By Jason Islas
Staff Writer

August 21, 2013 -- Despite major setbacks for its plans to build a $40 million theater just off of the Third Street Promenade, Santa Monica-based Metropolitan Pacific Capital (MPC) is set to be a major player in its own backyard.

City Hall tapped MPC last month to develop two and a half acres of prime City-owned real estate in Downtown Santa Monica and now, the local firm has shown interest in buying the former home of the bayside city's historic New Deal-era post office, across the street from the City parcel.

“They're interested in buying the property,” said Councilmember Bob Holbrook, adding that the proximity of the 75-year-old building to MPC's project on City property makes it an attractive site for the developer.

While the Council has ultimate discretion over any plans MPC has for its project on City land at Fifth Street and Arizona Avenue, the Council has no say on the sale of the old post office building which is owned by the US Postal Service.

However, the Council will have a say next Tuesday on the preservation covenant that will be written into the sale contract by the Postal Service.

That covenant, as proposed, would require any future owner of the property to seek “express permission” from City Hall before any “construction, alteration or rehabilitation” could take place.

It also lists features, both inside and outside the building, that would have to be preserved, including original light fixtures, wood paneling and the tall tables customers have used for the last three-quarters of a century.

Holbrook said that if MPC does end up buying the property, the firm's principal, John Warfel, understands that the building will have to be preserved.

At this point, there have been no formal negotiations, but Warfel has suggested the idea of turning the old post office building into something like San Francisco's Ferry Building Marketplace, according to Holbrook.

Carol Lemlein, president of the Santa Monica Conservancy and a vocal advocate for preserving the the post office building, said, “There has always been discussion that it would be wonderful and complimentary” to incorporate the building into the larger project across the street on City land.

The $331.3 million project Warfel has proposed for the City-owned site would include residential space, hotel rooms, retail and open space that could host the City's annual ice skating rink. ("Panel Picks Design for Santa Monica's 'Dream Site,'" July 15)

In July, the design won out over two others, drafted by major developer teams and reviewed by an inter-departmental panel of City staffers. On Tuesday, the Council will take its first look at MPC's proposal.

Considering the variety of uses proposed for the City site, Holbrook thought a market across the street would be a nice fit, serving as a place where residents could grab a snack or visitors could wander after ice skating.

And if plans to turn the building into a marketplace are realized, the public will have access to the interior of the building, ameliorating concerns of some conservationists.

Some have worried that if the building were used for something like private offices, public access to the former lobby would be limited.

Last summer, many in the community protested the US Postal Service's decision to relocate the Downtown Santa Monica post office to a remodeled sorting facility at Seventh Street and Olympic Boulevard.

Nonetheless, the USPS went forward with the relocation, shuttering the New Deal-era building at the end of June as part of a nation-wide plan to sell off the Federal agency's most valuable real estate holdings to help stem an ever-increasing budget deficit.

On Tuesday, the Council will vote on the whether to approve the preservation covenant drafted by the USPS, paving the way for the eventual sale of the building.

“My understanding that the building won't go on the market until the covenant is settled,” Lemlein said.

Warfel is no stranger to development in Downtown Santa Monica. MPC had originally hoped to work with AMC to replace a City-owned parking structure south of Arizona Avenue on Fourth Street with a 70,000 square foot theater complex.

AMC pulled out of the deal late last year, however, because the movie house giant was concerned it would not be able to make up the costs of construction.

The project is currently listed as “on hold by applicant or pending redesign” on the City's website.