SR-913-000C:\work\W PD\export\12977.wpd
City Council Meeting 10-26-99 Santa Monica, California
TO: Chairperson and Redevelopment Agency
FROM: City and Redevelopment Staff
SUBJECT: Recommendation to: 1) Adopt a Resolution Certifying the Initial Study and
Negative Declaration for the Acquisition of The RAND Corporation Excess
Property by the Redevelopment Agency; 2) Authorize the Executive Director
to Negotiate and Execute an Owner Participation Agreement and Related
Documents with The RAND Corporation for its Excess Property; and 3)
Authorize the Executive Director to Negotiate and Execute Lease
Agreements with The RAND Corporation and Chez Jay Restaurant.
INTRODUCTION
This staff report requests that the Redevelopment Agency take the following actions:1)
Adopt a resolution certifying the initial study and negative declaration for the acquisition
of approximately 11.3 acres of The RAND Corporation (RAND) property by the Redevelop-
ment Agency; 2) Authorize the Executive Director to negotiate and execute an Owner
Participation Agreement and related documents with RAND for its excess property; and
3) Authorize the Executive Director to negotiate and execute Lease Agreements with
RAND and Chez Jay Restaurant.
BACKG ROU N D
In 1993 the Civic Center Specific Plan (CCSP) was adopted, setting policy and planning
guidelines for future development in the Civic Center area. The RAND Corporation, a
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nonprofit research institution, owns and occupies approximately fifteen (15) acres of land
in the Civic Center. The CCSP envisioned demolition of RANDCs existing buildings and
development of a replacement facility as part of a wider array of housing, park, and retail
uses. RAND has been unable to proceed with developing the envisioned mixed-use
complex of over one- million square feet. This has caused concern on the part of the City
and the community that the objectives of the CCSP might never be realized.
The City Council must provide direction to staff to initiate negotiations for the acquisition
of real estate. On May 11 1999, at an appropriately noticed meeting listing discussion of
the RAND property in Closed Session, the City Council directed staff to explore the
possibility that RAND would consider selling all or a portion of its property to the City, and
if so, to discuss terms and conditions that might be acceptable. Based on that direction,
staff initiated discussion and RAND expressed a willingness to consider selling
approximately 11.3 acres. To guide and inform the City in its negotiations, staff obtained
preliminary title reports, Phase I and Phase I I environmental assessments, and a property
appraisal.
DISCUSSION
The City and Redevelopment Agency now have a unique opportunity to purchase
RANDCs excess property. There are few other properties, if any at all, of this size in as
integral and prominent a location. The parcel strategically links the seat of government
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(City Hall and the County Courthouse), coastal beach and park resources, the Pier, and
the vital commercial areas of Main Street and Downtown/Third Street Promenade. If this
critical property is left in private ownership, there is considerable uncertainty that the
communityCs goals for the Civic Center could ever be realized. In the event that the
Agency proceeds with the acquisition, an extensive public process would ensure that
multiple community objectives are integrated and that a viable and truly distinguished Civic
Center emerges within a realistic time frame.
Terms of the Land Purchase
The Agency~s and RAND~s objectives can be realized by entering into an Owner Partici-
pation Agreement (OPA) for the sale and interim leaseback of the land. The purchase of
approximately 11.3 acres will allow the Agency and City to further implement both the
goals and objectives of the Civic Center Specific Plan, and those of the Earthquake
Recovery Redevelopment Plan. The OPA sets forth the following terms, summarized
below, to which RAND has agreed:
~SSl1P_ TP_CYIIS
Total Acquisition Land Area Approximately 11.3 acres (491,361 square feet). This
includes existing RAND office buildings and parking,
and RAND-owned lots along Ocean Avenue.
Land Purchase Price $53 million ($107.86 per square foot). Ten percent of
purchase price will be retained in escrow to ensure all
of RANDCs obligations are satisfied. As RAND fulfills
its obligations, retained funds will be released.
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Financing Agency to sell tax-exempt tax allocation bonds that are
secured by tax increment. The amount to be used to
purchase the property includes the 20 percent housing
set-aside. An appropriate amount of land must be used
for housing.
Estimated Close of Escrow No later than April 30, 2000.
Leaseback Provisions Permits RAND to continue to occupy the premises for
42 months from the close of escrow. Occupancy may
be extended by the Executive Director of the Agency
for cause in the event of circumstances beyond the
control of either the Agency or RAND. Agency will
negotiate interim lease with Chez Jay.
RANDCs Obligations When RAND obtains all necessary City approvals and
permits for demolition and remediation, it must: 1)
demolish and remediate the Ocean Avenue properties
soon after issuance of such permits; and 2) demolish
and remediate the RAND office building and associated
parking immediately following the expiration of the
lease agreement.
AgencyCs Obligation Provision of up to $2.3 million toward the costs of
demolition to partially offset the costs of conditions of
approvals, in the event of and wholly contingent on
RAND obtaining entitlements for a replacement facility
on its retained property.
In compliance with state law, the purchase price does not exceed the appraised fair market
value.
The Agency intends to issue tax-exempt tax allocation bonds to fund the land acquisition
and other redevelopment projects. Because the 20 percent set-aside revenue from the
Earthquake Recovery Redevelopment ProjectArea will be pledged toward the bonds, the
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Agency is required by Redevelopment Law to earmark a portion of the site for low and
moderate-income housing purposes.
Future Planning and Public Participation
If the OPA is approved, a new planning process for the Civic Center area will be initiated.
This process will formulate new guidelines for development in the area which reflect the
diversity of opportunities associated with public ownership of a majority of the subject
properties. The planning process may require amendment to the existing specific plan or
adoption of a new specific plan and will involve extensive public input, new environmental
impact analyses, and Planning Commission and City Council approval.
CEQA STATUS
An Initial Study and Negative Declaration for the proposed project was prepared by the
Planning and Community Development Division in compliance with the California
Environmental Quality Act (CEQA). The Initial Study did not identify any significant
adverse environmental impacts resulting from the acquisition of the property by the City.
The environmental analysis acknowledges that the property will remain in its present
condition and that no redevelopment, change of use, or building demolition is proposed
as part of the purchase. Any future development will be consistent with the Civic Center
Specific Plan (CCSP) or amendments thereto. The Initial Study states that any future
development will be subject to separate review for compliance with CEQA.
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The 30 day public review and comment period for the initial Study and Negative
Declaration commenced on September 9, 1999 and closed on October 11, 1999 and was
noticed in The Argonaut and sent to the GovernorCs Office of Planning and Research,
State Clearinghouse. Planning staff received no comments during this public review
period. A resolution certifying the Initial Study and Negative Declaration is contained in
Attachment 2.
BUDGET/FINANCIAL IMPACT
To finance the land acquisition, the Agency intends to issue tax-exempt tax allocation
bonds secured by annual tax increment revenue from the Earthquake Recovery
Redevelopment Project Area.
RECOMMENDATION
It is respectfully recommended that the Agency take the following actions:
1) Adopt a Resolution Certifying the Initial Study and Negative Declaration for the
Acquisition of The RAND Corporation Excess Property by the Redevelopment Agency.
2) Authorize the Executive Director to negotiate and execute an Owner Participation
Agreement and related documents with The RAND Corporation for its excess property; and
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3) Authorize the Executive Director to negotiate and execute Lease Agreements with The
RAND Corporation and Chez Jay Restaurant.
Prepared By: Jeff Mathieu, Director of Resource Management
Bob Moncrief, Redevelopment and Housing Manager
Tina Rodriguez, Redevelopment Administrator
Mona Miyasato, Senior Administrative Analyst-Project Coordinator
Suzanne Frick, Director of Planning and Community Development
AndyAgle, Deputy Director of Planning and Community Development
Lyn Cacciatore, Deputy City Attorney
Katie Lichtig, Assistant to the City Manager for Management
Services
ATTACHMENTS:
Attachment 1: Map of RANDCs Excess Property
Attachment 2: Resolution Certifying the Initial Study and Negative Declaration
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ATTACHMENT 2