One Beverly Hills to Generate More Than $1B in Total Benefits

One Beverly Hills is a project unlike any other. The massive development—the largest in Beverly Hills’ history—will transform a 17.5-acre site adjacent to the Beverly Hilton and Waldorf Astoria Beverly Hills into a mixed-use urban resort adjacent. It will also generate impressive benefits exceeding $1 billion for the City of Beverly Hills.

In very round numbers, the general fund revenues from this project are in excess of $500 million, maybe much in excess. “We are projecting to receive an additional $1 billion in total benefits over and above the otherwise applicable benefits. So, we doubled or tripled the financial benefits,” Henry Finkelstein of Greenberg Glusker tells GlobeSt.com. Bob Baradaran adds, “This type of transaction is unique. I don’t think you’ll find another development agreement in the country that is similar to this.”

Greenberg Glusker’s Finkelstein and Baradaran served as special counsel representing the city in the transaction. “Our job was to try to negotiate a favorable economic deal for the city on a project that was perceived as beneficial, advantageous and positive to the city already,” says Finkelstein. “It is designed by a super world-class rock star architect, it has a number of great green spaces and environmentally, it is on the leading edge. It also has a number of components that are very desirable to the city like modernized event spaces, ultra luxury hotel rooms and repositioning the Hilton as a better property than it has been in a long time.”

Despite the quality of the project, the city was able to negotiate favorable terms without offering incentives and rebates to the developers, a joint venture between Alagem Capital Group and Cain International, as is typically standard in these deals. “Almost all of the economic analysis that goes along with a large beneficial project that generates a big future general fund revenue base for the city is the developer asking they city to make up a gap or shortfall between what it takes to make the project feasible and the basic economics of the project,” says Finkelstein.

This made the deal very unique. “I have negotiated dozens of development agreements over the years where the developers were getting incentives and rebates from the city,” adds Finkelstein. “This is the only one of the development agreements that I have worked on or heard of where the developer was paying premiums to the city on generally applicable taxes.”

The City was able to negotiate such a deal because of the quality location of the site and the Beverly Hills brand; however, it was not an ease feat. “This was a hard fought negotiations and there was a lot at stake. This project is the largest project ever to be built and developed in the City of Beverly Hills, and from the city’s perspective, it was an important and critical project,” says Baradaran. Finkelstein adds, “What the city was asking of the developers was counterintuitive to what the developers and the capital partners are accustomed to seeing. The people on the other side of the table had done a lot of deals where the city gives an incentive or rebate.”

This is the third deal that Finkelstein and Baradaran have negotiated for the City of Beverly Hills. “In the past, the city counsel members would individually negotiate with the development team in coming up with a development agreement, but this in not their primary areas of expertise,” says Baradaran. “A few years ago, they brought Henry and I in to lead the negotiations on these types of developments.”

One Beverly Hills is three-building property featuring condos and a hotel, along with 8 acres of botanical gardens on the property. The joint venture has tapped Foster + Partners, Lord Norman Foster and RIOS for design, architecture and landscape design.