MWD looks to be nearing decision on Union Station headquarters site.

The Metropolitan Water District's Board of Directors, after three years of searching and debating various options for permanent headquarters space, voted last week to go into exclusive negotiations with Catellus Development Corp. for a build-to-suit facility at Union Station.

If the negotiations are concluded successfully, the MWD will move in the late 1990s into a roughly 475,000-square-foot building at Los Angeles' transit hub that will cost about $100 million to $110 million to build. The MWD will be a neighbor of the Metropolitan Transportation Authority, whose new headquarters -- phase one of the Union Gateway development -- is currently being built by Catellus on adjoining property.

The MWD board last week chose to go ahead with the Union Station project rather than buy all or part of downtown's 1.3 million-square-foot Two California Plaza building at 350 S. Grand Ave., where the MWD now leases about 40,000 square feet of space.

The MWD hopes to conclude negotiations with Catellus late this summer and move into the new building in late 1998 or early 1999.

The MWD discussed the decision in closed session April 12 and would not release details of the Catellus offer, or the competing offer from MS Management Services to acquire Two Cal Plaza. Greg Schultz, senior vice president at MS Management Services, had no comment on the decision.

The $100 million to $110 million estimate was derived from statements made after the meeting by Tim Brick, chairman of the MWD's task force on headquarters selection. Brick said the price was about $75 million to $80 million less than Catellus' original offer to build a 600,000-square-foot building, earlier estimated at "close to" $200 million.

Brick also said the MWD was paying slightly less than the MTA is paying per square foot for its building. The MTA is paying about $235 per rentable square foot, and Brick said the MWD is paying "in the low 200s."

Brick admitted that Two Cal Plaza, which MS Management was willing to sell for less than it cost to build, would have been cheaper per square foot. MS had offered to sell the MWD a 600,000-square-foot condominium interest in Two Cal Plaza for less than $70 million ($117 per square foot).

But Brick said the build-to-suit facility will better meet the MWD's needs.

"It gives us greater flexibility. In terms of value, it's a better deal," said Brick. "It gives us a better image -- a civic image, rather than a corporate image."

Brick also said the construction of the building will stimulate the economy.

"I think we have been fiscally conservative," Brick added. "Because of the real estate market, we were able to save money over the original estimate."

But Dan Webster, who represents the Beverly Hills area on the MWD board, said he voted against the Catellus project because he doesn't think public agencies "should build big buildings." Webster, who cast one of only two "no" votes, said the MWD should look at existing space for headquarters and concentrate its building efforts on water projects.

Other headquarters options that have been considered by the MWD included a build-to-suit Three Cal Plaza building, Times-Mirror Square (a renovated 622,000-square-foot building and fleet maintenance yard for just under $87.5 million) and a new building on property the MWD owns on Arrow Highway in the City of La Verne.