
“Condo prices everywhere have dropped dramatically and on the… spreadsheets they use to project out the value of these projects, they don’t make sense anymore,” said attorney Eric Rowen of Greenberg Traurig LLP, who handles litigation involving real estate financing. He emphasized that he is not specifically familiar with The Grand’s financials.
Difficult Months
The Grand has in recent months seen potential signs of slowing momentum.
In September, architect Martha Welborne announced that she would leave her post as managing director of the Grand Avenue Committee to join the L.A. office of the Portland-based architectural firm ZGF.
Welborne said the move was natural with The Grand on hold. She will continue to oversee the development of the Civic Park through the end of the year.
“In January, it will be nine years that I’ve spent on this project,” said Welborne. “I’ve given it my all. It’s very hard to predict when the development side might come back, but I need to predict my salary, so it was time to move on.”
As for whether plans might have to change for the project, she said last week, “The position I’m in, I can’t speculate on that.”
In late November Dubai World, the parent company of Grand Avenue investor Istithmar — a sovereign fund controlled by the royal family of Dubai that put $100 million into the project — began talks with banks to restructure $26 billion of debt. Witte said the troubles at Dubai World will not impact The Grand.
“We pretty much spent all the money we need to get ready, including their money,” he said. “As far as we know, there’s no material effect on us.”
Still, in order to break ground before The Grand’s entitlements expire in 2011, Perry said, “I think it would be incumbent upon Related to come back to us with proposals that would reflect the elements we think are important and possibly look at different staging based on economic indicators.”
That, she said, might mean a short-term development strategy as well as a long-term plan.
http://www.ladowntownnews.com/articl...6822331639.txt