Santa Monica’s Week In Business

Michael Rosenthal

   Boulangerie Update
   Howard Jacob is mad as heck and is not going to take it any more! In fact, the prominent Santa Monica developer has employed land use attorney Christopher Harding and is sueing the City for failing to comply with its own rules and regulations. His plan for the Boulangerie property on Main Street is a mixed-use development along a transit corridor, just what the City has been requesting. Problem is, the City was supposed to have given final approvals for the project within one year of the development application of April of 2000. In August of 2001 with no firm date in hand, Jacobs decided to seek legal remedies for the losses he has incurred. It is possible the legal damages could rise to nearly one million dollars, if appeals and Council actions delay the process until next spring. Jacob is asking for $85,000 a month from April of 2001, when the process was legally supposed to have been completed. A hearing is set for the property on December 5 with no indication whether the Planning Commission will approve the project.
   Jacob, a Chicago native, came to Southern California in 1979 and graduated from UCLA with a BA in History and a degree in law. He chose to become a developer with several projects successfully completed in Santa Monica. His most controversial development was the mixed use Citrus Suites located at 5 and Broadway. Some resident activists and members of the City Council felt the project was an attempt to circumvent local housing laws and feared it would attract temporary residents instead of long time members of the community. According to Jacob, “ I have always tried to explain this is a limited niche market, the percentage of corporate units is small — at max a couple of hundred units. There is not much demand for it beyond this capacity. We also have unfurnished market rate units and at least 25 or 30 tenants below market due to rent control.” Jacob turned the old Pussycat theatre on Second Street into a more beneficial community use, including a build out for the Bucca Di Beppo Italian eatery and has helped Benihana find a home in Santa Monica with his property on 4th Street.
   The Boulangerie project promises to be Jacob’s most significant development, as its Main Street location and historical connection to the community piques residents’ interests and involvement. According to Jacob, “The proposal is for a mixed-use building with complete conformity to the codes. The only text amendment we seek is the uniqueness of the full block. We treat Main Street as the front, not Bay Street, which was agreed to by staff. There are no special variances. There is pedestrian-oriented retail along Main Street, and the rest is housing, which complies with affordable housing guidelines of the city. This is a significant Green building including a 150 Kilowatt capacity photovoltaic power added and other features including rooftop gardens. Apartments will be offered at market rate.”
   The development includes a building across the street with 26 rental apartments over pedestrian-oriented retail on Main Street. The East Main Street section will be 32,000 square feet, while the main building will be approximately 125,000 square feet, with 107 residential units and ground floor retail. Both buildings will have parking underground and are less than the maximum footage allowed for development.
   The property has been an eyesore on the Main Street corridor for several years now. If Jacob does his job right, and a large affordable housing complex up the street from it gets its approvals, the North section of Main Street can see significant revitalization. Jacob understands and agrees fully with the need for community input, EIR reports and careful analysis of development. He also feels the city should be made to live up to its own rules, as developers must. The Boulangerie project and others like it in Santa Monica have to go through the planning process in a timely fashion. One year is the time frame the City has set for itself.
   If the Jacob-Harding lawsuit prevails and Harding is the first to point out case precedents in the appellate courts for just such damages, the City will learn a tough and possibly costly lesson. The truth is, according to Harding “There has never been any political consequences for lawsuits the city has lost”. He pointed to the Granny flat litigation settled earlier this year where the City Council attempted to legislate who could live in second units. The City lost that one, too, to the tune of $295,000, yet where is the political fallout? He has a point.

   Visit to Playa Vista
   I took my first tour of the Playa Vista Visitor Center last week. Inside is a slick presentation of how the project plans to proceed, featuring an overview of the entire development and its many apartment and condominium complexes. I love plans, drawings and renderings, because as a contractor I know how they materialize, as something is created out of nothing.
   There is a very real possibility that all of the properties west of Lincoln and the land abutting the Ballona concrete channel can be preserved by the state as open space parkland. This would be a good thing, as I was taken aback by the sheer density of the residential portion planned. I became particularly concerned when I saw very tiny parks with no sign of a baseball diamond, soccer field or gymnasium in view anywhere. In fact…where were the schools? When the young man supervising the demonstration asked if there were any questions, I queried as to where someone living in the community could go to get a quart of milk? “Uh…they would need to travel to the Marina, or Westchester or east to Fox Hills, as we do not have enough space for the parking lot that would be needed for a grocery store.” Oy vey, Steve Soboroff has his work cut out for him, and one of the first things he needs to attend to is the absence of playing fields, schools and grocery stores.

   The Other Mike (Milken).
   Yes there is another Mike besides the famous Mr. Jordan, I am talking about Michael Milken a native Southern Californian, prominent on the national business scene, a man who, by the sheer genius of his ideas and force of will helped to create some of the largest, most prosperous and cutting-edge businesses in the U.S. Some years ago Milken set up headquarters in Santa Monica at the Milken Institute, situated conveniently at the corner of 4th and Arizona where he has helped to provide knowledge and leadership for many in the local and national business community. His philanthropic organization disperses millions every year helping with research on cancer and giving a boost to our educational processes in the meantime.
   Milken hosted the California 2001 State of the State Conference on November 6 at the Santa Monica Fairmont Miramar Hotel. Several hundred people attended, and the sheer weight of the information will take me several columns to cover properly. Various panels covered a full range of topics, including energy, industry, technology, international trade, real estate, entertainment and new media, demographics and finance and venture capital, the final panels, which were led by Mr. Milken. During the course of the day we heard from the Director of Regional and Demographics studies at the Milken Institute, Ross DeVol, Robert Kotick CEO of Santa Monica-based Activision, former governor Jerry Brown, current governor Gray Davis, State Treasurer Phil Angelides and a host of other interesting and provocative people.
   I began my day in the back of a packed banquet room with several hundred people in attendance listening to Kotick inform us that the video gaming industry is now as large as the motion picture industry with each grossing approximately $8 billion in sales yearly. Kotick’s firm has hired 125 new employees in the past year and anticipates reaching $1 billion in sales within just a few years.
   Did you know that over the past five years, TV and motion picture filming in Los Angeles has nearly doubled with the industry adding 81,000 new jobs with a payroll of $8 billion? The things you learn at a Milken conference!
   At the lunch break I introduced myself and Santa Monica Mayor Michael Feinstein to Mike Milken. He was quite warm and charming and immediately discussed how proud he was of the mural on Fourth Street he had commissioned, giving his employees something cool to look at while at work. Mayor Mike congratulated him for getting it through the planning process. That was it, two minutes with the other Mike in town, yet I was impressed by his demeanor, his openness and obvious good will. In the past, I have requested an interview with Milken, but his staff has studiously kept me away, though they themselves have been generous and supportive of our paper. I find it ironic as Milken speaks of small business being the catalyst for future growth, yet our status as “just” the local paper seems to prohibit him from speaking directly with us. Same goes for Ross DeVol who “is not taking interview requests right now,” though I see him quoted regularly in the Los Angeles Business Journal and other major publications. According to their own demographics, Fortune 500 companies lost 4 million employees in the past 30 years while small business generated 62 million jobs in the U.S. during that same period. The bias towards large continues even with the seemingly most enlightened! The situation compounded itself when a panelist noted Mayor Mike in the audience and suggested Santa Monica rethink its development policies in order to provide for greater density. Instead of allowing the Green Party Mayor of the host city the opportunity to respond, he was forced to wait his turn and, in the end, the panel concluded without his being allowed to ask his question. For those interested, I believe it was on livable cities and included mention of living wages.
   Next week…what did Jerry Brown mean when he spoke of “elegant density,” what did our Governor and State Treasurer add to the discussion, and what did the massive amount of statistics as revealed by Ross DeVols demographic studies reveal?