Hermosa Beach Agrees to Buy Santa Fe Right of Way Property for $7.5 Million

Ending years of public debate and prolonged negotiations, an agreement has been reached for the city of Hermosa Beach to buy the Atchison, Topeka & Santa Fe Railway’s right of way for $7.5 million.

City officials and railway officials made the announcement at a news conference Thursday held on the 20-acre, 100-foot-wide strip that bisects the city. They then adjourned to City Hall to toast the end of what both sides called difficult negotiations.

“I want to thank the community, because it was their own determination that helped to bring this to a conclusion,” Mayor Jim Rosenberger said after he unveiled a huge “SOLD” sign on the right of way at Valley Drive.

The city will preserve it as parkland.

Mayor Pro Tem June Williams said both sides talked for about four months, then sent a proposal to the Santa Fe board of directors in July. The board, which meets only once a month, announced its acceptance Wednesday.

‘Win-Win Situation’

Benjamin B. Salvaty, an attorney for Santa Fe, said: “It is a win-win situation. It was a good deal on both sides.”

The purchase roughly doubles the amount of open land in the city, Rosenberger said.

The acquisition came at the direction of voters, who in last November’s election approved a referendum increasing the utility user’s tax by 4% to help pay for the purchase.

Rosamond Fogg, head of Open Space People’s Action Committee, a citizens group that had pressed the city to buy the land, said the city received excellent terms.

“Of course I am very pleased,” Fogg said. “A lot of people worked hard to assure this would happen. I am very happy.”

$10-Million Asking Price

City officials said last year the land was worth $6 million and that the railway was asking more than $10 million.

Under the agreement, escrow will close in late 1989. Since ownership of 20% of the right of way is under litigation, the city agreed to pay only for the land Santa Fe can prove it owns.

Money for the land that is in dispute will go in an interest earning account, he said. The $7.5 million is the price of the entire right of way and would be pro rated. Santa Fe agreed to bear the legal cost of determining ownership of the property in dispute, Rosenberger said.

The Santa Fe line slices through the heart of South Bay beach communities to a dead end near King Harbor in Redondo Beach. The tracks, laid in the late 19th Century, have been overgrown with grass and weeds, or removed. The land in Hermosa Beach serves as a jogging path and an exercise course.

Obstacles to Purchase

Railway officials said the line became obsolete as the coastal communities developed into residential and commercial centers, leaving most heavy industry to other areas of the region. In 1983, Santa Fe officially stopped running trains over the right of way in Manhattan Beach, Hermosa Beach and Redondo Beach. The tracks north of Rosecrans Boulevard in El Segundo are still active.

For years, citizens have been asking the city to purchase the 1 1/2- to 2-mile-long property to keep it as open space, but there were obstacles.

In 1982, Santa Fe filed a $15-million lawsuit against the city after the council designated the right of way as open space in the General Plan. Railway officials complained that the zoning would reduce the land’s value.

Santa Fe dropped the lawsuit in 1985, two weeks before trial, deciding instead to negotiate with the city to modify restrictions on use of the land.

Officials for the railroad have never formally asked the city to approve a development project for the strip of land. But more than two years ago the railway took the first step toward a large-scale commercial and residential development there when it requested drastic changes in the city’s General Plan and zoning.

“Many people felt helpless. They didn’t think we could keep them from putting in a development,” Fogg said. “I was optimistic.”

Price Disputed

Another obstacle has been agreeing on a fair price for the land.

In the past, railway officials have said the fair value should be based on its worth if developed to its full commercial and residential potential. City officials, however, said the price should be based on the lower value of open space.

Rosenberger said Santa Fe estimated the value at over $10 million. The city had estimated its open space value at $6 million. Rosenberger said he feels the city and Santa Fe reached a fair compromise.

Mayor Pro Tem Williams said the negotiation process was difficult.

For a time, “we attempted to negotiate and they kept saying that it was not for sale,” she said.

Secret Negotiations

Once Santa Fe decided in October, 1987, that it wanted to sell the entire strip, City Atty. James P. Lough and City Manager Kevin Northcraft and Rosenberger met periodically with Santa Fe officials to come to this agreement, she said.

Officials kept the negotiations secret.

Expressing relief over the sale, Santa Fe attorney Salvaty said the negotiations were difficult but fair.

“We were never hostile toward the city,” he said. “In the lawsuit we were just trying to protect our interest.”

Some money for the purchase of the land will come from the sale of the city’s only vacant beachfront property, the Biltmore Site, between 14th and 15th streets, and five adjacent lots to the east.

In November, the voters will decide how they want the seven-lot parcel to be developed. One of the options on the ballot will be to retain the current use and offer the Biltmore Site and a nearby parking lot on Hermosa Avenue for $6 million. Another option would call for auctioning the property after changing the zoning to single-family residential or commercial business.