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Shine Comes Off Clean Tech Hub

After three failed and sometimes high-profile attempts to lease a 21-acre site south of downtown, the city of Los Angeles has sold the parcel to a developer in hopes it can do better.

The property is the heart of the city’s so-called clean tech corridor. But the area remains vacant, and the decision to put the property into private hands demonstrates how little success the city has had in bringing to fruition Mayor Antonio Villaraigosa’s goals of turning Los Angeles into a leading center for alternative energy and clean transportation companies.

The sale of the 2425 E. Washington Blvd. property for $15.4 million to Culver City real estate investment firm Genton Property Group requires the firm to bring in only environmentally friendly companies. Genton wants to build a $90 million, 500,000-square-foot industrial building on the parcel and reportedly is in talks with prospective tenants.

It’s unclear how much success a private developer will have either, especially since much of the property, which has sat vacant for decades, is contaminated and lies in an old industrial neighborhood south of the Santa Monica (10) Freeway.

“That’s a tough sell for that location in this economy,” said redevelopment consultant Larry Kosmont, president of downtown-based Kosmont Cos. “It’s not an easy time to generate ground-up development.”

The sale moved forward rapidly and with little fanfare, in comparison to the hoopla surrounding past efforts to redevelop the site. The Los Angeles Community Redevelopment Agency approved the sale March 17, and the City Council ratified the deal the next day. The CRA is hustling to close the sale before a loan on the property comes due May 1.

Officials said the quick action was partly due to Gov. Jerry Brown’s proposal to dismantle local redevelopment agencies, which would affect the ability of the local CRA to move forward with the project.

But the idea to sell the property started with a September request for proposals and was prompted by the failed redevelopment efforts.

A plan to have rail car manufacturer AnsaldoBreda Inc. locate a factory there to build and service light-rail cars for the Los Angeles County Metropolitan Transportation Authority received wide publicity. But the deal fell apart in 2009 when the Italian company pulled out at the last minute over questions on whether it could deliver the cars as promised.

Since then, Santa Clara solar panel manufacturer Applied Materials attempted to set up a manufacturing plant, but the firm failed to get an expected contract from the Los Angeles Department of Water and Power. Most recently, Santa Monica electric vehicle maker Coda Automotive Inc. considered building a lithium-ion battery pack assembly facility, but wasn’t able to get the financing it needed, according to a redevelopment agency report.

Alex Paxton, CRA project manager, said the agency believes that a private developer could be more successful because the city was attempting to have the tenants both develop and utilize the property.

“The companies weren’t looking to build out a site; they were looking for a place to put their business,” said Paxton. “Now that we are up against the clock, we’re doing it this way. It still gets us to (our) vision.”

Sustainable businesses

The request for proposals issued in September requires that the developer bring in only ecologically sustainable businesses such as an electric car manufacturer, recycling centers or healthful food manufacturers.

Any tenant must adhere to CRA policies, which require that local workers are hired, all jobs pay a living wage for 10 years and all construction is energy efficient. Any tenant also must create 100 immediate jobs for at least five years and aim for the creation of 250 permanent jobs within five years.

After a months-long bidding process, Genton was chosen over six other developers. A key reason the firm was chosen, Paxton said, was that it was willing to promise 100 percent occupancy by clean tech tenants, unlike others in the running.

Should Genton not secure financing by May 1, the city is prepared to offer the land to runner-up Trammell Crow Co., a Dallas-based developer that built millions of square feet of commercial real estate in Los Angeles County. It was acquired five years ago by CB Richard Ellis Group Inc., a West L.A. commercial real estate services firm.

Several calls to Genton were not returned by press time. However, a report in the Downtown News said the company would like to build a $90 million, 500,000-square-foot industrial building on the property, and a source confirmed that to the Business Journal. The paper also reported the company was in talks with several prospective tenants. The target date for construction is 2013, as the site still needs substantial environmental cleanup and Genton would have to get entitlements.

“The least effect we would hope for is the creation of a large number of good jobs and a model of clean manufacturing which brings environmental justice to the area,” said Paxton. “It’s a symbol of what could be done. Down the line it could create a catalytic effect where people see and want to be part of it.”

Genton has a $350 million portfolio consisting of 10 residential, commercial or mixed-use developments statewide. It includes the Blackwelder Creative Campus, a $70 million project that adapted 25 light industrial buildings at La Cienega Boulevard and Fairfax Avenue into creative offices.

In September 2009, the City Council approved Genton’s plan for a 12-story $230 million apartment and condominium development on Wetherly Drive next to the Four Season Hotel at Beverly Hills. Construction has yet to begin.

Founder and Chief Executive Jonathan Genton is a local commercial real estate veteran who was vice president of Woodland Hills-based financial services firm SunAmerica in the early 1990s.

Councilman Jose Huizar, who represents the district in which the parcel is located, said in a statement that he wants to “partner with and assist” Genton.

“My vision for the site remains unchanged: the creation of quality green jobs – along with job training educational and apprenticeship opportunities for local residents,” he said.

The site is at the northern end of a four-mile stretch of dilapidated land that has been incorporated into a redevelopment project area along Los Angeles River officially known as the Alameda Corridor Improvement Project, but commonly called the clean tech corridor.

It’s minutes from the bustling Fashion District but the streets are vacant and the infrastructure crumbling.

The CRA has been working with UCLA, USC and CalTech in an effort to attract green, high-tech businesses there, an approach that was supported last year by an Urban Land Institute report. The report suggested the city begin with startups and small companies, and build from there.

“It’s a pretty widespread agreement that clean tech is a growth sector,” said Jim Robbins, owner of Portola Valley advisory firm Business Cluster Development and a CRA consultant. “What L.A. has going for it is the universities and businesses committed to the project.”

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