Why Is Eli Broad Renting a Full Block of Downtown L.A. for $6,481.48 a Month?

Eli Broad’s new agreement to build a downtown Los Angeles art museum gives the capricious billionaire and medieval patron of the arts what may be the sweetest rental deal of the century: a 99-year lease of a large parcel in downtown L.A. for a mere $7.7 million.

If that figure is accurate (more below), this means one of the 100 richest people on the planet is leasing a full block on Grand Avenue for $6,481.48 a month. The owner of the land (in this case, L.A.’s Community Redevelopment Agency) could have gotten more than that with four rental units.

Instead, L.A. taxpayers will be funding the creation of yet another art museum, as part of Broad’s long-term goal of bringing “culture” to  a city full of actors, musicians, filmmakers, writers and artists.

Maximizing value has never been a goal of the subsidy-rich, too-big-to-fail “Grand Avenue Project,” a deal so rotten even CalPERS stayed away from it. Heavily boosted by the L.A. Times as well as the city and county government, but attendant upon the whims of Broad and featuring projected numbers that never penciled out, the project has gone on not happening for nearly half a decade. Fortunes are lost in anticipation of the Grand Avenue Project. People go mad waiting for the Grand Avenue Project.

So the tiny handful of GAP supporters are relieved that at least the museum “piece” may soon break ground.

But why is Eli Broad, whose net worth is estimated to be $5.2 billion, getting such affordable housing for his vanity project?

The L.A. Times’ David Ng and Jori Finkel spend a lot of time marveling at the competition among fancypants architects to add a new eyesore to the cityscape. (The blue-chip New York firm Diller Scofidio + Renfro won, if you’re into that kind of thing.) But they don’t give much thought to the fiscal details – probably a wise move when considering the smoke and mirrors involved in the “rejuvenation” of downtown L.A.

I have calls in to every member of the Grand Avenue Committee, and a helpful staffer in the office of Councilwoman Jan Perry says reporting on the 99-year lease is wrong: The $7.7 million is “not the lease," my new friend says. "That’s money the Eli Broad foundation paid for affordable housing” under a 2004 Disposition and Development Agreement. Instead, Broad will lease the property for even less: a mere $1 a year – the going rate, I’m told, for “cultural institutions.”

That’s a pretty big taxpayer hit just to realize one old man’s vision of a more New York-like Los Angeles. Take it away, Terry Allen:

Update: County CEO William Fujioka returned my call and explained that initially this entire city block of public land was going to be given to the billionaire at the buck-a-year rate. Thus, he says, Broad's $7.7 million price is the result of tough negotiation. "That $7.7 million will go for affordable housing," Fujioka said. "And for a guy like me, I'm a big supporter of affordable housing."

When I asked how $7.7 million can be considered a good price for the sale of an entire block on a hilltop in downtown Los Angeles (according to Zillow, condo units along a less attractive stretch of Grand Ave. still fetch $1.25 million each), Fujioka referred me to the CRA, which did the appraisal (and has not yet answered any of my calls). "If you’re expecting a comment I’d be commenting on something I don’t know about," he said. Then why did he vote for the deal yesterday? "There were a bunch of reason we approved it," Fujioka said.

Fujioka (who seems like a nice guy, and I'm sorry to have to lay into him) says these de facto land grants to rich developers pay for themselves in currency that he can't exactly quantify. "In other situations like this, where the person will fund the thing himself, it would be a buck a year," Fujioka says. "We'd do that for the value it brings -- value to the city and the county. If you’re saying it’s a gift, I wouldn’t characterize it as a gift."

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  • ||

    What about the literally dozens of jobs this will bring to LA?

  • Master Shake||

    Do you know how many birthdays there are in a year?

    There are hundreds.

    Literally. Hundreds.

  • ||

    And isn't it supposed to house his collection of crap I mean contemporary Art? Hell why don' they just rent the thing to graffiti artists. They would get a better quality of art. And the rent would probably be better.

  • ||

    And isn't it supposed to house his collection of crap I mean contemporary Art?

    I missed where the post mentioned Chony.

  • ||

    It is only rumor that Chony shits in mason jars and keeps them in a room in his basement.

  • ||

    He was going to at least store them in formaldehyde, but then Damien Hirst threatened to sue. It smells terrible.

  • ||

    I understand that you are an "archetypical art house geek elitist", so you should favor such things.

  • ||

    I seek offensiveness over all else, so I do favor shits in mason jars.

  • ||

    That's what I told he-who-thus-labeled you.

  • Citizen Nothing||

    I was at a museum of modern art in a Midwest metropolis recently. There were some old tables sitting on concrete blocks in one gallery. Thinking it was possibly some kind of reception desk being dissembled, I laughingly asked my wife "Is that part of the art?"
    It was.
    But then in a hallway we came upon a few old tables pushed into a corner that really were functional tables just waiting for the custodial staff to put back into storage.
    True story. Strange world.

  • Citizen Nothing||

    --disassembled--
    although "dissembled" might work, too.

  • ||

    And THAT is why journalism will soon be a dead profession...Welcome to the history books Mr. Nothing.

  • Citizen Nothing||

    I thought history is written by the winners. I assume I won't be in that book.

  • ||

    You will be tweeted about...

    Aw fuck, that sounds like hell.

  • ||

    Oh my god, I used EMPHASIS CAPITALIZATION...I have gone full on retard!

  • waffles||

    there is NOTHING wrong about emphasis CAPS, UNless you DO IT ALL wrong.

    nevermind, it's stupid, I feel bad now

  • ||

    This time was foretold by the elders.

  • ||

    In the Before Time.

  • ||

    I miss the days where we could banish or stone the all caps transgressors.

  • ||

    What's with that model? Did it get crushed in the kids backpack on the way to show'n'tell?

  • Pip||

    No. Ugly is the current architectural zeitgeist.

  • ||

    It is meant to invoke the funhouse mirror that interjects itself between art and the world that inspires it. Just as there is no perfect mirror, art cannot perfectly reflect reality to the viewer. It's up to you to find the distortion pleasing or upsetting.

  • ||

    As someone who loves painting...I have to conclude that I hate art. It's kinda like the difference between spirituality and religion.

  • ||

    Painting and sculpture ended as art sometime in the 19th century, with a few dying gasps in the early 20th.

  • ||

    Hey, watch it! You almost hit me with that cane you were shaking.

  • ||

    On this issue, I am correct.

  • Fire Tiger||

    And the trash pile to the left signifies?????

  • ||

    Represents? That's the new Green Trash Composting Facility.

  • Drax the Destoryer||

    I think it's a Soylent Green facility.

  • george||

    since when is there not a perfect mirror? i mean the one in my bathroom does a pretty bitchin job

  • Fist of Etiquette||

    If you leave the private sector to its own devices, it may choose not to fund culture on its own, and then where would culture be?

    And Eli Broad didn't become one of the richest people on the planet by funding a shitload of culture on his own.

  • Pip||

    The OVERWHELMING majority of arts funding in the US comes from the PRIVATE SECTOR.

  • ||

    The MAJORITY of posts using EMPHASIS CAPITALIZATION are usually written by RETARDS.

  • Pip||

    I KNOW!

  • Urkobold™||

    YOU ENJOY HAVING A TAINT?

  • Fist of Etiquette||

    Will you a-holes keep it down? You're gonna wake up the other threads.

  • ||

    Tim,

    The city won't be getting 7.7 million. You missed this part.

    The City also would have put up $1 million toward the design of the museum. Additionally, Santa Monica would have absorbed all fees associated with permitting, which City staff estimated would cost $900,000, and pay an estimated $750,000 to prepare the site for development.

    So you are being too generous.

  • ||

    Additionally, Santa Monica would have absorbed all fees associated with permitting

    The gov't can pay its own fees? Brilliant.

  • Tim Cavanaugh||

    As I said, this baby is "subsidy-rich"!

  • BakedPenguin||

    LA already has 2 baseball teams, 2 basketball teams (sort of), a football team, a soccer team, ten universities, and a billion dollar high school. What else are they supposed to blow their taxpayer money on?

  • ||

    They don't have a football team. They actually told the NFL to go fuck themselves. And the NCAA won't let USC pay their players anymore.

  • ||

    But at least USC has the Kiff-ster now - that's a spectacle both entertaining and edifying! (If you're not a fan of the team he's coaching, to be sure.)

  • ||

    You're clearly not paying attention. They have a football team, and a championship one at that.

  • Fire Tiger||

    2 basketball teams (sort of)
    Hey, no need for the snarky use of (sort of), the Sparks have won 2 championships.

  • ||

    Pretty sure it referred to the Clippers

  • Matt Welch||

    The other "L.A." baseball team plays in a different *county*, let alone city.

  • dfd||

    But both NYC football teams play in a different state, let alone county, so I'm not sure geographical inconsistency keeps it from being an LA team. I admit, however, that name Los Angeles Angels of Anaheim raises the bar from mere inconsistency to incoherence.

  • BakedPenguin||

    What dfd said. All I know is that they appear as "LAD" and "LAA".

    Also, I didn't know the NCAA made USC stop paying their players. Forget what I said about the football team.

  • NoVAHockey||

    and that team that Gretzky played for.

  • The Gobbler||

    The Edmonton Oilers?

  • dfd||

    No, dummy. The St. Louis Blues.

  • BakedPenguin||

    Hey, it's my troll. Too bad he's really kind of crappy. Epi, do you want to trade trolls?

  • ||

    You own a troll?

  • BakedPenguin||

    Yeah, but he sucks. Hasn't come up with any original material since he was rctl's troll.

    Like Epi said, rent before you buy.

  • ||

    Okay, I'll keep that in mind.

  • BakedPenguin||

    Maybe it's a new troll strategy - instead of trying to outrage, he's trying to be so mind-numbingly repetitive and boring that people will get pissed at that.

  • BakedPenguin||

    5:33 wasn't me, although oddly, it could have been. Apparently the AI is improving.

  • ||

    This might explain your curious not-you post in that other thread.

  • ||

    Wait, is that a not-BP comment?

    Ye gods, reality is slipping away like our access to blink tags!

  • ||

    Amazing. There needs to be a federal agency to deal with this imbalance in the Farce.

  • ||

    Fewer trolls.

  • ||

    There is a disturbance in the Threads, that's for sure.

  • ||

    Okay, now it's even more distressing, as posts that were here are not. Or were they ever here?

  • Paul||

    at the competition among fancypants architects to add a new eyesore to the cityscape.

    Pff, you Angelinos have no idea what a real eyesore is.

  • Pip||

    Check out the Weisman Art museum:

    http://images.dpchallenge.com/.....339852.jpg

  • ||

    Architects suck. And they all love that shit. It is the same way with composers. Modern classical composers hated people like Gershwin and Copeland because they produced music people wanted to listen to. Architects are the same way. Anyone who designs a building people like and is pleasant looking is a philistine.

  • Ray||

    Don't tell Ayn Rand!

  • DesigNate||

    As an architecture graduate student I would like to say that we don't all "love that shit". I absolutely abhor Frank Ghery and his wadded up piece of tissue paper buildings. There is a lot of beautiful modern architecture out there, just not his.

  • ||

    Maybe you can start a revolution. The powers that be seem to love Ghery. He certainly gets enough commissions and accolades.

  • ||

    What do you think of Gaudi, John?

  • ||

    I like him. Very interesting.

  • ||

    Go to Barcelona and see his works right in front of you. They're even more interesting and impressive.

  • ||

    I bet so. To me his stuff looks like it was carved out of solid stone like some kind of cliff dwelling. I like the idea of taking something old like Gothic and doing it in a new way. He was pretty brilliant.

  • slayer of hot dogs||

    Wait, there's seriously an architect named Gaudi? What's next, one named Gehryish? Overrott? Behrokh?

  • DesigNate||

    I'm trying to, but it is an uphill battle.

  • ||

    I see a Frank Ghery right outside my office everyday. It's the Minneapolis Central Library. The way the roof is designed causes huge chunks of ice to plunge about sixty feet to the sidewalk below during the winter, so they have to cordon off the sidewalk.

  • ||

    Art must be dangerous to wake up the slumbering mind of the modern mediocre man.

  • ||

    That comment so makes me want to slice off your ears and mail them to a prostitute.

  • Paul||

    Functionality is so bourgeois.

  • DG||

    And since you're in Minneapolis, that means the sidewalk is closed all year.

  • ||

    No, Minneapolis sidewalks are plowed all winter long. Almost constantly when the snow is falling.

  • ||

    Downtown, that is.

  • The Gobbler||

    It's a lot like saggin' one's pants.

  • ||

    Too deep for me, Gobby.

  • ||

    The Walker Art Center:

    http://www.nodinpress.com/macaroni/images/walker-1.jpg

  • Citizen Nothing||

    Hey! That's where my desks are!

  • ||

    I kinda like the Weisman Art museum.

    It should be noted that numerous buildings/structures that were once decried as aesthetic crimes are now considered classic works of art.

    This is in no way an attempt to except architecture from Sturgeon's Law.

  • Citizen Nothing||

    Yeah - I kind of like the wackiness of the Weisman. But for modern art on Big 10 campuses, the Wexner is best. Beat Michigan!

  • ||

    True some things do improve with age. But other things are just fucking ugly. And if you ever notice, the buildings that are hated at the time but grow better with age, were usually loved by the populace but hated by the art establishment. Then after years of popularity, the establishment has to admit the obvious. It almost never goes the other way. I can't think of a single example of something that was loved by the art establishment and hated by the public that ever won over the public or was seen to be better with age.

  • DG||

    What the hell is that? It looks like one of those model hearts we played with in high school anatomy.

  • ||

    It's the Seattle "Experience Music Project and Science Fiction Museum and Hall of Fame". I actually kind of like it, as it...looks kind of science-fictiony.

  • ||

    That kind of building works as long as it sits out by itself, which that one kind of does. It so weird it doesn't relate to anything around it. But off standing on its own it kind of works. I wouldn't want every building to be like that but for what it is I like that building to.

  • Paul||

    If they'd have made the whole thing that cool gold reflective metal, it would have been better.

  • ||

    The red metal on the side facing into Seattle Center reflects the sunset in the evening, and looks really cool and trippy. Some of the metal is slightly concave so it creates various focused hot spots that get pretty warm. Groovy.

  • ||

    I saw that when I was there a few years ago. $20 to get in? Fuck you.

  • ||

    Hey, how is the S/F part? I went to the music museum when I was last out there, but it was pre-science fiction (Paul Allen contributed to that, didn't he?).

  • Gary S||

    God, that was eye-wrenching.

  • ||

    Because government ownership is relatively free of cost constraints, concerns about generating a market return, etc., it's prone to squandering resources on unproductive uses...

    Some people think that's just a theory!

  • ¢||

    Check out the Weisman Art museum:

    Ain't that some pixels.

    Unless they've torn down about half of Minneapolis since last time I was there, in real life, that building is quite literally not visible from any angle.

    But it was really expensive.

  • PantsFan||

    Since I missed the morning links,
    this was pointed out to me last night.

  • ||

    By the way, I think this ties in nicely with observations I've seen made about public art...

    Back when development was still going strong, a lot of cities around Southern California would let you cut a corner or two if you'd agree to fund public art. So, you don't want to pay for all the bushes and shrubs in your parking lot that the Parks and Recreation Department says are necessary?

    That's fine, you can make a donation to the public sculpture fund--they'd rather put up a statue in front of the library than have bushes in your parking lot anyway...

    But I think it's a fairly universal observation that such art is of the lowest quality! Show me ten public sculptures commissioned by cities under such programs in Southern California between 2003 and 2006, and I'll give you a walking tour of some of the lowest quality work in contemporary art.

  • ||

    It is terrible. We just can't do public art anymore. In the 19th Century we did things like the Shaw Memorial. Hell we did the Jefferson Memorial in the late 1930s. Sometime after World War II, we ceased to be able to produce decent public art.

  • ||

    I blame the New Deal.

  • robc||

    I really, really, really like the Vietnam Memorial.

  • creech||

    Any bets that Broad has investments in surrounding properties that he hopes will soar in value when the museum comes in and the area gentrifies?

  • Slut Bunwalla||

    THREADJACK...sorry, but this is kind of an interesting piece (well, honestly, I only read two pages because it's really long and the NYT helpfully split it into TEN separate pages, the fuckers).

    http://www.nytimes.com/2010/08.....&scp=1

    One of those "what's the deal with young people" articles, this time worrying about why 20-somethings aren't growing up as fast as they used to.

    As I mentioned, I didn't read the whole thing so I don't know if the article goes into any possible answers, but personally, and speaking as a 20-something myself, I think it could have a lot to do with the fact that a lot of us were raised being told that we can do whatever we want in life as long as we try, and that education is just the bestest thing we can ever get so that staying in college for 10 years seems pretty reasonable. We're given extremely easy access to loans and grants for schooling, making it easy to stay in college for 10 years; laws allowing us to stay on our parents' health insurance plan until we're way too old to still be on our parents' plan; and this odd mindset that we're all entitled to the job and the life we want regardless of whether we can achieve it or are willing to work hard enough to do so.

    But that's just me, and I'm a 20-something, so what do I know, right?

  • PantsFan||

    that's why they have a link at the bottom called "single page"

  • Citizen Nothing||

    Sheesh. Kids today.

  • Slut Bunwalla||

    D'oh!

    Oh well. I read a few more pages and couldn't take the bullshit anymore anyway.

  • ||

    Broad’s long-term goal of bringing “culture” to a city full of actors, musicians, filmmakers, writers and artists.

    I can't think of a group that needs culture more. Good. And. Hard.

  • Tim Cavanaugh||

    Post has been updated.

  • ||

    Just for the record, a ground lease isn't exactly a gift.

    Typically, you need 99 years on a ground lease in order to finance construction--it's based on "leasehold interest", and 99 years of that is typically required to be considered equity by a bank making a construction loan or--more importantly--to when you refi out of the construction loan and into more permanent financing.

    I would say it's actually worse than advertised because it's like the city's offering free financing. He can use the leasehold interest as equity without actually purchasing the property--buying it, even at a steep discount market, would almost certainly be much more expensive.

    I've negotiated on these things before, and usually what you ask for is an option to buy the property at some point in the future as part of the lease--it may be ten years or thirty years out, but that way, the bank will give you an appraisal on the land based on the option price. That appraisal, of course, tells you how much equity you don't need to raise for the loan because the equity is already in the dirt.

    Sometimes the option is simply wherever the market is at the time (it could be thirty years out), and there are contractual stipulations about how the market price is agreed on, but if you look in the fine print, you may find some mention of an option somewhere. Sometimes your bank will insist on it--and a specified price.

    What good is foreclosing on a project if you can't resell the land the buildings are on? Look in the details if you can, and my guess is you'll find an option somewhere. If that option price is under market, then this deal is even rawer than raw for the taxpayers. They're basically financing it for him--with little or no money down.

  • bags||

    I understand that you are an "archetypical art house geek elitist", so you should favor such things.

  • ||

    "Art house", I understand people hating hipsters...

    But "art house elitist" is over the top. I know what you're tryin' to say, but you'd be better off with "latte swilling liberal", even if apolitical hot chicks like lattes too.

    At some point you start marginalizing yourself with this stuff--but maybe that's the point? You need a "them" to feel like you're a part of an "us"? I think I saw something about that recently...it was playin' at the Laemmle's on 2nd Street.

  • fendibags||

    Any bets that Broad has investments in surrounding properties that he hopes will soar in value when the museum comes in and the area gentrifies?

  • scarf||

    I read a few more pages and couldn't take the bullshit anymore anyway.

  • the power of one||

    More bot posts.

  • KD||

    How do they do that? Bot posts I mean..?

  • Yonemoto||

    The japanese american national museum rents its land from LA at $1/month.

    I wonder if Fujioka voted for that, too.

  • lilly zhang||

    i am not sure for this idea,may be you are right.

  • burberry scarf||

    here are nice burberry scarves at a good discount,great welcome every one order from us.

  • LemonMeister||

    Eli Broad Sucks everything he touches turns to dodo? Just Google Eli Broad Sucks. http://www.akbhomesucks.com this is the product Stephen F. Bollenbach, Ron Burkle, Bruce Karatz, Wendy Marlett, Wendy C. Shiba, Kelly Masuda, Timothy Finchem, Robert L. Johnson, Luis G. Nogales, Timothy W. Finchem, Jeffrey T. Mezger, Kenneth M. Jastrow II, Melissa Lora, Michael G. McCaffery, Leslie Moonves, Glen Barnard, William R. Hollinger, Thomas Norton and John Staines all built as the KB Home Board of Directors. They are posing to ruin more companies and lives. All of them ignore your customer complaints and violate KB Homes aka Kauffman & Broad its 1979 FTC Consent order. The order states KB Must BUY BACK YOUR HOME if your not 100% satisfied. The problem is no one in the Government is making KB Home accountable? Why should you pay taxes if the system is broken. I wrote a song to make Eli Broad & KB Homes Board feel better for the Holidays (YouTube): http://tinyurl.com/kbhomechristmas

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