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SR-400-004-08~ t~ ~ ~D~-oDr-~-~S- M E M O R A N D II M CITY PLANNING DIVISION ~ ~r ~~ B 2 B ~989 MAR ~ lg8g COMMUNXTY AND ECONQMIC DEVELOPMENT DEPARTMENT CITY OF SANTA M4NICA DATE: Februa~y 23, 1989 TO: The Honorab~.e Mayor ana City Caunc~l FROM: Paul Berlant, Planning Director Suzanne Frick, Principal Planner Laurie Lieberman, Deputy City Attarney John Read~ Associate Planner sUEJECT: Changes to Staff Report far February 28 City Council Hearing Regarding Proposed CAP The attached staff report regarding the Commercial Allotment Prograin (CAP) incorporates three substantive and two minor changes from the report that was issued to you on Friday, February 10. The substantive changes concern the following: o The version af the raport that was sant to yau on February lOth alluded to a proposa~ to create a separate annual limit of 5~,000 square feet for projects that fall under site review thresholds (see page 24). The attached version of the report eliminates this proposal and recognizes that site review thresholds citywide wo~Id be loraered to 1Q,00o square feet in C2 and CM zones and 24,000 in a~l ath~r comm~rcial zones, thus accounting for a greater share of small projects; - 1 - ^.r F~ B 2 8 ~98~ ~AR 7 ~~u~ ~ ~ o Reqarding the constitution of the Ad Hoc Advisary Committee, the attached version af the repart eliminates the recommendation that the neighborhaod organizat~i.ons represen~ed on the Committee be N.S.C.-funded; o Concerning the budgetary impacts af deve~oping the CAP program, this version adds a recoinmendation that staEf st~bmit a request for appropriatian of funds for consu].tant services (far preparatian of an EIR and assistance in developing a rating system) at the time that the contracts for consul.tant servzces aze returned for Council appraval. The minor changes to the report include the addition of page numbers to the Table of Contents (page 3} and the addition qf Table V(page 17), which was inadvertent~y omitted from the previous (February 10) version of the repart. This version of the staff report supersedes all previous versians. w/cAFmemx - 2 - ~ C/ED:CPp:PB:SF:JR:se COUNCIL MEETING: Februar~ 28, 1989 TO: Mayor and City Cauncil FROM: City Staff ~ Santa Monica, California SUBJ~CT: Recommendation to Direct Preparation of ardinance Establishing Commercial Allotment Program Transmitted herewith is a recommended proposal for develaping and implementing a Commercial Allatment Program ~CAP}, scheduled for a public hearing before the City Council on February 28, 1989. Copies of this report have been made available to all parties who have expressed an interest in the CAP program. - 1 - ~ ~ Proposed Co~ercial A~Zo~ment Program ~CAP) Februa~r 28 City Council Meeting - 2 - ~ ~ Proposed CAP Program Table of Contents Page I) Introduction 4 IIj Background A) Purpose 5 B) Summary of CAP System 7 C} Programs in Other Jurisdictions 9 D) Recent Developmnent Trends in Santa Monica 12 E3 Rationale for 200,Ofl0 Square Foot Annual Limit 15 F} Jobs/Housing Ba~.ance 18 G) Traffic, Sewage, and other Environmental Issues 19 H) New Zoning Ordinance Impact on Development 2Q III} Provisions of the Proposed CAP Program A) Applicability and Exclusions 22 1) Small Projects 23 2) PublicZy-sponsored Projects 24 3) Schaal District Property 26 4) Replacement of Existing Square Footage 27 B} Annual Square Foo~age Limit 28 C) Guidelines far Evaluating Proposed Projects 3I D) Administrative Procedures 33 E) Environmenta~ Review Process 35 F) Development of Rating System 35 IV) Legal Issues 36 V} Other Issues 38 VI) Fi.scal/Budget Impacts 38 ~ 3 - ~ Praposed CAP Program z~ INTRODZ7CTYON ~ At its Apri3 26, ].988 meeting, the City Council directed staff to develop a program that wouid pZace an annuai limit on non-residentia~ developz~ent and create praceduzes far a competi.ti.ve selection process for praposed projects. The purposa of such a program is to control the pac~ of development and promote high-quality projects sensitive to the City's land use gvals. In response, City staff prepared a preliminaxy outline af a CAP (Com3mercial AZlotment Programj and presented it to the Planning Commissian for cauunent. Thi.s ini.tia~ outline is attached as Exhibit A. On May 18, the Planning Commission and severa~ members of the public provided staff with numerous co~nents on the pragram. These com~nents are summarized in Exhibit B1 and addressed in this staff report. A transcript of the Commission's discussion is als~ attached as E~ibit B2. A prior draft of this staff report was reZeased to the pub~ic for revision in ~ctober, 1988. This report provides ratzonale and a canceptual framework far a CAP proqram and explores variaus legal issues relevant to the pragram. It is racommended that the City Counc~.l: - 4 - ~ i 1) Direct the City Attorney to prepare an ordinance implementing CAP for a tria~ period ~f twa years; 2} Direct the City Manager to establish an Ad-Hoc Ad~isory Co~amittee, consisting of representatives of the business organizations and neighborhood groups, to work with staff to develop a) an objective, quantifiable rat~ng system for evaluating projects under the CAP, and b) a methodalogy for determining the annual. square footage limit under the CAP; 3) Direct staff ta prepare by July I, 1989 a resolution to adopt the rating system developed by the Ad Hoc Advi.sory Committee; and, 4} AuthQrize the Planning staf~ to retain a consultant to prepare an environmental impact assessment af the pxoposed CAP pragram. (It is anticipated that the consultant who prepared the Zoning ardinance EIR which exa~nined the CAP as an alternative will be engaged to complete the environmental review af the CAP ordinance, II) BACKGROUND A) Purpose zn recant years, th~ pace of commercial developmant in th~ City of Santa Monica has acceZerated dramatically, This increased rate of deve~opment has ad~ersely affected the capacity and quality ef the City's street and highway system, the jobs/housing balance within the City, and the quality of Zife in the community, including environmental quaZity and neighborhaod character. - ~ - ~ ~ Revisions to the Zoning Ord~nance responded to some af these problems by lawerinq heights and FARs in commercial and industrial zones throughaut the City. Hawever, whiZe these red~ctions will limit the size and scale af future development, they will not control the rate or character af develapment in the City. To a great extent, the City remains in a reactive pasa.tion in raiation to private deve~opment projects. The Commercial Allotment Prog~am provides two major benefits to the City. First, it will allow the City to better plan infrastructure to accommodate new development and to avoid over-uti.~.izing existing infrastructure systems. Secondl.y, to the extent that an annual limit an deve~opment wiil allow the City to chaose between development propasals, a.t will aZlow the City to influence the quality of development. Far example, the City may evaluate proposed projects based upon needed communa.ty services and amenities, environmental mitigation, and hi.gh quality architectural and site design. The Commercial Allatment Program is aZso designed to promote the following fallowing principles of the Land Use Element: The Land Use Element should guide growth toward the areas oF the City best suited to accanuuodate it from the standpoint of access, existing infrastructure, and mini~aizinq o~ impact on adjacent residential neighborhoods; The Land Use and Circulatian Elements should minimize the n~~mher and length of automobile trips by locating growth along major alternate transit routes, promoting alternate transit modes~ and locating housing near employment distr~cts; - G - ~ ~ The Land Use Element should protect aspects of Santa Monica which are unique and vaiued. These includa its stable and desirable rasidential neighbarhoods, its easy access to the Oceanfront, its well-maintained parks, its attractive streets, . . its pleasant ~ow buil.ding scale, and its sunlit and walkable streets. Other goals that the CAP will. he~p the City achieve inc~ude: o Promote the provision of needed ne~.ghborhood-serving businesses both Citywide and in particular neighbarhoods. o Minimize adverse environmental impacts through innovative traffic, parking, wastewater, energy and other mitigation measures. o Balance j~bs and hausing within the City; o Pzovide employntent and hausing opportunities tha~ address the diverse economic needs of the community; o Provide needed social, recreational, welfare, and community services, such as child care, public open space and services for the homeless; o Promote hiqh--qual.ity architectural and sa.te design in new development; o Pramate desired cultural amanities, such as public art. In sl~mmary, ths CAP will help allow the City to cantrol the rate of development and, in turn, better control the qua~ity o~ developm~nt. B) Suinmary of CAP Syste~ The CAP program wouZd place an overall anr~ual limit of 200,00o square feet vn CQ1??mBXClal and industrial development. Site re~iew threshalds would be ree?uced citywide to I0,00~ square feet in C2 and CM zones and 20,000 in all other zones (necessitating a revision to the Zani.ng Ordiriance) , and al]. - 7 - ~ • projects that exceed these threshalds would be sub~ect ta CAP ~imit, with the exception af certain public3y-sponsored projects and projects in the Third Street Promenade Specitic Plan area. As projects are submitted under the CAP program, they will be grouped according to whether they are '~small projects", i.e. under 50,~00 square feet, or "large pxojects", i.e. 50,OOQ square feet or moze. Small pro~ects will only compete with other small projects, just as large projects w3.11 anly compete with other laxge projects. Although prajects wa.lJ. compete separately based on size, they will be evaluated ttnder the saine criteria. Included in the CAF wouZd be is an cpti.on to "borrow" squaxe faotage over time. Tha.s would a1.Zow the City ta approve a project of up to 300,00~ square feet, sa long as the construction of the praject is phased in a way that the annual CAP limit wauld never be exceeded in any given year. Proposed pro~ects would eampete with one anoth~r based upon various criteria, including environmental and econa~aic impacts, project design, and community benefits. A rating system adopted by the City Council k~auld be used ta evaluate each project and ta provide an objective basis for eval.uating projects. The review process wau~d include sul~mittal of applications by developers, preparatian of appropriate environmental impact - 8 - ! ~ documentation, staff analysis and rating, and review of the submittals by the Planning Commission and City Cauncil, with the CaunciJ. havi.ng ultimate approval autharity. ' A vote of five members of the City Council would be required to override the CAP system in order to approve projects in ~xcess of the annual limit. C) Progra~s in Other Jurisdictions Numerous ~urisdictions in the State of California have approved initiatives and/or specific programs to limit develapment by a specific amount each year (Exhibit C provides a list of some of these jurisdictions.) Staff has obtained documsntatian on six of these programs, inciuding the cities af Camar~llo, Davis, Petaluma, San Diego, San Franci.sco, and Ventura. Of those. fiv~ li.mit residential development, and one--the City of San Francisco--~imits co~nmercial develQpment. Three of these pzograras have been ~n effect since the 1970's. Whi~~ some of the programs of other cit~es liYait development by a nunterical amount that remains fixed over t~me, other programs call fox annual ad~ustments based on studies conducted by City staff. Factors considered in these studies incl~de population goals, econamic trends, housing needs, and a.nfrastructure constraints. All, the programs reviewed exempt projects under a certain size~ i.e. , under f~.ve units far res~.derttiaZ deve].vpntert~ - 9 - ~ ~ (Camarillo) and under 25,000 sq. ft. for commercial development (San Franci.sco). A number of the residentia~ pragrams exempt housing foz seniors, disabled a~d low-income persons. The San Francisca pragram exempts certain Community Development Block Grant and redevelopment projects. In terms of administrative procedures and approvals, four of the six ca.tzes leave final approval up to the City Council, while one (San Francisco) authora.zes the Planning Commission to n~ake Fina~ decisions, appealable to a Board of Permit Appeals, and another (Davis) leaves the final decis~on up to a Hvusing Review Board, whase decisions are appealable to the City Council. The City of Camaril~o uses a specially created Evaluation Board to make recommendations to the City Cauncil for final apgroval. The City of Peta~um:a aZlows "borrowing" af annual a].~ocations between years, so long as the average annual development over a thrse-year period stays with~in a certain amount. San Francisca alsa allows unallocated office space to be used in future years, provided that development does not exceed twi.ce the annual limit in a given year. N~neraus considarations used in evaluating projects emerge from the variaus progranis. They inc?ude the foll.owing: o Adequacy of public facilities and services; o Enviro~mental impacts; o Design quality; a Provision af social sezvices (i.e., child care - 10 - ~ ~ SErV1CSS); o Econ~mic growth nesds; o Einployment needs; o Eraplflyment and housing opportunities that promote sacioeconami.c diversity; a Evaluation of past developer perfarmance; a Needs o~ geographic sub-areas: o Objectives of the General/Master Plan; and, o Provision of affQZdable housinq. Thus, there are precedents for a pragram to limit development and distinguish between projects in a competitive review process. A more detailed description o~ the programs of other citi.es is provided in Exhibit D. This is not the ~irst time that the City of Santa Monica has considered a qrowth management system. In 1981., in response to a rapid growth spurt that brought approximately ~4 miZlian new square feet of office space into the City in the course of six or seven years, the City Council established a task force charged with developing the canceptua~ framework far a growth management system. This task foxce explored programs in other cities and, based on thea.r research, proposed the Develog~aent Evaluation and Management System, or ~EMS {see Exhibit B3). Like the CAP, the DEMS was intended to contr~l both the rate and qt~aZity of develapment in the City. With the abrupt decline in demand for new development an the early 1980's, the need tor the program all but disappeared. - ].1 - ~ i D) Recent Devalopment Trends in Santa Monica Staff has examined the square footage associated with all commercial and industria~ projects submitted for discreti.onary rsview between January 1.985 and June 1989. Table I shows these square footage figures by project type {hotel, office, mixed-use) for each year. The first eight columns of the table show square footage for specific pro~ect types. The third-to-last column shows total sq~are footage for each year. The Iast column shows annual totais minus ma~or development projects (the Airport Residual Lands project, Colorado Place Phase III, and the Water Garden). As the table indicates, the amount of commercial and industrial square footage approved each year between I965 and 1987, excluding major prajects, varies roughly between 200,000 and 320,000, and averages approximately 290,000 squ~re feet per year. Predominant uses have inclL~ded office, hotel, and retail development. The gross deveJ.opment figures in Table ~ include rehabilztation square foatage. Subtracting rehabilitatian and rep].acement square footage from the grass totals, the "net" annua3 new square footage figures between 1985 and 1987 (also shown on Table I) range between 194,000 and 272,000, and average appraxixaately 231,000 square feet per year. The proposed annua7. CAP Zimit of Z00,000 square feet proposed under the CAP is consistent with the net average new - 12 - [ITTED SINCE JANIIARY 1985 ' S OF JUNE 10~ 19a8 Hixed-Uset Mixed-use* Totals incl_. Less Hajor To~a}.s excY. Retail Restaurant Comm/Resid. Comm_ Major P~ojects ProjeCts Major Proaects 203,4Q0 11,UOP (I~9,fl00) (9,OOD) ~oo,aoo z~,oao {398,000) T,000 943~000 24,OOQ Zsa~,ooo~ ~z6,aoo) xgu~res are LLRIR +_ - -- 35,000 0 35,000 - - (28,0~0} - - ~ - 195,000 538,000 0 518,000 - (i26,oo0) (s~a,oao~ - - - 1,9G3,000 3,Y1G,000 -]„3G8,000 1,748,000 - (1,843,000] (2,~G7,a00J - - - 2,158,000 3,Gn9,U00 1,7G8,000 - (1,9G9,U00) (2,8GG,p00) - w/pt`a7ect5 • 4 2,32] 006 ~ T11PLS II T0111T. PENDIMG 5QUARB F00'P11GB Bl( YEAR ]~PPL7CATION SUn1[ITI'80 SINCE SANUARY 1985 F'OA PROJEGTS REQUIRIHG ~ISCRb'TIONARY REVSEW~ AS OF JUNS 10, 1989 M~zed-Use+ Nlxed-Use~ Hosplt~al Hotel. imlustrial otEice Retafl Restaurant Coms/Resid. copm~. 199'i GLYfs.r, - - - - - - - " ^ (Ncl:) - - - - - - - _ ~ I906 Gr'osS - ]5,000 - - - - - ^ (Net) - • (2&,Q001 - - - - - ^ 1987 Gros~ ^ -• 180,~00 - 1~4,000 207,P00 11,000 - 195,OOR (NetJ - - (96,OOa} - (127,000J (1]9,000) (4,000) - (I26,OOOy I'~69 CraSa - - ~,62~000 - 2,221,Oa0 7D0,000 I3,000 - 1,9G3.Q00 (Nrl:) - (-15,000~ (127,600~ (-115,OOD) (2,065,000} (]9B,OOOj 7,Onp - (1,84P,n00) TotAls inck. Lems ![.t)or Ta~xcl_ Ha7oY Projects ProjccL lSa~a7r ro7t!cte 75,000 0 (28,OnD) ^ 538,000 0 (771,Qq0~ ~ J,11G,Oa0 -]„768.000 (2,4G7,000) - Tokal~ Gm .. - )q7,060 2,]65,000 907,000 24,Opp - 2,L5R,Op0 3,689,000 (Net) -SS,000 (251,000) (-115,000) (2,1.72,000) (537,000) (L6.000) ^ ~I,969,060) (2,866,000) v/pio3ecL5 " Tttr. miKr.d-usc fiqu~'es are eot addmi to the tpt~ls sxnc:e thesc f~.qurc. arF hcoken dawn by individual usr.~ and added tn the appropr.iatn col.umnx. WlPL~>)ec'~t4 t,7b8,ooo ~ 15,000 578,000 t,~+e.ooo 2,?2~ ! ~ cammercial and ind~strial square footage between ~985 and 1987. Table II shows the amount of commercial and industrial square footage pending for each year since 1986 {there are no projects pending trom 1985). Includi.ng the major projects l.isted above, there is a total, of 3,654,000 square feet pending discretionary r~view for the period between January ]., 1988 and June 10, I.988. Excluding the proposed Airport Residual Lands project, there are 2,286,Oa0 squara teet pending. In 1988 alone, applications have been submitted for a combined total of ].,748,000 square feet (aga~.n excluding the Airport Residual Lands project). Thus, there was a sharp increase in propased square tootage during Z988. This increase can be partially attributed to the Council's consa,deration of the new Zoning Ordinance. Table III shows average project sizes by ].and use type between 1985 and 1988. Assuming ~hat developers continue to proposa projects af the same scale, the type af projects like].y ta ba affec~ed by the CAP limi.t are hotel, o£fice, and mixed-use projects. The average sized reta~l pro~ect (12,000 square feet) would generally not be sub~ect to the CAP. Staff has also examined residential develapment history ouer racent years ta review the issue of whether an allaaation system wauld be appropriate for residential devalapment. Statistics gathered fram the ~uilding and Safety Divisian for 1980-88 are d~.splayed in Table IV. _ ~3 - ~ ~ TABLE IV RESIDENTIAL DEVELOPMENTr 1980-88fI) Removed Units New Units Net Change 1980 65 371 +306 198]. 5i 324 ~-273 zss2 ~3 ~os +i~s 1983 13 287 +274 1984 4 124 +12D 1985 65 134 + 149 1986 40 74 +34 1987 128 3B6 +258 TOTAL (2) 379 1949 +1570 ~~gg{3) 35 107 +72 TOTAL 4~.4 2056 +1642 ~l~ Source: Santa Manica Build~ng Division (2) 1980-87 (~~ Through April 1988 - 14 - ~ ~ As indicated by the table, the l~ve~ of residential development ov~r the Zast eight years has been relatively modest. ~n addition, the statistics far the first ha1~ af the period ana~.yzed are somewhat higher than might have otherwise occurred due to the unusual demoli.ti.on activity that accurred prior to adoption of the Rent Control law in 1979 and to the Sea Colony redevelopment pro~ect. Residential development has not significantly contribut~d to the enviranmental impacts which are of concern to the City and which are tha genesis of the CAF concept. Given the low ra~e of net additions to the housing stock, applicat~on of a CAP limit to residential develapment wou2d not appear to be warranted, and indeed would po~ential].y run counter ta ~ha Ci.ty's hausing produc~ion and regional jobsfhousing baiance goa~s. E) Rationale for tha 200~OOD Square Foot Annual Limit The proposed 2DO,o00 square foot annuaZ CAP limit is based both upon growth projections 4f the 1984 Land Use Element as w~I.l as upon recent historical develapment trends in the City. As indicated abave, the average annual net new cammerciaJ, and industra.al development between 1985 and 1987, excluding majo"r development agreements, was approximately 230,000 square faet. Therefore, the 200,Ob0 square foot CAP limit would accommodate a].evel of growth roughly consistent with recent market demand. ' - 15 - ~ ~ The 200,000 square foot limit is also roughly consistent with the rate of growth projected by the 3984 Land Use ~lement. The Land Use Element predicted a net increase of 5.8 million square feet in office, retail, and industria~ land uses between 1984 and the year 2000. As Table V demonstrates, if the City-spansoxed grojects, totaling up to a maximum of 2.2 million square feet, are subtracted from the projected Year 2000 forecast, a balance of approximately 3.2 millian square faet remains. Over the sixteen year period between ].98~4 and the year 2000, the ba~ance of 3.6 mil.lion squax~e faet wouZd yie~.d an average annual rate of deve~op~nent of about 225, oo~ square feet. The LUCE develapment forecasts and th~ recently observed market demand fall within a range between 200,000 and 250,000 square feet. Thus, the proposed CAP limit of 24a,400 square feet is qenerally consistent with the forecasts oF the LUCE, upon which the City's land use policies are based, and with market de~nand. - I6 -- d3ITTEb STNCE JANUARY 1985 ,S OF ~TJtZE ].0, 1968 liixed-Usc'~ Hixed-Use* Retal]. Restaurattt Coaim/Ke$id. Comm. 43,000 6,Op4 -- 3U8,OQa (82,080) (~,,QAQj - (263,OQ0J ~a,ooo ~9,aoa ca,UOO z~,oao (81,000} [6,000) (64,000} {25,Q00} 187,006 ]2,000 ZZB,OOD 1,077,000 (I26,Q00) (25,OOD) fi8,Ob0 (1,046,b00} 95,OOD ~O,ObO ~ Z,253,400 (95,000) {~0,000) - {585,000) 4G5,p0U i47,000 !l32,000 2,G61,000 isa~,ooo) ~az,oon~ {i3z,ooo~ ~i,~3~,oon~ w/~~rc~~ect3 ~1cJUI'eS :~rP_ , o2umns. Ta~.a~:. inci. i,es5 Ha)or ToCa~,s excl Ma~os i'XO~ects PL'o~ec~s H~]o~ P~CO~ec 3I3,OOQ 0 31],000 cz~z,ooa~ ~z7z,ooo~ z~a,aoo 0 2sa,oao (2z7,UOQ) (227,Oa0) 1,352,Q0o -x,p40,i100 712, 0 (1,031,000) - (194 ) 1,253,000 -1,253,Oa4 0 (7~8,000) - - 3,172,000 2,293,OU0 879,000 (z,2s~~ooa) - ~~9s,ooq) ~ ~ TABLE I TPTAL AF'PROypn SQURRE FDp'P11C E IIY YE21R ApPLIC~TTQN S UF31'SIT'TEl] SINCS JIU1UAitY 19$5 FOR PFt0.7ECCS REQUIRI![G pISCRETTONARY Rh`Vih'If, RS [1P .7U1iE 10, 1.988 ~~ M~z4:d-Uscr Mixed-USe~ Tatals xacl. Less lta~nr ~'otaly excl 11osp~,F~1 Hotel IqdustXiel otfice Re!tail Restaurant Coam/Resid_ C1o~. ![a7or J'rofects 1'ro}ects lSajor Pro~ec 2985 Gross - - 140,OOp - 71,000 97,000 G,000 - ]OB,Q00 ]17,000 O ]i~ (Het) - , (140,000) - (49,p00) (82,000~ ~1,000) - (2B1,OOO) (272,000~ (Z72,000) 1986 GC~);S - - 25,DU0 - S1G~606 94~000 19~000 64,000 25~000 y5~~000 4 254,000 (Nct) - - (2~,000) - (116,000) (81,OOp) (fi,OQO) (G4,OOOy (25,000) (27.7,000) (227,OOOy 1987 GCO.s - - ]3].000 59,000 746~000 183,000 7T.~000 S.S9~Q00 2,07T~ODD 1~752~P00 -1~060.JU0 312~000 (COIo P1 ) (Npt) - - (317,OOO) (-1G7,a00~ ~714,000) (126,aa0) (25,aop) Gp,oaa (1,016,040] (2,o]1,UOO) - ~19~,noo} 191f& G[OSS - - - - ]„100.006 ~J~,000 50,000 - 1,253~000 1,257,004 -3,253~000 11 {U1~ter Gi[Ar.n) (Net) - - - - (593,000) (95,00(1) {50,000) •• (587,000) (7Z8,000) - ~ TotaLs Grus3 a ~gS,UOG 58,400 2,044,006 465,000 ]OT,000 182,000 2,66~,b00 3,172,000 2,29],oan n19,p00 (NCk) O (497~0~0] (-1G7,000) (1,462,OOO) (184,000) (@J,D00) (27a,000} (1,917,000) (Z,ZSn,U00} - (693~ ' The ~Lxrai-usc fiqures a7'e rtot added to thc totals sincr, the:c ftqures .tcr. M~~7 CU] CCt. 1 brokrn doan by ~ nd~vidual acns atul add ed to the appropriate colusns w/pro~eCt], i ~ TABLE V Publicly-sponsored projects: Airport Residual Lands Third Street Promenadel Santa Monica Piar Central Plaza Sand and Sea Hotel Santa Monica Aquarium LUCE Year 2000 Projectian Publ icly--sponsored proj ects Balance ~ 1,~00,0~0 794,9a0 83,600 155,600 64i600 2,198,700 5,792,322 -2r198~700 3,593,622 ~ Source: Third Street Mall Specific P].an, projected grdss new square footage for Year 2000, - 17 - TAB~E III: AVERAGE PROJ~CT SIZES BY US~ ~ FOR ~ACH YEAR BETWEEN x985 AND Z988, RS Ofi JUNE la, 1989 (EXCLUDING MAJOR PRQJECTS) ~,985 - Agpraved Z986 - Approved ' Pend3ng 1987 - Appraved Fendf ng Z988 ~ Pending Overa~I Average Hatween ~985 and 1988t Pending Approved Hote~ ~40,00~ (]**) 25,000 (Z~ 35,~00 (1) 63,040 (1) so,ooo ~2? a5,ooo la~ af tiee 3a,ooo ~2~ 23, 000 {5) 30,OOa (3) 3s,ao~ ~a? 55,OOd (16} Mixed-Use: Comm/Resid. 64~000 (1} 1.],8,000 (1} 47,D00 (4) Mixad-Use: Comm. a.~a,ooo ~2~ 25, 000 (1) 37,000 (~) b~,oao t3y 74, 000 (6~ Retai~ ~3,000 ~~~ ~2,000 (7) 10,000 (9} 29~4a0 (7) 35,400 (19J ~ 5~,aoa a~,aoo ~~,aoa sg,ooo 3a,ooo 76,000 30,000 97.,000 72,Op0 ],2,000 ~ * Ma~or ~ro~ecta ~.nclude the p~oposed Airpa~r Residua,l Land Pro~ec~, Co~or~tdo P1.aca Phase II~, and the Wat~r Garden, ** Numbera b~~ween parenthesis repres~nt "n"-~-the number of pro~ects included in ~tatist~.ca7, averaqe . ~' ~ w/pro~ eat6 ~ TABLE V Publicly-sponsox-ed projects: Airport Residual Lands Third Street Promenade~ Santa Monica Pier Central Plaza Sand and Sea Hotel Santa Monica Aquarium LUCE Year 2004 Pro~ection Publicly-sponsored pre~ects Balance ~ 1,100~000 794,900 83,600 155,600 64,~oa 2,19$r700 5,792,322 -2r198r700 3,593,b22 1 Source: Third S~reet Mal~ Specific P~an, praiected gross new square foatage for Year 2000. _ 17 .. ~ ~ F) Jobs~Housing Balance Jobs/hausing bal.ance refers to the relationship between the number af ~abs and number of housinq units in a given geographic arga. When there are enough units to house all the employees in a given ar~a, the relativnship is balanced. Conversely, when there is shortage of housing in relation to jobs, or vice-versa, the relationship is imbalanced. The ~obs/housing imbalance in the SCAG (Sauthern California Associ.ati.on of Governments) region is acute. Between 1970 and 1984, the two centxal counties in the region (Las Angeles and Orange} absorbed 80~ of the region~s growth in employment. During the same period, thesa two counties absorbed anly 45~ of the regian~s increase in housing. This means that more residents from outlying countias, such as Riverside and San Bernardino, had to drive langer distances to work in Los Angeles or Orange Counties. Commute times between counties already r~ach Z 1/2 ta 2 hours. These lengthy commu~es contribute to air pollution, traffic canqestion, and higher ratas of energy consumption. If current trends ga unchecked, most employment growth will occur in the central paxt of the SCAG region, while most new housing growth will occur ir~ ou~ciying regions, further exacerbating the ~abs/hausing ~mbalance. One of tha primary objectives of SCAG's proposed Grawth Management Plan is to promote a greater balanc~ between jabs and hous~ng in the - ~8 - ~ ~ region by redistributing commercial/industrial growth and resi.dential growth between central and outlying regions. The ReqionaZ Housing Needs Assessmen~ (formerly known as the Regional Housing Allocation Model, or RHAMJ is or-e of the tools usad to promote this balance. All jurisdi.ctians are currently required ta set housing goals based upon the Regional Housir.g N~eds Assessment. During recent years in the City of San~a Moni.ca, the pace of commerciaJ. development has Far autstripped the pac~ of residential develop~nent. Thus, as is typ~cal for a city in the central SCAG region, the jabs/housing balance in Santa Monica is becoming more acute, By limiting commercial develop~ent, ~he CAP program w~~l sex-sae ~o promote a better balance between ~obs and housing bath in the City of Santa Monica and i.n the region. The CAP will also allow the City to promote housing develapment in conjuncti.on with commercial de~elapment. G) Traffic~ Sewage~ and other ~nvzronmentai Issues Bes~.des al~owfng the Cfty to prontote a bet~er ~obs~housing baZance, the CAP can permit the City to promote prajects whi.ch minimize ad~erse traffic, wa~4ewater, air quala.ty and other environmental impacts in a much more diractive fashion than ~s the case under tha cu~rrent r~gu~atary framework. For example, prajacts with proportionately lower traffic or wastewater ganeration may be rated higher on thes~ aspects relat~.ve to other pro~ects. Dapending upon how the rating - 19 - ~ ~ system is structured, these considerations could be a powerful tool which the City could use to encaurage low-impact prajects or to discouraqe high-impact prajects in areas of the City which are currently adverseiy impacted. The rating system could also promote a higher level of environmental mitigation in a variety a~ axeas such as energy conservation, sol.id waste recycling, and transgortation. As ~.t becames a~a~lab].e, informatian resulting fram the City-wide traFfic study may require adjustments to the CAP system to promote specific circulation improveinent projects or mitigation measures. Similarly, as it is app].~.cable and appropriate, the CAP can be struc~ured to address particular environmenta]. issues which may deve~op over time. For examp~e, the Planning Commission suggested that the current wastewater capaci~y situati.on might be addressed through the CAP systent. The CAP rata.ng system can target wastewater impacts as a specific issue which will be evaluated as part o~' the system, and the annual square footage alZocation can be adjustad as needed to address changes in treatment capacity. Preliminary analysis indi.cates that the level af ~utura development wh~.ch would be allowed by the proposed CAP would not approach the 170,000 gallons/day capacity gaal set by the Los Angeles ordinance. H) New Zoning Ordinance Impact on Development The newly adopted Zoning Ordinance reduces FARs in cammercial and industria~ zones throughout the Ca.ty. According ta the - 20 - ~ ~ May 1988 Final Supplemantal Environmental Impact Report on the Zoning Ordinance, there is a maxin~um theoreti.cal capacity of bEtween 62,924,OOd ta 75,916,000 square feet for office, commercial, and industrial devalopment in the City. (Tha range zeflects ranges af FAR's per-,nitted with and without site review.) This total rapresents a substantial reduction in potantial development from the fir~t draft af the Zoning Ordinance, which, according to the December 1986 Subsequent Environmental Impact Report, wauZd have allowed between 84,942,Q00 and 110,924,160 square feet of total development. The low-end estimate for the adapted Zaning 4rdinance represents 74~ of the corresponding estimate fvr tha fir~t Draft, while the high-end estimate for the adopted Zaning Ordanance represents 68$ of the ca~respondinq estimate for the original Draft. Generally speaking, then, the adopted Zoning Ordinance reduces potential non-residential develapment by at least 25~. It should be emphasized that these numbers represent theoretical potential only. They do no~ take inta account a) market demand ox~ b) the tact that it would take many decades ~or alI existing development to give way to more intense development. Thus, it ~,s extremely unlikely that anything appraaching this amount of devalop;nent will ~ccur in the forseeabla future. WhiJ.e the zoning ordinance reduces the maximum buiid-out potential, it does not regu~ate the time period aver which that bu~ld-out may occur. Although limiting the scale of - 21 - ~ ~ development reduces stress upon infrastr~zcture in the long tena. it does nat necessarily limit impacts fn the short term. A rapid rate of develapment can outstrip the Ci~.yFs ability to oversee a tis~ely match between development and infrastructure, or even fully understand what the cumulative impacts of develapment will be. ~II) PROVXSIONS OF THE PROPOSED CAP A) Applicability and Exclusions The CAP would apply ta alI oftice, hatei, retail, hospital and industrial projects buiJ.t on private~y owned land and subject to site review. One of the P~.anhing Commission's concerns about tha program was that it did not seem ta take into account ~he substantially different impacts caused by different types of land uses. 'I'he question was asked, shouldn't there be differ~nt quantitative limits on specific types of uses, based uport impacts? The proposed program daes account far the differinq nature of impacts batween land uses. Tha rating system used to evaluate prvposed pro~ects will assign projects a score for each impact. The relative weight of each score may vary from year to ~rear depending upon relat~ve,importance of the impact durfng that year. For example, during ane year the City's ability to accommadate high s~wage generation may be severely limited. Under the provisians o~ this program, the scaring system could be adjusted so that projects generating lesser - 22 _ ~ ~ amounts o~ sewaga would be rewarded. In this way, the evaluation criteria under the CAP take into account the relative importance of prajects' enviranmental impacts. Fiv'e categories of projects are exempted from the provisians Qf the CAP: (1} mini~tariaJ. projects; {2) publ.icly-sponsored grajec~s; (3) development of schaol district praperties; (4J replacement projects; and {5) projects for which appli.cations have been filed prior to the effective date of the CAP program. These are discussed in turn below. (1) Ministerial Projects Prajects that fal~ under the proposed site review thresholds of 10,000 square feet for C2 and CM zones and 20,000 square feet for alJ. other coa-mercial zones are propased to be excluded from the pravisions af this program for twa reasans. First, the CAP program is designed to help mitigat~ substantxa2 adverse env~ronmental impacts. Such impacts general].y result from large, as opposed to small, projects. These thresholds are intended to permit lawer-scale prajects by administrative approval, and to subject larger projects to a discretionary process before tha Planning Commission. The CAP would expa~d on this basic concept of requiring a higher ~evel of review far more significant projects. The secand major reason €or excluding projects under these threshalds is that developers of ministeriaZ - 23 - ~ ~ projects generally cannat pr6vide the magnitude of benefits and amenities that are necessary to compete effectively against Iargar proaects in the program. {2} Publicly-Sponsored Projects Publicly-sponsored projects include projects for which the City has issued a Request tor Prapasals and development within the Third Street P~omenade Specific Plan area. The City engaged in a two-year public planning process designed to ~evitalize the Promenade area and has devoted substantial resaurces to this praject. A Specific P1an was prepared to guide davelopment iri ~he area, and an extensi.~cre Environmental Impact Report analyzed potential environmental effects of the Plan. Bath the Planning Commission and the City Council held extensive pub~ic hearings on the Specific P~an, and both approved the P~an. As a result of this effort, substantial public and private investment in the area is undex~way, and considerable pr~gress towards the City's revitalizati.on goals is being achieved. ~n view of the City's effarts and objectives for the Promenade area, exclusion from the CAP system is appropr~ate. - 2 Q~ - * • . Restoration and development pro~ects on the Santa Monica Pier wo~ld also be axempted from the CAP. The Pier is an important regional recreational r~source which is in need of substantial revitalizatian. since restoratian of the Pier is a recognized and high-priarity public purpose pro~ect, making it subject to the CAP would not be necessary or appropriate. Pro~ects for which the City has issued an RFP and selected a developer include the potential development at the Sand & Sea Club, the Aquarium, and an the Airport Residual Lands. These pro~ec~s shouid be cansidered on their own merits and may be appropriate~y addressed by the City, since they would be developed through ground lease or ather rights granted by the City. Thus, the City itself has full cantral over development at these sites, in contrast to privately-propased pxojects. The City has the ability to approve, re~ect, or modify each af these projects since it not only controls the permit process, but also the land itself. Also~ ~ust as the C~ty Council has consistently "grandfathered" ~n development propasals already in process as of a certain date, it is appropr~ate to provide the same consideration to these deveiapments. These develapers hav~ incurred significant expense pr~par~ng plans for develap~ent at the solicitation of the City. Ta create a new restriction an these projects and fail to cansider - 25 - ~ ~ them on their merits might canstitute bad faith on the part o~' the City. (3j School District Property Tha Santa MonicaJMalibu Unified School District is in poor financial condition, partly due to declina,ng enrallments, which in recent years have caused the District to cansider use of saveral of its pr~p~rties in Santa Manica far non-schoo7. development which would generate needed revenue ta finance educatiflnal services. Several school sites may be considered by the Distr~.ct for such reuse, including Madison Schoo]. on Santa Monica Boulevard, Muir School on Ocean Fark Baulevard, and SMASH an Fourth Street in Ocean Park. Most of the parcels on each of these properties .are zoned residential, and the majority af any development on tha sites would likely be rasidantial and thus not subject to the CAP system. However, sone commercial development may be praposed on District properties. As proposed by staff, development on the District properties would be excluded from the CAP aZlocation system due to the unique circumstances of Santa Monica's public schools and the importance of the public educatianal system to the welfare o~ the community. Any such development would, hawever, be subject to all oth~r development regulations, such as thosa which currently exist without the CAP. Ror example, the FAR limits, use - 26 - ~ ~ controls, and discretionary permits which the Planning Coinmiss~on and Cauncil have incorporated into the new Zoning Ordinance would apply to any ma~or development proposals on school sites. (4) Replacement af Existing Square Footage In order ~o encourage rehabilitation of bui.ldings throughout the City, the C?~P exempts replacement pro~ects. To the extent that a rep].acement project creates a net increase in total aquare footage a~ a given site, only the sqtzare faotage representing the a net increase would count towards the 200,000 annual CAP. However, i.n determining whether a project exceeds site review thresholds and is thus subject to th~ CAP, gross project square faotage wi~1 be used. The Planning Commission expressed concern that rehabilitata.on of large buildings that have bean vacant could have adverse i.mpacts on infrastructure. Whi3.e this may ba true, it is staff~s belie~ that once the City has gran~ed development rights ta a particular site and those rights have been exercised, it is not reasonable to effectively prohibit any use of the property ar to require the owner ta go through a second ma~or discretionary permit process, even if the site has been vacant for a period of time. Changes af us~ which would tr~.gger a discretionary ~erm3.t raquirement (such as a conversion of industrial space to offica space) .. 2 7 _ ~ ~ would be sub~ect to the same raview and permit requirements as current~y exist. Finally, it shou~d also be noted that inclusion of the existing space under a CAP limitation would serve as a disincentive to renovate and upgrade this space. Thus, older, vacant bui].dings cauld end up being re-used in poor condition for uses which may not serve currant City objectives. The Planning Commi.ssion also raised a cancern about the amount of development which wauld not be sub~ect to the CAP system. Hawever, there is currently no allocation system for any type of development in the City. Although the proposed CAP does allow a significant amaunt of develapment, the CAP wauld create a substantial limit on annual development relativ~ to recen~ development ~rends and would also promote high-qua~ity pro~ects which minimize adverse environmental effects. B) Annual 5quare Footage Limit The proposed 200,000 square foot limit on non-resid~ntia7. development allows significantly less annual develop~aent than has occurred in recent years. The purpose of the 200,400 square faot limit is to restrict development to an amaunt which will not averwhelm the City's inFras~ructure, whi].e encouraqing those pro~ects that can still provide significant benefits to the commun~ty. The pxoposed CAP defines two categories af projects bassd upon sqtfare footage. "Smail projects" are those under 50,000 _ 2g _ ~ • square feet, while "large pro~ects" are those of 50,000 square ~'eet or larger. The Planning Commission expressed concern that the CAP might discaurage small pro~ects by virtue of the faet that large pro~~cts could atford more amenities and thus earn a higher scare. To address this concern, the proposed pzagram exempts projects that fa~l below site review thresholds (proposed to be 10,000 faz C2 and CM zones and 20,00~ far all ather zanes) and, as previousl.y indicated, calls for a separate competition for "small" (under 54,000 square feet) and "large" (50,OOD square feet or more} projects. Furthermore, of the total 200,000 square foot allocation, 75,000 would b~ set aside for small prajects in order ta guarantee a fair allocat~an batween smal]. and large projects. (Based upon an assumed average size o~ 30, 000 square feet, this wouJ.d a].I.ow the ~approval of two to three smal]. pzojec~s per yaar.) Although small and ~arge projects would compete separate~y, they wou].d be sub~ect to the same evaluatian criteria. In order to give the City the flexibility to approve projects larger than 204,0~0 square feet, the prapased program allows the City to "borrow" square foatage over time. Specifically, it is groposed that the City may eleat ta apply future allocations of up to 50,000 square feet per year for up to a total of twa years tawards a specific project. In e~fect, the City could guarantee a developer the right to bui3.d a maximum total of 300,000 square £eet over a pariod of three years. The developer would have to phase the development so -- 2 9 _ ~ ~ that no more than 240,000 square feet during the first year and no more than 50,00o sqtxare feet per year duri.ng each i succeeding year cou~d be built. Thus, the "borrowing" provision would not increase the aznount of square ~ootage developed in any given year. The Planning Cammission also expressed a cancern that tha CAP could result i.n piecemeal development in the City. For example, davelopers might elect to build numeraus smaller projects over a period of t~me on a Iarge parcel as an alternative to submitting one largex project that would be subject to the CAP program. The concern is that such "piecemeal" development would be af lesser quality and pravide fewer amenities or mitigatinn than larger projects. The program should include pravisions to preclude such piecemeal develapment. A fundamental objective o~ the CAP is ta limit and control the number and timing of projects. The existing regulatory framework daes not allow the City to contral the pace and amount of development over time. The "borrowing" provisian of the program wouJ.d aJ.low the City to p~rm~.t some larg~ projec~s which may provide outstanding benefits ta the City. Further, the entire CAP pracess is intended ta provide a Zevel o~ intense pro~ect scrutiny as well as developex incentives designed to promote high-quality development. Final~y, the cAP lim~~ations wou].d be enacted by ardinance, and cauld be adj~tsted to reflect issues which a~ise as a consequence of its implementation. This has been the - 30 - i ~ experience of other jurisdictians which have established allotment programs. Another af the Planning Commiss~on's conc~rns was that by allowing the phasing af development over time, the City wo~tld be unable to co~lect in-li~u fees a~l at ance. However, under the provisions of Ordinanee 136~, in-lieu Fees for commercial develapment are paid over a period of several years and are subject to a CPI inf].atar. Thus, the CAP would not change the payment period far such fees but would reduce the overall amoun~. of fees callected. However, the rationale for the imposition of the ~ees is to mitigate parks/hausing impacts cxeated by tha da~elapment which is appr4ved. As development is reduced, the impact or need for the fees is also zeduced. Thus, the CAP would not adversely affec~ ~he collectian ot in-lieu fees. C) Guidelines for Evaluating Proposed Projects In general, the guidelines for evaluating under the Commercial Allotment P~ogram promote development that serves the goals corctmunity and minimizes adverse environme guideZines wauld be updated each year in curr~nt c~mmunity cancerns and prior~ties. proposed prajects are designed to and needs of the ntal impacts. The order to reflect The guidelines outiined below establish a framewark for evaluating projects. It is recommended that the rating system used ta eva~uate prajects be deveZoped by staf~ in - 31 - ~ s consultation with an ad hoc comm~ttee appainted by the City Manager. ~ ~ The proposed guidelines for evaZuatirg projects under the CAP program would require consideration of whether proposed projects further the failowing qaal.s; a Minimize adverse environmental impacts (i.e. air quality, traffic and sewage generation); conversely, promate deve~opment in areas where existing infrastructure is best able to acaommodate additional growth; o Pravide businesses which offer goods and services needed at a City-wide o~ neighborhood level (i.e,, a supermarket in an area lacking one) a Promate canservation of natural resources (i.e., provid~ recycling facilities and energy/water canservation measures) a Suppart/provide needed comm~nity services (i.e. child care, servic~s for the homeless); . o Pramote a balance between ~~obs and housing in the City; o Provide affardable housing; o Provide new and/or enhance ex~sting open space, landscaping, and recreational facilitias; a Match employment needs of Santa Monica residents; o Promo~e ~he development af minority a~d women-owned businesses; o Minimize adverse neighborhood ~mpaets (i.e. noise, shadows); o Provide €iscal bene€its to ~he City; o Promote high qua~ity architectural and site design; o Provide cultura~ amenities (i.e. public art}; o Ensure consistency with established land usa policy. - 32 - ~ ~ D) Administrative Procedures The Perma.t Streamlining Act establishes a maximum one-year deadline for approval of projects requirinq Environmental Impact Reports. It is tha City's experience that pro~ects requiring this level of environmental revi~w aften require the full time allowed in order to be processed. In order to a~low mare expeditious review of sma~7.er pro~ects, it is proposad that there be two separate review processes. For s~ta~~ projects (i.e., thoss under 5a,oao square feet), thers will be one. six-month review perfod per y~ar; for large projects (i.e.~ those 50,000 square feet or above}, as well as for any small pro~~cts requiring an EIR, there will be one, year-long revew period. The schedula for the six man~h review period would be roughly as folZows: submittals during month one, intial study preparat~.on, staff review and initial ratings during months twa and three, Planning Commzssian hearings during the fouxth and first haJ,f af the fifth months, and City Council hearings during last half of th~ the fifth and sixth manth. For the year-].ong review period, the schedu7.e would be as follows: submittals during inonth one, environmental documentation and preliminary rating by City staff during manths two through fiv~; review and public hear~ngs by the Planning Coznmission and the A.R.B. during the third quarter; and review, public hearings, and final decisions by the City Council dur~.ng tha last quarter. ~ - 33 - ~ ~ All pro~ects in each group would be ravisw~d simultaneously. Accordingly, the program provides for an ~~application window period" of one month, during which tirue alZ appllcations must be received. Once the application window is clased, projects must be deemed either complete or incomplete within thirty days. AppZicants would have another two weeks ta make any neces5ary ad~ustments in arder to make their applications complete. Projects would first be rated by City staff. Based on the rating system developed by the Ad Hoc Advisory Committee (and approved by the City Council), the staff committee would assign preliminary scares to each projec~. Staff wou].d then ~orward all CAP development proposals and corresponding scares to the Planning Commission, which will hold one or more pub~ic hearings on the propased CAP pro~ects. ~nce the Commissfon has reviewed the pra~ects, it will rank them accarding to the evaluation criteria and forward these rankings to the City Council for final select~on and approva~. Once the City Council has made ~ts final decision, the pro~ects granted a portion of the annual allotment will be required to undergo detailed site and design review as normally required. Projects appro~ed under the CAP syst~m could only be madified in a minor fashion without having to be re--evaluated in a discretionary process. -- 3 4 - i r E) Enviranmental Review Process As part of th~ CAP, the City will prepare on an annual basis a Master En~ironmental Assessment. This Mastar Assessment will include a comprehensive analyses of environmentai conditi~ns citywide, as well as a focused environmental analysis on each indivi.dual pro~ect submitted under the CAP. The major advantages of the Master Assessmant are that it will a13ow the City to avoid duplicative analyses and wi.1.1. pravide a single, comprehensive environmental reference dacument. A more immediate issue concerns environmental revi.ew o~ the CAP concept itsalf. The recommendations of this report include authorization for staff to zetain a consultant ta prepare an environmental impact assessznent of the concept. It is anticipated that the consultant can build on the environmental assessment of the Zaning Ordinance prepared in July 1988. ~'} Developing a Rating System Once the City Council has granted conaeptual approval of the CAP, the Ad Hoc Advi.sary Coinmittee will begin the task af develaping a rating system to evaluate pro~ects. The purpose of the Ad Hoc Comm~.ttee is to ensure that a broad range of c~mmunity fnterests are represented. It is recommended that tha Advisory .Cammittee consist af staff representativas from various City divisions, one member of the A.R.B., one member of th~ Planning Conunission, six representatives of the city's' - 35 - s • neighborhoad associations, and six representatives of the business community. incZuding the Chamber af Commerce. Each organization wil~ be asked to select a representative, subject to City AZanager appraval. The main function of ~he Ad Hoc Committee will be to work wi~h staff to develop a detailed rating system far projects subject ta the CAP. The Committee would a1.so have the ongoing responsibility of assisting in the annual examination of the square faotage limit and CAP project ~valuation criteria. In d~veloping critexia for rating projects, staff and the Advisnry Committee would begin first with broad critEria and then deve~op specific standards. For example~ ana criteria might be the provision of affordable housing units. 5tandards for this criteria might include a specific number, type, or geographic locatian of housing units. Staff and the advisary committee would also have the task of prioritiaing criteria, in order to help distinguish between projects that meet a comparable number of the evaluation critex~ia. Iv. Legal Issues Staff requested an opinion from the City Attorney regarding several aspects of the CAP. Under thE CAP, there would be a limited application period once each year for major projects during which appZications for regulated praj~cts cauld be submitted for an allo~ment a~rard. - 36 - i ~ If a developer or property owner missed the f~ling period tor ma~or prajects, it would be at least eleven months bafore he ar she could submit an allotment appl~.cat~on, follawad by a review and awards procedure. The City Attorney was asked if the time periods inherent in such a system would canstitute a temparary taking of property for which the City might have to compensate the praperty owner. The City Attorney was also asked whether if a given application was repeatedly submitted and re~ected in the course of several years, the City would be subjecting itself to liabil~.ty for a "takings~~ claim. The City Attorney has issued Memorandum Opinion 88-12 which addresses these questions (see Exhibit F). The memorandum cancludes that the City Attorney finds no Iegal obstacles to the proposed program. CEQA co~plianee wauld be part of the system set up by the CAP. Due to the increasing environmental sensitivity associated with development projects, EIRs may be required of ali major projects subject ta the CAP~ potentially incl.uding some sizes o~ projects for which Negative Declarations have typicaZly been prepared ~n the past. This would pravide a higher level af CEQA review. In order ta expedite the CE~A prac~ss associated with the CAP, the system wauld include preparation and annual updatinq of a Master Environmental Assessment. This rep~rt cou~d be incorporated by referenca in CEQA documents prepared for - 37 - ~ ~ individual projects. This would obviate the need far each EIR to contain some types of similar information, although such EIRs would need to cantai.n any necessary project-specific infox~ma~ion on existing conditi,ons and po~ential impacts. v. oTxER ~tssv~s One af the concerns idantified in the Planning Commission's discussion of the CAP was the po~ential for increased labbying of the Planning Cflmmissioners and Councilmembers by developers and others, since developmant would be signifxcantly limited and the a~lacation pr~cess woul.d be competit~.ve. This kind of activity already occurs without ~he CAP. HQwever, given the added review and importance of such review, the Counci.l may considar a variety of ineans ta address this issue separat~ from the CAP system, Possible actions could include limitations an ex-parte communicatian by Commissioners and Councilmembers, additional reparting raquirements, and establishing conf~.i.ct of in~erest rules concarnir~g voting on projects where the applicant has made a campaign or other cantribution to a Councilmember. VI) FISCAL/BUDGET IMPACTS New development is subject to a varie~y of fees and taxes. Building, Planning, and General Services Department fees are structured to recover the City's costs of reviewing and pzacessing deveiapment projects, thus deve~opment applications have no net impact on the City's budget. The CAP would not alter - 38 - ~ ~ these impacts. A new fee for pro~ects processed through the CAP would be created to recover administrative costs. Housing and Parks Program fees are proportianal to the amount o~ office deveZopment which accurs in the City. The CAP cauld be structured ~o either encourage or discourage ~ffice development throuqh its rating system. Overal~, based on recent development activity, it appears that the CAP would xesu~t in lower levels of affice development, and thus lower Hausing and Parks fee revenue. Howevez, the intent of these fees is to mi.tig~te the impact of new office deveZopment rather than ac~ as a revenue mechanism. New development also generates a variety of tax revenue from a number of sources including property tax, business 1,icense tax, utility user tax, sa~es tax, and f~r hotels and matels, transi,ent occupancy tax. With a lower level of d4velopment, tax revenues would be r~duced from what would othezwise accu~; however, the City's service costs would also nat increase as much. For example, a lower Ievel of development would reqt~ir~ a ~ower rate o~ growth in the City's general fund expenditures for pol~.ce, fire, and other general govarnment services. F~nally, the CAP rating system ailows the City to explicitly consider fisca~. benefits ot' dev~Zopment as part o~ the allotm~n~ process, and as appropriate, to rate projects wi.th sa.gnificant fiscal benefi.t higher than other projects. In this respect, the CAP cauid al.law the Ci.ty a greater measura o~ control over the - 39 - • ~ nature of the re~crenue stream associated with development than curr~ntly exists. The City will incur some casts in the initial development of the CAP program. These include the costs of stafE's time, as well as the costs of rataining consultants to a) prepare an Envi.ronmental Impact Report (estimated cost: $~0,000), and b} work with th~ Advisory committee ta establish the necessary eval.uation criteria. Staff will return ta Council with a request for appropriation of ~'unds at the time that the consultant contract is returned for Council approval. RECOMMMENDATION It is recommended that the City Council: 1) Direct the City Attorney to prepare an ordinance implementing CAP for a trial period of two years; 2) Direct the City Manager to estalalish an Ad-Hoc Advisary Committee, cansisting af representatives of the business organizations and neighborhood groups, to wark with staff to develop a) ~n objec~ive, quanti~iable rating systam for evaluating projects under the CAP, and b) a methodology for determining the annual square footage ].imit under the CAP; 3) Direct staff to prepare by July 1, 1989 a resalutian ta adopt the rating system deve3.oped by the Ad Hoc Advisory Committee; and, 4) Authorize th~ Planning staff ta retain a consultant to - 40 - ~ ~ prepare an enviranmental impact assessment of the proposed CAP program. Exhibits: A- 5/14 P~anning Cammission Staff Report o~tlining CAP Program BZ- Summary af Questians/Concerns revised at May 19, 1988 Planning Commission hearing on proposed CAP B2- Transcript of Planning Comamission Discussi~n B3-- 3/18/82 Recommendatian f~r Developmen~ Evaluation and Management System (DEMS) C- List of California Jurisdictions that have approved ini~iatives and/or programs to restrict annual develapment D- Description af development allotment programs in other cities E- Example of Rating System used in City of Ventura F- r~Iemarandum Opinion 88-12 from the City Attarney Frepared lay: Peggy Curran, C/ED Directar Pau]. Berlant, Direc~or of Planning Suzanne Frick, Principal Planner John Read, Associate Planner t•7/CCCAPZ - 41 -