Bloomberg

(Bloomberg) -- Beverly Hills, home to some of the priciest properties in the U.S., is becoming the site of an expensive battle over real estate.

On one side is developer Beny Alagem, who has flooded residents with calls and mailers promoting a November ballot measure to allow him to combine two planned condo towers into a single building that would be the tallest in the Southern California enclave. Alagem, owner of the Beverly Hilton hotel, has already spent $3.1 million on the campaign, or almost $140 for each of the city’s 22,500 registered voters.

On the other side is an adversary with even deeper pockets, and its own plans in the tony community midway between downtown Los Angeles and the Pacific Coast. Dalian Wanda Group Ltd., a Chinese developer headed by Wang Jianlin -- the world’s 19th-richest person, with a net worth of $32.7 billion -- is proposing two towers across the street from Alagem’s project. Wanda Group also intends to spend an undisclosed amount of money fighting the ballot measure, according to a filing with the city.

“We looked at a compromise, but they decided to go for broke,” said Beverly Hills Mayor John Mirisch, who opposes Alagem’s proposal. While Mirisch hasn’t taken a stance on the Wanda Group plan, which calls for a 15-story hotel-and-condominium building and an adjacent one with 13 floors of condos, he praised the company for seeking city approval rather than going straight to voters.

High Cost

Even before Wanda Group spends a penny, Alagem’s outlay for consultants, mailers and signature-gatherers dwarfs costs in previous races. For example, the priciest contest on a statewide ballot in 2014 was a measure to cap payouts in medical-malpractice cases, in which both sides spent a total of $4 per registered voter.

The projects from Alagem and Wanda Group sit across Merv Griffin Way from one another in a triangle bounded on two sides by Wilshire and Santa Monica boulevards, two major thoroughfares that pass through Beverly Hills on their way to the ocean.

Representatives for both developers say they’re not necessarily competing, even though both are planning luxury condos, and Alagem is already building a 170-room Waldorf Astoria adjacent to his Beverly Hilton, near Wanda Group’s proposed 134-room hotel. A June study prepared for Wanda Group by CBRE Group Inc. concluded that Beverly Hills could accommodate both hotels, with demand remaining for more rooms.

Election Spending

Still, both developers are girding for battle.

Wanda Group on Aug. 25 filed paperwork to form a committee that would raise money to oppose Alagem’s ballot measure, which seeks to combine two previously approved buildings into a single 26-story tower while setting aside the remaining land as a park with public gardens. The committee, Beverly Hills Residents and Businesses to Preserve Our City, hasn’t filed any financial statements, and Rohan a’Beckett, deputy general manager of Wanda Beverly Hills Properties LLC, didn’t answer a question about how much his company is prepared to spend.

At a city planning commission meeting on Aug. 23, lawyers and consultants for Alagem and his Oasis West Realty testified against the Wanda Group project, saying it would snarl traffic in the area and jeopardize the Beverly Hilton, which opened in 1953 and hosts the Golden Globe Awards and the Daytime Emmy Awards.

Criticism Dismissed

Alagem, an Israeli-American who in 1986 founded the computer company that uses the Packard Bell name, said he was surprised when Wanda Group filed paperwork to spend money against his Nov. 8 proposal. He dismissed criticism, from the mayor and others, that he’s trying to bypass normal city planning processes by going to the ballot. City voters in 2008 approved his plan for adjacent 8- and 18-story towers, and all Alagem is trying to do now is combine them while also developing a park, he said.

“We really don’t understand what is the purpose of the opposition,” Alagem said in an interview, acknowledging the CBRE study showing enough demand for multiple adjacent hotels. “If it turns into opposition during the campaign, we will deal with it and continue to deal with the facts.”

Wanda Group is seeking changes to its own previously approved project through the city planning commission. Under a previous owner, the city approved 235 condominiums on the site, once home to a Robinsons-May department store, that Wanda Group bought in 2014. The Chinese developer has proposed 193 condos and 134 hotel rooms in adjacent towers.

‘Architectural Jewel’

“This is going to be an iconic architectural jewel for Beverly Hills,” a’Beckett said. “In addition to the hotel, we’re able to provide a level of public access to what would have been an entirely private project.”

In an e-mailed response to questions about the development across the street, a’Beckett said Wanda Group is part of a “broader community-wide effort” to make Alagem submit to the same review process as other builders in the city.

“There has been a significant backlash against the proposed height of this new tower and the negative aesthetic impact it will have on the unique character of the city of Beverly Hills,” a’Beckett wrote.

Urban Village

A city of 35,000 where the median home value is more than $3 million, Beverly Hills zealously guards its character as an upscale urban village by limiting development of low-income housing and capping building heights at three stories unless the builder receives an exemption. The tallest building in the city, the 14-story Beverly Wilshire hotel -- where parts of the 1990 hit movie “Pretty Woman” were filmed -- charges $600 a night for its lowest-price room.

Robert Tanenbaum, president of the Beverly Hills North Homeowners Association, opposed Alagem’s two-tower plan in 2008 but said it’s now time for dissidents to stand down. The revised project, with 1.7 acres (0.7 hectares) of green space, is better for the community than the one voters already approved, Tanenbaum said.

“The people delivered their verdict in 2008,” he said. “Going back to the public was the right thing to do.”

To contact the reporter on this story: James Nash in Los Angeles at jnash24@bloomberg.net. To contact the editors responsible for this story: Daniel Taub at dtaub@bloomberg.net, Stephen Merelman at smerelman@bloomberg.net, Christine Maurus

©2016 Bloomberg L.P.

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