City Council Meeting: September 11, 2012

Agenda Item: 7-A 

To:                   Mayor and City Council 

From:              David Martin, Director, Planning and Community Development

Subject:          NMS Properties, Inc. proposes Development Agreement No. 11DEV-012 to convert 3,038 square feet of non-usable space into four residential units within an existing mixed-use building at 1548 6th Street.

 

 

Recommended Action

Staff recommends that the City Council:

 

1)    Introduce for first reading an ordinance adopting Development Agreement No. 11DEV-012.

 

Executive Summary

The applicant, NMS Properties, Inc., is requesting the approval of a Development Agreement (DA) to convert 3,038 square feet of non-usable space into usable floor area for the construction of four new residential units (three two-bedroom units and one one-bedroom unit) within an existing six-story, mixed-use development that contains 50 residential units and approximately 900 square feet of ground floor commercial space in the Downtown Commercial (C3) District. The existing building was previously approved through Administrative Approval (04AA-027) in September 2006. The proposed four units would be located within the existing building envelope in an area on the third floor that was designed as non-usable space – part of which would have been vaulted ceilings for the residential units on the floor below.

 

The integrated project would increase the FAR from 2.0 to 2.2, which exceeds the FAR limitation in the Zoning Code of 2.0. Therefore, a DA is required and project compliance would be limited to the LUCE. In the Downtown Core and Downtown District, the LUCE incorporates by reference the height and FAR adopted in the 1984 Land Use Element, which allows for a FAR of 3.0. As a result of the Interim Zoning Ordinance, the proposed changes to the approved original project must be made through a DA. Given the limited scope and size of the project modifications, the level of community benefits proposed for this project is less than that negotiated from projects involving complete site development.

 

The community benefits that have been negotiated as part of the DA include the following:

  • A Transportation Demand Management (TDM) plan with measures applicable to both the commercial and residential components of the project. (This plan was not a requirement of the previous administratively approved project).

·         One very low income residential unit.

·         A monetary traffic impact fee contribution.

·         Shared parking.

 

The following issues should be considered by the City Council in its review of the proposed project:

  • Whether the proposed FAR is appropriate and compatible with the neighborhood and subject site.
  • Whether the proposed plan and community benefits are consistent with the objectives, goals, general land uses, and programs specified in the General Plan.

 

This project was continued from the June 26, 2012, City Council meeting along with projects located at 829 Broadway and 1447 Lincoln Boulevard due to concerns regarding the implementation of unbundled parking in relation to deed restricted affordable housing units. The 829 Broadway and 1447 Lincoln Boulevard have been withdrawn by the applicant. However, this project, located at 1548 6th Street, differs from the other two projects as it is a 100 percent market rate project, with the exception of one affordable unit proposed as part of this Development Agreement.

 

All four of the new units to be added within the existing building, including the affordable unit, are proposed without additional parking being provided, based on the TDM Plan and the close proximity to public transit, including the future Expo station. The property owner would unbundle the parking through this Development Agreement. As parking becomes available, the affordable unit tenant(s) would have first priority to one available space at no cost above the set rent for a very-low income unit. If the tenant of the affordable unit opts not to have a parking space, the property owner may lease that space to someone else, who may or may not reside in the building.

 

The integrated project would contain 54 residential units, 900 square feet of retail use, and 102 parking spaces on-site. Staff believes the existing residential parking spaces on-site would be sufficient to accommodate the four new units.

·         2 singles: 2 x 1 = 2 spaces

·         18 one-bedrooms: 18 x 1.5 = 27 spaces

·         30 two-bedrooms: 30 x 2 = 60 spaces

·         Guests: 50 x 1/5 = 10 spaces

·         Total Residential Parking needed = 99 spaces (for 50 existing units)

 

The four proposed units include three two-bedroom units and one one-bedroom unit.

 

Background

This project was continued from the June 26, 2012, City Council meeting along with projects located at 829 Broadway and 1447 Lincoln Boulevard due to concerns regarding the implementation of unbundled parking in relation to deed restricted affordable housing units. This project differs from the other two projects because it is a 100 percent market rate project, with the exception of the one affordable unit proposed as part of this Development Agreement.  There is no parking provided for any of the proposed units.  Further, if parking becomes available, per the terms of the Development Agreement, the affordable unit would be offered the parking space with no increase to the deed restricted affordable rent.  After the affordable unit’s parking request is satisfied, any excess parking spaces could be unbundled.  This situation differs from the Council’s prior concern, which related to deed restricted affordable units constructed with code required parking, and whether tenants who forego these parking amenities would receive compensation or a rental adjustment.

 

The existing building was approved in September 2006, through the Administrative Approval process, which allowed for a six-story, mixed-use building with 50 residential units and 900 square feet of commercial tenant-space. The building contains 102 parking spaces in a subterranean garage. The approved floor area ratio (FAR) was 2.0. The building received a Certificate of Occupancy in August 2010, and is currently occupied with residential and commercial tenants.

 

The approved third floor plan design included a 3,038 square-foot area of non-usable space. Portions within that area were to be open to the units below. However, when the building was constructed, the third floor was not built with the openings and the entire 3,038 square feet was considered non-usable space.

 

The subject Development Agreement application was subsequently filed by the applicant for the additional four units within the 3,038 square feet of non-usable space. On March 21, 2012, the Planning Commission reviewed the proposed Development Agreement.

 

(  Indicates area approved to be open to below.)

 

The four units proposed would be located within the area of the building approved as non-usable space. All of the units would be located within the existing building envelope and would not require any changes to the exterior of the building.

 

Development Agreement Overview

 

A Development Agreement is a contract between the City and a developer that authorizes the type and amount of development that may occur within a specific period of time. Development Agreements typically provide developers with guaranteed development rights in exchange for public benefits. A Development Agreement must comply with the General Plan, but can establish different development standards than provided by zoning regulations.

 

Discussion

Project Description

The applicant is requesting the approval of a Development Agreement (DA) to convert 3,038 square feet of non-usable space within an existing building into habitable floor area for the construction of four new residential units. This would increase the FAR from 1.99 to 2.2, which exceeds the FAR limitation in the Zoning Code of 2.0. Therefore, a DA is required and project compliance for height and FAR would be subject to the LUCE. The LUCE does not currently identify a limitation for FAR in the Downtown Core and Downtown District, and incorporates by reference the 1984 Land Use Element of the General Plan, which allows a 3.0 FAR.

 

The existing project contains 50 residential units and with the addition of four (3 2-bedroom units and 1 1-bedrrom unit) new units, the integrated project would contain 54 residential units. The existing 900 square feet of retail tenant space would remain the same. As stated above, this project does not require any changes to the exterior of the building.

 

Staff believes the conversion of space in the existing building is appropriate as the added units would occur within the Downtown and in close proximity to the 4th Street transit station. The LUCE Policy D7.7 (Downtown District) encourages residential units with a diversity of types, forms, sizes, tenure and affordability for all income levels. The applicant has proposed three two-bedroom units at market rate and one one-bedroom unit that will be for a very low income tenant. Furthermore, through the DA process, the proposed community benefits would otherwise not be possible for this project as it was previously approved administratively.

 

(Proposed 3rd floor plan)

 

Parking

The integrated project requires 109 parking spaces by code with the addition of four residential units. The existing building contains 102 vehicle parking spaces within a subterranean garage, which complied with the parking requirement for the original project. In order to accommodate the parking for the four new residential units, the developer would lease four residential units to persons without a parking space. The developer would also offer to lease the parking spaces in the integrated project to the future residential and commercial tenants separately from their respective leases for residential units and leases for the commercial spaces (unbundling). Existing tenants’ leases would not change; the separation would occur as leases and tenants turn over.

 

Notwithstanding the requirement of leasing four residential units to persons without a parking space, each of the tenants in the four residential units without parking may lease from the developer any unbundled parking spaces that may become available for use by others from time to time.

 

As part of the negotiation for the DA, the applicant also proposes to include a minimum of 108 bicycle parking spaces for residents in the subterranean garage and six bicycle parking spaces for public use in front of the building on 6th Street.

 

The combination of unbundled parking and on-site bike parking, along with the building’s proximity to the 4th Street light rail station, justifies the reduction of code-required parking. Therefore, the applicant would not be required to construct additional parking spaces or lease spaces off-site; rather, the developer would utilize the existing 102 parking spaces for the integrated project by allowing the parking demand to determine the amount of parking needed.

 

Proposed Development Agreement

The following is a summary of the proposed Development Agreement, which is included as Attachment B.

 

Article 1

Definitions

Defines key terms contained in the Development Agreement

 

 

 

Article 2

Description of the Project

Describes the project components including vested rights, building design, height, parking, permitted uses, development standards, community benefits, and transportation demand management.

 

 

 

Article 3

Construction

Discusses construction mitigation and permitted hours.

 

Article 4

Project Fees, Exactions, Mitigation Measures and Conditions

Sets forth requirements of the project in terms of fees and exactions and project conditions.

 

 

 

Article 5

Effect of Agreement on City Laws and Regulations

Sets forth the laws and regulations governing the proposed project.

 

 

 

Article 6

Architectural Review Board

Sets forth the requirements for Architectural Review Board approval of the project.

 

 

 

Article 7

City Technical Permits

Describes the requirement of the City in processing building permit and other technical permit applications needed for the construction of the project.

 

 

 

Article 8

Amendment and Modification

Sets forth the conditions under which the Agreement may be modified.

 

 

 

Article 9

Term

Sets forth the term of the Agreement.

 

 

 

Article 10

Periodic Review of Compliance

Sets forth the requirements for the periodic review of the Agreement with respect to compliance with its provisions.

 

 

 

Article 11

Default

Outlines the circumstances, cure, and consequences of a breach of the Agreement by either party.

 

 

 

Article 12

Mortgages

Sets forth the rights of a lender on the property.

 

 

 

Article 13

Transfers and Assignments

Ensures that the Agreement remains in effect upon the transfer and/or assignment of property.

 

 

 

Article 14

Indemnity to City

Outlines the Developer’s and City’s rights and obligations in the event of a claim for damages.

 

 

 

Article 15

General Provisions

A list of provisions common to all Agreements.

 

 

 

 

Community Benefits

The applicant and City staff negotiated the following community benefits:

 

Transportation Demand Management (TDM) Plan – The TDM Plan, which was not a requirement of the previous administratively approved project, shall include the following components:

 

·                     Average Vehicle Ridership (AVR): The developer shall use its commercially reasonable efforts to achieve an AVR for the commercial occupants of at least 1.75 by the second year after issuance of the Certificate of Compliance for the integrated project. 

·                     Transportation Information Center (TIC): The TIC will include information for employees, visitors and residents about local public transit services and bicycle information.

·                     TDM Website Information: The developer and tenants shall be required to make available via website the information provided at the TIC.

·                     On-site Information Program: At least once a year, developer shall hold an informational meeting and shall invite all commercial tenants and residents of the building to discuss transportation alternatives, including guidance on public transit routes and coordinating vanpool and carpool formation.

·                     Unbundled Parking: After the DA is executed, developer shall offer to lease parking to residential and commercial tenants separately from their respective leases.

·                     Publically Accessible Bicycle Racks: The project shall contain bicycle racks for not fewer than six bicycles at locations that allow the public use for the ground floor neighborhood serving retail uses.

·                     Residential Tenant Bicycle Racks: The project shall contain bicycle racks for no fewer than 108 bicycles, which racks shall be for the exclusive use of the residential tenants of the project.

·                     Transportation Management Association (TMA): Developer shall be required to participate in a TMA, if one is formed in the area that includes the property.

·                     Bicycle Sharing Area: As shown on the plans, Developer shall provide a visible and accessible location on site for a bicycle sharing program station in conjunction with any bicycle sharing program instituted by the City or another operator.

 

Additional Very Low Income Unit

The developer would provide one Very Low Income Unit as part of the project. This is considered a community benefit in that the required number of Very Low Income Units to be provided pursuant to the City’s Affordable Housing Productions Program is ten percent (10%) of the total number of units, which is four-tenths (0.4) of a unit. In such case, the developer could choose to pay a cash fee to the City for the fractional unit. Therefore, the commitment by the developer to provide one Very Low Income Unit constitutes an additional community benefit. The developer would not only provide an entire affordable unit (instead of the cash value of a fractional unit); this affordable unit would also be provided within the project and thus create a new affordable unit for use by low income residents of the City.

 

 

 

 

Traffic Impact Fee

On or before the issuance of a Certificate of Occupancy, the developer would pay to the City a traffic impact fee of $75,000.00. (This is consistent with the Planning Commission recommendation discussed below.)

 

Shared Parking

The developer may make any unused on-site parking available for monthly lease at market rate to third parties in the surrounding area in need of parking.

 

Planning Commission Action

On March 21, 2012, the Planning Commission recommended that the City Council approve the Development Agreement with the specific project recommendations for the City Council’s consideration:

·         Increase the traffic impact fee – staff supports and the applicant has agreed to this recommendation. The applicant previously proposed a fee payment of $25,000.00.

·         Remove the “senior” restriction from the very low income unit – The applicant’s original proposal was to restrict the very low income unit to senior occupancy. Staff supports and the applicant agrees with the Planning Commission’s recommendation as the affordable unit will not be limited to a particular demographic.

 

General Plan Consistency

1548 6th Street is located in the Downtown Core land use designation and within the LUCE Downtown District. The LUCE vision for the Downtown Core maintains and enhances the Downtown area as the heart of the City and as a thriving, mixed-use urban environment in which people can live, work, be entertained, and be culturally enriched. The Downtown Core designation and District allows for the broadest mix of uses and activities and seeks to provide a substantial number of new housing units in mixed-use projects.

 

The existing building and integrated project is consistent with the objectives, policies, general land use and programs specified in the General Plan and any applicable specific plan, in that the addition is consistent with LUCE Policy D7.7 of the Downtown District as the addition to the existing project will include residential units with a diversity of type, forms, sizes, tenure, and affordability for all income levels. Specifically, the addition to the existing building includes three two-bedroom market-rate units and one one-bedroom very low income unit.

 

Alternatives

In addition to the recommended action, the City Council could consider the following with respect to the project:

1.    Continue discussion for analysis of additional options.

2.    Decline to enter into the Development Agreement, which would allow the building to remain as authorized by its Administrative Approval and without the provisions of the negotiated community benefits.

 

Environmental Analysis

The Planning Commission finds that the project is exempt from the provisions of the California Environmental Quality Act pursuant to CEQA Guideline Section 15301, Class 1 (e) (2), which allows for additions to existing structures provided that the addition will not result in an increase of more than ten thousand square feet if:

(A)         The project is in an area where all public services and facilities are available to allow for maximum development permissible in the General Plan and

(B)         The area in which the project is located is not environmentally sensitive.

 

The project includes the addition of four residential units within an existing building envelope and an increase of 3,038 square feet.

 

Financial Impacts & Budget Actions

Staff costs for the Development Agreement process are paid from application fees.  There is a wide range of public benefits that the developer will be required to provide pursuant to the Development Agreement negotiations. There are no immediate Budget/Financial impacts associated with actions recommended in this report.

 

 

Prepared by: Russell Bunim, Associate Planner

 

 

Approved:

 

Forwarded to Council:

 

 

 

 

 

 

David Martin, Director

Planning and Community Development

 

Rod Gould

City Manager

 

 

Attachments:

 

A.   Draft Ordinance Adopting Development Agreement 11DEV-012

B.   Development Agreement Findings

C.   Proposed Development Agreement

D.   Public Notification

E.   Project Plans