New Hotels Enrich Hollywood and Los Angeles

Two new hotels opened in Hollywood last month – the Kimpton Everly with 216 rooms and the Hampton Inn Hollywood with 112 rooms. Together with the Dream Hotel that opened in July, we have added more than 500 rooms to the Hollywood market this year. This is a 15-percent increase in the number of hotel rooms in Hollywood, bringing our total rooms to 3,926 in 51 properties.

By my count, there are another 15 hotels proposed for Hollywood. I’m sure some people are asking if we can support all of these hotels. One important thing to remember is that the hotels do not all come online at once. It is a long-way from a hotel being proposed to under construction. There is no guarantee that all the proposed venues will be built. The marketplace will be the final determinant of what is actually built. The interest in building new hotels in Hollywood is a nice problem to have!

I recall back in the year 2000 when our chair-of-the board, Oscar Arslanian, and I trekked to Beverly Hills to meet with a representative of Hilton Hotels to convince them that they should come to Hollywood. At the time, we had a boutique hotel task force and were trying to get new hotel construction in Hollywood. It had been 25 years since a significant hotel had opened in Hollywood. Hilton turned us down, saying that the timing wasn’t right for a hotel in Hollywood. We were ahead of our time.

It was a frustrating period for us. Hollywood was the top tourist draw in Los Angeles County, and yet no new hotels were coming to our community. They were locating in neighboring cities, which meant transient occupancy taxes (TOT) collected by those hotels were also going to other communities. TOT taxes can be an important component of a city’s budget, so this was potentially a huge loss for Los Angeles. In L.A. during its last fiscal year, the city received $230.8-million in TOT taxes and another $27.5-million from short-term rental taxes. With Los Angeles facing a budget gap of over $200-million, finding new sources of revenue are key to its survival and maintaining services. Each new hotel that opens in the city helps fill the budget shortfall.

Aside from providing tax revenue to a city, there are numerous other benefits that new hotels bring to the community – one of which is jobs. The Dream Hotel and its associated restaurants employ about 800 people. The Everly Hotel has a staff of 125 and the Hampton Inn employs another 40. These are all new jobs, on sites where there were few jobs before. To be able to add this many jobs to our employment base is exciting. Yes, many of these jobs are entry level positions, but in this community with all income levels, we need both entry level and executive positions.

New hotels also add to the ambiance of a neighborhood. Infill development helps to activate the street. The areas around the Dream Hotel and Everly were previously “dead” as far as pedestrians. There was no reason for anyone to walk there. Now, you see people walking to and from these venues, which creates more interest but also makes the neighborhood safer. It is impressive to now see people walking in Hollywood, not just on the major thoroughfares, but also on the side streets. Hollywood is a model for the entire City on how to activate a neighborhood.

And hotels also are great public gathering spaces for locals – with lobbies, restaurants, meeting rooms, and in some cases, rooftop terraces that overlook the Hollywood Hills and urban L.A. As we all know, Hollywood has the unfortunate distinction of having little park and open space. This makes it even more important to have places where people can gather. The general manager of the Everly Hotel related to me that they are positioning their hotel as one that is serving the local neighborhood. Since this new hotel lies in close proximity to many of our hillside neighborhoods, it only makes sense.

The fact is new hotels enrich a community in many ways. Downtown Hollywood is becoming an even more attractive urban neighborhood by having these hotels to complement the residential, retail and office components that are coming online. The Hollywood hotel boom is a very good thing for our community and for the City as a whole.

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Leron Gubler has been serving as the President and CEO of the Hollywood Chamber of Commerce for the past 24 years. His tenure since 1992 continues to oversee the great comeback story of Hollywood.

 

Does the Middle Class Have a Future in Los Angeles?

Recently I read Richard Florida’s book, The New Urban Crisis. Among the critical issues he identifies is the decline of the middle class in our urban centers. What his research found was that the middle class is the smallest in the most economically vibrant places, in particular, what he defines as “superstar cities” and tech hubs. Los Angeles was identified as one of these urban areas where the middle class is the smallest.

At a meeting we held last week with Mayor Eric Garcetti, he voiced what is undoubtedly one of the most challenging issue facing Los Angeles – will our children be able to stay here and enjoy the prosperous community that has been built over the last generation. “We need a middle class and not just a service class,” said the Mayor, emphasizing that it is essential that the middle class not be squeezed out. The Mayor was right in highlighting this challenge.

If we cannot provide an opportunity for our children to remain here, what kind of a legacy have we provided? It does not matter if Los Angeles is able to provide middle-class jobs, if the cost of living is such that they cannot get ahead. I think each of us know of young people who have left the state as it has become increasingly unaffordable. I have two nieces, third-generation Angelenos, who moved to Colorado, in order to be able to purchase a home. I’m sure you can name a few.

Let me share a few statistics that I have seen over the last few months. The New York Times reported earlier this month that housing prices in L.A., San Francisco, San Jose, and San Diego have jumped as much as 75 percent over the past five years, making California the toughest market for first time home buyers. The median cost of a home in California is now over $500,000, twice the national average. California’s homeownership rate of 54 percent ranks last in the nation.

A recent article by Elijah Chiland noted that the real estate website Redfin reports that just 6.6 percent of homes listed in the greater L.A. region are considered affordable to residents making the median income. The problem is that while there have been significant increases in home values, wages in Los Angeles have risen less than half a percent since 2012.

On top of this, there is the issue of taxation. When you consider the compounding effect of the taxes levied at the state, county and local levels, it adds up to a huge disincentive for the middle class and young people to remain here. In an article published last month, Chris Nichols of Politifact, responding to the question of whether California taxes were really among the highest in the nation, provided the following facts: On a per capita basis, Californians pay $1,991 annually in state income taxes, which ranks fourth highest in the country. California has the highest-in-the nation sales tax rate of 7.25 per cent (and that is before local levies recently passed for such worthy causes as mass transit and homeless services). When the recently-approved 12-cent per gallon increase in the state gas tax goes into effect on November 1, 2017, it will make the California gas tax second highest in the nation.

Now, I am not arguing against the need for these new taxes and fees to address serious state and local problems. What I am saying is that the compounding effect of these taxes threatens our middle class.

Even property taxes, which we tout as low because of Proposition 13, create a heavy burden for those just starting out. Since median housing prices are twice the national average, the property taxes are still a hurdle, especially when compounded by additional parcel taxes and fees charged to property owners in a specific area to pay for special needs and public improvements.

The state legislature has introduced 130 housing measures this year to address the affordable housing issue. The City is considering linkage fees to fund affordable housing. The problem with many of these proposals is that it is impossible for government to solve the housing crisis with new fees to develop affordable housing. The amount of housing they could fund is only a drop in the bucket compared to what is needed.

Christopher Thornberg of Beacon Economics recently said that California would need to add between 800,000 and one-million additional residential units to move the state to national norms for housing stock and vacancy rates. In L.A., we would need a total of 180,000 to 200,000 residential units.

The only way to meet these type of numbers is to stimulate the private sector, which is now weighed down with government regulations that make it impossible for the free market to work the way it is supposed to. Our public officials are going to have to make some tough decisions if they really want to address the housing crisis.

Here are a few suggestions. At the State level, our representatives are going to finally need to reform the California Environmental Quality Act (CEQA) to stop egregious abuses of this law that can kill or delay needed projects for years. They need to approve language that treats infill development in urban areas differently than pristine open space. State and city officials need to incentivize developers to build low and moderate income housing units. There are ways to do this, such as increasing density for targeted units or reducing parking requirements, which would bring down costs on a per unit basis. And the courts need to be directed to accelerate the review of legal challenges to housing projects.

It took a long time for this housing crisis to develop, and it may take a long time to work through a solution, but we cannot afford to delay. Our legislators need to start acting now to solve this problem. If they don’t, the California dream may be a thing of the past for our vanishing middle class.

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Leron Gubler has been serving as the President and CEO of the Hollywood Chamber of Commerce for the past 24 years. His tenure since 1992 continues to oversee the great comeback story of Hollywood.

 

Hotel Complex is a Dream for Hollywood Jobs

When one thinks about the visionaries who made Hollywood what it is today, there are a lot of candidates to consider: Sid Grauman who dreamed up the picture palaces and movie premieres, C.E. Toberman, who built most of the grand buildings on Hollywood Blvd. and made the Hollywood Bowl a reality, the Chandler family and their associates who put the huge Hollywood Sign on Mt. Lee, Johnny Grant, who built the Hollywood Walk of Fame into an international icon – the list could go on and on.

And in fact, the list continues to grow. Last week, the long-awaited Dream Hotel opened its doors – the culmination of a 10-year dream by Richard Heyman and Grant King of the Relevant Group. These two gentlemen looked at a very nondescript stretch of Selma Avenue just west of Cahuenga and imagined something no one else saw – a thriving entertainment complex.

Their original vision was to convert an old industrial building into a hotel and to activate the adjacent derelict alley with restaurants. Over the years, that vision grew. They now envision up to four hotels within a two-block area. This is a case study in “place-making” if ever there was one. The two partners envision a vibrant neighborhood something akin to the Meat Packing District in New York. Looking at what they have already created, we can only imagine what another three hotels might do for that neighborhood.

What is especially noteworthy is that the new hotel and the four adjacent restaurants have created 700 jobs. That is significant in a stretch where the previous structure on the site probably provided less than 10 jobs. Not only do the venues provide employment, but they will also offer new entertainment opportunities for Hollywood residents, and will act as a magnet, drawing guests from throughout Los Angeles. It will help to perpetuate Hollywood’s image as the entertainment center of Los Angeles.

If you talk with Grant and Richard, they will tell you of the many challenges they faced to make their dream a reality. When they couldn’t get financing locally for the project, Grant went to China where he successfully raised the needed funding.

They simply did not take “no” for an answer. They wanted to bring the “A-game” to Hollywood, and they did. Besides Dream Hotels, they brought in the Tao Group, one of the most successful restaurant groups in the nation. These unique restaurants in the Dream Hotel complex are already receiving rave reviews, so be sure to check out Tao, The Highlight Room, Beauty & Essex, and Luchini.

When you visit the Dream, you will agree that it will be catalytic not only for that stretch of Selma Avenue, but for Hollywood in general. This type of project perpetuates the excitement about the revitalization of Hollywood. I often speak with developers who remark that they can feel the energy here and that they want to be part of it. They have heard through word of mouth that things are happening in Hollywood. When they come to visit, they experience it.

Hollywood did not become the name synonymous with the film industry by thinking small. It has always been associated with “dreamers” – but dreamers who made things happen.

As the Hollywood Chamber of Commerce, we congratulate Richard and Grant on their success and express our appreciation for their faith in Hollywood. We can hardly wait to see their next project.

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Leron Gubler has been serving as the President and CEO of the Hollywood Chamber of Commerce for the past 24 years. His tenure since 1992 continues to oversee the great comeback story of Hollywood.

 

Studio Purchase Is Good News for Jobs

Earlier this month, Hudson Pacific Properties, Inc. announced that it had finalized a $200-million acquisition of the historic Hollywood Center Studios. This is the third studio acquisition in Hollywood by Hudson Pacific. Based on their track record, it is very good news for Hollywood.

Hudson had previously acquired Sunset-Gower Studios and Sunset-Bronson Studios. They will now own a combined 1.2-million square feet of facilities at the three studios, including 35 soundstages on 41-acres. The acquisition makes Hudson Pacific the largest independent owner-operator of sound stages in the nation.

I first became acquainted with Hudson Pacific when they purchased Sunset-Gower Studios in 2007. They were in a competition against several other firms for the property. Theirs was the only proposal to keep Sunset-Gower as an independent studio. The other developers planned to replace the studio with housing.

While there certainly was the need for housing, I was very concerned about the potential loss of industrial space, especially since Hollywood only has about 200 acres zoned for industrial uses. It was a time when Hollywood’s future hung in the balance. Many entertainment-related firms had exited Hollywood in previous decades, including almost all of the television stations. We were very concerned that Hollywood might lose its historical role as a commercial center.

Fortunately, Hudson Pacific did get the property, and they followed up by investing in the infrastructure and revitalizing the studio. Technicolor moved into a new 115,000-sq.ft. building at Sunset-Gower, making it their North American headquarters. This was the first major entertainment firm to move into Hollywood in decades.

In 2008, Hudson Pacific acquired the Sunset-Bronson lot. At that lot, they have built 423,000-sq.ft. of office space, all leased to Netflix. Their projects, along with others completed by Kilroy Realty and J.H.Snyder, have helped reestablish Hollywood as a commercial center. With 2,800 housing units under construction and another 7,200 in the pipeline in Hollywood, these projects will help us to maintain an important jobs-housing balance.

So the announcement that Hudson Pacific has acquired the historic Hollywood Center Studios bodes well for Hollywood. Hudson, in making the announcement of the purchase, also stated that they plan to move forward with a new 100,000-sq.ft. creative office building and a 350-space parking garage at the lot, which will be renamed Sunset Las Palmas.

For those not familiar with this lot, it is one of the most historic and oldest operating studios in Hollywood. It was founded in 1919 by a partnership formed by C.E. Toberman, John Jasper and C.W. Bradford. At the time, C.E. Toberman, who was the “Mr. Hollywood” of his day, had plans to convert Hollywood Blvd. (which was a mishmash of residential, retail and industrial uses) into a grand street and wanted to remove all industrial uses from the boulevard. The creation of the lot, christened Hollywood Studios, Inc., helped accomplish that goal. Over the years, the studio became home to iconic television shows like I Love Lucy, The Addams Family, Jeopardy, and legendary films like Hell’s Angels, When Harry Met Sally, and The Player.

Hudson Pacific has been responsible for bringing hundreds (if not thousands) of jobs to Hollywood. They have played a major role in the revitalization of Hollywood. On June 22nd, they will be honored with our Excellence in Economic Development Award at the annual Hollywood Economic Development Summit. The honors are well-deserved. On behalf of the Chamber, let me say that we appreciate having such great partners as Hudson Pacific in our community.

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Leron Gubler has been serving as the President and CEO of the Hollywood Chamber of Commerce for the past 24 years. His tenure since 1992 continues to oversee the great comeback story of Hollywood.

Musings About a Target

By now, most people have heard the disappointing news that Superior Court Judge Richard L. Fruin, Jr. has once again sided with a very small group of plaintiffs to prevent Hollywood’s new Target from being completed. I thought it might be appropriate to offer of few of my own observations on this sad state of affairs.

Let me first offer a little background. It has now been nine years since Target first filed to build a store in Hollywood. When it was initially approved by the City and threatened with a lawsuit, Target decided to do a complete Environmental Impact Report (EIR) to strengthen its case against lawsuits. However, that later proved to be of little value.

At issue was a quirk in the Station Neighborhood Area Plan (SNAP) that governs development in that area. The SNAP ordinance allows projects that are strictly retail to only be 35 feet in height, but allows mixed-use projects to be up to 75 feet. The City Council and Planning Commission felt that the Target would be a benefit to the neighborhood and granted a variance to allow the project to be built at the 75-foot height.

The La Mirada Neighborhood Association, which is reputed to have only two or three members, sued. Judge Fruin ruled that the EIR was fine, but that the city erred in granting a variance and should have changed the zoning.

The City, in order to comply with the judge’s order, created a new Subarea F zoning category for big box retail centers. Once again, the La Mirada Neighborhood Association sued, saying that the City should have performed a new EIR to justify the new zoning designation. And once again, the judge agreed with the plaintiffs. It serves no purpose to rebut the judge’s rationale for his decision, but I would like to share my thoughts on what a loss it means for Hollywood.

Between 250 and 300 permanent jobs have been lost to the community now for several years because of these lawsuits. These are jobs that could have been filled by many of the low-income residents in the neighborhood close to the Target site. In addition, the Target would have provided expanded shopping opportunities for our entire Hollywood community, and would have been within walking distance for many low-income neighborhoods. It is only two blocks from the Hollywood/Western subway station and so is easily reachable from all areas of Hollywood. We haven’t had a department store since Sears closed its Hollywood store in 2008, so this would have been a wonderful addition to the community.

I get more questions about the status of the Target from both residents and businesses than any other subject. There is overwhelming support in Hollywood for this store. So the question is “What are the specific reasons why these few people are opposing the Target so vehemently?”

Robert Silverstein, the plaintiff’s attorney, usually responds that the plaintiffs aren’t against a Target – they just want them to follow the city’s rules. My objection to that answer is that rules set by a city are not cast in stone. Historically, cities have always had broad discretionary powers to determine land use within their bounds. The SNAP ordinance is not the U.S. Constitution. The City should have the right to make changes as circumstances warrant.

We live in an urban area. What value is achieved by limiting a retail center to one story? When we have attended past hearings on the Target, the main justification of the opponents for their position is that they want housing built in the neighborhood, not just retail centers. If developers wants added height, they have to provide housing as well, they say. They also have voiced concerns over views being blocked or a building built out-of-scale with the neighborhood.

I could understand these arguments eight years ago, but circumstances have changed dramatically since that time and the rationale for those positions no longer applies. In the interim, three projects have been announced and are in the entitlement phase across the street from the Target that will provide 1,293 housing units. These projects will all be as high, or higher, than the Target. So what purpose is to be achieved by forcing the Target to be torn down and rebuilt at one story? My answer would be “Absolutely none.”

The opponents can bask in their latest court victory, but in my view, they should be asking themselves if they are really serving the greater good for Hollywood? If Target pulls out because they are tired of fighting this small group of naysayers, have the interests of Hollywood really been served? Does the loss of these needed jobs and shopping opportunities mean anything to the opponents?

Being with the Chamber of Commerce, I am an eternal optimist. We have been through some difficult times in Hollywood, and despite setbacks, the community’s revitalization continues to move forward. I remain hopeful that a solution can be found so that the Target can be completed. Meanwhile, I would urge everyone who is supportive of having the Target finished, to not be silent. Let the La Mirada Neighborhood Association know how you feel.

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Leron Gubler has been serving as the President and CEO of the Hollywood Chamber of Commerce for the past 24 years. His tenure since 1992 continues to oversee the great comeback story of Hollywood.

A Post Mortem on Measure S

In the aftermath of Measure S, it seems everyone is offering their post mortem observations about this giant struggle over land-use and development in Los Angeles. I’d like to add my “two cents”.

First, the voters made the right choice in sinking Measure S.  We can breathe a sigh of relief that a blanket moratorium did not go into effect that would have vaporized thousands of construction jobs and wreaked havoc on our economy. Now we can continue to address the serious shortfall in housing in our region.

Second, although the voters rejected Measure S, it was not a vote of support for the status quo. Far from it. Both residents and businesses made it clear that the current system is broken and needs to be fixed.

Third, the Mayor and City Council need to follow through on the reforms that were promised, among which were to update community plans in a timely fashion and to have the Planning Department select the consultants performing environmental impact reports.

Fourth, once community plans are updated, “spot zoning” (changing land-use rules to accommodate specific projects) should become the exception rather than the rule in approving projects. It would be helpful if criteria could be drawn up that explains when it is appropriate to grant an exception.

Fifth, greater transparency should occur throughout the entire process, so that trust can be established with the public. One particular area that needs improvement is with community benefits packages. The Planning Department and councilmembers now negotiate these packages, sometimes extracting millions of dollars from developers for projects that will benefit L.A. This process needs to be revised so that the public has more of an opportunity to provide suggestions on things that would benefit the impacted neighborhoods. And once a package is finalized and the developer hands over to the City mitigation funds, there needs to be accountability so that the public knows to which department the funds went and that they were spent according to the plan.

An example may help. When the Hollywood & Highland complex was built back in 1988, the City negotiated a contribution from the developer for more than $9-million to be spent on traffic improvements, etc. Years afterward, when I tried to find out if the money had been spent, I could get no answer. Yet, more than 10 years after the project was completed, I saw a motion before the City Council approving the expenditure of some of the mitigation money from that project. I am not implying that anything was done incorrectly. What I am saying is that the system was not set up for transparency with the public.

With today’s technology, there is no reason that a tracking system cannot be set up on a City website that easily allows the public to see what the community benefits packages are for each project and to track the expenditures of those funds as they occur. This is an issue of trust. If the public can see that these funds are truly going to benefit them and are actually being spent on the purposes intended, it will help to instill trust in the system.

Finally, in my conversations with neighborhood councils, one of their largest concerns is with evictions that are taking place to make way for some new projects. Most of these evictions are occurring with rent-controlled buildings and by-right projects. With the affordable housing crisis, some tenants are losing their homes with no place to go. The city needs to review its current policy to strike a balance between property rights and fairness for those being evicted. It is a complicated issue with no easy answers because of conflicting state and local laws, but the conversation needs to occur.

The voters have indicated by large margins in the last two elections that they understand the need to “densify” our City rather than to continue expanding outward. That is the proper course of action, but it is not easy to achieve. The Hollywood Community Plan update will be coming back later this year for reconsideration. Stakeholders will have ample opportunity for public input into the process. With all of the development and changes occurring in Hollywood, we really need to have an updated plan rather than operating under one that dates back to 1988. Let’s have the discussion necessary to adopt a plan that will move this community forward and which will help to reestablish trust in our land-use process.

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Leron Gubler has been serving as the President and CEO of the Hollywood Chamber of Commerce for the past 24 years. His tenure since 1992 continues to oversee the great comeback story of Hollywood.

 

A Few Observations about Measure S

 

With only two weeks to go until the election, there has been a lot of “ink” written on the topic of Measure S. You’ve heard the statistics about how this measure is going to cost our economy $1.9-billion and 12,000 jobs for each year it is in place. You’ve heard about its devastating impact on affordable housing, especially in light of the passage of Measure HHH to build permanent supportive housing that Measure S would make difficult to build. And you have heard the claims of the proponents that only five percent of the proposed construction within the City will be impacted.

With the debate drawing to a close, I would like to share a few of my final observations. Here are my thoughts:

  1. The idea for this initiative sprang from a small group of activists in Hollywood, who were not able to stop development here, and thought they would have a better chance by enacting a citywide moratorium. They have cloaked their real intent under the cover of popular terms such as “updating community plans” and “ending spot zoning”. They continue to minimize the impact of this measure (far below what real studies have shown). In reality, their goal is not to update community plans, but to stop all significant development that adds traffic near their homes.
  2. Almost everyone agrees that the City of Los Angeles project approval process leaves much to be desired and needs reform. The one positive result of the initiative is that it spurred the City Council to vote on February 8th to update L.A.’s 35 community plans every six years, which is realistically about as fast as the City can move in updating all of its plans. That vote has triggered creation of a new ordinance that will mandate these updates. If the ballot measure sponsors really cared about updating the plans, they would declare “victory” at this point and move on. The fact that they haven’t done so, tells you that they really have another agenda.
  3. The proponents of Measure S are disingenuous when they say that the moratorium will only last for two years. They know that it is impossible for the City to update all of its plans within that timeframe. They also know that there will be lawsuits challenging the approval of new updated community plans, which will prevent their implementation. It has now been five years since the Hollywood Community Plan Update was approved and then blocked by a lawsuit. We are still waiting for it to be reconsidered. This is a good example of what is in store if this measure passes. Voters need to understand that the moratorium likely will be in effect for years.
  4. In an ideal world, no exceptions would be granted to zoning rules. However, in the real world, that is not possible for various reasons. There are cases where spot zoning is needed, and where it demonstrably is a good thing. Probably the best example in Hollywood is our beautiful new Emerson College campus on Sunset Blvd., which has won numerous design awards. Under the previous zoning, about all that could have been built on the site was a hamburger stand. I don’t think anyone would argue that a hamburger stand was a better usage for that site. Until such time as community plans are updated to reflect today’s circumstances, there is a need to allow legislative bodies to exercise judgment to consider the issues in addressing development at specific locations. And, even after a plan is adopted, there is a need for flexibility. Changing circumstances, new opportunities that may never have been contemplated, or mistakes in classification require some flexibility in allowing exceptions. Granting exceptions to the rules should be infrequent, but blanket prohibitions of “spot zoning” without considering real life situations are not in the public’s best interests.
  5. Measure S is really a case of “the haves” versus “the have nots”. If you already own a home and don’t care about the larger community’s interests, then you may be inclined to vote for Measure S, but if you truly care about those who are just getting started in L.A. or who are forced to commute in from outlying regions, then this measure is not for you. Last fall I spoke with Councilmember Nury Martinez, who represents the 6th District, stretching from Van Nuys to Panorama City. She said it is a challenge to bring development into her district and that the Measure S moratorium would harm her efforts to do so. Her concerns are echoed in many communities across this great city. Other than Hollywood, Koreatown and Downtown L.A., most areas of L.A. are not seeing a great deal of new development. Many communities want and need development. As I have said before, developers are not the enemy. They are the ones who help to revitalize older neighborhoods. Our opponents forget how bad Hollywood was 20 years ago. It has been primarily through new development that we have been able to turn this historic film capital around. Where you see no new development is where you most often see communities in a state of decline. Measure S will perpetuate that problem and make it more difficult to revitalize communities.
  6. Measure S is about the future of Los Angeles. I remain convinced that one of the main goals of the proponents of this measure is to stop the addition of density near mass transit centers. The Palladium Residences project that seems to have been the genesis of Measure S (at least for the largest contributor to their campaign), is only one block from a subway station. Opponents of that project do not want density near transit centers, and yet they have suggested no alternative. The horizontal city model with connecting freeways may have worked when we had three million residents in this county, but it does not work when we have 10 million residents. In city after city, we have successful models on how development has been focused along mass transit lines in order to avoid increasing congestion elsewhere. That has also been the plan for Los Angeles. With the passage of Measure M last November, we have an opportunity to truly accommodate growth and new residents in a logical fashion. To not allow density where it makes the most sense will create future chaos for this region. It will result in a lot of housing and businesses moving outside Los Angeles, and it will force many new residents into peripheral areas, only worsening commute times. We cannot go back to the 1950s.

I add my voice to those who say that Measure S is the wrong remedy for Los Angeles. Now that the City Council has committed to regularly updating community plans, our energy would be much better spent on seeing that we get visionary, well-thought out plans adopted for each area of our city. Let’s work to see that good developments are added along future and existing mass transit lines, and that they contribute to making this a more livable city. That way, we will all be winners.

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Leron Gubler has been serving as the President and CEO of the Hollywood Chamber of Commerce for the past 24 years. His tenure since 1992 continues to oversee the great comeback story of Hollywood.

Keep the Momentum Going in 2017

As we begin 2017, I am optimistic about our future prospects in Los Angeles and Hollywood. When it comes to jobs, Los Angeles County has been moving in the right direction. In 2016, employment grew by 65,300 jobs and the unemployment rate declined to 5.1 percent.

Here in Hollywood, the news on the jobs front is also positive. Viacom has begun moving into its new home in Columbia Square and Netflix will be moving into the new Icon tower at Sunset-Bronson Studios within the next month. Netflix announced a week ago that they will take an additional 92,000-sq.ft. of office space at their new Hollywood home, bringing their total to more than 400,000-sq.ft. on that campus. Between these two companies, another 1,500 jobs will be added to the Hollywood market. These are good jobs that will provide opportunities for Hollywood residents and ancillary businesses.

Other positive prospects in Hollywood at the beginning of the year include the opening soon of two hotels – the Dream Hotel (which includes several restaurants) on Selma Avenue, and the Hampton Inn on Vine Street. Between them, about 300 hotel rooms will be added to the market and they will provide hundreds of jobs.

Later this year, we should see the completion of J.H. Snyder’s 1601 Vine Street office building and the Kimpton Hotel. There may also be a few additional ground breakings this year – provided Angelinos do not approve the ill-advised Measure S.

For the past year, we have debated this initiative that would place a two-year moratorium on significant building within Los Angeles – singlehandedly killing jobs, housing and reasonable growth in our city. The vote on this measure is coming up on March 7th.

Proponents say their measure will force the City to update community plans and to outlaw “spot zoning” and that it should only last two years. In actuality, it is much more complicated than that. Among the proponents are some of the people who sued to invalidate the Hollywood Community Plan Update in 2012.  Thanks to their efforts, the community is forced to operate under an antiquated plan that was adopted in 1988. What are the chances that any new community plan approved by the city will go into effect without a lawsuit challenging it?  In reality, the moratorium called for by Measure S could last for years under such a scenario.

L.A. city and county residents this past November overwhelmingly voted for reasonable growth. They passed Measure M, which will generate $860-million a year to accelerate the construction of a working mass transit system for this region. L.A. city voters also passed Measure HHH, a $1.2-billion bond to build housing for the homeless.

The passage of Measure S could put the brakes on plans to add density around mass transit stations and it could also make it very difficult to build housing not only for the homeless, but housing for anyone in Los Angeles. It would also apply to needed public improvements such as expansion of hospitals, etc.

I am indeed an optimist, and believe that voters will reject a measure that makes it difficult to implement the objectives that they just approved in November. However, it behooves all of us to do our part in educating our friends and neighbors about the negative ramifications of Measure S and to get out the vote!

L.A. is moving in the right direction on jobs. We need to continue that momentum. With the defeat of Measure S, I am convinced this will be another positive year for L.A. on the jobs front. Let’s make it happen.

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Leron Gubler has been serving as the President and CEO of the Hollywood Chamber of Commerce for the past 24 years. His tenure since 1992 continues to oversee the great comeback story of Hollywood.

Thoughts on the Passage of L.A. Infrastructure Measures

Los Angeles County citizens sent a strong message on November 8th that they support infrastructure development. They committed to a permanent sales tax increase to accelerate the expansion of our mass transit system by passing Measure M.

The annual $860-million that will be generated means that Los Angeles will finally get a system that takes people where they want and need to go. For Hollywood, it means there will be a direct light rail link between LAX and the county’s top tourist destination. And, there will be better linkages to other areas of the county as well.

The funding is expected to generate about 465,000 jobs across the region, which will be a significant economic boost to our area.

While Measure M will not eliminate congestion, it will indeed make a difference. People who don’t want to be stuck in traffic will have alternatives. It validates the strategy that regional and local planners have espoused for decades to encourage density near transit hubs. That strategy’s success is very visible here in Hollywood where thousands of new units have been built and occupied by young professionals, near Metro transit stations. That, in turn has attracted major companies like Netflix and Viacom, who are bringing thousands of jobs that will propel our revitalization forward.

Voters were also very interested in housing issues, with the passage of measures HHH and JJJ. Measure HHH is a $1.2-billion bond to build housing for the homeless. Measure JJJ adds a requirement for developers to include affordable housing in their projects. The Chamber did not endorse JJJ because its prevailing wage provisions will also raise the costs of construction by as much as 30 percent. However, its passage, as well as the approval of HHH, shows that voters are interested in funding affordable housing, addressing homeless issues and expanding mass transit.

The passage of these measures runs counter to the goals of the so-called Neighborhood Integrity Initiative (NII), which we will be voting on in less than four months. This no-growth initiative would suppress the development of housing due to its draconian building moratorium. It is targeted at decreasing density around mass transit, which runs opposite of what the electorate has just approved. Their solution to congestion is a two-year building moratorium. The voters, meanwhile have said that they want expanded mass transit and housing.

Hopefully, voters will send a strong message next March that we are going to stay the course by building needed housing and locating it where it makes the most sense – near mass transit lines. I believe most voters will agree that is where density should go, rather than spreading it across the entire region and creating more congestion everywhere.  We have a lot of work to do to educate the public about the NII measure’s adverse impacts, but the recent voter-approved measures give us an indication of how the electorate is thinking on issues like this. I feel confident that voters will reject NII. Help spread the word!

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Leron Gubler has been serving as the President and CEO of the Hollywood Chamber of Commerce for the past 24 years. His tenure since 1992 continues to oversee the great comeback story of Hollywood.

What is the Value of a Job – Close to Home?

The California Legislative Analyst’s Office (LAO) released a study in September (California’s First Film Tax Credit Program) that for the first time, offers an assessment of the economic and fiscal impact of the filming incentives that the State of California approved for our entertainment industry. This is particularly interesting because the LAO is the nonpartisan fiscal and policy advisor to the state legislature, which means we should be able to rely on the veracity of their report.

The study zeroes in on the tax incentives that were first adopted in 2009 which provided a total of $800-million in incentives spread over eight years at $100-million per year. The LAO did not evaluate the more recent incentives (AB1839) that were passed in 2014 and raised the subsidy to $330-million a year. That report will come in a couple of years. Why should we care about what the LOA says? Because when it comes time to renew the film incentives, the LOA’s report will likely carry a lot of weight with legislators!

Unless you are a policy wonk, you are unlikely to wade through this report, so let me share with you some of the most interesting data in the report.

The LOA estimated that the $800-million in tax credits went to productions that will spend an estimated $6.1-billion in California over the life of the first film tax program. They estimate that the “economic output of California was increased by between $6-billion and $10-billion on net over a period of more than a decade.” I wonder how many other investments by the state of California have resulted in numbers like this? That is money that went to buying goods and services and payroll for thousands of Californians.

What is particularly interesting is how much this new spending generated in tax dollars for state and local jurisdictions that would otherwise not have happened. The LAO estimates that the increase to State General Fund revenues amounted to between $300 and $500-million (not adjusted for inflation) and that the bulk of this increased revenue came in the form of state personal income taxes. Not only that, but they estimate that local tax revenues increased by roughly $200-million over the life of the program.

So, to summarize, the LAO is saying that on the low end State and local jurisdictions received $500-million in new taxes and on the high-end as much as $700-million in new revenues on an investment by the State of $800-million. This means that the net cost to the State was between $100 and $300-million. We haven’t yet seen any studies that estimate how many jobs have been saved, but conservatively it numbers in the thousands. These are the jobs of Californians, who previously were forced to leave the State to find work.

Paul Audley, the President of FilmL.A., Inc., tells me that prior to the passage of the 2009 tax credit, the L.A. region was losing key productions at an alarming rate. The worst quarter on record occurred immediately prior to the implementation of the tax credit. He added that with the enactment of AB1839 in 2014, California has regained ground and stabilized the vendor and crew base, and that currently, 25 percent of TV production and 10-percent of feature film production in L.A. is due to the tax credit program.

The LAO generally advises policy makers against tax expenditure programs, but in this case said that it was “understandable to defend a flagship industry targeted by other states” and that the credits “can be viewed as ways to ‘level the playing field’ to counter financial incentives to locate productions outside of California.”

If the State had not offered the incentives, it was on the way to losing its signature industry. Was this a good investment by the State? I think most Californians would say “absolutely.” Where else could the legislature have invested $800-million in economic development and seen income tax revenues coming back to the State of as much as $500-million with an economic stimulus as high as $10-billion?

But behind the numbers is a more important fact. California families were being separated for long periods of time since so many were forced to follow productions out of state if they wanted to work. We have heard from hundreds of people who are grateful to our public officials for enacting this program that has allowed them to return home to work. And that is a number to which you cannot attach a price tag.

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Leron Gubler has been serving as the President and CEO of the Hollywood Chamber of Commerce for the past 24 years. His tenure since 1992 continues to oversee the great comeback story of Hollywood.