Manhattan Beach to Pay $10 Million for Santa Fe Railroad Right of Way

MANHATTAN BEACH â€”  After a lengthy public hearing in which a Santa Fe Railway official made key last-minute concessions, the City Council this week tentatively approved an agreement with the railroad that will add 21.2 acres of open space to the city’s park system in exchange for $10 million in cash, land and development rights.

The action came after years of public debate and prolonged negotiations between the city and the railroad over the fate of Santa Fe’s 23.3-acre right of way, which slices through the city from Rosecrans Avenue south to the boundary with Hermosa Beach.

Santa Fe officially abandoned the unprofitable line, which continues through Hermosa Beach into Redondo Beach, about three years ago, ending a century of rail service in the area.

The council approved two resolutions and introduced two ordinances required to implement the agreement, but only after a Santa Fe negotiator agreed near the end of the hearing to add one provision to the agreement and to delete another.

To Delay Development

William Bentley, manager of real estate and contracts for the railroad, agreed to an amendment prohibiting Santa Fe from developing 2.1 acres of the right of way--which the company will retain under the agreement--until the city has received title to the remaining 21.2 acres of the corridor. Development rights for the 2.1-acre parcel, which is east of Sepulveda Boulevard near Rosecrans, are estimated by city officials to be worth about $5 million.

The amendment was proposed during the hearing by Mike Collins, a local real estate broker and a candidate for City Council. Collins urged the council to approve the agreement, but proposed the amendment to allay fears that Santa Fe would develop its portion of the right of way but that the city might never obtain legal ownership of the rest because of a legal snarl.

Despite two years of searching, Santa Fe has been unable to produce a conclusive deed to the property, which was purchased by the railroad in the early 1900s, according to available documents. As a result, the agreement requires Santa Fe to indemnify the city for the next five years against any legal action over title to the property. City officials said that after five years, with the consent of the courts, “quiet title� would be established--meaning the city would be the unequivocal owner of the property.

75 at Hearing

Collins and several other speakers, who were among the 75 residents attending Monday night’s hearing, said the amendment would protect the city and allow it to gain immediate control of 90% of the right of way. The agreement calls for Santa Fe to turn over the 21.2 acres west of Sepulveda in exchange for $5 million in cash and real estate and the development rights to the parcel east Sepulveda.

In another important concession, Bentley agreed to forfeit his company’s subsurface mineral rights in the 21.2 acres--rights the agreement originally allowed Santa Fe to retain. Bentley agreed to delete that provision after being questioned about it by City Councilwoman Jan Dennis, who along with Councilman Bob Holmes helped negotiate the agreement.

Bentley said the last-minute concessions by Santa Fe were meant “as an act of good faith� to bring an end to the lengthy negotiations, which began in 1982. He said it is company policy not to relinquish mineral rights, but that he was allowed to depart from that policy to secure the agreement.

Santa Fe also agreed to delay construction on the 2.1-acre parcel because the railroad won’t be ready to build for several years anyway, Bentley said, and because the company is confident the city will obtain conclusive title to the right of way within five years.

“I think we came out with an agreement that is in the best interest of both parties,� Bentley told the City Council. “The ‘give’ on Santa Fe’s part is just about exhausted. We have a piece of property worth a great deal of money.�

Mayor Objects

The council granted tentative approval to the agreement over the objection of Mayor Gil Archuletta, who earlier had joined Councilwoman Dennis in asking that the matter be continued until questions raised by residents during the hearing could be researched and answered.

Archuletta and Dennis were unable to muster a third vote, however, and Dennis later joined the majority in voting for the agreement after Councilman Russell Lesser appealed to her and Archuletta to let the “divisive issue� of the right of way be finally put to rest.

Archuletta, however, would not be persuaded. Instead, he condemned his colleagues for being “narrow minded� and “short sighted� and for ignoring questions posed by the public.

“If these questions are not answered, I think a cloud will forever be over this agreement,� he said, referring to questions raised about such things as the value of the land, zoning problems, Santa Fe’s ownership of the right of way, traffic problems a new development on Sepulveda may create and the timing of the public hearing.

“The only reason not to continue is our fear that the answers won’t come back the way we want them,� Archuletta said.

Decision Defended

But several councilmen defended their decision to move forward with the agreement, saying it is fair and in the best interest of the city.

“There are always people against everything,� Lesser said. “There were people against the Louisiana Purchase. . . . We can delay this forever, but it is the majority of people whose will will be thwarted if we don’t go ahead with this agreement.�

The tentative agreement, expected to receive final council approval next week, must also be approved by the railroad’s board of directors before it becomes effective. Bentley said executives at Santa Fe have been following the negotiations closely and said he expects the board to approve the final agreement and the amendments.