Upgrading buildings with an eye on the future and the past.

IF Wayne Ratkovich and Tim Meier have nostalgia for raw land, it's because restoring historic structures can be hard work. But they've found historic projects worth the payoff. Ratkovich, president of the Ratkovich Co., an L.A.-based development firm, is behind some of the city's early experiments with rehabbing old gems. In 1983, his company completed a $5 million restoration of the art deco James Oviatt Building, a 12-story downtown office complex that was later sold for $9 million. Meier, director of development at MJW Investments Inc., with offices in L.A. and Santa Monica, is currently turning Santee Village, a collection of nine manufacturing buildings spanning a city block in the Fashion District, into a mix of 445 condominiums and apartments and around 70,000 square feet of retail. The $165 million project should be finished next year. Unlike completely new developments, these projects retain pieces of LA. history. After the Oviatt Building was built in 1927, upscale men's shop Alexander & Oviatt clothed the city's finest from its bottom-floor location. Oviatt himself lived in the top-floor penthouse with sweeping views of the skyline. Florence Casler, a pioneering L.A. real estate developer, had her office in Santee Village's Textile Center Building, originally built in Gothic Revival style in 1926. Today, Santee Village is being filled with modern loft dwellers seeking an urban lifestyle, and the Oviatt Building houses the restaurant Cicada, as well as architectural firms and other office tenants.

Question: Talk about the process of rehabbing Santee Village and the Oviatt Building.

Meier: (On Santee) we had to detach the fire escapes section by section, repair the structural integrity of the entire fire escape system and crane them back up and re-bolt them to the building. They are part of the historic facade of the building, and they also have to be functional. We would find things as we started peeling paint doing lead and asbestos abatement. We found old graphics from the manufacturing facilities that existed 50 years ago. We were able to keep the painted signage as an added feature in loft units. One says the Bailey Hat Company.

Ratkovich: It is very difficult to predict costs. We provided for a significant contingency for unknown circumstances. We did the building incrementally. It was a prudent business decision that we wanted to spend as much money to make the building attractive, but not more than what is necessary, so we took it a step at a time.

Q: What was the historic status of Santee and the Oviatt building when you started renovation?

Meier: (Santee Village structures) were designated local historic monuments in 2001. We thought basically preserving the buildings of historic monuments created value in the lofts themselves. They are concrete frame buildings, and they have a distinctive architectural style. There is a decorative facade and oversized industrial loft windows.

Ratkovich: The Oviatt building had been neglected for a number of years. It was not historic at the time we purchased the building. The city (shortly thereafter) designated it as a cultural historic landmark. We chose to make the architectural and historic status of the building a marketing advantage. In preserving a 100,000-square-foot building, we ended up getting more notice than a one-million-square-foot new building.

Q: What's the significance of garnering cultural or historic status?

Meier: There are financial incentives and construction incentives that offer flexibility in meeting building requirements. On the financial incentives, the Mills Act is a big one. It provides property tax relief, and we are able to pass that along to our condo owners. We are the first to apply it downtown. It is an enormous benefit to us as, a landlord. There are rehabilitation incentives that provide a 10- or 20-percent tax credit on rehabilitation spending for historic buildings. There are also construction incentives. The city of L.A.'s adaptive reuse ordinance really streamlines the permitting process.

Ratkovich: It means that when you apply for a permit to do something with the building, it is reviewed by the Cultural Heritage Commission. This was in the late 1970s, early 1980s, and the idea of restoring a building of historic significance in Los Angeles was brand new. The city of Los Angeles has improved significantly over the years in the way in which it has worked with owners of historic buildings. It is certainly not going to be what we call easy, but there is greater cooperation in the city of Los Angeles.

Q: Do you have advice for others thinking about doing historic development projects?

Meier: The project has to turn a profit to be viable and the costs to renovate a building are typically greater than the costs to build a new one, but these tax incentives and other breaks make the preservation costs equal to those of new construction. You got to understand that you are dealing with antiquated systems that need to be entirely replaced. You can't underestimate the enormous cost of rehabbing these buildings.

Ratkovich: I would start off with making sure that the project has a strong financial base. I wouldn't count on any subsidies as part if that equation. I would look at it as strictly dollars and cents. Those additional sources may not be available to you. If you get into a project which involves tax credits, then there are requirements that you might (have to) conform to. In some cases, people may not want to do it.

Q: Was there anything that surprised you about dealing with historic structures?

Meier: We were surprised at the enormous cost of reusing these reinforced concrete buildings. It was enormously expensive to create light wells so that you could create light internally. When you reuse an industrial building and turn them into a residential building, these are inherent problems.

Ratkovich: We were particularly surprised at the reaction that we got in the marketplace. There seemed to be an appeal to an historic building that was far beyond what we imagined. A building that was about 60 years old doesn't meet the current modern-day standards of office building layout, yet the project seems to be very attractive.

Q: What other historic projects have you worked on?

Meier: We are looking at some additional projects. We are considering two or three projects in the Western United States that are adaptive reuse.

Ratkovich: The Fine Arts Building, the Pellissier Building and Wiltern Theatre, Chapman Market, Glendale's Alex Theatre, and the Terminal Annex Building with the U.S. Postal Service.

Q: What have you discovered about the market for historic buildings?

Meier: One thing about Los Angeles is that there is a buyer for every product. When you have a historic building, you have a unique, concrete piece of history. It is really something that can't be recreated, but it can be redeveloped. There is a lot of added value to having that piece of history. We see rehabilitation as an antidote to sprawl.

Ratkovich: I wouldn't underestimate the marketing advantages of historic buildings. People love to say I live in so-and-so building that used to be an oil company or department store.

BY RACHEL BROWN Staff Reporter