Silence in Sacramento Upsets VICA By SLAV KANDYBA Staff Reporter Letters and calls to Valley lawmakers from the Valley Industry and Commerce Association about two hospital-related laws that the organization wants postponed have gone unheeded causing frustration among officials of the local organization. “I don’t think they have any answers and that’s why they’re not calling,” said Bonny Herman, VICA president and CEO, who sent more than a dozen letters to lawmakers who represent the Valley, as well as Fabian N & #250; & #324;ez, the Speaker of the State Assembly. The two mandates VICA wants on hold or repealed are specific nurse-patient ratios for hospitals and the requirements that hospitals be retrofitted to meet new and more rigorous seismic standards. The hospitals, Herman said, are having trouble complying because the mandates are costly. “All these mandates are costing the hospitals a lot and lawmakers either don’t care or they are unsympathetic,” Herman said. Rick Miller, a co-chair of the health committee at VICA, spoke with Assemblyman Tony Strickland, Herman said, but only after contacting the legislator when VICA did not receive an initial response. Strickland, a Democrat, opposed the nurse-patient ratio mandate and his spokesperson explained letters and calls were unreturned because of timing. “We were already very actively involved with filing a sizable package of bills,” said Keith Jajko, Strickland’s spokesperson. It was uncertain why Nunez’s office didn’t contact VICA. “The speaker has been supportive of the nurse-patient ratios and he would not be supportive of blocking these,” Velasquez said. “Our office is aware of the concerns.” VICA has sent a letter to Gov. Schwarzenegger and is awaiting a reply, Herman added.

Pacoima Site of Price Pfister Plant Put Up for Sale By SHELLY GARCIA Senior Reporter Black & Decker Corp. has put the former Price Pfister plant in Pacoima up for sale and is currently entertaining offers for the property. Details of the negotiations have not been disclosed, but city officials say just about any redevelopment is likely to benefit the community, which is lacking for services. “We’re not locked into any one retail, industrial or commercial content,” said David Gershwin, director of communications to City Councilman Alex Padilla whose district includes the Price Pfister location. “We’d like to see it be something that serves the community. We’d like to see whatever businesses locate be a partner by doing a good deal of local hiring and understanding Pacoima is a special community.” Pacoima, one of the poorest communities in the San Fernando Valley, was particularly hard hit when the Price Pfister operation moved most of its manufacturing to Mexico. At its height, the faucet and hardware maker had employed 1,000 workers at the plant at Paxton Street, south of the 118 Freeway at San Fernando Road. Many of the local residents of Pacoima had worked at the foundry, which opened in 1960, for decades, but the antiquated plant was ill equipped to conform to the new environmental regulations that came into effect in California during the mid-1990s. Black & Decker, which acquired Price Pfister in 1989, began a reorganization and shifted many of the jobs to a new plant the company built in Mexicali, Mexico. But administrative jobs continued to be located at the site until last year. The location has been deemed a brownfield site, the result of the manufacturing activities that once took place there. And $1.4 million in grants and $7.4 million in low interest loans have been allocated for the cleanup of the 24-acre property, a task that is already underway. “They are in cleanup mode,” said Dick D’Amico, project manager at the Community Redevelopment Agency of Los Angeles. “We’re told it might take until the end of the year to get it done.” The area, part of an earthquake disaster district, is not a redevelopment district, which means the CRA has no eminent domain authority on the site, but the agency did spearhead the application to the Department of Housing and Urban Development for the cleanup funding. Earlier this year, an Orange County developer, along with Lowe’s Companies Inc., began negotiating with Black & Decker for the site. The developer, Rotkin Real Estate Group in Newport Beach, proposed a power center with a Lowe’s Home Improvement Warehouse and a grocery store. But it is not known whether the company is still in discussions with Black & Decker on the site. “It’s Black & Decker’s call,” said Gershwin. “We are as anxious as anybody to move forward. We’re hoping a deal can be worked out as soon as possible.” Officials at Black & Decker confirmed that they are in discussions with potential buyers, but declined to elaborate on those talks. About one-third of Pacoima’s population, some 81,000 people, falls below the federal poverty line, according to census figures.

Director of Local Offices of AeA Leaves Position By SLAV KANDYBA Staff Reporter The local office of the American Electronics Association is in a state of “flux” after the sudden departure of its executive director. Gillian Henchi, director of membership development at the Los Angeles-Santa Barbara Council of the AeA in Woodland Hills, said Dave Wood was no longer with the organization in a phone call to the Business Journal on Feb. 18. Wood was unavailable for comment and members of AeA’s local executive committee refused to give details about his departure but apparently it has been a struggle to pull together the busy executives who make up the Council’s executive committee. “We barely had an executive committee for a while,” said Henchi, who was juggling tasks due to Wood’s departure. “We just need new leadership.” Executives on the committee and a senior representative with AeA pointed to changing trends in the high-tech industry when questioned about Wood. “We will be moving very quickly to find a new executive director,” said Mark Albertson, an AeA senior vice president for the western region. AeA is the nation’s largest high-tech trade group, with representation in 15 markets nationwide and offices in Belgium and China. It represents more than 3,000 companies with some 1.8 million employees. Tech companies of varying sizes, as well as venture capitalists and others make up the membership of the Los Angeles/Santa Barbara Council, which serves Southern California from Orange County to Ventura County and east to the California/Nevada border. Albertson declined to speak about Wood’s departure in detail, but did say that it was a “normal course” to see turnover in the organization. As far as Wood’s replacement, no candidates were known, but Albertson said the next director will likely be a new face. “I fully believe this will be an external hire, and don’t know if there will be internal candidates,” Albertson said. Several new members recently joined the executive committee, which now has nine members, including two new additions and four departures, excluding Wood. New to the committee are Bruce Brown, CEO of Thousand Oaks-based Strix Systems, and Alan Spatz, partner at Troy & Gould of Los Angeles. Stepping down in early February were E. Michael Thoben, CEO of Interlink Electronics, Ronald Hood, president of WEMS Electronics, Charles Girsky, executive vice president of Jaco Electronics and Andre de Fusco, CEO of Sabeus Photonics. Albertson, who heads up AeA’s West Coast headquarters office in Santa Clara, and will select a new executive director for the local council, said the high-tech industry in the Valley and the rest of Southern California has changed over the past several years. Software, semiconductor and wireless industries have come on strong, displacing defense industry contractors as central drivers in the Valley’s high-tech scene. Across the 16 other AeA markets nationally, more than 30 percent of membership is made up of software companies, a growing trend, Albertson said. Strix’s Brown declined to comment about Wood’s departure, but said the Valley-area tech industry’s “composition has changed a lot, as companies that I have been involved in have had very little defense industry connection.” Further, Brown said his invitation to join the Council, which came from Wood, was likely because he is involved with Wi-Fi, a cutting-edge technology that enables connecting computers and other communications devices without wires. Henchi said the office was in a state of “flux” with Wood’s departure. Other members of the local Council could either not be reached after several attempts to contact them by the Business Journal or declined to comment about the situation.

Setting Sights Closer to Home By SHELLY GARCIA Senior Reporter Scarcity of land and a sea change in the attitudes of community officials and often, residents, is dramatically affecting the development environment for real estate. Development is out, redevelopment is in. And after years of seeking sites and projects in the suburbs, all eyes have turned back to the Valley floor. Many of the most noteworthy projects highlighted in the Business Journal’s special report on real estate this year are occurring in urban cores, and they are expected to have a significant effect on those neighborhoods. Not only does the emphasis on redevelopment in older neighborhoods mean a different set of opportunities, it is also creating a different set of challenges than those developers once faced. “Ten years ago the word most people used was NIMBY,” said Cliff Goldstein, a partner at J.H. Snyder Co., who is building NoHo Commons, a 16-acre mixed-use project in North Hollywood. “Today, the word is BIMBY.” When developers sought to build in suburban communities they faced a hostile neighborhood of homeowners whose battle cry was, “Not in my backyard.” But as land has grown more scarce, and these same developers target redevelopment sites in older neighborhoods, they are more likely to face a community anxious to see empty storefronts and rundown buildings rehabilitated and the kinds of retailers and restaurants found in more upscale neighborhoods. Developers say the message they are more likely to hear in these communities is “Build in my backyard.” That newfound receptivity doesn’t necessarily make the process any easier, it just makes it different, developers say. Battling NIMBYs required finding out what they objected to and trying to work around it. Testing the waters Developing in BIMBY neighborhoods can often mean getting a wide variety of input, beginning as early as possible into the process to get a sense of what kind of development will be successful. “What has changed is people are more selective in what they want in their area,” said Ira Handelman, a land use, government and community relations specialist who operates Handelman Consulting Inc. “You’ve got to come in with what makes sense to them.” In the Valley, as in other parts of Los Angeles, neighborhoods can take on a particular personality based on an ethnic group, and developers can often benefit by being sensitive to those tastes and preferences when, for example, planning a retail project, experts said. “Why are some centers successful?” said Handelman. “You have to have the right mix of stores. The successful centers bring stores that people will go to.” The emergence of neighborhood councils has necessitated another layer of communication for developers but it has also provided an opportunity to get wider input before a project gets too far along. The shift to infill development has meant other changes in the way developers operate. “Infill sites are more predominant,” said Scott Sheridan, a principal with Sylmar-based Sheridan Ebbert Co. “That has opened a Pandora’s box of environmental issues and what solutions are available to allow you to recycle a piece of property.” Sheridan said that 10 years ago it was virtually impossible to get financing for an infill site that had environmental issues, but the industry has grown far more sophisticated, and the methods available now to clean up many of these sites has loosened the purse strings of financiers. “The good news is, although it is complicated and time-consuming, your marketing risks are less,” Sheridan said. Infill development Development on a property far from the center of the city can be risky if companies are reluctant to move outside the radius of their employees’ homes. But a redevelopment on an infill site gives employers the opportunity of moving into a new, updated facility without the risk of losing their employee base. Redevelopment involving the residential sector may not come with the traditional environmental problems, but it does generate its own set of issues related to the environment, namely traffic. Developers say that concern over increased traffic has been the single most dominant issue they have faced as they try to move their projects through the pipeline. The other one is zoning. Turning a commercial property into a residential development or simply building a residential project on commercially zoned land requires navigating a time consuming bureaucracy, as DT Ventures learned when it filed a change of use permit to transform the former Adolf’s meat tenderizer factory into artists lofts. The developers of the first mixed-use project on Ventura Boulevard fought for two-and a-half years to get the zoning changes and permits they needed to construct an apartment complex with retail shops in Encino. But developers say that despite the time involved, city officials have become far more receptive to these kinds of projects because of the housing crisis. And if the red tape is delaying developers, it isn’t stopping them. At a recent conference presented by California State University Northridge, officials from the Community Redevelopment Agency of the city of Los Angeles said Panorama City is attracting considerable redevelopment interest. NoHo action And North Hollywood has become a center of redevelopment, with more than four different projects and hundreds of thousands of square feet underway in both commercial and residential projects. Retail tenants, who once shunned many of these areas, are also showing renewed interest, an encouraging sign to developers who have to bear the financial risk of betting that tenants will be willing to come to some of these neighborhoods. But more and more, retailers are realizing there is considerable buying power in these urban areas because the density of population compensates for the differences in per capita income, developers say. “Anybody that gives these areas something other than a cursory look will quickly find out that billion dollar buying power is sitting right there,” Goldstein said. “These people are driving many miles outside their communities to be served.”

Developer Prompts Changes in Ventura Boulevard Mix By SHELLY GARCIA Senior Reporter A two-and-one-half year journey ended last year when Gold Mountain Enterprises LLC finally received approval to build the first mixed use project ever on Ventura Boulevard. The development, Encino Heights, promises to help ease the housing crunch in the San Fernando Valley. But more important, the approval has laid the groundwork for similar projects along the Valley’s most famous street, setting into motion what many believe will be a transformation in the long-held lifestyles of Angelenos. By placing apartment units along Ventura Boulevard and other corridors that provide access to mass transit and offer neighborhood services within walking distance, planners and other city officials see the chance, finally, to get residents out of their cars and alleviate the mounting traffic congestion in the city. “When you continue to allow sprawl, you create even more traffic, so we have to look to mixed use projects along transportation corridors,” said City Councilman Jack Weiss, whose district includes the development site, when the project was approved. Weiss was one of many who initially opposed the project, worried that adding multi-family housing to a neighborhood tradition bound in single-family homes would taint the quality of life for long time residents. But the quality of life in the Valley as in other parts of the city, has already eroded, and many believe suburban sprawl has played a major role in that decay. By building out instead of up, the city has created an insurmountable traffic problem that is only going to get worse as the population grows. That was precisely the approach the developers took as they navigated the project through the tangled web of ordinances and zoning problems that stood in the way of the project. “We knew if we were going to convince the city this was an appropriate project, we had to raise the debate to a higher level,” said Benjamin M. Reznik, partner at Jeffer Mangels Butler & Marmaro LLP, the land use attorney that worked with Gold Mountain. “That’s the direction we took.” At its start, the developers found virtually no supporters, except for the Valley Industry & Commerce Association. “Everyone else, including the Encino Chamber of Commerce, was against it,” Reznik said. So the team began to build support, one person at a time. They invited the chief of the city’s planning department to walk the site. They met with city council members and listened to their objections, revising the project to try to accommodate the issues raised. They talked to the planning and land use committee (PLUM). “What won over in City Hall was the policy argument of, if we’re serious about providing housing, if we’re not going to put these apartments on Ventura Boulevard, where are we going to put them,” Reznik recalled. “That was my pitch, and it resonated.” When the process was completed, Encino Heights was entitled for 125 apartment units that will sit atop 16,000 square feet of retail shops. But the project still has a way to go. The developers, who would not respond to phone calls for this story, are not builders, and they were only willing to take the project through the entitlement phase. Encino Heights is currently on the market for sale, and it could be some time before another developer buys it and begins to build on the property. But several other developers, some who are also builders, are already following the path of Gold Mountain, seeking entitlements for other projects along Ventura Boulevard. Thanks to Gold Mountain, many say their road is certain to be easier. Most Influential Development Project: Encino Heights Developer: Gold Mountain Enterprises LLC, Calabasas Rene Bernasconi, Vice President, Acquisitions Mike Minder, Principal Attorney: Benjamin M. Reznik, Partner Jeffer Mangels Butler & Marmaro LLP, Los Angeles Largest Office Sale The Pinnacle, Burbank Seller: Jeffrey M. Worthe Principal M. David Paul & Associates, Santa Monica Broker: H. Carl Muhlstein Senior Director Cushman & Wakefield, Los Angeles Is any commercial property worth a staggering $365 per square foot? Apparently, it’s worth that much to Deutsch Bank and RREEF America, a German real estate investment adviser which purchased the 393,000-square-foot Pinnacle office building in Burbank. The bank paid $143.5 million for the six-story structure. H. Carl Muhlstein of Cushman & Wakefield represented M. David Paul & Associates, a Santa Monica developer and co-owner of the edifice in a sale that was signed off on in November of last year. The building’s tenants include the who’s who of the entertainment industry: Warner Music Group, Clear Channel Entertainment and NBC. There are plans to expand office space near the Pinnacle with another structure. Slav Kandyba

Charles Dunn Brokers Leave W. Valley Office By SHELLY GARCIA Senior Reporter Nearly all of the 12 brokers at Charles Dunn Co. Inc.’s Woodland Hills office have left amid plans by the brokerage to consolidate its San Fernando Valley operation at its Studio City office. The exodus, which was still playing out at press time, follows what Dunn officials described as six months of soul searching about the future direction and growth of the brokerage company. “We want to reallocate resources, and we would like to open on the east side of town, perhaps in the San Gabriel Valley,” said Jay Haskell, vice chairman at Charles Dunn Co. “We weren’t achieving the revenue we wanted, so we, over a six-month period, gave consideration to both offices.” Haskell said that Stacy Vierheilig, senior managing director and one of three brokers based at the company’s Studio City offices, completed 97 transactions in 2003, and that volume ultimately convinced the company to make its decision in favor of the east Valley office. “No one was doing that volume of business in Warner Center last year,” said Haskell. Some of the Woodland Hills office brokers reached by the Business Journal told a somewhat different story, saying that the company had not provided the management support and services they needed to operate effectively. “Ultimately, it’s a fantastic property management company, and that’s really where their focus is,” said one of the departing brokers who would not speak for the record. “For someone like myself, I could not service my clients from that platform.” Told that the departing brokers complained of a lack of leadership and support, Haskell, who said he had not received resignations from many of the staffers, pointed out that such issues were common in the brokerage community. “I’ve been in the brokerage business for 33 years, and I’ve never heard a salesperson compliment the company on providing adequate resources,” he said. “Office leasing has not been the strongest product sector at this time, and it is often that sales people will suggest it’s lack of support that causes their lack of production.” At least eight of the 12 brokers who had been based in Woodland Hills have taken jobs at either Lee & Associates (see related story on page 38) or at NAI Capital Commercial. Haskell said he believed three brokers remained at the Woodland Hills facility, but he conceded that those agents would likely exit when they had completed their current transactions. “I don’t think we expected to lose everyone we lost,” Haskell said. “Had it been our plan, some of them would have moved to Studio City.” One of the two support staffers in Woodland Hills resigned, and Haskell would not comment on the company’s plans for the remaining worker. The Studio City offices have three brokers with space for another five, but it is not likely those spaces will be filled. Haskell said the company has recently made substantial investments in other locations and plans to continue to recruit and build its offices, but would not respond directly when asked if that includes the Studio City locale. “Obviously this is a setback for us in the San Fernando Valley, but we have other priorities we choose to focus our resources on,” he said. Charles Dunn Co. was acquired about five years ago by Walter Kahn, whose background is in property management. Although the company has a very strong presence in the property management sector, it has continued to operate a brokerage division. The company manages about 170 million square feet of commercial space, including 2.6 million square feet in the San Fernando Valley. Tingus to Head Local Lee Operation By SHELLY GARCIA, Senior Reporter Mike Tingus has left Charles Dunn Co. Inc., to take over the helm of Lee & Associates North Los Angeles as the brokerage prepares to expand into Calabasas and to Ventura and Valencia later this year. Tingus replaces Ron Feder as president of the North Los Angeles division. Feder, who continues to be a partner in the company, will assume the duties of vice president for industrial. Lee, which has based its North Los Angeles operation out of Sherman Oaks, next week will open a Calabasas office with about 12 brokers stationed there. “I got my business up and running and I just needed a platform that provided me the ability to represent both landlords and tenant business throughout the Southwest,” Tingus said. Plans include hiring a total of 16 brokers in Calabasas, about six or eight in Ventura and five or six in Valencia. The Sherman Oaks office, which currently has about 28 brokers, will be downsized to about 20 brokers. Tingus said most of the brokers who will be based in Calabasas are already on board. They include former Dunn brokers Scott Silverstein, Casey Sides, Wayne Saldana, Chris Dorland and Jay Rubin, along with two new hires, Spenser Strull and Randy Kobata. Feder, who has been president of Lee for the past three years, said he is giving up the reins for professional and personal reasons. “I have from time to time felt like it was time for me to change and get back on the street and take better care of my customers and myself,” said Feder. Tingus had been a managing partner at Colliers Seeley in Encino for 13 years when he joined Capstone Turbine Corp., a Chatsworth based maker of microturbine engines, as president. He returned to real estate about one-and one-half years ago.