[CPEO-MEF] L.A. Military Base Swaps Land for Facilities

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California
WALL STREET JOURNAL
L.A. Military Base Swaps Land for Facilities
By Sheila Muto
Special to RealEstateJournal.com
November 26, 2003

Got a hankering to live near an Air Force base?

A development team consisting of San Francisco-based Catellus
Development Corp., Los Angeles-based Kearny Real Estate Co. and Morgan
Stanley Real Estate Fund IV, hopes so. The group is expected to break
ground today on a new facility designed to replace the outdated and
seismically unsafe buildings at the Los Angeles Air Force Base in El
Segundo, Calif., an aerospace center just south of the Los Angeles
International Airport.

In return for building the facility, which will cost an estimated $115
million, the developers -- rather than getting paid for the project --
will get nearly 60 acres of land at the base, where it plans to build
two gated communities totaling about 1,030 townhouses and condominiums.
The nearby city of Hawthorne, which has agreed to annex the residential
development from El Segundo, plans to put the property in a
redevelopment area, making the developers eligible for $25 million in
proceeds from tax-increment bonds.

(The $400 million residential project may be scaled back, the result of
a settlement agreement the development team was expected to sign
yesterday afternoon with Guy Hocker, a local real-estate broker who
threatened to file a lawsuit to halt the project. Mr. Hocker, a former
mayor of Hawthorne, opposed the residential project because of its
density and the expected traffic and strain on city services.)

"We're modernizing the Air Force base in an effort to save it and the
jobs there," says Jeff Dritley, managing partner of Kearny Real Estate.
"This is the first and only transaction to date where a branch of the
military is swapping excess land for new facilities. I think, depending
on how successful this is, the military will view this as a way to deal
with the old or excess facilities they have."

The development-for-land deal, supporters say, will help prevent the
shuttering of the Los Angeles Air Force Base as the Pentagon prepares
for another round of military-base closures in 2005. The construction of
a new research-and-development facility at the Los Angeles base is a
defensive move -- and one of many measures being taken by communities
that have vulnerable military bases within their jurisdictions --
designed to keep the installation off the chopping block.

This article can be viewed at:
http://www.realestatejournal.com/columnists_com/bricks/20031126-bricks.html

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