Major Financial Firms, Including a Funder of Major WeHo Developments, Defeat a Student Debt Relief Plan

A group of financial firms that includes Angelo Gordon & Co., the firm behind two of the most controversial development projects in and near West Hollywood, has  won its battle against a deal that might have relieved students of millions of dollars in college loans.

Bloomberg News has reported that a U.S. District judge in Wilmington, Del., sided with Angelo Gordon and three other money management firms that opposed a settlement negotiated between the Consumer Financial Protection Bureau and the National Collegiate Student Loan Trusts.  NCSLT is a group of 15 investment companies that had made bulk purchases of 800,000 private student loans totaling $12 billion.

Angelo Gordon & Co. is a major real estate investor and has been the backer of Townscape Partners controversial 8899 Beverly and 8150 Sunset projects.

The CFPB in 2017 filed a suit against NCSLT alleging that in collecting loan payments through its Transworld Systems contractor it processed some incorrectly, filed inaccurate papers in suits against the student borrowers, and also cheated many struggling borrowers out of their rights to lower repayment terms. The deal it struck with NCSLT allowed for an audit of the students loans to resolve allegations of illegal behavior by NCSLT.

Angelo Gordon, Libremax Capital, One William Street, and Waterfall Asset Management hold more than $1.8 million of the notes issued by NCSLT. In their opposition to the settlement, they argued that VCG Securities of Florida, which owns a share of NCSLT, didn’t have the right to negotiate the deal with the CFPB. The trusts that constitute the NCSLT are the largest single owner of private student debt.

Townscape’s plans required nearly doubling the size of the 10-story building, which was constructed in 1962, 22 years before West Hollywood was incorporated as a city. The building already didn’t comply with the city’s General Plan, which was adopted in 2011, or the zoning for the area, which limits commercial buildings in the area to three stories and a smaller mass on the 1.7-acre lot. However, it was “grandfathered in” because it had been in existence before the city was incorporated.

In 2015, Townscape got the West Hollywood City Council’s approval of its plan to purchase the 10-story 8899 Beverly building, used primarily for offices, and create a condo development that was twice the size of what was permitted under the city’s General Plan. The building already was seven stories higher than what was permitted in the General Plan, but that height had been “grandfathered” in because it had been built in 1962, 22 years before West Hollywood was incorporated as a city.

Townscape offered the city almost $3.5 million in “public benefits,” which included the construction of a small park on Bonner Drive near the intersection of Robertson and Beverly boulevards, contributing $2 million to the city’s Affordable Housing Trust Fund, and improving landscaping along Beverly Boulevard and Rosewood Avenue.  

Townscape and its managing partners, Tyler Siegel and John Irwin, have been major contributors in City Council elections, giving money not only to individual candidates but to independent campaign expenditure committees that supported John Heilman and to an unsuccessful campaign to fight a limit on City Council members terms.

Siegel, Irwin and family members also had donated $8,000 to Councilmember John Duran for to support one of his re-election campaigns his unsuccessful race in 2014 for the 3rd District Seat on the L.A. County Board of Supervisors.

Angelo Gordon also has been the financial backer of Townscape’s 8150 Sunset Project, which sits on the corner of Sunset and Crescent Heights boulevards just outside West Hollywood’s northern boundary.  The mixed-use project, designed by noted architect Frank Gehry, consists of five buildings that include 229 residential units, 38 of which will be set aside as affordable housing, along with 65,000 square feet of commercial space that will include including a grocery store, restaurants and retail shops. Townscape’s plans have received pushback from some residents of West Hollywood who have expressed concern about the traffic the development might generate, its impact on the city’s sewers and the height of its buildings.