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Scientology's Hollywood Real Estate Empire

The biggest owner of historic buildings in Hollywood, the Church of Scientology has earned a good-neighbor status as its acquisitions continue -- even as questions about its motives abound.
Neil Webb

TOUR WITH SCIENTOLOGY

The landmark Guaranty Building was swarming with activity on a recent afternoon. Within a matter of minutes, a scruffy homeless man shuffled past, followed by a woman laboring with a tandem stroller and a trio of backpackers who trudged past the 12-story tower engrossed in their guidebooks, oblivious to the building that once housed the offices of Charlie Chaplin, Rudolph Valentino and gossip columnist Hedda Hopper.

Amid the throng of tourists that meandered the boulevard, a clutch of uniformed men approached the building at Hollywood Boulevard and Ivar Avenue and made a sortie for the entrance of the tower, which features a stunning facade of columns and brick. Moments later, a woman emerged, toting pamphlets. On cue, a family ambled up, and though the brief conversation appeared pleasant enough, no, the tourists would not be stopping in for a visit to the L. Ron Hubbard Life Exhibition.

The historic 6331 Hollywood Blvd. building, constructed in 1923, houses ecclesiastical management offices and the Life Exhibition, a museum that venerates the Scientology founder. The tower looms over a neighboring property owned by the church, a drab two-story building that is hardly noticeable next to the Beaux Arts masterpiece. But in terms of the church's real estate operation, that nondescript (and non-historic) two-story building is far more important.

The church's real estate brain trust works out of the squat, unremarkable building, called the Hollywood Guaranty Building Annex. It is from this facility at 6349 Hollywood Blvd. that Bob Wright, the church's international construction supervisor, and Laurence Guenat, international senior designer, direct a staff of about 40 that designs, plans and oversees projects around the world. The church's real estate leadership team also includes Alan Nebeker, 31, senior project manager, and Mollie Hoertling, 35, executive vp project management.

The foursome led this reporter on the daylong June tour of the church's facilities. Wright, 42, and Guenat, 41, projected confidence -- they appeared to be natural leaders. Both have worked for the church for more than 20 years. They addressed questions directly and in detail, often with a smile. They wore matching frameless sunglasses adorned with decorative jungle cats on the temple arms.

They outlined the typical process the church goes through when acquiring a property. Often, a local arm of the church will discover a building it believes could work for the organization and submits it to the real estate team. In other cases, the professionals identify buildings that might be suitable for acquisition. After reviewing prospective deals, the real estate leadership team takes projects to the church's board of directors.

The church does not have an in-house broker; instead, it works with agents on a case-by-case basis. One of the church's mainstay commercial agents in Los Angeles is John Repstad of Binswanger Realty Advisory Group Inc., who represented the church in the KCET purchase. He declined comment.

Once a building has been acquired, Guenat and her team create initial designs and computer renderings, which Gensler uses to prepare construction documents. The San Francisco-based company, which designed the CAA headquarters building in Century City, has handled 18 projects for the church during the past few years -- including eight in Southern California -- and has several in progress. It began working with the church in 2006. Tommaso Latini, a Gensler principal who heads the company's team that works on the Scientology projects, praised the church for understanding "the importance of historic buildings."

After the design is complete, Wright turns over the project to CB Richard Ellis, which handles construction management, contract negotiations and hires contractors. The church started working with CB Richard Ellis in 2009. "The church has a well-deserved reputation as an excellent steward of historic buildings, respectful of the heritage of the properties they acquire," the Los Angeles-based company said in a statement.

During the period in which the organization acquired the bulk of its historic Hollywood real estate holdings, it was embroiled in a years-long battle with the federal government over its status as a religion. The quarter-century struggle with the Internal Revenue Service ended in 1993, when Scientology won recognition as a tax-exempt nonprofit organization. The benefits are clear: In Hollywood, the church saved more than $200,000 last year in property taxes on its historic buildings. Nearly two decades after being classified as a tax-exempt religion, the issue persists. "That's the question around Scientology from its inception: Is this really something about spiritual development and religion, or is it an economic scheme and a financial loophole?" says Urban. (He notes that the Catholic Church, itself with vast land holdings dating back centuries, would also be fodder for a discussion.)

Barry Wilner, owner of Prizzi's Piazza, a recently shuttered restaurant that was located across from the Celebrity Centre, takes issue with the church's tax-exempt status. Although Wilner believes the organization has done some good for the community -- noting that the church's substantial security presence is a crime deterrent -- he feels the group should not be exempt from paying property taxes. "I think it's a horrible thing to have places that take money from their parishioners and members and don't give back to the community," he says.

But Davis notes that the organization is an active member of the community, committing funds and resources to local groups and organizations such as the Hollywood Arts Council, the Hollywood Entertainment Museum and the Hollywood Beautification Team. "We've raised literally hundreds of thousands, if not millions of dollars," he says.

The Los Angeles County Assessor's Office provided THR with assessment information on the church's historic Hollywood properties. The church does not have exemptions on two of the seven: the KCET Studios (owing to its recent purchase by the church) and the Christie Hotel. But the remaining properties have exemptions of varying amounts, depending on a determination by the assessor's office of what percentage of each building is used for religious purposes and is therefore exempt.

According to data from the assessor's office, the church paid $43,359 in property taxes on the five buildings last year. Without the exemptions, it would have paid $265,650 -- good for an 84 percent reduction in property tax, or a savings of $222,291. The assessor's office did not supply THR with tax data on the church's 19 non-historic properties in Hollywood; these might also be entitled to property tax exemptions.

GETTING IT BUILT

In the past five years, Scientology has purchased 62 buildings worldwide. And the organization has another 16 historic or notable properties in various stages of completion. The expansion is part of a push by the church's ecclesiastical leader, David Miscavige, to open better facilities, called "Ideal Orgs," around the world. The campaign began in 2004. Miscavige was said to be out of town and unavailable for comment.

At least a portion of the empire has been built by Scientologists themselves. It's a topic of great controversy for the church. Labor issues were a focus of the New Yorker story and newspaper reports, including an award-winning series by the St. Petersburg Times from 2009.

While it is not illegal for a religion to employ its adherents as a labor force, it is somewhat unorthodox for a religion to require -- or encourage -- its flock to submit to manual labor. (Some groups, such as monastic Christian communities and Hindu and Buddhist yoga organizations, ask their members to perform various kinds of labor or service, Urban says.)

Questions about Scientology's labor practices center on the Rehabilitation Project Force, a church group for wayward members of the Sea Organization, a 10,000-person religious order. Rathbun, De Vocht and Scobee say the RPF has participated in the maintenance or restoration of the organization's historic Hollywood buildings. In response to this and other claims, the church has sought to discredit the trio. The church attacked the credibility of the defectors, focusing partly on their alleged personal transgressions. It sent THR several sworn declarations from Scientologists who rebutted some of the defectors' claims. But outside observers also shared their stories about the RPF's work on historic buildings.

J. Gordon Melton, a professor of American religious history at Baylor University, says that while conducting a study of the RPF in the mid-1990s, he observed members of the group installing drywall at the Celebrity Centre and laying bricks on L. Ron Hubbard Way, the street that fronts the group's West Coast headquarters, which is officially named Church of Scientology Western United States. "The RPF people just saw it as part of their program," says Melton. "The negativity tends to be, 'I either like this or I don't in terms of Scientology,' and then things tend to fall in place. There were a number of people who got into the RPF program and said, 'This is BS and I am out of here.' They came away with a negative view of the program."

Rathbun says that in the 1980s and '90s, the RPF was used for work on the West Coast headquarters and the former bank at 7051 Hollywood Blvd. Such labor, which Rathbun termed "coercive," included installing floor tiles and doing electrical and plumbing work. Rathbun, the onetime inspector general of Scientology's Religious Technology Center, which controls the church's trademarks, says he reported directly to Miscavige. (The church says that Rathbun had no involvement in its real estate program and is not credible; Rathbun says that there were instances in which he was directly involved in the real estate operation and also was privy to it because of his leadership role within the organization.)

Scobee, who left the church in 2005 after 26 years of service, participated in the RPF four times. In her self-published book, Scientology: Abuse at the Top (2010), Scobee writes that she received a $7 weekly allowance and that during a two-year period she averaged four hours of sleep a night. Later, when Scobee was an executive with the Celebrity Centre network, she claims she oversaw renovations of the Chateau Elysee and claims she used some RPF laborers for demolition, landscaping and electrical work. (The church says that Scobee was not involved in the renovation of the property and was dismissed from the church for gross malfeasance; Scobee says that her work on the restoration of the Chateau Elysee included daily inspections of the project and the organizing of personnel who worked on the renovations.)

Adams says that in the past, before the creation of the Ideal Orgs program in 2004, "church staff and RPF would, from time to time, assist on construction or renovations." But he says that is no longer the case, in part because of the large scale of Scientology's ongoing building program.

"The RPF does not work on any of our construction projects, historical or otherwise, in Hollywood or elsewhere," Adams says, adding that it is not a "labor force." He says that all current and future renovation projects are and will be carried out in the manner described by Wright, Guenat and the other members of the real estate team -- using hired professional firms.

Davis described the RPF as a group for Scientologists who are "not doing well and want to take a period of reflection and spiritual work and get back to basics." He says membership is voluntary, adding that criticism of the RPF comes from a "lunatic fringe." He says that Scientologists with "specialized skills" handle some projects in-house in order to save money.

Indeed, more than 100 Scientologists staff a Commerce facility that produces custom signage for the group's properties. On the June tour of the property, workers at the cavernous warehouse were eager to demonstrate their responsibilities, including the operation of an industrial laser cutter and a water jet cutter. The facility produces up to 1,000 pieces of signage for each of the church's properties.

Both De Vocht and Scobee say that in December 2009, the FBI interviewed them separately about the church; the conversations centered on the RPF. Scobee was interviewed after she sent a letter to the FBI.

Wright's New Yorker story detailed the alleged FBI investigation of the church. The story indicated that the investigation remained open at the time of the article's publication in February. But THR could not independently verify whether the alleged investigation ever occurred or is ongoing, and a spokeswoman in the FBI's Los Angeles office said she "could not confirm or deny an investigation."

The church and its attorneys strenuously denied that the FBI has conducted an investigation. Attorney Mary Carter Andrues, who represents the church, wrote in a May 16 letter to THR that she has dealt with representatives of the U.S. Department of Justice and "confirmed that there is no open investigation of the church or any of its affiliates or leaders; and any report to the contrary is false." She noted that there never was an investigation.

Alexa Cassanos, senior director of public relations for the New Yorker, says that the publication stands by Wright's report and is not "aware of any legal action taken with respect to the article."

"WHO ARE YOU? FIND OUT"

On a recent Friday afternoon, the church's West Coast headquarters was buzzing. As a security guard circled the perimeter on a bicycle, others walked in pairs, ambling past the property's large electronic sign on traffic-choked Sunset Boulevard that queried passersby: "Who are you? Find out." Uniformed men and women trotted across L. Ron Hubbard Way to meet up with others across the street at another of the organization's buildings. The road, long known as Berendo Street, was renamed in honor of Scientology's founder in 1996. Scientologists refer to the West Coast headquarters, formerly Cedars of Lebanon Hospital, as the Complex.

It isn't lacking in historic character: The building is the work of noted L.A. architect Claud Beelman. However, the property, which is less than a mile from KCET Studios, is not listed on any historic registers and can be altered. The property was overhauled and reopened in April 2010; it features Scientology's main L.A. church, classrooms, a theater and an office for Hubbard that is cordoned off and spotless. (Many church facilities include a ceremonial office for Hubbard.) The Complex is topped by Scientology's eight-pointed cross and adorned with a massive LED sign, which is 16 feet tall and cost roughly $500,000.

And more changes are imminent: There are plans to add a 2,000-seat auditorium to the more than 500,000-square-foot compound. But the three-acre property is still dominated by the aging main hospital building. In other hands, it might be razed and plans made for a development that could better utilize the valuable property. Because of its large size, the site could fetch as much as $100 million on the open market. But don't expect the wrecking ball -- or a for-sale sign -- to appear anytime soon: Davis says there are no plans to unload the group's historic Hollywood holdings. So far, none of the significant local properties have been sold. 

"Ultimately," says Davis, "these are spiritual investments, not a financial investment."

Email: Daniel.Miller@THR.com

Twitter: @DanielNMiller

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