The Commons: A Case History of Things Awry

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Times Staff Writer

What happened to The Commons is perhaps the clearest example of how a Stanley S. Sirotin project went wrong.

Tied up in bankruptcy proceedings for nearly two years, the building has recently been sold for an undisclosed sum to an undisclosed group of local investors.

The Commons is a striking development, modeled after European marketplaces. Three stories high and encompassing 75,000 square feet, it is complemented by cobblestone walkways. It was designed to hold small specialty shops on the ground floor and offices on the second and third levels.


Private Funds Sought

As he did with Les Bureaux and the Burlington Arcade, Sirotin solicited a substantial portion of The Commons’ funding from private investors, according to court documents.

Three letters were written by Sirotin to Beverly Hills real estate agent Fred Gottfurcht in February and March of 1980 that offered investment opportunities in The Commons. The letters, copies of which were obtained by The Times, authorized Gottfurcht to sell 50% of a newly formed limited partnership, Lake Avenue Associates, to investors for a total of $2 million.

At the end of two years, Sirotin said in the letters, he would exercise an option to repurchase the limited partners’ interests. In one letter, he offered a 60% profit; in the other two he offered a 55% profit. One letter also contained a reference to an article in The Times’ real estate section that heralded the planned office condominium and retail development.

Stories Lent Credibility

Investors later told state Department of Corporations investigator Al Lomas, who is heading an investigation of Sirotin involving possible embezzlement, that accounts in The Times of Sirotin’s ambitious plans lent credibility to the project that significantly influenced their decision to invest.

According to a written review of the limited partnership agreements compiled by The Commons investors Al Kaufer and Dan Lang in research for their suit, Lake Avenue Associates had gathered 26 private investors who contributed a total of nearly $2.1 million as limited partners by May, 1980.

Kaufer’s and Lang’s review also found that Lake Avenue Commons, a second entity that was formed by Sirotin to sell 20% of his own interest in Lake Avenue Associates, had collected a total of more than $3.7 million from 33 investors by July, 1982, bringing the total number of limited partners in The Commons to 59 and the total of their contributions to more than $5.8 million.


None of the limited partners in The Commons has been repaid, Kaufer and Lang said.

Unknown to The Commons investors at the time they put their money into the project, they said, was the falsity of several claims made by Sirotin in his letters, namely that the office condominiums were “100% sold,” and that Bank of America was the construction lender for an $8.5-million loan.

Bank Loan Refused

Bank of America had not loaned any money to Sirotin at that time, bank officials said. Indeed, the bank had refused to finance an office condominium plan, said leasing agent Daniel Hayes, who was hired by Sirotin to find tenants for The Commons. Hayes said his firm had sought interested buyers for office condos in 1979 and 1980, but that “no money was ever collected and no contracts were ever signed.”

The office condo idea died after the bank refused financing, Hayes said. Bank of America did agree, however, to loan Sirotin $10 million for construction of a retail and office complex that would be leased to tenants, Hayes said. That loan, however, was not signed until April 10, 1981, bank officials said, more than a year after Sirotin told investors that he had construction financing for The Commons.

In 1983, when The Commons was completed, almost all of the retail space on the ground level had been leased to restaurants and shops such as Il Fornaio bakery and the Cheese Store, Hayes said.

But things quickly began falling apart. The bottom-floor merchants complained that without second- and third-floor tenants, their businesses were languishing because of lack of traffic.

Attorney’s Office Management Inc., a firm that specializes in subleasing office space to attorneys, had signed a lease for the entire second floor, but filed for reorganization under federal bankruptcy law in 1982, thereby tying up the second level in lengthy court proceedings and making it impossible to lease the space to another tenant.


Rebellion Over Rent

According to Carolyn Huestis, former counsel for Sirotin’s Classic Projects Corp., the umbrella company for his various limited partnerships, and the lawyer appointed by the court to administer the Lake Avenue Associates’ bankruptcy, several of the ground-floor merchants refused to pay their rents and others left. With two vacant floors and rebellious tenants, The Commons was left with very little income, Huestis said.

Sirotin filed bankruptcy on behalf of Lake Avenue Associates in February, 1984, claiming that the partnership had $16 million in debts and $15 in cash on hand.

In newspaper interviews at the time, Sirotin said then that there was still hope for The Commons, and that he and others affiliated with the development would reorganize and find some way to bail out the indebted center and pay off its investors.

It never happened. Two months later, Sirotin left for England, having resigned as the general partner of Lake Avenue Associates.

“He believed that no matter what he was telling everyone, everything was going to work out,” investor Lang said.

Start of Recovery

Today, The Commons, under its new owners, is just beginning to recover. The interiors of the second and third floors never have been completed, and about 60% of the complex is vacant. Il Fornaio and the Cheese Store have pulled up stakes.


If Bob Peterson had his way, any reference to Sirotin ever being involved with The Commons would be obliterated.

Peterson works for R. A. Rowan & Co., a commercial real estate firm that arranged the recent sale of The Commons and now acts as property manager for the site.

“He’s gone,” Peterson said of Sirotin. “And as far as we’re concerned, he wasn’t very kind to the property.”

Peterson said plans are under way to revamp the center and find new tenants. “We’re off and running,” Peterson said. Negotiations with prospective tenants are in the works, he said, and about 40% of the complex has been leased. He would not, however, identify the new owners. “My hands are tied behind my back,” he said. “But we think it has every potential of becoming just what it was intended to be.”