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Sunday, Jul 21, 2024

Builder Outlasts Local Opposition

Nearly all real estate developments are a battle, with developers trying to overcome zoning hurdles or appease homeowners concerned about construction or traffic. But the decade-long saga of the Il Villaggio Toscano project in Sherman Oaks may be a case-study in how these battles can drag out into seemingly endless wars of attrition. Case in point: Developer M. David Paul Associates envisioned, designed, entitled, constructed and leased out its 51-unit, 90,000 square-foot Serrano mixed-use development on Ventura Boulevard in Encino all while Toscano inched along. But the 325-unit, 605,000 square-foot mixed-use project took a quantum leap last week when it finally received approval from the Los Angeles City Council. Still, some homeowner groups are angry, arguing its location on Sepulveda Boulevard near Camarillo Street – a stone’s throw from the Ventura (101) and San Diego (405) freeways intersection – will make the area impossible to navigate. That makes Paul Krueger, development manager at M. David Paul and the point man on the project since its inception, hesitant to celebrate. “When everything is settled, we’ll be rejoicing in the streets,” he said. “I’m excited, but we still have many things to overcome.” M. David Paul, based in Santa Monica, is perhaps best known for its $250 million acquisition in 2007 of Burbank’s 1.2 million square-foot NBC Studio lot, which still hosts “The Tonight Show” until it moves to New York next year. It also has developed multiple office buildings in Burbank, including The Point, a 480,000 square-foot office building next to the studios. Its portfolio totals 4.8 million square feet, with the vast majority in the Valley. The properties are built by its Krismar Construction arm and managed by affiliate Worthe Real Estate Group. The Toscano development will easily be the developer’s largest residential project. Outside of the Serrano, it only owns a 19-unit building on Ocean Avenue in Santa Monica. Toscano features 52,000 square-feet of retail space and a four-story parking garage, two levels of which are underground, with more than 1,000 spaces. The project would take two years to build and cost about $132 million, according to a study by the Los Angeles County Economic Development Corp. commissioned by the developer. Area brokers think the investment makes good sense. “This is going to be at the top of the market or above the top of the market in rents,” said Adam Christofferson, first vice president and regional manager at the Encino office of Marcus & Millichap, which is not associated with the developer. “I am sure they will be able to fill this thing up quickly.” The saga Ten years ago, Paul brought its initial proposal for Toscano to the Sherman Oaks Neighborhood Council. It included 500 units in an eight-story structure with about 55,000 square-feet of retail. But the community group was against the proposal, and worked with M. David Paul to revamp its project. Several years later, a new proposal called for a four-story development with 399 units and 52,000 square-feet of retail. Through further work with the neighborhood council, the project was downsized to the 325 units planned today. “We worked with the developer for 21 months straight on this project,” said Ron Ziff, chair of the land use committee on the neighborhood council. “After all our discussions, we think this thing is articulated well and will be very attractive to the community.” The group voted in favor of the project last year, which allowed it to go before the Planning and Land Use Management Committee of the L.A. City Council, which approved the project last month. That paved the way for the full council’s approval last week. “It’s through that community and neighborhood process that we scaled this thing down,” Krueger said. Still, some homeowner groups in the area aren’t pleased. Both the Sherman Oaks Homeowners Association and the Homeowners of Encino still are opposed. Gerald Silver, president of the Encino group, said the traffic impact of the project will devastate local homeowners. “This will be a monument to bad planning and ill-run process,” he said. And Silver has yet to give up hope on shutting down the developer, even hinting that litigation may still follow. “We’re doing everything we can to properly stop this,” he said. The Village Il Villaggio Toscano has a Mediterranean-style design, with tile roofs, an orchard garden and bocce court. M. David Paul hopes to lease out the bulk of the retail space to a grocer. Toscano will have 13 studios, 152 one-bedroom units, 140 two-bedroom units and 20 two-bedroom townhomes. Rents are expected to range from $1,500 for a studio to $3,500 for a two-bedroom townhome. The units will be located in multiple buildings, all surrounding a central courtyard. The developer plans to place several gardens on top of a commercial podium, similar to space in front of the nearby Sherman Oaks Galleria. The development hopes to attract tenants who work in the 6.5 million square-feet of office space nearby and who would prefer to walk to work rather than commute in their cars. “We’re really trying to create a value-oriented community,” Krueger said. “In the urban market, mixed-use has a viable and strong potential.” Once the first shovel of dirt is moved, which could happen in the next few months, the project would be ready for its first tenants in 22 to 24 months. Christofferson, the broker, said there is very little development of this kind in the Valley outside of Warner Center. “There’s really nothing to compare this to, which makes it even more exciting,” he said. “This is one of the most exciting developments in recent years.” And even if Toscano gets built as planned, Silver said there will still be something positive to take away for opponents. “Our group sees this as a long war of trying to control bad development,” he said. “We can make an issue out of this. When this all goes poorly, with horrible traffic, we can cite this as an example of what not to do.”

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