Beverly Hills makeover fact of fiction? The city has everything developers desire--wealthy residents, flush tourists and a manageable way of life. Those happen to be the very same factors keeping new projects out.

WHEN the gloves come off in the genteel world of Beverly Hills development, combatants often take to the pages of the local newspaper.

Nestled among the community announcements and ads for cold fur-storage in a recent edition of the weekly Beverly Hills Courier were several full-page ads arguing the merits and faults of a planned $200 million hotel and retail development.

That the project would add to the tax base is not part of the debate--nor really is it the most important factor for a city where the median annual household income exceeds $70,000.

"Some old-time residents would just as soon build a moat around the city," said Richard Rosenzweig, executive vice president at Playboy Enterprises and a past president of the Beverly Hills Chamber of Commerce.

The anti-growth contingent has usually gotten the last word. While Beverly Hills long has represented wealth and glamour to local residents and tourists--not to mention good schools and three-minute response times for police and fire--it has been a nearly impenetrable place for developers looking to capitalize on its outstanding demographics.

There are signs of change--both at the northern end of the city's commercial triangle, where Santa Monica and Wilshire boulevards intersect (see story, page 20) and, more immediately, within a two-block area of the eastern edge.

At Wilshire Boulevard and Crescent Drive, J.H. Snyder Co. is building Crescent Beverly Hills, a mixed-use development of 88 apartment units and 40,000 square feet of offices, scheduled for completion at year-end.

Far larger is a proposal that was presented in the Courier: a proposed Montage Hotel Beverly Hills and Public Gardens that would take up the better part of the city block north of Wilshire Boulevard between Beverly and Canon drives.

It's a 228-room luxury hotel with 25,000 square feet of restaurant and retail space, 33 condominiums and an underground parking garage that could hold as many as 1,500 cars. The project was unanimously approved by the Planning Commission last month and could go before the City Council in May.

Turning point?

Both projects, however, show scars of their battles with a wary community.

Snyder, one of the county's more prolific and successful developers, first approached the city five years ago with a plan that would have included a Gelson's supermarket and 130,000 square feet of offices.

"We thought everyone would like to have a Gelson's in Beverly Hills," said Jerry Snyder, the firm's principal. "The immediate neighbors didn't want 65-foot (delivery) trucks coming in and we got shut down, so I redesigned it."

The Montage could be up against similar challenges--and even represent a tipping point in the future of Beverly Hills.

The luxury hotel, whose backers developed the sprawling resort in Laguna Beach, would replace such venerable buildings as the Canon Theatre and the Taj Mahal-like Israeli Discount Bank. It would be partially built on an acre of city-owned parking lots, as well as an acre owned by billionaire Louis Gonda's Lexington Commercial Holdings. A $37 million commitment from the city for parking and gardens is involved.

Most significantly, the complex features buildings that would be about double the city's 45-foot height limit instituted in the 1970s.

That last bit has some in Beverly Hills up in arms.

A group called the Beverly Hills Residential-Business Alliance will try to force a referendum that would subject the project to a public vote, said Alliance spokesman Alex Auerbach.

"This would require taxpayers to subsidize a private developer, and we don't feel that our tax dollars should go for that," said Thomas A. White, chairman of both the Alliance and the Municipal League of Beverly Hills, a homeowners group. "We want to keep Beverly Hills a low-rise community."

The project's developer said it shouldn't be called a public subsidy.

"We're paying for the hotel and the city is paying for their garage and public gardens," said Jay Newman, principal of the Athens Group, which is developing the project for Montage Hotels & Resorts, whose majority investor is Pierre Omidyar, founder and chairman of eBay Inc.

In some ways, the Montage proposal encapsulates the city's push-pull dynamics when it comes to development.

On one side of the debate are those who want to keep things as they are. On the other are those who feel that development has actually gone too far--but in all the wrong ways.

As a luxury property, the Montage could gain favor among residents put off by the number of chain stores, such as Crate & Barrel, that have opened in recent years, said Jeff Hyland, president of Beverly Hills-based residential brokerage Hilton & Hyland.

"A lot of people feel that the city is starting to lose its charm," said Hyland. "If we can build something luxurious like the Montage, that makes up for Crate & Barrel, which has no business being there."

Incorporated in 1914, Beverly Hills began growing in the 1920s as the era's movie stars began building their mansions there. The Beverly Hills Speedway was constructed near Wilshire and Santa Monica boulevards.

Over the next three decades, the downtown area between the city's western border and its civic center to the east was built out. Its high-rise office buildings were largely constructed along Wilshire Boulevard in the '60s and '70s.

The building boom ended with the city's 45-foot height limit, which shifted attention to retail projects. In the intervening years only a handful of developers have been able to take on major construction. Many more have either scrapped plans or moved them to neighboring cities, where the entitlement process wasn't as painful.

"There have been very few large-scale projects over the last 20 years," said Mitchell Dawson, who stepped down from his second term as chairman of the city's Planning Commission last month. "There's always a group of citizenry who want the hamlet to remain."

Surrounded by the busier communities of Westwood, Century City and Miracle Mile, Beverly Hills residents have always been sensitive to projects they felt could increase traffic along Santa Monica, Wilshire and Olympic boulevards.

"Everybody likes Beverly Hills, but if there's too much gridlock, people will go elsewhere," said White. "The prices are not the cheapest, anyway, so if you take out the convenience and any other benefits, there's no reason to tolerate the additional drive-time delays."

With development continuing in Los Angeles, West Hollywood and Santa Monica, Beverly Hills residents may feel they have to shore up their island of relative quiet.

"Beverly Hills, unfortunately, suffers from a lot of through traffic, and the residents hate it, but they have no choice in the matter," said Brian Dunne, vice president at Grubb & Ellis Co. "They feel that any new construction will exacerbate the traffic situation."

In 1982, developer Dar Mahboubi built the high-end, 280,000-square-foot Rodeo Collection retail project. In 1990, the 196-room Peninsula Beverly Hills went up six blocks west, while San Francisco-based developer Douglas Stitzel completed the block-long Two Rodeo Drive complex.

But even the latter two sites were subject to controversy and delay. The Peninsula took about four years to develop, including two spent on community-initiated redesigns after the project was approved by the city.

The Two Rodeo site had been earmarked for a Four Seasons Hotel in the early 1980s but a referendum that would have changed the zoning to allow for a 350-room hotel was voted down in 1984--largely due to a campaign financed by then-Beverly Wilshire Hotel owner Hernando Courtright.

The Four Seasons Los Angeles at Beverly Hills opened three years later on Doheny Drive in Los Angeles, just across the city line.

Success lures new breed

There are plenty of reasons developers still fight to get into Beverly Hills.

Its annual household income is 70 percent higher than the county average. Monthly retail rents in the Golden Triangle range from $4 a foot along Canon Drive to more than $25 along Rodeo Drive.

The average daily room rate for a hotel room in Beverly Hills was more than $291 a night in February, up 17.5 percent from a year ago and more than double the county's $128 average, according to hotel tracker PKF Consulting.

But those same demographics describe a community with the wherewithal to fight to keep things as they are.

"The people of Beverly Hills are very well-educated, financially well-off and also politically and legally savvy," said Steven Crowe, principal of Santa Monica-based Hotel Development Group. Delays in his firm's application for entitlements to develop a 133-room hotel on Wilshire Boulevard, about a quarter mile east of the Montage site, contributed to its pullout.

"If they aren't satisfied that their interests are being protected, they're going to use their various legal and political options to affect various approval agencies."

And it's not just entrenched homeowners.

Membership in the Residential-Business Alliance includes owners of at least three hotels with which the Montage would compete.

White confirmed that Probity International Corp., which developed the Peninsula, the city's last new hotel, is one. He would not identify the others.

"Competition is fine as long as it's a level playing field," said White. "It's not a level playing field if you had to build your project to code and someone else is given an exemption."

Robert Zarnegin, a principal at Probity International, did not return calls.

In general, developers were understandably diplomatic when assessing the process of building in Beverly Hills.

The Montage's development schedule "has been in line with our expectations," said Newman. Snyder said he could "think of other cities tougher than Beverly Hills," though declined to identify them.

Still, by opposing the Montage project, community members risk sidelining a development that could bring tax dollars into the city while spicing up an area that has changed little in decades.

"It's getting a little tired--it needs a rejuvenation," said Dunne, who helped broker the sale of Crowe's property last year after that project's financing fell through. "We've moved on from Frank Sinatra."

Color of Money

Narrow commercial zones add to value of land.

Existing projects

1 Two Rodeo Drive

2 Four Seasons Los Angeles at Beverly Hills

3 Peninsula Beverly Hills hotel 

Under construction

4 Crescent Beverly Hills

Planned

5 Montage Hotel and Public Gardens

6 Assisted living site

7 Beverly Hilton

8 40-unit condo project

9 Office building

10 Office renovation

11 Synagogue

Potential

12 Old Hillcrest Motors site

13 Flynt Publications building

14 Robinsons-May

Source: City of Beverly Hills

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