Riordan, Chick Scramble to Save Warner Ridge Project

As new details of the apparent collapse of the San Fernando Valley’s massive Warner Ridge office project emerged Tuesday, Los Angeles Mayor Richard Riordan and Councilwoman Laura Chick scrambled to keep one of the Valley’s major employers from leaving and taking about 1,500 jobs.

After a long, costly lawsuit and eight years of Byzantine maneuverings through the City Hall bureaucracy, groundbreaking had seemed imminent for the $100-million, 690,000-square-foot complex.

But the project began unraveling last week when the New York-based bank that was expected to provide financing notified the developers, Warner Ridge Partners, that it was pulling out. After learning that the bank, Morgan Guaranty Trust, was not participating in the project, 20th Century Industries, the firm that was expected to be its major tenant, decided not to go through with its plans to lease quarters in Warner Ridge.

At stake in the looming collapse of the project are the possible loss of the jobs in the West Valley and extra funds for a cash-strapped community college nearby.

In addition, the political reputations of Riordan and Chick could be tarnished if the deal falls through. Both campaigned last spring on promises to revitalize the area’s lagging economy and to turn around the city’s reputation as being unfriendly to business.

Developers were stunned by Morgan Guaranty’s decision not to finance the project. The bank reportedly loaned the real estate partnership $50 million to $60 million to buy the land and had footed the bills for a suit filed against the city of Los Angeles by the developers. The city, led by then-Councilwoman Joy Picus, had sought to block the project through a zoning change that was later declared illegal in a series of court rulings.

Morgan Guaranty officials declined Tuesday to comment publicly on their decision, as did the developer.

Jack Spound, a Warner Ridge Partners official, appealed to 20th Century to provide developers with the necessary construction funds in exchange for an equity stake in the project, according to sources familiar with the situation. But 20th Century’s board of directors rejected the proposal, leaving Spound without financing or a tenant.

Meanwhile, Riordan’s interest in salvaging the Woodland Hills project and preventing 20th Century’s possible departure was complicated because the mayor’s former law firm, Riordan & McKinzie, represented Morgan Guaranty Trust.

The mayor planned to meet with the city attorney’s office to see if his involvement would constitute a conflict of interest. “If it’s legal, we want to be involved,” said Annette Castro, the mayor’s press secretary.

Chick, who represents the West Valley, called Riordan and 20th Century President James O. Curley on Tuesday in an attempt to keep the company in the city. “That’s my No. 1 priority,” Chick said.

Curley, Chick said, was “unfortunately oblique” about the company’s plans. “I think they’re kind of at square one. But I certainly didn’t get any reassurances or concrete responses.”

One source close to the Warner Ridge situation predicted that it would take outside mediators such as Riordan and Chick to save the project.

The unraveling Warner Ridge deal also affects Pierce College in Woodland Hills, which had counted on $1 million in cash in exchange for accepting 425,000 cubic yards of dirt from the planned development.