Tuesday, November 08, 2011

CRA Gets Buyer for Cleantech Site, But Strips Cleantech Requirements

CRA Gets Buyer for Cleantech Site, But Strips Cleantech Requirements DOWNTOWN LOS ANGELES - Since 2008, the city has been trying to find a developer to turn a contaminated 20-acre site in southeast Downtown into a hub for clean technology manufacturing companies. On Thursday, the Community Redevelopment Agency board of commissioners approved a $15.4 million sale of the so-called Cleantech Manufacturing Center site to developer Trammell Crow. The deal, however, was stripped of a slate of requirements binding the buyer to use the land exclusively for cleantech purposes. Under terms of the deal, the developer could pay $1 million to the CRA to be exempt from the few cleantech obligations that were preserved. Bradley T. Cox, senior managing director of Trammell Crow, said the firm is committed to building a project that fulfills the city's cleantech vision. As the president of the Los Angeles Business Council, Cox has been active in the city's effort to establish the eastern edge of Downtown as a hub for clean technology and other environmentally friendly companies. But Cox said that he couldn't finance the project if it were weighed down by stringent obligations. "We made a commitment that when we're going through our entitlements and working through our environmental work to go out there and find cleantech tenants for the project," Cox said. "But at the end of the day, I can't finance it if I don't have the option to lease it to someone else in the event that we can't make that vision a reality." In lieu of the $1 million penalty, the deal mandates: • The firm must set aside 140,000 square feet in the future building for cleantech companies. Trammell Crow imagines a development that would total 350,000 square feet. • The development must meet energy efficiency and green design standards. • The firm must hire locally, pay workers according to the city's living wage policy, and agree to have 100 people working on-site within 24 months of opening the building. • When escrow closes, the firm must spend $100,000 on an 18-month joint effort with the CRA to market the site to cleantech companies. The development cost is estimated at $40 million, on top of the $15.4 million purchase price, Cox said. While the $1 million penalty for ignoring the cleantech obligations would seem relatively minor, Cox said there's a valuable reason to do everything possible to meet them. "We're a community-based developer and we want to be invited back," he said, referring to potential future deals with the city. "If I stiffed everybody and didn't do what we said we'd do on the first project, you think I'd get a second project? You don't do those things. It's a small town." Alex Paxton, who helped negotiate the deal for the CRA, agreed that disregard for the cleantech vision would backfire. "It would burn bridges with the mayor's office," Paxton said. Fourth Time's a Charm? The sale to Trammell Crow marks the fourth attempt at developing the site east of Santa Fe Avenue near the intersection of 15th Street and Washington Boulevard. Initially, the city hoped to own the property and lease it out. However, deals with Italian railcar maker AnsaldoBreda, and then an electric car manufacturer, both came close to fruition before falling through. The agency then shifted to a sale strategy, but an attempt to sell the land, with a long list of cleantech requirements to Culver City-based Genton Property Group, fell apart in July. The firm cited contamination issues when it backed out of the deal. The property had long held industrial businesses. Part of it was used by the Crown Coach company as a manufacturing site, and another section was occupied by Amtrak machine shops and rail car repair facilities. According to the CRA, there was a rail car spill in the late 1970s or early '80s. Other pollutants came from the repair work. Analysis of the site is ongoing, and the agency, which is responsible for funding the clean-up, is waiting on state approval to proceed with a remediation plan. The contamination, however, will not prevent Trammell Crow from breaking ground, Paxton said. The development will be designed in a way so that its footprint doesn't interfere with future infrastructure needed to extract soil contaminants. Cox said the firm is eyeing a December 2012 groundbreaking. The deal still requires City Council approval. If approved, Trammell Crow would immediately begin working with the CRA to find cleantech companies and secure entitlements. The land was previously cleared for a larger, 1-million-square-foot industrial complex. Trammell Crow is looking to marry its plan with the project already approved for the site to expedite the planning phase, Cox said. If the firm fails to find cleantech tenants, he said the complex would likely turn toward businesses from the industries that dominate the surrounding market - wholesale produce and garment manufacturing. "If we can't execute the CRA vision, then we have an asset for some of these other users who are traditionally in the market there," he said. Contact Ryan Vaillancourt at ryan@downtownnews.com.

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