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SR-410-015 '" . . tj/O-tJIS I I-A APR 1 0 1990 CjED:EDD:PC:CSR (airfinal) Council Meeting: " :"-PD - (if? 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 . .- 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 BACKGROUND On January 23, 1990, the City Council rescinded its approval of General Plan Amendment Number 11 thus precluding development of the Airport Residual Land Parcel as originally proposed.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 / 1- It - 1 - APR 1 0 1990 . . 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. - 2 - . . 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. - J - , ) . . 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. - 4 - . . 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 - 5 - - . 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 - 6 - . . ..... . . 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 airfinal - 7 -