Thursday, June 26, 2008

Boomtown

LA CityBeat
Nov. 18, 2004
By Dennis Romero

At Glendale Boulevard and Second Street, you can see the crossroads of L.A., old and new. Immigrants from the Mexican state of Michoacan play the pre-Columbian handball game of tarasca in a dirt lot destined to soon sprout a 276-unit, five-story apartment building, mostly for the middle and upper-middle classes. On the hill above, the $45 million Visconti apartment complex is already going up rapidly, faster than the graffiti that lines the historic Toluca Yard, a long-abandoned Pacific Electric rail stop that's become home to the nation's only known tarasca court. Five blocks to the east, the towing skyscrapers of Bunker Hill reflect the setting sun, washing gleaming rays upon this gritty but shifting neighborhood just west of downtown. The area is patrolled by the Los Angeles Police Department's Rampart Division, once the city's leader in homicide reports, and once described as the Fort Apache of the LAPD. Now, Land Rovers, Minis, and BMWs rub bumpers for parking space alongside the Medici, the Visconti's sister development, at Seventh and Bixel streets to the south. Times are changing faster than L.A.'s collective fear of the inner city.

“Downtown is going through one of the most interesting metamorphoses in its long, long career,” says Jack Kyser, chief economist and senior vice president of the Los Angeles County Economic Development Corporation. “People will be surprised at what it looks like in five years.”

The entire city seems to be shedding old skin, or at least renewing itself with the redevelopment equivalent of Botox. Predictably, moneyed interests are rah-rahing the new lofts, apartments, and condos, but critics are concerned that, while the city's growth will continue to be led by working-class immigrants, little of the new housing addresses their needs. “There's an enormous population pressure on L.A. because of immigration and because of the tremendous strengths of the local economy,” says USC associate professor of history Philip J. Ethington.

Mid- to high-priced residential developments, from downtown loft conversions to the massive Playa Vista development near Marina del Rey, are reshaping the metropolis in a major way. New downtown cultural monuments, particularly Staples Center, Walt Disney Concert Hall, and the Cathedral of Our Lady of the Angels, are a draw, and more are on the way, including a planned redevelopment of Grand Avenue between First and Third streets, a park between Grand Avenue and the Civic Center a few blocks east, a new police headquarters in Little Tokyo, and a $70 million Mexican American cultural center on Olvera Street to be called Plaza de Cultura y Artes. To the west, in Koreatown, plans are taking shape for a 4,200-student education complex at the site of the Ambassador Hotel and a 260-unit condominium-and-retail complex at Wilshire Boulevard and Western Avenue. At Hollywood Boulevard and Vine Street, a loft project plans to bring 60 units online. On the Westside, a $100 million residential-and-commercial project dubbed Palazzo Westwood is in the works. Alongside estimates that the region's population will grow by more than five million by the year 2050, all this development indicates the city is in the midst of what Ethington calls its “third wave” of growth.

“You see three big periods of growth,” he says. “The '20s, when some of the signal monuments were created – City Hall, Westwood, the big satellite areas, Hollywood. And then the next phase was postwar, with a vast expansion of the suburbs. Then you can look at this as a third major period of its growth, taking place now. But it's a different kind of growth. It's rebuilding. Developers are looking all over to reuse space.”

The development boom in these economically flat times could seem like a paradox, but there is a driving force: housing demand, including sky-high rents and even higher property values fueled by real estate speculation, retiring baby boomers' investments, and low interest rates. Los Angeles is at a point of maturity where political leaders and developers are thinking urban instead of suburban for housing solutions.

“Cities are truly ecosystems,” says developer Tom Gilmore. “They have an almost tidal nature in the way they grow and develop and spread. The tide goes out, reaches its natural limits, and then begins to look inward again.”

The biggest beneficiary of this reexamination is downtown, where 1,673 housing units have been etched out of old office buildings, hotels, and factories, and about 5,300 more are planned.

“Until a few years ago, downtown … seemed ancillary to the city … ,” declared The New York Times recently. “But that was then.”

Now, people like nightlife marketing guru Dave Dean call downtown's financial district home. He first moved to the area for a two-year stint in 1998, but found, back then, “it was like living on the moon,” he says. “There was nothing around.”

He moved back, to a loft-office space last year, and now finds seeds of nightlife at the Standard Hotel and the Golden Gopher lounge. Sometime next year he'll be able to get groceries at a Ralphs that's under development nearby on Flower Street. “What drew me downtown was, having lived in San Francisco, London, and New York, it really feels like a city,” Dean says. “And I can jump on the freeway and be anywhere in 10 minutes.”

This year, Dean is planning his fourth New Year's Eve mega-party, Giant Village, on the streets of downtown. He's expecting 12,000 revelers rocking out to the Killers live and dancing to DJs Paul Oakenfold, John Digweed, and Mark Farina on four blocks near Wilshire and Hope. “Now people are very comfortable with this area,” he says.

But, while party people will be living it up, the new look and feel of downtown doesn't seem accessible to all.

Rising Up, Rising Down

USC's Ethington says the greater community could face a price of upheaval – 1992-style – if it ignores minorities, the working class, and immigrants in its march toward redevelopment. Although he finds some good in the renewed housing's proximity to the urban core, Ethington says the city is still segregated. Research he's conducting at the moment finds that the city is more diverse than at any time since 1940, yet daily contact between whites and minorities remains less than ideal, with segregated enclaves remaining. The kind of high-priced housing that's happening with adaptive reuse isn't helping, Ethington argues.

“The poor and working class can't really win in this situation,” he says. “The development is all for profit. It's aimed at the affluent end of the market … . It's going to translate into more crowded living conditions for working people. This is all exciting and celebratory in a period of social peace, but there's no guarantee against another upheaval. The [1965] Watts riots were sparked by terrible overcrowding and lack of attention to segregation and impoverishment. I'm not saying the outcome is necessarily going to be a riot, but somebody has to pay attention to the majority of the city that is not white collar.”

The professor notes that in many of the buildings in and around downtown, where rents usually start around $1,200, “there's a lot of attention paid to security and isolation. That doesn't speak well for a rubbing-shoulders scenario.”

While demand from young professionals is there – downtown lofts fill as ´´ soon as they open – more pressing housing demand in the region comes from the lower-income service workers and immigrants, who have a hard time with median home prices at more than $400,000 and median rents in the $1,100 range.

“The downtown thing is going to get a big haircut soon,” says urban scholar Joel Kotkin, the New America Foundation's Irvine Senior Fellow. “I think the lofts are too expensive, and I think there's going to be a limit to the demand. I'm not so sure you're building communities there.”

But boosters are happy the city's core, once barren save for the “urban pioneers” who braved aggressive panhandlers and car burglars for the privilege of living the loft life, is starting to take off, at least financially. Bankers and lawyers are leasing apartments near the financial district (Gas Company Lofts, the Pegasus building, and the nearby Medici), while artists are expanding from their traditional base near Alameda Street and Traction Avenue south to the industrial zone (Toy Factory Lofts – one's listed for sale at $710,000), north to Little Tokyo (Little Tokyo Lofts), and west into Skid Row and the Fashion District (Santee Court lofts). Restaurants from Ciudad to Pete's Café cater to the benefactor and City Hall sets, respectively.

“What we're seeing is very contextual,” says Linda Dishman, executive director of the Los Angeles Conservancy. “How do we bring life to our historic, underused resources?”

For preservationists, the redevelopment boom has provided an opportunity to reinvent historic structures, and there have been bitter losses, including the school district's plan to raze most of the Ambassador Hotel in Koreatown, site of Sen. Robert F. Kennedy's assassination in 1968. But there have also been countless successes, from the saved Belmont Tunnel, once home to the Red Car subway line, now neighbor to a planned housing development, to St. Vibiana's Cathedral, scheduled to reopen in February as a performing-arts center.

“This ensures some historic structures will stand for another 150 years,” says Trudi Sandmeier of the conservancy. “This is truly gratifying to see these buildings reborn.”

What's missing in the urban core, perhaps, is more nightlife. The conservancy's Broadway Initiative started in 1999 to help area landlords transform their offices into lofts and apartments under the then newly minted “adaptive reuse ordinance” that opened the door to such conversions. The initiative then set its sights on the preservation of Broadway's 12 historic theaters, the largest such concentration of movie and show venues in the nation, according to the conservancy. A few theaters, including the Orpheum and the Los Angeles, have already come back to life. Now the organization is conducting a market analysis to decide what reuse options would be best for some of the other venues. Ideas include nightclubs, comedy clubs, and restaurants.

“We're sort of right on the cusp of what I believe will be a massive transformation of Broadway,” says Sandmeier, the conservancy's Broadway Initiative coordinator. “We want to create a 24/7 scene downtown.”

Billionaire philanthropist Eli Broad, meanwhile, is helping to spearhead the 16-acre park planned for the area between the Civic Center and the Music Center. The space will also contain retail establishments, restaurants, and nightlife, and the city-county authority in charge of the project is already wooing retailers such as a Borders bookstore, Broad says.

“They're not trying to create a mall downtown, but they want to have unique types of retail,” he says. “They want to have life from 8 in the morning 'til past midnight every day. There will be a culture and civic district, which is Grand Avenue, then I see a convention/sports district, which is Staples Center and all they're planning to do to the south. Hopefully, we'll connect the two areas with some sort of fun transit.”

Indeed, the Community Redevelopment Agency is studying the possibility of creating a downtown trolley circuit using restored Red Cars or replicas.

But for the city, the story's more than just downtown. It's everywhere there's new housing being developed for a thirsty market.

Almost one year ago, L.A.'s adaptive reuse ordinance, originally limited to downtown, was opened to citywide use. The result is that moguls are also looking at residential redevelopment in places like Koreatown, where 260 units are planned for “The Wilshire at Western”; Hollywood, where two projects, including “The Lofts at Hollywood & Vine,” will bring 129 units to life; and Miracle Mile, where 45 units are planned for a building at Wilshire and Crescent Heights boulevards.

It's not all about adaptive reuse, either. Developer G.H. Palmer has eschewed the tax and code benefits of reuse, along with public funds, to create a privately bankrolled web of brand-new Italianate apartment buildings (the Medici, Visconti, et al.) west of downtown that are expected to bring 1,500 luxury rental units to the city. Nearby, a skyscraper at 1100 Wilshire Blvd. will be transformed into 250 housing units. Two blocks south, a Holiday Inn is being converted to hipster residences. And, a few blocks west, a Home Depot and Starbucks have planted roots.

“All of a sudden, these things start to fall into place,” says economist Kyser.

Palmer's buildings have been criticized, however, for their fortress-like positioning that isolates them from their largely Latino, working-class-immigrant neighborhoods. Critics also accuse Palmer of doing everything he can, including avoiding strings-attached public money, to sidestep affordable housing in his projects. His buildings are strictly “market rate,” which translates to expensivo.

Meanwhile, on the Westside, Playa Vista's Phase 2, approved by the City Council this fall, will include 2,600 housing units – apartments, condos, and homes – and retail space of 150,000 square feet slightly more than a mile from the ocean. Billed as “smart growth,” the project will include the kind of shopping and office-adjacent living that proponents spin as an “urban village.”

“It was the beginning of sort of a return to the suburban-village model, really the model that L.A. was built on,” says scholar Kotkin. “It's happening in a lot of areas – Studio City, Burbank, Pasadena – that are self-sufficient in a cultural sense. You work and live in the same five-mile radius. That's where we're going.”

While opponents argued that Playa Vista would generate too much traffic for already overburdened Westside streets, some urban planners and experts say there is no other way: The market must accommodate millions of newcomers and their housing needs by building on the last remaining open spaces, and reusing aging and historic structures.

“When we look back in 20 years on the increasing density in Los Angeles, we'll say it started here … ,” Fernando Guerra of the Center for the Study of Los Angeles told the Los Angeles Times after Playa Vista's approval.

Back From Hell

The notion of young professionals and middle-class families invigorating life within the city limits and arriving to the barrios in and around downtown would have been almost unimaginable more than a decade ago. The 1992 riots saw thousands of white, middle-class families flee the city, clogging freeways in SUVs, U-Hauls, and luxury sports cars as core urban neighborhoods still burned with rage.

That's the year developer Gilmore arrived from New York.

“In '92-'93, there were the riots and their aftermath, and the Northridge earthquake was about to hit,” he says. “The city was truly at its most fragmented. L.A. had set itself into these segregated mini-towns and was having trouble coming up with a civic notion of what it was anymore. Maybe that's when a place is ready for its greatest change.”

In 1993, a Time magazine cover story asked, “Is the City of Angels Going to Hell?” Thus, city fathers and mothers began to reflect at a time when the city's planning momentum seemed flat-footed and shell-shocked. Los Angeles was no longer the glamorous place to be, nor the immigrant-fueled metropolis of the future touted in previous years.

Developer Broad re-envisioned downtown as the region's cultural center and campaigned, sometimes at the behest of former Mayor Richard Riordan, to get the Museum of Contemporary Art and Walt Disney Concert Hall built, and he helped plant the seeds for the planned redevelopment of Grand Avenue. Although the arts institutions have become magnets for change, different city and business leaders seemed to be thinking in parallel. As the concert hall, the new cathedral, and Staples Center to the south were on the drawing boards, developers had their own ideas of a new downtown.

“It's sort of this amalgam of things that happen, and sometimes they're unrelated,” says Gilmore. “We were planning the ‘Old Bank District' at the same time Geoff Palmer was planning Medici. They were totally unrelated, but there was a similar notion on both our parts that something was about to happen.”

People like Gilmore, Downtown Center Business Improvement District President Carol Schatz, and architect Wade Killeler lobbied City Hall for a law that would allow them to convert abandoned and underused office buildings to lofts, apartments, and condominiums.

In 1998, anticipating the revitalization of downtown and City Hall's approval the next year of adaptive reuse, the New York transplant purchased three early 1900s buildings at Fourth and Main, structures that would become the cornerstones of his Old Bank District. Gilmore's also a principal in the purchase and redevelopment of the nearby El Dorado Hotel, the Palace Theater, and St. Vibiana's Cathedral. “When I look at the important things downtown, I look at Staples Center, Disney Music Hall, and us in the historic core,” Gilmore says. “Those are the three legs of the three-legged stool that make downtown finally have some sense to it.”

Inner-city developers know there's some distance to go. Opening up their projects more to street life, for example, means there must be safety, goods, services, and culture. Already, Gilmore says he's inundated with retailers who want to put shops, cafés, and bars of all types in the ground floors of his buildings. And this, he thinks, “makes the streets nicer, and so it drives your market even more.”

Real estate moguls see progress in downtown more than they see problems.

“Downtown has been neglected, but it's now going to get started on brighter days,” says Yuval Bar-Zemer, a principal in Linear City LLC, which developed the Toy Factory Lofts and is working on the Nabisco Building across the street in southeast downtown. “A street once covered with prostitutes and homeless is coming to life.”

For developers, the biggest obstacles to reinventing the city's housing stock – particularly for middle- and lower-income residents – are construction costs (materials and fuel are through the roof) and red tape. “The prices of construction are escalating dramatically,” Bar-Zemer says.

“It's not going to stop development at this point,” he says. “But there's going to be an adjustment in what people can build and how much of it they can build.”

Gilmore credits City Hall, particularly former Mayor Riordan and his Planning Commission, for kick-starting the city's housing boom by passing adaptive reuse. But he says bureaucracy continues to be daunting for those who want to turn, say, an old office into a new loft. Rules regulating doors, windows, electrical outlets, and fire-safety precautions abound and add to the bottom line.

“The city and state, unintentionally perhaps, over the course of decades, have created a system that makes dense urban living significantly more expensive than it needs to be,” Gilmore says. “For me to build new construction in downtown, it costs me $225 a square foot. Do the math. How can you ever create affordable housing in an urban environment at that cost?”

The city does, however, often require, or at least request, that redevelopments and new projects include some low-income units, and even the Westside's decidedly yup-scale Playa Vista Phase 2 will include a few $600-per-month units.

The question for the future is, will L.A. finally become a city and cease being a collective of communities?

“I get a kick out of it when people say L.A. is this, and L.A. is that,” Gilmore says. “It's a work in progress, and it will never be finished.”

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Story notes: I remember L.A. after the riots of 1992: It seemed as if anyone with a little money had fled town. The city felt depressed. Fast forward to 2004 and the inner-city -- downtown and environs -- was booming with an influx of the young and mobile. I had to note the changes.

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