Transit agency nears decision on new headquarters.

Options change dramatically from initial site go-round

The Metropolitan Transportation Authority likely will decide this week where to locate its new headquarters, an issue that already has created a storm of controversy about such things as alleged open meeting law violations, political favors and wasteful spending.

The choices now being considered by the MTA board have changed completely from those examined by one of its predecessor agencies, the Los Angeles County Transportation Commission.

The LACTC, knowing that the Rapid Transit District had entered into a contract with Catellus Development Corp. for a new building at Union Station, and knowing it would soon be merged with the RTD to form the MTA, compared three proposals. The choices were a second Union Gateway building near the RTD building, a brand new building at the proposed Watt City Center at 7th and Bixel streets, or purchase of its existing headquarters building at 818 W. 7th St.

Now the MTA is considering three other options -- one expanded Union Gateway building to accommodate both the RTD and the LACTC offices, an expanded Watt City Center building to accommodate all the MTA offices (abandoning the Union Gateway project), or leasing existing office space and not building anything.

The LACTC had decided in closed session last January to negotiate exclusively with Watt, and Catellus challenged the decision, charging violations of the open meeting law. Allegations of political favors were also raised, as the LACTC's own staff analysis showed that the 818 building was the least expensive alternative.

The MTA set up a committee to study the issue.

Meanwhile, the MTA's new director, Franklin White, came on board. He recommended that the RTD's Union Gateway building be expanded to accommodate all the MTA offices.

At the committee meeting earlier this month, developer Ray Watt and his partner Kent Merselis came prepared with their alternative expanded building, and broker John Cushman represented the 818 building, arguing that it was foolhardy to break the LACTC's lease and build office space in a saturated market.

The committee instructed White to examine the three options and prepare a report. A second committee meeting scheduled for April 21 was canceled.

The full MTA board meets April 28, and spokesman Greg Davy said White's report likely would be available by April 26 if the headquarters issue is on the MTA's agenda.

At the committee's meeting, its chairman, Los Angeles Mayor Tom Bradley, challenged why the MTA is now looking at expanded Gateway and Watt projects, when those alternatives were never examined by the LACTC.

White said that it was because the LACTC's discussions "didn't anticipate, as they should have, the needs of the merger."

Marvin Holen, who serves as L.A. County Supervisor Ed Edelman's alternate on both the MTA board and the committee, pointed out the RTD board had originally wanted a 26-story headquarters building, large enough to accommodate the full MTA, but the LACTC quashed the idea, approving only a 19-story RTD building. Staff confirmed that the Gateway project is "entitled and ready to go" at 26 stories.

MTA staffer Bob Lewis predicted that either the expanded Gateway building or the Watt building could be completed by September 1995, when the agency wants to move in.

Watt's partner, Merselis, said his project is $36 million cheaper than Union Gateway and questioned the speed with which Catellus could complete its project.

"We encourage you to make a quick decision so we can get back to work and get Rebuild L.A. going," said Merselis.

Watt and Merselis have argued that construction of their building would create jobs and therefore contribute to revitalization of the inner city.

Cushman said the MTA will have to pay a $10 million penalty if it breaks the LACTC lease scheduled to expire in the year 2000. And MTA staff said RTD has already spent $15 million on "soft predevelopment costs" connected with Union Gateway, money that would be lost if the MTA abandons that project.

Cushman argued that buying or leasing the 818 building and other existing space downtown is by far the cheapest alternative, saving the agency at least $41 million, and saving the depressed real estate market from the effects of having more space dumped on it.

"There is already an excess of 2 million square feet of sublease space available on the market," said Cushman. "It is much, much cheaper to pursue existing alternatives."