Developer Jona Goldrich : Deal Maker Transforms Downtown L.A.

Longtime real estate developers in Los Angeles used to know Jona Goldrich as an eager young immigrant from Israel, not long off a Greyhound bus, who installed window screens for a quarter apiece and cleaned up housing construction sites in such places as the San Fernando Valley.

“He had his hat in his hand, looking for work,” builder Julian Weinstock recalled. “He was very humble.”

Though Goldrich is still humble, his friends say, the hat has long since vanished from his hand.

Now 58, Goldrich cruises Southern California in elegant automobiles, moves with the real estate elite of Beverly Hills and has been a major force behind developments that are altering the fabric of many California cities, Los Angeles in particular.

Goldrich is the multimillionaire majority owner of Goldrich & Kest Industries, a diversified development concern based in Culver City whose modest roots in construction cleanup are now but a blur in the company’s rear-view mirror.

Goldrich & Kest projects of all types dot the state, varying from mammoth to mundane in neighborhoods from tony to tawdry. The firm owns housing for the poor in Pasadena, boat slips for the rich in Marina del Rey and retirement homes for the elderly throughout the state.

“He’s into so much that I don’t have a clue about where he’s at,” one Beverly Hills banker complained. “He could be making $100 million or losing $100 million.” (The company is healthy financially, Goldrich said, with revenue surpassing $200 million a year, but he would not reveal its earnings.)

Goldrich is one of a group of European-born Jews who, after surviving or narrowly avoiding the Nazi death camps of World War II, eventually made their way to Los Angeles and grew rich in California’s development boom. It was 33 years ago last May that Goldrich arrived in Los Angeles, where he spent his first days living in a $1-a-night downtown hotel.

Another of the group is Goldrich’s publicity-shy partner, Sol Kest, the only one of nine children in his family to survive concentration camp incarceration. Goldrich met Kest in 1959 when Kest was a laborer on a construction site; Kest now runs the company’s far-flung construction and apartment management operations.

Business associates of Goldrich describe him as an ethical deal-maker with outsized ambition and energy. “I think he wants to own the city,” longtime friend Stanley Black said. “The money he makes, he’ll never spend. Business is an ego trip for him. He loves to make deals.”

Goldrich is a voluble and animated man who loves to talk business and politics. He is a wealthy builder who was once a top union leader in Israel, a self-made man with strong liberal sympathies, a naturalized American citizen who remains fiercely loyal to Israel.

Informal, Unpretentious

Informal and unpretentious, Goldrich sometimes maps out his business deals with his real estate development pals over breakfast on Saturday morning at Nate ‘n’ Al, the well-known Beverly Hills deli.

Along with developer Nathan Shapell, Goldrich is spearheading the major residential developments in downtown Los Angeles, believing that one day it will give up its image as a place that people are eager to get away from, especially at night, and will rival other big-city downtowns as an attractive place to live.

“There’s no doubt in my mind that downtown is growing up,” Shapell said. “Traffic has become a nightmare and people want to live close to work.”

It’s a thrust strongly supported by the city of Los Angeles. “We’re trying very hard to make downtown Los Angeles a 24-hour city,” said Marti Snyder, head of housing operations for the Community Redevelopment Agency.

Goldrich-Shapell joint ventures include the Promenade condominium and apartment complexes on Bunker Hill. The latest addition is the just-completed $60-million Promenade Towers, a twin-tower apartment and office complex hard by the Harbor Freeway.

Construction on the Grande Promenade--a $200-million, 972-unit apartment, retail and office complex next to Crocker Center--is to begin shortly. Goldrich and Shapell are also minority partners in a $1.2-billion residential, commercial and retail development known as California Plaza, now under construction on Bunker Hill.

Goldrich is a well-known figure around Los Angeles City Hall, where his clout as a builder is ranked with the best in Southern California. It was the Community Redevelopment Agency of Los Angeles, for example, that issued tax-exempt revenue bonds to finance Promenade Towers, where rents range from $700 to $1,800 a month.

Political Contributor

Goldrich’s name is also a familiar one on lists of contributors to local politicians, including Los Angeles Mayor Tom Bradley and members of the Los Angeles City Council. “That’s where I always run into him--at other people’s fund-raisers,” City Councilman Marvin Braude said.

Major Goldrich & Kest projects outside downtown include a joint venture with builder Sheldon Appel to redevelop the site of the General Motors assembly plant in Southgate that was closed in 1982. Plans call for the construction of a $80-million retail and industrial center on the 90-acre site that is expected to create 3,000 new jobs and breathe new life into economically hard-hit Southgate.

Another is a $50-million office building and retail joint venture between Los Angeles County, Goldrich & Kest and Sheldon Appel Co. The developers are leasing the land--near the Long Beach Airport--from the county in a deal expected to provide the county with more than $1 billion in revenue over the 66-year life of the lease.

Goldrich & Kest has also carved out a niche as one of California’s biggest developers of rent-subsidized homes for the poor and elderly. But these projects have been less important to the company in recent years as government funds have dried up.

For his efforts, Goldrich has been bestowed honors by everyone from builders’ groups to the Boy Scouts. Last year, the Los Angeles-area scouts gave him their Good Scout award, saying he best represented the character and qualities promoted by the scouting movement.

Yet, the record of Goldrich & Kest is hardly unsoiled or without major problems.

Active Cleaning & Maintenance, the original construction cleanup company, pleaded guilty to a felony and was fined $5,000 in 1978 for filing false payroll forms with the Department of Housing and Urban Development. The firm went out of business a couple of years later.

The conviction was unearthed during a prolonged and bitter proxy fight that Goldrich spearheaded in 1984 in an effort to get on the board of directors of Western Federal Savings & Loan in Marina del Rey.

He abandoned the effort early this year when private investors from Canada bought his stock at more than 40% above the market price. Goldrich says he made a profit of $2 million on the sale.

Some Work Criticized

Goldrich & Kest has also been criticized because of its combative business style and by those who say its work is shoddy or inadequate. Complaints have come from such varied places as the Los Angeles City Council, condominium owners in the Promenade, poor people in San Francisco’s Tenderloin district, a federal judge in Los Angeles and angry homeowners in the city of San Fernando.

Condominium owners in one of the Promenade buildings have sued the developers, including Goldrich & Kest and Shapell’s company, Shapell Industries, alleging that the building is “seriously defective.”

According to the suit, filed in late 1984, it will cost more than $3 million to fix the problems, which include a faulty heating and air conditioning system, defective trash chutes and leaky windows.

“It’s bad,” condominium association President Ralph Lopez said in an interview. “It really is.”

Four Goldrich & Kest hotels in the Tenderloin, a shabby high-crime area near downtown San Francisco, have also sparked public outcries because of their run-down condition.

Goldrich & Kest bought the hotels in the Tenderloin five years ago in a widely publicized renovation project whose intent was to provide decent living quarters to low-income residents. Money for the work was provided by government grants and loans, a consortium of banks and a group of private investors led by Goldrich & Kest.

But the project has fallen far short of expectations. According to published reports, the hotels have been plagued by crime, poor security, management neglect and shoddy work.

In another confrontation that lasted for years, Goldrich & Kest sued to overturn a one-sided referendum in the city of San Fernando that barred the company from building a 42-unit apartment building, financed by the Department of Housing and Urban Development, in a neighborhood of single-family homes.

Judge Rebuked Firm

Goldrich & Kest not only lost its court challenges, but its conduct in court and toward the City Council of San Fernando was sharply criticized by U.S. District Judge Robert J. Kelleher. The judge issued the rebuke last year in a written opinion that ordered Goldrich & Kest to reimburse the city for $57,500 in attorneys’ fees.

Then there was the highly charged decision this year by the Los Angeles City Council to refund $220,904 in so-called Quimby fees to Goldrich & Kest. Quimby fees are paid by builders to the city for development of parks and recreational facilities.

Goldrich and other proponents of the refund argued that the money would allow Goldrich & Kest to reduce rents on a 212-unit apartment complex that the firm was building in the mid-Wilshire area. Approval was granted only after acrimonious debate on the council.

Goldrich, discussing the problems with his customary directness in heavily accented English, called the Tenderloin projects “one of the worst real estate deals I’ve ever been involved in” and labeled the San Fernando court fight a “mistake. Sometimes, you can’t fight City Hall.”

He also conceded that there are leakage problems at the Promenade condominiums but said they are not nearly as bad as the owners contend in their lawsuit. And he defended the Quimby fee rebates, saying, “I was just right and the city (of Los Angeles) was just wrong.”

Goldrich has always displayed a streak of obstinacy and single-mindedness that is woven through his life like a piece of brightly colored thread.

There was the time in the early 1940s when underground Jewish leaders in Eastern Europe refused to allow Goldrich and his younger brother to travel together on a refugee train filled with Jewish teen-agers and children bound for Palestine.

Smuggled Into Hungary

As Goldrich tells the story, his parents smuggled the boys into Hungary because the Nazi extermination program had begun in their occupied hometown of Lvov, Poland. But Jewish leaders in Budapest did not want the two traveling together because of the fear that they would both be caught by the Germans on the dangerous, monthlong train trip to the Middle East through German-occupied parts of Eastern Europe.

Only by badgering the underground authorities relentlessly for weeks did Goldrich, only a teen-ager, get them to bend the rules and allow the brothers to go together. “I was in their office every day,” he said. “I had nothing else to do.”

The rest of the Goldrich family, including his parents and another brother who stayed behind in Poland, died in the concentration camps. Of 6,000 Jews in Lvov, Goldrich said, fewer than 100 survived.

Goldrich was to spend his next 11 years in Israel, working as an auto mechanic, going to school at night and serving as apprentice union head in Haifa for the General Federation of Labor, Israel’s principal labor union.

He obtained a mechanical engineering degree in Haifa and served as an engineer in the Israeli navy before emigrating to the United States in 1953 with the hope of entering the Massachusetts Institute of Technology.

When MIT refused him admittance because his English was not good enough, Goldrich says, he set out by bus from Boston for Southern California, where he thought the climate most resembled Israel’s.

For a while, Goldrich worked as an auto mechanic at an Oldsmobile dealership on Sunset Boulevard, but then he began installing screens at the housing projects that were springing up like weeds all over Los Angeles.

“I used to install 100 screens in four hours” at 25 cents a screen, Goodrich recalled. “That was a lot of money.”

Formed Own Business

With the help of a $1,000 loan from Bank of America, Goldrich formed his construction cleanup business in 1954 after he realized that it was the practice of builders to leave the windows dirty and the trash lying around for the new owners to clean. He constructed his first building three years later--a 22-unit apartment building in North Hollywood.

These days, Goldrich is a picture of wealth. Though he will not reveal his net worth, he admits to giving about $500,000 a year--an amount equivalent to 10% to 15% of his personal income--to educational, Jewish and Israeli charities.

He’s also a portrait of health, his black bushy hair graying slightly around the temples and tanned face creased kindly by time. He keeps in shape by playing tennis on the court next to the home that he and his wife built in Beverly Hills 16 years ago. His two daughters are in college.

But Goldrich’s true love is business. It dominates his life so much that his wife complains to him that he does not do anything socially without mixing in a little business.

Riding around recently in his gray 1976 Rolls-Royce, Goldrich talked proudly of the 10,000 apartments units that he has built for the elderly. At one government-subsidized complex near the beach in Santa Monica, residents pay less than $200 a month in rent, cheap even by Santa Monica’s standards of rent control.

“No one likes making money more than I do,” Goldrich said during an interview. “I love it. But I also fill a social need.”

On another occasion, this time riding in his 1985 gray Jaguar, complete with speaker telephone, Goldrich paid unannounced visits to two properties in Pasadena, including a troubled low-income housing project, Kings Villages, that he now owns and manages.

Discussed Crime Problems

There, Goldrich discussed crime problems with the buildings’ beleaguered managers, who complained that they are powerless to prevent known criminals from living there. Goldrich listened intently, offered no solutions, but did promise the managers a new photocopy machine.

Another stop was the Green Hotel, a Pasadena landmark that Goldrich & Kest converted into a retirement hotel in the 1973 at a cost of $4 million. Average monthly rent there is about $100 a month.

“God bless you for letting me live here,” a woman from Beirut told Goldrich.

“That’s what I like,” Goldrich remarked later. “Helping people like her.”

Though Goldrich certainly has his admirers, he also has critics who are saying that his big developments downtown have not lived up to expectations. The Promenade apartments and condominiums are drawing flak even from Goldrich supporters.

“I don’t think they’re attractive,” Councilman Braude said in an interview, “and they’re not up to the stature of what should be on Bunker Hill.”

“Nobody ever said he built anything of architectural significance,” added another developer who has worked closely with Goldrich. “I think he’s interested in getting the deal done as cheaply as possible.”