II. Background

Verizon is a telecommunications carrier regulated by this Commission and engaged principally in the business of providing local exchange service in

California. Baxter is a subdivision of Baxter International, headquartered in Deerfield Illinois. Baxter Biosciences develops technology and products designed to treat hemophilia, immune deficiencies, and other blood-related disorders.

On September 14, 2001, Verizon and Baxter entered into an Agreement for Purchase and Sale (Sale Agreement) of Verizon's buildings and real estate located at One Verizon Way. The Agreement is targeted to close on July 1, 2002.

The Property that Verizon is selling includes two buildings on 40.49 acres of land located in the City of Thousand Oaks in Ventura County. The Property currently serves as Verizon's regional headquarters for general and administrative purposes. The primary building is a 426,000 square-foot, three-story structure that includes approximately 380,000 square feet of rentable space. The building was built in 1977-78 and is rated as Class A office space suitable for a corporate headquarters facility. The other building on the Property is a one-story, 2,100 square foot building, which houses Verizon's vehicle fleet maintenance services.¹ In addition, the Property includes approximately 1,250 outdoor surface parking spaces and landscaping.

In D.01-11-063, the Commission granted approval of a lease agreement (Lease) involving the use of the Property by Baxter pending Commission approval of the sale. The Lease allowed Baxter to occupy approximately 31,000 square feet of office space on the Property beginning on January 1, 2002. The Lease is set to expire on July 1, 2002, at which point it would be superseded by the Sale Agreement, assuming that closing has occurred. If the sale has not closed, Baxter has the option to extend the Lease and to rent approximately 230,000 square feet of additional space.