Billionaire Ed Roski Jr., L.A.’s largest commercial real estate developer, is famous for getting his way in land-use battles. Now one small town is going toe-to-toe with him.
Roski, who has built a local empire of industrial, office and retail real estate through his Majestic Realty Co., is in an escalating dispute with La Mirada, which plans to build a tunnel under train tracks that run near one of his buildings.
City officials said they need the underpass to keep traffic flowing while trains pass – which happens about 200 times a day. Roski claims the long construction period will create such obstacles that it’ll prevent him from leasing the property, a 141,604-square-foot industrial building that is currently vacant.
La Mirada filed an eminent domain lawsuit in Los Angeles Superior Court on Nov. 10 because Roski didn’t accept its offer to buy land the city needs for utility lines related to the project.
La Mirada officials said they’ve addressed Roski’s concerns about the construction, which they believe are linked to his demand for more money for the disputed property.
“They are just trying to set the stage to argue for more money,” said James Markman, La Mirada city attorney.
Dennis Daze, a property manager for City of Industry-based Majestic, said La Mirada still hasn’t addressed concerns that construction will create problems for vehicles trying to get access to Roski’s property.
“The ingress and egress to any site is paramount for a distribution facility,” Daze said, “and the city and the agencies have been pretty rough on us.”
Majestic said Roski was too busy to respond to the Business Journal’s request for comment on the issue.
La Mirada officials said the underpass, a joint project with the bordering city of Santa Fe Springs, is needed to keep traffic flowing as freight and passenger trains go by. Markman said the city developed a plan that would be the least disruptive to Roski’s property.
“If Mr. Roski’s building is empty, or has been empty or not full, it’s not because of this project,” he said.
The two cities announced plans for the underpass about six years ago. Now that they’ve received enough state and federal funds to pay for it, they are moving forward with the $72 million project and have scheduled it to begin in August. It’s expected to take 30 months to complete.
La Mirada’s tussle with Roski over the project is the latest of many development battles. The difference this time is that it is the city that’s taking the aggressive role.
Roski’s political power was evident recently in his effort to build an $880 million, 75,000-seat National Football League stadium in City of Industry.
Gov. Arnold Schwarzenegger signed a bill in October to help speed up construction of the stadium by exempting the project from state environmental laws.
Meanwhile, the City Council of nearby Walnut agreed earlier this year to drop its lawsuit to block the stadium in exchange for $9 million, and up to $500,000 per year for 30 years if the stadium is built. Walnut residents who oppose the stadium, which is less than a mile from the city’s border, have criticized their council members for what they see as favoring the interests of a wealthy developer over theirs.
Daze declined to comment on Roski’s past business dealings in relation to the La Mirada dispute.
Local real estate brokers said successful developers, including Roski, often forge strong political ties – and use them to their advantage.
“I think anyone that has risen to the largest industrial real estate developer in the community probably has had to make a lot of political friends,” said Bill Goodglick, president of L.A. commercial and industrial real estate firm Goodglick Co. “And I would say that has done Roski really quite commendably.”
Underpass problems
Despite Roski’s connections and clout, La Mirada hasn’t been willing to make any deal on his terms.
The property in dispute is home to an industrial building on Valley View Avenue near the Los Angeles-San Diego rail corridor, the nation’s second busiest intercity passenger rail system. It’s the largest of Roski’s five buildings in La Mirada, and includes 9,000 square feet of office space and 28 truck loading stations.
Besides the obstacles caused by construction, the dispute centers on La Mirada’s efforts to obtain 7,325 square feet of Roski’s property for underground utility lines, and its need for temporary use of 3,770 square feet for construction.
The La Mirada City Council approved a resolution in late October to condemn portions of Roski’s property, and then filed the eminent domain suit against the developer Nov. 10.
Roski has hired an eminent domain lawyer to fight the city. La Mirada said it is ready to battle back.
“One of their arguments was that we could have designed the construction in a way that was less damaging to the private property,” said City Attorney Markman. “And we said, ‘No. Our engineers said we did the best we could have done.’”
Markman also noted that Roski didn’t come back with a counterproposal.
But Roski isn’t the only critic of the plan.
Arnold Applebaum, chief executive of Solid State Devices Inc., a manufacturer of power conductors for defense and aerospace contractors, is concerned about power outages during the construction period. He also feels that the road work might prevent trucks accessing his facility.
“Through planning and a little more coordination and efforts, they could have come up with a plan that mitigated all of this,” said Applebaum, who believes the road should have gone over the tracks instead of under them. “They are doing what they want to do and have eminent domain on their side, and have little use for business owners when it comes to this project.”
Applebaum said he has discussed the project with Roski at a La Mirada council meeting.
“We had a small chat on how it’s going to be a boondoggle and it could have been done in different ways,” he said.
History of development
Roski, who ranks No. 13 on the Business Journal’s list of Wealthiest Angelenos with an estimated net worth of $1.9 billion, has been turning large swaths of land into commercial real estate centers for decades.
His dealings with the City of Industry – a San Gabriel Valley city with fewer than 100 voters and tight-knit city hall relationships – have resulted in his development of hundreds of acres there. His latest project is the highly publicized proposal for an NFL football arena as part of a retail, dining and office complex.
A portion of the football stadium is set to be built on a 425-acre site that Roski first sought to develop in 1999. At the time, he quietly cut a deal for a 68-year ground lease with Industry. Officials entered into the lease without seeking bids from competing developers.
Roski has defended the stadium plans against critics who claim his political pull led to the waiving of environmental requirements. He repeats that no public financing will be used to build it, and that the project will generate 18,000 jobs and about $760 million in annual revenue.
The NFL stadium isn’t the only Roski project that’s drawn criticism.
In the late 1990s, when he proposed developing a shopping center on 1,200 acres of unincorporated land surrounded by Redlands and known as the “doughnut hole,” the Redlands City Council tried to stop the development because Roski wanted more concessions than the city was willing to provide.
Roski turned to then-Gov. Gray Davis, who signed a bill in 2000 that let Roski develop the land over Redland’s objections. Majestic built Citrus Plaza there, a large retail center with tenants such as Target, Barnes & Noble and Macaroni Grill.
La Mirada officials said they are undaunted by Roski’s record of success in development battles.
“We think we have a solid condemnation case,” Markman said, “and are anxious to negotiate a condemnation settlement with Mr. Roski.”
