Clash could mean a delay for big downtown project.

For the first time, a modern downtown Los Angeles redevelopment project is pitting neighbor against neighbor--and raising concerns about the future of a new "western gateway" to the area.

Mani Brothers Real Estate Group, owner of a 24-story high-rise office building at 801 S. Figueroa St., is challenging the approval of a 3 million-square-foot, mixed-use development called Metropolis next to its property.

The family-run real estate company charges the city inappropriately approved substantial changes to the project without first allowing for adequate environmental studies and public input.

The Metropolis project was first proposed 17 years ago when downtown was going through a prior renaissance. It totaled 2.7 million square feet, with four towers limited to 36 stories. The new version is about 20 percent denser, totaling 3.3 million square feet and towers reaching 55 stories.

A lawsuit filed by Mani Bros. last month is seeking to have the project go through an entirely new approval process, marking the first time a modern downtown high-rise project has been challenged by one of its neighbors--and could delay its completion.

"We have problems with the project as it's now proposed," said Mani Bros.' attorney Thomas F. Winfield III. "We feel had the project been fully scrutinized in the public, there would have been noticeable changes."

Winfeld contends the developer and Los Angeles Community Redevelopment Agency worked out the changes in private and the redevelopment board and the council approved the alterations without allowing for public input.

Those changes would allow the developers to essentially build a wall of skyscrapers, practically blocking all western views from Mani Brothers' tower--where upper floor tenants currently have ocean views.

Joseph Mani, a vice president in the family firm, said the lawsuit isn't about the building's views and he said the company isn't trying to stop a project from happening on the site.

"Something is going to be built there--and that's fine because something needs to be built there," Mani said. "What this all really comes down to is that somehow this project got approval without going through the proper process."

Shaky start

The Metropolis project came about during the booming L.A. real estate market of the late1980s when the city's redevelopment agency teamed up with City Centre Development LLP to build a new "western gateway" to down-town.

When it was conceived 17 years ago, Metropolis contained 1.7 million square feet of office buildings, a hotel with 500-700 rooms and a large shopping center and a cultural center.

The city's redevelopment agency assembled just over an acre of the 6.3-acre site for the project through eminent domain and sold the parcels to City Centre Development--a partnership including original family owners of watch-maker TAG Heuer International SA--for just over $2.8 million.

The complex, designed by noted architect Michael Graves, aimed to stretch the burgeoning development taking place on downtown's Bunker Hill westward. However, the project hit the skids when L.A.'s real estate market imploded during the early-1990s recession.

City Centre held the land, a collection of mostly surface parking lots, until late last year when it struck a deal to sell the land to L.A. developer IDS Real Estate Group for $70 million--or about four-times the original amount.

IDS applied for the project changes with the CRA to reflect the new market driver of development downtown--condominiums. Instead of attracting commuters, the new Metropolis towers will contain 836 units of for-sale housing.

In exchange for the conversion to housing, the city asked that IDS increase density of the project to reflect the neighborhood growing up around the site, which is near Staples Center and a slew of high-rises. To get the added density, IDS had to buy unused development rights from the Los Angeles Convention Center.

Linda Bozung, an attorney for IDS, said several hearings were held on the changes made to the project and at each hearing Mani Bros. had an opportunity to influence the project.

"I'm a little baffled at how (Mani Bros.) can say they haven't had input into the process," she said. "This hasn't been some secret, stealth project. It's hard to keep anything of this size under wraps."

By all accounts, Winfield became a fixture at public meetings any time the topic of Metropolis arose--each time asking the redevelopment agency and council to delay approval and allow for more public input. "The city didn't seem to think they had time for us," Winfield said. "So they went ahead without comment and voted."

Jonathan Diamond, spokesman for City Attorney Rocky Delgadillo, said the office doesn't comment on current litigation. Councilwoman Jan Perry, whose 9th District includes the Metropolis site, said the Los Angeles Superior Court lawsuit prevents her from commenting as well.

CRA spokeswoman Kiara Harris said the redevelopment agency will contest the complaint. "We are in litigation," she said, "and we plan on defending ourselves from this lawsuit."

A growing family

Joseph Mani said the approvals given to IDS are too flexible and allow the firm to change the project in ways that are unclear.

Mani claims IDS officials have told them they are focusing on the first phase of the project, a large condo tower, while the subsequent three phases--another condo, a hotel with condos and an office tower--could be changed to reflect market conditions.

The last phase--a proposed 40-story office skyscraper at the comer of Eighth and Francisco streets--would dwarf the Mani Brothers' 24-story tower, blocking any remaining western views from the building.

While Mani Bros. owns offices in West Hollywood and Santa Monica, the downtown building represents the family's largest asset, which it purchased in 2003 from Common-Wealth Partners LLC for $105 million.

Before buying office buildings, Mani Bros. had long been known locally for operating bakeries. The family eventually sold its businesses to Sara Lee Corp. Though it's had real estate interests for 30 years, the family shifted fully to commercial property in 1998, when it first began buying downtown buildings.

Joseph Mani denies the property's role in the family portfolio has any relation to its lawsuit. "It's an important property," he said, "but it's not about that."

Until now, the Mani Bros. suit is focused on challenging the propriety of Metropolis' approvals, but other issues could be added, including questions that have been raised about City Centre profiting off land assembled with public funds.

An Oct. 27, 2004 redevelopment agency memo provided to the Business Journal and composed by former downtown CRA administrator Ayahlushim Hammond raises that very question, pointing out the redevelopment agency could be owed $8.6 million from the transaction.

Hammond didn't return calls seeking comment. CRA spokeswoman Harris said no such memo exists in the public file on Metropolis. Winfield said Mani Bros. hasn't asked him to explore any further areas beyond what's contained in the firm's complaint. However, he left open that additional points could be raised. "Lawyers can ask all sorts of questions," he said.