Fact Check: There Is No $38.7 Million Payout to JMB Realty in Westside Subway Plans
1:19 PM PDT on May 15, 2012
(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.
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