Yaroslavsky to NBC Universal: Save Studio Production Jobs

Zev, in a recent letter to Universal Studio President Ron Meyers, you questioned a portion of the Studio’s development plan, which includes their building nearly 3,000 housing units on a portion of Universal’s back lot. What about their plans most upsets you?

One of the troubling things about L.A.’s economy is the loss of its manufacturing base. And, one of the contributing factors to that is the loss of zoning that permits manufacturing within the city limits. Too many industrial/manufacturing zones have been changed to commercial or residential designations to permit office and residential development where only manufacturing was once permitted. Once you lose your manufacturing zones you can never recreate them.

Universal is a factory that creates television shows and motion pictures. That is primarily what they do. What allows them to do this are the sound stages, ancillary studio facilities and their back lot. Universal’s back lot is not only a production venue, but it’s also a major tourist attraction and one of the most popular on the Universal Studios tour. What Universal originally proposed as part of their master plan was to eliminate a large portion of their back lot, change the zoning and build 3,000 housing units within a few feet of the remainder of its production campus. This would have been a short-term money maker for the company but a long-term loss for the L.A. economy.

The creative people at Universal have long shared this concern. When General Electric owned NBC/Universal, they saw the housing development as a way to monetize the real estate. What they did not consider was the long view of what this would mean for the studio and its contribution to motion picture and television production in the region; and by extension, the impact it would have on the regional economy.

This is not one of the traditional LA and use battles where you have the real estate developer up against his neighbor. This is a contest of visions between making a quick and substantial buck or investing in the long term future of our economy. The motion picture and television industry is a major employer in Los Angeles. It’s our hometown industry. It is a wealth producing industry for our city. We should protect it rather than cause it to disappear.

It is apparent to me that Comcast, which bought NBC/Universal from General Electric, are in this business for the long haul. They have a long View of the studio and theme park and are not necessarily looking for a short-term real estate fix. I have had conversations with the new ownership as well as the studio leaders, themselves. Based on my conversations, I thought they would be open to my suggestion that they scrap the residential component of their plan in favor of the longevity of their production facilities.

I have always supported the expansion of our hometown industry in Los Angeles. I took a lot of heat as a city councilman when I supported 20th Century Fox’s proposal to give up their 2,200 condominium tract map in favor of an expansion of their production capacity in Century City. it turned out to be a good deal for the studios and their neighbors. Most importantly, it was the shot in the arm that our economy needed at that time (the early 90’s).

The NBC/Universal issue is very similar. What our economy needs for the long-term is a major employer who pays good wages and produces primary, secondary and tertiary economic activity. Expansion of sound stage capacity, production facilities, ancillary uses such as editing rooms and post­production facilities will have the support of my office and the community at large. In a city that has seen much of its studio capacity shrink over the last several decades, preserving production capacity is far more important than 3,000 high priced condos in Universal City. I would recommend that we look at the subway stop at Universal City for housing rather than the studio’s back lot.

Universal Studio’s planned development lies in both LA County and LA City. What’s within the county’s jurisdiction? What’s within the city?  Elaborate on how the two jurisdictions will process the proposed project?

A large part of the studio lies in the unincorporated area of the county, and this is another historical anachronism that makes no sense to anybody. The remainder of the back lot is in the county, the two hotels—the Sheraton Universal and the Universal Hilton—are in the city, and the closer you get to Lankershim Boulevard, the more real estate lies in the city limit.

Some of the development proposals that they’ve made are in the city portion, and some of the proposals are in the county portion. The proposal they made for the residential development would annex the county portion into the city. The 3,000 housing units would be annexed into the city. If they decide to jettison the 3,000 housing units, then the need to annex that land into the city disappears because it would essentially be a status quo situation.

The city will have the first shot at this. The City Planning Department and the County Planning Department have been working together to review the environmental impact report, but the City Planning Commission will hold the first hearings. Once they’re done, that document will come to the County Planning Commission for approval, and then they will both appear before their respective legislative bodies—the City Council Board of Supervisors.

The ‘Evolution Plan’s’ draft environmental impact report was released in 2010, and the expectation was that it might be concluded this year, in 2012. Is that still a fair expectation? 

No. When they originally proposed this plan they were hoping to be done in half a year. To call that optimistic would be an understatement. A lot of things happened in the interim: the economy collapsed, the Jim Thomas proposal on the Metro site died because it was economically unfeasible, and Comcast bought General Electric’s majority share of the company. I don’t think the final decision on Universal will be made this year. I think the environmental impact report will probably get through the commissions this year. Whether they’ll be getting through the City Council and the Board of Supervisors this year depends on them, as well as on us. Time will tell.

You’ve framed your concern with NBC/Universals housing plan as economic. Given your views on the importance of movie productionto Los Angeles, what, if any,  competitive disadvantages does the film industry face in metro LA that result in Universal’s bacik lot being one of the few still producing TV and film. 

It depends on what you’re looking at, but the studio space in this town is pretty well subscribed. There is a shortage of soundstages, and there certainly is a shortage of back lots. Obviously there is a lot of production that has moved elsewhere around the country and around the world. Those are for economic reasons that have something to do with the cost of doing business here, but a lot of it has to do with currency exchange rates. The reason that a lot of production has gone to Canada, for example, is because the exchange rate between the Canadian dollar and the US dollar was very favorable to them moving. So, production moved to Vancouver or Toronto.

Universal’s back lot is not just a production venue—it’s also a tourist attraction. Universal theme park tours take you through the back lots, through some of the most historic buildings and sets on the property. People come from all over the world to take tours of that back lot. When you look long-term at the economy of Los Angeles, one of the legs of our economic stool is going to be tourism. And one of the major tourist attractions that we have in Los Angeles is Universal Studios. Universal announced a few months ago that they’re going to build a Harry Potter attraction, and that is huge economic news. When Universal built the Harry Potter attraction in Orlando, their attendance went up 20 percent.

Many of the people who live in that area are part of the entertainment industry. Whether they are actors, editors, makeup artist, set designers, or cinematographers, the entertainment industry is one of the biggest in this region. The cultural arts industry, which includes television and motion pictures, is an economic engine for Los Angeles County, and we need to be very protective of the assets we have, and to create opportunities to grow those assets.

Let’s close by pivoting from your economic concerns for LA’s entertainment industries to your recent comments on redevelopment ending in Los Angeles and statewide. Do local governments now have the tools to nurture and grow the economic base of their jurisdictions?

Redevelopment was initially conceived of as a way to eliminate blight. It was not principally an economic development tool in the universal sense—it was an economic development tool aimed at turning around blighted communities. When I first became an elected official I was a big supporter of redevelopment. And, I still am a supporter when it comes to eliminating blight in many of our urban areas.

But redevelopment in the last couple of decades has become a honey pot for areas that are not blighted. The County of Los Angeles has filed multiple suits against cities—the city of Los Angeles, the City of Arcadia, among others—where the cities have argued that proposed redevelopment areas were blighted when, in fact, they weren’t at all. The proposal by the City of Los Angeles several years ago to expand the central business district redevelopment plan included areas that could not have been considered blighted by anybody’s definition. Another example is Bunker Hill. This area remains a redevelopment district and continues to spin off tax increment funding, even though it has long ago ceased to be blighted.

What’s the downside of this? The tax increment generated by these redevelopment areas are funds that normally would have gone to the city’s general fund, which, the last time I checked, was in a world of hurt. The city, county, and school district’s general funds are denied these tax revenues. It’s not like this is a win-win situation. When the redevelopment agencies continue to exist even though blight has been eliminated, they are winners while the traditional taxing agencies are the losers.

This is unacceptable, and hundreds of millions of dollars have gone to underwrite commercial projects that make no economic sense on their own. The private sector should build what they’re entitled to build. If it makes economic sense, build it, but if it doesn’t make economic sense then they probably ought not to build it; and certainly they shouldn’t ask tax-payers to subsidize them. That’s what Governor Brown has concluded. He was Mayor of Oakland, and he knows the games that are played with redevelopment.

Cities got hooked on this tool, and they don’t want to give it up. The City of Los Angeles is sitting on nearly a billion dollars in cash through all of its redevelopment agencies. That’s a billion dollars that is not going into the city’s own general fund, the county’s general fund, or the school district. It’s gotten so bad that there were actually bills introduced to the state legislature over the last few years to eliminate blight as one of the prerequisites of enacting a redevelopment agency, thus standing redevelopment on its head. 

This is going to be a very tumultuous period; this is uncharted water, to say the least. There will be mistakes made, and there’s going to be a lot of tumult. But at the end of the day, redevelopment as we have known it has got to end. It’s time to go back to the original purpose of redevelopment. I’ve talked to leaders of both houses of the legislature; I’m supportive of a new structure for redevelopment that would explicitly focus on blight.