Developer May Get Big Refund : Council Tentatively OKs $403,000 for Contributor

The Los Angeles City Council has tentatively approved a measure that would refund more than $400,000 in city funds to a real estate developer who is also a generous political contributor.

An ordinance, initially approved last week and amended on Friday, would return $403,000 in so-called “Quimby” fees to developer Jona Goldrich, according to city figures. A longtime financial supporter of Mayor Tom Bradley, Goldrich has also donated money to various council members for years.

The fees, collected by the city since 1970, are used to develop parks and recreational facilities. More than $26 million has been paid by developers since the Quimby fund began, according to figures from the city Department of Recreation and Parks. Goldrich’s money was paid earlier this year and placed into a yearlong maturing account, recreation and parks planning officer Alonzo Carmichael said.

Carmichael said the ordinance, which does not mention Goldrich by name, is “a privilege bill for this one developer. . . . Why should he not be charged?”

The ordinance, scheduled for a final vote next week, was also ridiculed by Councilman Ernani Bernardi in an angry exchange Friday with fellow Councilman John Ferraro, who helped push the ordinance through.

“How obvious and how blatant can it be, why it is being done?” Bernardi asked.

He noted that Goldrich’s development would be the first for-profit complex ever exempted from paying Quimby fees, which are named after former Assemblyman John P. Quimby, who conceived the program. However, he acknowledged that other developers could benefit in the future.

But Ferraro and Goldrich, in separate interviews, said heatedly that the refund is meant to lower construction costs--and thus rents--on Goldrich’s 212-unit Museum Terrace apartment complex in the mid-Wilshire area. Goldrich has said rents will range from $700 to $1,200 a month.

Under the amendment passed Friday, Goldrich’s refund hinges on an agreement to provide the city with “additional consideration.” Goldrich said that because of that agreement, he will drop rents in his complex by about $12 per unit each month for 12 years, if he is granted a refund.

“I don’t benefit from it,” he said. “I have to pass on all the savings.”

The Museum Terrace complex broke ground last June at 6th Street and Curson Avenue and was hailed then as the first new apartment complex to be built in the Miracle Mile area in several decades.

Goldrich’s company--Goldrich and Kest Industries--received financial backing for the project with more than $20 million in tax-free bonds issued by the city of Los Angeles. Twenty percent of the project will be set aside for low- and moderate-income residents.

Goldrich is president and chief executive officer of the Culver City-based firm, which has constructed more than 27,000 housing units in the two decades since he became a developer.

Bernardi and recreation and parks planning officer Carmichael said representatives of Goldrich first tried to gain an exemption from paying the Quimby fees through administrative channels, but were turned down by the recreation and parks board and the board of zoning appeals.

Then, on Oct. 1, the city’s Grants, Housing and Community Development Committee considered two ordinances that would have led to the refunding of part or all of the Quimby fees paid by developers such as Goldrich, who financed their projects with city bonds and have promised to make 20% of the units low- or moderate-income housing.

One draft would have refunded the proportion of Quimby fees for the low- and moderate-income units, on the argument that providing those units below market value was a financial hardship for the builder.

The second, eventually sent to the council and tentatively approved there a week ago, would have refunded the full Quimby fee if the builder lowered rents on all units by an amount equal to the fee. The ordinance retroactively covered developers who paid their Quimby fees from Feb. 19 to the present. Ten council members approved the ordinance; only Bernardi objected.

Objection Voiced

But on Friday, Councilwoman Joy Picus objected to the tentative ordinance, saying that her district could lose up to $400,000 in park fees if developers there appealed for refunds. The council then approved her amendment, which gave the council the power to refund fees if the developer provides “additional consideration,” which could include dedication of land, payment of another fee or a lowering of rents.

But Picus admitted that the “additional consideration” clause was vague. No time limit is given for negotiations over which considerations will replace the fee, and there is no device for monitoring whether developers keep their word, she said.

When asked who would oversee the agreements, she said: “Good question. I don’t know. I think a combination of the council members, the city attorney and (the) community development (department.) They could all lose track or all keep track.”

Proof at Issue

Bernardi said the council--except for the developer’s word--will have no proof the rental fees are actually being cut to make up for the refunds.

“He could say he’s going to charge $1,100 or $1,200 for one that he might be only able to rent for $1,050 or $1,100,” Bernardi said.

Ferraro conceded that point.

Goldrich, who called the ordinance a “joint effort” between the city and himself, said he has compiled a rent schedule for each of the apartments and will systematically knock about $12 off all of the rents to account for the refund.