New Life Planned for Old Downtown Buildings : Government: State envisions updating three pre-World War I structures as the cornerstone of a cluster of offices. Critics say there are too many problems to overcome.

Its eight-story facade is scarred by graffiti and its street level is wrapped in battered wooden boards. Just to get inside the 80-year-old building at Broadway and 4th Street, authorized visitors have to step around a small encampment of homeless people.

Inside, the place is a mess, a gutted hulk that was a Broadway department store until the early 1970s and later abandoned partway through renovation into an office complex with a modernistic penthouse. Piles of wallboard were left unused for a future that never arrived.

Some people might run in disgust, seeing only a wreck entangled in bankruptcies. But Daniel Rosenfeld sees something different in the Luby Building. He envisions it restored as a cornerstone in Gov. Pete Wilson’s plan to move 3,500 state workers into the historic center of Downtown Los Angeles, seeking to improve government efficiency while giving the neighborhood a much-needed boost.

“It’s a different kind of Los Angeles emerging here,” said Rosenfeld, the governor’s enthusiastic point man on the plan. “First of all it’s a Los Angeles that celebrates its history rather than reject and destroy it.”

The Luby would be one of three pre-World War I structures to be purchased or leased and restored under the $245.9-million proposal to cluster state employees near the Ronald Reagan State Building built on Spring Street three years ago. In addition, a building might be erected along 4th Street between Broadway and Spring by 2000.

However, many details must be worked out and much skepticism must be overcome.

State workers in many suburban locations resist the idea of moving to what they fear is a threatening and traffic-clogged location. Owners of modern office buildings Downtown grumble about their high vacancy rates. Some planners worry that the retrofitting may prove much more expensive than projected and that the old buildings present too many problems in earthquake safety, work-space layouts and wheelchair access.

And some real estate experts doubt whether state investment can fight centrifugal housing and telecommunications trends that undermine the city center. Recent efforts to revive Spring Street with a theater complex, a nightclub and condominiums failed.

“It’s a question of whether the state (offices) can be the critical mass or not, a big enough influence on the district to shape it,” said Thomas Black, an official at the Urban Land Institute, a national real estate think tank. “That’s uncertain. It’s dicey.”

Similarly skeptical is William Wheaton, an economics professor at Massachusetts Institute of Technology who often performs real estate consulting in Los Angeles. With the tough real estate recession in Downtown, this may be a great time for the state to pick up properties cheaply, Wheaton said. But at the same time, computers and fax machines allow private industry to disperse workers, a trend that is counter to the proposed consolidation of 2,000 state employees from 40 sites around Los Angeles County and of 1,500 from another part of Downtown.

Still, even strong cynics might feel a pulse of hope for the troubled six blocks close to the Reagan building if they tour it with Rosenfeld, who is deputy director of the Department of General Services, which is in charge of the state’s real estate. A passionate fan of downtowns and historic architecture, he seemed to enjoy hiking up eight flights of ancient, dirty, metal stairways to check out the view and ventilation systems atop the Luby Building.

“We’ve got to save cities from the inside out,” Rosenfeld said during the climb. “If you are going to cure this animal, you’ve got to start from the heart.”

The Luby Building is at Los Angeles’ heart. Named after a recent owner, the former store sits next to a new subway station and is half a block from where the Angel’s Flight funicular will be rebuilt. The gleaming skyscrapers of Bunker Hill are above the back door. The Grand Central Market, which is undergoing renovation, is down the street and the bustling but grimy shopping district of Broadway is at the front door. City Hall, the Music Center and Little Tokyo are within short walks.

Wilson’s plan is designed to link what Rosenfeld refers to as the three Hs of downtown: the hill’s financial towers, the Hispanic shopping corridor and the historic collection of 70- and 80-year-old buildings on Spring Street that were the Wall Street of the West until sadder days set in. Property managers estimate that the buildings along Spring between 3rd and 9th streets average only a 30% occupancy rate.

Government is obliged to revive the area since government wrecked it by encouraging a corporate exodus to Bunker Hill, according to Fred Cowan, who owns the 12-story Continental Building at 408 S. Spring St. When it opened in 1904, the heavily ornamented structure was the city’s first skyscraper; it is now boarded up and, Cowan said, in the midst of “bad sociology.”

Christopher C. Martin, the architectural and planning consultant for the state, stressed that an important goal is to improve “the pedestrian environment” between the Metro stop on Hill and the Reagan building on Spring. Although wider sidewalks, better lighting, increased security and more trees won’t by themselves stop all drug sales or panhandling, the influx of state employees will “change the imagery of the social life,” he added.

“It is a bit of a gamble, no doubt about it,” Martin said. “But it’s also the way so many people want it to go.”

He and other consultants looked at many options for state office consolidation, including one that would only have built structures Downtown in an insulated campus along Spring.

Architectural preservationists are delighted that the state adopted many restoration steps urged in the city’s proposed strategic plan for the area. “I’m very impressed,” said Linda Dishman, executive director of the Los Angeles Conservancy. “The state seldom takes the long view of things. In this, they have not only the sense of saving individual buildings, but of how to make this a more livable city.”

The choice is especially startling because it is not the cheapest. A related scheme calls for demolition of the 35-year-old state building at 1st and Broadway, to be replaced by a new structure for Caltrans. Combined with the work around 3rd and 4th streets, that would bring total expenses to $382.9 million. According to the Coopers & Lybrand accounting firm, it would cost about $62 million less to reject renovations and instead construct all the buildings or lease space in modern towers.

But the plan to include restoration of three buildings would save $55 million over the next 50 years compared to keeping the current scattered leases, officials say. Plus, they emphasize that the value of reviving a neighborhood is incalculable if restaurants, shops and other businesses open nearby.

Some state workers may start to move temporarily into rented space throughout a wide swath of Downtown in six months. Meanwhile, the state is to invite sale or lease proposals from properties in the six blocks between Hill and Main and 3rd and 5th. The Martin report focuses on three buildings as prime, permanent possibilities:

* The Luby, which the study estimates might cost $72.2 million to buy through the Bankruptcy Court, renovate and furnish. The large open-floor layout and high ceilings from its department store days appeal to planners, but it probably needs expensive seismic strengthening. Offices for General Services and parole functions are suggested there.

* The 81-year-old Washington Building, at the southwest corner of Spring and 3rd, across from the Reagan building and adjacent to a recently built 900-space garage that would have room for state workers’ cars. The Washington has been renovated twice in the last three decades but still requires safety and mechanical upgrading. Estimated costs to buy and fix the 13-story structure total $19.7 million. Now only about 40% occupied, the offices may be used in the future by the state Industrial Relations Department

* The eight-story Banco Popular Building, also built in 1912, at the northeast corner of Spring and 4th. Now about 90% occupied, it was remodeled twice since the 1970s but would require some new ventilation and safety work, according to a report that estimates purchase and repair costs at $24.4 million. The city Community Redevelopment Agency is the largest tenant, and the CRA presumably would move elsewhere on Spring Street to make room for the state Environmental Protection Agency.

The plan would require demolition of several one-story retail buildings along 4th Street to make way for a $73.3-million state complex, probably for health and welfare offices. Like the Washington, the new structure would be adjacent to the existing garage.

A state law passed in 1991 requires new projects in Downtown Los Angeles to be close to the Reagan complex. Such grouping makes sense even in the era of faxes and computer networking, Rosenfeld insisted.

“The real advantage of Downtown is the same thing that has caused downtowns to work for 10,000 years,” Rosenfeld said while walking along Spring Street. “That is people want to be around people to do business, to buy and sell and talk. There’s nothing like a face-to-face meeting. And this is still the best place to do it.”

A Moving Proposal The state proposes moving about 3,500 employees from offices around Los Angeles County to the historic district around Spring and 4th streets, near the state’s 3-year-old Ronald Reagan Building. Consultants urge the state to build a structure on 4th between Spring and Broadway and buy and rehabilitate the Banco Popular Building, the Washington Building and the Luby Building, the former Broadway department store complex. 1. Luby Building 2. Office building site 3. Broadway Spring Center garage 4. Washington Building 5. Banco Popular