Daily Journal- Sept. 29, 2003

An Eye for Detail -- Fred Nicholas and Amy Forbes examine the Frank Gehry-designed Walt Disney Concert Hall with more than a curiosity for the structure's wavy, steel exterior. Among the curves, they see 16 years of legal wrangling.

By John Ryan

Daily Journal Staff Writer

Fred Nicholas squints into the late September sun as he approaches a large stainless-steel structure atop Bunker Hill in downtown Los Angeles.

It towers over him, as if he could be swallowed by the building's exterior.

The giant steel layers and waves of this exterior have been described as billowing sails of a ship or petals of an exotic flower, and Nicholas examines the structure with the keen eye of a captain or gardener.

His eye catches a few handprints and stains on a flap of steel that hangs a few stories above him.

" They're going to clean it up," Nicholas, 83, says.

Some markings are intentional. Nicholas walks past one wave of steel and encounters another, by the front steps at First Street and Grand Avenue. It bears the name of Nicholas' labor of love, the Walt Disney Concert Hall.

Next month, the Frank Gehry-designed building will open after 16 years of political squabbles, cost overruns, designs and redesigns, countless hours of lawyering and negotiations, battling egos and publicity both good and bad.

The hall will become the new home of the Los Angeles Philharmonic and a key addition to the Music Center of Los Angeles County, which includes the nearby Dorothy Chandler Pavilion, Mark Taper Forum and Ahmanson Theatre. Beyond that, city leaders hope the concert hall becomes the crown jewel of redevelopment plans sweeping downtown Los Angeles.

No one could blame Nicholas for a twinge of melancholy at the hoopla surrounding Disney's curtain raiser. Though the hall probably would not exist without him, more immediate players have relegated him largely to the wings.

He was center stage in 1987, when Disney family lawyers selected him to head the concert hall project after Lillian Disney gave the county of Los Angeles $50 million to erect the hall in memory of her husband, Walt Disney.

Nicholas poured his life into the job for eight years, pro bono. During that time, he led the project through an unpredictable string of legal hurdles, inaccurate cost estimates and lack of supplemental funding. By 1995, construction of the hall hadn't started.

Nicholas stepped down that year under political pressure and cries of mismanagement. Since then, he says, his relationship with the concert hall project has been "bittersweet."

His friends and admirers are hoping the hall's opening will shine a fresh light on the critical role Nicholas and others played during an era typically rendered as a subplot of mistakes and delays.

" Fred was the fall guy," says Ronald Gother, a retired Gibson, Dunn & Crutcher partner who began representing the Disney family in 1964 and oversaw its interests throughout much of the hall's tortured history.

Gother, who says the project turned out to be more complex than anyone ever imagined, takes great offense at suggestions of mismanagement.

" Fred should be getting a gold medal for all the time and effort he put in free of charge," Gother says.
Former Los Angeles Mayor Richard Riordan and billionaire developer Eli Broad are credited with rescuing the concert hall by heading a new project team after Nicholas exited in the mid-1990s and by raising the money needed to complete the project.

Gibson Dunn real estate partner Amy Forbes, who worked on the project from 1987 until 1998, praises the efforts of Riordan and Broad. However, Forbes adds, they were able to do their part only because Nicholas had kept the project alive through its most turbulent period.

" I really view Fred as the hero because he was the guy who said, 'We are going to do this,'" Forbes says. "I view it as a remarkable achievement. Fred held so many pieces together for so long."

Long before Lillian Disney decided to donate the largest arts gift ever made to a county, the idea of a new concert hall - and its exact location - were embroiled in controversy.

Gibson Dunn managing partner Daniel Frost, who chaired the board of the Music Center, had become a big proponent of a new concert hall by the mid-1980s. He was the son-in-law of Dorothy Chandler, whose name graced the Music Center's largest venue.

Though the Dorothy Chandler Pavilion was a respected venue, its acoustics weren't of the highest quality, according to Frost, who is retired and living in Washington state.

" We also had a tremendous need for space," Frost adds.

He noted that the Pavilion housed the local Philharmonic, opera and master chorale and hosted other performances.

So Frost turned his eye to a piece of land owned by the county, known as Parcel K. The county had agreed to let the Performing Arts Center, a Music Center-related entity, expand on the land at First Street and Grand Avenue.

However, by the mid-1980s, the county wanted Parcel K for more lucrative commercial development. County officials suggested alternatives to free up Parcel K for commercial use. They suggested expanding the Music Center east of the Pavilion, across Grand Street, between the County Courthouse and the Hall of Administration.

" We just thought that was atrocious," Frost says.

Attracting donors to a project wedged between two unattractive government buildings would have been challenging, if not impossible, he explains.

The Parcel K dispute turned "very bitter," Frost says.

It also garnered headlines. Gother remembers reading with interest an article about the dispute in February 1987 in the Los Angeles Times. He knew Lillian Disney was looking for a charitable donation for the $47 million in stock proceeds the Disney family had made from the sale of Walt Disney's name and likeness to the Walt Disney Co. six years earlier.

Gother showed the Times article to Lillian Disney, who became intrigued with the idea of donating money for a concert hall on Parcel K. Gother told his partner, Frost, who was ecstatic.

Disney and Gother toured downtown Los Angeles to examine various land spaces. And Disney became convinced that Parcel K, a wide-open area in the center of Bunker Hill that was free of obstruction from other buildings, would be the ideal site for a hall to honor her husband.

Gother, who since has retired from Gibson Dunn, went to work, scheduling five individual meetings with Los Angeles' five county supervisors for one day: May 12, 1987. He had very specific instructions from Disney. Gother was to hand-deliver a letter to each of the supervisors and assess the supervisors' reactions as they read the letter.

" My instructions were that, unless I got a positive reaction from all of the supervisors, I was to put the letter back in my briefcase and leave," Gother recalls.

The letter was signed by Lillian Disney and detailed her plans to donate $50 million for a new concert hall. The deal was contingent on Parcel K being used for the building.

County Supervisor Pete Schabarum, who had been vocal in his support of commercial use for Parcel K, expressed some reluctance. But Gother was able to report that the reactions were positive.

At the time, the $50 million was believed to be the largest single private contribution to the arts in U.S. history. Not surprisingly, Gother says, the supervisors and other county officials were grateful.

The use of Parcel K was not the only term required by Lillian Disney. She required approval of the architect, and she imposed a deadline on construction. Ground had to be broken within five years, by Dec. 31, 1992.
The gift letter also stated that Disney had the right to "to designate an agent, or a committee, to exercise on her behalf, all of the powers vested in her under this letter."

Frost's wife, Camilla Frost, a patron of the arts and Dorothy Chandler's daughter, suggested that Nicholas head that committee.

Nicholas was a longtime real estate developer and lawyer at the Hapsmith Co., which he co-founded. Nicholas also founded the Public Counsel law center, a Los Angeles-based nonprofit public-interest law group.

Perhaps most important, Nicholas had played a similar role in directing the design and construction of the Museum of Contemporary Art throughout the early to mid 1980s, a project he brought in on time and on budget. That building sits just south of the concert hall near Second Street and Grand Avenue.

" Camilla knew about that and said, 'We just had to have Fred,'" Frost recalls.

Gother and Frost met with Nicholas and offered him the job. Nicholas didn't accept it, however, until meeting for two hours with Lillian Disney at her home.

" I wanted to make sure Mrs. Disney was interested in truly having a world-class architect do the hall," Nicholas says. "I wasn't interested otherwise."

" Mrs. Disney loved him," Gother recalls.

Nicholas became chairman of a 10-member Walt Disney Concert Hall Committee and the chief executive of Walt Disney Concert Hall I Inc., the nonprofit created by the Disney family to implement the project.

Lillian Disney's daughter, Diane Disney Miller, became vice chair of the concert hall committee and was the family's most active participant in the project.

Nicholas hired Fred Stegeman of project management firm Stegeman and Kastner as his project manager. Nicholas also established a seven-member architectural subcommittee, which helped him organize a worldwide design competition. During four critical months between 1987 and 1988, the subcommittee winnowed the field from 80 architectural firms to 25 to four. Frank O. Gehry & Associates was the only American finalist.

Each of the four finalists received $75,000 to develop plans and models and prepare a presentation for the Disneys and committee members. Gehry, not yet at the pinnacle of his career, was a dark horse.
Gehry had, however, left a strong local footprint as the designer of the Temporary Contemporary museum, Loyola Law School and the Aerospace Museum and from his work improving the acoustics at the Hollywood Bowl. However, of all the finalists, he was the only one who had not won a Pritzker Architecture Prize, the top honor in the field.

But Nicholas says that he and Richard Koshalek, the Museum of Contemporary Art director who chaired the architectural subcommittee, were looking for "ripeness": an architect who could make the concert hall the best work of his career to date.

" I knew he was the right guy from the beginning," Nicholas says. "His presentation was the best, and he took the best approach to solving problems associated with the site."
Nicholas and Koshalek rallied the subcommittee around Gehry, then took the group's unanimous choice to the larger committee.

" Not everybody [on the committee] was for it," Nicholas says. "But once Mrs. Disney and Diane [Disney Miller] were convinced, that made his selection possible."
In December 1988, the committee announced Gehry as its unanimous choice.
In a symbolic ratification of the choice, Pritzker jurors awarded Gehry their $100,000 prize the next year.
Harry Hufford, who in 1995 replaced Nicholas as the leader of Walt Disney Concert Hall I Inc., says that the selection of Gehry may be his predecessor's greatest achievement.
" His group got Gehry," Hufford says. "That wasn't easy. It took a lot of courage."
Though courageous, selecting the architect was a breeze compared to Act II: design, construction, maintenance and operation of the hall.
The hall could not proceed until the Disney family, which was providing the money, and the county, which was providing the land, could agree on terms.
Disney's initial gift letter of May 12, 1987, and subsequent letters between her lawyers and county representatives put forth general terms.
" Letters are one thing," Gother says. "The other thing is for lawyers to agree on the wording of terms in the documents, to reach agreements. Lawyers can have a field day with these things."
Reaching legal agreements on construction and operation took five years. Disney representatives, led by Gother and Nicholas, met with county lawyers virtually every week from 1987 to 1992.
" We spent every Monday morning for five years negotiating various parts of the deal with the county," Nicholas recalls. "It really was unbelievable."
Though the county was grateful for the gift, it wanted to protect its financial interests if problems arose with the project, explains Richard Volpert, who started representing the county in 1989 as a partner in the Los Angeles office of Skadden, Arps, Slate, Meagher & Flom. He moved to Munger, Tolles & Olson in 1995.
Though the hall would be built with Disney money, the county planned to issue $110 million in bonds to cover the construction of an underground garage, which would generate revenue for the county.
The county insisted that a term be included that would prohibit Walt Disney Concert Hall I Inc. from starting construction of the garage, which was to be built first, until it had had secured funding for 85 percent of the concert hall's costs, eventually estimated to be $100 million. This clause became known as the "85 percent test."

A similar clause prevented Disney from starting construction of the concert hall, once the garage was complete, until it had 95 percent of the hall's total costs.
" The county was willing to make available 31/2 acres of the most prime space in downtown and to finance a garage to serve as the foundation to support the concert hall," Volpert says. "The county was very concerned that there would be cost overruns and no funds to pay for it. We did not want them to seek additional public funds."

Gother recalls County Chief Administrative Officer Richard Dixon's suggesting during negotiations that the Disney family cover any garage costs that exceeded the planned budget.
" I remember being so incensed that I got up and left the meeting in his office," Gother says. "Here was this civic-minded woman trying to help them build a concert hall, and they insist on that. I just blew my cool. That is not behavior characteristic of Ron Gother."
The Disney family eventually agreed to cover the excess garage costs on the condition that, if the garage came in under budget, the savings would go to concert hall funds.
County lawyers also wanted to guarantee a source of revenue if the project fell through. One term required Disney to redesign and finance the construction of a complete garage if it defaulted on building the concert hall.

The Disney gift gave ownership of the hall, once completed, to the county. Lillian Disney's insistence that the county preserve the hall's "world class status" through the highest levels of maintenance created another negotiation wrinkle.
" The maintenance costs we were undertaking were substantial," Volpert says.

He noted that the two sides were working toward a lease agreement that would last 66 years, with maintenance costs expected to run $5 million to $10 million each year.
The lawyers also had to agree on what "world class" meant for maintaining the hall. In addition, the county negotiated for approval of construction decisions, such as what building materials to use, that later could affect maintenance efforts.

At times, the county's approach to negotiations bothered Gother.
" They fought us on every detail as if we were private entrepreneurs building on their land," Gother says. "They could never seem to adjust to the fact that this was being built for them, that it was going to be a county building."
" Ron maybe thought that we were being picky, but we, as a public agency, could not sign a blank check," Volpert says.

Some hassles couldn't be blamed on either side of the negotiating table.
Forbes, who is Volpert's second cousin, says that that the city of Los Angeles also had to approve building plans because Parcel K was located in a Community Redevelopment Agency renewal area. Disney, county and city lawyers had to negotiate a three-way deal known as an owner participation agreement.

At the same time, city, county and Disney lawyers faced a challenge by an environmental watchdog group called A Local And Regional Monitor, which filed a lawsuit in Los Angeles Superior Court in 1990, claiming that the city failed to address adequately the project's impact on traffic and other environmental issues.
Gibson Dunn partner Gary Justice, who represented Disney interests, city outside counsel Pamela Schmidt, who is now at Jeffer Mangels Butler & Marmaro, and county counsel Helen Parker defeated the complaint in 1991. The watchdog group, represented by attorney Sabrina Schiller, also lost on appeal.
Perhaps the biggest wrench in the negotiating process resulted from the county's desire to create a revenue source in addition to the planned garage.
" We came up with the concept to put a hotel in there, and eventually we all became very excited with it," Nicholas says.

Gehry had changed acousticians and been through redesigns. He had to endure a much more complicated revamping to include a four-star, 350-room hotel to be operated by Ritz Carlton.
Though Disney and county lawyers negotiated a three-way deal with Ritz Carlton, it was scrapped, thanks in part to city opposition. The Community Redevelopment Agency would not approve the hotel's labor policies regarding employee wages.

" That was a nightmare, a big waste of effort," Nicholas says of the hotel's decision to pull out in 1991.
The group decided not to negotiate with other hotels, Forbes say, in part because design issues for the hotel had proved so complex.

Through all the changes, Nicholas adds, he had to consider not only county, city and Disney concerns but also those of the Music Center and Philharmonic, which would operate and use the hall.
All these voices worked their way into the legal negotiations and redesign efforts.
Finally, on Dec. 16, 1991, Walt Disney Concert Hall I Inc. and the county signed a "Master Agreement" that finalized design, construction, maintenance and operation terms of the hall.
The agreement put forth the conditions that Walt Disney Concert Hall I Inc. would have to meet before the county entered into a "Master Lease Agreement" with the nonprofit. For example, Disney needed a number of building permits and would have to prove that it had 85 percent of the money necessary to complete the project.

Without the lease agreement, construction could not begin.
Unbelievably, Forbes says, what seemed a throwaway condition of Disney's gift - that construction start by Dec. 31, 1992 - was starting to jeopardize the project.
" Five years was the longest possible time we could think of to reach a groundbreaking," Forbes says. "We couldn't imagine it taking that long."
However, because of the protracted phase of negotiations and redesigns, the project lacked detailed working drawings. As a result, near the end of 1992, Walt Disney Concert Hall I Inc. did not have firm cost estimates from building contractors.
With the deadline looming, Disney's two daughters, Diane Disney Miller and Sharon Lund, on behalf of their mother, sat down with Gother, Nicholas, Frost, ARCO executive Ronald Arnault, who chaired the hall's finance subcommittee and James Thomas of building firm Maguire Thomas Partners, acting Music Center chair.

Frost, Arnault and Thomas all told the Disneys that the project should not break ground, despite their mother's Dec. 31, 1992, deadline, Gother recounts.
" In essence, they said that, with a project as complex as this, it was foolish to go forward without full working drawings and price guarantees from contractors," Gother says.
The group hoped to ask Lillian Disney to extend the Dec. 31, 1992, deadline to break ground only when reliable cost estimates came through.
A silence filled the room for close to a minute after the notion was floated, Gother recalls.
" Sharon spoke first after the silence and said she wanted to go forward," Gother says. "Then Diane said, 'I do, too.'"

" The three gentlemen were flabbergasted," Gother says.
They didn't know that before the meeting, during lunch with Gother and Nicholas, the Disney daughters had received contrary advice. Gother and Nicholas had recommended they go forward with construction, starting with the garage, which was ready to be built.
On Dec. 10, 1992, the ceremonial groundbreaking was held.
" It was a beautiful ceremony," Nicholas recalls.
He served as master of ceremonies for the event, which drew a few hundred attendees.
Nicholas and Diane Disney Miller were among those who shoveled up the project's first dirt. At the time, the final lease agreement was forthcoming. After Forbes tracked down the requisite permits and signatures, Disney and county lawyers signed the master lease Dec. 23.
The document shows how negotiators nailed down the legal responsibilities of all the entities that would play a role in the concert hall. Under the deal, the county leased the land to Walt Disney Concert Hall I for construction of the hall and garage. Concert Hall I subleased the land to the county, obligating the county to its maintenance role.

The county sub-subleased the land back to an entity known as Walt Disney Concert Hall II Inc., tasked with operating the concert hall, which itself agreed to enter into separate subleases with the Music Center and the Philharmonic for the completion of other operations.
The decision to "fast-track"- the architecture term used to start construction without detailed drawings - may have been a bold move, but it was hardly irresponsible.
As 1992 drew to a close, the Disney family kicked in another $17.5 million, hiking its total contribution, with income earned on interest, to $93.5 million.
Facing the 85 percent test outlined in the master agreement, Nicholas sought numerous cost estimates from construction companies.
Three of them - Beck-Peck/Jones, Iskander Associates and Turner Construction Co. - backed up project estimates that costs of the hall would be in the range of $100 million to $110 million. Maguire Thomas Partners, at the request of the Music Center, performed an independent review and reached a similar conclusion.

The Music Center also committed itself to raising $17.5 million for construction costs and $5 million for cost overruns.

Ever the stickler for details throughout negotiations, county officials wouldn't have signed the lease if they weren't convinced that the project had 85 percent of the hall's costs in hand.
" We wouldn't have gone ahead if we felt it was a nonstarter," Volpert says. "From the county's point of view, we were committed and satisfied that it was time to go ahead."
The 1992 groundbreaking was only "imprudent" in hindsight, Gother says, when costs skyrocketed, often in unpredictable ways.

The firm of Dworsky Associates had been hired to do the working drawings of Gehry's designs. But the subcontractors couldn't understand the drawings, in large part because of the complexity of Gehry's vision.
" As the subcontractors started giving fixed bids, things got out of hand," Gother says. "When you see the building, you know there's not a wall that's straight. Contractors would say, 'I have no idea what it will cost to build that.'"
To protect themselves, firms gave high bids. The 1994 Northridge earthquake didn't help matters, Nicholas adds. Busy contractors were less inclined to give competitive bids, and new earthquake standards raised construction costs.
And the Music Center, dealing with the tail end of a recession, also hadn't lived up to its fund-raising role, Gother says.

Nicholas told county officials in the summer of 1994 that the project was at least $50 million short of funding and that the total cost would approach $180 million. The project came to a halt as Concert Hall Inc. hired Hines Interests, a construction and management firm, to perform a cost-reduction study.
County officials went public, threatening to declare the project and its managers in default.
As Hines began its study in 1995, county officials, committee members and Music Center staff applied pressure to overhaul project management and replace Nicholas.
" It was just a consensus," Gother says. "I know that Diane [Disney Miller] was being advised by many others that, if we were going to get a new team in there, it should not include Fred."
It fell to Gother to break the bad news, which Nicholas was expecting.
" I went to see him one afternoon," Gother says. "He knew what I was coming there to say, so he beat me in saying it."
Gother likens Nicholas' fate to that of a baseball manager.
" It wasn't Fred's job to get the hits or do the pitching," he says. "But when the team fails, the manager has to go."

Nicholas also was on the boards of the Music Center and the Philharmonic. He resigned from both, deciding it was best to separate himself completely from the project. Though the Philharmonic sent him a nice letter, Nicholas says, the Music Center did not respond.
The lack of appreciation stung. He believes that his project manager, Fred Stegeman, who was replaced by the Hines group, also deserved some recognition for years of hard work.
Stegeman's office did not return a call.
Nicholas' last task was briefing his replacement, Harry Hufford, who was leaving his post as Gibson Dunn's chief administrative officer. Hufford also was a former county chief administrative officer and a past acting president of the Music Center.
Cost estimates for the hall soared to $265 million in 1995, leaving Hufford with a funding gap of $150 million. Hufford and the county negotiated a new agreement allowing the nonprofit "additional time to fund, commence and complete construction" of the hall.
That 1995 agreement also required Disney to complete construction of "a functional, complete" garage by 1996. That project was completed on time.

The county further insisted on Disney meeting strict fund-raising guidelines; if they failed to meet the standards, the project would be thrown into default. The first goal came in June 1997, when Walt Disney Concert Hall I Inc. had to have raised 35 percent of total costs for the hall.
" The county was being as cooperative as it could be to keep the project alive," Volpert says.
The nature of the project had changed completely. Nicholas always operated under the assumption that money from the Disney family would finance virtually the entire hall, with Music Center fund raising as a small supplement or backup.

But now, on its deathbed, the project became almost entirely a fund-raising effort. Hufford says his job was to restore confidence in the project before passing it off to a new leadership team that could raise the funds.
Gother says that Hufford did a stellar job.
" That's all I could do," Hufford says. "To raise that money, you need the big hitters up there knocking on the doors."
Riordan had been a client of Gother's, and Gother had kept him apprised of the hall's development over the years.
Diane Disney Miller authorized Gother to call Riordan and tell him that the Disneys were willing to turn over leadership of the project to whatever group the mayor wanted.
Perhaps the final act began when Riordan joined the cause in 1996 and tapped Broad to join him, creating a new momentum for the project. Rounding out the trio of key fund-raising leaders was Andrea Van de Kamp, the new chair of the Music Center.
All three were motivated by the progress of Gehry's Guggenheim Museum in Bilbao, Spain, which would be completed in 1997.
" I was absolutely blown away by it," says Van de Kamp, who visited Bilbao in 1996. "It let us know that a building like that can be done."
The improving economy, making its way toward the boom, also helped with fund raising, she adds.
Hufford left his post in June 1997 after hitting the first fund-raising goal and transferring project responsibility to the new team.
A Broad-led project oversight committee was established later that summer. Diane Disney Miller also became more involved in the committee that year and donated more money, to make sure that Gehry was the architect who completed the designs and working drawings, a concept Broad had opposed for cost reasons.

In 1998, William Siart, an oversight committee member and former head of First Interstate Bancorp, became chair of Walt Disney Concert Hall I Inc., a post he still holds.
Nicholas has high praise for the work of Hufford and the new leadership team that followed.
Still, Forbes suggests, the hall may not have been built if Nicholas hadn't kept the momentum going through 1992, when the gift's deadline was set to expire.
To this day, Gother doesn't know whether Lillian Disney, who died in 1997, would have granted an extension to her gift. At the time, Gother knew that she was extremely frustrated with the project's course.
" I would write these memos to Mrs. Disney, explaining the delays," Gother says. "She was ready to tear those memos up."

Forbes believes that Disney, frustrated by the overlawyering, would have yanked the gift away from the county.
Both Gother and Forbes insist that the decision to fast-track at the end of 1992 was what saved the concert hall.
" If we didn't start it then, it just never would have happened," Forbes says. "That's just the nature of these big projects. If you don't start them at a certain point, they just won't start."
Standing on the steps of the hall, dwarfed by Gehry's undulating steel, Forbes and Nicholas agree that the hard work was worth it.

They take time to catch up, having not seen each other for five or six years.
The 16-year saga of the hall is etched in them both. Nicholas says he had a full head of hair when he agreed to chair the project. Forbes was a single associate in 1987. She is married with three kids and in her 10th year as a partner.

Nicholas has remained a player in the real estate world, still at the Hapsmith Co. and in his 51st year as a lawyer.

Just a few blocks south of the Walt Disney Concert Hall on Grand Street is the Museum of Contemporary Art, Nicholas' baby of the 1980s.

A temporary exhibit at that museum is showing Gehry's designs, including a model of the new concert hall. The introduction to the exhibit contains a timely recognition of Nicholas' pro bono efforts: "Frank O. Gehry: Work in Progress is dedicated to Frederick M. Nicholas in honor of his leadership of the arts and architecture in Los Angeles."

" Well, that's something," Nicholas says with a smile.

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