Developer's default may prod Hollywest into new directions.

Controversial CRA project may go totally commercial

The developer of the controversial Hollywest project at Hollywood Boulevard and Western Avenue is in default on his $5.2 million in Los Angeles Community Redevelopment Agency loans, but Hollywood's CRA project manager said the city is still working to rescue the project -- albeit a different version of it.

"He (developer Ira Smedra) is technically in default, but we are working to keep this project alive," said Hollywood CRA Project Manager Len Betz. "We are working with him to cure the default."

Curing the default would involve "taking out" $4 million in CRA affordable housing loans to Smedra and replacing the money with new economic development loans from the CRA and the city's Community Development Department, Betz explained.

The project would be converted from a commercial/retail project with senior citizen housing to a strictly commercial one.

The new deal, which was discussed at a special meeting in L.A. City Councilwoman Jackie Goldberg's office last week, would also mean rejecting a request from the Metropolitan Transportation Authority to lease the now vacant parcel for use as a "staging area" during construction of a neighboring Metro Rail station.

"That (the MTA deal) is not going to happen if we can get this project going," said Betz. "We need to meet with the MTA to see if all the construction issues can be dealt with... We're trying to get this on a fast track."

Betz explained that the CRA hopes that Hollywest construction can run concurrently with construction of the Metro Rail station, which is planned to begin next year and last five years.

But local developer Gerald Schneiderman, a member of the Hollywood Community Advisory Council appointed by former City Councilman Mike Woo, said he plans to introduce a motion at the next HCAC meeting recommending that the CRA foreclose on the Hollywest site, and presumably pursue the MTA lease.

"I think we're all sick of watching (Smedra) rip off the CRA," said Schneiderman.

The Hollywest project, on the site of the recently demolished Hotel Rector, dates back to 1990, when Smedra first borrowed money from the CRA.

When the loans came due six months ago, the city extended them until Nov. 4, over the objections of the HCAC. Woo lobbied heavily in favor of the project, and former Mayor Tom Bradley attempted to obtain federal block grant money for Hollywest.

But Smedra was unable to obtain construction financing, and only demolished the hotel.

When Woo left office to run for mayor and Goldberg was elected, she studied the project and decided the affordable housing component was not feasible. Because 190 housing units were included in the project, it was ineligible for Housing and Urban Development funds, which only apply to projects with 40 to 70 units, Goldberg noted.

"We're not quite done with the negotiations, (but Hollywest) will be substantially different," Goldberg told the Business Journal in an interview Nov. 2. "There can be some new (affordable housing) construction (elsewhere), but our focus will be on rehabilitation. We want to keep the density down on low-income senior housing."

Smedra said he intends to proceed with the project as a strictly commercial development, as preferred by Goldberg.

"I hope it will work out," Smedra said. He would not comment on specifics.

MTA spokesman Greg Davy, meanwhile, confirmed that the transportation authority would be interested in leasing the vacant Hollywest site to store equipment and materials and park vehicles during Metro Rail construction "if it's available."