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Hollywood Developer Fights to Keep its Supergraphics

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A move that could result in more legal tussling with the city over its sign policy, a local developer is pursuing plans to put up two large supergraphics in Hollywood. Despite the current ban governing off-site signage, DS Ventures plans in the next 30 days to ask the city for building permits that would allow supergraphics to rise on the Metropolitan, the developer's green-hued tower at 5825 Sunset Boulevard. The signs, which would cover both the eastside and westside of the buildings, would bring in $137,000 a month for DS Ventures, whose founder David Schwartzman filed for Chapter 11 bankruptcy protection in July. DS Ventures will likely sue the city if the permits are denied, according to Jerry Neuman, an investor in the Metropolitan and an attorney for law firm Allen Matkins. (He also is retained as a lobbyist for DS Ventures on matters not related to the Metropolitan, he says.) “We obtained vesting entitlements to put up the signage prior to the ban, and believe we have vested rights,” says Neuman. "Vested rights" basically means a party is entitled to promised future earnings, and in this case DS Ventures is claiming vested rights based on numerous points, including the fact that the city granted approvals for two supergraphics back in August 2008.

According to Kevin Keller in the City's Planning Department, DS Ventures was granted approvals by the city’s local Community Redevelopment Agency for two supergraphics at the Metropolitan site, a former hotel that's currently being used an apartment building, back in August 2008. But following the passage of the Interim Control Ordinance banning new signs (passed in December and since extended), and the more recent ban enacted by the City Council in August, no new off-site permits are being issued by Building and Safety. (A developer must get a permit for signs from the Department of Building and Safety, which requires a sign-off from the City Planning Department.)

Per the city, it's too late for DS Ventures to apply for the permits. Which may not matter, according to Neuman, who is says he doesn't know if city-issued permits are needed to put up the planned signs for the Metropolitan, which he describes as being made of a self-adhesive material and not like a "structural" billboard.

"It's not clear to me if permits are needed....There’s no requirement for putting an actual message, meaning copy, on the side of the building," says Neuman, while also stating that DS Ventures "isn't going to go rogue and start putting up signs."

While the company hasn't picked a sign company to work with, Mike McNeilly's SkyTag, the firm behind the rash of 1969 Statue of Liberty images around the city, is one firm being considered by DS Ventures.

DS Ventures had previously been approached by SkyTag. Neuman was quoted in a Los Angeles Times February 2009 story in which he said DS Ventures turned down an offer from SkyTag because the developer wanted to abide by the city’s wishes that signs go up in a regulated manner. Via the article:

"Lobbyist Jerold Neuman, who represents the Metropolitan Hotel in Hollywood, said a SkyTag representative called his client two months ago to suggest that a Statue of Liberty supergraphic go up on one of the hotel's walls. During the call, SkyTag said that the image would probably end up as a permitted sign once the moratorium ends, Neuman said. DS Ventures, owner of the Metropolitan Hotel, did not agree to put up the supergraphic. The company has continued to work within the city's sign approval process -- a decision that has had a financial cost, Neuman said.

"We've worked really hard to live within the rules and do the right thing, and have foregone a tremendous amount of income and revenue," he said. "The city, in effect, rewarded people who were renegade."

Seven months later, that sentiment has changed. “We have been good actors in this process,” says Neuman. Over the last year, he says city officials asked DS Ventures to hold off applying for the supergraphic signs given the increased negative attention over the signs. “They didn’t want another supergraphic going up,” says Neuman, who declined to say which city officials asked him not to apply for permits.

“Now the city is saying, 'We are going to ban everything,'" he says. “So there’s no reason to play the game, to say, 'Yes, we will go on with everything.' At one point, you say, 'We have to earn money.'"

As first reported back in July, DS Ventures’ founder David Schwartmzan filed for Chapter 11 bankruptcy protection back in July, blaming the filing on the collapse of Lehman Brothers, a financial partner of the developer. Schwartmzan owns a 86 percent stake in DS Ventures, and as the Chapter 11 case has moved forward, the bankruptcy court has asked for revenue plans for some of DS Ventures' dozen or so projects, which range from a Playa Vista planned development to a hospital in Pasadena.

In response to a question from the bankruptcy court about projected revenue at the Metropolitan, Schwartzman’s lawyers at Sulmeyer Kupetz filed papers on September 1st indicating that the signage is expected to go up this fall. (See below. While the papers give an October date, Neuman says it may be November.)

Given the Chapter 11 filing, DS Ventures clearly has a financial motive in wanting revenue from the signs. But Neuman stresses the time issue. In addition to the 2008 sign agreement with the city, DS Ventures is arguing vested rights on the grounds of the city’s approval of the tract map, which Neuman says expires in 2011. A tract map is basically a blueprint for development, and since DS Ventures says its construction loan was based on revenue from the signs, the ordinances, policies and standards should essentially be “frozen,” at the time of the map was approved, believes DS Ventures.

With new City Attorney Carmen Trutanich promising to crack down on signage, it's likely many people will be watching to see how the City Attorney reacts to the developer's push for its signs. Dave Michaelson, Chief Assistant City Attorney, says DS Ventures’ vested rights claim was submitted last week to his office and is now being evaluated. In an email to Curbed, he writes: "State law requires local municipalities to recognize vested rights and, therefore, the City's new sign ordinance which bans off-site and supergraphic signs exempts those owners who can establish vested rights. Whether a site has vested rights is often a complex fact specific analysis. This owner put his claim to vested rights before our office last week and it is now being evaluated. No determination regarding vested rights has been made, nor will be made prior to the conclusion of this office's thorough and independent analysis."

Dennis Hathaway, founder of the Coalition to Ban Billboard Blight, says that to his knowledge, none of the current lawsuits over billboards in Los Angeles involve a company arguing on vested rights. More often than not, the issue of constitutional rights is raised instead, he says.
Screenshot from the Sept 1 court filing:

Looking west on Sunset

· Hollywood Takes a Hit? DS Ventures Looks to Reorganize [Curbed LA]
· L.A. officials, firm at odds over supergraphics [LA Times]