Big flap over Hollywood landmark

HOLLYWOOD, Calif. – New York has the Statue of Liberty, San Francisco the Golden Gate Bridge and Hollywood has that sign up in the hills overlooking Tinseltown.

It was constructed in 1923 as an advertisement for a real estate subdivision called "Hollywoodland." Later, the sign fell into disrepair and was acquired by the city. In 1949, when it was being renovated, the last four letters were removed, leaving the present-day Hollywood sign.

VIDEO: Saving the Hollywood sign

Now, fans of the sign are up in arms about plans by a group of Chicago investors to develop 138 acres of nearby land as lots for luxury homes. Promotional material touts the property as a perfect spot for multi-million dollar mansions with spectacular 360-degree views of Los Angeles. But one city official claims if those plans were carried out, the result would be huge eyesore.

"It's a crazy idea," said Los Angeles City Council Member Tom LaBonge, "I'm not going to let it happen. The city is not going to let it happen."

Now, LaBonge is trying to find a way for the city to purchase the land, perhaps calling on Hollywood luminaries to ante up the money to acquire the property. One sticking point: the city believes the land is worth only $6 million at most, while the investors are asking $22 million for it.

"It's a fair market price," said Sarah Blanchard, a realtor who represents the sellers.

But at $22 million, the investors would be reaping a huge profit. They acquired the land in 2002 for only $1.7 million at a time when no one in Los Angeles thought it could be developed because it was inaccessible, surrounded entirely by city property. But the investors did their homework and found a loophole in their favor.

The property was originally bought by billionaire Howard Hughes, who had successfully sued the city and won a one hundred foot wide easement, still valid, to construct a road up to the peak of the mountain. Hughes had planned to build a love nest there for his girlfriend, actress Ginger Rogers. But when she danced out of his life, telling people she didn't want to be cooped up on a remote mountaintop, he left the acreage vacant.

"The more we learned about the property, the more we realized we'd found a Van Gogh at a garage sale," said Keith Dickson, one of the partners in the investment group, Fox River Financial Resources.

Councilman LaBonge argues that the land and the views are valuable but that his constituents want the mountain left as it is. "It is the dream, the beauty of the land, that is what Los Angeles is about," said LaBonge, "That's what Hollywood is."

Hollywood is also about making deals, and that's what the city is looking for as it tries to preserve the land surrounding the world-famous sign.