Grand Avenue Committee Project Overview

Updated January 22, 2007

The Grand Avenue project will involve the development of four prime parcels, the creation of a new park, and improvements to the pedestrian environment all directed toward the goal of creating a more welcoming and active environment in the heart of downtown Los Angeles. Included in the Implementation Plan is a description of the amenities that will be provided for the public that have been required by the Joint Powers Authority as a condition of its ultimate approval of the project. In addition to these physical improvements, the project will have tremendous economic benefits for the City, County and general public, both in terms of on-going annual tax revenues as well as one-time tax revenues from construction. These economic benefits are described in more detail below. In addition, consistent with the mandate of the JPA when it was formed by the City and County, the development of the project will also follow the social policies of the Community Redevelopment Agency of Los Angeles, including affordable housing requirements, living wage policies, utilization of minority and women-owned businesses and public art policies, among others. The public benefits that will be provided by the project are summarized below.

The project will provide affordable housing in every phase of development. When the Joint Powers Authority was created, it adopted the CRA’s policies on affordable housing. The initial Request for Proposals issued to every potential developer required that the Project comply with the CRA’s affordable housing policies. In keeping with the CRA’s policies in effect in October 2003, the Joint Powers Authority required that 20% of all housing units must be affordable. A minimum of half of these units (10% of all housing units) must be restricted to moderate-income households (not more than 80% of Area Median Income [“AMI”]), and the other half (10% of all housing units) to low-income households (not more than 50% of AMI). The balance of the units may be made available at market rates. The income and rent restrictions will be recorded and remain in effect for a minimum of 45 years for ownership units and 55 years for rental units from the date of initial occupancy of the Project and shall be provided, maintained and made available to residents in a manner consistent with California Redevelopment Law.

As proposed by The Related Companies, the selected Developer, the total project will include up to 532 affordable units for all phases, assuming maximum residential buildout (Phase I – 100 units; Phase II – 170 units; Phase III – 262 units). For Phase I, the 100 affordable units will be rental housing, with 35% at Extremely Low Income (35% AMI) and 65% at Very Low Income (50% AMI or below) levels.

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The Related Companies, as Developer, has agreed to capitalize $750,000 to $1,500,000 for a revolving loan program to fund non-profits over a ten-year period to develop permanent supportive housing within a five-mile radius of the Project site. As currently proposed, the Developer will provide $1,500,000 until the initial three predevelopment loans have been repaid, after which the Developer may reduce the total amount available to $750,000 for the balance of ten years. Details are in the process of being worked out between the CRA, Developer, and community groups regarding the parameters and details of the program.

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Park and open space improvements will be funded by the Developer’s pre-paid ground rent for Phase I and by tax increment funding generated by the project. All of these spaces will be available for the public to use. The Grand Avenue project will include the following significant open space components:

The transformation of the existing County Mall into a new 16 acre park that will connect the Music Center at the top of Bunker Hill to City Hall at the bottom of the hill. The park will be activated and designed to host a range of activities including cultural and entertainment programs, civic and community events as well as everyday recreational amenities. The park will be programmed, maintained and secured by a park manager. The initial park budget is comprised of $50 million pre-paid ground rents from the Developer and an additional $970,000 from Proposition 40 funds, for a total budget of $50,970,000.
The completion of streetscape improvements along Grand Avenue and adjacent to the development parcels will create an enhanced pedestrian environment and a strong visual identity that links the various cultural and civic institutions in the area. The streetscape improvements will include the addition of trees, landscaping, paving systems, benches, trash receptacles, street graphics and distinct street and walkway lighting. $2 million in tax increment funds from the CRA have been targeted to partially fund these improvements.
Outdoor public spaces will be created throughout the development that will be integrated with the streetscape improvements. These spaces will include landscaped and comfortable plazas, seating areas, public art, water features and a collection of gathering places. The Implementation Plan calls for a pedestrian bridge over Olive Street to connect the first and third phases of the project. This bridge, and the pedestrian spaces leading to it, will facilitate access to the project and Grand Avenue from Hill Street and the Metro subway station that exists at First and Hill Streets. $12 million have been targeted to fund these improvements.

The development of the Grand Avenue project will have an enormous positive economic impact on the Los Angeles economy. Based on the Development Team’s Implementation Plan, a detailed study was completed by the Los Angeles Economic Development Corporation (LAEDC) to evaluate the economic activity generated by the new uses in the development as well as the significant one-time economic benefit associated with the construction of the project.

A total of $615 million in annual business revenues is expected to result from the direct and indirect economic activity associated with the residential, commercial, entertainment, and hotel uses in the project. Approximately 5,900 permanent jobs (both on- and off-site) will be created as a direct result of the development of the project. These new jobholders will earn $166 million in pre-tax wages.

Governments at all levels will gain revenues totaling $109.5 million annually in new tax revenues generated by the project. While the bulk of this total will be collected by the federal and state governments in the form of personal income tax, the County and local cities (including schools and special districts) will annually collect approximately $5.7 million and $8.2 million respectively from sales, business, parking, hotel, and utility taxes.

The construction cost for the entire development proposal, including streetscape improvements and the new park, is estimated to cost approximately $2.05 billion and will yield both significant economic impacts and government revenues. Construction will take several years and during that period the project will generate employment equivalent to more than 29,000 full-time jobs, both on and off-site. These employees will earn approximately $1.1 billion in pre-tax earnings. [Reminder: all figures are quoted in 2006 dollars.]

In addition, construction activities, and increased economic activity associated with construction, will yield $711 million in tax revenues to all levels of government. Although the federal government will be the prime beneficiary, collecting $551 million, California will receive $131 million and the County (including the Metropolitan Transportation Authority) will receive $11 million. More than $19 million will be received by local cities, the bulk of which will go to the City of Los Angeles from sales and business tax revenues and construction permits and fees.

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Affordable Housing

Revolving Loan Program

Park and Open Space

Jobs and Tax Revenues

Hiring and Jobs Programs

Prevailing Wage Requirements

Living Wage and Service Worker Retention Policy

Public Art Policy

Sustainable Development

Preference for Displacees

Affirmative Marketing Requirements

Management and Marketing Plan

Equal Opportunity

Minority, Women, and Other Business Enterprises

Equal Benefits Policy

Contractor Responsibility Policy

Nondiscrimination

Using the CRA’s approved Local Hiring requirements for projects in the City Center Redevelopment Project Area as a model, Local Hiring requirements (one for construction and one for permanent jobs) were drafted for inclusion in the Grand Avenue Project Disposition and Development Agreement. These Local Hiring requirements include a 30% local hiring goal, of which one-third (1/3) of this requirement (or 10%) is an at-risk hiring goal, for construction employers and a 30% local low-income hiring goal for permanent employers, both of which assign one-third (1/3) of the 30% requirement as the at-risk hiring goal (10% of total workforce).

The following goals of the Hiring Program were identified:

To provide local residents, including low-income individuals and those with multiple barriers to employment, the opportunity to obtain both construction and permanent jobs directly generated by the Grand Avenue Project
To establish relationships and to build a network of job training, recruitment, and outreach service providers, including the City’s and County’s Worksource Centers
To facilitate the job placement of targeted residents through cooperation with the developer and employers

To maximize opportunities for local workers to gain employment at the Project, the Developer is voluntarily contributing $500,000 to support training that will help ensure that local workers have the skills needed to get hired for the jobs that are going to be created.

The Developer has stated that it is their intent to use a Project Labor Agreement (PLA) for the Grand Avenue Project, which will secure the cooperation of the trade unions and further facilitate the placement of local low-income residents into construction jobs and trade apprenticeships. All construction jobs on the site will be paid at Prevailing or Union Wages.

Additionally, the Developer has committed to “First Source” hiring procedures by which employers within the project would be required to give local workers early notice on job availability and first opportunity to apply for permanent jobs related to the Grand Avenue Project.

To provide specialized job training targeting local and at-risk populations, the CRA intends to commit its share of Project-related incentive rents and other available funds in the aggregate amount of $500,000, plus up to $850,000 on a dollar-for-dollar matching basis for any other funding source, to job training programs for the Project.

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The Developer must abide by the CRA/LA’s Prevailing Wage and Equal Opportunity standards. Effective January 1, 2002, pursuant to SB 975, the Developer shall pay or cause to be paid to all workers employed in connection with the development of the parcels, not less than the prevailing rates of wages, as provided in the statutes applicable to the CRA/LA’s public works contracts.

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Unless approved for an exemption, contractors under contract primarily for the furnishing of services to or for the Authority and that involve an expenditure or receipt in excess of $25,000 and a contract term of at least three (3) months, lessees and licensees of Authority property, and certain recipients of financial assistance, shall comply with the provisions of the CRA/LA’s Living Wage Policy (LWP) and Service Worker Retention Policy (SWRP).

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The Project is subject to the CRA/LA's Public Art Policy. The Policy requires the Developer to dedicate one percent (1%) of the total Project “development costs” to an Art Plan. “Development costs” exclude the cost of land, off-site improvements and the cost of low and moderate-income housing units. The Policy provides three options for an Art Plan:

(a)	On-site artwork utilizing a maximum of 60% of the art budget, with a minimum of 40% contributed to the Downtown Cultural Trust Fund;
(b)	Up to 100% of the art budget allocated to the cost of developing a permanent cultural facility;
(c)	Payment of the full art budget (100%) to the Downtown Cultural Trust Fund.

Since the art budget for the Project is estimated to be sizable, the Development Team is strongly encouraged to consider the option of a cultural facility utilizing all or a portion of the total art budget. To determine a cultural activity that might best be added to the mix of existing cultural institutions in the Grand Avenue corridor, a study of needs and feasibility would be necessary.

Should there be artwork planned for the Project, the Development Team must commit to bringing an artist or artists into the design process early. The Policy requires that artists be selected before schematic design begins and preferably before concept development so that artists and designers can work collaboratively toward a totally integrated design. Selection of artists should only be made following a review of a diverse pool of qualified artists. Since this Project is so large and prominent, the Development Team will be encouraged to issue an open call for artists.

The CRA/LA’s Public Art Policy may be downloaded from the CRA's web page at: http://www.crala.net/ (select “programs”and then “art program”).

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The Project must incorporate “sustainable” building methodologies and technologies. Sustainable technologies and methodologies could include, but are not limited to, the conservation of water through the use of water saving fixtures, drought-resistant plants to reduce the amount of watering, installation of double pane windows, installation of 1.5 gallon toilets in each dwelling unit, insulation on hot water piping at exposed areas, and the use of forced heating systems as established by the CA State Title 24 energy efficiency guidelines.

The Developer will strive towards certifying the Project in the Leadership in Energy and Environmental Design (LEED) Green Building Rating System, a nationally accepted benchmark for the design, construction and operation of high performance green buildings.

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The Developer must give first priority for leasing units (if the proposed Project is a rental development) to any displacees currently being relocated from other CRA/LA Redevelopment Project Areas. Selection of other occupants must follow a Management and Marketing Plan approved by the Authority. Prospective tenants referred by the CRA/LA may be screened by the Project’s manager and be required to meet the Project’s tenant selection criteria, as established by the Developer in the Management and Marketing Plan.

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In advertising for residential tenants (or purchasers for a for-sale project), the Developer must promote equal housing choice for all prospective tenants or buyers regardless of race, color, religion, sex, creed or national origin. Within the above Guidelines, preference must be given to qualified CRA/LA displacees. Prior to occupancy, the Developer will be required to submit an Affirmative Housing Marketing Plan for Agency approval.

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Prior to final approval of a development, the Developer will be required to submit to the Authority a Management and Marketing Plan for the Project. The Plan should emphasize expertise and experience with the management of all components of the proposed development.

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It is the policy of the Authority to provide minority, women and other business enterprises (M/W/OBE’s) with the opportunity to compete for and participate in the performance of all Authority contracts. Any firm awarded a contract will be required to use best efforts to recruit M/W/OBE’s and enhance employment opportunities for minorities, women and others for subcontract opportunities created by any contract.

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The Developer will be required to prepare an Action Plan to recruit minority and female contractors and subcontractors. The goal for M/W/OBE utilization is 25%.

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The Developer is subject to the applicable provisions of the CRA/LA’s Equal Benefits Policy (EBP). The requirements of the EBP are available on the CRA/LA’s website at http://www.crala.net/.

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The Developer is subject to the provisions of the CRA/LA’s Contractor Responsibility Policy (CRP). The requirements of the CRP are available on the CRA/LA’s website at http://www.crala.net/.

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The Developer shall be required to covenant by and for itself and its successors and assigns that there shall be no discrimination against or segregation of a person or of a group of persons on account of race, color, religion, creed, sex, sexual orientation, marital status, ancestry or national origin in the construction, sale, lease, sublease, transfer, use, occupancy, tenure or enjoyment of the Development Parcels or the Project, nor shall the Developer or any person claiming under or through the Developer establish or permit any such practice or practices of discrimination or segregation with reference to the selection, location, number, use or occupancy of tenants, lessees, subtenants, sublessees, vendees or employees in the Development Parcels or the Project.

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