PCD:SF:AA:f:\administration\share\civctr\smplace\da\council preview\sr6.doc

Council Meeting: January 25, 2005 Santa Monica, California

TO: City Council / Redevelopment Agency

FROM: City / Agency Staff

SUBJECT: Proposed Santa Monica Place Development Agreement, Relative Timing of Consideration of the Civic Center Specific Plan, which includes Santa Monica Place, Resolution of Intention to Consider Amending the Civic Center Specific Plan Update and Land Use and Circulation Element, Direction on Downtown Redevelopment Plan Update

INTRODUCTION

This report recommends that the City Council/Redevelopment Agency give direction regarding a development agreement with the Macerich Company for redevelopment of Santa Monica Place, give direction regarding the timing of consideration of adoption of the Civic Center Specific Plan update which includes the Santa Monica Place site, adopt a resolution of intention to consider the Civic Center Specific Plan update and associated amendment of the Land Use and Circulation Element, and set a hearing to consider amendment of the Downtown Redevelopment Plan.

BACKGROUND

In the late 1970s, the Santa Monica Redevelopment Agency entered into a Disposition and Development Agreement for the creation of Santa Monica Place, an indoor mall designed to rejuvenate Santa Monica’s struggling downtown. The project was subsequently challenged by referendum, approved by Santa Monica voters and opened in 1980. In 1990, the mall underwent a complete remodel and in 1999 was acquired by the Macerich Company, an owner/operator of shopping centers that is headquartered in Santa Monica.

Multiple entities have ownership or long-tern leasehold interest in the Santa Monica Place site. The parking structures are owned by the Redevelopment Agency, the Macy’s site is owned by a Cincinnati limited partnership under long-term lease to Macy’s, the Robinsons-May site is owned by Macerich under long-term lease to Robinsons-May, and the remainder of the site is owned by Macerich. Like many other indoor shopping malls developed in the 1970s and 1980s, Santa Monica Place has struggled over the past few years to attract tenants and patrons. At present, the General Plan establishes certain development parameters for the site, including a height limit of 84 feet.

In 2001, the City embarked on a comprehensive update to the Civic Center Specific Plan (CCSP). During initial preparation of the Specific Plan update, one of the critical issues was how to create stronger links between the Civic Center area south of the Santa Monica Freeway and the larger downtown community to the north. Santa Monica Place was identified as a major barrier to enhancing this connection due to its multi-block, interior-oriented configuration which discourages movement between the Bayside and Civic Center Districts. During the same period, the Macerich Company approached the City about its desire to reinvest in the enclosed shopping mall. As a result, on November 13, 2001, the City Council authorized the inclusion of Santa Monica Place in the draft update to the Civic Center Specific Plan. During the following months, Macerich representatives, staff and consultants worked to prepare a reuse plan for public consideration.

In June 2002, the City Council, Civic Center Working Group and Promenade Uses Task Force met jointly to review the proposed redevelopment master plan for Santa Monica Place. The plan included removal of part of the mall structure to reinstate Third Street as a pedestrian connection between Broadway and Colorado, adaptive reuse of the upper levels of the remaining portions of the mall structure for offices and restaurants, and replacement of the two above-grade parking structures with underground parking, street-level retail and restaurants, and upper-level residences. The plan included a range of potential housing development options on the parking structure sites ranging from 150 to 450 residences with associated height and massing scenarios. The plan presumed that the separately controlled Macy’s and Robinsons-May department store sites would not be included in the redevelopment project.

The draft CCSP, released for public review in late 2002, provides policies for the development of the Civic Center area, including Santa Monica Place (Attachment B). The draft Plan provides for up to 350 residences on the Santa Monica Place parking structure sites with a height limit (85 feet) that is similar to the Land Use Element requirements (84 feet by site review).

In 2003, the City began preparation of an Environmental Impact Report (EIR) assessing the draft CCSP. The draft EIR was released for public review in June 2004, comments were addressed and the Final EIR was completed in October 2004 but is not yet certified. In order to provide the most conservative and sensitive analysis, the EIR examined the upper-limit program of 450 residences at Santa Monica Place, replacement of the existing retail and restaurant program, and 85,000 square feet of offices, and modeled shade and shadow impacts for heights of 56 feet, 85 feet and 160 feet on the Santa Monica Place site, similar to the three housing scenarios considered by Council in June 2002. Attachment A summarizes the project history.

Concurrent with preparation of the EIR, Macerich representatives worked with staff to develop a project proposal within the standards articulated in the draft CCSP. Ultimately, Macerich proposed a project with building heights greater than what was studied in the EIR or proposed in the Draft CCSP, which Macerich considered necessary to maximize housing on the site, provide for more light, air and open space, and make the project financially feasible.

SANTA MONICA PLACE PROPOSAL

In November, 2004, the Macerich Company submitted an application for a development agreement to redevelop Santa Monica Place (see Attachment C). The proposed Santa Monica Place redevelopment includes complete demolition of the existing structures, including the parking structures, and replacement with a mixed-use project that includes:

§ Retail and restaurant program equivalent in size to the existing program (including food court);

§ 450 rental and for-sale mixed-income multifamily residences, organized in four buildings, three of which would extend to 300 feet in height;

§ 14 live-work residences;

§ Approximately 70,000 square feet of offices; and

§ All parking underground.

As part of the project, Macerich has identified a variety of public benefits, including:

§ An extension of Third Street as an open-air, pedestrian promenade between Broadway and Colorado, linking the Downtown and Civic Center districts;

§ 45 units of affordable housing;

§ A publicly accessible park on over two acres, elevated to provide ocean views;

§ Landscaped “green roof” open space designed to reduce storm water runoff into Santa Monica Bay;

§ A community room;

§ Publicly accessible restrooms; and

§ Opportunities for increased sales, property and business license taxes.

The proposed project falls well within the 3.5 floor-area ratio maximum permitted by the Land Use Element. However, the proposed project represents a departure from the urban design approach that has governed development in Santa Monica since adoption of the Land Use Element in 1984. These standards provide for lower-scale buildings with heights of no more than 84 feet in the Downtown Core and floor-area ratios that allow for maximization of the building volume within height, building envelope, and upper-level stepback requirements. The proposed project represents an alternative urban design approach whereby the majority of the site is covered by low-scale buildings but contains focused elements that reach much greater heights. Macerich indicates that such an approach is intended to enhance air and light within and adjacent to the site, increase the amount of landscaped open space and reduce the perceived bulk of the project as a whole, while resulting in a modification to the Santa Monica skyline.

TIMING OF REVIEW

As proposed, the project is inconsistent with both the Draft CCSP and the current Land Use Element because of proposed heights of the residential and office buildings. As a development agreement must be consistent with the General Plan and any applicable specific plans, the project would require plan amendments and environmental review beyond what has been completed for the Draft Specific Plan. As a result, staff is seeking direction from Council on the process for review and consideration of the project relative to the timing of consideration of EIR certification and CCSP adoption. There are several approaches that the Council could take, including:

· Proceed with negotiations on the DA and delay action on the EIR and CCSP update until the general parameters of an acceptable Santa Monica Place redevelopment proposal are established, and then prepare any necessary plan amendments and additional environmental review. This approach is expected to delay consideration of CCSP adoption by approximately six months. The primary risk of such an approach is that it may impact the timing of the proposed Village housing and open space, particularly if the City wishes to give the Village development team certainty with respect to completion of environmental review.

· Indicate to the applicant that Council prefers not to enter into a Development Agreement until completion of the comprehensive update to the Land Use Element. This approach would ensure that should development intensities and the City’s commitment to creation of housing opportunity be modified through the Land Use Element update process, the project could be reviewed in light of the changed objectives. Such an approach could delay any consideration of redevelopment of Santa Monica Place by at least two years while the update to the Land Use Element is prepared. One risk of significant delay is that the mall may continue to lose its position in the market and find it more difficult to attract lost customers, thus affecting the success and vitality of the broader Downtown. Another risk of delay is that Macerich could choose an alternative investment in an interior remodel of its property that would not require extensive discretionary approvals and likely would not contribute significant public benefits such as efficient and convenient underground public parking, replacement of blank-wall streetscape with pedestrian-oriented uses, new mixed-income housing resources to meet the City’s housing goals, a broadening of activity within the two single-use blocks, and reinstatement of Third Street as a publicly accessible open space connecting Downtown with the Civic Center.

· Consider the CCSP update and a development agreement for Santa Monica Place on parallel paths. Any necessary plan amendments or supplemental environmental review could be considered in concert with the development agreement. As Macerich has indicated its desire to host a series of community workshops to solicit public comments on the project, as well as work with the Planning Commission and City Council, staff recommends this parallel-path approach in order to ensure appropriate consideration of the Santa Monica Place redevelopment and avoid delay to the Village housing and open space. The process of shaping the project, conducting independent economic analysis and negotiating a development agreement could be completed in approximately six months.

NEGOTIATING PARAMETERS

If the Council directs staff to proceed with an economic analysis of the proposal and alternatives and to commence negotiations, staff is seeking guidance from Council on the focus of negotiation and community benefits. Potential guidelines could include:

§ Ensure a broad range of housing types

§ Maximize public parking

§ Maximize public-oriented open space

§ Design at a human scale with strong pedestrian-orientation and sidewalk-oriented activity

§ Minimize heights generally and demonstrate clear advantages of increased heights, if recommended

§ Ensure extensive sustainable design and construction

§ Ensure integration with broader transit, parking and circulation strategies

§ Ensure a project that is economically sustainable for the applicant and the City.

Santa Monica Place is governed by an existing Disposition and Development Agreement. At a later date, the Redevelopment Agency will be requested to give direction to staff on the terms of an amended and restated Disposition and Development Agreement with Macerich to address the redevelopment of the site, including the provision of parking.

REVIEW PROCESS

If Council favors analysis and negotiation of a development agreement, staff is seeking direction on the review process and, given the complexity of the proposed project, recommends a modified approach. The Municipal Code requires the Planning Commission to formally review a proposed Development Agreement and make a recommendation prior to Council consideration of approval. Applicants are typically encouraged to host a public meeting prior to Planning Commission or Council review. In this case, Macerich has proposed to hold multiple public meetings to review the project. Staff would be negotiating with the assistance of experts in redevelopment, housing and project economics. Because of the scope of this project, negotiations would take approximately six months. Instead of presenting a proposed project to the Planning Commission and Council at the conclusion of negotiations, staff recommends an interim meeting with the Planning Commission and Council within three months of the start of negotiations. This “check-in” will allow the public, Planning Commission and City Council the opportunity to review the project’s general parameters and economics, discuss alternatives and trade-offs, and review progress in light of the Council’s initial direction. After the check-in, staff and the applicant will finalize the development agreement and associated documents for formal review. Attachment D provides a proposed timeline of this approach.

PLANNING COMMISSION RECOMMENDATION

At its December 15, 2004 and January 5, 2005 meetings, the Planning Commission considered the Santa Monica Place proposal, including the timing of the proposal. The Planning Commission recommended that Council direct staff to delay initiation of Development Agreement negotiations until adoption of the updated Land Use and Circulation Elements and Civic Center Specific Plan. However, if the Council chooses to move forward with negotiations, the Planning Commission recommended that the project be required to conform to existing General Plan limitations of six stories and 84 feet.

RESOLUTION OF INTENTION

If Council supports moving forward with the adoption process for the Civic Center Specific Plan, a resolution of intention to officially begin the process is required. The resolution of intention identifies the comprehensive update to the CCSP as well as a discrete amendment of the Land Use and Circulation Element to reflect that development standards for the blocks that make up the Santa Monica Place site will be established by the Civic Center Specific Plan, rather than by the Third Street Mall and Downtown Core Specific Plan, as originally identified in the 1984 Land Use Element.

The Municipal Code prescribes a 90-day period for the Planning Commission to make a formal recommendation on the Specific Plan, unless a different period is established by the City Council. Staff recommends that the Council adopt the attached resolution which establishes a 150-day period in order to provide sufficient time for the Civic Center Working Group and the Planning Commission to meet and consider their recommendations on the CCSP prior to consideration by the Council. Council may also wish to ask the Planning Commission to identify a member to participate on the Civic Center Working Group. The six-member Civic Center Working Group originally included a member of the Planning Commission. When that member resigned from the Working Group, the Planning Commission chose not to designate an alternate member and the City Council authorized the Arts Commission to appoint a member at that time. If desired, the Council could authorize the Working Group to grow to seven members to accommodate both the Arts Commissioner and a Planning Commissioner.

Because Santa Monica Place is located within the Downtown Redevelopment Project Area, consistency between the CCSP and Downtown Redevelopment Plan (and any future development) is necessary. As the draft CCSP proposes housing on the Santa Monica Place site, a discrete amendment of the Redevelopment Plan would be needed to include housing as a permissible use.

BUDGET / FINANCIAL IMPACT

Giving direction on these issues will not have an immediate budget impact. Local revenues generated by Santa Monica Place have gradually declined commensurate with sales activity at the mall. A successful repositioning of the property is expected to have a long-term beneficial impact on the local economy and the City’s revenues.

RECOMMENDATION

It is recommended that the City Council:

1. Direct staff regarding consideration of a development agreement with the Macerich Company for redevelopment of Santa Monica Place;

2. Direct staff regarding relative timing of consideration of the Macerich proposal and consideration of the adoption of the CCSP update which includes Santa Monica Place;

3. If the City Council favors beginning economic analysis and negotiation of a development agreement, identify the focus of the negotiations, proposed community benefits, and process for consideration of the Development Agreement;

4. Adopt a resolution of intention to adopt an amended and restated Civic Center Specific Plan and an amendment to the Land Use and Circulation Element, and

That the City Council / Redevelopment Agency:

5. Set a joint public hearing date for consideration of the proposed amendment to the Downtown Redevelopment plan to coincide with consideration of adoption of the Civic Center Specific Plan update and authorize staff to implement the public notice requirements and to prepare and transmit the proposed Plan Amendment, the report required by Section 33352 of the Community Redevelopment Law, and the proposed Plan Amendment and related documents.

Prepared by:

Gordon Anderson, Assistant City Manager

Suzanne Frick, Director, Planning and Community Development

Andy Agle, Assistant Director, Planning and Community Development

Jeff Mathieu, Director, Resource Management

Miriam Mack, Economic Development Manager

Tina Rodriguez, Redevelopment Administrator

Attachments: