Development/Gentrification

Jerde Leaving Venice, Snapchat Moving In, The Freak Show Still Homeless

by Venice Dawgs
Within the next month or so, and after almost 30 years, world-renown architecture firm Jerde Partnership will be moving its global headquarters from their location at 913 OFW to an office Downtown. “Moving to Downtown from Venice Beach reestablishes our company as a Los Angeles architectural firm,” Paul Martinkovic, an executive of Jerde, said in a company statement. “In Downtown, we have 360 degrees of quality of life, better commutes and accessibility to more affordable housing for our existing employees.” What Martinkovic did not mention is the stress and legal battles that Jerde has had to endure ever since Jon Jerde passed away and Snapchat started gobbling up every property they could find in our beloved town.

Most people know the Jerde location on 909-913 Ocean Front Walk as “The Freak Show” building. The historic Freak Show was there about 12 years before they were unable to renew their lease this past April of 2017, and the changes within the building owners, land owners, lease holders, management companies, parking spaces and tenants the last few years is the epitome of typical real-estate collusion and is confusing to say the least. Confusing probably for a reason – confidentiality.

Real estate developers nowadays are shadier and slimier than your average car-salesmen and unethical lawyers. They are heartless and pick on the little guy and use smoke and mirrors to gain greater wealth and control and are the loudest to cry when something doesn’t go their way, all while sitting on more money most people could dream of. They continue to tear down things most people love and replace them with something everybody hates while side-stepping the laws and using shell companies and trusts to hide owner identities. According to Zillow, many luxury property purchases over $3M in the US have been built by shell companies and LLC’s rather than people. The Treasury Department’s Financial Crimes Unit says shell companies are one of the most common ways of laundering money through real estate and more importantly they can provide an extraordinary level of secrecy, making it impossible for even the seller to know who they’re making a deal with. When the Bush administration pushed through the Patriot Act after the 9/11 attacks, it essentially gave big property sellers a pass. Under the law, banks have to find out who owns shell companies before doing business with them, but the real-estate sector got a temporary exemption. Seventeen years later, that exemption is still in place—despite the fact that almost half the expensive residential properties in the US are owned through shell companies, according to a 2015 New York Times investigation.

The Jerde/Freak Show building was built in 1984. Thirty years later, Snapchat’s VP of Operations and head of monetization, Phillipe Browning, was visiting every real estate office in town each week asking where there was more office and residential space in Venice. The OFW building was owned and used by famous architect Jon Jerde since 1990 who then died in February 2015. In the following months, his wife Janice Jerde then sold the building (probably without knowledge of exactly who she was selling to).

It’s no secret that Snapchat has wanted to get into Jerde’s space for quite some time now, even though Jerde has been there for almost 30 years and Snap says they’re only leasing the top floor and that’s it. Even Snapchat employees themselves made it known around town that Snapchat wanted Jerde’s space. One employee at Jerde who wished to remain unidentified stated they had to get a lawyer to protect Snapchat from moving into their space. “They [Snap] purchased the building in March of 2016 and then proceeded with very harsh eviction proceedings. We fought back hard and spent hundreds of thousands of dollars fighting back to protect our legal rights. The building was owned by an investment company called Foothaven, LLC which we believe to be controlled by Snapchat key executives. Snap subleases 5,000 square feet in the facility with a right to assume the remaining term of the lease should we vacate earlier. It’s sad – we’ve been a great Venice neighbor for 30 years and contributed to the community in many positive ways.” An article in the LA Business Journal on June 10, 2016 titled “Snapped Up” also stated that Snapchat has a right of first refusal for the full 33,000-square-foot space when it becomes available.

On June 28, 2016 a Property-Commercial Eviction case was filed by Foot Haven LLC against The Jerde Partnership Inc in the jurisdiction of Los Angeles County Superior Courts in hopes of evicting the famous architecture firm. Foothaven LLC is one of the many spiderweb of names that have some type of interest in the building. In fact, there is so much changing hands of the inner workings of that building the last few years that even LA City (Miranda Pastor, Mario Montez & Rita Moreno) & Tara Devine of LA Strategies had a hard time figuring out whose signature was needed for the Venice BID! The Scharff family, the Ekker family, the Jerde family, Cambra Realty & Snapshot Partners LLC (Michael Schlesinger), JSB Trust (Jonathon Brooks), Mike Kafka, Hancock Orange LLC, Foothaven LLC and variations of all the above have all had their names on it the last few years. The information that is of public record is scarce and to do a thorough investigative report on the all the lease holders, building owners, land owners, trusts, management companies, LLC’s, and the people behind them would cost anyone many long hours leading to many frustrating dead-ends, especially without the cooperation of being able to talk with the named individuals, who may be in litigation at the time or simply unwilling to disclose details.

The Venice BID was finally signed in June of 2016 and Snapshot Partners LLC was listed as the legal owner when they voted YES – it was signed by Robert Minsky. They have a 65-year ground lease on a parcel owned by Ekker (aka Scharff) and refused to give the city a copy of their lease for the BID. Eventually a copy was given but was missing pertinent information due to confidentiality concerns.

Todd Ray, who founded Venice Beach Freak Show, says he learned in the fall of 2016 that the building had been sold and that the new owner would not be renewing Ray’s five-year lease on the first floor. After that, Ray says, he was paying rent to Snapshot Partners LLC, an investment group that, according to the “Snapped Up” article, was hired by Snapchat to acquire the leasehold interest in the building for $32 million in March 2016. The article also said that the site sits on separately deeded land and that Snapshot LLC is controlled by Cambra Realty’s Michael Schlesinger.

Then in January of 2017, Hancock Orange LLC acquired the property along with partner JSB Living Trust (Jonathon Brooks) and then took out a 20M credit a month later. Some believe that Hancock Orange is one of Snapchat’s capital partners or simply a shell company that is also controlled by Snap, Inc.

In February 2017, parking tenants of the building began sending their payments to Snapshot Partners LLC, with Lincoln Property Management overseeing management and operations.

And then in April of 2017, after trying to renew their lease in every way possible, The Freak Show was forced to close. The events leading up to the last days of The Freak Show are of typical developer/real estate conduct. Many months before when Ray tried to renew his lease, he was told from building management that Snapchat bought the building. Not only was he told that, but all the other businesses on the ground floor were told that. In addition, residents who live nearby that have inquired about monthly parking were also told that all the parking spaces, over 100 spots, were all for Snapchat even though most of them are sitting empty every single night. Despite everyone from neighboring tenants, parking lot attendants, building management, and immediate residents all pointing to Snapchat as the owner, Ray still couldn’t get in contact with anyone that actually owns the building for him to negotiate with as he begged management to at least let him stay through the summer months when the Freak Show makes most of their annual income. He was repeatedly denied and eventually even threated litigation if he stayed 1 day longer. Mysteriously, no one would admit to the ownership. All of this was going on while everyone knowing Snapchat’s desire to get in Jerde’s space and seeing them gobbling up property all over town. He was sending his checks to Snapshot Partners, LLC who claimed they have nothing to do with Snapchat and the similarity in name was a coincidence. In mid-March, Ray finally got a call from a representative of Snapchat claiming they have nothing to do with Snapshot Partners LLC and they can’t help him. Ray referenced the “Snapped Up” article and the Snapchat representative told him “not everything in that article was 100% true.” Ray even told the Snapchat representative he would use his platform to praise Snapchat if they could help him to stay, but obviously to no success.

Ray was obviously frustrated and also concerned about his many employees who are specialists and would all be out of work, not to mention everything he put his heart and soul into for the last 12 years. Snapchat continued to deny anything to do with SnapShot Partners or the lease of The Freak Show and even put out a statement in the press relieving themselves of any responsibility saying Snapchat sub-leases a space on the third floor of the same building as The Freak Show, but the company does not own the building, “nor do we have any leasing rights to the ground floor retail,” the statement reads. “We have already said publicly that we intend to focus our future expansion outside of Venice.” Snapchat, as mentioned earlier, is the only one that claim that they do not own or have controlled interest in the building, yet all the retail stores, parking lot guys and security guards all claimed they do (and still do currently). In addition, immediate neighbors were told Snapchat owns the building and also Jerde who have been in lengthy legal battles trying to remain in that location. Some people within the community, including law enforcement and other local press outlets, just blindly believed Snapchat’s statement … simply because that’s what THEY said.

When the Freak Show closed, it was the talk of the town for many reasons and there was a lot of emotion from many people. It’s safe to say the most popular reaction was one of shock. The Freak Show was far from just another business on Ocean Front Walk. It’s hard to estimate, but it’s safe to say hundreds of thousands attended the show from all over the world and the loss of this local entity hit many people hard. On Sunday April 30th, the Freak Show had its farewell party complete with everything you would expect – live performances, local deejay music, stilt walkers, a wedding ceremony, and an influx of community love and support along with protestors holding signs that said “Snapshot = Snapchat”. Thousands of locals and tourists witnessed this event along with vast media coverage from all outlets. It was a day to be remembered unfortunately for all the wrong reasons. For many, this realization was a wake-up call to what’s been going on in Venice the last few years – that the “Snap-Effect” was in full force.

After the Freak Show left, local egotistical real estate developer and Snapchat-property owner Brad Neal of Gold Coast Properties insisted the protesters were wrong about everything and started boasting on social media that a restaurant was going to take over the ground floor – which of course never happened.

Which leads us to the latest title-holder Hancock Orange LLC which many believe is a shell company that is controlled by Snap Inc. “The fact that the lease-holders name coincidentally is Snapshot pretty much says it all” says a longtime local that lives behind the building, “Not to mention the continued ploys and constant refusal to publicly disclose true ownership.” In another conversation with a Snap Inc. representative, they said “We do not own that building. We have no business relationship with Snapshot Partners or Hancock Orange, other than being a tenant in a building that they own.” So… who do you believe: A billion-dollar company who has no logos on any of their numerous buildings and whose business model is built around secrecy or… literally everyone else?

Fast forward about 9 months after The Freak Show was ousted and everyone has been kicked out of the building EXCEPT for Snapchat, even though they continue to tell the press and community that they’re moving everyone to Santa Monica. Jerde Partnership is packing their bags and all that is left are “For Lease” signs in the ground floor windows. Where the liveliness of The Freak Show used to be is now a ghost town and Todd Ray is still looking for a new venue, hopefully in Venice. Some will say this is “progress” but how is “progress” pushing out beloved world-renown businesses and replacing them with a sign?? Undoubtedly, the community will watch that building very closely and have strong feelings about its future changes. It’s been rumored a Starbucks may go into the ground floor which would be worse than an Adidas Store saying they’re “Defining Venice” and would undoubtedly instigate another protest of some sort. A common thought in Venice is that there is an ordinance prohibiting national chains on Ocean Front Walk. That is unconfirmed as of the writing of this article.

Another issue within that building that deserves attention is the underground parking. Before the building was built, the California Coastal Commission designated 41 lower-level spaces in that building to be used on a lease-basis by residents of the North Venice area. Now, only 1 resident is known to be using those parking spaces while the lot basically sits empty every single night and other residents are forced to park on the street. More than a few residents were blatantly told to their faces that all the parking spaces were for Snapchat, and Snapchat employees have been seen parking there and then walking to other nearby buildings that Snapchat uses for offices. Phone calls are never returned when calling Peg Hale at Lincoln Parking at 310-393-4848 or they simply state that “parking is not available” and they supposedly put your name on a list. The California Coastal Commission and local law enforcement have done nothing to uphold this law that they designed over 30 years ago despite multiple phone calls and emails from the residents and the press in the past year.

And now, the big question after all of this is – will Snapchat take over Jerde’s vacated space or are they really moving to Santa Monica like they say they are? So far, their “moving” only looks like an expansion. Only a week ago, another person who works inside the building was asked if Snapchat was moving into Jerde’s space and their response was, “They own the building – what do you think?”

The Freak Show building is like the Alamo. Winning over that building is a big win for Venice. And the community wants it like it was before – without the hated Snapchat, with parking spots used for residents as they’re legally supposed to be, and the ground floor with mom & pop stores in addition to The Freak Show which was a perfect location for them. If it turns into a 100% Snapchat building with parking used only for their employees, and national chains or empty storefronts on the ground floor, it will almost be like our Venice has been lost forever to the Evil Empire of the tech world. It’s in the heart of Ocean Front Walk and is very sensitive to the residents given the recent history, and it will most certainly be watched very closely by our inquisitive community. The community watch on this building is so heightened that on January 31st, 2018 when the railings in the front were being painted a horrid Snapchat yellow and word spread around town, they were immediately painted back to white the following day.
And much like anything else the rumors are still flying, and many times, where there’s smoke there is fire. There was the Starbucks rumor, plus another rumor that Google bought the building and planned on bringing back The Freak Show. Then another anonymous source within the building stated that Snap Inc just bought the entire building with cash in mid-January 2018. Not surprisingly, a Snapchat representative denied that was true. The drama continues…

Remember the Alamo? Sure, but also Remember Jerde and remember The Freak Show.

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1 reply »

  1. Thanks for so much info and good reporting here.

    the FREAKshow guy was the sweetest, genuine, friendliest person on the east side of the whole boardwalk…for years… fun to listen & watch his “come on in and see ….” circus type unusuals.
    yes, i, too, came for last day dismay event, to honor all who showed themselves openly, humbly, at his place….and realized, this was 1 more visible display of ghe demise of all thag was and annot be in this Extremely Greedy era…where money, low price deals, and entitled me’s dominate..for a while.

    What used to be feared as “gentrification”. .. but now better called “Commercialization ” has rotted what is not duplicatable any where else… either.
    some do well to get angry….others have-to “Let it all go “….and just remember well….forever.

    mary
    in Venice since 1971…and still here”

    Like

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