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Deal for Parkland Calls for New Appraisal of How L.A. Deals With Developers

The Los Angeles Garment & Citizen, Commentary, Jerry Sullivan Posted: Feb 25, 2009

Who doesnt like parks? Especially these days, with so many of us thinking green.

So whats better than a park?

Two parks.

Why this simple math lesson?

Because it might be that officials of the City of Los Angeles could have secured land for two parks at the same price they now propose to pay for one.

That cant be said for certainnot at this point, anyway. City officials have yet to fully explain how they came to offer $5.6 million for a 0.8-acre parcel of land for a park on the 400 block of S. Spring Street, a location in the heart of the gentrification trend that took hold Downtown during the recently busted real estate boom.

The answers are coming slowly, but theyre still not adding up as the deal heads toward escrow.

The fuzzy math started with an announcement in mid-January, highlighted by a strange reference that 9th District Los Angeles City Councilmember Jan Perry made to the $5.6 million price tag on the land. Perry called it a bargain because its 12.5% below the appraised value in September of 2008.

Perry left the reference to September open to interpretation, with no specific acknowledgment of the steep downturn in the real estate market since September. Or the massive job losses. Or the wave of foreclosures. That begs this question: Do you feel only 12.5% worse than you did before the crisis started in earnest?

It turns out that even the ill-defined reference to September didnt tell the whole story. Sure, someone might have handed city officials an appraisal in September. But the comparable sales used as the basis for the $5.6 million price for the parcel of land on Spring Street had nothing to do with September.

They occurred between November of 2006 and July of 2008, we later learned.

That gives us a price based on an appraisal that overlooks the latest declines of the real estate market and the economy in generaland the last five months, in particular, have brought the shakiest economic performance our nation has seen in 80 years. Yet the price for the park land is based on the good old days for Downtowns real estate market. Downtown remained plenty hot in November of 2006 and into 2007, after all. The U.S. didnt enter recession until the end of 2007, according to the federal government. As recently as June of 2008 a panel of high-profile Downtown real estate developersgathered under the banner of the Central City Associationleft the impression that the basics of the local real estate market were just fine.

That last part turned out to be about as far off the mark as possible.

It appears, however, that city officials are nonetheless willing to pay $5.6 million for the land on Spring Street based on those earlier days of a booming real estate market and the sort of discredited sales pitch that kept coming right up until the fall.

Heres the kicker on this whole deal: It also appears that the city and the developers bank used the same appraiser to determine the value of the land on Spring Street, a rather cozy agreement with $5.6 million of the publics money on the line.

This is all important in and of itself, but also because of the window it offers on how the city does business with special interests.

There appears to be plenty in this deal for the developer and the bankand not much effort expended on behalf of the publics interest. There are too many questions and not enough sound answers. The public first heard about this deal in a way that was clumsy at best and deceptive at worstand weve heard too little since.

This looks like the sort of dealings that are threatening our very way of life, undermining what little trust is left between government and the governed amid the most severe economic circumstances in several generations.

We can live with this and watch our economy and our way of life continue to slip away.

Or we can let the politicians, bankers, and real estate developers know that our world has changed dramatically in just the past few monthsand its time for them to make some changes, too.

Jerry Sullivan is the Editor & Publisher of the Los Angeles Garment & Citizen, a weekly community newspaper that covers Downtown Los Angeles and surrounding districts(www.garmentandcitizen.com)

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