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SR-414-002 (6) '/1,/ /OtJ-z- C/ED:EDD:EF:MM Redevelopment Agency Meetl~g 05/08/84 Santa Monlca, Callfornla To: Redevelopme~t Agency Board Wc-3 HAY - 8 IIN From: Clty Staff SubJect: Recomme~datlon to Authorlze the Executive Director to Negotlate al'!d Execute a Contract for FIpanClal Consultant and to Retaln the Servlces of Bond Counsel for the Issuapce of Tax Allocation Bonds INTRODUCTION ThiS report requests authorization to retalp a flpanclal consultant apd bond counsel to deslgn and prepare a tax allocatlon bOl"'d offerll'~g t:J fll'!anCe the completIon of lmprovements to the Oceaf' Park Redevelop,ment ProJect. If' addltlon, the report brlefly summarizes the estimated cost and sources of funds necessary to undertake these improvements. Recommerdatlons to authorlze the Executlve Dlrector to pegotiate and execute COl"tracts for flnanclal consul tal'!t serVlces and for bond cou~sel are preserted. BACKGROUND Or January 24 the Age~cy approved pIal'S for developmel"t :Jf Ol'!- and off-slte ProJect lmprovemepts; lpcludlng a work program for the developmert of 55 unlts of affordable housIng apd a beach lmprovement plan. The plan for the permaner.t Park had beer approved if' prIor CouPcil/Agepcy actlOl'!s. CounCIl dlrected staff to proceed with lmplemeptation of the affordable housIng program, the beach Improvement plan al'!d the on-sIte park. At that tlme tlA -3 MAY - 8 19&4 the Councill Agency was advised of the ~eed to bond current tax Increment proceeds to asslst l~ flna~cll'!g the proJect. Staff IS proposIng to begIn the process of IssuIng the bond and requests authorIty to retaIl'! a flrancIal consultant and bond counsel as the fIrst step In thIS process. DISCUSSION Development costs for the on-and off-sIte Improvements are estlInated to total $8.6 mIllion. Sources of funds to fll'~ance these Improvements include land sale proceeds ($2.1 mIlllor), developer payments ($2.0 mIllIon) ard bOI'!d proceeds (est. $4.5 - $5.5 mIllIon). Tax allocatloI'! bOI'!ds may be Issued by redevelopme~t ageI'!CleS under SectIor 33670 of the CalIfornIa Health and Safety Code to fund redevelopmel'!t actIvItIes. The code provIdes that tax Increment can be commI tted to repay the bop-ds. These berds may be Issued by the Agercy WIthout voter approval and do l'!ot have a lImIt set on the amount that can be borrowed. Current tax Increment reverues from Phase I of the Ocean Park Project are $810,000 per year. Prior dIScussIons With finanCIal consulta)"lt, iI'!dIcate that the Agency could borrow between $4.5 and $5.5 mIllIon on Its current tax II'!Crement reveI'!ue. The actual amount that could be borrowed IS dependent on the prevalllI'!g II'!terest rates at the time when bonds are fInally sold. FIrancIal COPsultant Agency staff revlewed the qualiflcatlo~s of the following fll"anCIal corsultll"g fIrms: (1) Call'-:!e, Gressil, MIdgley aI'!d Slater; Blythe, Eastman, Paire, Webber; (3) Barcroft, QtCOI'!nor, ChIltel" and Lavell; and (4) Sutro and Company. The fIrms were 2 evaluated based on their experlerce with bond Issuarces Involvlrg redevelopm en t agenc les, quallfl catIons and exper Ience of sta ff , serVIces offered and fee arrangemerts. Staff recommends that the Agency retaIn the financial consulting fIrm of Blyth, Eastman, PaIne, Webber to deslgr and Issue the bord offerIng. The Agency has worked with thIS fIrm on other bard offerIngs; most recently for the ISSUal"!Ce of lease revenue bonds for the parkIrg structures at Sarta MonIca Place. Staff has been satIsfIed WIth the qualIty of serVIce provided. SerVIces to be prOVIded by the cOT'sultant Include InVeStIgatlOl"! ard evaluatIon of fIr arCIng optIons, a1"!alyslS of proJect reve1"!ues and debt capaCIty, a plan for admInIstering bord funds prIor to dIsbursement, preparatIon of ar OffICIal Statement, and fInanCIal gUIdance corcernlng maturitIes of bonds, tlmirg of sale and securIty prOVISIons. A proposed scope of serVIces IS attached as Exhlbl t A. Bond Coursel The CIty Attorney requested proposals from the followIng three law firms: (1) Morrlsor> & Foerster, Los Angeles; (2) O'Melveny & Myers, Los Angeles; ard (3) OrrIck, Herrlngtor & SutclIffe, Sar Franclsco. Each of these fIrms has exterslve experIence In bard Issuances Involvlrg redevelopment agenCIes. A careful reVIew was conducted of each law fIrm'S proposal includIng lrformatlon regardl.ng fee arrangements, serVices to be prOVided, quall.flcatlons and experience of each firm's attorneys, OplOl.OnS or'! valIdation actions filed in conJunctIon wIth bond Issuances, 3 and knowledge of pe~dp'g lItIgatIon affectIng bond Issuances by redevelopment agencIes. The proposals were also dIscussed by telephone wIth representatIves from each fIrm. FOlIOWl!"g evaluatIon of these proposals, a deCIsion was reached to recommend the fIrm of Horrlsor & Foerester for bond counsel based upon the followlrg: 1. Assurances that senIor legal staff would be asslgred to the proJect. 2. DemorstratloP of exte!'slve knowledge regardlrg currel'!t Issues and lltlgatIor affectIng redevelopment bonds. 3. A proposed fee arrapgement based o~ ar hourly rate SUbject to a maXImum cap of $30,000, wIth fleXIble payment terms. AddItIonally, thIS fIrm dId not request an option to reregotlate theIr fee arrangement-at a future date. 4. The fIrm's excellent past worklP-g relatioY'.shIp wIth Blythe, Eastman, Paine & Webber, the fu'!ancIal cop-suItIng firm recommended herelP. 5. MorrIson & Foerster's Los Angeles offIce would be supervIsing all legal work. It IS antIcipated that by USIng a local fIrm, out of pocket expenses (e.g., travel and telephone expenses) could be kept to a mInImum. At the same tIme, MorrIson & Foerster's San Frapclsco offIce could eaSIly coordInate wIth Blythe, Eastman, PaIne & Webber's San FranCISCO off1ce If necessary. 6. WIllIam Kramer, the partner who would superVIse all legal work by the fIrm, has outsta~dlng credentIals and extensive experIence as bond counsel. He IS well-Informed on all pendIng 11 tlgatlol" copcernlPg bapd lssuapces in connectloP WIth redevelopment agenCIes a~d has already presented us WIth lnslghts as to the outcome of such lltlgatloP, H'cludlng practIcal suggestlo~s in the event of an adverse deCISIOI'!. We belIeve that the flrm of MorrlsoP & Foerster WIll rerder hIgh qualIty legal services IP thIS matter, hold legal fees and costs to reasonable lImIts, and keep us fully Informed on all relevant legal Issues. Services to be prOVIded by bond counsel Irclude draftIng all resolutIons, notlces and other legal documents required by CalIfornIa law for Issuance, sale apd dellvery of the bonds; adVIce and Instructlor'S to the Agency regardIng such Issuance, 4 sale and delivery, 1l"'cludp\g tax advice al"d drafting of the Non- Arbi tr age Cert 1 fic ate j ass 1 stu'!g Agency sta ff at'!d cOl"'sul tar.ts In preparatIon al"d reView of the OffIcial Statement to be used It" cot'!~ection WIth the sale of the bOl"ds; reView of a certIfIed transcrIpt of legal proceedIngs taker. by the Agency al"d the City for Issuance and sale of the bot"dsj and issuance of a legal opInion regardll"g the valIdity of the bonds a1"d exemptIon of Interest on such bonds from state at"d federal Income taxatIon. BUDGET/FISCAL IMPACT The fee for fl1"a1"Clal ccpsultant serVIces IS $27,500. Per the consultant's proposed contract, fees WIll be paId out of bond proceeds after receipt of saId proceeds by the Age~cy. In the event that the bonds are I"'ot actually sold no fee will be charged. Addltlol"'al costs related to the sale of the bOl"'ds Including prIntIng of the Offlcal Statement, bond insurance, ratlPg serVices and other Issuance costs are estImated at approximately $150,000. These costs can be paId out of bond proceeds. The fee for bond coursel will be approximately $30,000. SuffICient funds are avaIlable In account number 18- 200-263-128/129-506 of the Agency's FY 1984-85 budget for bOl"'d cout'!sel. The fIscal Impact of ISSUIng the tax allocatIon bond Will be discussed In a separate report to the Board, after the consul tants have ar.al yzed the Agency' S fH'!a~c lal status al"'d the proposed bond Issue. 5 RECOMMENDATION Staff respectfully recommends that the Age~cy authorize the ExecutIve Dlrector to negotlate and execute a contract wIth Blythe, Eastman, Palne, Webber for a fee p-ct to exceed $27,500 a~d to retain the services of Morrisop- and Foerster for a fee not to exceed $30,000 for the purpose of designirg and issuing a tax allocatIon bor.d. Prepared by: Robert M. Myers CIty Attorney MarJorIe MattuccI Ocean Park ProJect Manager Ecoromic Developmert DIVISIon CommunIty & Ecoromlc Development Departmert 6 i I , i I , I I e>d1ib/f JJ Part ill Scope of Services , Scope of Services The Public Finance Department of Blyth Eastman Paine Webber is experienced in undertaking the steps necessary to brmg a tax-exempt bond issue to marl(et a?ld would be res90ns~ble for the effectI ve coordmatIOn of these steps wIth the various parties - the Agency and staff, attorneys, underwrIters, engl'1eerS, and consultants - involved In the financmg process. As the A.gency's financial consultant, we would complete the prelnnnary steps necessary to develop strong public support so that the Bonds or other Instruments of indebtedness wIll be sold under optimal market conditions. As financial consultant to numerous tax-exempt debt issuers, Blyth Eastman Pame Webber prOVides the full scope of consultmg serVIces. These services would accomplish the tasLcs inherent to each stage of the fmancing process, from developing the financing structure through marketing and closmg of the debt issue. Though each of the services rendered IS discussed m reference to a particular stage, many of the services are accomplished simultaneously. The outline '...hlch follows is only a g'..llde of the serVIces to be provided by Blyth Eastman PaIne Webber. It should not be considered as all-inclusive of the services that our flrTn would prOVide to the Agency In structurmg a successful refundmg bond program. PROGRAM DEVELOPMENT: During thIS phase of the process, Blyth Eastman Pame Webber would: o Provide the Agency with information about the structure of pertinent finanCIng programs; o Develop and recommend a prelimInary financing plan which will lead to a successful financmg and a coordinated approach to meeting the financing requirements of the Agency; . o Prepare debt covenants including the earmngs test, accountmg and reporting requirements and reserve requirements. Suggest such modificatlOns as may be necessary to achIeve flexlbllity for the Agency and assure a positive reception With the ratmg services and investors; o Establish a list of duties of all partIes involved In the fmancing and develop a time schedule for the sale of debt Instruments gwmg consideration to cash needs, market condItions, availability of finanCIal data and engi- neermg/consultant's prOJections; o Discuss, at the directlOn of the Agency, the fmancing program With mter- ested partIes such as lnstItutlOnal and retaIl mvestors, and local dealers; and o Use our firm's computer capabll1ty to test the economics of the proposed program through cash flow estimates based on assumptions regardmg SIze, mterest rates, or relnvestment of funds. . " , I 1 , I \ . FINANCING PLAN: DurIng thIS phase of the process, Blyth Eastman Pame Webber would: o Prepare an outline regarding the extent of the reports needed to support the financmg. Such reports ',villmclude cash nov" of the bonds; o Hold discusSlOns wIth Agency staff concerning cash flow requirements for proposed financmg; o Consult WIth the Agency and bond counsel regarding the legal requirements related to the structure of the debt issue, the overall fmancing objectives, and the procedures for the debt sale; o Provide the Agency With recommendations for the type of debt instrument, the type of sale, its tlmmg and amount m l1ght of the program to be financed and the market factors likely to affect such timing; o Compute estlmated debt service and reserve fund requirements; and o Prepare for the Agency a schedule of recommended investment securities with approprIate maturity dates for the investment of funds within the framework of its construction cash flow requirements. SUPPORTING DOCUMENTS: Durmg thIS phase of the process, Blyth Eastman Pame Webber would: o Work with the Agency. Bond Counsel and other advisors to prel?are reports and documents necessary to support the ISsuance of debt, including the development of cash flow and debt serVlce projections and redemption features and suggest other techmcal fInancmg features as deemed approprIate to enhance marketabIlity of the debt; o Consul t and assist the Agency and Bond Counsel in the preparatIon of the legal documentatIon necessary to support the debt issue; o In cooperation with the Agency, prepare the text or the Official Statement describing the debt, the revenues, security features, proposed construction, and other information deslgned to pravlde analysts, mvestors and the rating serVIces WIth adequate disclosure of a material nature; o Work with the Agency, Bond Counsel, and other related parties, to finalize the OffiCIal Statement; and o ASSIst t."e Agency In prmtmg and dIstrIbuting the Official Statement to prospectIve under'.'oJTIters and mvestors. . " ~ , i ~ j l I t I I , t i llARKET DEVELOPMENT: During this phase of the process, i31yt!l Eastman Paine Webber 'Nould: o ProvIde the debt ratmg servIces with information necessary for them to analyze the fI:1ancIal soundness of the Agencyrs proposed financmg pro~am, and discuss the security of t1'1e debt Issue with their analyst in order to obtaIn the highest possibLe credIt ratmg; o Arrange and attend meetmgs mvolving appropriate representatIves from Agency staff, Bond Counsel and the ratmg agencIes; o Arrange and conduct pre~ale information meetings for prospective under- wrIters and institutional/retaIl investors in principal financial centers as approved by the Agency; o Provide trade publications '.'lIth mformatlOn regardIng the Agencyrs financmg schedule and proposed debt sale cates: o Answer questions from potentIal Investors and underwriters regardIng the debt issue; o Arrange for the printing and maIlmg of debt sale documents to a compre- henSive 11st of underWriters, InstitutIOnal investors and investment adVisors; o Fallowing consultation 'Nith the Agency's Bond Counsel and other consultants, arrange to prmt and distribute the OffiCIal Statement. DEBT SALE: During this phase of the process, Blyth Eastman Pame Webber would: o Analyze market climate in the p.erIod preceding the debt sale; o Determme the best method for' marketing the debt under mar'<et conditions eXISting at the time of the sale; and o Provide mformatlOn to the Agency concerning the market climate, active investors in the munici;?al market during the sale period, and other tax- exempt issues scheduled for sale durmg such peri.od. FOLLOW-UP: DUring the perIod after the sale of the Agency's bonds, Blyth Eastman Paine Webber would: o Prepare a schedule of recommended Investment securIties for the Investment of funds wlthm the fram ework of the Agencyts reqUlrem ents and assist the Agency in the placement of such funds; ~ ~, j , i I I I , i 1 J 1 I ! I t , o AsSIst t;,e _-\gency 1'1 establls'll'1g fmanclal a.nd o!?eratlng systems :::-l'ch 'nil help insure complIance ''11th the resolution of Issuance requIrements, I.R.S. regulations and program goals; o Adv1se the Agency of ne'.'1/ financing techniques as they are developed; and o Provide perIOdIc analysis of market conditrons as they relate to future sales and keep the Agency mformed of current market prtces on its outstanding debt issues. o Monitor finanCIal operations of the Agency and adVIse the Agency of ways to 'j?rotect and/or Improve its credit rating. :\1arket permitting, we estimate that development of a VIable bond program could be accomplIShed WIthin 60 days and that a bond sale and delivery of funds could be held wIthm 90 days follOWIng final approval of the financing plan. .. CM:JHA:JJ:mmm City Counc11/Redeve~ment Agency: Santa~n1ca. Cal1fornia 4/6/82 .. TO: Redevelopment Agency 1/ t/ r' () CJz ., - t..... ~ ,,,i" --~'\.,:............ FROM: SUBJECT: City Staff Proposed Settlement Agreement wlth Llncoln Property Company Introduction This report transm1ts a proposal for a settlement agreement w1th Lincoln Property Company and recommends that the Agency authorlze the staff to enter 1nto a settlement agree~ent and fl1e for an amended Coastal Development Perm1t. The report also recommends that Staff in conjunction with commun1ty representat10n begln plann1ng for the construction of affordable housing and the des1gn of parks and other neighborhood fac1l1t1es. The Staff ;s recommendlng this settlement because It would provide for a project with reduced denslty. lower build1ng height, greater setback, on-site affordable housing, and $7 million dollars to be used for a varlety of ne1ghborhood improvements. The Staff 1S fully cognizant of the concerns of Agency Members and the communlty about the impact of thlS proJect on its surround1ng neighborhood. Aspects of this project. eve~ 1n thlS substant1a1ly mod1fled verslon, do 1n fact raise d1fflcult and complex questlons. Absent pressure of an eX1st1~g contract and the resulting lawsuit, lt lS unl1kely that staff would be recommending that th1S proposed development proceed in the form currently under conslderation. Howevery 1n review1ng the recommendat1on of staff, 1t lS lmportant to consider: 1 e e 1. ThlS recommended settlement represents compromlse on the part of Lincoln Property Company and on the part of the Redevelopment Agency. 2. This compromise is the result of dlff;cult and lntense negot1atlons. Addltional open space, less denslty or malntenance of the golf course, can only be pursued through sustalned, costly and dangerous litlgatlon. 3. The compromlse has been developed wlthin the restraints of the Coastal Commission pertaining to housing, beach access and recreatlon facillties. 4. The prlmary alternative to thlS settlement is lltigat1on. Glven the serious flnancial r1sks, staff recommends aga1nst th1S possible alternat1ve. Also, fallure to prevail 1n the courts could result 1n the project belng bUllt 1n accord w1th the current contract, an eventuallty not in the best interest of the Agency, the City, or the neighborhood. 5. Members of the C1ty Counc1l and the Agency have expressed a strong abld1ng commltment to affordable housing 1n an altered economlC and regulatory environment. Th1S settlement maintains and enhances the Cit~ Councll.s commltment by providlng access to the site to households of dlvergent economic means. 2 e e Background In 1958 the City Council appointed the Redevelopment Agency and entered into agreement with the Federal government to provlde urban renewal assistance for the Ocean Park redevelopment project. In 1960 the Agency approved a redevelopment plan consisting of high density-high rise resldential, office and hotel uses; and proceeded with acquisition, relocatlon, demol,tion and site lmprovement activ1tles. In 1962 the Agency entered into a land Dispos1tion Agreement with Kern County Land Company. In 1965 the developers, Kern County construction on the first installment, a Santa Monica Shores Towers. and Del Webb commenced 5 acre parcel known as After four years of delays 1n develop1ng the balance of the project, the Agency approved the transfer of Kern County's 1nterest to Crescent Bay Propertles 1n 1969. Followlng three additional years of project inactlvity, the Agency declined to renew Crescent Bay's contract and executed a new land D1Sposition Agreement 1n 1972 with a Substltute developer, HFH Ltd. to construct 1400 un1ts of rental housing. 3 e e In 1973 the South Coast Reglonal CommiSS1on denled HFH1s Coastal Development Perm1t. Upon appeal, the State Coastal Comm1ss1on, by an unanimous vote, upheld the Regional Commission1s decis1on. The Commission recommended that the Agency reduce the number of housing un1ts from 1400 to 400, prov1de a min1mum 6 acre on-s1te publ1C park, and construct 100 un1ts of low and moderate lncome senior c1t1zen hous1ng. HFH was unable to comply and filed a SU1t against the Coastal Comm1ss1on. In 1975 the Agency approved a $415,000 settlement agreement to remove HFH as project developer thereby ending two years of litigat1on. (By 1975 the proJects indebtedness to the Federal government exceeded $6 mill10n dollars and resulted 10 annual interest cost to the Agency of $400,000). The Agency then, using the Coastal Commission development standards of 400 maximum housing un1ts and a 6 acre public park, solicited proposals from Qualif1ed developers. The campet1tive process resulted 1n t~e selection of the hlghest bidder, Lincoln Property Company, from among seven developers. Lincoln's proposal included a land purchase pr1ce of $4.6 million dollars. The Agency applied to the South Coast Reglonal Commisslon In 1976 and rece1ved condit1onal approval for construct1on of 397 condaminimum un1ts. Upon appeal of the Reglonal Comm1ss1on's Conditlonal Approval, the State Coastal Commission in 1977 unan1mously approved a Coastal Development Permit for the construct1on of a two-phase condomlnlum project and required that a publlC park lncluding beach accessway be installed; that a hOUslnq ass1stance and 4 e e rehabilitatlon program be provided; that the 27 unit City-owned apartments at 175 Ocean Park Boulevard be rehabl11tated; and that other public improvements including 1andscaplng of beach parklng lots be undertaken. A copy of the Coastal Development Permit 15 included as Attachment I. Followlng the Coastal Comm1s51on's approval, the project rece1ved prelimlnary plan approval from the Santa Monica Arch1tectura1 Review Board and the Plann1ng Comm1ss1on, and tentative and final tract map approval from the City Counc11. A land sales agreement encompasslng Phase I and II of the proJect was executed and construction of Phase I cons1sting of 187 condominimum units began in 1978. The Agency then, using a combination of land sale proceeds, Federal funds and a loan from the City reduced the project debt to the Federal government to the current level of $1.5 million dollars. On February 24, 1981, the L1ncoln Property Company, 1n order to proceed w1th the development of Phase II of the proJect, requested the Redevelopment Agency to join Lincoln Property Company in subm1tting an amendment to the Coastal Development Permlt. The essence of the proposed amendment was to lncrease the number of low and moderate lncome houslng unlts to be provided by the developer, and to uncouple the remaining obligations of the developer from those of the CltyfAgency. Lincoln's letter was considered by the Agency on March 10, 1981 and August 25,1981. The Agency, however, because of substantlal 5 e e community oppos1t10n to the project under contract~ did not support Lincoln Property Company's amendment. On April 3~ 1981, Lincoln Property Company filed a monetary cla1m against the Redevelopment Agency and the C1ty 1n the amount of $20 mlllion dollars. Lincoln's c1a1m was followed by a $23 m11110n dollar laWsu1t ag1nst the C1ty and the Agency ln September, 1981, claim1ng that the C1tyjAgency falled to comply wlth earl1er agreements and made 1t lmposs1ble for Llncoln Property Company to proceed wlth the second and f1nal phase of ltS development. On September 8, 1981, the Agency retalned the flrm of OrMelveny and Myers to examlne the C1ty and Agency's legal positlon with respect to cancellatlon of the contract with Lincoln Property Company. After reviewing O'Melveny's report, lt was the opinion of the staff, concurred by the Agency, that negotiations rather than l1t1gation was in the best lnterest of the Agency. The City/Agency therefore directed 1ts staff to commence negotiations w1th L1ncoln Property Company and seek concessions to modify the proJect and respond to many community concerns expressed at various publ1C meetings. The Agency staff, follow1ng numerous meetlngs with Llncoln Property Company and some sixteen meetings w1th var10US community groups over a four month period has reached a tenat1ve settlement agreement. 6 e e PrOject Revisions Following is a llst of proposed revislons tentatlvely agreed upon by the Staff and llncoln Property Company and graphically shown on the accompanYlng attachments. 1. The total number of units is 150 (124 mldrlse condominlums and 26 townhomes). ThlS is 8 units (or 5%) less than the 158 provlded for in the original contract project. 2. All lofts have been ellmlnated from the uppermost mldrlse project and the entire midrise portion of the project has been reconfigured to three and four story bUl1dings. The north building along Ocean Park Boulevard 1S three stor1es and the south two build1ngs are four storles. There are six loft unlts that remain along the Barnard Way elevation; however, because of the lnternal stepping of the project; the roof of these lofts does not vlolate the helght reduction noted above. 3. The mldrise project has been moved ndownhill" toward Barnard Way and the effective helght is reduced by one add1tlonal story. 4. The overall height as noted 1n paragraphs 12 and #3 has been reduced by 27 feet at the north building and 18 feet at the 7 e e four story buildings. Th1S is a 43% - 29% reduct10n from the approved contract project as viewed from Neilson Way. 5. The corner of the three story north bU11ding located at Ocean Park Boulevard and Barnard Way 1S further reduced to two stories. This will provlde a transition from the eX7sting one and two story nelghborhood to t~e north. The south corner of the south building will be reduced to three stories (from four storles), providing a slmilar transit10n to the two and three story townhomes. 6. The Neilson Way. property llne for the mldrise project is moved 165 feet toward Barnard Way. The resulting area is being proposed for the new construction of affordable hous1ng. The parceT area is approximately 165 feet x 400 feet, or 1.5 acres. 7. The building setback along Ocean Park Boulevard is increased to 18 feet from the approved contract scheme of 10 feet. This area wilT be devoted to landscap1ng to further enhpnce the environment. The mlnlmum bUllding setback along Barnard Way 1S 18 feet and will vary up to 28 feet. The setback at the Ocean Park Boulevard/Barnard Way corner 1S 24 feet. 8. The south bU1lding 1S reversed (or flipped). This will minimize the "walT" effect on the southern slde of the midrise project WhlCh is apparent in the contract scheme. 8 e e 9. The main entrance/exit to the project wl11 be off Barnard Way. It 1S the Clty'S 1ntent to close Barnard Way and reduce the street to two lanes where it accesses Sea Colony 3. If this plan 1S not completed, an access across the existing meridian strip will be requlred. There wl1l be a secondary entry/exlt off Ocean Park Boulevard. There wl11 be no vehlcular access off Neilson Way as provided for 1n the contract scheme. 10. The resulting public park to the south of the townhomes is approxlmate1y 360 feet x 250 feet (about 2.06 acres). Th15 1S in addition to 1.5 acres of open space w1thin the project area. A tennlS complex 1S proposed for th1S area which relates to the east/west pedestr1an accessway. There 15 suffic1ent area for four north/south orlented tennls courts and four paddle tenn15 courts or flve tennis courts and no paddle tennlS courts. 11. Solar asslst will be provlded for the domestic hot water and swimming pool of the rnidrise bUl1ding. The solar panels located on the roof will be archltecturally screened. 12. The garage for the m1dr1se bui1d1ngs w111 be naturally ventl1ated wherever possible to further provlde signlflcant energy savings. 13. There ;s minimal shadowlng effect from the mldrise bUlldlng on the homeowners to the north of the project under the 9 e e settlement scheme. Durlng the summer, there is no shadowlng at 7 a.m. (P.S.T.). Durlng the spring and fall, only three units are shadowed at 7 a.m. (P.S.T.) and those units are in full sun at 7:30 a.m. In the wlnter, on the shortest day of the year, only two units are 1n shadow at 9 a.~. (P.S.T.). They are in full sun by 9:30 a.m. prior to 9 a.m.t the north tower of Santa Mon1ca Shores shadows everyone. Financial Conslderatlons The proposed settlement would 1nclude a payment of $7 m1llion w1th $2.25 mlll10n to the Clty at the start of construct10n and $4.75 m1llion to be pa1d by Lincoln Property Company w1th1n nlne months after a certificate of occupancy 1S 1ssued. These mon1es can be used for housing, parks, street and parking lmprovements, and a wide ranqe of related neighborhood needs. The Clty wlll rece1ve approxlmately $500,000 in condomlnlum permit fees. The Agency will rece1ve $2.1 mllllon for the land. Tax 1ncrements generated by the total proJect wll1 Y1eld an est1mated $1 ml1lion a year. Debt repayments for the proJect amount to $2.3 mlll1on. In addition, the proJect will contrlbute $12,200,000 mlllion 1n constructlon payroll. See Attachment II for a more detailed flnanclal analysls. The proposed beach parklng lot improvements shown on the accompanying concept slte plan merely lllustrate one example of how the beach lots can be lmproved. The staff lntends to work very closely wlth the commun1ty groups to develop 10 e e speclfic plans for all off-slte lmprovements includlng park developments, landscaping and parklng and traffic clrculation plans. The affordable houslng component of the proJect wll1 also require addltional Community lnput. 11 - e Recommendatlon Staff recommends the Clty Councll and Agency authorize the Clty Attorney/Agency Counsel and the Clty Manager/Executlve Director to enter lnto a settlement agreement wlth Llncoln Property Company; file for and obtaln an amended Coastal Development Permlt; and commence worklng wlth the communlty groups to develop speclflC plans for all off-slte lmprovements and for the affordable houslng program. PREPARED BY: John H. Alschuler City Manager JOHN JALILI Assistant Clty Manager 12