Fact Check: There Is No $38.7 Million Payout to JMB Realty in Westside Subway Plans

Do the math. "Constellation A" assumes a station entrance at the NE corner of Constellation and Ave. of the Stars on property owned by JMB Realty. "Constellation B" assumes a entrance at the SW corner in front of the Hyatt Regency. Note that the station on JMB property would actually cost $38.7 million less than the one in front of the Hyatt. Table from the ##http://www.metro.net/projects_studies/westside/images/final_eir-eis/38.%20Century%20City%20Station%20Location%20Report.pdf##Century City Station Report## from the Westside Subway EIR.

(Hello Beverly Hills Courier readers!  Confused by allegations that Metro controls editorial decisions here at Streetsblog?  To help clear things up, we’ve compiled a list of the connections between Streetsblog and Metro right here.)

The headline was breathless, as many headlines in the Beverly Hills Courier often are. “Courier Exclusive Report: Century City Subway Station $38.7 Million Payoff to JMB,” blared last week’s lead story. Even by the sensationalist standards of the Courier, this one seemed a big story.

The gist of the Courier’s big scoop: Metro is planning to spend $38.7 million dollars more to purchase property for a Constellation Avenue Station on property owned by JMB Realty than it would for property located literally across the street.  Of course, as is often the case, the story isn’t factually accurate.

From the Courier Exclusive:

Although the disclosure is difficult to read, it appears that Metro will pay $38.7 million more for JMB’s property at 10131 Constellation Blvd. than a comparable site underneath Hyatt Regency Century Plaza, 2025 Avenue of the Stars.

The story plays right into the Courier’s narrative about the Westside Subway alignment.  JMB Realty and its ties to Mayor Villaraigosa have long been the culprit when discussion of why the Subway will probably go under Beverly Hills High School to a station at Constellation Ave and Avenue of the Stars rather than Santa Monica Boulevard adjacent to a golf course.

We should note that either of the stations discussed in this story  would require tunneling under Beverly Hills High School.  The purpose of the article is not to demand a station re-route, just to smear Mayor Antonio Villaraigosa, Metro and JMB Realty by claiming that the realty company will receive nearly $40 million more than the Hyatt across the street would if the station were built on its property.

This “payoff” seems the perfect story to continue the narrative of a realty giant colluding with a big city mayor to blow up Beverly Hills High School.

Except, of course, the story isn’t actually true.  As a matter of fact, the station on JMB owned property is actually $38.7 million less expensive to build than the one in front of the Hyatt according to Metro’s environmental documents.

Confused by the difficult to read document as many people are when confronted by hundreds of pages of government-speak, the Courier makes some pretty large assumptions that there are no differences in the cost between the two stations other than the real estate costs.  Using advanced research techniques commonly known as “reading the next page after the chart” Streetsblog was able to get to the bottom of why the Subway will cost 4,241,525,000 with a station on one side of Constellation and another $4,280,252,000 on the other.  Hint: it has nothing to do with the funds Metro would have to spend to buy property from JMB Realty.

In fact, the Century City Station Report actually makes clear that Metro doesn’t know what the exact cost of station construction will be because Metro doesn’t know what the real estate costs will be to purchase property.  Negotiations between Metro and land owners won’t begin until after the project completes the “Final Design” stage. In other words, Metro’s EIR says the exact opposite of what the Beverly Hills Courier says that it says.

The following paragraph comes directly from the Century City Station Report that is part of the Final Environmental Impact Report for the Subway.  The paragraph follows a pair of charts on pages 2-10 and 2-11 that discuss the estimated station construction costs.  The chart at the top if this story is from page 2-10.  The below paragraph follows a chart on page 2-11.

So what accounts for the difference in cost between the two sites if not for the imaginary payout to JMB Realty?  The main difference between Constellation A and Constellation B is the “laydown area” where contractors will store their equipment including the Tunnel Boring Machines (TBM’s).   For “Constellation A,” at the JMB lot, equipment would be stored at a 5.6 acre lot which Metro would rent.

For Constellation B, the equipment storage is catchier, and more expensive.  The below picture, again from the EIR’s Century City Station Report, shows the difference between storing construction equipment for Constellation A, the less expensive option with a station on JMB Realty property, vs. Constellation B.  Because of the location of the entrance, the storage lots are both spread out down the middle of Constellation Boulevard and at the eastern intersection of Constellation Boulevard and Century Park East

Of course, during final design, things can still change which is why Metro posted the disclaimer after its cost estimate charts.  For example, it’s possible that Constellation B is the superior station location, but the contractor prefers storing equipment as though it were the Constellation A design.  What we know for certain right now is that Metro is not proposing to pay JMB Realty $38.7 million more for their property than the Hyatt Regency across the street and that sometimes if a report is hard to understand, journalists should use a phone to talk with someone who understands what they’re reading.

31 thoughts on Fact Check: There Is No $38.7 Million Payout to JMB Realty in Westside Subway Plans

  1. Just to clarify, when you say “one station would cost $4,241,525,000 and another $4,280,252,000” you actually mean that the entire line would cost that much with each station option, right?

  2. 1. Zero fact checking.

    2. Biased reporting.

    3. Disorganized, unreadable website.

    4. No free commenting (editor’s review and publish ALL comments)

    Can the Beverly Hills Courier even call themselves a legit newspaper?

  3. This article falsely states that the tunnel has to go under BHHS. It has been scientifically proven that the Santa Monica station rather than a Constellation station is safer and will cost $6 million less to build. If JMB doesn’t get the station they will be angry after throwing LA mayor a huge political fundraiser in Chicago. Is the mayor of LA working for LA voters or the citizens of Chicago?

  4. Naturally the Courier is against tunneling under BHHS when a safer and cheaper alternative is available. Even LA has told MTA their study is flawed and has authorized the development of a 39 story high rise on the location that MTA states is unsafe. Folks it’s all in the money, and the major politicians of LA including the mayor of LA is bought and paid for by JMB of Chicago.

  5. If you come to Streetsblog spouting tinfoil hat nonsense, you’re gonna have a bad time.

  6. I’ve read this twice and I’m confused. Nothing is clear. I won’t read it a third time.

  7. The article states that either of the stations discussed in the Courier article and in our article pertain to a route that goes under Beverly Hills High School.

  8. There is no doubt that the shorter route to a Santa Monica Boulevard station.  However, that is not what this article is about.  The Courier stated in an article that Metro was giving 38.7 million to JMB realty for property comparing costs between two proposed station options on Constellation Blvd.  
    That statement is false in every way it can be false.

  9. real newspapers shouldn’t be against anything. They should report facts. true that it is all in the money though. people of BH have it so we’re still talking about this nonsense.

  10. The BH Courier is a work of propaganda and fiction.  It carries water for Supervisor Antonovich, a Metro Board Member.  The Courier takes yellow journalism to a new low.

  11. Neither.

    I know it’s shocking, but some of us actually use the Metro on a daily basis, and have an interest in new stations being locate conveniently, near our destinations.  places.  Not everything is a massive conspiracy.

  12. But Damien, do the cost estimates reflect the $60+ million savings for the SM station? If not, why not?

  13. In case anyone is wondering about the connection between LASB and Metro based on the Courier’s allegations.  We just published this statement outlining our connections including that Metro advertisements account for a whopping less than 2% of our budget.

    http://bit.ly/J8n61h

  14. Then, Damien, if the $60.4 million savings is included in the Santa Monica A station cost, why is this station $25 million more than Constellation B and $65 million more than Constellation A? If you remove the $60 million savings because of the shorter route, this station costs $85/$125 million (respectively) more. Why?

  15. To people like CrackMonkey: A project like this is a balancing act between cost and efficacy. So, yes, a Constellation alignment will cost $60m more than an SM Blvd alignment. But, Constellation is expected to serve 3,000 more people every day, which is about 1.1m boardings each year. That makes for a more effective system.

    You can’t look just at cost: it’s cost vs. benefit that determines value.

  16. Tomorrow at 1:30 in the MTA board room I understand that The City of Beverly Hills will show how in the future the ridership of a Santa Monica station will far exceed the ridership of a Constellation station. This, together with evidence that SM Blvd has no active faults (which the City of Los Angeles has already acknowledged by approving the construction of 39 story building) will reveal whether a “project like this is a balancing act between cost and efficiency” or is a balancing act between cost, efficiency, AND political gain.

  17. “Santa Monica A” is the least expensive of the four options that were discussed in the Century City Subway report: http://www.metro.net/projects_studies/westside/images/final_eir-eis/38.%20Century%20City%20Station%20Location%20Report.pdf

    See the table on page 2-11

    I am not an expert on the differences between the two Santa Monica Blvd. station designs.  I believe there are some mitigation issues, and that’s one reason Santa Monica B was never really on the table.

  18. The only way that the ridership at the Santa Monica Blvd station will exceed the ridership at the Constellation Station is that the Los Angeles Country Club is developed with very large buildings. 

  19.  Joe Parker – that would be very interesting if they can successfully argue that a Santa Monica station will have higher ridership than a Constellation station.  The only explanations I can imagine would be people transferring directly to/from the 4 bus, or if the golf course on the north edge of Santa Monica Blvd is redeveloped as skyscrapers that are equally dense with Century City (perhaps including that 39-story tower everyone is talking about? I also don’t really see why that’s relevant – a subway station is underground and would be severed by a movement on the fault, while a skyscraper has very different design requirements and could just sway)

  20. Damien You Said: “The Courier stated in an article that Metro was giving 38.7 million to JMB realty for property comparing costs between two proposed station options on Constellation Blvd.  That statement is false in every way it can be false.
    I guess I don’t understand how the statement can be “false in every way it can be false” Maybe I have not read the articles enough to fully understand but I see BH Courier making an allegation of a $38.7 million pay off to JMB and supporting it with some form of documentation though that documentation is not quite clear. Then you start  “Fact Checking” their statement and claiming it completely false based on some MTA drawings and discussions but I missed the part where you showed that their documentation was in fact wrong.  I have no dog in this hunt (or horse in this race) so to speak but I don’t see how your assertions prove the BH Courier story false. Perhaps for the benefit of people like me you could address the actual accusation and the supposed supporting documentation that BH Courier references.  I know it’s in their court to prove the accusation but when making a claim that the accusation is absolutely false (which is what you imply) then it becomes your task to support the counter accusation.

  21. Did you miss this part?

    “As a matter of fact, the station on JMB owned property is actually $38.7 million less expensive to build than the one in front of the Hyatt according to Metro’s environmental documents.”

    “Constellation A” is the option that uses the JMB property for the entrance portal and construction staging/laydown, as shown in Figure 2-1. It would result in a total project cost of $4,241,525,000, per Table 2-1. “Constellation B” doesn’t use the JMB property, instead placing the entrance portal on the Hyatt Century Plaza property and placing construction staging/laydown areas in the middle of Constellation and along Century Park East, as shown in Figure 2-2. It would result in a total project cost of $4,280,252,000.

    The Courier’s entire reason for claiming there would be some massive payoff to JMB is that Metro estimates it would spend $38.7 million extra to use JMB’s property vs. the Century Plaza property. But the very numbers cited by the Courier show the exact opposite — the option using the JMB property results in a total project cost that is LOWER by $38.7 million.

    The Courier MIXED UP the two Constellation station alternatives. That’s the most important “fact” that the Courier failed to check, and that Damien corrected for them.

  22. My response to Metro’s response to the Courier would seem to have some relevance here:

    While Metro [and Damien] may try to take issue with the specifics of the Courier’s calculations, it does not address the fundamental issue of the role of money, influence peddling and campaign donations in the decision-making process, other than to spew forth the bland catch-all: “many businesses and individuals in the United States” are “politically active.”  Well, you don’t say…(Nor does Metro do a good job of credibly explaining why the taxpayers would “save” $39 million by buddying up with JMB, other than to cite calculations by their own “experts.”  As we’ve seen in the past, Metro’s “experts” are expert at expertly finding ways to reach conclusions which the internal Metro Kremlinologists feel will keep their very own Suslovs happy, or at least at bay.)

    Thanks for that insight, Steve [Hymon, Metro’s PR guru].  You probably would have done better to go right to the point and quote Jesse Unruh’s legendary comment on campaign donations: “Money is the mother’s milk of politics.”

    What is ironic about the above article [meaning “The Source” article, though with relevance to Damien’s piece, as well] is how Metro’s PR arm — rather than JMB’s own PR generals — is quasi speaking for JMB, somehow attempting to answer the suggestion that JMB has a significant financial motive to push for the Constellation Station.  Of course, Metro conveniently leaves out the fact that JMB actually is backing that financial motive with financial muscle on steroids, including funding the Astroturf organization “We Do Our Part LA.”  The blandness of the apologia offered above shows, in its own understated way, just how much Metro is in lockstep with JMB in designing its own PR strategy.

    In addition to the potential trip-count credits which an in-house subway station could bring JMB (financially useful in any potential effort to amend the Century City specific plan for more density and more dinero), and the other benefits from the subway JMB is already touting in its very own brochures (with the concomitant raised rent potential and even more dinero for the JMB coffers), Metro admits above that its own monetary negotiations with JMB would be filed in a “confidential” dossier until those negotiations are concluded.  In other words, we’ll find out about the extent of the financial commitment and deal-sweeteners between a Public Agency chaired by one of the largest beneficiaries of JMB’s largesse and JMB itself once those secret negotiations are concluded.  And that’s a process that is supposed to inspire public confidence?  Really?

    Rather than get lost in the weeds of the specifics of the Courier’s articles in a blatant attempt to discredit the Courier, which only serves to distract from getting to the core of the more important issue, one could do a lot better by moving away from those weeds and by looking at the bigger picture.  Let’s just say that the words of Jesse Unruh seem as true today as they ever were.

  23. What you call “a blatant attempt to discredit the Courier,” others would call “holding an ostensibly serious and credible news source accountable for the accuracy of the material it publishes.”

  24. “Rather than get lost in the weeds of the specifics of the Courier’s articles in a blatant attempt to discredit the Courier, which only serves to distract from getting to the core of the more important issue, one could do a lot better by moving away from those weeds and by looking at the bigger picture.”

    IOW, “Please don’t point out how the specifics of the Courier’s allegations against Metro show said allegations to be complete and utter BS. It detracts from my and my political allies’ ability to make vague, unaccountable claims about an unholy relationship between JMB and Metro, and generally diminishes the power of the narrative with which we’re attempting to frame the public discourse around this issue.”

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