The fall of DTLA’s power broker

Jan.January 17, 2019 10:00 AM
Jose Huizar

Take a ride through Downtown Los Angeles, and at every other block, you’ll pass a building under construction or a site destined for a massive project. Greenland USA’s Metropolis, Related Companies’ The Grand, Greystar’s Circa towers and many megadevelopments at that scale seek to erase the area’s former image as an archetype of urban blight and reposition it as one of the country’s most desirable live-work-play neighborhoods for decades to come.

One big developer after another is vying to cement its legacy as DTLA’s primary change agent. But perhaps that distinction belongs not to a builder, but a politician: L.A. City Council member Jose Huizar. Huizar, who’s represented Downtown since 2012 and chaired the powerful Planning and Land Use Commission (PLUM) since 2013, became the ultimate arbiter of what was and wasn’t built in Downtown. And for the most part, he operated by the “Build, baby, build” ethos.

With Huizar in office, developers could count upon a sympathetic voice in the City Council. But all that changed on Nov. 6., the day FBI agents raided Huizar’s home and office in search of what were later revealed to be documents related to fundraising activities. A week later, Council president Herb Wesson removed Huizar from all of his committee appointments, including his PLUM chairmanship.

Huizar hasn’t been charged with any crime, but he’s been effectively stripped of the key powers he held at City Hall. On top of that, his wife, Richelle Huizar, abandoned her campaign to succeed him as the representative for District 14, leaving the seat open to challengers who may not share Huizar’s enthusiasm for development.

The state of affairs thrusts DTLA developers into uncertainty. Political support for projects is important anywhere, but given L.A.’s archaic zoning code, it’s paramount here: Nearly any project of significance in L.A. requires exceeding as-of-right limits, which in turn requires discretionary approval from the City Council. An unwritten rule exists in L.A. that council members defer to the colleague who represents the district in which the project lies. 

In DTLA’s case, that was Huizar.

With the cloud of the investigation over him, Huizar has kept a low profile. In early December, he canceled an annual festival for Bringing Back Broadway, his signature initiative to revitalize DTLA’s historic Broadway corridor. The move gave constituents a glimpse of what losing their development booster could look like. 

“We need a lot of help,” said Patti Berman, president of the Downtown L.A. Neighborhood Council, stressing that the area still has pressing issues such as the homeless crisis. “We need to be taken care of, and we need to know we have strong representation.”

Mr. Downtown

DTLA has been a boomtown in the years following the recession — more so than any other part of the city — and Huizar has been there for all of it.

About 14,000 new residential units have been built in the area since a 2012 redistricting put Downtown within Huizar’s district, according to the Downtown Center Business Improvement District. Over the same period, 3 million square feet of new office and retail developments have popped up, along with 2 million square feet of hotel space. Class A monthly office rents are up 35 percent since 2012, to $3.60 per square foot.

Huizar’s role in this transformation is clear. Along with economic policy initiatives such as Bringing Back Broadway, the charismatic land-use lawyer eagerly took up the helm as DTLA’s number one cheerleader. On YouTube, he lauded the influx of new businesses to the area, including the Ace Hotel opening in 2014. In 2016, he appeared on KCAL 9’s “Shameless Weekend Weather Plug,” segment to push Night on Broadway. 

In a 2012 interview with the trade publication The Planning Report, Huizar said his focus was to “continue the [economic] momentum” Downtown, namely by supporting new business, development and entertainment. Five years later, he spoke with the publication again and gushed about the progress made.

“We are finally getting the Downtown that we’ve always wanted — one that serves as a center point for the entire region,” he said. “I think we are going to look back at the last three years of development in the Downtown core as days where L.A. moved forward by leaps and bounds.”

It speaks to Huizar’s still-uncertain fate that developers have largely stayed mum about the FBI raid. Nearly all the developers The Real Deal contacted to gauge the industry’s reaction declined to comment. Those who did seem optimistic that Huizar’s ouster is more of a bump in the road than a long-term crisis.

Steve Afriat, a veteran lobbyist whose clients include the Warner Center Hilton and Metropolis’ original developer, IDS Real Estate Group, said decades of working in L.A. have inured him to upheaval at City Hall.

“In the first 10 years of doing it [lobbying], I’d get nervous if there was a change in chairmanship or if members [left] PLUM,” Afriat said. “But then I realized that the city itself is probably supportive of development — some members might be more sensitive to neighborhood groups, but as a whole, the City Council is pretty committed to housing and development.”

He expects a smooth transition at PLUM under new chair Marqueece Harris-Dawson, the commission’s former vice chairman, who was expected to succeed Huizar after 2020 anyway.

Harris-Dawson took office for the 8th District in 2015 and has so far shown himself to be a strong voice for development in his South L.A. district, sources said. In 2016, he and Huizar jointly authored Proposition HHH, a $1.2 billion bond measure to build permanent supportive housing for the homeless.

They both also supported the Affordable Housing Linkage Fee, a controversial per-square-foot levy on all new residential and commercial developments to help pay for affordable housing. The ordinance passed in late 2017.

Harris-Dawson hasn’t yet seen any hot-button issues as PLUM chair, but in the past, he’s generally voted in step with his colleagues in the district where the project lies.

Arnie Berghoff, a lobbyist active in DTLA, said he doesn’t expect any seismic shifts at PLUM.

“Personally, I think he [Harris-Dawson] has been more than objective and fair to developers,” said Berghoff. “You look at his record, and he’s voted for nearly every major project in Downtown L.A. and other parts of the city.”

In the immediate future, Afriat said it’s possible that Huizar’s legal troubles could impact how his colleagues view projects he’s championed. But Afriat doesn’t expect any major changes to policy.

“If there’s a good project in Downtown L.A. — whether Huizar weighs in or not — they will support it,” he said. “If it’s on a trajectory, it’ll probably continue in that direction.”

Alexander Irvine, president of land-use consulting firm Irvine & Associates, said he’s focusing on meeting Harris-Dawson’s team.

“[Huizar] was definitely pro-development, especially Downtown, so it’s yet to be seen what will happen,” he said. “But I feel the movement on DTLA is still going strong, and I’m encouraged that will remain.”

Vision 2020

It’s hard to predict how the FBI investigation will shake out. Federal agents are notoriously tight-lipped about ongoing investigations, and few people with the knowledge to speculate will do so. The bureau’s L.A. Field Office has acknowledged the agency was executing search warrants at a City Hall office and declined to comment further.

Huizar’s lawyer and spokesperson declined to comment for this article. In the first few weeks after the raid, it appeared that Huizar could be in trouble for how and when he solicited donations to his high school alma mater. A pair of former staffers alleged he ordered staff to solicit donations on city time.

Since then, the L.A. Times has gotten its hands on at least one FBI search warrant dating from July; it suggests the scope of the investigation is much wider. That document reveals that investigators are looking into possible bribery and kickbacks concerning federal funds, extortion and money laundering.

Huizar, Wesson’s chief of staff, Deron Williams, and Council member Curren Price, along with some staffers and a former aide for Mayor Eric Garcetti, are all named in the search warrant. It also seeks records related to Greenland and Oceanwide Holdings Company development activity Downtown.

Even if Huizar avoids an indictment, there’s still the question of what happens in 2020, when he’s forced out of office by term limits. Development, particularly on large projects, can drag on for years, so builders would be anxious for clarity now. Richelle Huizar’s withdrawal from the race puts the seat entirely up in the air.

No one has declared he’ll run. Some names floating around include State Assembly member Miguel Santiago, whose District 53 includes Downtown. 

But Huizar’s District 14 is larger than just Downtown. It stretches to Boyle Heights, through Chinatown and north to Lincoln Heights and Northeast Los Angeles. Boyle Heights and Chinatown in particular are undergoing rapid gentrification, and not everyone is thrilled about it.

Gloria Molina tapped into that disquiet during her campaign against Huizar for the 14th District in 2015. The former L.A. County Supervisor, City Council member, and State Assembly member said there was “too much density” in Downtown L.A. and that Huizar supported projects that fueled gentrification in other parts of the district. The incumbent, however, beat her in a landslide, with 65 percent of the vote.

A forthcoming redistricting following the 2020 Federal Census complicates the political situation Downtown even further. Berman, of the Neighborhood Council, worries that the City Council could “chop up” the economic hub between several districts if District 14 doesn’t have a strong enough voice in its corner. That would be disastrous, she said.

“I think because of the financial advantages of having a piece of Downtown, it will be a feeding frenzy” Berman said. “I was here for the last redistricting 10 years ago, and there was blood in the water.”  

Crony hall

Huizar’s troubles have pulled back the curtain on the often cozy relationship between developers and elected officials in the city.

L.A. has no laws barring council members from taking campaign donations from developers whose projects they later vote on. In addition, no laws bar donations to pet charities, such as the donations that could be part of the FBI’s investigation into Huizar.

Naturally, people with business in real estate shower their attention — and dollars — on lawmakers sitting on PLUM.

It “has always been known as the ‘juice’ committee, because developers need approval from PLUM, and they tend to become very friendly with members of the committee,” said Richard Close, a real estate lawyer who’s squared off with numerous developers as president of the Sherman Oaks Homeowners Association.

Mike Hernandez, who sat for a year on PLUM, said council members don’t always know if someone with a project in front of them has donated to their campaign.

“Council members are put in that position,” he said. “Most of the time, council members don’t know who’s giving them money.”

Council members are often subject to criticism for supporting major developments, particularly when there’s money involved. Wesson and Mayor Garcetti came under intense fire in 2015 for approving a 27-story apartment tower located in Wesson’s district in Koreatown despite the Planning Commission’s opposition to the project. Their support came after developer Michael Hakim committed $250,000 to the Wesson-controlled Council District 10 Community Benefits Trust Fund and another $1 million to the city’s affordable housing fund.

Critics cried foul and accused the officials of approving a bad project because they saw political benefit. Groups opposing the project sued, and, last April, a judge rescinded the approvals for the project and ordered that a new environmental impact review, which typically takes at least a year, was needed. 

One potential solution to what critics describe as a pay-to-play environment for development is citywide reform of zoning laws — in particular, a change to the unwritten rule of deferring to local council members. 

The city is working on a massive rezoning initiative, called re:code, which would allow for more dense as-of-right zoning. Re:code is being rolled out over the course of several years across the city’s 35 community plans, but DTLA is first on the list, and rezoning could be completed and take effect within the year, according to principal city planner Tom Rothmann.

Another step that could be taken is a hard look at political donations. In January 2017, in the lead-up to the vote on Measure S, which would bar development outside of existing zoning, Council members David Ryu, Paul Krekorian and Joe Buscaino proposed an ordinance to bar contributions to elected officials or candidates from developers with projects currently or recently put before the city. Alternatively, the motion proposed requiring lawmakers to recuse themselves from voting on contracts when they’ve received campaign donations from a developer bidding on that contract.

That proposed ordinance has now expired (lawmakers did little to move it along). 

It’s likely the motion was little more than a way to sway voters ahead of Measure S. But Ryu announced on Jan. 15 that he and other council members plan to reintroduce the proposal and expand it to restrict donations made by developers at the request of council members to charities and other outside groups. 

It’s very well possible that DTLA development will continue to proceed full tilt, Huizar or no Huizar. Some will bid him good riddance. Others will mourn. Developers will likely keep building.

For those who believe DTLA’s current politicians are in bed with developers, only a true outsider could usher in a cultural shift. But that, critics say, may be too much to hope for. 

Jill Stewart, executive director of the Coalition to Preserve L.A., expects “tired people from previous offices” to crowd the field of candidates vying to represent District 14.

“We’re worried,” she said. “It’s wide open in a sense, but you wonder in L.A., with all the petty corruption, if a door that opens is already closed.”

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