Developer to Renew Large Project at Warner Ridge

Warner Ridge, site of one of the Valley’s most embattled commercial development proposals, is about to be sold to longtime Los Angeles developer Jerry Katell, who plans to revive controversial plans to build offices and apartments on the property.

It is the same kind of development that led to court battles that cost the city hundreds of thousands of dollars, challenged the city’s planning bureaucracy and eventually helped bring about the downfall of longtime City Councilwoman Joy Picus, who led the losing effort to defeat the project.

If the deal goes through as planned, Katell may start building the proposed 690,000 square feet of offices and 125 apartments on the site as soon as next spring, he said.

In short, Katell will carry on where his predecessors--who ran into financial problems--left off: He will build a vast office, retail and residential hub to rival those in nearby Warner Center.

Wednesday’s announcement that Katell plans to proceed with the Warner Ridge development was applauded by Mayor Richard Riordan--and promptly lambasted by local homeowners.

“It’s another major investment, another new development” for the city, said Rocky Delgadillo, a senior aide to Riordan.

“What else would you expect the mayor’s office to say?” countered Gordon Murley, president of the Woodland Hills Homeowners Organization. The proposed development will be “just another geometric design of ugliness that won’t serve any purpose except to increase office vacancy rates,” he said.

Homeowners’ dreams for the land to be used for parks and single-family homes have been dashed, Murley added.

Onlookers caution that Katell’s purchase of the 21 1/2-acre site east of De Soto Avenue depends on the settlement of a lawsuit between the former partners involved in its development.

A settlement agreement has been drawn up and presented to a judge but not finalized, sources close to the case said. “There are still some what-ifs out there,” said Bill Ripberger of Cushman & Wakefield, a broker involved in the deal.

The original Warner Ridge project was envisioned as six- and seven-story buildings, apartments and a few retail stores, Katell said. Proposed by a partnership that included developer Jack Spound, the project entered limbo in January 1994, when a key tenant backed out of the deal because of the developers’ failure to secure adequate financing.

Since then, pending lawsuits have prevented the sale of the land. These pitted Spound and others against former partner Morprop, an arm of lender Morgan Guaranty, which in turn is an affiliate of New York-based J. P. Morgan & Co.

But on Wednesday, Richard Mahony, a spokesman for J.P. Morgan & Co., said a tentative settlement in the court case has been reached.

“We are pleased to have it resolved with a sale to a local developer capable of developing the property,” he said.

The price was not disclosed.

The proposed settlement would permit the other Warner Ridge partners to receive an undisclosed amount of cash in exchange for their interest in the land, sources said. This would allow Morgan Guaranty to execute a purchase contract it has already signed with Katell, said Ripberger.

Formal documents sealing the deal are expected to be drawn up and signed by the end of the year, sources said.

Katell is a Los Angeles-based developer who has constructed at least 4 million square feet of commercial space in the L.A. area over the past 30 years, 25% of that in the San Fernando Valley. Among his better-known projects are the Great Western Bank complex in Chatsworth and the Agoura Hills Business Park.

Katell said he has yet to decide exactly what sort of development he will pursue at Warner Ridge, but added that low-rise campus-style office buildings are in demand. Katell said he plans to try to lure 20th Century Insurance to lease space there.

It was 20th Century’s decision to back out of a plan to lease space in the proposed Warner Ridge complex nearly three years ago that helped bring about that project’s demise.

20th Century was supposed to be the project’s major tenant but balked after the original Warner Ridge Partners failed to get adequate financing for the project.

“We will be one of the competitors trying to bring them back to the project they signed up for in the first place,” Katell said.

Ric Hill, a spokesman for 20th Century, confirmed that the company may be looking for new quarters once its current lease in a nearby Woodland Hills office building expires in 1999 but added that the firm “hasn’t defined alternatives.”

Since officials have already approved the project, Katell’s main worry will be whether he can find tenants to pre-lease the offices and investors willing to finance construction.

Zoning battles are probably not in the cards. “The battle has been fought,” said Ken Bernstein, planning deputy for City Councilwoman Laura Chick, who holds the seat Picus vacated.

Although Chick is not enthused about the current plans, “we can’t change it. The approvals are all in place,” Bernstein said.