When developers announced the $1-billion Oceanwide Plaza project in 2016, they promised a crown jewel in the booming downtown Los Angeles renaissance and said it would be “one of the most significant mixed-use developments in the history” of the city, that would “magnificently” reshape the skyline.
But years after construction halted in 2019, the unfinished and abandoned luxury three-tower site next to Crypto.com Arena has become a symbol of the city’s dysfunction since controversy erupted over its graffitied glass facades in recent weeks, observers argue.
“This building is a huge sign we have a decaying downtown and we have a big problem in LA, that this kind of thing can happen in downtown,” developer and former Los Angeles mayoral candidate Rick Caruso told Fox 11 News Feb. 15. “I’ve never heard of such a thing happening before.”
Last week, the Los Angeles City Council agreed to allocate nearly $4 million in city funds to secure and clean up the property, after the overseas developer failed to meet a Feb. 17 deadline to do so. The council also instructed city attorneys to seek reimbursement, but the process may be complicated as it is in bankruptcy in China.
The site has also become popular in recent weeks among thrill-seeking skydivers, raising safety concerns and prompting city officials to crack down by ordering the company to secure the site.
The Los Angeles Police Department said last week it has already spent 3,000 hours securing the complex and arrested 18 people for trespassing in recent weeks.
Some have said the estimated 27 floors of graffiti on the development’s glass facades is art, not vandalism.
“This building has needed love for years. If the owners aren’t doing anything about it, the streets of L.A. are happy to make something out of it,” a graffiti artist told Hyperallergic, an art website based in Brooklyn, New York, earlier this month.
The controversy sits at the intersection of some of the city’s most entrenched issues, including a lack of affordable housing, and the corruption-plagued development machine that recently ended in prison sentences for two former city councilors.
The embattled Hong Kong-based developer behind Oceanwide Plaza—Oceanwide Holdings Ltd—was named along with other major Chinese developers in a 2018 FBI search warrant related to the years-long corruption investigation of former Los Angeles City Councilman Jose Huizar, who federal investigators say ran a complex criminal scheme accepting bribes and kickbacks in exchange for greenlighting favored developments.
Oceanwide was never charged with any crime. Mr. Huizar pled guilty to one count of racketeering and tax evasion and was sentenced to 13 years in prison last month.
Oceanwide’s parent company, according to media reports, is being liquidated after an order from Hong Kong’s high court, which follows a similar, earlier order from a Caribbean court. The company has also been sued by a major Chinese bank for defaulting on loans totaling more than $1 billion, and by the security company hired to protect the Los Angeles site. Earlier this month, the project’s general contractor filed a petition in U.S. Bankruptcy Court to force a sale of the property.
After sinking more than $1 billion into the three-tower project, which envisioned a five-star hotel, condos, and retail space, the developer acknowledged, according to real estate media outlets, it would need to put in at least another $1 billion to complete it—and ultimately abandoned it.
Now, city officials have said it would cost closer to $2 billion more to complete.
Mr. Caruso said in the Fox 11 News interview he has declined to buy the development as, he said, it would cost more to complete than be worth when finished, but suggested there’s a unique business opportunity amid the collapse.
“It’s more complicated now there’s no doubt because of the bankruptcy. But the bankruptcy might also create an opportunity from a business standpoint to cut the right deal,” he said.
Mr. Caruso suggested the city purchase the property with federal funding or via private investment, and convert it into workforce housing for police, firefighters, and teachers to live close to where they work.
Others on social media suggested the city purchase the development and repurpose its 900 hotel rooms, suites, and condominiums to house and provide services to the region’s homeless, thousands of whom are on nearby Skid Row, as an alternative to purchasing and converting hotels.
But neither would be a quick fix, said Donald Spivack, a professor at the University of Southern California’s Sol Price School of Public Policy.
“Is there a short-term ability to make use of the property to solve some of the housing crisis in downtown or in the city? I don’t think it’s something that you’re going to be able to get to the point of occupancy in a matter of just a few months,” Mr. Spivack told The Epoch Times.
However, he suggested the city should tap various funding mechanisms to finish the property and introduce a “much broader range of housing prices into that complex.”
The complex was slated to include 340 luxury units, as well as 164 branded Park Hyatt Residences. Premium 2-bedroom condos in the South Park neighborhood of downtown, where the development is located, often sell for around $1 million, but can be much higher with five-star amenities and hotel branding attached.
Mr. Spivack said the federal government would be more apt to allocate funds to such a project given the state’s shortage of housing, and suggested infrastructure and transportation funding, as well as local mechanisms, could help.
“I think it’s important that this project get back underway. It’s a very critical location,” said Mr. Spivack, also a former deputy chair of the city’s Community Redevelopment Agency. “There’s a lot of opportunity there to do things that are good for the rest of the city that could spill over to other properties.”
Richard Kent Green, director of the USC Lusk School for Real Estate, also pointed to an affordability problem with the site from the get-go.
“Incomes have never been high enough in DTLA to support the kind of rent necessary to do large, luxury, apartments. Land values in DTLA are generally not high enough to justify high-rise steel construction. And managing such buildings is expensive,” Mr. Green wrote in an email to The Epoch Times.
Requests for comment to Councilman Kevin DeLeon, who represents the area where the project is located, and the mayor’s office were not returned on deadline.
