L.A. Developers Have Mixed Feelings on Charter Reform

Los Angeles Mayor Richard Riordan’s circle of friends reads like a local Who’s Who of real estate.

The mayor’s buddies include office developer Robert Maguire; real estate investment manager Robert Lowe; and Bruce Karatz, president of home building giant Kaufman & Broad Home Corp.

Despite his close ties to real estate, many in the industry are expressing mixed feelings over Riordan’s effort to overhaul the city’s constitution in the June 8 municipal elections.

Many support changes that would give the mayor’s office more power and clarify the lines of authority and responsibility among city’s branches of government. However, some real estate executives and attorneys fear that reforming the City Charter could backfire and create unexpected roadblocks to development. Some would rather stick with a system that, while flawed, is familiar.

“What developers are concerned about the most is the uncertainty in the process,” said real estate attorney Steven W. Weston, who spoke last week on a charter reform panel discussion. “It’s going to be very complicated to sort out.”

Advocates of charter reform say it will make city government more efficient and more accountable to residents. In addition, certain features--including an option to expand the size of the City Council--are designed to give far-flung residents a greater voice in shaping city policies and priorities.

But it is that very dispersion of power and decision-making that has raised the biggest concerns among some real estate developers.

For example, the charter reform proposal calls for creation of neighborhood councils composed of citizens, business owners and community groups that would serve as advisory boards to council members. These boards could review major real estate projects in their area and then relay their support or opposition to their City Council representative, who would be free to accept or reject their recommendation.

Charter reformers had once considered giving the neighborhood groups decision-making power. But despite their advisory-only role, some real estate executives fear that these councils could create another potent political hurdle for developers.

“If you start to set up another political process, another institutional process, you are going to run the risk of having gridlock at times,” said Cliff Goldstein, a partner in the Los Angeles development firm J.H. Snyder Co. “While I can support some of the components of charter reform . . . in the end I probably will vote against it.”

In addition to the neighborhood councils, the revised charter would establish at least five area zoning commissions to review local land-use decisions in different parts of the city. Also, a separate commission would review projects determined to have citywide impact. But it is still not clear how a project will be judged as having citywide importance.

“I think that’s going to be a difficult decision to make,” said shopping center developer Rick Caruso, president of Caruso Affiliated Holdings.

Also, developers point out that the decisions of area planning commissions could affect the city as a whole. For example, rejection of a request to build a large apartment complex in a particular neighborhood could worsen the citywide housing shortage, developers say.

“You bring those [area] commissions closer to the neighborhood level,” said one real estate attorney. “But the problem is that I might get shot down if I’m doing something that may have broad regional relevance.”

However, with a few exceptions, most real estate developers remain charter reform supporters. In fact, many real estate executives, including Lowe, president of Brentwood-based Lowe Enterprises, have contributed cash to the campaign in support of charter reform.

Riordan’s campaign to make the city more business friendly has also helped to win support for charter reform within the real estate and greater business community--even if some are not thrilled about the entire package.

“I think there is certainly some deference [to Riordan] on this issue,” said Caruso, who supports charter reform and was appointed by the mayor to serve as head of the commission that oversees the Department of Water & Power. His Santa Monica-based company is working on an addition to historic Farmers Market in Los Angeles.

Many developers are willing to overlook their concerns in return for what they view as a more efficient operating structure for city government.

“I think it is critical to streamline the [governmental] process and make the system . . . more accountable to everyone in the community,” said Maguire, whose company ranks as the largest office landlord in downtown Los Angeles.

* SECOND THOUGHTS: A County Federation of Labor panel voted to oppose charter reform. B1

(BEGIN TEXT OF INFOBOX / INFOGRAPHIC)

Charting a New Course

Voters in the city of Los Angeles will vote June 8 on a proposed new charter that would result in an overhaul of the city’s civic constitution. Some of the proposed changes and related items have raised concerns among people in real estate development:

n Neighborhood councils: New advisory boards would be set up, designed to give neighborhoods a voice in city decision-making. Some developers fear the boards could become another political roadblock for future projects.

n Planning and zoning: At least five area planning commissions would be created to review local projects while a separate commission would be responsible for developments of citywide importance. It remains unclear, however, what would qualify as a project of citywide or of neighborhood significance.

n Ordinances: If voters approve the new charter, the City Council would have to draft and adopt numerous laws--more than 70 by one estimate--spelling out the details needed to make the charter work. Some legal experts and real estate executives fear that there will be a frenzy of lobbying that could distort the intention of charter reform and result in regulations that impede the development process.