SR-410-015
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APR 1 0 1990
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Council Meeting:
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April 10, 1990
Santa Mon1ca, California
TO:
The Mayor and City Council
FROM:
City staff
SUBJECT:
Recommendation Regarding Future Planning Efforts
for the Development of the Airport Residual Land
Parcel
INTRODUCTION
This report recommends that the city Council not proceed at this
time with planning for development of the residual land parcel at
the Santa Monica Airport. Staff recommends that the City Council
authorize city~taff to find interim uses for the property that
utilize exisiing structures and unused property that do not
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impact the -surrounding neighborhood and that do not preclude
development of the property for some other purpose at some future
time. staff further recommends that the Council authorize the
Ci ty Manager to negotiate and execute a Right of First Refusal
agreement with Reliance Development Group.
BACKGROUND
On January 23, 1990, the City Council rescinded its approval of
General Plan Amendment Number 11 thus precluding development of
the Airport Residual Land Parcel as originally proposed. At that
meeting, the Council requested that staff investigate various
processes available to the city to plan for the use of the
parcel,
to consult with interested community members
in
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APR 1 0 1990
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formulating a recommendation, and to recommend to the city
Council an appropriate course of action.
In February, staff met with representatives of groups and
individuals who had been active in the Airport Residual Land
Development project process. Staff presented a set of options
to ini tiate discussions on appropriate processes: these ranged
from a lengthy "start overU process to taking no action at all.
The views of these representatives varied but everyone appeared
to agree with the notion that the community should be involved in
any future decision-making process in some way, most notably
through an eventual ballot measure. Concepts expressed included:
1. That community workshops be held to work with City staff
during initial planning stages to help determine the appropriate
use(s) for the parcel;
2. That a "working groupU be formed to work with city staff
through the entire process;
3. That the concept of development of the parcel be placed on a
ballot as the first step in a process to determine if the voters
want to develop the land at all:
4. That a specific, Council-approved project be placed on the
ballot, either quickly or as the result of a lengthy process, as
the last step in the planning effort: and,
5. That the entire process be halted until the legal issues
surrounding the City's right to develop the land are settled by
the Courts.
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It is important to note that the Airport project as previously
proposed to the Council by staff was itself the result of a
lengthy public process, including the kinds of workshops
suggested above, public hearings, a Planning Commission and city
Council approved Request for Proposals, and so forth. Indeed,
one of the inherent drawbacks in a lengthy public process is the
fact that attitudes, players and physical settings change over
the course of the process: analyses become dated, new
individuals who may not have participated in earlier processes
step forth and demand retracing of steps, or the public's
perception of a project or its context shifts.
staff has evaluated the prospects for a meaningful process that
might yield some consolidation of ideas for appropriate uses of
the residual land. A succinct process resulting in a ballot
issue being placed before voters for the November 1990 election
does not appear to be feasible. There is significant divers1ty
among the strongly held opinions that divide the community on
this issue: they cannot be readily resolved. Given the
importance of this asset for the future of the ci ty , it is
questionable whether it is prudent to rush to judgement during
this brief period. The atmosphere is so volatile and charged
over the use of this resource that it is unlikely that resolution
can be pursued at this time with an appropriate level of
objectivity. Simply put, the stakes in terms of potential costs
and benefits for the City are great: any lasting decisions about
the land should be made with equally great care.
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staff has also evaluated instituting a new "start over" process
to rethink the use of the land, which would most likely culminate
one or two years from now in a ballot measure for the voters'
consideration. staff cannot recommend commencing such a process
at this time due to workload considerations. With the variety of
major planning efforts underway, staff is feeling "spread th1n"
and overtapped with regard to available resources. Attention is
focused on the Civic Center Specific Plan, the Growth Management
Stra tegy , the General Plan update, the Sand and Sea Club site
hotel proj ect proposal, updating of the City's seismic safety
standards for unsafe buildings, and so forth. Add1tionally, it
may be useful to await the conclusion of the Growth Management
Strategy process to better understand the future of the city 1n
terms of both development pressures and revenues. In light of
these concerns, staff does not recommend beginning a new, lengthy
process at this juncture with present staff resources.
staff, therefore, recommends that the proj ect be dropped from
further consideration at this time. Such a step does not preclude
the City from pursuing the development of the site for any
purpose in the future if it so wishes. In the interim, we
recommend the site be used to the fullest extent possible for
revenue purposes through the use of existing structures in a
manner that does not negatively impact the surrounding
neighborhoods. This is necessary in light of the significant
deficit the Airport Fund is facing this year.
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RIGHT OF FIRST REFUSAL AGREEMENT WITH RELIANCE DEVELOPMENT GROUP
In April, 1986, the city issued a Request for Proposals asking
developers nationwide to propose how they would develop 1.275
million square feet of commercial buildings for the city. After
two rounds of competition and a significant expenditure of funds
by all the competing firms, Reliance Development Group (RDG) was
selected by staff and approved as the developer for the site by
the city council. RDG has negotiated in good faith with the City
since that time, and has expended approximately $2.5 million
dollars on architectural work, pre-development activities, legal
assistance and so forth. It must be exphasized that this was
undertaken by RDG at the request of the city.
The City has in effect at this time an Exclusive Negotiating
Agreement with RDG. The agreement limits the city's ability to
negotiate with other parties for use of the airport land. The
ENA was secured by a Letter of Credit for $800,000, and can be
terminated by the City. Because inherent in the recommendations
of this report is the cessation of negotiations with RDG, it is
appropriate to terminate the ENA as part of the resolution of the
project disposition. This would enable the city to use the the
residual land and its existing structures to the fullest extent
possible without restriction as to future encumbrances.
However, in recognition of their good faith efforts and
signficant costs incurred in both dollars and lost opportunitYt
it is recommended that the City Manager be authorized to
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negotiate and execute a Right of First Refusal Agreement w1th
ROO. This agreement would state that if the city decides to
commercially develop any portion of the residual land within the
next five years, ROG would have the right to review the terms the
city set forth and accept or reject them. This would not tie the
City's hands in any way or commit the City to any particular
course of action. staff posits this recommendation in the belief
that it constitutes fair treatment of the developer without
restricting the City's latitude on future policy decisions. In
the event that the City Manager is unable to negotiate an
acceptable Right of First Refusal Agreement with ROO, the ENA
would be terminated and all futher obligations cease.
RECOMMENDATION
staff respectfully recommends the City council take the following
actions:
1. Direct staff to cease pursuit of development of a plan for
the use or redevelopment of the residual land at this time;
2. Direct staff to pursue the use of the existing structures and
land at the airport to maximize revenues to the Airport Fund in a
manner that will not negatively impact airport neighbors or
unreasonably prejudice future land use decisions or preclude the
city from commencing a planning process to reuse the property;
3. Authorize the city Manager to negotiate and execute a Right
of First Refusal Agreement with Reliance Development Group where
RDG would have the right to review and accept terms set forth by
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the city for commercial development of the site if it is to be
undertaken by the City within the next five years; and,
4. Authorize the C1ty Manager to terminate the Exclusive
Negotiating Agreement with RDG and release the Letter of Credit
held by the City upon the execution of the Right of First Refusal
Agreement or the cessation of negotiations.
Prepared by: John Jalili, City Manager
Peggy Curran, Director of Community and
Economic Development
Christopher Rudd, Sr. Administrative Analyst
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