It was called the “Cesspool on Vine,” the “Vinegate Scandal,” a “fraud against the people” and the “poster child for all that’s wrong” with Community Redevelopment Agency — the entertainment office project at 1601 N. Vine St. that wannabe mayor Eric Garcetti wanted so badly for so long to “bring Hollywood back to Hollywood.”
Developer Hal Katersky declared before the City Council 361 days ago that it was “shovel-ready” and construction would being in the fall. By the time fall came, Katersky’s runaway film production studio in Albuquerque was bankrupt and his labor union financiers booted him out of his role the 8-story, $60 million premium office project at Selma and Vine.
By year’s end, the Community Redevelopment Agency that had bought the empty lot from Katersky for $5.45 million in 2006 — a month after he bought it from the Ullman family for the same price — and contracted to sell it back to Katersky for $825,000 was itself no more. The deal was left in limbo along with hundreds of others.
On Feb. 16, Chris Essel, CEO of the defunct agency, told the panel appointed by the governor to clean up LA’s redevelopment mess that 1601 N. Vine project was in serious trouble because “material changes” had occurred and the new developer was unable to meet the conditions of the CRA contract.
Specifically, the requirement for entertainment industry tenants was unattainable so the contract would have to be negated or renegotiated by the new redevelopment panel, the designated local agency headed by developer Nelson Rising.
The $4.6 million gift of taxpayer money promised to Katersky and his Pacifica Ventures was no longer on the table.
With the project all but dead, the land sits idle with the only winner of this dark comedy about City Hall corruption being Mrs. Kwok Yi, owner of Molly’s Burgers who managed to walk away with a $1.1 million payday from the CRA and Katersky to close her modest stand adjacent to the office project site.
So much was wrong with this project from day one that it never should have gone forward, never would have gone forward, were it not the force driving being Garcetti, the Council’s President.
He acknowledges the Ullmans are his friends but they wouldn’t sell the property to the CRA because of an earlier dispute so the site was sold to Katersky to sell in a sleazy buy-back deal to the CRA.
The CRA’s own appraisal of the property in 2006 was 30 percent lower than the $5.45 million selling price which was based on an appraisal supplied by Katersky. CRA officials have never explained why they used the seller’s appraisal and so much more than the property was worth in 2006 — and as much as twice what it is worth today as part of the agency’s legacy.
All this and more was brought to light by community activists through dogged leg work and the California Public Records, presented at numerous public hearings and written about on blogs, websites and in corporate media.
Time after time — more than a dozen times in all — Garcetti pushed the project forward and finally on March 9, 2011 ran roughshod over opponents to win Council approval with only Paul Krrekorian voting against it.
Garcetti offered his absolute personal assurance that he had personally investigated every allegation about this project and was totally satisfied that despite the mistakes that were made, there was nothing corrupt about it and the project would be built as planned as create hundreds of temporary and permanent jobs and helped spark the continued revival of Hollywood.
He was wrong, dead wrong.
Given that he is now a leading candidate for mayor in city elections next March, it is important that voters watch what transpired at that Council meeting a year ago and decide for themselves whether Garcetti was lying or just plain stupid.
DOCUMENTS: FinalCouncilAction, FullCouincilFile, 3-9-11 Council MeetingVideo, CityWatchLA, ronkayela.com
Congratulations, Ron. Consider this a personal victory. YOU DID IT!!!!~
Excellent analysis.
What is particularly galling is Garcetti’s willingness to hop into bed with Hal Katersky, the undercapiatized and ethically challenged developer who had a history of bankruptcy, fraud, and broken promises.
Garcetti is also trying to jam the Hollywood Plan down the throats of the Hollywood residents.
Of course, this is just another way to finance his mayoral campaign.
We need to follow the cash.
The problem with this extremely corrupt deal is that it was completely out-in-the-open and exposed. There are audio tapes of the Housing and Economic Development Committee meetings headed by Herb Wesson in which several Councilmember/Committee members acknowledged wrong-doings.
The developer told several lies including that the project was shovel ready and that he had no lawsuits pending him or his company. The CRA staff and Executive lied about the appraisal policy and dates of its implementation.
By the time this reached Committees in 2011 it was all out in the open, not a Conspiracy or secret as alluded to by then Council President Garcetti.
The facts which were exposed and well documented in the audio tapes and Council files point to fraud involving $1.4 million of Redevelopment bond proceeds (public funds).
This information was turned into the FBI. And nothing was done about it.
The problem with the current FBI investigations of Los Angeles is that unlike past of FBI investigations of organized crime where those at the top are targeted, the low level employee is taking the fall and the leadership is left untouched (like Bud Ovrom in Building and Safety).
Because of the failure of the FBI to fully investigate, elected officials in Los Angeles feel immune to prosecution or even investigation and they feel no need to hide continued theft of public funds.
The problem with the FBI is the US Atty in Los Angeles who is as much a cover-up artist as Trutanich and Cooley. Sad to say, it is not only the GOP that plays politics with the US Atty Office. Although the City is non-partisan it is well known that Villaraigosa and Garcetti are rising stars in the Dem Party and this political hack refuses to even acknowledge receipt of evidence of fraud.
Everything Garcett is saying about Ullman and Katersky is BS. Due to prior use of “developer appraisals” by Ullman, which had been subject to prior investigations, the CRA would not take a “developer appraisal” from Ullman again — it would raise too many questions.
So some found Katersky who already had an extreme shady history all across the county. Probably a hundred pages of Katersky’s “problems” were submitted to Garcetti and others at city hall. There was the sewage treatment plant in New Orleans years and year ago, the Oklahoma SEC kicking him out of the state, the fraud lawsuit by Culver studios which Katersky lost, the problems in New Mexico. A simple internet search would have brought enough information on Katersky to have disqualified him from anything — except one thing. A scam. Katersky appears to have been the Ullman stand-in for the appraisal fraud. We do not know what he was paid or what his real deal was, and Garcetti isn’t talking and the FBI and the US Atty and the DA refuses to ask.
Los Angeles is riddled with corruption because all the law enforcement agencies that deal with RICO and other white collar and economic crimes are also corrupt. Garcetti should be headed to prison, but instead he’s headed to be LA next mayor!
Yes, all true. But unless someone exposed that information, it would have happened.
Ron made a hugh difference here by undermiining the truth and then writing about
it and it made the difference. He wrote about it until finally the truth became known
and made a huge difference from Sacramento all the way to Los Angeled. He is no
quitter. We all owe you a big thank you, yes we do.
Teddy, You don’t know the whole story. Yes Ron, Jack, and others did a great job exposing the facts and publishing it. It is all out there in the open. It is all a matter of record.
The point is that those at the top who were responsible for the theft got away with it.
The fact that this project did not go through was always part of Katersky’s plan. All he wanted was the DDA and entitlements in place to increase the financial value of his agreement and then get the whole thing off the books (flip it).
But those who knew about this and participated in the fraud continue to siphon off public funds.
So even with all the facts exposed, those responsible have not been brought to justice and they keep on defrauding the public without fear.
You’re right. This CRA project at 1601 N. Vine was corruption as usual in Los Angeles, expecially in Hollywood since Garcetti and LaBonge have been councilmen.
If either councilmember tells the truth it is by coincidence or by accident. The Hollywood Community Plan is fraud to cover up the hundreds of millions of dollars which have been looted from the tax payers. The 1601 N. Vine fraud, ironically, is one of the smaller frauds.
The only reason the fraud came to light is that a few citizens took it upon themselves to make public records requests and then the hidden $4 M appraisal was uncovered and produced by some unknown person who was unaware of the corrupt history and had no idea it had been “mis-filed” in order to conceal it.
The FBI has all this information for years and yet there has been no investigation! The fact that we have a Democrat US Attorney is irrelevant as a GOP US Attorney would also stop any investigation. In Los Angeles, the crooks come in all shapes, sizes, ethnicity, religious persuasion, sexual orientation, genders and political parties.
Ron:
You omit reference to the City Attorney’s incompetence in this fiasco. . . The City Attorney should have been up front and out front in protecting the public. . . But the conflict of interest which exists in the City Attorney’s dual representation of the CRA and the City Council prevented it. . . This was (and remains) a ‘self-imposed hardship’ which undermines the social contract between the government and the people. . .
The City Attorney committed both legal and political malpractice in ‘covering’ for Garcetti and the Council when he should have been representing the people who are the beneficiaries of the public trust known as the City of LA (presided over by the Council as public trustees).
Come election time, the people will exercise their right to ‘fire’ Mr. Trutanich.
Noel Weiss
I TOLD THOSE BASTARDS, OVER AND OVER AND OVER. BUT THE COUNCIL HAS THOSE AUTOMATIC “YES’ VOTING CHAIRS, BUT Krookorian found his “No” button and decided to keep his name off this corrupt and stupid pile of shit of a project. Molly’s Hamburger stand that stood in business since the 1920′s IN THE SAME SPOT couldn’t get spared as a City Landmark since the corruption is so thick and powerful. But the Asian owners, the Yis got a nice payday of 1.1 MILLION to fire all their employees and shut the place down GIVING UP A LEASE! Obama would surely not define this practice as “creating or saving jobs…” I spent my Sunday in Ventura County for the 2nd weekend in a row. The beaches were packed (yes People were throwing frisbees and footballs and digging holes over 18″ deep and NO ARRESTS, unlike the L.A. County Board and their bullshit new rules.) Gas was 4.24 at one gas station SO I FILLED THE ENTIRE TANK UP. Now I’ll find a way to sell all my L.A. shithole property and get the hell out because L.A. is OVER AND DONE WITH. The only thing L.A. is good for is going to work (if you must) and DRIVING THE HELL OUT OF! If I have it my way I WON’T BE ELIBLE TO VOTE IN L.A.’S UPCOMMING PHONY-ELECTIONS BECAUSE I’LL BE A RESIDENT OF A FAR AWAY AND BETTER COUNTY! You and I have TWO votes in this mess—the LEFT FOOT AND THE RIGHT FOOT.
Oh, there is one silver lining—-seems that Dennis “Douche-Bag” Zine has TWO WELL FUNDED CHALLENGERS to his Controller seat that the Machine pre-purchased for him. Mike Feuer also has his payoff bucks funded for City ATTORNEY—so Trutanich WON’T BE ABLE TO SLIVER BACK TO IT WHEN HE FACES THE COUNTY’S ELECTORATE IN JUNE.
I will make this prediction—if Zine AND Trutanich BOTH LOSE and get their asses shown the Door–then I’ll consider believing in God!
“Corruption means never having to say you’re sorry”
Thank you to Ron and everyone else for exposing this legal theft of Taxpayer funds by “Wannabe King” Garcetti and “Court Jester” LaBonge. So if Garcetti gave his “absolute personal assurance” that there was no corruption involved, that about sums up the value and credibility of any actions on all issues that involve Garcetti.
Now that these actions have been exposed and documented maybe Garcetti would be willing to write a check (“personal assurance”) to repay the Taxpayers for the “theft” of these funds so that we can stop the ongoing and dangerous reductions in Public Safety for Police and Fire protection as well as providing street repair and maintenance that is badly needed and ignored. Mr Garcetti: please provide two pieces of ID when sending in your check.
I find Garcetti’s inquisition into the land deal before Council to be credible. I’ve worked with the CRA/LA and can say incompetence is truly the most likely explanation. The incompetence was greatly abetted by the incredible arrogance of a closed organization.
I’ll give you another example. Within blocks of there at Sunset + Vine, CRA/LA also greatly incentivized the developers of the mixed use residential commercial project. The idea was that the developers would be stewards of the project for several years. However, as the project set to complete suddenly many of the subcontractors, including the public artist were being slandered and denied legitimate payments. One HVAC subcontractor who was blamed for a roof water problem. They would not even let him into the unit where the problem supposedly occurred but held back much of his money. He was not a huge operator and his business was badly hurt. Soon enough everyone learned what was going on…. A hot deal was underway and Bond needed clear decks-fast. The original development team flipped the project to Blackrock before it was barely open.
Bond Companies and its set of Chicago investors away with a very handy sum and CRA/LA was upset to say the least. It was caused by the fact that CRA/LA had not crossed the t’s and dotted the i’s on the development agreement. The development deal gave the developers a way to gain excessive profits that should have instead ended up in the city’s coffers. As the close of the deal approached the true colors of the developers came out. Anybody with too much knowledge or a bone to pick was isolated, not paid, phone calls not returned. It all happened so fast that the subcontractors failed to file the well-justified liens on the building to get their payments…
Skip to the next round: CRA/LA over-scrutinized Bond’s next deal in Chinatown (a block long mixed use project well-conceived to stretch from the old Italian restaurant to the Metro station.) It was a good project but CRA/LA and Bond were by then like bitter divorcees. On the first round CRA were entranced as they were whispered sweet nothings in bed; on the second round all they could see is red. Bond went bankrupt on Chinatown. Yea! He deserved it. However, bad for the City of LA and Chinatown who would have greatly benefited from the project.
RIP CRA/LA