Delays Fuel Concern That Library Plan Could Fizzle

Despite pressures to hurry the project along, a city panel Wednesday extended the deadline on a $27-million payment by a developer who in return for permission to build huge office towers is supposed to help finance the renovation and expansion of the fire-gutted Los Angeles Central Library.

The delay, coupled with other problems in a complex public-private financing deal, has fueled speculation that the long-awaited renovation of the library could fizzle. At a City Council Finance and Revenue Committee hearing last week, Chairman Zev Yaroslavsky said he is becoming “very skeptical” that the $141-million project, which is lagging several months behind its original construction schedule, will proceed.

Most city officials, including Community Redevelopment Agency commissioners that granted Wednesday’s extension, dismiss such fears. “This project will go ahead,” CRA Commissioner Christopher Stewart said.

Stewart and others cite a multimillion dollar investment by developers and the city in architectural drawings, land acquisition and utility relocations associated with the library project.

CRA commission Chairman Jim Wood, however, said delays were beginning to make him “uneasy.” “At some point a project begins to collapse back on itself,” he said.

Pressure to get on with the long-awaited library rehabilitation increased from City Council members and preservationists after a $22-million arson blaze last April shut down the historic building.

The fire hit as uncertainties already were creeping into the project’s financing plan. Originally, the renovation was to be paid for almost entirely with revenue from private investments, including the purchase of the library’s high-rise development rights, new taxes generated by three new office buildings and the sale of tax credits related to preservation of historic buildings.

Changes in federal tax laws and the pullout of one office developer reduced expectations for such funds, leaving a gap of tens of millions of dollars in funding that would have to be made up by the CRA. In addition, cost overruns of up to $20 million on the library project have been predicted by city budget analysts--costs that could rise as a result of the fire.

Despite setbacks, the linchpin for the library project, city officials have said, remains a deal with a major developer, Maguire Thomas Partners, to build two office buildings that would be the tallest in the Central City. The firm has agreed to purchase the library’s development rights for nearly $50 million. The exchange of development rights takes place when one property owner yields permission to expand building size to another property owner, who then may exceed allowable limits by a corresponding amount.

Original Due Date

The first $27-million payment for the library project was originally due late last year. The payment deadline was extended to April and again to this month by delays in relocation of city utilities, officials said.

Recently, Maguire Thomas officials said they needed still more time--until Dec. 15--to close leasing deals necessary to secure $300 million in construction financing for the first tower. They said one lease is assured already and with another large tenant expected to sign up soon, sufficient financing is in sight.

Nelson Rising, a Maguire Thomas executive, said: “We are all operating on the assumption this thing is going.”