Los Angeles Sets Deadline for Oceanwide Plaza Cleanup

The delinquent owner of the empty husk of the 2.4M SF Oceanwide Plaza mega-development—a Chinese-owned company now being liquidated in Bermuda—soon will be getting a very large bill from the City of Los Angeles.

The bill will cover the cost of erasing a global embarrassment that was broadcast around the world during the Grammy Awards, which were held on Feb. 4 at the Crypto.com arena in Downtown L.A., across the street from the shuttered Oceanwide Plaza construction site.

We use the term “shuttered” loosely here, meaning that there hasn’t been any construction at the unfinished site since 2020, when owner China Oceanwide Holdings ran out of money.

A few days before the Grammys, a group of vandals covered the windows of the 53-story centerpiece of the three-tower Oceanwide Plaza development with graffiti. The site is filled with debris and hasn’t been secured because the security company is suing China Oceanwide for payment.

We don’t know how many people around the world viewed this representation of L.A.’s downtown as a dystopian center for rampant vandalism at towering vacant building sites. Let’s just say the images went viral.

The Los Angeles City Council pushed through a measure on Friday giving Beijing-based China Oceanwide until February 17—that’s next Saturday—to clean the graffiti off Oceanwide Plaza, remove all debris and put a guarded security fence around the construction site.

“It is abundantly clear that Oceanwide Plaza has become a hazard to surrounding residents, businesses, passersby, and to the criminals recklessly breaking into the property and it must be dealt with immediately,” the motion adopted by the council stated.

By declaring the Oceanwide Plaza site at 1101 South Flower Street a public nuisance, the city is setting in motion a process that potentially could lead to a takeover and demolition, although it’s not likely to get that far.

If China Oceanwide doesn’t comply, city law allows the city to began an abatement process to permits it to enter the property, “remove debris and dangerous material,” and to charge the property owner for the costs and put a lien on against the property and foreclose if there’s not payment.

In the near term, the most likely outcome is that the city hires someone to clean up and secure the site and sends the bill to China Oceanwide, the Beijing-based firm that being liquidated.

The California state court of appeals—which has been considering the matter since August—is deciding which of China Oceanwide’s creditors and lien holders gets priority in a foreclosure sale of Oceanwide Plaza, a group of EB-5 investors or general contractor Lendlease and subcontractor Webcore. It’s unclear whether a foreclosure by the city would get priority over that outcome.

In October, China Oceanwide disclosed in filings with the Hong Kong Stock Exchange that it had been hit with a court-ordered liquidation after a Bermuda court issued a winding-up order against the company. Liquidators were appointed and the company’s shares stopped trading.

The winding-up petition that triggered the court order in Bermuda was filed in June 2022 by New York-based lender DW Partners, the report said. The complaint involved China Oceanwide’s failure to pay a $175.4M loan on 80 South Street, a residential development project slated to be one of Lower Manhattan’s tallest skyscrapers.

In June 2023, a notice was filed in Los Angeles County stating that China Oceanwide had defaulted on $157M it owed to a group of EB-5 lenders on Oceanwide Plaza.

In a filing, China Oceanwide said it would need more than $1.2B to finish construction on the Oceanwide Plaza development after spending $1.1B on the project, which was building 504 condos and a hotel, as well as commercial space.

According to the default notice filed with the county, Oceanwide failed to complete construction as specified in the loan agreement with the EB-5 lenders; failed to obtain a senior construction loan for the project; had allowed mechanic’s liens to be filed against the project; and failed to keep all risk insurance on the development.

The default notice said a foreclosure sale of Oceanwide Plaza could take place in August, but at the end of August California’s state court of appeals temporarily blocked the sale in order to determine which of the lien holders get paid first.

Last fall, the security company responsible for patrolling the Oceanwide Plaza site sued China Oceanwide, alleging it had failed to pay more than $1.3M in security fees, CoStar reported.

In 2021, creditors took over Oceanwide Center, a development in San Francisco which planned to include a 910-foot-tall office and residential tower as well as a 600-foot-tall hotel. The project backed loans worth about $322M.