Last September, I took a closer look at the peculiar bidding frenzy surrounding a federal property known as “the ziggurat.” At that time, the bids had skyrocketed to $154 million. A few weeks later, it changed hands for a whopping $177 million, despite an earlier auction where no bids were placed at the minimum price of $75 million, largely due to buyers being barred from demolishing the structure.
So, is everything hunky-dory now? Not quite. I had my reservations about the potential developer getting ensnared in a web of bureaucratic red tape, but I didn’t foresee what followed:
A U.S. government agency has pulled the rug out from under the sale of the iconic Ziggurat federal office building in South Orange County, nullifying the deal with the original auction winner and handing it over to Hoag Memorial Hospital Presbyterian, which had submitted the second-highest bid. This was confirmed by both Hoag and the other bidder on April 2.
Hilco Development Services of Long Beach, which had made the winning bid of $177 million last fall, announced on Wednesday that the General Services Administration (GSA) decided to rescind its purchase after Hoag sought an injunction to halt the sale.
Hoag’s lawsuit claimed that a Hilco partner breached auction rules by attempting to manipulate the sale price.
In response, Hilco contended in court documents that no collusion occurred and that all actions during the auction were above board.
Hilco attorney Todd Theodora expressed confidence in their case, asserting that the firm believes the GSA will ultimately uphold its initial decision.
Indeed, it appears that six months later, the auction remains mired in uncertainty.
The hurdles presented by our legal system are formidable barriers to new development. Even after this particular case is resolved, the developer will still have to navigate a labyrinth of requirements to secure approval for any new projects. Once that approval is finally granted, local community groups will likely spring into action, filing lawsuits to obstruct development.
There are valid arguments about whether elected officials or the judiciary should have the final say in construction decisions. (Personally, I’d prefer property owners to have that authority.) However, the most dysfunctional system is one in which no single level of government can effectively greenlight a project, while multiple entities can easily block it.
One potential legislative proposal aims to slightly alleviate the barriers to construction:
A new bill introduced by Assemblymember Buffy Wicks from Oakland seeks to exempt most urban housing projects from the 55-year-old California Environmental Quality Act (CEQA).
If this bill passes—which is a considerable “if” even in today’s pro-development political climate—it would eliminate environmental lawsuits against proposed apartment complexes, remove legislative squabbles over which projects deserve exemptions, and curtail the use of the law by environmental justice advocates, construction unions, and anti-development homeowners to extract concessions from developers or prolong approval processes indefinitely.
While this initiative won’t resolve all the hurdles—many other obstacles to construction would still linger—it would at least somewhat mitigate the so-called “Nimby” problem in California, a critical factor driving residents out of the state.
PS. There was a moment in California’s history when it stumbled into an effective housing policy. But take a look at what transpired:
