November 30, 1994 - From the November, 1994 issue

Sony Studio Expansion: A Win-Win Development for Culver City

The issue of studio expansions has been greatly debated in Los Angeles over the last few years as communities struggle to balance economic development opportunities and preserve neighborhoods. The Planning Report presents an interview with Mark Winogrond, Community Development Director, City of Culver City and Ken Williams, Senior Vice President, Corporate Operations for Sony Pictures, on the three-year process of securing one million square feet of new construction for Sony Pictures in Culver City. The Sony expansion offers lessons for both municipalities and the development community on the paradigm of large-scale development projects in highly urbanized environments.

How did Culver City react to proposals from Sony to master plan and expand its studio facilities, and what were the City Council's goals as it grappled with the issues raised by such plans? 

Winogrond: You are asking a couple of different questions. The goal from our perspective was to stabilize and protect the role of the entertainment industry in Culver City, which has had a long-standing relationship with the studios since the inception of the city. Our goal was to stabilize and protect the industry, and take advantage of the multiplier effects that come from having the studio in the city. 

Any larger objectives/interests, as a city official, that you were weighing while entertaining the Sony proposal?

Winogrond: Well, addressing the second part of the question, we attempted to strike a balance between the studio's needs and the surrounding community. This was an unusual experience because, throughout the entire process, they were linked some times and at other times they were on a collision course. There was basic community support for what Sony wanted to do, but there was a need to achieve that goal within a certain framework within which the community could live. That was the two­fold goal. 

Mark, could you tell us a little bit about the Studio Zone you crafted? What specifically does such a planning device uniquely allow the City and Studio to do? 

Winogrond: It's merely an arbitrary devise within which you create a strategy that achieves those two goals I mentioned, which can be competing at times. A device to ensure that Sony can succeed in the way they need to and that does not injure the community, but helps it to grow. 

Mr. Williams, Sony proceeded with its development proposal when it was not politically correct for a City to be pro-growth. In hindsight, would you submit your plans in such an environment again? 

Williams: Well, we really had no choice, because when we acquired the studio from Warner Brothers, they were the last in a long line of transient owners who had never fully delivered on the City's requirement for a master plan of the studio facility. We were given one more extension and were told, we know it's not Sony Picture's fault that this planning process has lagged behind as it has, but until Sony submits its vision for the lot over the next fifteen to twenty years, you cannot increase any of the occupable footage on the lot, and any significant work will be subject to later revision should the ultimate plan not mirror the work you've done. 

We were in a situation where we had to react very quickly. We'd acquired what we had hoped to be the corporate headquarters of the company but we walked into a situation where there was very little patience for delays and we bad to put a team together immediately. I would say that in four months we did one and a half years of work in terms of the preplanning necessary to submit a plan. 

This was also at a time when the company itself was in a state of flux. We were moving a significant number of employees from the East Coast. We had virtually all of our employees in Burbank, based on our former partnership with Warner Bros. in what was then known as the Burbank Studios. Put together the emergencies and crisises of five years ago with the deadline-oriented expectation on the part of the city; it was a tough situation. 

Were the City and State's development processes a disincentive for Sony to invest in Culver City? How much of a factor are such regulatory hurdles in deciding to invest in Southern California? 

Williams: Well, you have to differentiate between the commitment we made to Culver City and dealing with the process. We did not have the opportunity to play one jurisdiction against the other. Our experience was to make the commitment to stay, then move forward as a member of the community. I think that is probably different from many companies in Los Angeles or Southern California. 

I've often said that based on the existing business and regulatory climate in California, I'm not sure why many companies deciding where to locate would chose to take on the quality of life issues as well as the high cost issues. Sony was entering the process with a much different perspective of having a long-standing commitment to Southern California. Sony really looked at this opportunity to develop the studio into its showcase for much of what we hope to bring to the industry. 

Mr. Williams, from your perspective, does the City's planning and review process facilitate or inhibit the reaching of an acceptable and economical development project? 

Williams: Mark commented earlier on the importance of studio zoning. It's a double-edged sword. For Sony, it's fine, because it allows certain things that you can’t do in other places - less restrictive height limits, operational and privacy issues are easily resolved. Certain activities such as set building don't require certificates of occupancy. There are many things that the studio zoning provides, but also, it irrevocably designates the site as a studio, so that would not be an attractive designation for a developer.

I think you have to differentiate rules and regulations, which tend to be applied on a state-wide basis, because of CEQA, from the local development process which is a more tailored exercise from city-to-city, including the willingness of the redevelopment agency to participate, and the style of a city, be it adversarial or "pro-business". Culver City is a city that perhaps unjustly has a reputation as a tough town in which to do development. Certainly, Culver City isn't a place you can steamroll through with a project. It has less to do with the city bureaucracy than the fiber and core of the people who live here. My first City Council experience was as close to a New England town hall meeting as I could imagine. People really participate and express strong opinions, but unlike other jurisdictions that I have dealt with, people don't come to the council meetings to "stop" a project, but to express their opinions. 

They expect the developer to work with the community to modify certain aspects of the proposed development; essentially, they come to contribute and be a part of the ultimate solution. In many respects, I've been gratified to work in this type of community. We could not have afforded to have the community adopt a "no­project" stance. I think that is one of the things that differentiates our EIR process compared to some of the other studios that have bad much tougher times including the need to bring in the Governor and the State Legislature. We settled our own issues in Culver City, with Culver City. 

Do cities, such as Culver City, have the economic development and planning tools necessary to take full ad­vantage of opportunities like the Sony Studio in expansion? 

Winogrond: We don't need other tools. The scale of this project is what makes it different. However, we could use financial resources. I want to get back to the question you just asked. Switching to planners' vernacular for a moment: There were two or three levels to this project. The studio, the applicant in this case, was being asked to lay out a strategy to guide decades of development. In exchange, the applicant wanted a development agreement. Thus, in exchange for giving up the city's rights to dictate their business for the next couple of decades, we needed to create a structure that gave enough comfort to the community and the decision-makers, that they could walk away from that right. 

It was very important, internally, for the city to demonstrate that we could take on a project of this scale and not do it in the poor way that many articles in The Planning Report describe. As a result, there was a simultaneous environmental process, development agreement negotiations and a community process. 

Sony did a great job with the community process. Interestingly, from my perspective, they tried two approaches simultaneously. One approach was a very organized consultant-based process, and the other strategy was based on Sony as a personal member of the community. Both approaches demonstrated advantages, but clearly the one that got them to the point of broad-based community support, vesting rights for one million square feet, was their personal explanation why they needed to expand in order to protect their position. Because of the consensus, we were able to offer a package of provisions which everyone, with some exceptions, was able to live with. A package that protected Sony's interests and the community's interests. 

We developed negotiating teams from both sides which negotiated issues at an administrative level, so we could present to the decision makers both the issues we had agreed upon, and the outstanding issues on which we disagreed which were clearly threshold issues to Sony and the community. It ended up being a very small list by the time we got to the hearings. 

Williams: However, that might have been a mistake. Whether it was out of sheer habit that elected officials expect more outstanding issues or whether it was the size of the project, in some respects, I thought it was anti-climactic, and we hadn't left enough to do. At one point, I thought we hadn't left enough on the table to "play the game". I think that is where the very strong and consistent community support weighed in. The community gave strong feedback to the elected officials.

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It's a delicate balance, and we were probably more lucky than smart. I do think that we might have been in a potentially dangerous situation because we really did workout the vast majority of the issues at the staff level. Another interesting point, shortly after we submitted the preliminary plan, we said to the city that we know this is going to be a two or three year process, but we can't stand still; can we design something that is less than full-scale development with certain parameters within which we can begin renovation?

To the city's credit, they developed significant measures for interim improvements below the threshold of CEQA, that did not create additional space per se, but allowed very imaginative uses of existing structures. This showed great flexibility on the part of the city to understand our business; secondly, it meant that by the time we went for final approval of our plan, we had three years of work that we could point to and say, "Look, you don't have to take our word that we are going to do quality work, look at the buildings we have restored to Los Angeles Conservancy guidelines." That was very helpful, and really gave us a model that few developers have a chance to replicate. 

How much can other cities and industries generalize from the Sony/Culver City master planning experience?

Winogrond: There are a lot of generalities. First, it requires a team approach. Internally, we established a team of key players from all the departments. They were the Sony team all the way through the project. Second, once we bad established that this was a worthwhile effort, viewing Sony as our partners was important. Third, the simultaneous activities were critical. And fourth, which is something that we have now applied over and over again in Culver City, we needed to identify the "public interest" in order to determine how much we should care about an issue. 

It's important to separate what we need to do, from what we not only don't need to do, but shouldn't be doing. We found that in some instances we were in their business much more than we needed to be, and in other instanccs, not enough. For example, at the start of the process, we weren't going to establish design guidelines for building on the street to reflect the existing nature of Washington and Culver Blvds. However, we established a system during the process, a system acceptable to both Sony and the city, that tells Sony's designers how they have to design the structures facing the boulevards over the next twenty years. On the other hand, we were going to regulate the signs in the middle of the studio lot, which nobody sees and is none of our business. 

Williams: I'm constantly reminded that this was not a competitive jurisdiction exercise. Many of the things we agreed to do were because in most instances we were doing them already. When we found ourselves being asked to make contractual obligations for donations to schools or provide videos for retirement centers, we were doing those types of things anyway. 

But I'll also say, that for someone coming in with choices, that type of a laundry list from the community would be a non-starter. In fact, it is a little scary for me, someone who is now a California resident looking to maintain the vibrancy of the film production industry. For example, when Fox Studios decided to build a new animation company, they went to Arizona. When companies have those kind of location options, you can't just automatically assume that businesses are willing to make that kind of investment in Southern California anymore. 

Ken, switching sides for a moment, if you were on the municipal side of the table during the processing of this development plan, how differently would you have approached this development project? 

Williams: I'm not sure that I would be able to do anything differently. The one thing in the planning process that has the lowest visibility was the long-term economic impact of a major industry on the community's future. Perhaps that's because it isn't staff's job. We spent most of our time trying to develop a sense that we were a necessary participant in a healthy and vital community. In fact, the tax burdens to maintain the services that have become expected in primarily residential communities such as Culver City, simply are not sustainable without healthy, growing, tax paying businesses. I found the CEQA-defined economic contribution analysis incredibly narrow. 

Perhaps the only opportunity that was missed is that while the surrounding area is clearly not blighted, it is on the edge of some marginal aspects of development, and the same people who we saw from the city planning perspective, were also in charge of Redevelopment. I never felt that we, as a major employer with substantial capital to invest in the community, were viewed as an opportunity by the redevelopment agency. We wrote checks all along the way, but we didn't get anything out of Redevelopment. 

Marie, if you were representing Sony before the City, what would have been your approach? 

Winogrond: I would have taken a strong position affirming that Sony wanted to get to a "yes" on their plan. I would have done more of what Sony does best, that is, get out and personally explain to people why the development is in everyone's best interest and rely less on the consultants. 

Secondly, I would have been tougher in fighting against some of the conditions which were coming from other bodies which had no stake in the outcome. The reality of the CEQA process for major projects is that regional agencies respond to EIRs with boilerplate lists. Because they weren't challenged by Sony or Culver City, they, and we, got stuck. You would not believe some of the suggested mitigation measures that became conditions for approval. For instance, Sony is supposed to submit quarterly reports on the retuning of every engine in the entire Sony lot. 

Mark, how do you decipher, as a participant in a development process, those EIR comments which are meritorious and those which are without merit or deserving of attention? 

Winogrond: By maximizing our knowledge of regional agencies and our relationships with them in order to assist in negotiations instead of just accepting conditions. 

Another real lesson I learned from this process is that, at the start of the process, a project of significance to a community is often coordinated by or brought forward by multiple parties throughout the city, and they are each working on parts. If they don't have a single vision for that effort, they end up pulling in lots of different directions as they try to bring it together. 

As we were gathering comments from the various agencies in the region, our choice was one of the two Los Angeles planning models: either a word processor mentality of assembling them into one document, or trying to blend them together in a way that still meets the basic goal while recognizing the different interests. The latter requires the team approach. However, the former happens more often, particularly with subdivision maps or development approvals, where everyone puts in their conditions. Planners call it death by 1,000 nicks. 

How onerous or easy is it going to be for the two parties to live under this developmental agreement?

Williams: In terms of the cost, most of the really expensive mitigation will be triggered only if we elect to move forward under the development phases and we have already analyzed that we can afford that cost of doing business.

From a regulatory perspective, I've entered into a contract. I have an individual who literally spent months creating an abstract of that contract in terms of the things we had to do. While the contract was extremely well-crafted, we found therein many items that were not completely clear. 

On the other hand, notwithstanding the fact that it took three years, that we could secure a one million square feet entitlement in an area that is developed as it is, and in a community that has not embraced large-scale development is a major achievement. If, as a testament to our commitment to the community, we have a three-foot binder that we have to adhere to in terms of compliance, so be it. 

Winogrond: At the end of the process, the community embraces Sony being here and trusts them.

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