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What’s Wrong With The Montage Project?

 Gerald summarizes his concerns regarding the Montage project.

 The City Council has scheduled its hearings on the Montage project for July 12th at 6:30 p.m., and has also set aside time to continue this on July 13th, 14th and 15th as necessary.  All of these hearings will be broadcast on cable Channel 10.

 If you want more traffic and a larger City budget deficit, you should stay home.  If you want to reward secrecy, cronyism, greed and incompetence, then you should stay home. 

 This will be my twelfth column relating to the Montage project.  There is no way to cover all of the issues in depth in a single column.  This week I will summarize my key concerns, but anyone who wants a fuller analysis can find my prior Montage columns at www.geraldlunn.com.  You can find additional arguments against the project at www.protectbh.com

 To encourage a more informed debate, this week I will summarize my concerns about this project.  But first, I want to provide some context as to my general perspective about development.

 In the abstract, I favor development that is consistent with the City’s general plan and zoning rules, and that does not involve demolishing historic structures.  I also believe that there are situations where it makes sense to make exceptions, but only after careful, unbiased analysis of the potential impacts on the quality of life of the residents.

 In the abstract, I am not opposed to allowing the Montage developer to get some concessions, if the economic analysis shows that this is necessary for the project to succeed and there is an independent analysis that is credible with respect to the impacts on quality of life. 

 However, I have opposed the specific project that has been presented, because the City and the developer have presented a one-sided analysis that is riddled with obvious errors (e.g. that there will be insignificant effects on traffic) and have  concealed their economic analysis from the public.  I have also been deeply concerned about the City Council’s decision to commit to this project without public debate then slant every aspect of the process in the direction of approving it with a minimum of genuine debate.

 In my opinion, this project could still be salvaged, but this would require lifting the veil of secrecy and re-negotiating a deal that was made with zero public input.  If the City Council and the developer were willing to move from the darkness of the back room into the light of public discussion and genuine debate, it might be possible to make changes that would make the project a lot better.  However, for the reasons stated below, the current version of the project is clearly unacceptable.

 1.  Traffic.  The City’s hand-picked traffic consultant has opined that traffic won’t be significantly affected by 228 new hotel rooms, banquet facilities for at least 571 people, 37 new luxury condos, a separate retail building, two new restaurants, a huge spa facility and 1,000 to 1,500 parking spaces.

 There are strong reasons conclude that the City’s traffic study was skewed to reach the desired conclusion. 

 First, common sense suggests that a project of this magnitude will create significant traffic.  Adding such a huge development to an area that is already gridlocked most of the time will clearly make a bad situation worse, and we won’t know how much worse unless someone puts together an unbiased traffic study. 

 Second, the City departed from its usual practice of requiring an independent environmental impact report (“EIR) and instead handled this itself, supposedly to save money.  However, this explanation is not believable, considering that the costs of an independent EIR are normally paid by the developer. 

Third, it took a lawsuit to force the City to release the first draft of its traffic study, which strongly suggests that the authors of the traffic study were improperly pressured to change their analysis to come to the desired conclusion.

 Fourth, the Beverly Hills Residential-Business Alliance has engaged its own traffic expert who has produce a 28 page report that documents numerous defects in the City’s traffic study, including the fact that the City’s expert failed to analyze mid-day and evening traffic on weekdays, or evening traffic on Saturday nights.  The Alliance’s expert has also pointed out that the assumptions of the City’s expert were faulty in numerous respects, all of which conveniently skewed the analysis towards downplaying the potential increase in traffic.  

Fifth, the developer has projected that it will take 36 months to build the project, but has asked for up to 60 months.  Try to imagine the amount of trucks and other large vehicles that will be clogging the center of our City during this construction phase.  This is a huge project, involving the removal of over 10,000 truckloads of dirt and debris, but the City’s EIR glosses over any adverse effects on our quality of life.  Again, the City’s EIR seems skewed to reach the desired conclusion. 

2.  Financial Responsibility.  The proponents of the project are trying to make us believe that the City will reap huge revenues from its investment of $36.75 million of cash, over $12.75 million of City land and zoning concessions worth at least $15.5 million.  However, if you look at the fine print, you will see that over a period of eight years, all that is guaranteed to the City from its investment is $1,092,000, which will cover only part of the interest on the $36,750,000 that the City will borrow to fund the project.

 As established in previous columns, it appears that the City has made the type of deal that Ralph Kramden would get from negotiating with Donald Trump.  I believe that it was not a good idea to put then Councilmembers Mark Egerman and Linda Briskman in charge of negotiating a $50+ million deal with a sophisticated developer.  First, this was like having paramedics perform open heart surgery – they lack the training and experience to do a good job.  Second, we did not elect them to make real estate deals – we elected them to make policy and to select and supervise people who know what they are doing.  Third, there is no way that they can now objectively evaluate and vote on a deal that they created – the developer is basically guaranteed their two votes, because they are not going to vote against a deal that they personally designed.

 In an article that appeared in the Weekly last week, former Mayors Richard Stone and Ed Brown both argued that the City had made a bad business deal, and Mr. Brown made some specific suggestions for restructuring the deal to be fair to the City.  I believe that they are both correct.

 3.  Fairness and the Slippery Slope to Montageville.  The City Council’s partnership with the Montage developer to allow a nine-story structure on land zoned for three stories is unfair to those who have followed the rules in the past.   Why should one property owner be allowed exceed the height limit by 69 feet when others have been able to live and prosper without any height concessions?  Also, this project will set a bad precedent.  What’s the City going to say when other property owners (rightfully) demand similar concessions? 

 Also, it’s scary for the City to enter into a perpetual partnership with a private business.  What’s going to happen five or 10 years from now when the Montage says that it needs special consideration in order to stay in business?  Will the City be able to afford to say no?  Or will the City Council have “no choice” but to enter into another joint venture to bail out the hotel?

 Also, as Richard Stone argued in a recent letter to the Weekly, the City should not reward a property owner who argues for concessions to eliminate a blight that resulted from the owner’s decision to neglect the property. 

 4.  Discouraging Political Corruption.  The City Council relied on loopholes in the law to commit to the Montage project without any public debate about the merits of the project or of any alternative project.  Then, for over two years the City Council and the developer worked in secret to negotiate a memorandum of understanding and engineer a one-sided EIR.  Then the City Council dropped this on the Planning Commission, while forbidding the Planning Commission from considering the financial aspects of the project.

 I am willing to believe that a majority of the City Council believes that the City is going to eventually recoup its investment then reap a substantial revenue flow for many years.  I also believe that they decided to keep this project secret until the last possible minute in order to push it through before the opponents of growth can stop it.

 

In my opinion, this has been the City Council’s biggest mistake.  If the City Council had decided to make its deal with the Montage people at a public meeting and share the financial information with the public, then the people would have had ample time to make an informed judgment and try to influence the process so that their concerns were addressed.  Instead, the City Council is presenting a fait accompli, along with a handful of alternatives that do not address the concerns of the homeowners associations and many residents. 

To boil this down to its essence, a majority of the City Council has decided that they know what’s best for us, and that it’s OK to take a few shortcuts around the democratic process in order to get the project going as soon as possible, with as little public input as possible.  Previous attempts to develop this property in 1995 (as a Bloomingdale’s) and in 1999 (as the Beverly Lane Theatre project) foundered after attracting substantial opposition.  This time, the City Council has decided to stack the deck in favor of a project that will have more negative impact than the Bloomingdale’s and perhaps as much as the movie theatres.

 In my opinion, this is a strategy built upon an elitist perspective that the homeowner’s associations are obstacles to progress, as well as a decision to spend hundreds of thousands of dollars of taxpayer funds to “rig” the process with a one-sided EIR and pay for an army of overpriced lawyers to maintain as much secrecy as possible for as long as possible. 

 Fortunately, the Superior Court ruled in favor of the Alliance last week and ordered the City to produce 56 of the 63 documents that the City Council wanted to keep secret.  However, we may never know what’s in the other 7 documents.

 If the City Council and the Montage developer were sincere in their positions that they are willing to provide the public with all relevant information, they would BOTH put all of their analysis, reports and communications on the table, so that the public would have access to the same information that they have.  If they did this, we could then judge for ourselves, and many people might change their minds based on having all the information.  However, so far, they have merely pretended to be open, while suppressing all attempts to release the key information that would help people make an informed decision.

 Perhaps the secret studies will support the City’s theory that, eventually, this deal will produce a lot of revenue that will make our lives better.  Perhaps the secret studies contain erroneous assumptions or major analytical mistakes that would be exposed if they were made public.  In either event, the City Council is supposed to be our elected representatives, not our privileged rulers, and I think that it’s critical that people speak out against this behavior. 

 The City Council’s secret decision-making process and deliberate decision to limit public access to information provide ample grounds to smell corruption.  However, there are additional reasons to believe that the process has been “rigged.”

 First, the Montage developer hired a political consultant who is married to the City Treasurer and who is owed significant political debts by Councilmembers Steve Webb and Linda Briskman.  When he was on the Planning Commission, Councilmember Webb had the integrity (under pressure to do so at a time that he was running as a candidate the City Council) to recuse himself based on his relationship with such consultant.  However, now that Councilmember Webb has won his seat on the City Council, such enforced integrity seems to have vanished. 

Second, the official guardian of our City funds, City Treasurer Frank Fenton, has taken a “see no evil” approach to commenting on the financial aspects of the project, which is especially disturbing in light of the fact that his wife has been paid to promote the project. 

 Third, Mayor Mark Egerman and City Manager Rod Wood have openly shilled for the project, leaving little doubt that, for them, next week’s hearings will be an annoying formality on the path to a decision that they have already made.

 If the City and the developer would disclose all of their secret financial analyses and their secret communications, I would feel a lot better about the project.  However, the City Council has taken the position that its “common interest” with the developer is superior to its common interest with the people of Beverly Hills, and I believe that this position speaks volumes about the attitude of our “rulers” towards the homeowners associations and average citizens who only want to understand the ramifications of the project on the City budget and on our quality of life.

 5.  The Project is Clearly Out of Scale.   According to the website for the Montage hotel in Laguna Beach, such hotel has 262 rooms located on 30 acres.  The Montage hotel in Beverly Hills is expected to include 228 rooms on approximately 2.5 acres.  This works out to roughly 9 rooms per acre in Laguna versus roughly 91 rooms per acre in Beverly Hills.  Clearly, this dog is too large for the yard. 

Whether or not you agree or disagree with my analysis, I urge you to take the time to attend the City Council meeting on July 12th or 13th or, at the very least, submit written comments by faxing such comments to the City Manager at 274-3267

You can also fax your comments to the City Council at 275-8159.  You can also leave a message for the Mayor and the other Councilmembers by calling 285-1013, or speak with the City Manager by calling 285-1012.  Also, if you go to the City’s website at www.beverlyhills.org, you can find e-mail addresses for all of these people, as well as read the official version of the Montage project.  

Don’t wait until Wilshire Boulevard is clogged by hundreds of construction vehicles and Olympic and Sunset are made even more impassable by the overflow of people avoiding Wilshire.  Don’t wait until the City commits over $50 million of cash and property on a bad economic deal.  This is a huge project, and whether you favor or oppose it, now is the time for open debate, whether the City Council is willing to listen or not.

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