Investors and developers are eyeing sites and quietly buying up properties around the $900 million Eastside rail line now under construction through Boyle Heights and East Los Angeles.

Developer interest in the rail line is coinciding with a surge of publicly sponsored projects in the area and could lead to a rebirth that’s similar to what happened in Hollywood after the subway was completed there.

“For years, it was very hard to get developers interested in this area. But now, we’re running into more and more developers, buying property and looking at other properties to develop, and much of this interest is centering on the rail line,” said Tony Salazar, principal in the development firm McCormack Baron Salazar LLP.

The firm is working with the city of L.A.’s housing authority and Related Cos. to develop the $100 million Aliso Village housing project in Boyle Heights, just north of the rail line. McCormack Baron Salazar is also eyeing other sites along the route.

The 6.5-mile Gold Line Eastside Rail Extension had been on the drawing boards for 25 years as a mass transit option for the densely populated and heavily transit-dependent Eastside communities of Boyle Heights and East Los Angeles. But because of dwindling federal transportation budgets and lingering doubts about rail construction after the Red Line fiasco in Hollywood 10 years ago, it wasn’t until last year that final federal funding was secured.

Preliminary construction began last summer. This October, work is set to begin on the centerpiece of the project: a two-mile tunnel underneath First Street in Boyle Heights.

Next year, preliminary work is set to begin on the eastern portion of the rail line, which will go down the middle of Third Street in East Los Angeles. Construction of the entire line is set to finish in mid-2009, about six months ahead of schedule.

Public housing work


In past years, developers tended to hang back to see how much additional traffic the rail lines would generate. But there is now enough of a positive track record in Hollywood and along the Gold Line to Pasadena that activity is blossoming early. Construction on the western end of the line is already getting off to a healthy start.

Trammell Crow Residential has nearly completed the $66 million first phase of the 500-unit Alexan Savoy project at First and Alameda streets in the Little Tokyo section of downtown. The first building consists of 300 units, with rents starting at $1,400 a month.

In Boyle Heights itself, massive public housing projects are nearing completion, wrapping up a 10-year overhaul of the largest public housing complex west of the Mississippi River. Over 1,260 public housing units built immediately after World War II have been torn down and are being replaced with 880 units in two projects on either side of the proposed rail line. The Aliso Village and Pico Aliso projects are now a mixture of townhomes, affordable housing units, senior housing and for-sale homes.

Also under way is a $183 million rebuilding of White Memorial Medical Center on Boyle Street one block north of the planned rail line.

Much of the development will be controlled by the public entities that own considerable tracts of land along the route of the Eastside Extension, including the city and county of Los Angeles and the Metropolitan Transportation Authority, which is building the rail line.

The MTA owns land around five of the eight proposed rail stations, ranging from 1 to 6.5 acres.

“We’re looking to build affordable housing and retail at each of these stations,” said Diego Cardoso, director of Transportation Development and Implementation for the MTA.

Cardoso said the projects would be pursued in partnership with private-sector developers.

The first of these comes up next month, when the MTA is set to solicit proposals for a mixed-use project on nearly 3 acres in Mariachi Plaza, a cultural and historical hub of Boyle Heights that will be one of the station stops.

“We’re expecting a great deal of competition for this and other proposed solicitations,” Salazar said. “People have seen how mixed-use projects have worked along other rail lines in L.A. so they’re all coming over here.”

‘I’m not selling’


One landowner, Anita Castellanos, says she’s received dozens of offers for her 27,000 square feet of retail shops over the last two or three years.

“The offers are coming in from national investment firms, from Orange County, even from doctors at White Memorial (Hospital) just up the street,” she said. “I’m not selling, though. I grew up a few blocks from here and I want to remain here. I just opened up a music school that offers free lessons to children in the community and I want that to continue.”

Castellanos said one of her neighboring property owners “just sold their property for way above what most of us thought was market value all because of the rail line.”

Near the next planned station at Soto Street, the MTA owns 3.6 acres that local officials have for years been trying to convert into mixed-use development. Cardoso said this site is likely to be next on the MTA’s list for solicitation of proposals.

The largest publicly-owned undeveloped site along the Eastside Extension is in Little Tokyo, at the northeast corner of Alameda and First streets. Once called the Mangrove Estates, this 10-acre, city-owned parcel has seen several development proposals come and go, including one in the late 1980s for a 600-room hotel and 1,200 condo units. The plan was derailed when former councilman Art Snyder, then working as a lobbyist, pleaded guilty to laundering political contributions on behalf of the site’s developer.

At the other end of the Eastside Extension, in unincorporated East Los Angeles, there is little development activity, in part because much of the land is already spoken for. Several major cemeteries line the route, as well as the East Los Angeles Civic Center complex. Construction of the rail line isn’t slated to begin in earnest until late 2006.

But that hasn’t stopped developers and investors from eyeing other East L.A. sites.

Agoura Hills-based Amcal Multi-Housing Inc. is in negotiations to buy land near Third Street on the eastern part of the line. Amcal president Percy Vaz said the company is looking to build about 100 units of housing, with “a little bit of retail.”

Amcal is just finishing up construction of a $107 million mixed-use project at the Avenue 26 Gold Line station in Montecito Heights. That project has 540 residential units, including for-sale condos and affordable housing for families and seniors; it also includes 7,000 square feet of retail.

“We’ve seen how development has really taken off at these rail stations and it’s a priority for us now to look at sites along the Eastside rail line,” Vaz said.