Building Trades News

The demolition of the existing structures is expected to begin in March and construction on the new in-fill development is anticipated to begin in the third-quarter of 2011. The properties for the project were purchased over several years to create the contiguous, one-acre site.

Genton Barth is providing the community with several tangible benefits to enhance the neighborhood including the first-of-its-kind Sustainable Employment Housing Initiative, which may become a model for the city. Genton Barth purchased a 48-unit, market rate apartment building near Cedars Sinai, the area’s largest employer, and contracted with Cedars to rent the apartments at below-market rate to its moderate income workers who cannot afford to live in the area. In addition to the housing program, Genton Barth is providing $396,000 for a “universal valet” to relieve the areas parking situation for the 3rd Street business district.

Jonathan Genton of Genton Barth has found a friend in the Building Trades. “For organized labor to do a private residential project like this is unique. I think we should change that. We are in the same business. Why not work together?” the developer said.

“I pride myself on creating solutions that you can touch,” said Jonathan Genton, company principal.  “I want the money we contribute to stay within the community, as close the project as possible.  For instance, I don’t want to pay in lieu fees to the city that could go to fund something miles away, say an off ramp in Torrance.  I’d rather put that money to work to help our neighbors with programs like the Third Street Valet.”

Genton sat down with Building Trades News to discuss The Wetherly project and his relationship with the Building Trades. Though he has received flak from others in the development community for this partnership, Genton is unphased because the decision makes good business sense, he said, and he can sleep better at night knowing he is doing the right thing. 

“It’s in my genes,” he said.  “My mom and my uncles were in a union.  I’m a product of that so why not stay engaged?  It brings more voices to the table and that’s valuable to the process.  It’s hard to get these projects done.  So I think the trades and the development community coming together would be interesting and very powerful for creating positive change and better projects.”

Now that the Wetherly is entitled, Genton is ready to move on to the next project and is eager to partner with the Building Trades again.

“My job here is done,” Genton said. “I don’t design it; don’t know how to build it. My best value now to the Building Trades is to go do this three more times. How do I bring them along? I can now because they know me.”

What was your vision for the project? Why did you decide to take it on?
I was trying to show LA how you do density and do it right; You don’t just build a block in the middle of the parcel and put a park around it, you activate the street, you bring in pedestrians, you address the issues of the neighborhood. It took us a couple of years to reach a consensus with everybody.

The project got nipped and tucked as we addressed the various issues. But finally we ended up with a nice sized project — $130-$140 million  –  which is important for me because its almost as much work doing a project half as big.

It’s a real challenge to create a sizable project in West LA. There’s really nothing in terms of land so you have to buy separate parcels and assemble them. Then you can start to think about what you can do on a site that’s roughly an acre in the middle of West Los Angeles — working within the constraints of the zoning and the general plan, working with the political bodies and primarily with the neighborhood.

What were some of the innovative solutions you came up with to address the community’s concerns?
The issues with the community are always the same two: affordable housing and traffic.

Where I get in trouble is I believe that the solutions need to remain in the community where you are developing and be delivered at the same time as the project.  I don’t want to spend money on studies that say we need affordable housing in Los Angeles.  It produces not a single housing unit.

Let’s start with affordable housing. How did you go about solving that problem?
I bought a 48-unit apartment building by Cedars – and said okay, I’m going to take those 48 units and the $2-3 million I would have paid in lieu of housing fees which would only produce a study and write down the rents on those apartments..

I approached Cedars Sinai Hospital and privately entered into a contract that would mass lease the entire building at a reduced rent to qualified Cedars employees.  They have a lot of orderlies, technicians and RNs who can’t afford to live in West LA, but now they can because I am writing down the rents to below market rates.

Guess what? I just produced affordable housing in West LA. Employees from Cedars can now walk to work. It was pretty unique for the community for a developer to say, “I accept the responsibility to address affordable housing,” and not only that but to actually step in and create affordable housing.

If I tried to build 48-units of new affordable housing in this community, I couldn’t do it. I’d get sued for 10 years. Many developers will just pay the in lieu fees and get a hall pass and say, “Okay city, now it’s your problem to create affordable housing.”

Now let’s discuss the other main issues - traffic and parking.
I went to the council office and said I’d like to write a check to help traffic, but I’m not going to give you a study that says we have traffic.

If you need a turn lane or a traffic light or something we can physically do, I’ll do that. The city said we can’t do that. I said then I’m out. I’m not giving you money for the general fund for who knows what.

So in that spirit I happened upon the Third Street Business Association. There was an enormous parking problem on Third Street. My residents are going to benefit from having a cool little Third Street but the new restaurants have no parking so they can’t get occupancy permits to open because they can’t prove to the city that they have parking spaces.

The group was trying to do a universal valet program.  It’s been done in Pasadena and Eagle Rock, so why not here?   You take an entire merchant group and combine them for the purposes of valet parking. You have more than enough parking to service the entire area but what happens when you have multiple valets is that they claim different pockets so you can’t manage your parking pool efficiently.

It’s an incentive for people to walk around, spend more time and more money because they can park on part of Third Street and pick up their car three blocks away and it allows the merchants to open because they can prove to the city that they have parking. Great idea. Like most great ideas, they have no money. So I said, “Okay, I’m going to finance the valet program and see what happens.” I am directly taking cars off the street today and helping improve parking in the community today.

Why did you decide to use union labor on this project? Were there advantages to your final choice?
These are dangerous projects, complicated projects. You have to build them with a competent, talented and skilled labor force.

There are worse things you could be doing than actually getting people working in this economy. When you get an opportunity to put $130 million into the system – at the end of the day a lot of that is labor dollars — I can just say we’re going union and get a PLA and you affect a lot of people’s lives and maybe your peer group doesn’t like you all that much.

Historically there have been these walls built because developers have seen the unions as taking profits; they want it done cheaper and cheaper. You can’t compromise on these buildings. That philosophy needs to be wiped out, and you can do it on these kinds of projects because you can show that there are no changes in costs.

Your quality of production improves because it gets completed a month earlier. And you don’t get sued because the work was actually done correctly because the crafts know how to follow a spec. At the end of the day it costs you no more to do it right instead of trying to cut corners on skilled labor and ending up with an inferior product.

What challenges do you face as a developer in this economic climate?
LA is generally under housed. Whatever the market is today is going to change. I’m almost four years out from selling one of these units. I don’t know what those four years look like, but I know that no one else is doing this. Even if someone wanted to compete with me and started now, I’d beat them by three years.

The projects that are finished and open today are suffering because they were built at the most expensive time in the market and are now selling at the lowest. So in some respects I am very fortunate. I am designing a building at the lowest point in the economy, but I’m also in a segment of the market – West LA – where there is nothing being built here. You can go to Century City and see these towers being built but you’ve got two or three of them there.

The issue is when you go to pull the trigger will there be construction financing available?
We are 18-20 months away from having to have that discussion and I’m betting that there is. I’m betting that LA will still need housing and that there are enough people that want to live in a mid-rise building on Third Street next to the Four Seasons in this little submarket that it will be successful.

How would you assess your experience in partnering with the Building Trades on the Wetherly? What advice would you have for other developers?
I think having the Building Trades as a partner in the process is very important. It puts a face on what we are trying to do. I have an interest in getting this built and the Building Trades have an interest in creating jobs. They can stand up and say, “We need jobs; we’ve got 20,000 members out of work.” Those voices help off-set the people who stand up and say” I don’t like this project. I don’t want you to change anything.”

For organized labor to do a private residential project like this is unique. I think we should change that. We are in the same business. Why not work together? There has always been this “us and them” mentality. It’s just kind of foolish.

It’s not a well marked trail. There are not a lot of signs that say – “Here’s the Building Trades, go talk to them. Here’s what they can do for you, what they can’t do for you. Understand what you can do for them and not do for them.”

As a developers you can finance this stuff through labor pension funds – you’ve got potential equity partners here, plus you’ve got the very guys who are going to build it are putting their money into the pension fund that’s financing the project and they have a voice at the table politically. And they’ll show up at City Council to help get your project approved. I would say to other developers go talk to these guys. Do it now. Don’t wait until your project is on fire. That’s a hell of a time to realize you need a fire department.