RAND Land Deal Closes

By Jorge Casuso

One of the most significant land deals in Santa Monica history was quietly completed Tuesday morning when RAND turned over ownership of 11.3 acres of prime property to the city for $53 million.

The landmark deal for the civic center property, which took five months of intense negotiations, was approved by the City Council in late October.

The city expects to use the land - which sits between City Hall and the sea -- for park space and affordable housing. RAND plans to build a new headquarters on its remaining 3.7 acres.

"We're just happy that the escrow has closed, and we're continuing working with RAND on their project," said assistant City Manager Gordon Anderson. "We will be planning the community process."

"We are pleased that this important milestone has been reached," said RAND Executive Vice President Michael D. Rich. "But we realize that there is still a long road ahead -- finalizing the design of our new building and completing the governmental review process."

Attention will now turn to a new plan for the city-owned site and construction of RAND's replacement headquarters, which requires separate hearings by Santa Monica's Planning Commission, City Council and Architectural Review Board, and by the California Coastal Commission.

Some city officials have privately expressed concens that the design of the proposed five-story, 310,000 square-foot oval structure would block a panoramic view of the city's skyline and mountains from Main Street and Pico, a popular entrance to the civic center.

RAND officials have noted that the view corridor approved under the Civic Center Specific Plan was Fourth Street, not Main.

"We have heard from many people who are excited about the creative preliminary design for our new headquarters," Rich said. "Others have expressed serious reservations about it and have suggested that we redesign the project so that it looks more like typical office buildings in downtown Santa Monica or like the Arboretum.

"Our principal concern is that it supports our operational needs and it would make no sense to develop something that we can't use," Rich said. "We are not surprised by differences of opinion in Santa Monica, but hope that the community sees this as an opportunity to create a distinctive and visionary civic center instead of just another office building."

In a letter sent to local businesses late last month, RAND officials warned that the internationally renown think tank would have to leave Santa Monica, where it has been headquartered since 1946, if the project approved by the city fails to meet its needs.

"We would relocate our headquarters only if we are unable to obtain the approval of city officials for a new facility that supports RAND's business and education needs," said the letter, which was signed by RAND's president and CEO James A. Thomson and Rich.

RAND officials said they complied with a city request to sell as much of the 15-acre property as possible and to reserve the section of the site between City Hall and the pier for open space. As a result, RAND must fit its proposed 310,000 square-foot structure on 3.7 acres, some of which sits above the Pico-Cantor storm drain.

"Although a larger parcel would have allowed more design and functional options, the city expressed strong interest in obtaining as much of the civic center land as possible for public use," the letter said.

RAND's agreement with the city requires that it replace its headquarters within roughly three and a half years. The existing buildings would be demolished after staff moves into the new headquarters.

The entire transaction has been on a fast track. The deal was negotiated by former City Manager John Jalili before he retired in November and approved by the council on Oct. 26.

City staff then immediately began preparing a bond issue to raise the purchase money. After numerous meetings with credit rating agencies and bond insurers, the city issued bonds totaling $65 million on Dec. 15, said Robert Moncrief, the city's housing manager.

The city received a Triple A bond rating and was able to obtain the funding at about a 6 percent interest rate, Moncrief said. As a result, it raised $7 million more than was necessary for the purchase. The money, Moncrief said, will go towards housing.

"This was one of the largest real estate transactions for the city government in the city's history," Moncrief said. "The negotiations were quite complex, and the time frame was fairly short. We pulled it off, and it's exiting that things can be done so quickly and so well."

The city - which also has signed a three-year lease with Chez Jay, the venerable hole-in-the-wall tavern on the recently purchased land -- must now embark on the lengthy process of deciding what will go on its sprawling site.

Preliminary public testimony before the City Council indicates that city officials will have to strike a delicate balance between open space and affordable housing.

"To paraphrase Woody Guthrie," said Councilman Kevin McKeown, "on behalf of Santa Monica park users and affordable housers, 'This RAND is our land.'"