June 1, 2011 - From the May, 2011 issue

SCI-Arc Purchases Campus Site; L.A. Arts District Also a Winner

SCI-Arc recently purchased the Sante Fe Depot, the site on the eastern edge of Downtown Los Angeles that has housed the world-famous school of architecture and design since 2000. The sale, which marks the end of the school's nomadic ways, also marks the beginning of a new chapter for the Arts District of Downtown Los Angeles. In the following TPR exclusive interview, Jerry Neuman, attorney with Sheppard Mullin Richter & Hampton LLP and board chair of SCI-Arc, details the mutual benefits the school and the Arts District can expect in the future.


Jerry Neuman

Why is SCI-Arc's purchase of its Downtown Los Angeles campus such a milestone for the school and Los Angeles?

Two reasons: One, SCI-Arc has been a nomadic school for so long that having its own campus solidifies its place as one of the great institutions with a presence in Los Angeles, especially in a neighborhood that it has worked so hard to be recognized as a destination.

The second reason is that it provides an opportunity for the city to celebrate the presence of an institution that has become the number two college of design in the country and the number two university of applied technologies related to architecture in the country. Some people say that SCI-Arc is the leader in those fields, but people haven't recognized the institution, partly because the school hasn't had a set presence. Having a set presence allows people to point to and celebrate its place in Los Angeles.

The school hasn't had a home for 39 years, but now it is in the Santa Fe Freight Yard Depot. What was the vision that accompanied the purchase of that site?

The school had experienced difficulties with its landlord-a number of disputes that cost the school a lot of money. The school recognized that without a set place, the school would not stabilize from an institutional point of view. The vision was to start building relationships with the landlord and then, after the landlord went bankrupt, with note holders to ensure that any resolution of the bankruptcy included the sale to SCI-Arc of the building and the surrounding properties necessary for parking. We set a course that was on parallel paths to build those relationships and ensure that commitment, no matter who owned the note or who owned the property as the bankruptcy worked itself out.

The second piece started a few years ago by putting SCI-Arc on a path to financial security, building up the necessary reserves to get the financing that we needed to buy the building at the price we anticipated. We did a lot of work to shore up the financial stability of the school so that bond underwriters and lenders would look at the school as a rateable entity that could make the purchase happen. In the end, we had a very high rating and significant reserve that we could bring to bear, which made the purchase easy.

Are you saying that it wasn't sheer luck that SCI-Arc had a skilled and talented lawyer as its chair?

We have a lot of skilled and talented people on our board. We all brought our skills to the table in making this work. We have John Geresi, the former chair of SCI-Arc from J.P. Morgan, Tom Gilmore, Kevin Ratner, and Bill Fain, who have great sense for the businesses and spaces around Downtown. We all got in, rolled up our sleeves, and made it work. It took a bit of leadership, which really came from Eric Moss, who galvanized us to make it work.

You have been thinking about the built environment and the land use patterns of Los Angeles for a long time. What is the significance of owning the Santa Fe Depot for the economic stability of that undeveloped area of the city on the eastern edge of Downtown?

It says that we have a community burgeoning there. We know that-like with the Barkers Block area and what is going on with the industry and the restaurants there-things are happening in that area. But nothing anchored the area in a way that made sense. This anchors the area in a way that crosses the tracks, attracting people from that whole area. Having SCI-Arc there guarantees at least 500 students for the long term, along with the faculty and administration to support them. On top of that, there will be a need for housing, retail, and all of those things that are in the formative stages, but no one was going to take the risk of financing them without knowing that there was a permanent anchor.

SCI-Arc was only guaranteed to be there for another few years. The fact that we are staying there means that we become much more of a financeable community. The presence of SCI-Arc says that we understand and are sensitive to the context of neighborhood. People understand that the growth of the neighborhood will be contextual. We are not looking to support things that are going to be overblown or change the environment. SCI-Arc moved there for great reasons: it had a sense of place that no other part of the city really had. We are not looking to change that.

Is this the end of that area being an industrial land use site? Is this tilted toward being a residential, commercial, and academic center?

The area immediately around SCI-Arc probably lends itself to arts, design, and ancillary support uses that need to go along with the institution. If you look south of SCI-Arc, even just south of the 4th Street Bridge, it is possible to retain the industrial character. There is a lot of brownfield property that will be coming available. It may change what we define as industrial-not just manufacturing pieces but the support for manufacturing in the economic chain. That could be the design, logistics, packaging, or marketing that goes into the industrial chain. That is the way Los Angeles and California are moving anyway. We are not making the widgets, but we are creating the connective tissue that makes the widgets happen and move around the world.

Is the Cleantech Corridor a reality? Is there a nexus between that vision that the city has attempted to achieve and SCI-Arc's aspirations?

There is. Is it as cognitive as people would like it to be? I don't think so, but we certainly recognize what goes along with that concept from an educational standpoint and how to connect the dots between institutions. For instance, SCI-Arc is currently in a collaboration with CalTech for the Solar Decathalon-a competition between universities in Washington D.C. to build self-sustaining housing on the National Mall. Those sorts of connections will be vital to make the Cleantech Corridor work-building relationships and showing how architectural design meshes with engineering and with production, hopefully sparking investment not only at single sites but in the connective tissue of the whole area.

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You have been a part of a number of significant real estate projects and teams. What team has come together to finance and build out this vision for SCI-Arc?

We have great banking relationships that we have formulated. We brought those banking relationships to bear. We haven't figured out whom we will work with to build and develop the site. There are still two major pieces of that property available, where the owners are trying to decide if they are going to develop themselves or if they are going to sell to SCI-Arc, in which case it would expand the opportunities.

What about SCI-Arc enticed you to assume leadership of the board?

SCI-Arc's mission is to beat the forefront or cutting edge of how the world and society is shaped by physical form. That was very enticing to me, having done a lot of land use projects and thinking of planning as a way to utilize physical development to influence social strategy and the experience of the city. Seeing what SCI-Arc did and when Mayor Riordan and his business team brought SCI-Arc to Downtown, it really set the tone for taking an underutilized edge of the city and bringing in an institution that was recognized for making things happen around the world. When SCI-Arc got in a little bit of trouble, they reached out to me to advise them on a strategy to maneuver away from the trouble and become a vital and permanent part of that area. I was intrigued by that and helped and advised them.

Ultimately, I was invited onto the board, seeing that the institution was striving to be more-to gain recognition in the world that wasn't realized in our community. I had some skills that helped SCI-Arc achieve the visibility it wanted in our community and capitalize on its reputation around the world. Since the previous board chairs of the school saw SCI-Arc through those difficult times and then solidified its foundation as an institution by securing its finances, I saw the opportunity to promote SCI-Arc, bringing to the institution things like alumni associations, outreach to a variety of communities, work across the country, and outreach to students around the world.

Recognizing that I was being asked to lead, I jumped in and said, we need to be more active and expand our board in a comprehensive way and a way that increases its stature. The addition of Thom Mayne and, hopefully soon, Ted Tanner, makes that happen. I am speaking to groups across the country, along with Eric Moss, from San Francisco to Washington to New York to China and elsewhere, about what the institution is doing. That makes leadership exciting.

At the same time, bringing them together to make the school the best it can be is amazing. We have a more engaged board than we have ever had in the time that I have been on the board. Who wouldn't want to lead in those circumstances?

SCI-Arc is a leading institution in design-with a fascinating focus on the built environment. Does the school mesh with the seeming lack of interest in the built environment in the city of Los Angeles? What can SCI-Arc teach L.A.?

Eric Moss does a lot of lecturing about how forward thinking other communities are around the world and around the country. As progressive as we want to be in L.A., we are still confined by our own conservatism from NIMBYism and the like. SCI-Arc can teach L.A. to change the form and physical nature of our built environment without changing the impact, visually or otherwise, of creativity, ingenuity, and looking outside the box's box or looking back into the box.

Eric says this all the time: Now everyone is outside the box, so maybe now you have to look either inside the box or outside the outside of the box. SCI-Arc can challenge L.A. to do that. As a permanent resident of L.A., we can demand that the city, especially the area around us, lead in looking at our infrastructure and requiring that the way we build is innovative, creative, and, yet, synergistic with the areas in which we live.

What else is on your plate that our readers should be aware of?

I am chairing the Home for Good program. We have committed to ending homelessness in five years. The work we have done has been recognized in Washington. While I was there last week, we had people in cabinet level positions trying to meet with us to see what we are doing. We are being so innovative and making such headway in Los Angeles in programming and creating an opportunity to end homelessness. Now we have heard that Michelle Obama and Dr. Jill Biden may want to work with us on some homeless veteran initiatives.

This is a countywide issue. We wrote the plan, Home for Good, which has now been unanimously adopted by the county of L.A., accepted by the city of L.A., and 44 cities within the county are looking at it. We are trying to get buy-in from all 25 public housing agencies in the county. Four have bought in already: the city of L.A., county of L.A., Santa Monica, and Long Beach. It is about changing the system: the old system is broken, so let's create a new system.

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