THE COMMUNITY REDEVELOPMENT AGENCY OF THE CITY OF LOS ANGELES, CALIFORNIA M E M O R A N D U M DATE: APRIL 15, 2004 HO2020

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1 THE COMMUNITY REDEVELOPMENT AGENCY OF THE CITY OF LOS ANGELES, CALIFORNIA M E M O R A N D U M 8 DATE: APRIL 15, 2004 HO2020 TO: FROM: RESPONSIBLE: PARTIES AGENCY COMMISSIONERS ROBERT R. OVROM, CHIEF EXECUTIVE OFFICER OSCAR JAUREGUI, PROJECT MANAGER PAULINE LEWICKI, PRINCIPAL PLANNER SUBJECT: VARIOUS ENVIRONMENTAL ACTIONS AND AMENDMENT TO OWNER PARTICIPATION AGREEMENT WITH USC-CEC, INC. FOR THE DEVELOPMENT OF THE USC GALEN EVENT CENTER ON PARCELS M-3C, M-4 AND M-5 (LOCATED AT THE SOUTHEAST CORNER OF FIGUEROA STREET AND JEFFERSON BOULEVARD) WITHIN THE ORIGINAL HOOVER REDEVELOPMENT PROJECT AREA (CD8 CD9) SOUTH LOS ANGELES REGION RECOMMENDATIONS That the Agency: 1. Adopt the attached Resolution (Attachment A) certifying that the Final Environmental Impact Report (EIR) for the proposed USC Galen Center and Athletic Pavilion (Project) a. Has been completed in compliance with the California Environmental Quality Act (CEQA), State and Agency CEQA Guidelines; and b. Has been reviewed and considered by the Agency Commissioners; and c. Represents the Agency s independent judgment and analysis. 2. Adopt the attached Resolution (Attachment B) certifying that the Agency Commissioners have reviewed and considered the Final EIR with respect to the environmental effects of the Project, adopting Mitigation Measures, Findings, Mitigation Monitoring Program and Statement of Overriding Considerations for the Project, and approving the Project. 3. Authorize the Administrator or designee to approve Design Drawings for the proposed Galen Event Center. That the Agency, subject to City Council review and approval:

2 AMENDMENT TO OPA Page 2 4. Authorize the Administrator or designee to execute the Second Amendment to the First Amended and Restated Owner Participation Agreement (Amended OPA) with USC- CEC, INC. to revise the Scope of development from a commercial office/hotel/retail development to an academic event center development. SUMMARY The major thrust of the original Hoover Redevelopment Project has been to forestall the potential exodus of the University of Southern California (USC) from the City of Los Angeles, by facilitating development of its campus program and eliminating significant blighting elements surrounding it. The recommended actions are consistent with the redevelopment plan s objectives in that it will allow USC to build the Galen Event Center, a much needed permanent home for the men s and women s basketball and volleyball teams, which are part of USC s nationally acclaimed athletic program, on the last remaining undeveloped site in the Original project area (Attachment C). The USC Galen Center and Athletic Pavilion is to be built at the southwest corner of Figueroa Street and Jefferson Boulevard. The proposed development consists of two components. The first component is the USC Galen Center, a 245,00-square foot arena with a seating capacity of approximately 10,260. The second component, the Athletic Pavilion, would provide 55,000 square feet of additional space for the University s athletic program and ancillary services for the Galen Center. Athletic Pavilion facilities would include three practice gymnasiums, with seating capacity for approximately 2,000 persons, offices for basketball and volleyball coaches and staff, administrative offices for venue managers, a conference room and a classroom. The Athletic Pavilion would be attached to the south side of the arena. The 2,000 seats within the Athletic Pavilion would not be used concurrently with the arena. Parking will be provided immediately south of the Athletic Pavilion in a new 1,200-space parking structure, as well as in the existing University Parking Center located east of the Galen Center (Attachment D) The development site, which is now owned in its entirety by USC and is subject to an OPA with the Agency and USC-CEC, Inc., was originally envisioned to be developed with commercial office/hotel/retail uses by Figueroa Corridor Associates, a for-profit entity that was a subsidiary of USC. However, that scope of development proved to be financially unfeasible. USC subsequently submitted a revised development plan that calls for the development of the Galen Event Center. An Environmental Impact Report for the proposed new scope has been prepared. The first two recommendations of this memorandum are the adoption of resolutions regarding the EIR. These are discussed in the Environmental Review section of this Board Memorandum. In order to allow for the development of the Galen Event Center, the fourth recommendation allows for a change in the scope of development from commercial office/hotel/retail uses to an academic event center in order to allow for the development of the Galen event Center to proceed. In addition to providing athletic facilities, the USC Galen Center will also house the USC Athletic Department Hall of Fame, which will pay tribute to USC Sports heroes and events through the display of memorabilia and artwork in the lobby of the Center. Complementing this, the

3 AMENDMENT TO OPA Page 3 Developer is planning to focus its Art Budget for the development, which it anticipates will exceed the 1% Art Budget requirement estimated to be approximately $1 million, on an Art Plan themed around the many sporting events supported by USC. The Art Plan will enhance areas of the Center s exterior walls and the public plaza along Figueroa which will be open 24 hours a day and accessible to all. The Art Plan for the development will be reviewed by Agency staff and the Hoover PAC and will be submitted for approval to the Agency Board of Commissioners at a later date. The $105 million event center will be built with private charitable donations. Since no public funds have been or will be used towards the development of the Galen Center, the Agency s Living Wage requirement does not apply. The development will be constructed under the Agency s prevailing wage requirements. The Academic nature of the development will qualify the property for a property tax exemption, and the property will therefore remain off the tax rolls, as it has been since it was purchased by USC. The Development will provide significant economic benefits to the City of Los Angeles as well as the County of Los Angeles. As set forth in a report by Economic Research Associates (ERA) submitted to the Agency in Fall of 2003, economic impacts of the Galen Center portion of the project alone are estimated as follows: (1) An estimated total economic impact of $19.5 million per year, of which $6.57 million would accrue to the City of Los Angeles; (2) An estimated onetime economic impact of $142.9 million to the regional economy from construction of the Galen Center; and (3) An estimated $336,121 in various taxes per year from the Galen Center. Staff has reviewed ERA s report and concurs in its findings regarding economic impacts of the Project. RE October 23, 2003 Agency Board Approval of an amendment to OPA to change the owner participant from Figueroa Corridor Associates to USC-CEC Inc. for the development of the southwest corner of Figueroa Street and Jefferson Boulevard. SOURCE OF FUNDS No Agency funds are required for the recommended action. Further, the developer has not received any Agency funds in the past on this development nor is requesting any other public financial assistance for this development. Construction of the development will be financed by private charitable donations. PROGRAM AND BUDGET IMPACT Approval of the recommended action is consistent with the proposed FY04/05 Budget under HO2020. The development will not generate tax increment since the facility is considered academic and exempt from property taxes. The development however will generate economic benefits to the City and the community, as described above and as set forth in the report prepared by ERA.

4 AMENDMENT TO OPA Page 4 ENVIRONMENTAL REVIEW The Final EIR includes all of the comments received during the public review process and a transcript of the oral testimony at the public hearing and responses to the comments, where required. Comments on the Draft EIR related to cumulative impacts, land use and planning, views and aesthetics, artificial light and glare, traffic circulation, parking and alternatives. Certification of the Final EIR does not imply approval of the project. The first action, to be considered by the Agency is certification that the Final EIR for the proposed USC Galen Center and Athletic Pavilion has been prepared in compliance with the California Environmental Quality Act (CEQA). A Draft EIR was made available for public review and comment on December 10, The 45-day public review period ended January 23, 2004, and a public hearing on the Draft EIR was held on January 15, Notice stating that the Draft EIR was available was published in the Los Angeles Times on December 10, 2003, and the Southwest Wave on December 11, The notice stated that members of the public could review the Draft EIR at the Agency s Records Department, the Los Angeles Central Library, the Los Angeles Exposition Park Branch Library, and on the Agency s web site. It further stated that the document could be borrowed in accordance with the Agency s procedures at the Agency s Records Center. The Final EIR includes all of the comments received during the public review process and a transcript of the oral testimony at the public hearing and responses to the comments, where required. Comments on the Draft EIR related to cumulative impacts, land use and planning, views and aesthetics, artificial light and glare, traffic circulation, parking and alternatives. Certification of the Final EIR does not imply approval of the project. The second action, requested to be taken by the Agency, is the adoption of the Resolution (Attachment -B), which sets forth the environmental impacts, mitigation measures and environmental findings, and mitigation monitoring plan for the Project. The Final EIR concluded that significant, unavoidable adverse impacts would remain in the following areas: traffic circulation, construction related air quality, construction related noise, and solid waste disposal. Since there are significant, unavoidable adverse impacts, the Agency must also adopt a Statement of Overriding Considerations. The Overriding Considerations allows the Agency to weigh economic, legal, social, technological, or other benefits of a proposed project against its unavoidable environmental risks, when determining whether to approve a project. The Overriding Considerations for the Project include: providing the City of Los Angeles with increased revenues of approximately $6,577,000 per year, providing approximately 645 construction jobs, creating approximately 20 net new fulltime permanent staff positions for USC and approximately 57 full-time equivalent positions associated with event operations. This action is a prerequisite to amending the OPA. BACKGROUND The Agency has sought to develop Parcel M-3C with commercial uses since the early 1970 s, consistent with the economic development goals and objectives of the Hoover Redevelopment Plan. Parcel M-3C is the last remaining Agency acquired parcel within the Original Hoover

5 AMENDMENT TO OPA Page 5 Redevelopment Project area. Parcel M-3C is currently developed with a surface parking lot. Attempts to develop Parcel M-3C with hotel and office uses by Figueroa Corridor Associates (USC-CEC Inc. s predecessor) over a ten-year period were unsuccessful, despite the expenditure of more than $24 million in land acquisition and pre-development activities. A highest and best use analysis prepared for the Site concluded that office and hotel uses at the Site were no longer economically feasible and would continue to be economically infeasible for the foreseeable future, and that academic uses associated with USC constituted the highest and best use for the Site. In September 2001, USC submitted a conceptual master plan that outlined development of a non-commercial, academic and athletic use for the Site an arena for university athletic events and other uses (the Galen Center and Athletic Pavilion, or Project). Subsequently, the Agency approved an amendment to the Owner Participation Agreement (OPA) that (1) allowed Figueroa Corridor Associates to assign its rights and interests in the OPA to USC-CEC, INC.; and (2) authorized the Agency to negotiate an amendment to the OPA to revise the scope of development to reflect development of the proposed Galen Center and Athletic Pavilion. The Second Amendment to the First Amended Owner Participation Agreement (Attachment B) reflects the revised scope of development for the Galen Center and Athletic Pavilion, which provides for academic and athletic uses on the Site, consistent with the highest and best use analysis. The Site will be developed with a state-of-the-art events center arena and athletic pavilion. The 10,260-seat arena will host approximately 60 athletic events per year for the USC men s and women s basketball and volleyball teams. The athletic pavilion will provide three practice courts for USC athletics, and will have 2,000 temporary seats that can be used for smaller events. In addition to the 60 USC athletic team events, the arena and athletic pavilion will be available for approximately 70 additional events per year, including high school athletic tournaments, graduation ceremonies for surrounding schools, convocations, concerts and theatrical performances, and other community uses. Events using the 2,000 seats in the athletic pavilion will not be held concurrent with any events in the arena. Code-required parking will be provided in two structures located off-site: a proposed 1,200-space structure located immediately south of the Site, and the existing University Parking Center located east of the Site. Both parking structures are located within 750 feet of the Site. Additional parking to meet demand for a capacity event at the arena is available in several University parking facilities located within ¼ mile of the Site. Exterior signs proposed for the Galen Center include a freestanding sign to be located at the northeast corner of Galen Center, near the Jefferson Boulevard and Flower Street intersection. The sign would be visible from the Harbor Freeway and would announce upcoming events to be held at the Galen Center. The overall height of the sign would not exceed 100 feet and it would include the name of the Galen Center and an electronic message board. The signage will be developed in accordance with City adopted policies and ordinances and Section 522 of the Plan. The recommended mitigation measures would reduce potential impacts to less than significant levels. Environmental impacts associated with the Galen Center and Athletic Pavilion are analyzed in Environmental Impact Report SCH No Approximately 92 mitigation measures have been identified and incorporated into the Project to mitigate impacts to the extent feasible. Significant, unavoidable impacts remain relating to traffic circulation, construction-related air quality, construction-related noise, and solid waste. Substantial benefits associated with the

6 AMENDMENT TO OPA Page 6 Project have been identified to support a statement of overriding considerations. In sum, those benefits are as follows: (1) improve social and economic conditions in the Hoover Redevelopment Area and Figueroa Corridor by providing a state-of-the-art venue for sporting and entertainment events; (2) provide an estimated total economic impact of $19.5 million per year, of which $6.57 million would accrue to the City of Los Angeles; (3) provide an estimated one-time economic impact of $142.9 million to the regional economy from construction of the Galen Center; (4) provide an estimated $336,121 in various taxes per year from the Galen Center ; (5) provide approximately 645 direct construction jobs; (6) create approximately 20 net new fulltime permanent staff positions for USC and approximately 57 full-time equivalent positions associated with event operations; (7) eliminate and prevent the spread of blight, thereby promoting the redevelopment of the Hoover Redevelopment area; (8) provide and encourage additional private sector investment in the development and redevelopment of the area surrounding the Project, consistent with the objectives of the Redevelopment Area; (9) assist in the logical development of the Figueroa Corridor as a Regional Sports Entertainment Area; (10) assist in attaining the purpose of the Community Redevelopment Law by eliminating a surface parking lot at a major intersection that inhibits the full aesthetic potential of the site; (11) create a synergistic effect of upgrading, inducing and stimulating growth, increasing pedestrian activity and interest in the area, and attracting greater numbers of visitors to the area; (12) promote the City s Land Use/Transportation Policy by coordinating and concentrating development in proximity to transportation alternatives; (13) improve the existing transportation and circulation system to enhance access to and egress from the Project area, and to provide convenient and pedestrian friendly circulation within the Project area; (14) minimize public expenditure on needed infrastructure in the vicinity, including street and traffic signal improvements;

7 AMENDMENT TO OPA Page 7 (15) provide public art, designed to be compatible with the character and context of the USC campus and surrounding vicinity, and other public amenities which may include open space, plazas, and street trees; (16) provide landscaping and urban design features of the Project that will unify and upgrade the appearance of the Project area, substantially improve the aesthetic quality of the Hoover Redevelopment area, and provide a visible gateway to the USC campus and Figueroa Corridor; and (17) provide a venue for high school athletic championships and by making the facility available for high school graduations, the annual high school Decathlon competition, and the club volleyball community in the Southern California region, among others. The Galen Center and Athletic Pavilion are being funded entirely by private, charitable donations. USC-CEC, INC. has not received (nor has its predecessor), and is not seeking, any agency assistance in developing the Site. Estimated development costs for the site are $105 million. This represents a significant investment in the Project Area, which is currently developed with a surface parking lot. The only source of revenue generated by the existing use is approximately $38,500 annually in parking tax revenues. The Project will generate substantial economic benefits beyond that, by providing approximately 645 construction jobs over an month period for the Galen Center portion of the project alone, with an estimated one-time economic impact of $142.9 million to the regional economy. The Project will also create approximately 20 net new full-time permanent staff positions for USC with a new payroll of $600,000, and approximately 57 full-time equivalent positions associated with event operations at the Galen Center. The Project will provide the City of Los Angeles with substantial annual increased revenues of approximately $6,577,000 per year from sources such as, but not limited to: sales and use taxes (estimated at $6,200,000 per year), arena-related parking (estimated at $205,000 per year), transient occupancy taxes (estimated at $104,000 per year), utility user and franchise fees (estimated at $59,000 per year) and business licenses (estimated at $9,000 per year). USC-CEC, INC, plans to enter into a project labor agreement with the Building and Construction Trades Council and the Regional Council of Carpenters for the construction of the Galen Center and Athletic Pavilion. Operational jobs associated with the arena will be covered by existing collective bargaining agreements with the organizations providing those services. It is anticipated that all jobs will be at or above the City of Los Angeles living wage. A proposed art plan for the Project will be submitted to the Agency for review and approval prior to issuance of certificates of occupancy for the Project. USC has obtained an exemption from the City of Los Angeles s art policy due to the academic, non-commercial nature of its developments. Rather than seek an exemption from the Agency s public art policy, USC-CEC INC. will voluntarily comply with the Agency s art policy. In lieu of the required contribution to the Hoover Cultural Trust Fund, the full amount of the Cultural Trust Fund Contribution will used for an On-Site Art Plan in a public space on Site within the development. The dedication of these funds to enhancing a community-accessible public space is in keeping with the goals of the Public Art Policy because the new plaza will be a valuable public space for the Hoover Redevelopment Project Area, a redevelopment area with limited public space.

8 AMENDMENT TO OPA Page 8 An extensive community outreach program has been undertaken to inform the community on the proposed development and to solicit its input. The proposed actions have been presented to the Hoover Project Area Committee for comment. City Councilmembers Jan Perry and Bernard Parks have been briefed and have been supportive of the development of the Galen Center. Robert R. Ovrom There is no conflict of interest known to me, which exists with regard to any Agency officer or employee concerning these actions. Attachment A - Resolution Attachment B - Resolution Attachment C - Site Map Attachment D - Illustrations of Galen Center