Economic Lag Overshadows Ventura Blvd. Growth Plan : Development: Construction along the 17-mile corridor is dormant because of the fiscal climate. Builders may eventually gravitate to less-controlled thoroughfares.

The stringent growth controls in the soon-to-be-adopted Ventura Boulevard Specific Plan are likely to have little immediate effect because of the slowing economy, experts say--an ironic finish to a years-long effort to curb development.

Even when the real estate market picks up, land-use authorities said, it is likely that builders will locate new projects along cheaper, less-regulated corridors such as Sepulveda and Van Nuys boulevards. That will be a triumph for residents near Ventura Boulevard, perhaps, but a bane to homeowners elsewhere.

“The plan has significance, but it is currently overshadowed by the economy,” said Bruce Kusada, a senior sales consultant with the Charles Dunn Co. of Encino.

“The biggest restriction on new development is really the much tighter underwriting requirements for construction and permanent loans. And without financing for real estate--with or without the Specific Plan--you wouldn’t see a lot of construction occurring.”

The long-awaited Specific Plan, a sweeping set of building controls for all 17 miles of Ventura Boulevard, received tentative City Council approval Tuesday and is expected to be adopted Jan. 4.

Also slated for approval Jan. 4 is a modified building moratorium that would strictly limit, but not freeze, Ventura Boulevard building permits. The interim control ordinance, which could be in effect as long as six months, was proposed by Councilman Michael Woo to give city officials time to digest and implement the new Specific Plan.

A testament to the slow-growth movement, the complicated Specific Plan will control development on the boulevard from Studio City in the east to Woodland Hills in the west. It will dictate the size, height and use of buildings, and will generally try to encourage pedestrian-friendly projects such as ground-floor shops and sidewalk cafes instead of the high-rise office buildings and shopping centers built during the late 1970s and 1980s.

Most importantly, the plan charges developers a fee for every additional vehicle trip their project is expected to generate during the evening rush hour. Those funds are to be used for new traffic signals, wider streets and other congestion remedies.

A citizens advisory committee began work on the plan in 1986, a time when developers flush with construction loans were putting up glitzy office buildings and shopping centers with high-priced stores. Residents of the mostly affluent communities along the boulevard watched angrily while the markets and bookstores they had patronized for years were steadily replaced----and while traffic taxed their neighborhood streets.

Today, however, the Valley’s commercial real estate industry is dormant because of a dearth of financing for new construction and, according to a recent survey by Grubb & Ellis Commercial Real Estate Services, an average 14% vacancy rate in existing space.

Warner Center, the Valley’s latest prestige office address, has a 20% vacancy rate, although that figure reflects a large office tower that opened only a year ago. Ventura Boulevard’s 5-year-old Encino Terrace Center, commonly known as the Fujita building, has a vacancy rate of slightly less than 10%, its broker said.

Land-use lobbyist Larry J. Kosmont said the timing of the Specific Plan’s approval is ironic but not surprising, given the length of time controversial measures take to be enacted.

“The demand for control usually is generated at a time when economic productivity is at its highest,” said Kosmont, whose Burbank-based firm helps private developers and cities obtain building rights. But, he continued, “the impact of the controls is typically felt when the economy is at its lowest.”

Once the market picks up, the Specific Plan will be in place to control new development, city officials and slow-growth activists said.

“I have faith that the economy will rebound and at that time, developers will want to build,” said Richard Close, president of the Sherman Oaks Homeowners Assn. “In two years, we may be back in a boom, so this is the time to do the planning.”

But both Close and Kosmont agreed that builders will also turn to other areas of the Valley when financing is easier to get. Sepulveda Boulevard is already the site of a nascent financial center and Kosmont predicted that Van Nuys Boulevard will be attractive because of its large, relatively inexpensive lots. North Hollywood and Burbank may also become the sites of intense development.

“The development will just move. It will find a path of least resistance,” Kosmont said.

Others said that Ventura Boulevard’s vocal homeowner groups and existing interim control ordinance, in effect while the Specific Plan was being prepared, have already done their part to block high-rise development. The ordinance has generally limited buildings to three stories--considered too tall by many neighborhood activists but modest compared with the 20-story towers of Warner Center or Encino’s financial district.

“I think it just validates, if you will, what’s been occurring on Ventura Boulevard for some time,” Howe Foster, district manager for Grubb & Ellis in Sherman Oaks, said of the Specific Plan. “It doesn’t change very much.”

Another investment specialist, Encino accountant Arnold Dubin, predicted that, perversely, the Specific Plan will prompt a flurry of applications for building permits by landowners who want to put projects in the pipeline.

The plan sets ceilings on the number of additional car trips for each of the boulevard’s five communities--Studio City, Sherman Oaks, Encino, Tarzana and Woodland Hills--and Dubin said that landowners will flock to reserve their building rights before the trip quotas are filled.

“It will encourage people to develop their property, rather than be faced with the economic risk of having their land frozen,” Dubin said.

Still, others said that while remodeling and redevelopment will always take place, the building frenzy Ventura Boulevard saw during the last decade is unlikely to be repeated.

“I would say that development as we know it on the boulevard is pretty much over,” said investment specialist Jim Nolan of Grubb & Ellis.