CleanTech Manufacturing Center is a planned development in Downtown Los Angeles. The 19-acre tract on which the green industrial belt would be built was just acquired from the state of California for $14 million. Originally owned by Crown Coach, a builder of school buses, the land was supposed to be a site for a state prison, which was never built because of community protests. Thoroughly cleansed of toxics, it is now ready to receive one or more anchor tenants. The property once laced with toxic contaminants is where city officials hope to build Los Angeles’ future epicenter of clean technology and green jobs.
Green Building Program in Los Angeles
The Green Building Program was approved by the Los Angeles City Council in 2008.
Requirement
- Meet the intent of the US Green Building Council’s (USGBC) Leadership in Energy and Environmental Design (LEED®) Certified level. (Formal certification by the USGBC is not required.)
- Project team must include a LEED® Accredited Professional (LEED® AP). Information about local consultants can be obtained at: www.usgbc.org.
- Both by-right and discretionary projects must receive clearance prior to the issuance of a building permit.
Subject Projects
- A new non-residential building or structure of 50,000 gross square feet or more of floor area; or
- A new mixed use or residential building of 50,000 gross square feet or more of floor area in excess of six stories; or
- The alteration or rehabilitation of 50,000 gross square feet or more of floor area in an existing non-residential building for which construction costs exceed a valuation of 50 percent of the replacement cost of the existing building; or
- The alteration of at least 50 dwelling units in an existing mixed-use or residential building seven stories or more, which has at least 50,000 gross square feet of floor area, for which construction costs exceed a valuation of 50 percent of the replacement cost of the existing building.
LEED® is comprised of various Rating Systems designed by the USGBC that establish green development standards. The existing Rating Systems include: New Construction (NC), Existing Buildings (EB), Commercial Interiors (CI), Core and Shell (CS) and Homes (H).
Southern California-based Shangri-La Industries and Thompson National Properties are forming a $100 million fund to make buildings more environmentally friendly and energy efficient – a big chunk of money for the growing green building industry. The companies’ $100 million Green Building Fund will be aimed at “value-add commercial and industrial assets that can be retrofitted, repositioned or redeveloped as energy efficient and environmentally sustainable,” according to the companies’ news release.
CALIFORNIA GREEN INNOVATION INDEX (2009): The Index provides insight on a California culture that includes three decades of ambitious state environmental and energy policies, putting California on a path to energy independence and one of the lowest per capita carbon footprints in the nation, all the while growing one of the most vigorous economies in the world.
Large Industrial Property Owner In Distress
The largest private landowner in downtown Los Angeles said it may have to file for bankruptcy protection, the latest sign of how the credit crunch has frozen a multibillion-dollar revitalization of the city’s downtown.
Real-estate firm Meruelo Maddux Properties Inc. said Thursday that it was working to reach agreements with four lenders after the developer stopped making interest payments on 26 loans valued at $266 million. Three of those loans are due, and the company hasn’t been able to extend them. “The debt capital markets have totally shut down,” Andrew Murray, the company’s chief financial officer, said in an interview.
It is the latest shoe to drop for Los Angeles’s downtown district, which has been the focus of a decade-long renewal project designed to convert old warehouses and office buildings into lofts, high-rise residential towers and an entertainment and retail district.
Meruelo Maddux, which owns land but has done little development, has reached 50% occupancy on its first luxury rental building, Union Lofts, which opened in mid-2008. Some of the prominent industrial real estate properties owned by Meruelo Maddux include: The Overland Terminal on Olympic/Alameda; Sci-ARC on 3rd; Seventh Street Produce Market on 7th; Salvation Army Building at 801 E 7th Street; Rykoff Building now occupied by American Apparel at 7th/Alameda; and the Chaffee Warehouse at Olympic and Alameda.
Meruelo is trying to sell its buildings to pay down debt and to persuade its lenders to restructure loans, but said that if those options fail, a bankruptcy filing could be a “strategic alternative.”
Full article printed in The Wall Street Journal, page A3
CMBS Defaults Expected to Increase in 2009
Of $25.7 billion in distressed assets, the Western U.S. takes $10 billion. However, the good news is that of all commercial property types in the U.S., Industrial has the lowest distressed amount of $700 million out of $25.7 billion, compared the higher amounts of Office, Retail, Apartment (multi-family), Hotel, and Development. Industrial includes warehouse and manufacturing buildings. According to Real Capital Analytics Troubled Asset Radar.
Some of the owners of the distressed or potentially distressed properties are taking preventative measures and seeking bridge loans prior to their primary loans expire. Many bridge loan terms max out at 18 months and have interest rates from 10-18%.
City of Vernon – Competitive Utility Rates
The City of Vernon’s Light and Power Department produces attractive electric rates compared to Southern California Edison. Typically Vernon is 30-40% lower than SCE. Rates vary between small/medium and large power users. The City of Los Angeles DWP also beats SCE in power rates, but typically Vernon is the cheapest. However, during the power shortage a few years back LA’s DWP was selling power to many neighboring cities and making a huge profit. SCE and Vernon both produce power and buy it on the free market so they are somewhat vulnerable to fluctuations in the power marketplace.
Additionally, Vernon is 30-60% lower in supplying water given a typical user consuming about 6,000 HCF (hundred cubic feet) of water per month.