By SHELLY GARCIA

Staff Reporter

With the first phase of its expansion completed, the CBS Studio Center is planning to begin work soon on a $20 million project for two new sound stages and to add a new office complex and commissary.

Established in 1928 near Laurel Canyon and Ventura boulevards, the studio began the expansion program in 1995 to meet an increasing demand for production space.

As new networks come on the scene and competition for hit shows escalates, more and more programs are being produced.

“I turn away $5 million to $8 million a year in business,” said Michael Klausman, president of the studio.

CBS lost 11 of the 17 shows produced on the lot last season due to cancellations, including “Seinfeld.” But Klausman said demand by other shows quickly fills the schedule.

“I filled them all in a week and turned away six more,” Klausman said.

The first phase of the project, three new sound stages and an office complex, was completed early in 1996, and a five-story parking structure with a basement level to accommodate 1,250 cars was completed last month.

Klausman said the second phase of construction is awaiting funding authorization from CBS executives in New York. The project, expected to cost $17 million to $20 million, already has been approved by Los Angeles city officials.

CBS also wants to build a $2.5 million commissary and office complex in an older portion of the center.

The studio center is a linchpin of the local economy, with San Fernando Valley businesses supplying everything from food to lumber to production services on such shows as “Seinfeld,” “Caroline in the City” and “Cybill.”

Film and television production pumped more than $210 million into the Studio City economy in 1997, according to the Motion Picture Association of America and the Economic Alliance of the San Fernando Valley.

And while CBS Studio Center is only one of a number of companies that contributed to the economic impact, its role is significant, said Dan Margolis, director of communications for Mayor Richard Riordan’s Office of Economic Development.

The studio has served as the anchor for the expansion of entertainment and multimedia companies in the area, said Margolis. “The expansion of CBS Studios played an important role in turning around the retail sector in Studio City.”

“I think it brings in a highly paid group of professionals and artists who have a tendency to help upscale restaurants and stores to thrive in the area,” said Bob Scott, executive vice chairman of the Economic Alliance of the San Fernando Valley. “Businesses in turn end up attracting other businesses.”

The impact can also be seen in the higher real estate prices and rents in the area.

“Has employment at the studio contributed to the affluent nature of that community? Absolutely,” said Jim Lindvall, senior vice president for the L.A. North division of Grubb & Ellis Co., who handles office space in the area.

One local restaurant, Al Dente, draws 80 percent of its business from the studio, said Jim Sahin, the owner. “Most is word of mouth. I do not advertise much.”

“On Friday nights, when the shows finish taping, you’ll see Jerry Seinfeld and all the people from the shows at Jerry’s (Famous Deli),” said Bert Abel, a senior associate who brokers commercial space in the area for Grubb & Ellis.

Though the CBS expansion plan is relatively small compared with the $1 billion project under consideration for Universal Studios, it is significant because the complex is surrounded on all sides by a residential community with a history of successfully fighting the encroachment of business on the neighborhood.

While community groups have hammered away at Universal Studios’ expansion proposals, the Studio City residents gave their support to CBS on the first pass. The difference, say residents, is the way Klausman approached the task.

“In one case you have a community that’s very suspicious; in the other you have a tone of discussions where they’re grounded in a basic level of trust,” said Tony Lucente, president of the Studio City Residents Association.

Leaning over a map in his office, Klausman explained how he approached the job of appeasing neighbors, pointing to a residential area just west of the CBS Studio Center.

“I tried to pretend I lived here, and I compromised to the point where I thought what they were asking for was ridiculous,” he said.

Klausman, who regularly meets with neighborhood groups, kicked off the expansion program by hosting receptions with residents. Once plans were drawn up, “they provided us full access to the planners, traffic design people, landscaping people, and the negotiations began,” Lucente said.

To alleviate some concerns about potential traffic problems, CBS contributed $40,000 to a plan that would provide for additional traffic signals, permit parking in the surrounding neighborhood, road striping and other improvements.

Klausman also routed traffic leaving the studios onto Ventura Boulevard so cars would not be able to cut through the residential areas to get to Laurel Canyon Boulevard.

“When Universal Studios asked for the world, it was reduced significantly, and then they claimed they had made a concession. We couldn’t help but wonder whether they didn’t get exactly what they set out to get in the beginning,” Lucente said. “CBS said, ‘This is what we have to have and this is what we can negotiate,’ ” said Lucente. “That’s not to say we believed everything they said, but we started with a basic trust. And that’s a dramatic difference with CBS.”

Another difference is the relationship that Klausman established with the community from the time he assumed his position in 1991. He has offered use of the facility and financing to assist a number of community projects.

Because the Carpenter Avenue School, just north of the studio, was not large enough to hold all its commencement exercises at the same time, CBS decided to loan its premises for graduation activities.

The company also contributes its facilities to CSUN Northridge for classes and it allows UCLA film students to film on site without charge.

The Center has required construction companies that land jobs at the studio to pay a “cultural arts fee” amounting to 1 percent of the revenues earned from the studio. The fees have been used to build a media center for the Carpenter School and a theater for Ulysses Grant High School in North Hollywood, among other projects.

CBS was the first to sign on as a contributor to a Business Improvement District along Ventura Boulevard, and it has offered up its premises for numerous fund-raising efforts. Most recently, CBS has agreed to let the Studio City Residents Association use its premises for its monthly meetings, at no charge.

“Most residents feel industry is trying to make their lives worse,” said Klausman. “We’ve become part of the community. The studio is not just here to do business.”

As land values increase, so too have the pressures to eke more revenue from the studio, which last year generated about $40 million. Still, Klausman refuses to open up the studio to tours, “in deference to the community.”

Instead, he has worked to make more of the facility’s space more productive.

The center maintains several back lots, including the New York street made famous in “Seinfeld” and a grassy area that doubles for Central Park. These spaces use a lot of real estate, but they make the center more valuable to production companies because they can operate more cost-effectively if they can keep most of their filming on the grounds.

In addition to refurbishing existing stages to meet the growing need for larger spaces, Klausman has turned other spaces into potential shooting locations. The wardrobe building, for instance, was designed with a Santa Fe-style fa & #231;ade so that it could be used as a backdrop. Even the hallway outside Klausman’s own office has doubled for an airport location. “Whenever we build a structure, we give it some character so shows can shoot in front of it,” he said. “This whole lot is a theater.”