City Officials Miffed With Developers of Sun Valley Project By SHELLY GARCIA Senior Reporter A much lauded development project that promised to bring hundreds of jobs to the Northeast Valley is drawing fire from city officials who are threatening to shut it down if the project developers don’t clarify their plans and the current ownership of the development company responsible for it. City officials say the developer Sunquest Development LLC, is overdue in providing information required for about $10 million in government financing that has been tentatively approved for the project, and they have been frustrated in their efforts to get the information. Some of the partners have changed since the developer first began negotiations with the city more than three years ago for some 20 acres of land that had been the site of the since closed Branford Landfill and a Sanitation Bureau yard. And a litany of remediation problems have plagued the development, located at Branford Street and San Fernando Road in Sun Valley. As a result, the project is now expected to be downscaled from the 550,000-square-foot light industrial manufacturing park first envisioned to roughly 300,000 square feet of space for building structures. But none of those changes has been conveyed to city officials, who say they have not been able to clarify the status of the project or even who is running the show. “Not one dime of public money will be spent until we have an absolutely clear picture of who’s running Sunquest and until they’ve proven in no uncertain terms how this development company is structured and who is in charge,” said David Gershwin, a spokesman for Los Angeles City Councilman Alex Padilla, whose district includes the location of the project. “We’ve heard rumors that the project is being revised. We need to know exactly to a brick how it will be revised.” Randy Roth, listed as managing member of Sunquest, said in a voice-mail message left with the Business Journal after numerous requests for an interview went unanswered, that he continues to be in charge of the project, and Sunquest has different partners than those the group started with. “Sunquest development is being built. It’s on it’s way,” Roth said. “Our plans are in plan check. We are applying for permits.” At stake is not only the federal funding, which is needed to mitigate the cost of redeveloping the site profitably, but also some face on the part of city officials who have backed the project. Hopes for jobs Before approving the sale of the city land to Sunquest, officials made a great deal of the jobs and rebirth it would bring to the area. A considerably smaller project would presumably bring far fewer jobs. At the same time, the U.S. Dept. of Housing and Urban Development would likely re-evaluate the loan and grant applications and could decide not to allocate the funding or to apportion a smaller amount. “If they reconfigure the project what our job will be is to describe those reconfigurations and submit to HUD as an amended application,” said Jasper Williams, director of industrial and commercial development, and Ernest Tidwell, finance officer at the Community Development Department, the team charged with steering the Sunquest proposal through federal financing channels. “That would cause them to make recommendations on what kinds of dollars might be justifiable.” But first, the Community Development Department and city council office have to nail down the details, and it has been many months since most of those involved have heard from anyone on the team. Genesis L.A. Real Estate Fund, which invests in redevelopment through its financing arm, Shamrock Capital Advisors, made an investment of $1.6 million in the development, but that position was sold to some of the “original equity partners” in 2002, said Joe Fahey, director of Shamrock Holdings. Los Angeles Alliance for a New Economy, which in 2001 reached an agreement with Sunquest that provides for living wage practices at the site as well as other community improvements has had no recent communication either. “We haven’t met with the developer since we signed our agreement,” said Roxana Tynan, director of accountable development for LAANE. “We’ve had a few meetings with Padilla’s office giving us updates.” But Padilla’s office seems in the dark as well. “We were informed there was a new project manager for the development team,” said Gershwin. “His name is Justin McGilvery. We’re waiting for confirmation on the ownership and the development entity. Because of the confusion, we want good, bonafide information on who’s running the show. We simply can’t be operating in a vacuum on a project.” McGilvery did, in fact, respond to an e-mail sent on March 10 by the Community Development Department to request additional data on the financing application, although Tidwell and Williams said the information was not sufficient and they are awaiting a response to a follow-up letter sent on May 13. McGilvery refused to be interviewed by the Business Journal. When told, Gershwin said, “Clearly this development team is acting in a way where they are not informing the city of their goings on a day-to-day basis. I think it’s fair to say this development team has been operating in a black hole.” Dealing with problems But the hole may simply be that the developers are still working through numerous problems on the site, which after three years still lies undeveloped. The landfill is decades old and the maps of the property have not proven to be accurate, said Barbara Emmons, senior vice president at CB Richard Ellis, who is representing Sunquest in marketing the site to users. Emmons said until the developers determine where the landfill areas are, they cannot know where structures can be built. They currently estimate that roughly 300,000 square feet of the site can hold buildings, but they won’t know for sure until they grade the property. “We’d quote a build to suit and then we’d find out there’s a finger of landfill running through it and we can’t build,” Emmons said. Inline Distributing Co., which distributes asbestos abatement products, signed a $7 million deal to buy a 122,000 build-to-suit on the property two years ago and has been waiting since then for construction to begin. “We have a plan drawn for them, and we want to move forward,” Emmons said. “We have two other proposals outstanding. Activity has never been the problem. It’s been the entitlements and the process.”