Finances of NoHo Plan Challenged

A developer proposing a $277-million film studio and office complex in North Hollywood has failed to demonstrate that most of the project is financially feasible, according to a report Thursday by two key city officials.

As a result, they recommended the city negotiate for only a part of Alan Radford’s proposed project and postpone talks on most of the development until later.

The report challenged the recent vote of the Community Redevelopment Agency board, which decided to enter negotiations for a development agreement on the entire project at once. The project is considered one of the most ambitious planned in the Valley, and is considered crucial to long-anticipated revitalization of the area around a planned subway station.

“We just think it’s more prudent this way, because ultimately the city would be responsible if something goes wrong,” said Chief Legislative Analyst Ron Deaton, who joined Acting City Administrative Officer Paul Cauley in issuing the report to the City Council.

The project includes building a first phase of 430,000 square feet of film sound stages and production offices on 16 acres, and second and third phases consisting of another 1.1 million square feet of office and commercial buildings on 14 acres.

Radford downplayed the effect of the new recommendations, saying he has been assured by the CRA that the entire project will be included in negotiations. He believes talks can be structured so the city gets the assurances it needs.

Radford said it is essential that he be allowed to negotiate a development agreement for the entire project before ground is broken on the first phase.

“We would not move forward on just 16 acres,” he said.

Two firms bid for the development, which the CRA will assist with land acquisition and possible financial help.

The report released Thursday said Keyser Marston Associates was hired by the CRA to evaluate the proposals, and the auditor raised concerns about the large office vacancy rate in the area, which is around 15%, and the lack of firm financing for later phases.

Keyser Marston did not consider the potential benefit to the project of its construction next to the North Hollywood subway station, scheduled to open next year.

“I think it’s wise to get the studio up and running and see what that does for the office demand,” said Walter Beaumont of the CRA board. “Based on the current demand for office and commercial leases, right now it’s a little risky.”

Beaumont said he is confident the larger project will not be jeopardized.

Deaton said Radford’s development partnership might be able to provide sufficient assurances during the next six months to allow negotiations to proceed on all phases. Assurances requested include proof of financing and agreements for leasing the office space.

In the interim, Deaton and Cauley proposed that a plan be devised that would allow the city to bring in another developer for the second and third phases if Radford is unable to build them.

Radford said it might be two or three years before phase one is complete and financing is in place for the rest of the project.

“We have not arranged any financing yet to do phases two and three, and we won’t until we are downstream,” Radford said.