City Council
Report
City Council Meeting: July 29, 2025
Agenda Item: 12.A
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To: Mayor and City Council
From: Arminé Chaparyan, Director, Administration
Subject: Public Hearing and Adoption of Resolution Approving Proposed Civic Center Specific Plan Amendment; and Introduction for First Reading to Adopt the Second Amendment to the Development Agreement for RAND’s existing institutional office building located at 1776 Main Street Recommended Action
Recommendation that the City Council take following actions pertaining to RAND’s headquarters building located at 1776 Main Street:
1. Adopt a finding of categorical exemption pursuant to Section 15301 of the State California Environmental Quality Act (CEQA) Guidelines (Class 1 Exemption (Existing Facilities));
2. Adopt a resolution approving a Civic Center Specific Plan Amendment; and
3. Introduce an ordinance for first reading to adopt the Second Amendment to the RAND Development Agreement.
Executive Summary
The RAND Corporation (“RAND”) proposes a Second Amendment to its Development Agreement to allow its existing institutional office building located at 1776 Main Street to update and expand allowable uses within the existing building, remove barriers to leasing and/or transferring the project site, and provide additional community benefits.
RAND’s August 1, 2023 request1for a broader range of permitted uses would be applicable only to the project site, and includes business and professional office, creative office, banks and financial institutions, business services, limited life sciences 1 On August 1, 2023, RAND filed the following: (a) an application to terminate the First Amended Development Agreement (23ENT-0137), (b) an application to amend the CCSP to contemplate a broader range of uses within the project (23ENT-0142), and (c) an application to amend the Zoning Ordinance to allow a broader range of uses within the project (23ENT-0143) that was determined to be unnecessary. 2 of 14
research and development, media production support facilities, and retail/personal services/restaurant uses. No new construction of floor area is proposed.
RAND’s existing building was approved for construction by the City Council in 2000 via a development agreement that only authorized “institutional office” based on the overriding purpose of the original development which was to provide RAND with new replacement office space when it sold land to the City’s Redevelopment Agency where its then-existing building was located (now Tongva Park and the mixed-use Village Project).
A Civic Center Specific Plan (CCSP) Amendment accompanies RAND’s proposed Second Amendment to ensure consistency with the site-specific expanded uses requested for RAND’s property at 1776 Main Street. The City Council is considering a recommendation to adopt a finding that the project, including the proposed Second Amendment to Development Agreement and Civic Center Specific Plan Amendment, is exempt from the California Environmental Quality Act (CEQA) pursuant to State CEQA Guidelines Sections 15301 (Existing Facilities).
In summary, staff recommends approval of the proposed Second Amendment to the RAND Development Agreement and Civic Center Specific Plan Amendment based on the following key points:
• Allows for a reasonable range of uses in an existing commercial with operational attributes similar to its authorized institutional office use. All proposed permitted uses are consistent with the City's Land Use and Circulation Element (LUCE). • Removes barriers to fuller utilization and occupancy of a property that has been significantly underutilized due in part to the global rise of remote and hybrid work and associated changes in workplace norms.
• Creates opportunities for additional local business commerce and activity in Santa Monica’s Civic Center with a new tenancy.
• Provides significant community benefits that will support City services and priorities following good faith negotiation between the City and RAND. 3 of 14
Project Information
Discussion
Existing Building and Development Agreement
RAND is a non-profit public policy organization that was founded in Santa Monica in 1948. The existing RAND headquarters building at 1776 Main Street opened over 20 years ago in 2004. It has approximately 326,170 square feet of Floor Area and 811 parking spaces.
The RAND headquarters building is governed by a Development Agreement that was approved by the City Council on October 24, 2000 and the Coastal Commission (CDP Nos. 5-01-196 and 5-01-445) in 2001. The Development Agreement was amended in August 2012 to allow conversion of a portion of the P1 level of the subterranean parking garage for RAND use as offices for production, warehousing and distribution, a call center and research. Although up to 17,300 square feet was approved for conversion, RAND ultimately found space within the above-grade levels for most of these uses and only converted about 5,500 square feet of the P1 parking area to support functions/offices.
The Development Agreement covers the 3.86 acres of land retained by RAND after it sold approximately 11.3 of the 15 acres it previously owned to the City’s Redevelopment Agency. The existing building replaced RAND’s prior 295,000 squarefoot headquarters. The 11.3 acres sold to the City’s Redevelopment Agency is now improved with Tongva Park and the mixed-use Civic Center Village Project.
As RAND’s original Development Agreement was approved with the assumption that RAND would occupy the building throughout the 55-year term of the Development Agreement (until November 23, 2055), it restricts use of the existing building/property in three key ways:
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1. Because the office building was envisioned as RAND’s “forever home,” the Development Agreement only allows “Institutional Office Use,” which is defined as research, analysis, educational, philanthropic or charitable uses, and accessory uses. Institutional Office is not a use category in the Zoning Ordinance. In 2000, this term was specifically crafted for RAND’s project.
2. The Development Agreement restricts RAND’s ability to transfer the property to another user absent a DA amendment unless the transferee is also an “Institutional Office Use” and other criteria are met.
3. The Development Agreement limits RAND’s ability to lease the property to nonRAND users to a maximum size of 15,000 square feet. If RAND wants to lease out more than 15,000 square feet in this building, a DA amendment is required.
The original Development Agreement included substantial community benefits; these include:
• Dedication of land and construction of Vicente Terrace. • Dedication of land and construction of a sidewalk along Main Street. • RAND’s contribution of $500,000 to the City for the purpose of supporting a future early childhood development center in the Civic Center District. This center has since been realized with the Santa Monica Early Childhood Lab School opening in September 2021.
• RAND’s building is LEED Gold Certified and utilizes reclaimed/recycled water for toilet flushing and landscaping.
RAND remains in good faith compliance with all Development Agreement obligations.
Finally, two Minor Modifications to the Development Agreement have been approved since the project was approved in 2000:
1. A June 16, 2011 Minor Modification allowed for relocation of a pedestrian pathway to the Village project in return for RAND transferring certain land to the City for desired City improvements.
2. A January 20, 2023 Minor Modification replaced RAND’s obligation for an annual community conference on early childhood development research with an annual 5 of 14
contribution of $40,000 to the Santa Monica Early Childhood Lab School for financial aid to offset tuition for low-income Santa Monica resident families through the expiration of the Development Agreement on November 23, 2055.
Discussion
Second Amendment to the Development Agreement
Since approval of the original Development Agreement over 24 years ago, RAND’s employee and visitor utilization/occupancy of the building has fundamentally changed, in large part due to “work-from-home” mandates resulting from the COVID-19 pandemic that ultimately led to dramatic and permanent changes in RAND employee work location policy and employee and visitor occupancy/utilization of the project. With so few employees in a relatively large facility, the work environment no longer meets RAND’s needs.
More specifically, based on discussions to better understand why this amendment is necessary, RAND noted that only an average of 225 employees come to the building on any given day (less than 25% of the project’s employee capacity) – and that such low utilization of the building represents inefficient use of RAND’s financial capital and constitutes unnecessary spending on facilities that in turn reduces resources that could be used directly for public policy research that is core to RAND’s nonprofit mission.
Furthermore, City staff agrees the property’s underutilization results in a decrease in daily office visits, foot traffic, and patronage of local businesses, which impacts the vitality of the Civic Center and Downtown areas as envisioned by the LUCE and CCSP goals and polices for the Civic Center District.
The City and RAND engaged in extensive negotiations to define the expanded land uses, vested rights, and community benefits that form the core of the Second Amendment. It is important to note that through this process, City staff and RAND reached agreement on all the terms presented with this report. The following sections provide a summary of the key aspects of RAND’s proposal.
Permitted Land Uses
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During negotiations, City staff and RAND reviewed different variations of permitted uses to ensure the final recommendation would be consistent with the LUCE and CCSP’s vision for a “vibrant mixed-use district” that includes employment/offices, retail, open space, recreation, and cultural and government uses. RAND's proposal presented with this report focuses on commercial uses including categories of offices, media production, and limited life sciences research and development that have a high level of similarity to “Institutional office" use in terms of the physical activities occurring with the building. This proposal also allows companion retail, restaurant, and business services that would serve the broader district. Moreover, allowing this range of proposed uses would help effectuate the Civic Center Specific Plan’s vision for the Village Special Use District while also limiting potential impacts to surrounding uses.
The following land uses are proposed in Section 6 of the Second Amendment:
As defined in SMMC Section 9.51:
• Business and Professional offices and Creative offices (including RAND) • Media Production, Support Facility
• Business Services (ground floor)
• General Retail Sales, Small-Scale (ground floor)
• Restaurants, Full-Service and Limited Service & Take-Out (ground floor) • Banks and Credit Unions (ground floor)
• Convenience Market (ground floor)
• General Personal Services (ground floor)
• Any other uses that are designated as permitted uses on the project site by the SMMC in effect at the time the use is established
Proposed use defined by the Second Amendment to ensure consistency with the existing building and neighborhood context:
• Facilities for scientific research and the design, development, and testing (but not production, assembly or manufacturing) of components and productions related pharmaceutical, biotechnology-based food and medicines, medical devices, 7 of 14
biomedical technologies, nutraceuticals, cosmeceuticals, food processing, and other products that improve the lives of organisms; provided, that (i) all such activities/uses permitted by this Section 6.1(c) shall occur within an enclosed building, (ii) in no such event shall the laboratory Floor Area exceed 40% of the Project’s Floor Area; and (iii) the Community Development Director makes a finding that such proposed uses conform with all applicable regulatory state, county or local regulatory requirements then in effect.
The Second Amendment also provides updated provisions for uses permitted through a Minor Use Permit, Conditional Use Permit, and other discretionary City Planning approvals (Sections 6.3-6.5).
Proposed Term Extension
While RAND initially proposed termination of the Development Agreement, through the course of discussions, both parties agreed that amending the Agreement would be preferred. As presented with this staff report, in addition to expanding permitted land uses, the Second Amendment also updates transfer provisions to allow lease and/or sale of the RAND project site; establishes new project and community benefits accruing to the City; and extends the term of the Agreement for ten (10) additional years to November 22, 2065.
Proposed Community Benefits
Under a development agreement, the City may negotiate community benefits consistent with its legal authority. In this case, the City prioritized benefits that support a more vibrant Civic Center – specifically, broader use of the RAND building, continued support for early childhood initiatives, opportunity for sharing parking in the Civic Center, and the financial and economic enhancements negotiated as part of the Second Amendment.
More specifically, substantial monetary contributions were negotiated to support the City’s work around community and Council priorities. As detailed in Section 7 of the Second Amendment and summarized below, these community benefits represent terms 8 of 14
mutually agreed upon by the City and RAND and would be subject to annual compliance review and the amended Agreement would be recorded on property title. 1) $5.5 Million Monetary Contribution [Section 7.1]
As part of the Second Amendment to the Development Agreement, RAND would pay the City a total of $5.5 Million in two installments:
• $3.5 Million due by the effective date of the Second Amendment. • $2 Million due later, triggered by the earliest of: Coastal Commission approval (if needed), the owner using the property for new vested uses other than RAND’s continued use of the property for institutional office, or a transfer of ownership. o If no Coastal Commission approval is needed or sought within 90 days of the Second Amendment effective date, the $2 million is due within 180 days.
o If approval is required but not obtained within three years from the Second Amendment effective date, the Second Amendment terminates unless the $2 Million is paid before the deadline. In the event of such termination, the First Amended Agreement would remain in full force and effect and allow the continued use of the property for Institutional Office. 2) Additional Monetary Contribution If First Sale/Transfer of Project Site is Exempt from Measure GS [Section 7.2]
If the first sale or transfer of the project site is not subject to the City’s Measure GS tax set forth in SMMC Chapter 6.962, the owner must pay the City an additional contribution equal to 4.6% of the sale price.
This applies only to the first qualifying sale or transfer, and only if it would otherwise avoid GS tax. The payment is due at the time of transfer, and escrow must be established to ensure it is paid properly.
2 SMMC Chapter 6.96 outlines certain affordable housing transfers and governmental units that are exempted from Measure GS tax.
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If the site is subdivided before any sale, the City and owner will agree on how this payment applies to each separate transfer. Once the payment or GS tax is made on the first transfer (or each first partial transfer), this obligation ends.
This provision does not change or replace the City's transfer tax rules under Measure GS – it only ensures the City receives comparable revenue in the form of a contribution if the first sale is exempt.
3) Right of First Offer for Parking for Off-Site Users [Section 7.3] If the property owner decides to lease or license any unused parking spaces to off-site users, the City must be given the first opportunity to lease those spaces. The owner must notify the City in writing of the availability and proposed terms. The City then has 30 days to accept or decline. If the City does not respond or declines, the owner may lease the parking to others, provided the rate is at least 95% of what was offered to the City – unless the City is offered those terms again. If the City accepts the offer, both parties have 60 days to negotiate a formal agreement. If no agreement is reached in that time, the City’s rights expire, and the owner may lease the spaces to others, again subject to the 95% pricing rule.
This right does not apply to parking used by on-site employees, contractors, or visitors.
However, the City may assign this right to a third party. Additionally, the owner may allow for up to 40 parking spaces to be used by employees of the Santa Monica Early Childhood Lab School without offering them to the City first. 4) Early Childhood Initiatives Contribution [Section 7.4] Beginning January 1, 2026, and continuing annually until the end of the Agreement term, RAND or its successor in interest would contribute $40,000 per year to the nonprofit operator of the Santa Monica Early Childhood Lab School. The funds would be used to help offset tuition for low-income Santa Monica families, following Cityestablished guidelines. This is a continuation of RAND’s current obligation that was approved in 2023 in lieu of hosting an annual community conference on early childhood development research. As part of the Second Amendment negotiation, this annual 10 of 14
$40,000 payment would be extended ten additional years to match the new date for termination of the Agreement (November 22, 2065).
5) Reallocation of Existing Funds [Section 7.4]
Effective on the Second Amendment Effective Date, the $125,000 currently held by the Santa Monica Early Childhood Lab School – and previously reserved for tuition subsidies for qualifying RAND employees – will be unrestricted and may now be used for any eligible low-income Santa Monica families.
Planning Commission Recommendation
The Planning Commission reviewed RAND’s request at its July 2, 2025 meeting and unanimously voted to support the proposed amendment and community benefit proposal. The Commission made one recommendation for inclusion of a provision providing an option for a future owner to satisfy the annual $40,000 contribution to the Santa Monica Early Childhood Lab School with a lump sum payment based on a future net-present-value (NPV) calculation authorized by the Community Development Director via a Minor Modification. While staff appreciates the Commission’s interest in avoiding the potential for a third amendment to the Development Agreement to satisfy the annual obligation, staff has not included this additional term in the proposed Second Amendment. Specifically, there would need to be more analysis done to establish the parameters for how NPV would be calculated in the future; and additional discussion with the Lab School to gauge their interest level and to identify terms for accepting a NPV payment in the future by the Lab School or its successor.
Land Use and Circulation Element
RAND’s Second Amendment to the Development Agreement is consistent with the objectives, policies, general land uses and programs specified in the general plan and any applicable specific plan. More specifically, the RAND property is located in the LUCE's Civic Center District. In addition to the district having government uses and expanded open space, the LUCE states that “commercial, retail, office, affordable, workforce and market-rate housing, and community facilities such as early childhood 11 of 14
centers are also allowed in this mixed-use area.” In this regard, LUCE Policy D15.1 states:
"Create a diverse mix of uses and activities in the Civic Center, including government uses, parks and open space, affordable, workforce and market-rate housing, retail, office and cultural uses."
RAND’s proposal to expand permitted land uses to allow different types of commercial uses such as offices, media production, and limited research and development – all of which are similar in character to “institutional office” use – along with neighborhoodserving retail, restaurants, and services support the goals and vision for the Village Special Use District while also not impacting neighboring properties. RAND’s Second Amendment also focuses on the Civic Center through the commitment to support early childhood initiatives and to create an opportunity for sharing existing parking resources.
Accordingly, this project is consistent with the following additional LUCE goals and policies:
• “Create a diverse mix of uses and activities in the Civic Center, including government uses, parks and open space, affordable, workforce and market-rate housing, retail, office and cultural uses.” (Policy D15.1.) • “Create an economic base that satisfies the commercial service needs to the City’s residents while providing employment opportunities and a strong fiscal infrastructure for the City.” (Goal E1.)
• “Make land use decisions that respond to changing market conditions and meet the needs to City residents and visitors.” (Policy E1.1.) • “Judiciously manage the growth of existing and new uses that can generate the greatest potential for fiscal well-being and ensure financial support for a high level of public services.” (Policy E1.2.)
• “Support the continued viability of existing office uses and local-serving offices as a means of supporting high-quality public services.” (Goal E9.) Civic Center Specific Plan
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Within the Civic Center Specific Plan, RAND’s property is located in "The Village Special Use District." The Village Special Use District consists of four developments/properties: (1) the Civic Center Village Project (i.e., The Waverly Condos/mixed-use at 1705 Ocean Avenue, The Seychelle Condos/mixed-use at 1755 Ocean Avenue and Belmar Apartments/1725 Ocean Avenue), (2) the private office building at 1733 Ocean Avenue, (3) the RAND property/1776 Main Street and (4) the Viceroy Hotel property.
The Civic Center Specific Plan (p. 61) calls for The Village Special Use District to aid in "transforming the Civic Center from a single-purpose district into a vibrant mixed-use neighborhood." The Civic Center Specific Plan includes individualized policies for each property/development site within this District. For RAND, the relevant policy (VD-29) cross-references the Development Agreement rather than providing separate use policies. Given the specific references to RAND within the Civic Center Specific Plan and to ensure consistency between the Civic Center Specific Plan and the Second Amendment to Development Agreement, the following language is proposed to be added on page 84 of the Civic Center Specific Plan:
“In 2025, after years of significantly reduced occupancy in the RAND Headquarters and consistent with LUCE Policy D15.1 to create a diverse mix of uses in the Civic Center area and this Specific Plan's vision for the Village Special Use District to be a vibrant mixed-use neighborhood, the RAND Development Agreement was amended to allow use of the property by a broader range of commercial office, research and development, pedestrian-oriented retail/restaurant and other uses. For the purposes of clarity, references to the ‘RAND Headquarters’ site/building throughout the Specific Plan refer to the 1776 Main Street site/building.”
Environmental Analysis
The proposed Second Amendment to the RAND Development Agreement is categorically exempt from the provisions of the California Environmental Quality Act, 13 of 14
California Public Resources Code Section 21000 et seq. (CEQA), pursuant to Section 15301 (Existing Facilities). Class 1 exemptions consist of the operation, repair, maintenance, permitting, leasing, licensing, or minor alteration of existing public or private structures, facilities, mechanical equipment, or topographical features, involving negligible or no expansion of use beyond that existing at the time of the lead agency's determination. The proposed Development Agreement Amendment does not affect or increase the floor area or height for the existing building. The allowance for certain commercial uses (business and professional office, creative office, banks and financial institutions, business services, limited life sciences research and development, media production support facilities, and retail/personal services/restaurant uses) for an existing commercial office building is consistent with a Class 1 exemption. Therefore, no further environmental review under CEQA is required.
Conclusion
The proposed Second Amendment to the RAND Development Agreement and accompanying Civic Center Specific Plan Amendment reflects a balanced approach to modernizing permitted uses for the RAND property at 1776 Main Street. It enables expanded but appropriate commercial uses consistent with the LUCE and Civic Center Specific Plan, facilitates greater activation of an underutilized building, and supports broader Civic Center goals by modifying leasing and transfer restrictions for an important anchor property in the District.
In exchange, the City secures meaningful, long-term community benefits that align with critical needs and policy priorities, including significant financial contributions to support provision of City services, and support for early childhood initiatives. Collectively, these amendments to the RAND Development Agreement and CCSP will help ensure that the property remains a productive and contributing asset within the Civic Center for decades to come.
Accordingly, City staff recommends the Council adopt a finding of categorical exemption as outlined in this report; approve the attached resolution authorizing an amendment to 14 of 14
the Civic Center Specific Plan; and introduce for first reading the attached ordinance adopting the Second Amendment to the RAND Development Agreement.
Financial Impacts and Budget Actions
As part of the Second Amendment to the Development Agreement, RAND would pay the City a total of $5.5 Million in two installments to the General Fund:
• $3.5 Million due by the effective date of the Second Amendment. • $2 Million due later, triggered by the earliest of: Coastal Commission approval (if needed) but no later than three years from the Second Amendment effective date, the owner using the property for new vested uses other than RAND’s continued use of the property for institutional office, or a transfer of ownership.
Prepared By: Roxanne Tanemori, Deputy Director – Special Projects Approved Forwarded to Council
Attachments:
A. Attachment A RAND Letter Request to Terminate DA
B. Attachment B RAND Resolution City Council CCSP Amendment 7-29-25 C. Attachment C RAND Ordinance + Second Amendment DA 7-29-25 D. Attachment D Resolution of the Planning Commission 25-012 (PCS) E. Attachment E Public Notice RAND DA & CCSP Amendment
F. Attachment F RAND Agreement & First Amended Development Agreement G. Written Comments
H. Powerpoint Presentation