A few years ago, a developer had a plan to put up roughly 100 condos at Melrose and Larchmont, but the development was challenged by local homeowners’ group La Mirada Avenue Neighborhood Association. Eventually, the developer and the homeowners association settled under confidential terms. The story is all pretty standard in the world of Los Angeles development–California has a very controversial statute called the California Environmental Quality Act that’s supposed to allow little guys to take on big, potentially environment-destroying or neighborhood-changing projects. But the practice is often abused, projects get held up in lawsuits for years, and there have been a million calls for some kind of reform (they’ve been getting louder lately). Now here’s a new piece of the puzzle: the leaked terms of that confidential settlement between the developer and La Mirada (which has challenged several projects in Hollywood under CEQA).
The documents reveal a practice sometimes called “greenmail,” in which businesses and homeowners groups use the threat of CEQA-based lawsuits to generate cash from developers for things that have nothing to do with the environment. Because land use agreements are confidential, the public isn’t aware of these agreements–they are also cut out of negotiations between challengers and developers to change the size, scope, and design of the development. “This is business as usual, but everyone acts like it doesn’t happen,” says a local developer with knowledge of the project who spoke under terms of anonymity.
The document, leaked from an anonymous source in City Hall (and with the developer’s name redacted), includes the details of a settlement agreement between La Mirada (represented by notorious Hollywood-development-challenging lawyer Robert Silverstein) and the former developer of the property at 5641 Melrose Avenue. The leaked agreement states that the developer will pay to cover attorney’s fees and costs: “[redacted] shall pay and deliver to La Mirada the sum of NINETY THOUSAND DOLLARS ($90,000) for La Mirada’s costs, and attorney’s fees and costs.” The developer also agreed to pay a monitoring payment: “[redacted] shall pay to La Mirada Avenue Neighborhood Association of Hollywood the sum of TWO HUNDRED FIFTY THOUSAND DOLLARS ($250,000) to be used as La Mirada sees fit.”
In exchange for this payment, “La Mirada … shall not commence, support, file, or participate in any administrative appeal of any litigation … challenging or in any way attempting to interfere with or otherwise modify, limit or delay the Revise Project.” Two confidential sources also confirmed that the parcel has changed hands since this agreement was approved, and the lot remains undeveloped–it was announced last fall that California Landmark Group planned to put up an 85-unit apartment building on the site.
The document provides hard evidence for this common practice. “We absolutely don’t know what happens with the money. Typically in a settlement, there is no limit on how much money or what the money can be used for,” says Jennifer Hernandez, partner at the firm Holland & Knight (she runs the firm’s West Coast Land Use and Environment Practice Group) and author of A Practical Guide to Implementing the California Environmental Quality Act. Hernandez describes the lawyers who seek financial sums unrelated to the laws that they are suing under as “bounty hunters.” CEQA provides such bounty hunters with a loophole that can be easily exploited without the knowledge of the public: “Unlike all other parts of CEQA, litigation is remarkably shielded from transparency. You can hide who you are suing on behalf of, and you can hide what you settled for.”
La Mirada and Silverstein are frequent opponents of development in Hollywood and beyond. La Mirada has thrown up the stop sign for the 20-story tower planned for the corner of Hollywood and Gower, the Hollywood Community Plan to guide planning in the neighborhood, and the CIM development of the Old Spaghetti Factory site. Robert Silverstein has slowed the progress of the huge mixed-use Blvd6200, the Gold Line Foothill Extension, and the Thom Mayne-designed Emerson College campus. (Neither Silverstein nor Doug Haines, who heads La Mirada, responded to multiple requests for comment.) The natural question is whether the money lost to greenmail would be better spent on design improvements, quality of life or infrastructure investments, or for some kind of public benefit.
The “Hall of Shame” (as Hernandez describes it) of bounty hunters seeking economic settlements under environmental statutes features more than just La Mirada and Silverstein. Hernandez also includes unions, which sometimes seek project labor agreements, and economic competitors (e.g., in the case of the University Gateway development near USC). “California is also unique in allowing unincorporated associations–informal groups with no legal standing–to sue and not disclose their identity.” That makes it impossible to know who is even truly responsible for lawsuits. Hernandez cites statistics (pdf) showing that local associations–not formal groups like the Sierra Club or the National Resource Defense Council–brought nearly three-quarters of lawsuits involving CEQA’s Environmental Impact Reviews between 1997 and 2012. Of the lawsuits by local associations, 43 percent originate from unincorporated associations, meaning that the public has zero information about the group or its backers.
Over on the other side of Los Angeles, a new lawsuit might finally be making some headway in exposing the extent of greenmail practices in Los Angeles. Notorious NIMBY neighborhood group the Beverly Wilshire Homes Association and its leader Diana Plotkin have recently been sued for their alleged shenanigans, according our pals at Eater LA: “The suit claims that Plotkin and her group accepted bribes and business donations in exchange for favorable recommendations to businesses seeking permits, variances and licenses from the city. Additionally, the suit states that the BWHA’s directors refused ‘reasonable’ settlements from businesses, and instead pursued legal action to obtain attorney’s fees and other gifts.”
The greenmail problem, Hernandez notes, is unique to California’s backwards use of a statute like CEQA: “In other states and under NEPA [a federal law similar to CEQA], if your interests are primarily economic, you cannot sue under an environmental statute … California has gone in a remarkably different direction.”
– James Brasuell
Senior Director, Coldwell Banker New Homes Division
With over 200 condominium, townhome and loft projects successfully marketed
“Fewer properties for sale with such remarkably low interest rates make it a great time to sell but a more difficult time to buy”