When Beny Alagem didn't get the OK for his plans to build a Waldorf-Astoria hotel and two condo buildings in Beverly Hills, he did an odd thing for a developer.
Instead of scaling down the project, he asked for more and got it.
The Beverly Hills City Council earlier this year ignored its planning commission recommendation and approved a $500 million project on the site of the Beverly Hilton, including an 18-story condo tower that originally was to have been shorter.
So much for the ritual developers and cities normally act out: developer shoots for the moon, is brought back down to earth by a wary city and ultimately builds a project that splits the difference.
"The usual trend is, you ask for more and you negotiate from there," said Larry Kosmont, president of Kosmont Cos., an Encino real estate and economic development firm. "Generally you start at a point you can retrench from."
But it's all not so unusual for Alagem, a 55-year-old Israeli immigrant who made his fortune selling inexpensive personal computers that, for a time in the 1990s, were the top sellers.
The former Israeli army tank driver was known for his tough negotiating tactics, dogged desire to pursue his business ideas and an extreme reticence even about the simplest details of his personal life.
That doggedness has served him well as he has unrelentingly pushed forward with his Beverly Hilton plan when many other developers might already have scaled back. But that unwillingness to compromise also angered opponents who gathered enough signatures to place a referendum on the project on the Nov. 4 ballot.
With the vote just a week away on Measure H, opponents are bitter, saying the project at the corner of Wilshire and Santa Monica boulevards would create traffic problems at an already bottlenecked intersection in a city beset with congestion.
"This entire campaign is a fraud. It is not a hotel project, it is a condo development disguised as a hotel project," said attorney Larry Larson, a Beverly Hills commercial property owner and treasurer of Citizens Right to Decide Committee, the main opposition group. "They are almost doubling the existing square footage of the buildings."
It would be hard to know that Alagem is the target of such vitriol talking to him in his offices last week at the Beverly Hilton, which he bought in 2003 from the late Merv Griffin.
Asked to respond to the commotion generated by his project, he calmly shrugged it off, saying he wants to focus on its merits.
"My interest is to speak about Measure H; I'm not trying to build here my image," said Alagem, who displays an equanimity perhaps drawn from an up-and-down business career.
Alagem moved to the United States in 1975. Eleven years later, after buying the brand name of the legendary but defunct Packard Bell, he co-founded a pioneering personal computer maker in Chatsworth.
Starting in the late 1980s, the company produced some of the first IBM compatible machines that were aimed at the mass market. They were designed for consumers while other manufacturers were still trying to sell them business machines.
"He revolutionized the total consumer PC experience," said Ron Fisher, managing partner of technology investor SoftBank Capital, who knows Alagem from his days at Phoenix Technologies Ltd., a Packard Bell supplier. "He did for the PC something similar to what Steve Jobs did for Apple. Before Packard Bell launched its line of PCs, the consumer got the tail-end of corporate technology."
But it wasn't all smooth sailing. In fact, the meteoric rise was coupled with a rapid decline. By 1996 Packard Bell started to lose market share as other PC makers like Compaq caught up. An attempt to take the company public failed to get off the ground.
The company was merged into Japanese electronics company NEC Corp. in 1996, and by summer 1998 Alagem resigned as chief executive of the merged company. A 1999 Wall Street Journal story said that in 1997 and 1998 Packard Bell NEC had total operating losses of almost $1 billion. By the end of 1999, NEC had mothballed the Packard Bell brand in the U.S.
Even during his go-go days of the PC revolution, Alagem was reticent. Instead, stories about the company labeled him a "mystery man" and examined Alagem's alleged desires to run his company like a military machine.
When asked about Packard Bell, Alagem wouldn't say much. "I think as owner of Packard Bell, this is one of the greatest computer companies," said Alagem, who lives in Bel-Air with his family. "I think that we are talking about the Beverly Hilton and Measure H and that's all what I would like to talk about."
Larry Mondry, an old friend and former chief executive of defunct electronics retailer CompUSA, said he's not surprised by Alagem's reticence.
"He's always been a pretty private guy," said Mondry, who has known Alagem for 20 years. "He's never been the kind of guy who has wanted the limelight. If anything, it's been the other way."
However, Alagem has been forced to get involved in promoting his Hilton project. He has hosted numerous meetings, attended coffees and has gone door-to-door pleading his case.
But he's failed to sway opponents who say that the project will destroy the western gateway of Beverly Hills. Of particular concern is an eight-story, 26-unit condo building at the corner of Wilshire Bouelvard and Merv Griffin Way, across the street from a Beverly Hills school. The city's planning commission, which only has advisory powers, suggested Alagem remove the building.
Instead, the City Council allowed him to keep a downsized version of the building while adding up to five stories on a second condo tower. In total, the project approved by the council and now before voters has 10 fewer condos but 50 more hotel rooms than the project submitted to the planning commission.
"What we rejected was actually lower in scale than what is now on the table. This is now bigger than what the planning commission or the EIR was looking at. That's never been done before," said former Planning Commission Chairwoman Stacy Marks, who no longer sits on the body.
But the developer managed to convince the City Council to approve his project.
"The planning commission approved 88 percent of this project. The planning commission, in their charter of business, they are not allowed to look at the economic impact. That's why the final decision resides at the end with the City Council," Alagem said. "That is the process. That is how the city government is working in every city. The changes are very, very minimal and miniscule."
Councilwoman Linda Briskman, who supports the project, said:
"The planning commission in essence greenlighted a project that didn't pencil. The City Council had to go back to the drawing board and come up with a project that would.
"To be perfectly honest with you, I think we have a need for residential expansion," said Briskman. "We have very little place to do it. We are talking 90 condos here. You would think we are building 900."
Also, Alagem and his supporters point out that the project involves the demolition of a substandard hotel building at the Hilton site, while the iconic three-wing Hilton would remain. As a result, even with a new Waldorf-Astoria, the site would have 47 fewer total hotel rooms. All in all, the project, including the condo towers, adds 280,028 net square feet to the site, according to Alagem's development company, Oasis West Realty LLC.
Still, those who oppose the project cast themselves as the David to Alagem's Goliath. Larson said his group has spent about $45,000 on the campaign, while Alagem has hired political consultant Harvey Englander, who engineered the long effort to get a Montage hotel built in the city. Oasis West acknowledges spending $500,000 on its effort.
In a way, Alagem's plans for the Hilton mirror his Packard Bell business model. He purchased the Hilton for about $130 million with intentions to renovate the 53-year-old hotel and redevelop the site. So far, he's managed to complete an $80 million rehabilitation of the Hilton, returning a lot of the sparkle that regularly attracted President John F. Kennedy, who used to call it his Western White House.
Alagem says he's proud to own the Hilton, and in at least one way, the vote will take him full circle. He is said to have spent his first night in the United States at a Beverly Hilton hotel room. Now, he's got a chance to take the property on another journey.
"Thank God there are two more weeks left and we will come out as winners," he said.
Measure H asks Beverly Hills voters to approve Beny Alagem's plans to develop the Beverly Hilton property. Defeat of the measure would prevent construction of a hotel and two condo towers.
It will add needed residential units and provide tax revenue for the city.
It will create too much traffic.
Alagem, who has been referred to as a "mystery man," co-founded a computer company that pioneered IBM-compatible machines. He bought the Beverly Hilton property in 2003 and has been planning the development since.
THE NEXT STEP:
Voters will decide on Measure H on Nov. 4.
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