City Council Report and Redevelopment Agency Report

 

City Council Meeting: July 13, 2010

Agenda Item: 8-A

To:                   Mayor and City Council

                        Chair and Redevelopment Agency Members

From:              Andy Agle, Director of Housing and Economic Development

                        Eileen Fogarty, Director of Planning and Community Development

Subject:         Civic Center Village

 

 

Recommended Action

Staff recommends that the Redevelopment Agency:

1.  Approve amendments to the Civic Center Village Disposition and Development Agreement (DDA), provided as Attachment A, involving extending the period for the developer to obtain financing, close escrow and commence construction and,

 

2.  authorize the Executive Director to execute the DDA.

 

Staff recommends that the City Council:

1.    Approve a resolution of intent to amend the Civic Center Specific Plan (CCSP) to remove the Main Street Circle and

 

2.    Review the design changes proposed for approval by the Planning Director as a minor modification to the Civic Center Village Development Agreement (DA) and provide direction to staff, if necessary.

 

Executive Summary

The Civic Center Village (Village) development has been unable to obtain financing necessary to close escrow and commence construction since it was approved by the City Council and Redevelopment Agency in 2008.  The developer (Related) has requested an extension of the Schedule of Performance period not to exceed 24 months, with commencement of construction to occur no later than August 2012.  Additionally, minor modifications to the approved design have arisen during the course of preparing the detailed plans for ARB review.  The Director of Planning and Community Development has the authority to approve the design changes as minor modifications to the DA, and staff is using this opportunity to inform Council of the design changes.  Finally, initiating the process of removing the Main Street Circle from the CCSP will facilitate land dedication and easement issues related to RAND and the Village.

Background

The Civic Center Village property comprises approximately 3.7 acres and will enhance the Civic Center area with up to 324 residences (including 160 that will be affordable to low-income households, including families and artists), public open space, an extension of Olympic Drive, public art and sustainable design.  The City Council approved the Development Agreement for the Civic Center Village on May 13, 2008 and the Redevelopment Agency approved the Disposition and Development Agreement (DDA) on June 10, 2008.

 

Discussion

DDA Extension

The terms of the DDA between the Agency and developer, Related/Santa Monica Village, LLC (Related), establish a Schedule of Performance reflecting milestones to be achieved by Related for the Village development.  One milestone involves obtaining financing for the Village by July 2010.  Related has requested an extension not to exceed 24 months for the financing milestone due to the continued inability to obtain construction financing in the current economic environment.  As consideration for granting the requested extension, Related has agreed to revise the DDA’s existing profit-sharing participation formula. 

 

The existing participation formula is proposed to be modified in two ways.  First, the existing formula provides that the Agency will receive 30 percent of gross condominium sales (Parcel A and C) that exceed defined thresholds measured by per square foot of building area.  Related proposes to lower the threshold at which the Agency would begin sharing this 30/70 split in the condominium sale proceeds.  Additionally, a second participation threshold would be created above which the Agency would receive 50 percent of condominium sale proceeds.  The existing and proposed thresholds are as follows:

 

 

DDA Participation Formula for Agency

 

Existing

Proposed

Parcel A

30% share of sales revenue

$1,351 +

$1,229 to $1,390

50% share of sales revenue

N/A

$1,391 +

Parcel C

30% share of sales revenue

$1,437 +

$1,241 to $1,403

50% share of sales revenue

NA/

$1,404 +

 

 

Staff and the City’s real estate economics consultant, Keyser Marsten Associates, believe Related’s extension request is warranted given the continued challenges in construction financing, as well as the weak character of real estate markets.  Staff and the City’s advisors also recommend the proposed participation formula as a fair and reasonable developer concession in conjunction with an extension of the Schedule of Performance.

 

Additional Changes to the DDA and DA

The construction of the extension of Olympic Drive by Related from Main Street to Ocean Avenue is a public benefit negotiated as part of the DA.  The First Amendment to the DDA acknowledges that as a result of the 2-year extension, assumptions regarding the development of the Olympic Drive extension are no longer valid in that the extension may not be constructed in time to reduce significant construction impacts of projects planned for the Civic Center Village and adjacent Downtown areas, including the Expo Line and Esplanade Projects (the “Adjacent Infrastructure Projects”). Accordingly, the DDA has been revised to include provisions (i) for Related and Agency to cooperate in good faith to mitigate the impacts of the Adjacent Infrastructure Projects by coordinating the development of the Village with the Adjacent Infrastructure Projects and executing any necessary amendments to the DDA, DA and/or the Lease Agreement to effect such mitigation and coordination; and (ii) for Related to release the City and Agency from any claims resulting from any delays to the Schedule of Performance resulting or arising from the Adjacent Infrastructure Projects.

 

DA Minor Modifications for Design

As Related has worked through the more detailed technical building requirements associated with development of the Civic Center Village, certain design changes have become necessary.  The design changes are illustrated in Exhibit B.  Related and its designers have developed minor revised design approaches for all sites associated with glazing, unit organization and landscaping. Site A contains some massing changes related to locations of balconies and bay windows, as well as an increase in ceiling height at the first level.  Site C has been reconfigured to allow for additional ground-floor open space, and to correct a structural design issue associated with the “transparent spine” at the rear of the building.  Although minor, Site C is the only site that incorporates changes more significant than is typical for the transition from concept to final design.  The original design proposed to create thin, horizontal walkways connecting three vertical elements at each level of the proposed housing.  Related’s detailed building code analysis revealed that the walkways must be fully enclosed.  While the change has eliminated the openings between the vertical elements, Related’s designers have responded by increasing the distance between each vertical element as they extend toward Ocean Avenue, requiring additional height at the back portion of the northern wing which does not exceed the previously approved maximum height of 96 feet. The additional height accommodates a pool structure and event space at the top level. Design changes also increase the commercial square footage and ceiling height at the ground level to ensure appropriate spaces to support pedestrian-oriented uses.

 

The design changes are within the parameters contained in the Development Agreement and associated CEQA analysis, and therefore may be approved by the Planning and Community Development Director as a minor modification to the Development Agreement.  Staff believes that the design changes have improved the overall aesthetics and orientation of the proposed buildings, including reducing the perceived mass of the buildings from Ocean Avenue.  As the changes involve some shifts in massing and heights, staff wanted to inform Council and seek any necessary direction prior to completing the minor modification approval process.  Following Council action, the minor modification language will be finalized, and the project will proceed to the Architectural Review Board for approval of the final details of building design, colors, materials and landscaping, as described in the approved Development Agreement. 

 

CCSP Amendment

The CCSP currently includes the creation of the Main Street Circle.  On March 24, 2009, the City Council held a study session to consider an integrated approach to planning and implementation of Civic Center and Expo Light Rail improvements.  The study session presented recommendations for further study and community dialogue, including elimination of the Main Street Circle as a public improvement that was no longer aligned with the broader priorities for the Civic Center due to its location in relation to the proposed overall circulation improvements in the Civic Center. On May 11, 2009, community members participated in a workshop to consider the integrated planning opportunities related to Civic Center / Expo.  At that meeting, there was broad community support for removing the Main Street Circle from the Civic Center Plan.

 

The proposed Main Street Circle has also created challenges with respect to the RAND Corporation.  As part of its Development Agreement, RAND is required to make a land dedication if, and when, the City chooses to move forward with construction of the Main Street Circle.  Following the events of September 11, 2001 and subsequent security studies, RAND and its clients, including the federal government, have become concerned about how best to secure the RAND facilities.  RAND has requested that in exchange for its land dedications necessary to support the development of the Civic Center Village, the City expeditiously process a discrete amendment to the Civic Center Specific Plan to remove the Main Street Circle.  Adoption of the Resolution of Intent attached in Exhibit C marks the first official step in that process.

 

Financial Impacts & Budget Actions

There are no direct budgetary impacts associated with Agency approval of an extension to the Civic Center Village DDA or execution of minor modifications to the Village DA. It is difficult to estimate potential additional revenues that may result from the proposed change in the participation formula in light of uncertainties in the real estate market. Amending Civic Center Specific Plan will involve minor consultant costs for environmental review which can be funded within the existing budget.

 

Prepared by: Jim Kemper, Housing Administrator

 

Approved:

 

Forwarded to Council:

 

 

 

 

 

 

Andy Agle, Director

Housing and Economic Development

 

Rod Gould

City Manager

 

 

Approved:

 

 

 

 

 

 

 

 

Eileen Fogarty, Director

Planning and Community Development

 

 

 

 

Attachments:

 

A.   Village DDA Amendments

B.   Village Design Modifications

C.   Resolution of Intent to Amend CCSP