Developers Back Out of Hollywood Plaza Project : Redevelopment: Proposed $300-million ‘urban village’ was one of two major undertakings to revitalize area’s core. Second project is in financial trouble.
Developers have backed out of a planned $300-million complex of apartments, stores and offices in Hollywood, killing a cornerstone of the massive renewal effort under way in the movie capital, city officials confirmed Monday.
The proposed “urban village,” known as the Hollywood Plaza, was one of two major development projects that city officials hoped would be the centerpiece of their $922-million redevelopment project and help turn Hollywood’s blighted 1,100-acre core into a gleaming metropolis.
The pullout comes at a time when the Community Redevelopment Agency’s other proposed cornerstone, the $300-million Hollywood Promenade project, is facing stiff opposition in the City Council because of plans to bail out the developer with $48 million in public subsidies.
Some city officials and critics are saying that with one project down and the other in potential jeopardy, the city’s redevelopment efforts in Hollywood could soon be back at Square 1 after years of work and planning.
Norton Halper, a longtime critic of the CRA, said the pullout is proof that the agency’s emphasis on building large developments, instead of encouraging renovations, is not working.
“This just shows that the CRA cannot subsidize people enough to come into a prime, traffic-filled area, with all the crime and other problems,” said Halper. “If they would clean up the area, they wouldn’t have to subsidize anyone.”
The developers, Hollywood/Highland Partners, refused to comment Monday. But they have told city officials that the lagging real estate market, dwindling sources of financing and high construction costs have made the project “infeasible,” said Jim Wood, CRA chairman.
City Councilman Zev Yaroslavsky described the project’s demise as “shocking,” but said he was not surprised.
“Some people believe that Hollywood’s future depends on one or two projects. That’s a false messiah. The best thing that could happen to Hollywood now would be for the city’s redevelopment agency to make a beeline for some other neighborhood and let the private sector and property owners do their own thing,” Yaroslavsky said.
The project, in the works since early 1988, was to include 1,000 housing units, 300,000 square feet of retail stores and 400,000 square feet of office space over several levels of underground parking.
“Sure, we’re disappointed,” said Donald Spivack, the CRA’s operations director. “We’d much prefer to say we were moving forward. But that is not the case.”
Wood said the CRA remains committed to developing a project on the corner, saying it is the kind of project necessary to “restore Hollywood to its proper place as a healthy community for the people of Los Angeles to live, work and play.”
Wood said that the developer could come back with a smaller project, and that city officials will look for other developers.
The project would have been built on the north side of Hollywood Boulevard at Highland Avenue, just east of the Hollywood Promenade project and next to a planned Metro Rail subway stop.
The Promenade project would create more than 1 million square feet of museums, offices, retail shops, movie theaters and a hotel, all wrapped around Mann’s Chinese Theatre.
Although the CRA had publicly announced that both developers would build their projects without any taxpayer money, The Times reported last year that they had gone to the city and asked for $70 million apiece in public funds in order to proceed.
The CRA has proposed giving Promenade developer Melvin Simon $48 million over 12 years to help get the project going. That subsidy is scheduled to be discussed at a special City Council committee hearing today, and CRA members expect it to be “a very tough sell.”
“With Fire Department brownouts and budget cuts, it is absolutely unthinkable that we would spend $48 million in public money to underwrite this private project,” said Yaroslavsky, one of three committee members. “It makes me sick, and I don’t know any politician who would want to be associated with it.”
City officials have refused to discuss how much of a public bailout would have been needed for the Hollywood Plaza project, or whether the failure to reach an agreement on subsidies prompted the developer to give up on the plan.
But CRA officials and the developer had many disagreements, over such things as traffic and density problems and what to do with the Hollywood Wax Museum and other historically significant buildings at the site, Wood said.
“From our point of view, it would have been an incredible investment in Hollywood Boulevard,” he said. “But what they wanted from us, we couldn’t agree to. And what we wanted them to build wasn’t profitable for them. That’s where the question of public subsidy comes in. And on that, we could not reach an agreement.”
Hollywood Update
The Hollywood Promenade project, which would stretch around Mann’s Chinese Theatre along Hollywood Blvd., is facing opposition.
Developers of the Hollywood Plaza project, an urban village of apartments, offices and stores, said they do not plan to go forward.
