Varied Interests: Soboroff Talks Real Estate, Public Service – Los Angeles Business Journal
Steve Soboroff is a veteran real estate developer as well as a public leader who served 10 years as Los Angeles Police Commissioner. He has also served as a parks commissioner, a vice chair of the Los Angeles Dodgers, chair and chief executive of Playa Vista and was a major proponent of the Staples Center, now Crypto.com Arena.
Soboroff, 75, sat down with the Business Journal at The Park at Cross Creek, a project he developed with partners in Malibu, to talk about his roles in the public and private sectors, difficulties developing in Los Angeles, a desire to do more and his hope that he “made complicated things simple.”
“The key to getting things done is to take complex situations and break them into little, simple pieces and work on those simple pieces every day,” he said.
You served 10 years as Los Angeles Police Commissioner before terming out, and you’ve held many other public sector roles as well. How do they compare to being a real estate developer?
My public service background has been broad based. I’ve learned a lot about a lot. I’ve learned that the way to the finish line in all these places, in all these areas…is through positive reinforcement and appreciation for public servants. It’s almost like appreciation for the bureaucracy because democracy is exhausting…
Development is much easier because it’s not democracy, it’s a benevolent dictatorship or just dictatorship.
Last year you announced a program where apartment owners would subsidize police recruit units to help make it more affordable for them to live in Los Angeles. Can you tell me how that program has gone?
What LAPD has almost uniquely as an obstacle is that in a community policing environment, the cops can’t afford to live in the communities they police…
The idea was a cop, on his or her salary, these are recruits only because we don’t have enough for everyone, based on their salary they could afford to pay about $1,500 to $1,600 a month. So my goal was to get $3,500 a month units for $1,500 a month…We were able to get a number of landlords to reduce the rent in apartments from $3,500 to $2,500 and we matched that, we raised $2.5 million.
My hope is that the city will see that it’s a necessary line item to add to the budget if L.A. is going to be competitive in recruiting. We’re losing a lot of cops.
More generally speaking, is the city doing enough to encourage affordable housing developments?
It’s doing exponentially more than it’s ever done but it’s not enough because the need is growing faster than the supply because there’s no more middle class because it’s either the haves or the have nots.
How has the cost of doing business here and the climate for business changed in Los Angeles over the years? Is it difficult to work here or has progress been made in that regard?
There’s been one thing that everybody has told me since 1971 and that is ‘I just finished a project in L.A. and I’m never going to do another one.’ And my question to them is ‘how’d you do?’ and they always say ‘great.’ And I say, ‘so why aren’t you going to build another one?’ And they say, ‘oh, I probably will,’ and that continues on to this day.
I called Phil Anschutz on the phone who owned the Kings and part of the Lakers and asked him about building an arena downtown with Ed Roski.
It was Staples Center and he said to me those exact words. (He said he) struggled so hard with the Alameda Corridor and so hard with the fiber optics and he says, ‘I don’t want to do this again.’ So I said to him, ‘Phil, how’d you do on the fiber optics?’ ‘Oh, we did terrific.’ ‘How’d you do on Alameda Corridor?’ ‘Oh, we did terrific.’ I said ‘do me a favor will you? Trust me. Give me a chance to put this thing downtown just give me a chance’ and he said ‘okay.’ And the whole goal was to make it as painless as possible for him to put in close to $1 billion of his own money and have the city put in no money to build that arena and LA Live and the hotels around it.
Why was it important to you to have Staples Center, now Crypto.com Arena, built downtown specifically?
Our Convention Center had just finished a $500 million renovation and was losing $50 million a year and was not competitive with San Francisco, Anaheim, San Diego, Phoenix. A noncompetitor. When you looked around the Convention Center, there was nothing. I felt that it could help the Convention Center… and felt that it could be a 50-year dynamic shift in downtown, and it exceeded any of our expectations.
Now it’s got competition from Inglewood and our downtown has its own issues now but Phil Anschutz did more with his money for L.A. than anyone other than William Mulholland who brought water here. Look at all the residential, look at everything that has grown there, look at the transportation hubs. All of that stuff was helped by the dynamic of the arena and what it did for the Convention Center and for the hotel industry down there but there are new challenges moving forward.
One of your more recent projects is The Park at Cross Creek in Malibu. It took so long to build that Whole Foods’ lease expired once before even opening. What made you interested in creating a project like this and why did it take so long to build?
The opponents were saying that even though he has a signed lease that he’s a developer and the D word is the worst word in the world. They said, ‘he says he’s got a lease with Whole Foods but it’s really going to be Food 4 Less or a 30-story office building there.’ They would make things up, the opponents, and it made it very difficult. So difficult that it took 15 years and three months. So the lease expired before the store opened. The president of Whole Foods told me that’s never happened to them. We extended the lease.
I felt that this was needed for the community and the tenants I wanted to put in here were local tenants, people with Malibu and Valley heart to them. And so it was worth it.
One of your massive undertakings over the years was Playa Vista. What are your thoughts on the direction the area has taken? Did it live up to the way you envisioned the project?
It went way beyond in certain ways and exactly in other ways. Beyond was a result of Silicon Beach. The 2 million square feet of office space, instead of leasing in 15 years it leased in 15 months.
The residential and the retail and the park system and the community self-esteem and the school and the library were exactly what I thought and it’s basically urban European living.
Could another project of that scale be built in L.A. today?
Yes, if they can be built on environmentally challenged land versus lemon groves like Playa was. If the project can be used for mitigation like Playa did. Playa was built on an airport, not on a wetland…
The projects have to be built not as real estate projects. They have to be built as public policy projects.
What does the future hold for you?
Just a continuation of balance. Positive experiences with my family and with my community and importantly now with my work. I want to do more…
I have a prom king issue. I believe that most prom kings don’t have dates on weekends because people are afraid to ask them out. I feel like people feel like I’m so busy or I have to work on $6 billion projects like Playa Vista but they’re free to call me. I want to do some more work. There are things that I can do that could be really helpful to this community. I’ve done my public service and nonprofit stuff, but I still love to work and work can be in any widget really…I’m on the board of directors of a New York Stock Exchange company but I could go on two or three more…
I’m looking to go broad. As far as real estate goes, I’m interested in public projects, institutional projects of any kind, things that other people are having trouble doing.
I don’t like to do consulting, but I don’t mind going on the board or being a leader or a face of a project.
Any plans to retire?
This is retirement. I’ve been retired my whole life. Very few people who work have spent the amount of time that I’ve spent with my family and most people do it when they retire. So no.