BankAmerica Corp. is quietly working with city officials and developers of the proposed downtown sports arena to relocate its richest Southern California vault, which holds an estimated $1 billion in cash.
The downtown L.A. vault is expected to be moved to accommodate construction of the arena being proposed for the site directly across the street.
In an interview with the Business Journal, BankAmerica Chairman and CEO David Coulter called the possible relocation a “big deal.”
“It’s the main (Southern California vault),” Coulter said. “You have a tremendous structure there; it’s like the Federal Reserve Bank. You’ve got to handle all sorts of security problems. You have to handle a lot of traffic flow in and out If there was a stadium there, that would cause us traffic-flow issues.”
Disruptions and security risks associated with the expected throngs of arena-bound patrons coming into the area are what’s driving BofA to consider relocating its vault.
The City of Los Angeles is expected to be the purchaser of the underground vault and overlying BofA facilities. Both sides have indicated a strong desire to transact a sale. Any holdup could hinder construction of the arena, which developers are trying to complete by 1999.
BankAmerica, meanwhile, is eager to keep its huge cash-handling facility free from risks and disruptions.
“If you ask me, I just can’t imagine there will be a BofA cash vault and building there,” said Steve Soboroff, senior advisor to L.A. Mayor Richard Riordan and the mayor’s point man on the arena project.
City officials must ultimately decide which properties to purchase with the $63.5 million the city has tentatively earmarked for land acquisition to accommodate the $250-million arena project.
The proposed 25,000-seat arena would be the centerpiece of a major new commercial development, which would also include a hotel and a shopping/entertainment area similar to Universal CityWalk. The project is being developed by Philip Anschutz and Ed Roski Jr., owners of the Los Angeles Kings hockey team.
The BofA vault property could end up costing the city a good portion of its $63.5 million acquisition fund. Property tax records show two BofA-owned land parcels at 1100 and 1130 S. Figueroa Street are appraised at a combined value of $8.6 million. However, that appraisal took place more than a decade ago, and the value could have risen since then.
It’s conceivable that the city may ultimately decide not to purchase the property and build the arena around it if the two sides cannot agree on a price, according to city officials and representatives of the developers.
“We have to use the taxpayers’ money efficiently,” said John Semcken, vice president of Majestic Realty Co. and manager of the sports arena project. “Just because (the vault) is the best site (for arena-adjacent development), if we can get the same amount of land for less money by buying a block away, then that’s what we’re going to do.”
But Soboroff said the BofA building “doesn’t fit into the overall master plan for that area. It would be shocking to me if that building doesn’t eventually become part of this project.”
In fact, the “building” to which Soboroff refers is actually three buildings, which take up most of the city block bounded by 11th, 12th, Flower and Figueroa streets. Immediate neighbors to the vault property include several warehouse-type buildings on Flower Street, and the Club Flamingo on 12th Street.
“The current BofA site is good because it’s in a freestanding building, which tends to give them more control and flexibility over emergency back-up systems,” said Brad Cox, senior managing director of real estate brokerage Cushman & Wakefield of California who has handled bank-vault leasing for Wells Fargo Bank. “It’s also convenient because of the conflux of major freeways into downtown L.A., and it’s central to the Federal Reserve Bank, as well.”
The three windowless, gray buildings that sit atop the vault reveal little about their occupant. The only hint of BofA’s presence comes from a lone Versateller machine on 11th Street and the small BofA sign above it. There is also the steady stream of armored trucks pulling in and out through two entrances to the complex, one on 11th Street and the other on Figueroa.
The site employs approximately 1,000 people, but even their presence is hardly apparent from the smattering of cars parked in the outdoor surface lots surrounding the three buildings.
BofA officials said the downtown L.A. vault is the biggest of their six vaults in Southern California, but they refused to say how much money is stored there. Sources who asked not to be identified said the amount could range anywhere from $800 million to $1.5 billion.
If the city moves forward with the arena deal and decides to purchase the vault site, the next step would be for the Community Redevelopment Agency to appraise the property. That process could start within weeks of the signing of a memorandum of understanding between the city and developers, said Celie Stanford, real estate acquisition manager for the CRA.
“BofA is very much in the site area that’s been identified for the arena assemblage,” she said.
Meanwhile, BofA officials are meeting regularly with the arena developers to discuss the vault’s fate, said Semcken, and both sides emphasized that BofA is very much committed to seeing the arena deal move forward.
“I think we have to try and be a concerned player here. I think the arena will be positive for downtown L.A.,” said Coulter. “But at this stage of the game, not having much detail about what exactly’s going to happen, we’re just trying to be a constructive part of the dialogue.”
Semcken said contacts between the developers and BofA have been cordial so far, with both sides wanting to work out a mutually beneficial agreement.
“BofA has been cooperative. They want to help, but they also have shareholders to report to. We’re trying to find ways to make it economically viable for them and us,” he said.