The Santa Monica City Council has approved a major amendment to the RAND Corporation's development agreement that will allow the nonprofit research organization to expand commercial uses at its underutilized headquarters building at 1776 Main Street while securing $5.5 million in community benefits for the city.
The council's action enables RAND to sell or lease significant portions of its 326,170-square-foot building for a broader range of commercial uses, marking a significant shift from the current agreement that restricts the property to "institutional office" use essentially limited to RAND-like entities.
Under the newly approved Second Amendment to the Development Agreement, the building can now accommodate business and professional offices, creative offices, banks and financial institutions, business services, limited life sciences research and development, media production support facilities, and ground-floor retail, restaurant, and personal services.
"I think we've all been briefed on this item extensively over the last several months," said City Council member Caroline Torosis. "I feel confident about the plan laid out here. It's a win, win for the city, and I, for one, would welcome increased economic opportunity in the civic center area, which is not being fully realized with the current footprint that Rand has."
The amendment addresses a dramatic change in building occupancy that has left the five-story facility significantly underutilized. RAND now averages only 225 employees coming to the building on any given day—less than 25% of the project's employee capacity—largely due to pandemic-induced shifts toward remote and hybrid work arrangements.
This underutilization represents what city staff described as "inefficient use of RAND's financial capital" that reduces resources available for the organization's core public policy research mission. The low occupancy also decreases daily foot traffic and patronage of local businesses, impacting the vitality of the Civic Center and Downtown areas.
In exchange for the expanded use permissions, RAND will provide substantial community benefits. The organization will pay the city $5.5 million in two installments: $3.5 million due by the amendment's effective date and $2 million triggered by Coastal Commission approval or when the property is used for new purposes other than RAND's institutional office use.
Additional benefits include RAND's continued $40,000 annual contribution to the Santa Monica Early Childhood Lab School through 2065, extending the current obligation by ten additional years. The funds help offset tuition for low-income Santa Monica families attending the school.
The amendment also includes a provision ensuring the city receives comparable revenue if RAND or future owners sell the property to buyers exempt from the city's Measure GS transfer tax. In such cases, the seller must pay the city 4.6% of the sale price.
City staff projects the increased building occupancy could generate approximately $3.3 million annually in various city taxes and potentially $25 million in transfer taxes under Measure GS if the building sells at expected prices, totaling roughly $130 million over the development agreement's extended life through 2065.
The expanded uses align with the city's Land Use and Circulation Element goals for the Civic Center District, which calls for "a diverse mix of uses and activities" including government, residential, retail, and office uses. The amendment allows up to 40% of the building's floor area for laboratory use and includes provisions for ground-floor commercial activities that could activate the surrounding area.
The proposal received unanimous approval from the Planning Commission in July before advancing to the City Council. RAND, founded in Santa Monica in 1948 as a spinoff from Douglas Aircraft Company, has occupied the building since 2004 under a development agreement originally set to run until 2055.
The amendment removes previous restrictions that limited RAND's ability to lease more than 15,000 square feet to non-RAND users and restricted property transfers to similar institutional office users. These changes are designed to remove barriers to fuller utilization of a property that has been significantly underutilized due to changing workplace norms.
The council also approved a companion amendment to the Civic Center Specific Plan to ensure consistency with the expanded uses for RAND's property. The project is categorically exempt from environmental review under the California Environmental Quality Act as it involves no new construction or expansion of the existing building's footprint.
The amendment now proceeds to the California Coastal Commission for final review before taking effect.