In recent weeks, global news outlets have reported on the financial troubles of the Chinese real estate colossus Evergrande. The massive company at risk of defaulting on hundreds of billions of dollars of debt is the most extreme example of the troubles weighing on China’s major developers, but it is hardly alone.
Many smaller firms have similarly borrowed huge sums of cash to accelerate housing growth on the Chinese mainland and abroad. In fact, Angelenos can find evidence in our own downtown skyline, where the skeleton of the three-tower Oceanwide Plaza looms like a clean-picked whale fall on the ocean floor.
Oceanwide Plaza was first planned to open in September of 2018. If ever completed to its original design, the project would add a luxury hotel, 500 condos, a shopping mall, and a Disneyland-sized parking garage to the Figueroa corridor. After blowing through that 2018 deadline, and its $1 billion construction budget, work screeched to a halt in January 2019 when Oceanwide Holdings, the developer, reportedly ceased making payments to the project’s construction contractors. Lendlease, the project’s general contractor, recently won a judicial order for some of what it claims are nearly $250 million in unpaid invoices from Oceanwide.
With no realistic expectation for work to resume on the abandoned site in the near term, it’s past time for the City of Los Angeles to consider taking the Plaza over, and using it to help out Angelenos in need.
That is, the half-built project should be purchased and converted into public housing.
It’s crucial to remind readers that the towering skyscraper husk is not only a blight on Los Angeles, it is also a neon-bright reminder of the city’s failures during the last decade.
There is the misguided political strategy, stewarded by Mayor Eric Garcetti in the wake of the Great Recession, to cater obsequiously to the needs of tourists while neglecting struggling residents. Then there’s the extravagant corruption in City Hall, where elected leaders abused their power to party with, and profit from, their connections to moneyed developers. And, of course, there’s the spiraling crisis of unaffordable housing, and the unmitigated humanitarian disaster that has tens of thousands living out criminalized lives on the street while homeowners and landlords rake in record profits.
The trajectory in Los Angeles is a downward one for too many families who are caught in a double bind of low wages and impossibly high rents. So, in a city where all but a scant few housing units are privately owned, local officials must take action, and use the subsidizing power of government to start freeing tenants from landlord abuse.
In the mid-2010s, Los Angeles made one of its central policy pillars the development of thousands of new hotel rooms in the immediate vicinity of the Convention Center. It was an attempt to shift tourist dollars to LA from nearby destinations like Anaheim and Las Vegas. Proposals like Oceanwide’s, which promised to add high end hotel brands, found a city willing to grant them major tax breaks in order to accelerate construction.
The firms entering the LA market were promoted as being decisive, ready to build, and able to cut through red tape to quickly complete major development projects.
At the time, some speculated the downtown condo boom might be a vehicle for offloading capital from the Chinese mainland by members of a skittish wealth class, rather than becoming primary residences for Angelenos in our dire local market. That fear was reinforced when the Chinese Communist Party moved to curtail the outflow of capital from within its borders, which prompted the river of real estate investment to dry up. And that was even before the Trump Administration in 2017 began provoking a trade war, let alone the Biden Administration’s decision to continue on a path that looks increasingly like cold warfare.
Then there were the revelations that came when the FBI investigated the development wave, and found that the vaunted red-tape cutting was the product of corrupt dealings with a number of pliable public officials. The ensuing scandal, including the arrest and prosecution of former Councilmember Jose Huizar, has touched a number of South Park’s largest new developments, including Oceanwide Plaza.
Los Angeles should look to purchase Oceanwide Plaza, not because it would right these wrongs, but because it would be a first step to show the city is standing on the side of Angelenos rather than lining up against them.
Doing so would require city leaders to rebuke their own decision-making from the last decade: to state that a convention center sweepstakes is not a chief city priority, that luxury condos outside the Staples Center are not a difference-maker in the fight for lower rents, and that access to transit and job rich downtown should be open to all Angelenos.
