Las Urbanistas

The woes of sub-prime lenders, several with offices in Orange County, may make a dent in the county’s hot office market, some analysts say.

“If you get a bunch of [mortgage industry offices] coming back on the market all at once, combined with the new buildings, there is a possibility the vacancy rate could go up fairly significantly,” Knott said.

“For the long term, Orange County is a great market,” he said. “On the short term, there could be pain.”

But one of the county’s largest office landlords, real estate investment trust Maguire Properties Inc., said Tuesday that the market would be only minimally affected if Irvine-based sub-prime lender New Century Financial Corp. filed for bankruptcy protection.

Los Angeles-based Maguire leases about 267,000 square feet of space to New Century in two buildings at Park Place, a landmark office campus along the San Diego Freeway in Irvine. Maguire also has agreed to lease about 190,000 square feet to the lender at its newest development, an office building at 3161 Michelson Drive that is scheduled for completion this year.

Those leases are below the latest rates Maguire and other landlords are commanding in Orange County, the company said. If New Century gives up its space, Maguire said, it could benefit by renting it to another tenant at a rate as much as 52% higher.

The rates that New Century is paying in the existing buildings “are rock bottom,” Chairman Robert Maguire said. “We wish them well, but we have really minimal exposure.”

If it took a year to re-lease the existing space, lost rent would total about $6.5 million, he said. The company earned $70.3 million, or $1.11 a share, last year.

But leasing activity in Orange County has slowed lately as tenants wait to see whether rents will come down from the addition of new space, said real estate broker Greg May of Grubb & Ellis. Most of the 600,000 square feet that the owners of Ameriquest Mortgage Co. put on the market last summer has been subleased. New Century, however, might have trouble finding subtenants if it pursues a similar tack.

“Tenants may say that they don’t want to sublease from a mortgage company that might not stay in business,” he said.

The mortgage industry occupies more than 5 million square feet of Orange County’s office inventory of more than 74 million square feet, according to real estate brokerages. Demand for office space is also coming from biotechnology, healthcare, technology, professional service and other firms.

Maguire is one of the largest landlords in Orange County after Irvine Co. and expects to own more than 6 million square feet after completing announced acquisitions and sales. Millions of additional square feet are being built or are planned by Maguire.

SAN FRANCISCO — It’s a good time to be Thom Mayne. A founder of the Los Angeles-based firm Morphosis, he has evolved from brash outsider into one of the country’s most celebrated architects in less than a decade by infusing his industrial-machine aesthetic with a slyly idiosyncratic sensibility. And he pulled that off while taking on an improbable mix of clients, including public school administrators and government bureaucrats.

Tim Griffith/ Morphosis
The new San Francisco Federal Building, designed by Thom Mayne: The exterior includes a screen that curls just over the top of the building.

Tim Griffith/ Morphosis
San Francisco Federal Building At Seventh and Mission Streets, a new structure tries to balance security and transparency.

Tim Griffith/ Morphosis
The lobby of the new San Francisco Federal Building uses leaning columns to help create a sense of airiness.

His recently completed Federal Building in San Francisco is his most powerful government work to date, its slender form and perforated metal skin a clever play on notions of transparency in an era when the fear of terrorist attacks is prompting government agencies and corporations to turn their offices into armored compounds.

The building may one day be remembered as the crowning achievement of the General Services Administration’s Design Excellence program, founded more than a decade ago to remedy the atrocious architecture routinely commissioned for government offices. Under the leadership of Edward A. Feiner, the agency’s former chief architect, it has pushed through some of the most important civic buildings since the New Deal, including a stellar courthouse designed by Richard Meier in Islip, N.Y., and Mr. Mayne’s new federal courthouse in Eugene, Ore.

Since Mr. Feiner left the agency in 2005, some have fretted that the program may be unable to maintain that level of ambition, raising the prospect that the San Francisco building, which will be formally dedicated in July, might serve as a bookend to a heady phase of government-sponsored architecture.

Its 18-story structure rises on a choice site across from the city’s imposing federal courthouse, at the seam that divides the densely packed towers of the downtown civic center and financial district to the north, and the more rugged, horizontal landscape of the warehouse district to the south.

Playing off that contrast, the federal building offers two radically different faces to the city. On the north side, a stoical rectangular green-glass facade conjures landmarks of late Modernism like the United Nations in New York, with its conflicting messages of social progress and bureaucratic conformity. A series of delicate vertical glass fins serve as brises-soleils, adding an unexpected note of refinement.

That image of postwar Modernism turns out to be a trick, of course, and the hint is in a barely visible, uneven stainless steel screen curling just over the top of the building. As you walk toward its south end, the screen unfurls across the entire facade, finally lifting at the base of the building to create a canopy over the edge of a small public plaza.

The effect is mesmerizing. The texture of the screen shifts with the quality of the light, turning hard and gray as stone on bright days and more transparent when the light softens, allowing you to discern the skeletal frame underneath.

The delicacy of the composition is offset by a big, cube-shaped terrace that punctures the south facade. A narrow seam extending down one side of the cube continues across the plaza, like a tear across the building’s fabric. (As part of a permanent light installation conceived by the artist James Turrell, the cube will glow in various colors at night.)

The play between transparency and opacity plays up the porous relationship between inside and out, as if the federal bureaucracy had been pried open and reconnected to the world around it. Parts of the screen will open and close mechanically to regulate the light, further breaking down the facade’s uniformity and hinting at the busy and varied activity taking place inside.

As with all of Mr. Mayne’s work, this formal experimentation serves a heartfelt social agenda. Despite the high level of security the building demands, the architect forged a rich hierarchy of public zones. The concrete cylinder bollards that surround the plaza and protect it from car bombings are scattered in an informal pattern and double as stools; a cafe anchoring the southeast corner of the site will give government workers a chance to mingle with the masses at lunch hour.

The main entrance features a single tilting concrete column that braces one corner of the building, setting the entire composition slightly off balance. That effect is repeated in the lobby, framed by leaning columns that heighten the sense of the building’s looming weight above.

Like the plaza, the lobby is intended as a social mixing chamber. A staircase at the front descends to a day care center, a gym and a meeting room that will all be accessible to the public. A grand staircase anchoring the back draws you toward the elevator banks, which also serve as an informal seating area.

As you reach the top of the staircase and turn back toward the lobby, views of the busy lower level open up, including one of a playground. On the left side of the lobby, a long, faceted form that contains the upper-level offices shoots outward, punching through the front window and cantilevering over the street, smashing the boundary between inside and out.

Mr. Mayne’s nostalgia for Modernism reasserts itself in the elevator ride to the office floors. Modeled on the intricate skip-stop system that Le Corbusier invented for his 1952 Unité d’Habitation building in Marseilles, France, the elevators stop on alternate floors. From there, stairs lead up or down to big, loftlike spaces saturated with light.

The sense of airiness is magical. Protected by the perforated steel screen, the windows can be operated from inside, and when they are open, a cool breeze drifts through the space. Beautiful undulating concrete ceilings help channel the air from north to south, sensitizing us to the natural world waiting outside. (Unfortunately, some of this effect has been lost by the erection of a crude system of partitions and office cubicles.) Aside from the compositional inspiration, what the architect is clearly seeking to retrieve from Modernist forebears like Le Corbusier is an unflinching optimism. In a world where commercialism regularly trumps public service, Mr. Mayne seems to be telling us that the values of Old-World Modernism may not be so bad. Rather than obliterate this architectural past, he aims to imbue it with the human element that Modernism forgot, the quirks and odd delights that can root a building in personal and emotional territory.

The sad paradox is that this vision may be threatened, unless the Design Excellence program survives intact. The Federal Building was Mr. Feiner’s last major commission as director, and few architects believe that this level of ambition will survive his departure. Let’s hope they’re wrong, and that this project will inspire further daring government commissions.

Herman Wouters for The New York Times

Corey M. Reardon and Hudson Young live in an apartment along the Herengracht, or Gentlemen’s Canal.

Even though he lives in an Amsterdam canal house built before 1593, Corey M. Reardon expects 21st-century, American-style service. And he has learned to go out of his way to get it.

Every other week, Mr. Reardon stuffs a suitcase full of stained and soiled clothes and leaves his apartment along Amsterdam’s swankiest canal, bypassing boatloads of envious tourists too busy admiring his residence to suspect his dirty little secret.

Ten hours later, he and his grimy cargo land in northern Virginia. Awaiting him there, in the interest of love and clean laundry, are his partner and, almost equally important, his dry cleaner.

Hauling dirty clothes across the ocean to have them dry-cleaned is Mr. Reardon’s signal to the Dutch that some of their service industries are to him, like his home, a bit dated.

“Dry cleaners here are only open during working hours typically, and it takes three days to get dry cleaning done,” he said. “In the U.S., it’s half the price and you can drop it off in the morning and pick it up in the evening. That’s inconceivable here.”

Mr. Reardon, 45, who owns an international market research company, smiles when he tells this story, pleased by how he has outsmarted the system while, at the same time, aware of how silly his minor grievances may sound.

Buying and renovating his first home abroad — together with his partner, Hudson Young — proved almost easier than finding a place to get his shirts done. But Mr. Reardon still had to find innovative ways to mix and match Dutch tradition with American expediency.

The first challenge was finding a place.

The couple, self-employed Americans who married here four years ago, looked at more than 20 properties in just a couple of months. All the properties needed work.

“You really needed to look at properties with an imagination,” said Mr. Reardon, who moved to the Netherlands 13 years ago but waited 8 years before buying. “Everything you looked at needed to be renovated. So it was a bit daunting and frustrating.”

They eventually settled on a 100-square-meter, or 1,076-square-foot, apartment on the second floor of a brick-front town house along the Herengracht, or Gentlemen’s Canal. The building was once home to a coffee bean trading company. Mr. Young, 38, spends more of his time in Virginia, where he owns a scholastic-supply company.

The Amsterdam apartment, just a two-minute walk from the canal house in which Anne Frank and her family hid from the Nazis for more than two years until they were betrayed, cost 400,000 euros, or $525,000, when the couple bought it five years ago.

Apartments in Amsterdam last year sold for an average of 2,915 euros, or $3,831, per square meter, or about $356 a square foot. And property along Amsterdam’s canals, like Mr. Reardon’s home, can cost anywhere from 3,000 euros per square meter, or about $366 a square foot, to more than 6,000 euros per square meter, or about $733 a square foot, depending on the location, according to local real estate agent associations and tax authorities.

Mr. Reardon’s apartment was in better condition than most of those the couple had seen, but the 12-foot-high ceiling and the fireplace’s mahogany mantel were chipped or peeling and urgently in need of repair. Also, the parquet floor was stained and faded.

As usual, Mr. Reardon wanted the best of both worlds: a restoration that would honor his new home’s rich Dutch history, coupled with a renovation that would feature decidedly modern American amenities.

Some of his ideas — like an open kitchen — were immediately pooh-poohed. “Dutch friends told us that was a big mistake,” Mr. Reardon said, explaining that many here prefer a kitchen distinctly separate from the dining room. Anything else, he said, would be “very American.”

Undeterred, Mr. Reardon sketched his vision and, together with Mr. Young, found a Dutch interior architect flexible enough to help shape the design and carry it out.

“We did the smart thing of hiring him on top of that as a project manager, to deal with the contractors,” Mr. Reardon said. “I’m traveling 80 percent of the time. It was well worth hiring a project manager.”

Seeking to capitalize on his waterfront view, Mr. Reardon created a great room, an 80-square-meter, or slightly more than 860-square-foot, open space that stretches from the canal on one side to the building’s courtyard in back and contains his living room, dining area and kitchen.

It is a front-row seat onto Amsterdam’s canal scene, in which Dutch bicyclists rush past carefree tourists in boats and horse-drawn carriages. The canal and its ever-changing cast of characters keep Mr. Reardon company, in one form or another, in every part of the room.

From the living area, he can watch the show below or admire the architectural beauty of the nearby landmark church, Westerkerk. In the kitchen, he can hear its bells toll while he is cooking. And in between, in the dining area, he can savor the view of the canal houses that face his.

To wrap up the renovation, Mr. Reardon had the contractors tuck a 20-square-meter, or 215-square-foot, bedroom behind the apartment’s entryway, along with a small bathroom and walk-in closet.

All told, he and Mr. Young spent about 80,000 euros, or $105,000, on repairs and renovations. Mr. Reardon estimates that, today, the renovated apartment would sell for about 650,000 euros, or almost $855,000. When Mr. Reardon and Mr. Young set about furnishing the apartment, they stuck with a trans-Atlantic approach. For instance, in the living room, an American prairie desk, above which hangs a signed Miro print, has its back turned to Dutch black leather chairs and a gray plaid sofa.

In spite of the Netherlands’ mild but often dreary climate, Mr. Reardon made sure his apartment had one last American addition: air-conditioning.

“The Dutch thought we were crazy,” he said. But a heat wave last summer has Mr. Reardon convinced that he may once again prove his naysayers wrong.

“It’s getting warmer,” he said with a grin.

Michael Stravato for the New York Times

In October, Trammell Crow broke ground on a 330,000-square-foot building.

HOUSTON — The good times are back.

Michael Stravato for the New York Times

Chevron has leased the 1.2-million-square-foot tower that used to be Enron’s headquarters and plans to move in this year.

Galvanized by the record profits at energy companies, this city, the center of the country’s energy industry, has shaken off the effects of the Enron implosion six years ago and is enjoying its strongest resurgence in more than 20 years, business officials and real estate developers say.

Some energy companies are expanding and putting up new buildings. Others, like Citgo, Schlumberger and Halliburton, have moved their headquarters to Houston. Oil and natural gas companies have helped reduce office vacancy rates to 15 percent, a five-year low, according to Grubb & Ellis, a real estate company. Job growth is double the national average — 97,400 jobs were created in 2006. The National Association of Realtors says the housing market in Houston is one of the strongest in the country.

“The increase in the oil business has made Houston,” said Randall Davis, a Houston condominium developer. “It feels a touch like the 1980s — everyone is out, the restaurants are full, the bars are full. It’s like New York.”

The good news extends across the city. The port recently opened a $1.4 billion container terminal to tackle soaring traffic. In 2006, it handled 1.6 million 20-foot containers, up 29 percent from 2003. At the Texas Medical Center, hospitals and universities are investing billions in new facilities. Residential and mixed-use developments are going up downtown.

The Houston economy has been growing since 2004, when energy companies started investing more in big-ticket projects and hiring thousands of employees to run them. Before that, oil companies had been hesitant to pour more into exploration and production, because they had lost millions in the past when oil and natural gas prices collapsed.

“There was always a real reluctance to buy into the commodity cycle,” said Robert W. Gilmer, vice president and senior economist at the Federal Reserve Bank of Dallas.

Those fears are long gone. Real estate investors, enticed by rising rents and occupancy rates, are returning. Over the last five years, sale prices for office buildings in Houston have climbed by 34 percent, to an average of $129 a square foot in 2006, according to Real Capital Analytics, a national research and consulting firm. Compared with other large cities nationwide, like Chicago and San Francisco, where prices average $191 and $338 a square foot, respectively, Houston is still a relative bargain.

“The office investment market has taken off,” said Ariel Guerrero, Texas research and client services manager at Grubb & Ellis in Houston. “If you look at the price per pound, there’s still value.”

Brookfield Properties, a New York-based real estate investment trust, seems to think so. Last October, Brookfield became the biggest landowner in downtown Houston when it joined with the Blackstone Group to buy Trizec Properties for $8.9 billion in cash and debt. The deal gave Brookfield eight buildings in Houston, for a total of 7.4 million square feet.

Although the merger included properties nationwide, Richard B. Clark, the chief executive of Brookfield, said Houston was one of the deal’s attractions. (Almost a quarter of Brookfield’s portfolio is energy-related.)

Chevron signed a lease shortly afterward for one of the buildings — the 1.2-million-square-foot tower that used to be Enron’s headquarters — and plans to move in this year. The lease, Brookfield says, was the biggest in the country since 2000 and lowered the availability rate for Class A space downtown. In the fourth quarter, the rate dropped six percentage points, to 12 percent, according to Grubb & Ellis.

“This confirms our belief it’s a strong market,” Mr. Clark said. “I think our timing is good, fundamentals are improving and tenants have confirmed that they’re growing.”

Brookfield is banking that Houston will grow even more. It is considering putting up a new office tower downtown, Mr. Clark said, but is holding off until the availability rate for Class A office space drops below 10 percent. He said he expected it to reach that point within a year.

Encouraged, developers have started building again. In the fourth quarter, 2.4 million square feet of office space was under construction, more than double the amount in the third quarter. For the first time in years, developers are building without a signed tenant, though most projects are typically smaller than 500,000 square feet.

Nowhere is the growth more apparent than in the city’s Energy Corridor. Straddling Interstate 10 west of downtown, the area — home to companies like BP, Royal Dutch Shell, ConocoPhillips, Exxon Mobil and Citgo — has become one of the strongest real estate markets in the city. Occupancy rates are at 92 percent, the highest in the city, and rents average $19.26 a square foot, according to Grubb & Ellis.

“When occupancy rates reached the mid-90-percent range and there were no blocks of space, we said, ‘Hey, maybe it’s time to build,’ ” said Aaron Thielhorn, a principal at Trammell Crow in Houston.

Last October, Trammell Crow broke ground on a 330,000-square-foot building in the Energy Corridor without a signed tenant. Construction is to begin this summer on a second building. The two-building project is now the largest under construction in the Energy Corridor.

Speculative office buildings are also going up in places like the Galleria and downtown, which have less available space. Work on Houston Pavilions, a $170 million complex with retail space, restaurants and music clubs as well as a 13-story office tower, began downtown in February. The Texas Real Estate Fund and the Entertainment Development Group, the builders of the project, have not yet signed an office tenant.

“If you would have told me six years ago I’d be investing $170 million downtown, I’d have said you were nuts,” said William Denton, chief executive and president of the Entertainment Development Group of Agoura Hills, Calif. In those days, he said, downtown Houston often seemed virtually empty.

Of course, it is an open question whether the good times are here to stay and for how long. Only six years ago, Enron collapsed, the Arthur Anderson accounting firm imploded and Houston was hit hard when the national economy staggered after the Sept. 11 terrorist strikes.

[Halliburton announced Sunday that it would move its chairman and chief executive, David J. Lesar, from Houston to Dubai and open a corporate headquarters there. Analysts say, however, that the Halliburton move will not lead to a general exodus, because Houston is still the country's energy capital.]

Oil and natural gas prices could plummet, some worry, and stall Houston’s economy. About half of the city’s jobs, or 1.1 million positions, are tied to the energy industry.

“One thing we’ve learned, whether it’s real estate or the oil industry, is that we’re always looking over our shoulder,” said James Arket, senior vice president at Grubb & Ellis in Houston. “No one takes anything for granted.”

The Greater Houston Partnership, an organization of businesses, is not waiting for the economy to slow. In 2006, it started a $40 million effort to diversify the local economy and bring 600,000 new jobs to the area over the next decade. Typically, the city creates 45,000 new jobs a year.

“It’s one of those gulp-and-hold-your-breath figures,” said Jeff Moseley, president and chief executive of the partnership. “The economy is very robust, but we’re going forward because we know the economy will cool off.”

Illustration by Nancy Doniger

By AMY GUNDERSON; Published: March 14, 2007

Many second-home owners dream of increasing the size of their weekend or vacation getaway — putting up a second story, expanding the pool house, building a detached garage, adding a deck, installing an extra-long boat dock. Buyers of vacant land also often think big. The challenge, of course, lies in turning those dreams into reality.

One reason is that buyers and owners must confront zoning limitations — those rules in hamlets, villages, towns and cities across the country that can govern everything from the height of a house, to the number of structures allowed on the property, to distance of a home from the property line. Some municipalities even have rules about the size of the shadow a dwelling can cast on a neighbor’s property.

Dealing with zoning has never been fun. And these days, as large-scale development continues to replace open land, many areas are approving even more restrictive rules. “Towns have concerns about growth,” said Barbara Strapp Nelson, a lawyer in Lawrenceville, N.J., who deals with land-use issues. “When growth occurs in a way that was not anticipated, they try to correct that and enact additional regulations.”

As a result, Ms. Nelson said, “even a relatively simple project may turn out to be complicated.”

If your plans don’t jibe with the zoning regulations, there is something you can do. But that something isn’t ignoring the rules or trying to get zoning approved after the fact — as a couple in Sarasota, Fla., recently learned to their cost. They had started building their 4,200-square-foot home too close to a creek, according to the Sarasota County Board of Zoning Appeals, but were unable to get the structure approved. A stop-work order was issued, and they may have to tear down the house, which is three-quarters completed, to comply with the zoning regulations.

What you can do, before you begin, is seek a variance, or an exception, to the zoning rules.

Getting a variance isn’t all that unusual, said Dwight Merriam, a lawyer in Hartford who is the author of “The Complete Guide to Zoning” (McGraw-Hill, 2005). To receive it, you present your case to the town’s zoning board of appeals or planning commission (the entity will vary by the municipality). And with the right preparation and approach, you can often get what you want.

Here are some tips.

1. Work with a local architect or builder

Since regulations vary by town, find someone who knows the ropes. A New York architect, for example, might not be familiar with the ins and outs of zoning rules in a Florida beach town. He or she may not be savvy about what that zoning board will approve and what it will scoff at. A local professional is likely to know how a local board works.

2. Go to board meetings

To get a sense of the types of variance granted and the types steadfastly denied, attend zoning meetings before you submit your application. If possible, meet a few board members. A friendly introduction can go a long way to helping your case.

“Go and introduce yourself before you even apply,” Mr. Merriam said. “Say, ‘I wanted to see how these things work because I might have to apply for a variance.’ ” Cordial personal relationships, especially in a small town where the board member may be a neighbor, can only help.

3. Get the neighbors on your side

The biggest influence on whether a variance is approved may be the attitude of your neighbors. The board is going to ask how those neighbors feel about that second-floor addition or new front porch, Mr. Merriam said. And you’ll pretty much need their support, either in letters they write to the board saying they’re with you, or through their appearance at the meeting to give their approval.

If there is opposition, Mr. Merriam said, you will need to show that you approached your neighbors in a conciliatory way — that you, for instance, offered to plant new shrubs to block their view of your new back deck.

4. You may not need a lawyer

There are times when the legal issues can be complex and a lawyer is absolutely necessary, said Gary DePersia, a real estate agent with the Corcoran Group, in East Hampton, N.Y. For example, Mr. DePersia said, buyers of waterfront homes in the Hamptons should get a lawyer early in the process.

“You have setback issues and wetland problems,” he said. “You need someone who knows the probability of what you are going to get and what you aren’t going to get and the time frame involved.”

But when the issue is less complicated — say, a simple extension of a backyard deck — you might not need a lawyer at all.

In such a situation, using an architect might be a good alternative — for one thing, an architect is likely to charge less. “Even though it costs you a little money, it may be worth it to hire an architect,” Mr. Merriam said. “An architect can guide you right through all the regulations without having to get a lawyer.”

In many cases, however, the application and hearing process is designed for the do-it-yourselfer, and leaving a lawyer out of the hearing can help keep the tone nonadversarial, said Jon Goodman, a lawyer in Boulder, Colo., who handles land-use issues and was once a member of the Boulder board that issues zoning variances.

“It’s designed to be user friendly,” Mr. Goodman said of the process. “If an owner can get by putting on their dog-and-pony show without the help of a lawyer, it’s a good idea.”

With advance planning, it’s also possible to avoid the zoning-variance process altogether. A potential buyer can simply look for properties where the zoning allows all that he or she wants to do, or for properties being developed that already have their necessary permits.

“The developer has already done the work to make sure you can, say, build the house, with a pool, pool house and tennis court,” Mr. DePersia said. “They’ve already done the work with the local board to get these structures approved. It can save you a lot of time.”

Less than three months ago, the Los Angeles Department of Water and Power let water flow once more into a nearly dry Inyo County riverbed as part of one of the largest river restoration projects in the nation.

But now a judge says the department’s efforts are still falling short.Environmentalists on Tuesday cheered the judge’s comments as city officials defended their actions to restore the river. Indeed, the judge lauded the city for establishing a steady flow of water — 40 cubic feet per second — in the riverbed well before a July 25 deadline to do so.

But in a ruling issued late Monday, Inyo County Superior Court Judge Lee E. Cooper said city water authorities had constructed only nine of 17 water-monitoring stations called for in the Lower Owens River, about 200 miles north of Los Angeles. In addition, the water measurements provided by the DWP have been inadequate, he said.

As a result, Cooper denied a request by Los Angeles City Atty. Rocky Delgadillo to lift sanctions that the judge imposed on the city for failing to restore the river in a timely manner. In addition to imposing sanctions, Cooper has threatened to bar the city from using the so-called Second Los Angeles Aqueduct if it continues to delay full implementation of the project.

“In the record before me, I cannot find the city has complied with all the conditions,” the judge wrote in his ruling. “All means all, not just some of the conditions!”

Cooper praised the DWP for “proceeding with commendable diligence.” He added that “regrettably, however, given the history of the Lower Owens River Project, a certain level of skepticism by other parties about DWP’s representations is understandable.”

The DWP has missed at least 14 deadlines connected to the project. Water still flows in the Upper Owens River, but then it is diverted into the aqueduct by a dam about midway between the communities of Independence and Big Pine. This, plus groundwater pumping, left the Lower Owens essentially dry for decades. Since December, however, some water has been channeled back into the lower river at the dam.

Cooper has imposed fines of $5,000 a day until water is flowing in the Lower Owens at 40 cubic feet a second, along with other conditions. The fines began accruing Sept. 5, 2005.

In reference to Delgadillo’s request, David Nahai, president of the DWP’s Board of Commissioners, said, “We cannot be criticized for attempting to lift the burden of a $5,000-a-day fine against the city at the earliest opportunity.”

Nahai called the project “a showcase of our scientific and technical prowess. It is also an example of our reinforced sense of environmental responsibility in this city.”

The DWP was also ordered to reduce by a third its pumping of water out of the Lower Owens Valley. Failure to comply with his ruling, the judge warned, would result in a permanent injunction against using the Second Los Angeles Aqueduct, an $89-million facility that has been exporting millions of gallons of water to Southern California since 1970.

“That’s a huge hammer hanging over the city’s head,” said Don Mooney, an attorney for the Owens Valley Committee, which in 2001 filed a lawsuit with the Sierra Club against the DWP. Later the California Department of Fish and Game and the State Lands Commission joined the suit.

“The city is on notice; there are clear consequences for failing to comply,” Mooney said. “Yet somebody in Los Angeles made the decision to build only nine stations and never bothered to ask the court to modify its order.”

Cooper urged the warring parties to “see if these issues can be resolved informally.”

The impact on the environment of adding more water-measuring stations will be considered in future talks with environmental groups.

“We are in a position to negotiate with Los Angeles,” said Mooney, who declined to elaborate.

Los Angeles city officials said Tuesday that they plan to sell 9 million square feet of unused “air rights” above the Convention Center to developers — who could add the vertical space to build housing projects elsewhere in downtown L.A. that exceed current city growth limits.

The move opens up downtown to larger and denser development at a time of growing debate across the region about overdevelopment and traffic congestion.

City officials said developers who buy the rights could significantly expand projects beyond what Los Angeles’ zoning allows.

The city intends to sell the air rights for about $20 a square foot — which could be a bargain for developers who would have to spend many times more to buy the equivalent amount of land.

The new program was unveiled Tuesday by Los Angeles leaders and downtown developers who hailed it as a major step in giving downtown the dense urban atmosphere of cities such as New York, Chicago and Vancouver.

But the air rights sale was met with concern from some community activists who worried it could further clog the region’s roads and strain other services.

“We haven’t really created any more space. That’s a fiction,” said Robert Scott, past president of the Los Angeles Planning Commission and chairman of the Valley Industry and Commerce Assn. “And we don’t have the infrastructure to accommodate it just because somebody came up with a mathematical formula to create floor space.”

At the heart of the plan, quietly approved by the City Council last week, is the space above the Los Angeles Convention Center.

Although the center is only a few stories tall, the land is zoned for high-rise development.

The city plans to sell the space above it to developers, who could take the square footage and add it to their own downtown developments.

Money collected from the air rights sale — estimated to be about $200 million — would go into a special trust that would be disbursed by a special community commission for certain new projects downtown, such as affordable housing and park construction.

In most of downtown, zoning rules allow high-rise developers six square feet of building for every square foot of the total lot. If developers buy air rights, they are allowed up to 13 square feet of building for every square foot of total lot.

Carol Schatz, president of the Central City Assn., said she considers the air rights ordinance the biggest step by the city to encourage downtown residential development since the late 1990s, when the passage of Los Angeles’ “adaptive reuse” ordinance allowed developers to convert office buildings into housing.

“We want to see that skyline change,” she said.

After decades of decline, downtown Los Angeles has seen a major rebirth in recent years fueled by an increase in high-rise condos and luxury lofts. Several towers are rising around Staples Center, while work is to begin on two Frank Gehry-designed condo towers next to his Walt Disney Concert Hall later this year.

Backers say that the added density from the air rights sale won’t affect traffic because the new downtown dwellers can use the area’s transit system, including subways and buses. But a recent survey showed that the vast majority of downtown’s estimated 30,000 residents “rarely or never” use public transportation.

Critics also questioned whether the city was getting enough out of the deal, charging that it was underestimating the sale price for the Convention Center air rights.

The transfer of air rights is a tool that long has been used by cities to allow the preservation of old buildings while simultaneously encouraging new high-density development.

But the city of Los Angeles has never before attempted to use its own air rights to help spark more residential development — let alone on such a massive scale.

In New York City, the sale of air rights above historic buildings, including its old theaters and Grand Central Station, was largely responsible for those buildings’ preservation. The air rights over Grand Central Station were at the heart of a seminal 1978 U.S. Supreme Court decision. The court ruled that because the city granted the owner of the historic train station the ability to sell air rights, it could designate the building a landmark and limit future building on or above the site without denying its owner certain economic rights.

In Los Angeles in the late 1980s, the city granted developer Rob Maguire the right to build the Library Tower (now the U.S. Bank building) to a then-unheard of height of 73 stories by selling air rights to the old, fire-damaged Central Library. Maguire paid $51 million for air rights from the library to build two new towers nearby. That money was used to renovate the library.

The money collected by developers would have to be spent within 1.5 miles of the original project, said Councilwoman Jan Perry, who represents most of downtown. She called the ordinance’s adoption “a major win-win for downtown and the neighborhoods that surround it.”

In the case of the Convention Center, the developers did not use up their entire ratio, and it is the excess square footage that is being sold off.

If the new ordinance is used by developers to the extent that city officials predicted Tuesday, it would represent another signal that there is a growing confidence in the downtown real estate market.

Still, some real estate analysts questioned whether the city was charging enough for the Convention Center air rights.

“Nine million square feet sold for $200 million is not a real high price,” said Richard Little, director of the Keston Institute for Public Finance and Infrastructure Policy at USC.

Most likely, he said, the development would increase congestion downtown. But, he said, that might be a trade-off the city is willing to make in exchange for more housing downtown. “If the city is serious about making the transition from spread-out L.A. to a more core-oriented city, then you do need pockets of density,” Little said.

Urban areas, Little said, can absorb certain increases in congestion, particularly when the higher density is phased in over time, as this probably will be. The key, he said, is improving public transportation before the area is built out.

“When this is all built, if everybody is going everywhere by car, it’s going to be a mess,” he said.

H. Carl Muhlstein, an executive vice president in developer Cushman & Wakefield’s downtown Los Angeles office, said it is difficult to assess whether the city is charging the right amount for its air space because the value would vary depending on a developer’s other costs.

For example, he said, if the city were requiring a developer to pay for expensive additional amenities, such as schools or extra parking, then the value of the extra density might not be very much. Depending on the specifics of the deal, air rights can be worth as much as $100 per square foot or even be worth less than zero, in which case the city would have to pay the developer to build the extra space.

Scott of the Valley Industry and Commerce Assn. said he worried about adding thousands of housing units without a clear plan to ease congestion or provide police and fire services.

“I think we’d all like to see downtown enhanced and improved,” he said. “But just adding more people downtown doesn’t necessarily make it a world-class downtown.”

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sharon.bernstein@latimes.com

Robert Hollis, Special to The Chronicle; Tuesday, March 13, 2007

In a deal that apparently shattered the record price per square foot for a commercial building in San Francisco only a couple of months after the previous top price was set, a German investor has paid $103 million for a four-story retail property at Post and Powell streets on Union Square.

The price for the 61,407-square-foot building at 400 Post St. that houses Morton’s steakhouse, the Disney store and Borders bookstore works out to about $1,677 per square foot. This eclipsed the $1,430-per-square-foot price that was paid late last year for two floors of retail space at Powell and O’Farrell streets, which was said to be a record price at the time, according to a broker who was involved in both deals.

“This is probably the best retail location on Union Square, which is one of the best retail markets in the United States” said David Robertson, who with Joe Lanyadoo of Pacific Union Commercial Brokerage represented the unnamed German investor who closed on the 400 Post St. building on March 6.

What’s the secret of the record price? “The answer: location, location, location. It’s a premier building in a premier spot. You can’t duplicate it anywhere in the country. Plus you have a real nice tenant mix,” Robertson said last week.

Robertson and Lanyadoo also represented another unnamed buyer who paid the old record price for 43,000 square feet of space at 150 Powell St. That site is leased to the H&M clothing store.

Cushman and Wakefield represented the seller in the 400 Post St. transaction, Jamestown Properties, a real estate investment firm in Atlanta. Jamestown’s major assets include Pacific Place in San Francisco and Chelsea Market, One Times Square, the General Motors Building and 1211 Avenue of the Americas, all in New York City.

Robertson said the 400 Post St. deal was an off-market transaction. The buyer “came in with a pre-emptive offer. We approached the seller. We said we’ll give you a price that you are happy with. It was a quick deal, with a 30-day close” of escrow, he said.

Escalating real estate prices downtown are of course nothing new. They reflect ever-higher lease rates in the city’s hottest commercial neighborhoods, said Robertson and other brokers who specialize in transactions in the area.

The current boom basically coincides with the expansion of Westfield San Francisco Centre, with the new Bloomingdale’s store on Market Street plus other new retail offerings, all within walking distance of Union Square, brokers said.

Indeed, some buyers are willing to pay prices that are not currently justified by the rents they are getting, but are instead based on even higher rents that the owners expect to negotiate once leases expire, brokers say.

Such a situation is another one of the upsides to the 400 Post St. purchase, Robertson said. “The (tenant) leases expire in a couple of years, so I expect some turnover” in the tenant mix, he said. He declined to be more specific.

E-mail Robert Hollis at realdeals@sfchronicle.com.

http://sfgate.com/cgi-bin/article.cgi?f=/c/a/2007/03/13/BUGQ4OJU981.DTL

This article appeared on page E - 5 of the San Francisco Chronicle