June 2, 2000 - From the June, 2000 issue

Mirror, Mirror – Who's the Most Successful Mall Developer of 'em All?

Most in the planning and development fields would argue that it's impossible to go into a neighborhood, announce you're going to build a high-end retail center, and gain neighborhood support--especially if you are trying to link the new plaza to the historic Farmer's Market. So how did Rick Caruso get unanimous City Council approval and neighborhood support? By rolling up his sleeves and asking what the community wanted. TPR was pleased to talk with Rick, who explained why The Grove will help revitalize the Westside, why he's been so successful, and what developer's should take away from his approach to development.

Rick Caruso

Rick, after a 10-year struggle, you recently received final approvals and are about to start construction on The Grove at Farmer's Market. Give our readers a sketch of what the development encompasses, and its architecture.

The original project was to be a typical enclosed mall: 1 1/2 million square feet, two typical anchor stores and shopping in-between. That was 10 years ago; we weren't involved with that. When we became involved in the project, we completely redesigned that concept.

Our design is a 650,000-square-foot town center with a pedestrian street dividing the site and retail lining each side. We are even going to bring back one of the original L.A. trolley cars and have it run down the street.

It's a great gathering place, a new shopping venue, and a place where one can dine and be entertained. That's what we are going to contribute to the community.

In an era where development is so difficult in the metropolitan area and traffic densities are constant concerns, how was unanimous approval from the City Council obtained?

We work very diligently with city officials and the community and we've been very lucky--every project we've built has received unanimous approval. It comes down to one simple thing: We take the time to meet with the community and we give them what they want. Because of this, we don't have community opposition.

The Grove's high-end retail focus could be likened to the nearby Beverly Center, Santa Monica Promenade, or Century City development. So, what will set it apart froms its competing retail landmarks?

A number of factors will set this development apart from those mentioned. First, the quality of architecture, design, and materials is unparalleled in Southern California.

Second, the experience is unique. It's an entirely different experience, being inside a mall and being in an outdoor venue. The Beverly Center simply can't match that.

And third, there is really nowhere on the Westside that provides a place to shop, eat, see a movie and hang out in a nice environment. We're filling a unique void in the marketplace.

Let's take a half-step back: Given your development company's experiences, how difficult is it to successfully develop urban infill as opposed to suburban development in Los Angeles?

There are many differences both from a municipality and political standpoint. When you are dealing in the areas like Calabasas or Thousand Oaks you are dealing with difficult politics-people are much closer to the issues and are generally anti-development.

In contrast, the dynamics of a larger city, like Los Angeles, are much different and a little easier. It's just a different culture.

So what does that say about the opportunities re: urban infill in Los Angeles. The general impression after Playa Vista is that it's too hard, if not impossible. Are you saying the opposite?

Yes. In most jurisdictions you're going receive a warm reception if you are offering a quality project, are sensitive to community desires, and have a track record of delivering on your promises.

Under the new Charter planning functions are going to be devolved. Will area planning councils and the like, improve or dissuade developers like yourself from going forward with urban infill?

It will make people change the way they do business. Neighborhoods should be more empowered.

On the flip side, I don't agree with politicians shirking their respondibilities-simply differing decisions to community groups is unacceptable. They need to make tough decisions for the betterment of the City-that's what they get paid for-they shouldn't be able to hide behind community organizations. At the end of the day the buck needs to stop with the local Council Office, and that office needs to focus on the City's best interests.

It's going to be a rough road and no one knows how it will work, but its healthy that we have new life coming to the Council and that might encourage fresh ideas. In the end everything will balance out and we will be better for it.


Let's turn to some of the difficulties of managing properties like what you've proposed. You've articulated a vision for "The Grove" as a place where people can bring their children to enjoy a safe and clean environment. How do you plan to regulate the clientele and the environment to meet that expectation? By what criteria do you judge who can and cannot come to "The Grove"?

Our business is different than our competitors-our plan is to own these centers for a long time-we don't build to "flip" the properties once completed. Accordingly, we make a greater investment on the front-end and throughout the life of the center's operation and management.

We're also vertically integrated. We have our own construction, design, engineering and management divisions. It's our own people taking care of these centers and that leads to a higher standard of quality and care.

And third: From a safety standpoint, we have a zero-tolerance policy. We have a commitment to keeping it clean and safe and the resources to provide that level of service. Multiple landowners can't make that promise. We can't prevent people from walking on the property, but we don't have to tolerate problems.

Let's talk about the transit and how it will be integrated into the project. How will it work and what are the economics?

I think it's going to be a huge draw. It will take people from The Grove to the original Farmer's Market. My hope has always been that it will go off the property and connect to the merchants along 3rd Street--that would be simply phenomenal.

What did the community get as amenities and mitigation that brought them on board? And when will the project come online?

From a design standpoint they got an open-air center that is half the density of an enclosed mall previously approved and permitted. Second, we limited the amount of restaurants and liquor licenses approved for the property. Third, we provided adequate on site parking. And lastly, we set up a fund that the Council Office can access to do street calming.

In terms of coming on line, the current date is February 2002-we recently pulled demo permits and should start demolition within three weeks.

Let me transition from your dealings with the community on this particular project to the broader topic of community involvement in the development process. The school district is trying to locate 100 sites for new schools. Anywhere it looks it runs into opposition. What advice can you offer the school district in dealing with complex projects in dense neighborhoods?

The first thing I do when going into an area is meet with community groups. I go with a blank pad and ask what they want and what their concerns are. It's all about community empowerment, not just in pre-development but throughout the life of the project. The minute they have ownership, they'll support it. Anybody that wants to get a project built needs to start that way.

As Chair of the City's Department of Water and Power Board, what are the issues your face re: infrastructure needs and demands for water and power in this basin? What's the priority list for you and the Board?

Our first priority when Mayor Riordan asked me to come back on the Board was-make it financially viable. The Department was close to bankruptcy and there was a big question mark regarding DWP's ability to compete in a deregulated economy. Today we have decreased debt by over $2.5 billion and are on our way to being debt free by 2003.

However, from a resource standpoint, we can't forget that there will always be growth and we have to provide for it. To compensate we need to look towards renewable resources.

One more question related to DWP governance. DWP General Manager David Freeman is again talking--as he did at the close of charter reform--about reconstituting and having just one board to report to instead of a Commission, Council, and Mayor. Where will DWP governance be at year's end?

There's a breach between what we need and what we're realistically going to get. We need a more streamlined form of governance- there are simply too many bosses. It will be very difficult to compete in a deregulated economy with our current framework. The board needs to be more independent. The Mayor and City Council can have oversight authority on a small number of issues but commissioners should be held accountable.

Last question: The election cycle for the next Mayor of L.A. has begun in ernest. What should the candidates for Mayor be discussing during the campaign that would be relevant to the City you envision?

The number one issue is education. If the Mayor does nothing else, s/he needs to fix the School District. It needs to be broken up into smaller regions and should be the best in the country. Without a strong school system, new business attraction and vibrant neighborhood life will be severely affected.


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