In a 90-minute hearing on the 1601 N. Vine St. office project, a City Council committee on Wednesday exonerated controversial developer Hal Katersky and blamed the Community Redevelopment Agency for the project’s “troubling” history.
With Alarcon walking out before the vote, Wesson, Reyes and Cardenas voted to approve the project and send it to the full City Council next week – the 13th time it has been on the Council agenda.
Disputing accusations his business dealings have been marked by numerous lawsuits, investigations and bankruptcy of a runaway film production studio in Albuquerque, Katersky portrayed himself as an innocent developer with a long history of success.
“We’ve done everything we’ve been asked to and we’ve spent $4 million to push this project forward,” Katersky told the Housing, Community and Economic Development Committee.
Attorney and Hollywood activist Richard MacNaughton (MacNaughton.pdf) laid out the case against Katersky and the CRA’s gift of $4.7 million to the developer.
He called for a full criminal investigation of possible fraud involved in how the property was sold by Ullman Investments to Katersky’s Pacifica Ventures in 2006 and then flipped a month later to the CRA for the same $5.45 million price. The deal called for the CRA to sell it back to Katersky for $825,000.
CD4 candidate Stephen Box questioned the project itself, saying, “The last thing we need in Hollywood is more office space … the reason new office space has not been built for 30 years is because there is a glut … If this project were viable, it would take off on its own momentum.”
Echoing CRA Commissioner Madeline Janis, he called the project the “poster child for abolishment of the CRA.”
“This is an example of what’s wrong with the CRA, a call to action for a city prosecutor … to investigate the CRA. The people of Los Angeles are unrepresented in a situation like this.”
The critical question involving 1601 N. Vine involves separate appraisals by Katersky that put the property’s value as $5.45 million and the CRA’s own appraisal that placed the value as $4.08 million.
Without informing Katersky or the CRA Commission of their own appraisal, CRA staff went forward and paid the higher price and now claims it cannot find documents showing there was an attempt to reconcile the massive gap in appraisals,
An aide to Council President Eric Garcetti who is pushing for approval of the project acknowledged a “lack of transparency … and some problems” but insisted the only question is “whether it is viable.”
For his part, Wesson said how much he hates it when “when I hear the word fraud” and promised to “really vet this …. The biggest mistake you can ever make in life is to feed a stray cat, you can never get rid of it … We want to get rid of this one way or another.”
Cardenas claimed he wasn’t going to vote to approve the project but accepted CRA staff’s admission that mistakes were made and that Katersky did nothing wrong and was going to submit documentation of what steps are being taken to make sure such problems “never happen again.”
Reyes called for a one-page summary for the full Council showing what public funds have been invested and what is going to be gained from the project.
In abstaining, Alarcon went a step further and called for “conservative and extremely conservative estimates” of the public benefits of the project.
“The most troubling thing is that CRA knew $4 million appraisal yet encouraged developer to pay $1.4 million without informing the developer or the board. Somebody was interested in benefiting Mr. Ullman $1.4 million more than CRA appraisal.
“This is very troubling, may even be more than troubling.”