San Fernando Valley Studio Project Delayed Long Enough to Claim New Tax Credit

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Seven years ago, a developer floated a plan to build a new TV and film production facility on the site of an old gravel pit in the San Fernando Valley. It would be the first such project built in Los Angeles in decades, and it would help stop shows from fleeing to other states.

The neighbors didn’t like the plan, citing traffic and other objections, and the project got bogged down in years of costly litigation.

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But now, that long delay looks like a lucky break.

Last week, Gov. Gavin Newsom signed a new $150 million tax credit into law, which is aimed to spur the construction of new production facilities. The 10-acre site in the Valley, now named Sunset Glenoaks, stands to be among the first in line to benefit.

On Thursday, the new owners of the project — a partnership of Hudson Pacific Properties and Blackstone — announced they intend to invest $170-190 million to build the facility over the next two years. The project will include seven soundstages — with clear heights of 35 or 40 feet — and 120,000 square feet of support space. The developers expect to complete the project in the third quarter of 2023.

Though the project was approved by the Los Angeles City Council in 2015, it appears that productions that shoot at Sunset Glenoaks will qualify to claim the incentive. That would make it much cheaper to shoot there than at pre-existing facilities.

“(W)e do not believe that the project being entitled prior to the legislation’s signing would preclude Sunset Glenoaks tenants from benefiting from these new tax credits,” said Jeff Stotland, senior vice president of global studios at Hudson Pacific, in a written response.

The $150 million will be doled out by the California Film Commission on a first-come, first-served basis. That sets up a race for productions to lease out space in newly built soundstages before the credit funding is exhausted.

Other sizable studio projects have already been announced in Los Angeles, including the $450 million Echelon Studios project in Hollywood and the $1.25 billion renovation of Television City in the Fairfax District.

But Sunset Glenoaks already has administrative approval, and the neighbors’ legal challenge has been defeated.

The law specifies that a studio will be considered “new” so long as it did not have a building permit on the date the law was signed — that is, July 21. The developer applied for a building permit in April, but has not received it yet, according to city planning records. The timing almost could not have worked out better.

Line 204, a company that owns soundstages in Pacoima and Hollywood, first proposed building the studio in 2014 on the site near the corner of Glenoaks Boulevard and Peoria Street in Sun Valley.

The property was home to a gravel mining operation until 1974, when it was filled in and left vacant. A group of homeowners from the Shadow Hills community fought the project at City Hall, arguing that the studio would be too big and would generate too much traffic. They also claimed that the facility conflicted with the zoning, and that the site should remain open space.

Their lawsuit was rejected by a Los Angeles Superior Court judge in 2016. They appealed, and the appeal was denied in 2018. At that time, Alton Butler, the CEO of Line 204, said that he expected to break ground that September, and that the project would be operational by late 2019.

But he encountered further delays. By early 2020, Butler told the L.A. Times that construction had just gotten underway, and was expected to last 20 months. The company also said on its website that construction began in 2020. It does not appear that any building permits were pulled, however, and in January 2021, the Commercial Observer reported that Line 204 was looking to unload the property to Hudson Pacific.

Hudson Pacific and Blackstone already own three facilities in Hollywood: Sunset Bronson, Sunset Gower and Sunset Las Palmas. Needing an appropriate backdrop, Newsom signed the tax credit bill last week at Sunset Gower.

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