RTD rolling out two $200 million L.A. projects.

RTD rolling out two $200 million L.A. projects

The Southern California Rapid Transit District will announce this week that it has entered into exclusive negotiations with Catellus Development Corp. to build a $200 million office-retail project adjacent to Union Station in downtown Los Angeles, according to Business Journal sources.

Separately, RTD will issue within the next few weeks a request for proposals to develop yet another $200 million commercial project just east of MacArthur Park.

RTD's two mega-projects are the first to be unveiled under a public-private development program the transit agency launched about a year ago. Such public-private partnerships have been gaining widespread popularity throughout California in recent years, and many industry sources said such ventures will become even more prominent in the recession-riddled months to come.

"Public agencies are becoming ever more mindful of the revenue-generating potential of their real estate holdings," explained Judith Kendall, director of development for Los Angeles County's Community Development Department. "And private developers are realizing that public agencies have the most desirable surplus real estate in the county. You are now seeing a marriage of the two."

Such ventures usually involve the private developer signing a long-term ground lease for the land. That enables the developer to avoid the high cost of purchasing the land outright, and allows the public agency to immediately begin generating revenues from the land in the form of ground lease payments.

Some of the public-private partnership even allow the public agency to keep a certain percentage of the profits generated by the completed project. The public agency also gets back full use of the property when the ground lease expires.

As for RTD, that public agency is looking to fulfill two major goals through its participation in the public-private partnerships.

First, revenue from the income-producing properties will help RTD defray its mounting rail system construction expenses. Second, the projects will revitalize the blighted areas through which the Metro Rail will travel, the agency hopes.

The RTD-Catellus project near Union Station, slated to break ground in 1992, is expected to help accelerate revitalization in the area encompassing Chinatown, Little Tokyo and Olvera Street.

The MacArthur Park-adjacent project, as now planned, would serve as a catalyst for the widespread rejuvenation of what is now a drug-and crime-infested slum.

The Union Station project will come first. It will be the first commercial component of a master-planned development that will eventually encompass the entire 52-acre Union Station property.

Construction is already underway there on a massive public transit hub, where passengers will board and exit cars, RTD buses, light rail, Metro Rail, commuter rail, Amtrak trains and helicopters.

The project being announced this week, however, will be situated on 6.5 acres at the eastern edge of the station property, bordering Vignes Street.

It calls for about 1.24 million square feet of office space, 13,000 square feet of retail space and some 4,000 parking spaces to be developed in two phases.

The first phase will include a 595,000-square-foot office tower, 13,000 square feet of retail space and a 1,900-car parking structure. Most of the office tower's space will be occupied by RTD, which will relocate from its current headquarters at 425 S. Main St.

The second phase, which could break ground as early as mid-1993, calls for a 645,000-square-foot office tower and 2,000-car parking structure.

The Los Angeles County Transportation Commission is already studying the feasibility of becoming that second-phase tower's anchor tenant, according to Roberta Tinajero, a commission spokeswoman. The commission is presently in leased space at 818 W. Seventh St.

Meanwhile, near MacArthur Park, RTD is planning another $200 million project for the two blocks bounded by Alvarado, Seventh and Bonnie Brae streets and Wilshire Boulevard. Now under construction there is a subterranean Metro Rail subway station.

That station will lie beneath a four-acre swath running the entire east-west length of the 12-acre property, which will limit the future architectural possibilities.

"There are some structural constraints," explained Karen Heit, joint development specialist for RTD. "Buildings of significant weight could not be situated directly on top of the station. They would have to either span the station, or be built to either side of it."

Unlike the Union Station project, which will contain mostly office space, the MacArthur Park project will contain mostly retail and residential space.

"There's a lack of secondary housing and basic retail amenities in the MacArthur Park area," Heit said. "People who have outgrown the smaller, older housing units outgrown the smaller, older housing units there, but want to stay in the neighborhood, have nowhere to go. They can't trade up."

Concerning retail, Heit said. "There are no grocery stores in the area and retail services are very poor."

By developing a new retail complex, RTD and city officials hope to encourage the area's residents to spend more of their disposable incomes closer to home.

"We are looking for the entire project to be designed with a strong ethnic character," Heit said, "because Wilshire/Alvarado is in the middle of a Central American neighborhood."

Within the next few weeks, RTD will issue a request for proposals from firms wishing to bid on the project's master plan design contract.

That master plan is expected to take about three to four months to complete, Heit said, which means the request for actual development proposals will not be sent out for another five to six months.