Those now infamous abandoned highrise condos downtown near L.A. Live have quickly become one of the most expensive eyesores in the country after the graffiti and base jumping debacles.
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What to do about the towers is a complicated and expensive issue - at least $1 billion has already been invested in the project, most of it coming from a developer in China.
Former L.A. mayoral candidate and real estate mogul Rick Caruso gave his two cents on the topic in an interview with L.A.’s Afternoon News.
"One of the problems here was they were building a project that really did not even meet the market,” he said.. “They were building units that were very large in size and weren't right for the market, and they just didn't do their homework."
Caruso said he was given an opportunity to take on the project a few years ago, but "The simple math of it is, it would cost more to finish the project than what the project would be worth when you're done completing it. So there was no path to be profitable to get a return on your investment here."
So how can someone sink billions of dollars into a massive development, run out of money, and simply walk away?
Caruso says, unfortunately, it does happen, and "When you have so much investment coming in from one country, particularly China, that has a history of cutting off funding, there's a high risk that these kind of things are gonna happen."
He said it has been an ongoing problem for over five years, and the city should have been more proactive earlier on to avoid the issues we are seeing now.
At this point, Caruso believes the city, state, or federal government should look at buying the project at some 'highly discounted number' and turn it into housing for the local workforce.
He also said while there is plenty of blame to go around, "The idea that the city passes a motion that they're gonna claim the building and charge the developer or the owner is just ludicrous since they're in bankruptcy, there's nobody to pay the bill, and taxpayers are gonna be stuck with the tab."
He said the company Evergreen is perhaps the largest bankruptcy filing in history.
According to Caruso, depending on the structural integrity, the most cost-effective way to handle the situation might be to tear it all down.
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