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Image: Diane Baldwin
RAND’s Santa Monica Office Building:
Creating a Win-Win for RAND and Santa Monica
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• Our mission is to help improve policy and decisionmaking through research and analysis
• Our work helps make people safer and more secure, healthier and more prosperous
• Started in 1946 as a project within Douglas Aircraft Company in Santa Monica
• Became an independent non-profit in 1948
2 ABOUT RAND
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RAND’s building opened in 2004
• Financed through bonds taken out by RAND (no City funding) • ~330K interior RSF plus large courtyards (372K RSF total) • 5 floors, plus 3 subterranean levels with 799 parking spaces • Gold LEED certified and extensive use of recycled water 3 Item 12-A
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Development Agreement for Existing Building
The DA, approved almost 25 years ago in 2000,
includes the following restrictive terms
• Limits use of building to “Institutional office” use
• DA amendment needed to allow for
– Any transfer/sale
– To lease more than 15,000 sf to third parties
The DA runs through 2055
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Daily Presence
People
Capacity
(Typical Density)
5 Pandemic
Return to “normal” operations
Staff Assigned to
Santa Monica
After 20 years, occupancy of RAND’s Santa Monica
Headquarters has changed dramatically
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RAND is seeking to unlock resources to further its mission • RAND now needs much less space in the Santa Monica area • Technology changes and the pandemic led to an increase in remote work • In-person interaction with government sponsors has become more important • RAND has an opportunity to further our mission
• Sell building or lease a portion of the building
• If sell, move to a much smaller building in the area
• Invest proceeds to fund independent research over time 666
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Proposed amendments to the Development Agreement
RAND and City Staff have agreed on the following proposed amendments:
• Allow a reasonable range of potential commercial uses for the existing building (DA and CCSP Amendment)
– Business/professional or creative office uses
– Research and development for life sciences
– Ground floor pedestrian-oriented retail/restaurants
• $5,500,000 in community-benefit payments to the City of Santa Monica • Right of first offer for the City to lease unused parking • $40,000 annual contribution to the Santa Monica early Childhood Lab School will continue and be extended
• 4.6% of sale price if a buyer is exempt from the Measure GS transfer tax • Extend DA term by 10 years to 2065
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LUCE Implementation
• “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.) 88 Item 12-A
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Civic Center Specific Plan Consistency
• CCSP 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.” • CCSP Policy VD-29
• “The RAND Headquarters site shall be subject to the provisions of the Development Agreement between the City of Santa Monica and the RAND Corporation.” • RAND proposes a clarifying amendment to the CCSP to
• Acknowledge that the RAND DA is being amended consistent with LUCE and CCSP policies for the Civic Center area to be a vibrant mixed-use neighborhood with a diverse mix of uses • Clarify that existing references in the CCSP to the "RAND Headquarters" site/building refer to the 1776 Main Street site/building
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Proposal would benefit RAND & Santa Monica
RAND
• Gain funding for independent research to further our mission • Reduce operating costs, allowing more research for sponsors • Right-sized office space, enabling a better work environment Santa Monica
• $5.5 Million + $40K annual Community Benefit payments per the DA Amendment • Substantial fiscal and economic benefits from for-profit occupancy, estimated as:
• $3.3M / year in taxes for the City, in addition to $3.6M / year for the county and state • $20M - $25M transfer tax
• ~$130M for Santa Monica through the end of the current DA term • Activation of the area, improve its vibrancy
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Requested Action
1. Adopt the Class 1 CEQA exemption finding.
2. Adopt the resolution approving the Civic Center
Specific Plan Amendment.
3. Adopt the Second Amendment to RAND’s Development
Agreement.
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Image: Diane Baldwin
Questions?
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Backups
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Next Steps
1. City determination on DA amendment and CCSP
amendment
• June 18th - Planning Commission unanimously recommended approval
• July 29th City Council decision hearing
2. Coastal Commission process
3. Market the Property
4. Find new location in Santa Monica or the Westside
5. Build out new facility and move
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15 Estimated Tax Benefits/Year (FY25$) from Sale & Typical Use Category Annual Change One-Time Benefit
Property Tax - SM $570,500
Property Tax VLF Tax $115,000
Parking Facilities Tax $204,500
Utility Users Tax $35,900
Transient Occupancy Tax ($64,000)
Sales Tax $129,400
Business License / Other Revenues $746,000
Other City Orgs (e.g., SMMUSD Property Tax) $1,611,600
Total $3,348,900
County and State Tax Benefits $3,555,000
One-Time 5.6% Transfer Tax ~$23,000,000
Assumes buyer is a for-profit firm
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16 Total Estimated Tax Benefits through DA Term (FY25$) Category Total Net/Gain Through DA Term (2055)
Property Tax - SM $17,115,000
Property Tax VLF Tax $3,450,000
Parking Facilities Tax $6,135,000
Utility Users Tax $1,077,000
Transient Occupancy Tax ($1,920,000)
Sales Tax $3,882,000
Business License / Other Revenues $22,380,000
Other City Orgs (e.g., SMMUSD Property Tax) $48,348,000 Total from Annual Taxes $100,467,000
One-Time Transfer Tax ~$23,000,000
Overall Total Tax Benefit to City ~$123,500,000
County and State Benefits $106,650,000
Assumes buyer is a for-profit firm
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17 In 2000, RAND sold 11.3 acres to the Santa Monica
Redevelopment Agency, retaining 3.7 acres
Owned by RAND and sold to city Retained by RAND Not owned by RAND • Market value
• RAND paid for the environmental
remediation of the 11.3 acres
• Proceeds put in an investment fund
for independent research
• Replaced outdated, damaged
building with one about the same
square footage but more compact
• Financed construction
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18 The City
redeveloped
the 11.3 acres • Tongva Park • Mixed-use Village project including 160 affordable
apartments
• Olympic Drive extended
between Main and
Ocean for access
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RAND in Santa Monica
• Non-profit
– Property tax exemption
– Negligible business license tax
– Limited other fees/taxes
• Opened Main Street building in 1953
– 15 acres
– 2 floor main building
– 5-floor small ‘Z’ section
– Surface parking
– By the 1990s, needed major renovation or a new building Image: Cavan Images via Getty Images
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