On the Cusp Of Something Big

SPECIAL REPORT: An incorporation drive and development in East L.A. are signs of change.
By: DANIEL MILLER: Los Angeles Business Journal Online
At first glance, it appears little has changed in East Los Angeles.

Along East Third Street it seems the bail bonds shops are among the most thriving businesses, despite their barred and dark windows.

But look more closely and you’ll see something else.

Light rail stations are in the works, and virtually every bus stop boldly proclaims in Spanish – “Llegando 2009 Gold Line”: the rail line will open in two years. Some commercial buildings have been renovated, others are being renovated, and “For Lease” signs are up. What’s more, the unincorporated community is now in the midst of another incorporation drive.

These are among the signs of change, the signs that say the East L.A. of tomorrow will be different from the East L.A. of yesterday and even today.

Several longtime residents say that East L.A. is on the cusp of something big.

“The market has changed in the last five years,” said local developer Ron Mukai. “When I first started, I couldn’t get any national retailer to look at me. They thought East L.A. was like South Central and were afraid of gangs and robbery and they thought people were too poor. It was before people realized the strength in the Hispanic market.”

In at least one way, there is no doubt that change is coming. Backhoes and other big construction equipment line East Third Street, where Metropolitan Transportation Authority crews have already dug a big trench in which the $900 million Gold Line Eastside Extension will pass.

And with the construction underway in earnest, developers have begun to take advantage of opportunities in the dense area near Boyle Heights that is a virtual redevelopment tabla rosa. Indeed, the county recently formed a redevelopment zone in the nearby Whiteside neighborhood, and some success stories are already evident in the heart of East L.A.

Mukai’s firm, Mukai Maravilla LLC, built Civic Center Plaza, which opened in 2003 on East Third Street and includes a Coffee Bean & Tea Leaf. The shopping center does brisk business. And at the other end of community, the Whittier Clela Shopping Center opened in 2005, boasting tenants like Cingular Wireless. The 14,000-square-foot development is now nearing 100 percent occupancy.

How far it all will go is still up in the air. A nascent incorporation drive, if successful, could be the impetus for decades long positive change in an unincorporated county area some community leaders feel has been neglected. But numerous past incorporation efforts have failed.

Moreover, while aging communities such as Burbank have reinvigorated themselves over the past decade, those efforts have come amid the long national economic boom fueled by cheap capital and a robust housing market. If East Los Angeles’ time has come, it may be toward the end of the economic cycle, something that could nip the community’s resurgence in the bud.

“We don’t want to be left behind,” said Oscar Gonzalez, president of the East Los Angeles Residents Association, the chief backer of the incorporation drive. “If you compare what is going on in East L.A. to other parts of the region, we are behind. I don’t think it is because of a lack of political or economic will. I think it is because of stigmas that East L.A. has actually long overcome.”

Transit-oriented development
The Gold Line Eastside Extension will connect East L.A. to downtown Los Angeles and beyond. The rail line ends in the heart of the unincorporated area at the intersection of Atlantic and Pomona boulevards and is expected to be heavily used by local residents who will take the at-grade train to work in central Los Angeles, Pasadena and the San Fernando Valley.

The area is more than 90 percent Latino, and ridership is expected to be heavy because East L.A. has about 150,000 people packed into a 7.5 square mile area. That’s something that hasn’t escaped the notice of developers.

“Any time you have rapid transit, it will entice developers to come,” said Christopher Beck, a broker at Cushman & Wakefield Inc. who brokered land deals for transit-oriented development in Lincoln Heights, near one of the first stops of the existing Gold Line route. “You are able to attract tenants because you have an easy transition to downtown.”

Whittier Boulevard has historically been the area’s commercial corridor, along with Atlantic Boulevard and Cesar Chavez Avenue. These streets, which are near Third Street, are expected to benefit from any economic development spurred by the transit corridor.

Mukai’s Civic Center Plaza, which is at Third Street and Mednik Avenue, includes a mix of local and national retailers and has become a popular shopping destination in the area. The project stands to benefit from the light rail line; a station will be located a stone’s throw from the 30,000-square-foot development.

“I think when the rail line is completed it will significantly increase north-south traffic on Mednik and will make it easier to get around East L.A.,” said Mukai. “Ultimately it is going to help but I think it is going to take time.”

Down the street from Civic Center Plaza, Agoura Hills-based Amcal Multi-Housing Inc. has begun construction of an 85-unit affordable housing complex. The project at 3929 E. Third St. is near the rail stop at the westerly border of the unincorporated area at Indiana Street. The development is slated to be completed in February 2009.

Amcal president Percy Vaz said that there is a significant lack of affordable units in the unincorporated area. His $28 million project, on the site of abandoned homes, will help rectify that.

“There has been very little development in the unincorporated part of the county and the need is immensely critical,” said Vaz. Amcal has already completed a $107 million Gold Line-adjacent mixed-use project in Montecito Heights. “There is opportunity to satisfy that need all along the Gold Line.”

The county’s Department of Regional Planning oversees development for the unincorporated area and is considering the creation of a transit oriented district along the East Third Street corridor that would set development standards for the area.

Development in the district would be governed by a county planning ordinance that encourages sidewalk cafes, plazas and colonnades, among other amenities. It also could result in the rezoning of some property to make the area better suited for development. A preliminary study of the district was done in March and planners hope to meet with community groups by the end of the year.

The district could be created in two years, and developers say it couldn’t come fast enough, given the challenges in the area. Several developers said it has been difficult to assemble parcels to create projects that make economic sense. Mukai, for example, had to assemble 30 parcels over several years to build his shopping center.

“You have different pockets of things that could be assembled and developed. It takes political will and vision, but those things will happen over time,” said Tony Salazar, a principal in the development firm McCormack Baron Salazar, which developed the Aliso Village housing project in Boyle Heights.

Complicated development issues have led some in the community to call for incorporation, saying that a city government could better address such localized issues.

Incorporation, again

A renewed incorporation movement for East L.A. has picked up steam, with local businesses and politicians supporting the drive. Supporters say that cityhood will better allow East L.A. to control its economic destiny, though the area already has something of a city hall in the East Los Angeles Civic Center adjacent to a planned Gold Line stop.

Gonzalez’s East Los Angeles Residents Association hopes to put the issue to vote in November 2008 but first must collect the signatures of at least 25 percent of the registered voters in the area in order to formally raise the issue with a county commission that oversees cityhood drives.

There are 33,875 registered voters in East L.A, and the association is in the process of conducting an initial fiscal analysis of incorporation. In order for cityhood to move to the ballot, the residents much show that their community would be financially self sustaining.

The cityhood movement so far has promise. Not only are leading residents and local businesses behind it, but some local political leaders, such as state Senate Majority Leader Gloria Romero, D-East Los Angeles, are supporting it.

“What Harlem signifies for the African American community, East L.A. signifies for the Mexican-American, Latino community. It encompasses a culture and a beat and there is momentum to move into cityhood,” Romero said.

For her part, Los Angeles County Supervisor Gloria Molina is officially taking a neutral stance on the topic. The supervisor is taking a wait-and-see approach, adding that “if that is the way they (area residents) want it to go then we will.”

Still, it’s widely agreed that cityhood would give the local stakeholders more of a say in development issues – everything from traffic to the large mixed-use projects that are being planned for the area. And many believe that development is coming regardless of cityhood.

“For about 40 years you couldn’t get developers to put a nickel into East L.A.,” said Roger Moliere, MTA executive officer of real property management and development. “There has been a lot of interest and I don’t have any reason to believe we won’t have more interest as we move forward.”