A Dream Delayed : Ambitious Residential Plans for L.A.’s South Park in Jeopardy

Standing on the sixth-floor balcony of their new downtown Los Angeles condominium with Marc and Betsy Axelrod, it is clear that part of what these young urban pioneers have bought is a dream.

Across the street, Marc Axelrod will point out, what is now a parking lot, a run-down hotel and some old shops is to be a park.

Below, an unappealing stretch of Hope Street is to be an elegant pedestrian promenade, lined with cafes and boutiques.

And sprinkled throughout the aging section of the city, an entire new neighborhood of thousands of condominiums, town homes and apartments is slated to rise.

Dream in Question

But two months ago, the Axelrods learned that their dream of living in a vibrant urban setting is in question. They discovered that city officials are quietly reevaluating ambitious redevelopment plans, which the Axelrods saw in brochures and a slick slide show, for the area dubbed South Park.

The Axelrods--he is an industrial hygienist, she a pharmacist--purchased their $200,000 home in the Skyline, a 2-year-old, 14-story tower that is the first attempt at middle-class settlement of the area south of the growing financial district.

South Park, an area east of the Convention Center, has been a cornerstone of downtown revitalization plans for more than a decade. It is slated to become the largest new community in the Central City and ultimately have three times as many homes as Bunker Hill, the more established and upscale residential area on the northwestern edge of downtown.

But at this point, there is little evidence of that long hoped-for community. The high-security Skyline stands as an island of stylish living in an uneven mix of gleaming new office and commercial towers, cheap hotels and drab, aging brick buildings.

Soaring land and development costs and the sluggish record of downtown condominium sales--the Skyline, for example, remains less than two-thirds occupied--has delayed development of the South Park community, which is supposed to have up to 7,000 homes and 15,000 residents by the year 2000.

And now, politically influential downtown landowners and developers have become divided over whether the city can or should go through with its longstanding plans for housing so close to the business district.

The hitches have begun to show themselves as city officials near decisions on commitments to proceed with 600 more rental units near the Skyline and the design of the three-acre Olympic Park, both on land that the city is acquiring near 9th and Hope streets.

Those decisions involve only a fraction of what is considered necessary to establish a viable community.

Some large landowners such as Transamerica Occidental Life Insurance Co. and Pacific Lighting Corp. have additional property that the Community Redevelopment Agency would like to see developed as housing. But the landowners argue that commercial development makes more sense.

Prominent Interests

At the same time, other prominent downtown interests have a stake in getting more people living in the immediate area and want the city to move ahead with housing. These include Forest City Dillon, the company that built Skyline, and Oxford Properties, which is building a huge office-shopping mall complex on the edge of South Park.

Top city officials, including Mayor Tom Bradley, the Bradley-appointed commissioners of the Community Redevelopment Agency and Councilman Gilbert Lindsay, who represents downtown, have become involved in the debate.

After hearing the concerns of one prominent developer, Bradley instructed the agency to reevaluate its South Park plan. The first decisions on how to proceed in South Park could be made by the redevelopment agency board on April 15.

Bradley, who has received large campaign contributions from businesses on both sides of the debate, has staked out a middle ground. He says he still supports residential development downtown. But he adds that the city and developers must find solutions to the problem of land costs, which in the last 10 years have nearly tripled in the area near the Skyline.

“There is a great deal of discussion going on in the development community about residential housing downtown, with a variety of viewpoints about the if, how, when, where and why expressed,” Bradley said. “I encourage those discussions, as long as it is clear we will build housing downtown.”

But for many of those who have already bought in the Skyline, reopening the discussion of the future is a bit unsettling.

Those who have purchased homes there did so for convenience--many work downtown--investment growth, the novelty of “something different” and the promise of things to come.

William Marello, a downtown stockbroker, said the city’s plan for the area was a key part of his decision to buy. “I’d like to see them go ahead with the master plan,” he said. “I look at this (to be) another New York City.”

‘Ghost Town’ Atmosphere

Many residents acknowledge the shortcomings of living in an urban outpost, even if it has spas, racquetball courts and saunas. Lack of convenient markets and the “ghost town” evening and weekend atmosphere of the nine-to-five business district are drawbacks.

“What I miss most is the Shakey’s Pizza a couple of blocks away in the evening,” said Tony Blomert, an executive with the Central City Assn., who moved from the western San Fernando Valley.

Concern about crime and the surrounding environment keeps many from venturing out on foot.

If the city does recast its plan for South Park, it will not be the first time.

In its earliest and grandest form, South Park was envisioned as a West Coast version of Central Park. High-rise residential towers were to surround a nine-block park with a lake. However, when the redevelopment agency halted massive land-clearing projects like Bunker Hill in the 1970s, the plan for South Park was slowed down. It now calls for a gradual development of condominiums, apartments and town homes--1,300 are supposed to be in place by the end of 1987--the park, children’s centers, a new marketplace block and pedestrian-oriented streets along Hope, 9th and 12th streets.

Change Downtown Character

Such a community would change the character of downtown, city officials say, creating night life, boosting retail sales, curbing future growth in commuter traffic and making the Central City more cosmopolitan and appealing to tourists and convention planners.

But even that scaled-down change has proven to be a tall order. The 200-unit first phase of Skyline--which offered condominiums at a higher price than some officials expected--has sold slowly, despite large development and mortgage subsidies by the redevelopment agency.

The second 212-unit phase of the project has been delayed, and the developers and redevelopment agency officials are considering offering those as rental units to tap a larger market.

Relocating existing tenants and acquiring the land for the new park also has taken longer than anticipated, said Donald Spivak, a downtown area administrator in the redevelopment agency.

Development Less Attractive

In the meantime, as the last available land in Bunker Hill was committed to projects, interest in commercial development moved to the south side of the business district, making residential development even less attractive to landowners in the area around the Skyline.

For example, redevelopment agency officials have indicated that they want to see residential development on a parcel of land north of the park site. However, the owner of the land, Pacific Lighting Corp., the parent company of Southern California Gas Co., hopes to build a large new headquarters office and hotel complex on its land.

“We don’t think if you put housing on that site it will be acceptable--either affordable or acceptable in the market,” said Wade Cable, executive vice president of Pacific Lighting Real Estate Group.

Cable said the gas company supports the concept of building housing, but would rather contribute to a fund to develop it elsewhere.

To strengthen their bargaining position, company representatives have suggested that the gas company, which has had its headquarters downtown since 1924, might have to move out of Los Angeles if it is forced to include housing in its project.

Others Firms’ Concerns

Meanwhile, Transamerica Occidental Life Insurance Co. and California Hospital Medical Center have been evaluating how their large landholdings in the area might be developed.

“Currently, there is no demand for residential that is economically justifiable,” said James Dederer, senior vice president and general counsel of Transamerica.

A major study conducted jointly by the two firms has found that the only viable market is for light commercial and industrial development, he said.

The redevelopment agency has indicated that it wants large-scale residential development on some of Transamerica’s property south of the park.

“The only way residential will work is if you’ve got a real demand for it,” Dederer said. “I don’t think you can artificially create demand. . . . Demand is not going to come from putting up buildings where the rents are too high.”

A solution for the complex problem is not likely to be easy.

Aggressive Action Suggested

To reduce land costs and the pressure for commercial development, Edward Helfeld, administrator of the redevelopment agency, suggests that the city take aggressive action.

He wants the city to strengthen its development controls to limit the scope of commercial development and permit even higher-density residential construction moves that could result in lower land values and development costs and could also produce more affordable housing.

Much of the land in South Park is now zoned to permit residential or commercial development.

But under existing market conditions and zoning, large redevelopment agency subsidies--some city officials say too large--would be required to keep housing in an affordable range.

“Clearly, if we don’t find some answer to holding the cost down, we’ve got some serious problems,” Helfeld said.

Redevelopment agency board chairman Jim Wood said, “In order for there to be a residential community, we must down-zone.”

Argument for Down-Zoning

Wood said he believes down-zoning--applying restrictions that reduce the density of development--is appropriate because it is the success of business revitalization efforts of the redevelopment agency that has driven up land values in South Park.

As for concerns about the market for downtown housing, Wood said, “I’m convinced we haven’t gone far enough to know yet. We have to tough it out, and that means go forward in the face of the current lagging residential sales.”

Any effort to down-zone, which could reduce the value of land in the area, is almost certain to trigger a major political battle at City Hall.

“If it takes a zoning action, by the time it gets to us, I’m sure a full debate will have developed,” said Daniel Garcia, chairman of the city Planning Commission. “It’s difficult to force major developers to do things they don’t think make economic sense. They create jobs, they contribute to campaigns and contribute to major policy decisions and they know it.”

Other Considerations

Economics of residential development are not necessarily the most important considerations, said John Welbourne, a downtown attorney and member of the South Park Task Force, an advisory panel to the redevelopment agency.

He said the benefits of having middle-class people living in the area, including an improved ambiance and reduced commuter traffic, must be weighed carefully. “The highest and best use (of the land in the area) doesn’t necessarily mean the best use for the public,” he said.

Some developers have suggested moving the bulk of future residential development to an area where property is cheaper. Farther south toward the Santa Monica Freeway or west of downtown, across the Harbor Freeway, are two areas often mentioned.

Councilman Lindsay, who is a key player in major downtown development decisions and has a sympathetic ear for business interests, said he favors moving the housing development south and “taking some of the pressure off the big landowners.” Lindsay said he has heard from landowners on the matter but insisted he couldn’t recall who they were. “They don’t see why they have to give up so much for the little that’s gained,” he said.

‘Isolated Enclaves’

However, Helfeld said relocating the residential community farther away from the business district would make it far more difficult to sell homes and “result in isolated enclaves, causing little revitalization to the heart of the central business district.”

Redevelopment agency officials say they hope that compromises and new residential development strategies can be worked out with landowners.

In the meantime, the pioneers at the Skyline are waiting and watching as the various bigger interests maneuver.

“They should (build up the area) faster,” said Denise Edell, whose boyfriend bought a unit in the building two years ago. “It would be so exciting if all that they said would happen happens.”

As for Betsy Axelrod, the pharmacist, she said that she, her husband and their expected baby may move out in a few years. But their decision will be influenced by what the city does.

If the sprawling neighborhood, park, walkways and children’s centers they saw in brochures look like they are developing, they might stay.

And, she said, the community’s first corner pharmacy might even be hers.