The joint City-County board overseeing the Grand Avenue project put Related Cos. on notice that their patience has worn thin. Monday afternoon the board approved a penalty schedule which would impose a $250,000 fee per month if the project’s groundbreaking is delayed beyond February 15, 2009. Nelson Rising, the newly appointed CEO of Maguire Properties, presided over the City-County committee negotiating with Related. Clearly he is a sympathetic voice on the commission: “The credit markets make it impossible to obtain construction financing in the amount we defined” said Mr. Rising according to The Los Angeles Times.
“Should the project be delayed beyond February, the developer would pay $250,000 a month to the Los Angeles Grand Avenue Authority for a maximum of two years, as part of the deal approved today. If Grand Avenue has not started construction by February 2011, the authority has the right to renegotiate the deal.”
As of July 28 at 9PM PST, Real Estate Flux predicts a 60.3% chance that the project will go forward by February. Check current market conditions here.
July 30th, 2008 at 4:28 pm
It is entirely unfair of the Los Angeles Grand Avenue Authority to impose such an astronimical fee on a developer simply because they cannot get financing in place to do a groundbreaking.
Banks are making it difficult to secure financing, especially when it comes to construction loans. To penalize a developer because they can’t get funding is outrageous.
July 30th, 2008 at 4:32 pm
I disagree. They should never have taken on the project if they couldn’t secure financing. Developers need to be in the habit of making sure financing is in place before they tackle a project.
July 30th, 2008 at 4:45 pm
That never happens. You can’t secure financing on a phantom project. The project needs to in place, your commitment solid and then you can get financing. Basically, you have to marry the project before you can begin to find out how to make it work.