Toll of bribery in Huizar case: Less affordable housing

Los Angeles Councilman Jose Huizar's district includes Boyle Heights, El Sereno, Eagle Rock and much of downtown.

June 26, 2020 5 AM PT

It was Halloween of 2018 and a real estate developer had just gotten a treat: The blessing of the Los Angeles City Council for a new high-rise in the Arts District.

The real estate executive crowed in an email that it was a “truly amazing” accomplishment — the council had approved the tallest building yet in the Arts District, and with “minimal” requirements for affordable housing, according to federal prosecutors.

Now federal investigators are describing the Arts District project as one of the real estate developments entangled in an alleged criminal scheme headed by Los Angeles City Councilman Jose Huizar. At a news conference Tuesday, U.S. Attorney Nick Hanna cited it as an example of “the harm that comes with bribery.”

“Thanks to Mr. Huizar, the development would have minimal affordable housing units, despite the fact that this area is desperate for low-income housing,” Hanna said. In a criminal complaint, prosecutors estimated that Huizar’s changes to the project saved the developer $14 million.

Huizar, who was arrested Tuesday and is suspended from the council, is accused by federal prosecutors of running a “criminal enterprise” fueled by developer bribes. His attorneys said this week that the councilman “intends to respond to the government’s allegations in court.”

In recent months, documents filed by prosecutors in the sprawling pay-to-play probe have focused on several other downtown projects. This week, prosecutors alleged that Huizar also schemed with the developer of the Arts District project and its lobbyist to provide “direct and indirect financial benefits” to the councilman in exchange for his help at City Hall.

Prosecutors did not name the Arts District project involved in that alleged scheme, but details included in their criminal complaint — including the building’s height, the dates and amounts of political contributions from the developer, and the timing of the city’s approval of the project — all match the 475-unit development known as 520 Mateo, which was pursued by Carmel Partners.

That 35-story project won council approval over the objections of labor unions and the owners of a nearby property in 2018. The planned tower on Mateo Street was reported to have broken ground earlier this year.

Representatives for Carmel Partners did not comment Wednesday. When Huizar reviewed the 520 Mateo project at a council committee, he recommended reducing the amount of affordable housing that the City Planning Commission had insisted on for the project.

Instead of demanding that 11% of the housing units go to “very low income” households, Huizar recommended requiring 6% of the units for “moderate income” residents and that 5% of its commercial floor area be reserved as affordable work space — a change sought by Carmel Partners. That amounted to roughly 24 fewer units of affordable housing.

A federal investigator alleged in an affidavit this week that the company behind the unnamed Arts District project provided tens of thousands of dollars in donations to political committees tied to Huizar. The developer also agreed to give him damaging information about two former aides who sued him for harassment, according to the affidavit.

Huizar, in turn, took key steps to assist the Arts District project, including urging the planning department to initiate a change to city rules to accommodate the development, rejecting an appeal against it and loosening requirements for affordable housing that were recommended by a city commission, federal prosecutors alleged.

At one point, a lobbyist for the Arts District project told Huizar that the developer wanted to meet to find out whether he was comfortable with the project’s height and affordability, prosecutors said. According to the affidavit, Huizar replied: “Are they gonna help with pac?” — a common shorthand for a political action committee.

“Iʼm sure they will, however — as your friend — let’s discuss this in a different text thread,” the lobbyist replied, according to prosecutors.

Prosecutors said the project drew a formal challenge from a labor union. Huizar allegedly told the project’s lobbyist that if he were to vote against that union, the developer would have to make it “worthwhile,” the affidavit alleges.

Soon after, the lobbyist told Huizar that the developer had offered to contribute another $50,000 to a political committee supporting Huizar’s wife’s council bid, according to prosecutors. In addition, the developer later provided the opposition research on Huizar’s former aides, according to the criminal complaint.

Key details in documents filed by prosecutors about the unnamed lobbyist involved in those discussions, including his role as a principal officer on a political committee, match information about Morrie Goldman, whose firm represented Carmel Partners on 520 Mateo, according to lobbying disclosures filed with the city.

Goldman, who has not been arrested or publicly charged, did not respond to messages seeking comment.

When 520 Mateo was seeking approval at City Hall two years ago, Carmel Partners’ Southern California development partner Neils Cotter touted the project as “high-quality live-work units with affordable housing” and environmentally sustainable features, one that had garnered support from people living and working in the Arts District.

Yuval Bar-Zemer, a resident and businessman in the Arts District, said Carmel Partners worked with the neighborhood, agreeing to requests from neighbors to add more commercial space to the project. Those design changes ultimately resulted in a taller tower than originally proposed, he said.

“They were one of the few developers that actually reached out to the community and made quite a number of changes to make it more of what the community was looking for,” said Bar-Zemer, manager of Linear City Development LLC.

Opponents of the project raised a range of concerns.

Two unions, the Southwest Regional Council of Carpenters and Laborers International Union of North America Local 300, said the developer had failed to properly address the project’s effects on air quality and other issues. Neighboring property owners Stephen and Carol Ann Warren argued it would be “egregiously out of scale with the neighborhood.”

Huizar moved to reject the appeals filed by project opponents. The Warrens’ attorney, Rob Glushon, said that during the battle over the project, it became apparent to their law firm that “the project was strongly supported by the council office.”

“The political battle was not something that we were going to win,” Glushon said.