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The Real Deal Los Angeles

Carol Schatz talks urban planning, oversupply and Downtown’s metamorphosis at large

CCA chief says housing push formed the basis of DTLA's renaissance

November 02, 2016 09:50AM
By Cathaleen Chen

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Carol Schatz at the Broad Museum Opening Celebration in September 2015 (Credit: Getty)

Carol Schatz at the Broad Museum Opening Celebration in September 2015 (Credit: Getty)

Carol Schatz once called herself the Queen of Downtown.

She headed the Central City Association during the most active period of Downtown’s renaissance and played an outsized role in bringing projects such as AEG’s L.A. Live to South Park at a time when DTLA was a no man’s land for investment.

If she’s not the Queen of Downtown, she’s certainly its patron saint.

“When I first started at the CCA in 1990,” she told The Real Deal, “there were some people, if they didn’t work there, who had not visited Downtown L.A. in 10, 15 years.”

Now, the submarket is considered one of the largest boomtowns in America, with new construction starts and new jobs growing six times faster than in the average U.S. zip code, according to an April report.

But with Downtown’s renaissance still underway, Schatz is stepping down from her role as CEO and president of the CCA. This week, she sat down with TRD to chat about DTLA’s biggest milestones, the perennial importance of housing development and why developer Geoff Palmer doesn’t get the credit he deserves.

Shatz will remain as CEO of the Downtown Center Business Improvement District, a sister association to CCA which she helped found.

What do you consider some of the biggest housing and real estate highlights during your term at the Central City Association?

The Adaptive Reuse Ordinance, which we began to advocate for in 1997, was a major achievement. It changed the face of Downtown when it passed in 1999, the year Staples Center opened. We played a pivotal role in that development as well, so the Ordinance and [L.A. Live] together laid the foundation for housing in DTLA. 1999 was the BC and AD of Downtown. Now we have 23,000 units that have been created since. [Housing] was the most important development in the evolution of our downtown. These two steps gave people a reason to go downtown again.

We also got involved with the Restaurant and Hospitality Express [Program], an initiative we began with Ray Chan. Restaurateurs would find a location in a building but they were going through absolute nightmares getting it approved — sometimes it’d take longer than two years. So this program reduced that time by almost half. We helped bring about 800 bars, restaurants and clubs. It’s very difficult to get projects through the L.A. system, so we’ve always promoted a more collaborative effort.

Can you go into detail about the labor of getting the Adaptive Reuse Ordinance passed?

It was our idea, the staff of CCA. I had gone to New York and other cities around the country, and I noticed that the ones that had the healthiest urban [downtown] environments were those that had strong residential communities. At that time, downtown New York was a 9-to-5 district as well, so they adopted an adaptive reuse policy with a [property] tax abatement incentive. People started to understand that the densest parts of the city require different sets of zoning rules. When it passed, Jim Hahn was the mayor. He hired one extra staffer to handle just the adaptive reuse projects, and the rest, as they say, was history.

Did you always have a vision of Downtown’s transformation?

For the first few years I was at CCA, it was the recession. We didn’t come out of it until 1997. During that period of time, we had to start thinking about what we could actually accomplish given the state of the economy. All the projects that were on the drawing board when I first got here in 1990 had disappeared by the end of that year.

First we talked about bringing retail Downtown, all the major brands: Gap, Crate & Barrel, etc. But after we reached out to them, we realized they weren’t going to come unless there was a market. So that’s when we realized we needed to create a critical mass of residence. It would propel everything: amenities, cultural institutions.

We knew the final leg of the piece would be more commercial space. We still have a ways to get there. But we’ve got the Wilshire Grand opening next year and the hotel market is very strong right now. When I first got to the CCA, occupancy rates were like 63 percent. Now it’s in the high 80s.

Who were some major players alongside you in DTLA’s transformation?

There are so many! Cushman & Wakefield’s Hal Bastian, who was our director of economic development; various chairmen of CCA, who gave me the authority to do some big things, including Tom Decker, who was with Bank of America. None of the big banks would lend on housing projects back then, but there were two exceptions: Bank of America and East West Bank.

We had wonderful developers: Tom Gilmore, Izek Shomof, Cedd Moses, Andrew Meieran, Homer Williams, Geoff Palmer — all these people spent millions not knowing whether they’d get it back.

Geoff Palmer? He’s been getting some heat lately.

Yeah, yeah and he always will. The Medici [building] doesn’t get the credit it deserves. He built it when it was still unorthodox to build housing in DTLA. It’s my job to call people out when they’re hurting but also call them out when they’re helping, and Geoff Palmer helped.

What’s on your plate in the immediate future?

We are going to be doing some marketing to keep interest in the units that are coming to market by the end of this year, and throughout next. It’s a large number of units to swallow — 10,000 currently under construction  — but Downtown is still a very hot commodity, especially with more offices coming. When Gensler moved here for instance, they found that a number of their architects and other personnel opted to lease and buy homes Downtown too. Turns out it’s nice to be able to walk to work.

Are you at all concerned about oversupply?

A lot of this depends on the economy in general. There has been some talk about a slowdown, but no one expects any sort of abrupt crash like what we saw in 2008. But things are very busy here, so we’re not really even seeing the effects of the slowdown. There’s no panic whatsoever. I believe that the folks who have made significant investments will work collaboratively to create an environment of prosperity.

Why do you think there’s so much Chinese investment right now?

I think it’s great. We didn’t directly court them but along with the Downtown Center BID, we created a growth opportunity so that all eyes internationally began to focus on DTLA.

We hosted Downtown living events, investors conferences. We gave tours to who knows how many investors and retailers. We showed them the nodes of growth, we founded urban initiatives to get creative and tech companies down here — all of these things helped.

What are some of your favorite DTLA projects?

Obviously, I look at Staples and L.A. Live as absolutely transformational. I love some of these magnificent housing projects like the Williams and Dame projects in South Park — they’re beautifully done. I am so happy to see the Broad [museum]. I still pinch myself when I see people lined up around the block. Young people — millennials — flock to the museum, and it activated all of Grand Avenue and it just warmed my heart. The Broad just brought the whole corridor to life. I consider him a pioneer, Eli Broad. He believed in Downtown and he really really put a stake in the ground.

Are there any particular developments you’re excited about?

I love seeing what’s going on in the Arts District.

What are some of your favorite DTLA spots?

I love the Edison. But it’s very hard for me to identify one or two restaurants that are really special. We’re a culinary masterpiece down here. When I first got here in 1990, there was no place to have dinner except in the restaurant of a hotel. There were some sandwich shops during the day. And now, you can’t walk a block without seeing all kinds of offerings, from Chipotle to Drago to Factory Kitchen. The other restaurant that I always want to tout because of its transformation was Bottega Louie. I was so concerned when I saw how big the space was, and it’s been a success since the day it opened.

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