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SR-091107-9A~~ City Council and atY of Redevelopment Agency Report Santa Monica City Council and Redevelopment Agency Meeting: September 11,007 Agenda Item: _~ To: Mayor and City Council Chairperson and Redevelopment Agency From: Andy Agle, Director of Housing and Economic Development Eileen Fogarty, Director of Planning and Community Development Subject: Proposed Santa Monica Place Remodel Recommended Action Staff recommends that the City Council (Council) and Redevelopment Agency (Agency) hold a public hearing to .consider the proposal for the remodel of Santa Monica Place (Project) and amendments to existing agreements for the construction, operation and maintenance of Santa Monica Place and adjacent Parking Facilities. Staff recommends that the Agency: 1. review the proposed Mitigated Negative Declaration (MND) and comments received during the public review. process and adopt the attached Resolution adopting the MND for Santa Monica Place Remodel Project; 2. approve the proposed remodel Project as conditioned and adopt findings that it conforms to the Downtown Redevelopment Plan; and 3. authorize the Executive Director to execute amendments to the Agreement for Sublease, Operation and Maintenance of Parking Facilities and the Construction, 1 Operation and Reciprocal Easement Agreement and any other agreements required to implement direction given by the Agency at this hearing. Staff recommends that the Council authorize the City Manager to execute amendments to the Agreement for Sublease, Operation and Maintenance of Parking Facilities and the Construction, Operation and Reciprocal Easement Agreement and any other agreements required to implement direction given by the City Council at this hearing. Executive Summary The Macerich Company (Macerich), owner of Santa Monica Place, proposes to extensively remodel its existing 558,556 gross leasable square foot shopping mall (Project), to achieve a number of objectives including: • Updating and redesigning the currently enclosed mall into an outdoor shopping venue; • Establishing an open connection to the Third Street Promenade and to adjacent streets in order to better integrate the shopping center into Downtown; • Providing an attractive shopping destination that will better appeal to retailers and the Santa Monica community. The specific components which implement these objectives include: • Removing large portions of the roof above the mall's walkways and common areas • Demolishing a portion of Parking Structure 7 in order to create an open-air connection to Broadway and the Third Street Promenade • Redesigning the Second Street, Fourth Street and Colorado Avenue entrances to create stronger pedestrian-orientation • Creating an open-air dining area on the third floor with a variety of food options 2 The proposed Project will retain the two anchor department store buildings and the two parking structures, and maintain the existing permitted building height of 56 feet while reducing gross leasable square footage by 10,234 square feet, slightly reducing the intensity of site development, and resulting in a shopping center with gross leasable square footage of 548,322 that will accommodate retail and restaurant uses within the three levels. Macerich has also agreed to make streetscape improvements to Colorado Avenue, sidewalk paving improvements to Second and Fourth Streets, and elevator and stair upgrades to Parking Structures 7 and 8. Santa Monica Place is located in the C3-C (Downtown Overlay) Zoning District and is subject to the Agency's Downtown Redevelopment Plan (Redevelopment Plan). As required by the Redevelopment Plan, the Agency must approve architectural, landscape and site plans for all new and modified improvements that occur within the Project Area to ensure conformance with the provisions of the Redevelopment Plan for the Downtown Project Area and any other documents formulated pursuant to the Redevelopment Plan. The Agency must approve the Project as lead agency and authorize negotiations to amend existing agreements prior to the issuance of any City entitlements. As the Project is central to the City's downtown, ensuring that the Project is well integrated into the existing urban fabric is one of the key elements of review. The current proposal incorporates redesign of each of the entrances and components of internal circulation. This staff report summarizes the Project's proposed design, reflecting Macerich's extensive revisions throughout the Design Review process in 3 response to input received at community meetings, advisory comments from two public Planning Commission meetings and from the City's design team. Subsequent to Agency review, the Project will continue to be refined through the Architectural Review Board process. In addition to their overall review, the ARB will focus on the two remaining unresolved design areas at Colorado Avenue and the former Robinson's May building. This staff report also discusses the Project's compliance with zoning regulations, the Redevelopment Plan, City participation and approvals, Agency terms and conditions of approval, and CEQA findings. Background In the mid-1970s, the Santa Monica Redevelopment Agency entered into a Disposition and Development Agreement for the creation of Santa Monica Place, an indoor mall designed to rejuvenate Santa Monica's struggling downtown. The mall opened in 1980. In 1990, the mall underwent a remodel and in 1999 was acquired by the Macerich Company. The following is a chronology of the process which has led to the current proposal. • Initial Planning Concepts 2002: City staff and consultants worked with Macerich on a master plan for revitalizing Santa Monica Place, as part of the comprehensive update to the Civic Center Specific Plan. In June 2002, the City Council, Civic Center Working Group and Promenade Uses Task Force reviewed the proposed master plan, which was subsequently incorporated into the draft update of the Civic Center Specific Plan and related environmental review. • Original Macerich Proposal 2004: In November 2004, the Macerich Company submitted an application for a development agreement to comprehensively redevelop Santa Monica Place. The proposed redevelopment included complete 4 demolition of the existing building and parking structures, to be replaced with a mixed-use project of retail, restaurants, apartments, condominiums, offices and underground parking. In January 2005, the City Council chose not to move forvvard with negotiations on the specific Development Agreement concept proposed and directed staff to work with Macerich in an extensive community engagement process to hear ideas from the community on what changes, if any, should be made to Santa Monica Place. • Reimagine Santa Monica Place 2005: During the period between March and May 2005, public outreach included workshop invitations and a questionnaire mailed to nearly 46,000 Santa Monica households; four community workshops that facilitated participation by nearly 300 community members; facilitated community interest group meetings with several Santa Monica boards and commissions; randomly sampled telephone survey of Santa Monica households; and Re-Imagine Santa Monica Place website with updates and summary information. During the summer of 2005, Federated Department Stores (the parent company of Macy's) announced the acquisition of May Co. (the parent company of Robinson-May) and in early 2006, Federated announced it was closing the Robinson-May store at Santa Monica Place. As a result, the Macerich Company requested that Re-Imagine Santa Monica Place activities be placed on hold, awaiting further information on the disposition of the Robinson- May store. Macerich subsequently acquired that store site. The Macerich Company has significantly re-evaluated their plans for Santa Monica Place as reflected in their remodel proposal. • Design Review by Staff: Planning and Community Development's urban design team worked closely with Macerich during the pre-submittal process. Key issues concerning integration and compatibility with the Downtown have been discussed and refined in the design review, including: • Improving visual connection to the Promenade • Clarifying and simplifying the Fourth Street entrance • Re-designing the Colorado entrance to provide a greater level of pedestrian orientation in relation to the importance of Colorado Avenue • Clarifying internal circulation • Current Proposal 2007: On March 6, 2007, Macerich submitted an application for Redevelopment Agency approval of the proposed remodel. Public Outreach On March 12, 2007, staff held a design update meeting to discuss the project and take public comments. Approximately 80 members of the public attended a presentation and 5 discussions. While most participants spoke in favor of the remodeling concept, several preferred the existing enclosed mall. Additional key issues raised in the community meeting included: • Traffic in the downtown • Visual and pedestrian linkages from Colorado to Broadway • Location of bathrooms • Economically diverse retail • Public#ransportation • Entrance design Macerich continues to address public concerns. Bathrooms have been located on each floor and entrance designs have been refined. The Mitigated Negative Declaration does not find any permanent traffic impacts to be associated with the project and identifies mitigations to address temporary traffic impacts associated with construction. Commission Action On June 20, 2007, Macerich presented its Project before the Planning Commission to seek input concerning the building and urban design and overall project aesthetics with emphasis on: • Integration of the project into the downtown and adjacent surroundings. • Compatibility of the four proposed remodeled entrances to the downtown • The conceptual design proposal for the exterior remodel of the former Robinson's-May site at the corner of Second and Broadway. The Planning Commission unanimously supported the project. In addition, several members of the public spoke in support of the project including the Bayside District. In their discussion the Planning Commission encouraged resolution of pedestrian/vehicle conflicts at the entrances to the parking garages, and the pursuit of sustainable construction practices and LEED certification. Commission members raised some concerns related to potential wind conditions at the third floor food court, and urban design incompatibility of the existing Macy's building. Macerich indicated that the project design will include windscreens and heating elements at the Third floor dining areas. Macerich is also meeting with Macy's representatives to encourage them to renovate their department store. 6 Project Proposal Macerich proposes to extensively remodel its existing 558,556 gross leasable square foot shopping mall to achieve a number of objectives including: • Updating and redesigning the currently enclosed mall into an outdoor shopping venue; • Establishing an open connection to the Third Street Promenade and to adjacent streets in order to better integrate the shopping center into Downtown; and • Providing an attractive shopping destination that will better appeal to retailers and the Santa Monica community. The proposed Project will retain the two anchor department store buildings (one anchor store presently occupied by Macy's and the other formally occupied by Robinson's May) and the two parking structures, and maintain the existing permitted building height of 56 feet with skylight projections to 61 feet while reducing gross leasable square footage by 10,234 square feet, slightly reducing the intensity of site development. The Project will result in a shopping center with gross leasable square footage of 548,322, accommodating retail and restaurant uses within the three levels. This reduction in retail space will allow for an increase in available open space and pedestrian walkways that will lead to a central open-air plaza. The principle design components of the Project are as follows • Open Air.• The Project proposes to partially convert the mall to an outdoor environment by removing the roof from the northerly axis to provide a stronger connection to the Promenade. Additional portions of the roof in the mall interior are proposed for removal, creating courtyards and pedestrian walkways that are open to the sky, benefiting from natural ventilation and air circulation. • Food Service: To strengthen the connection with the Third Street Promenade, the food court, (currently located on the northern axis that approaches the 7 Promenade), would be relocated to allow the architectural vocabulary of the existing successful outdoor pedestrian street to extend into this site. The food court is proposed to be relocated to the third floor, where it will be complimented by outdoor seating, viewing areas, and other restaurant uses. The intent of this principally outdoor space is to create a public amenity that allows for food service choices combined with a more attractive option for outdoor dining and enjoyment of views. • Demolition of Portions of the Parking Deck. In order to accomplish the proposed remodel and to complete the key concept of opening the northern axis towards the Promenade, the proposed Project requires that certain portions of the Agency-owned Parking Structure 7, on levels four, five and six, comprising 63 parking spaces, be demolished. The demolition would remove the portions of the garage over the food court and retail space. However, given the reduction of gross leasable square footage of 10,234 square feet throughout the mall, and re- striping of parking structure numbers 7 and 8, the Project will comply with both Zoning Ordinance and Redevelopment Plan parking standards. The Agency currently holds an exclusive easement on the sections proposed to be demolished; it is proposed that the Agency be compensated at fair market value for the relinquishment of the easement prior to issuance of building permits (see the "Relinquishment of Easement" discussion later in this report. • Entrances: Redesign of the four entrances to promote a more welcoming pedestrian-oriented and integrated design. Each entrance intends to augment the character of its particular context. Broadway -The entrance from Broadway, across from the Third Street Promenade, will be the most significantly changed, removing the roof from the current fagade line back to the center of the building, and re- configuring the store fronts to create a continuation of the outdoor mall street frontage found on Third Street. In order to accomplish this urban design component, the existing food court will be relocated to the Third Floor, with the intent of providing an ambiance of open space and views, as well as a providing a publicly accessible urban gathering place associated with both counter and table service restaurants. Fourth Street -The Fourth Street entrance has been redesigned to provide a clear entrance and path of travel, with the intent of providing direct pedestrian and visual access from the street to the corner stores, activating the corner and the building fagade. Colorado Avenue -The Colorado Avenue entrance will be redesigned to provide a more welcoming entrance with the intent to simplify the current complex series of stairs and ramps, to allow for this entrance to better connect to the Civic Center area and have a more significant presence in relation to the importance of Colorado Avenue and its role as a main thoroughfare. Second Street -The Second Street entrance will open the second and third floors to provide a visual connection between the third floor open space 9 and dining area and the outdoors. curved architectural vocabulary to beach and Pacific Ocean. Project Analysis The design will use an undulating, associate with the proximity of the Compliance with the City's Downtown Overlay District C-3C Zone The Project site is located within the Downtown Overly District (C3-C). The C3-C District provides for a concentration of comparison retail and cultural uses in addition to complementary uses such as hotels, offices, and housing. The development standards for the C3-C District are intended to permit a greater amount of floor area per parcel in order to encourage an increase in the mix of activity in the area while providing for the development that maintains a sense of human scale and pedestrian-oriented character, consistent with the goals, objectives and policies of the General Plan. The property development standards for the C3-C District designate a limit of 4 stories, 56 feet in height, and 2.5 FAR. The existing height in the sections of the proposed Project is 56 feet, with skylight projections that extend up to 61 feet tall. The proposed Project meets 10 the requirements of the Santa Monica Municipal Code in relation to height, number of parking spaces and use. The Administrative Permit approval process will evaluate all applicable aspects of the Code in greater detail. The Architectural Review Board review will focus on the applicable details of building design, colors, materials and signage. Parking -The existing parking supply in Structures 7 and 8 totals 1,968 spaces. Structure 7 provides a total of 939 spaces in six levels and Structure 8 provides 1,037 spaces in six levels. In addition, Santa Monica Place is governed by an off-site parking agreement that provides an additional 278 spaces. The Project will provide 2,197 parking spaces (1,919 on-site plus 278 off-site), four in surplus of what is required under the Redevelopment Plan and 220 in surplus of the Zoning ordinance requirements. Traffic & Circulation - As proposed, the Project does not alter the traffic and circulation of the project area. Due to the reduction of square footage of developed area, trip generation will not be intensified. The exits and entrances remain the same. As a separate matter, staff is working with Macerich to improve the internal circulation and the entrance and exit service of the garages, and has initiated discussions regarding incorporating these garages into the City's broader attendant-parking program. Urban Design & Neighborhood Compatibility -The City's Planning design team, serving as an advisor to the Redevelopment Agency, has evaluated the Project's proposed design for consistency with (1) Redevelopment Plan requirements in Plan §410 that alterations "...be safe and sound in all physical respects, and be attractive in appearance and not detrimental to the surrounding uses," (2) requirements in Plan §422 11 that the remodel be "in accordance with architectural, landscape, and site plans submitted to and approved by the Agency" consistent with objectives of the Plan "to create an attractive and pleasant environment" through "consideration to good design, open space, and other amenities to enhance the aesthetic quality of the Project area," and (3) Architectural Review Board standards. In reviewing the Project for urban design and neighborhood compatibility, staff has worked with Macerich on key design issues. The proposed design represents the revisions in response to both community and staff input, resulting in a Project that addresses the Redevelopment Plan requirements noted above. The Project design details will continue to be refined through the ARB review process. The following diagram represents the issues addressed to date including: improving visual connection to the Promenade, clarifying and simplifying the Fourth Street entrance, re-designing the Colorado entrance to provide a greater level of pedestrian orientation clarifying internal circulation. 12 Following Redevelopment Agency approval of the proposed remodel concept, the Project will be subject to a Planning Administrative Approval for zoning compliance and Architectural Review Board review for design. Specific publicly visible tenant improvements of individual store facades and signage will also require Architectural Review Board approval. Attachment F identifies the areas for which additional ARB review will be required. 13 The following design areas are not yet fully resolved and will be addressed in the ARB process: • Revision of the Colorado entrance to include amenities such as benches, tables, additional landscaping and site specific design elements to augment the design revisions, and further enliven the important Colorado Avenue entrance. • Design details related to a concept plan for the as- yet unleased former Robinson's May site at the corner of 2"d Street and Broadway which occupies a key corner in the downtown. Macerich worked with the City's urban design team to provide design revisions to all the entrances and has refined the building facade concept of the former Rob-May building to improve its pedestrian orientation and interaction with the street front while allowing the greatest potential flexibility for future tenants. Once a tenant(s) has been identified for this space; the City's urban design team will work closely will Macerich on the proposed design, prior to consideration by the Architectural Review Board ("ARB"). Public Art The applicant is complying with the new developer cultural art requirement by providing artwork on site. At this time, the applicant has secured the services of a respected public art consultant and is working with him to identify the appropriate artist or artists to develop a proposal for review. The artwork will be subject to approval by the Arts Commission prior to the issuance of a building permit. Compliance with the Redevelopment Plan for the Downtown Proiect Area The City of Santa Monica's Redevelopment Plan for the Downtown Project Area was first established in 1976 to provide a legal framework for planning and implementing revitalization activities in the Agency's Downtown Project Area. A key objective of the Redevelopment Plan for Downtown is to create a unified shopping district by linking 14 dispersed business centers of the central downtown area and to provide overall continuity between the central business district and the Civic Center areas of the city. In addition to providing the Agency the authority to perform design review and approval, the Redevelopment Plan allows the Agency to impose reasonable conditions of approval required as a result of the Project. Relinquishment of Easement In order to complete the key concept of opening the northern axis of the proposed Project towards the Promenade, certain portions of levels 4, 5 and 6 of Parking Structure 7 (Broadway /Fourth Street), must be removed, eliminating 63 parking spaces and resulting in the need for the Agency to relinquish its exclusive easement for use of those sections to Macerich. The demolition would remove the portions of the Parking Structure 7 which currently overhangs a section of the food court and the Kenneth Cole store. In June 2007, Agency staff obtained an appraisal on the fair market value of the 63 spaces lost to the relinquishment of the Agency's exclusive easement: The appraisal methodology was based on the additional costs associated with increasing a proposed parking structure size by 63 parking spaces. The results of the analysis are summarized in the following table: Area Per Parking Space (SF) 350 Replacement Cost Per Square Foot $65.14 Replacement Cost Per Parking Space Rounded $22,799 Number of Parking Spaces 63 Total Replacement Cost $1,436,400 Rounded $1,440,000 15 As the proposed Project involves the relinquishment of a public asset, it is proposed that Macerich compensate the Agency for the asset's fair market value. Agency Conditions of Approval Redevelopment Plan §§ 410 and 422 provide that the Project shall be safe and sound in all physical respects, attractive in appearance, not detrimental to the surrounding uses, and reviewed for good design, open space, and other amenities to enhance the aesthetic quality of the project area. To ensure consistency with these requirements, the Agency may impose conditions on the Project's approval. As a condition of Project approval by the Agency, Macerich has agreed to pay for and perform the following: 0 2nd Street and 4th Street o Selective demolition and replacement of sidewalks and pavement o Clearly defined pedestrian path of travel on 4t" street, which includes replacement of sidewalks and pavement o Remove and replace the landscape located in the planters along exterior of mall o Colorado Avenue o Selective demolition and replacement of sidewalks and pavement o Landscaping o Install pedestrian lighting o Install street trees o Parking Structures 7 & 8 o Remove and replace the interior stairs o Remove and replace two elevators in parking structure 7 and one elevator in parking structure 8. o Property Tax Assessment Appeals o Agree to notify Agency of intent to appeal property assessment 20 days before filing an appeal and consent to Agency participation in any assessment appeals. 16 As a condition of Project approval by the Agency, Macerich has also agreed to pay the Agency $1,440,000 for the relinquishment of the exclusive easement in parking structure 7 and loss of 63 parking spaces. Staff recommends that the Agency agree to increase the amount allocated toward parking structure aesthetic improvements by an equivalent amount. Amendments to Existing Agreements The construction, operation and maintenance of Santa Monica Place and the adjacent parking structures is subject to a number of agreements between the Agency, City, the shopping mall developer, and the two major department store owners. These agreements include, but are not limited to, the Agreement for Sublease, Operation and Maintenance of Parking Facilities ("Sublease"), and the Construction, Operation and Reciprocal Easement Agreement ("REA"). Staff requests direction from the Agency and City to authorize the Executive Director and City Manger, respectively, to negotiate amendments to these two agreements to implement the following project conditions: • Requiring public access to the shopping mall facility during operating hours. (REA) • Requiring developer, and its successors in interest, to notify the Agency of its intent to file an appeal of a property tax assessment and to consent to Agency participation in any assessment appeal. (REA) • Requiring developer to pay fair market value for relinquishment of the Agency's exclusive easement for parking uses in the Project property in the amount of One Million Four Hundred Forty Thousand Dollars ($1,440,000), before the issuance of a building permit. (Sublease and REA) • Requiring developer to construct the public improvements to 2"d Street and 4cn Street, Colorado Avenue, and Parking Structures 7 and 8 that are identified in the previous section of this staff report. (Sublease and REA) 17 • Requiring developer to relocate the traffic signal controller box at the corner of Broadway and Second Street, at a cost up to $25,000. (REA) Environmental Analysis Pursuant to CEQA, the project has undergone an Initial Study process, resulting in preparation of a Mitigated Negative Declaration (MND) provided as Attachment E. The MND finds that there are no significant impacts that cannot be mitigated. The potentially significant impacts were chiefly associated with construction. Mitigations were identified to address construction impacts related to air quality, traffic and parking, noise, hazardous materials and neighborhood effects. In addition, mitigations reflecting standard Santa Monica building requirements were identified to address potential geology and soils impacts associated with construction in areas with active or potentially active earthquake faults. The Draft IS/MND was circulated for 30 days with a public comment period ending on August 24. Although a Mitigated Negative Declaration does not require a response to comments, responses to comments received within the public comment period are included in Attachment A. Because potentially significant impacts can be mitigated to insignificance, approval of a resolution adopting the MND (Attachment C) is recommended. The applicant has agreed to certain specific project conditions related to infrastructure, streetscape and business .terms, as detailed in Attachment D. 18 BUDGET /FINANCIAL IMPACT While approval of the Santa Monica Place remodel does not have immediate and direct budgetary impacts, the eventual remodel of Santa Monica Place is expected to have beneficial impacts on the City's sales tax and property tax receipts. The Agency will deposit the payment of $1,440,000, for the relinquishing of the parking easement in Parking Structure 7, to revenue account 16263.400170. The budgetary actions for the $1,440,000 will be included as additional funding towards the aesthetic enhancements for Parking Structures 7 and 8. NEXT STEPS Following Agency approval, the proposed remodel will go before the Architectural Review Board and California Coastal Commission for review. Macerich plans to begin construction during early 2008, with an expected construction period of approximately 18 months, in order to be open in time for the 2009 Holiday Shopping Season. Staff has also initiated discussions with Macerich regarding implementing an attendant- parking program for Parking Structures 7 and 8 that will be integrated with the parking operations of the other Downtown public parking structures. This presents an opportunity to create an integrated parking program with uniform public information and consolidated parking management throughout the Downtown. Design concepts for aesthetic enhancements to Parking Structures 7 and 8 have also been initiated. Staff anticipates bringing both matters before the Council/Agency later this year. 19 Prepared by: Tina Rodriguez, Redevelopment Administrator Approved: Andy Agle, Director Housing and Econo Approved: Forwarded to Agency: 1 ~L _/ P a ont Ewell utive Director- Forwarded to Council: Attachment A: MND Comments and Responses Attachment B: Resolution adopting MND Attachment C: Findings of Redevelopment Plan Conformity Attachment D: Conditions of Agency Approval Attachment E: Final Mitigated Negative Declaration ("IS/MND") Attachment F: ARB areas of review (Exhibit 2 of Conditions of Attachment D) Attachment G: Proposed Project Plans 20 Agency Approval, Reference Resolution No. 505 (RAS). Additional attachments available for review in City Clerk's Office.