City Council Report

City Council Meeting: May 13, 2014

Agenda Item: 8-A

To: Mayor and City Council 

From: Marsha Jones Moutrie, City Attorney

Subject: Hines Development Agreement – Decision on Referendum

Recommended Action

Staff recommends that the City Council ("Council") hold a public hearing to reconsider and to determine whether to repeal Ordinance No. 2454 (the Hines Development Agreement) or to submit the question of repealing the ordinance to the voters. If Council sends the question to the voters, staff recommends that the measure be placed on the ballot of the November general election and that Council direct staff to prepare the necessary resolutions.

Executive Summary

On February 11, 2014, Council adopted Ordinance No. 2454 which is a development agreement with Hines 26^th Street LLC authorizing the construction of a large, predominantly commercial project at 1681 26^th Street. On March 11, 2014, a referendum petition was filed with the City Clerk ("Clerk) protesting adoption of the ordinance. On April 22, 2014, the Clerk reported to the Council that the measure had qualified for the ballot. Because it qualified, the California Elections Code requires that the Council either repeal the ordinance or submit it to the voters, either at the next general election or at a special election.

If Council opts to submit the matter to the voters, staff recommends directing staff to prepare the resolutions necessary to place the matter on the ballot for the next general municipal election which is scheduled for November 4, 2014. Currently staff anticipates coming to the Council in June 2014, with the appropriate resolutions that will set that election. This item will be added to those resolutions if the Council decides to place the referendum on the November ballot. This approach would conserve staff time and public resources by saving the City the cost of a special election. That cost is estimated at approximately $200,000, while adding the measure to the November ballot would cost approximately $5,000.

Background

On April 11^th of this year, Council adopted as Ordinance No. 2454, a development agreement with Hines 26^th St. LLC for the construction of a 765,095 square foot, mixed use project at 1681 26^th Street. The predominant use of the project is creative office space (374,434 square feet). The project also includes 473 rental housing units, 25 artist work/live units, restaurant space (15,500 square feet), retail space (13,891 square feet), various publicly accessible outdoor spaces, and public streets that would run north-south through the project site.

On March 11, 2014 opponents of the project filed a referendum petition with the City Clerk. Signatures were gathered, and they were verified by the County Registrar. On April 22, 2014, the Clerk reported to Council that petitions had been signed by more than the requisite 10% of the City's registered voters. Thus, the referendum qualified for the ballot.

Discussion

The Council's choices are established and constrained by state law. Elections Code section 9237 provides that, once a referendum petition qualifies, "the effective date of the ordinance shall be suspended and the legislative body shall reconsider the ordinance." Elections Code section 9241 provides, in pertinent part, that "[i]f the legislative body does not entirely repeal the ordinance against which the petition is filed, the legislative body shall submit the ordinance to the voters, either at the next regular municipal election … or at a special election called for the purpose, not less than 88 days after the order of the legislative body." If a challenged ordinance goes to the voters, the Elections Code provides that it shall not be effective until approved by a majority of those voting.

The Elections Code also establishes certain consequences of repeal. It provides that, if the legislative body repeals the ordinance or if the voters vote against it, "the ordinance shall not again be enacted by the legislative body for a period of one year after the date of its repeal or disapproval." Section 9241. This provision of state law precludes adopting, within one year, another ordinance which is "essentially the same" as the challenged ordinance. Lindelli v. Town of San Anselmo, 4 Cal.Rptr.3d 453 (2003). In deciding whether the subsequent ordinance is essentially the same or different, the courts focus on the features that gave rise to the popular objection. Id.

Thus, under state law, the Council's immediate options are to: (1) reconsider and repeal the ordinance in its entirety; (2) if the ordinance is not entirely repealed, put the question of repeal on the ballot for the November general election; or (3) call a special election to occur between August 10, 2014 and November 4, 2014.

Staff recommends against the third alternative. It would require the City to bear the costs of a stand-alone election. And, this public expense seems unwarranted given the proximity of the general election.

As between the first two alternatives -- repealing the ordinance or submitting it to the voters at the general election – either process will fully and finally resolve the issue of whether the ordinance should be repealed. If Council favors a prompt resolution, then it may wish to decide the matter itself. On the other hand, Council may favor an election as the preferred means of settling a dispute that has divided the community.

If Council opts to send the matter to the voters, staff recommends a Council direction to prepare the necessary resolutions to place the matter on the ballot.

Next Steps

If Council places the issue on the November ballot, staff will return in June with election resolutions, including the language necessary to place repeal of Ordinance No. 2454 before the voters. If Council decides to call a special election, staff will also prepare the necessary resolutions, though perhaps sooner.

Financial Impacts & Budget Actions

There is no immediate financial impact or budget action necessary as a result of the recommended action. Staff will return to Council with estimates for placing the measure on a Special Election or Regular Election ballot. At this time, it appears that a Special Election would cost approximately $200,000; adding this measure to the November 4, 2014, Regular Election ballot would cost approximately $5,000.

Prepared by: Marsha Jones Moutrie, City Attorney

Approved:	Forwarded to Council:
Marsha Jones Moutrie, City Attorney	Rod Gould City Manager