The effort to bring DreamWorks to Howard Hughes’ old aircraft factory — one of the most complicated and contentious real-estate deals in recent Los Angeles history — was at last resolved Monday with the announcement that a pact had been struck.
The agreement, contained in 40 documents totaling about 1,500 pages, was signed late Friday by DreamWorks’ chief negotiator, Ron Nelson, and Peter Denniston, president of the Playa Vista development north. It capped more than a year of often antagonistic negotiations between DreamWorks and the developer, a partnership that includes two Wall Street investment banks.
In August and September, it seemed increasingly likely that the deal would die an ugly death, with both sides sniping at each other in a series of letters that were excerpted in Daily Variety. At one point, DreamWorks partner Jeffrey Katzenberg threatened to pull out of the project when the developer not only changed the monetary terms of the deal but also proposed getting into the soundstage business alongside DreamWorks.
In the end, DreamWorks got what it wanted: a $20 million price for outright ownership of 47 acres. The plot includes several Hughes hangars, the largest of which once housed the Spruce Goose airplane. The studio will be the first built in L.A. since Warner Bros. went to Burbank in the 1930s.
Under the agreement, DreamWorks will pay $13 million now; a $7 million note will be payable in five years.
“We are very excited to have signed these agreements, which bring us one step closer to realizing our dream of building a state-of-the-art studio at Playa Vista,” Katzenberg said in a statement. “There is still a lot of work ahead but we look forward, at long last, to making the city of Los Angeles our home.”
Dream of superstage
Katzenberg and his partners, Steven Spielberg and David Geffen, envisage a bucolic complex bordering an eight-acre lake. They will build at least eight new soundstages, including a 42,500-square-foot superstage. In all, DreamWorks will acquire the rights to build nearly 1.5 million square feet of space for its live-action film, music, interactive, television and consumer products divisions. (DreamWorks’ animation unit plans to remain in its new facility in Glendale.)
Speaking for the property owners, Denniston said bringing DreamWorks to Playa Vista “has often seemed like climbing a steep mountain.”
David Nelson, veep of commercial land development at Playa Vista, said his company has “been in close discussion with a number of other tenants” who are interested in moving to the proposed Entertainment, Media & Technology campus.
“I’m pretty confident that we’re going to see an increase in the momentum of the project now that we have an anchor tenant like DreamWorks,” Nelson said.
“This is a really big day for us,” he added. “We’re looking forward to continuing to work with DreamWorks and we’re excited that they’re part of the project.”
Still to be resolved, Nelson said, are the terms of city and state financial incentives for the project that were tied to DreamWorks’ participation.
The studio campus will be part of a much larger residential and commercial complex adjoining a delicate coastal marsh that has been the subject of intense concern on the part of environmentalists.
Much design and architectural work remains to be done. Groundbreaking will likely take place late next year, with opening contemplated about 18 months later, said Andy Spahn, DreamWorks’ corporate affairs chief.
Reacting to the agreement, Los Angeles City Council member Ruth Galanter, who represents the area, said DreamWorks “has always been an integral part of our vision for Playa Vista, and this is an important step forward.”
Los Angeles Mayor Richard Riordan said the proposed studio “is another tremendous example of the power of a public/private partnership.”
The agreement, Riordan said, “will bring a landmark development to our city and thousands of quality jobs to Angelenos.”