SR-06241986-11C1 t - ~..
JUti 2 ~ 1l16
C/ED:PC:ms
City Council Meeting 6/24/86
Santa Monica, California
TO: Mayor and City Council
FROM: City Staff
SUBJECT: Recommendation to Approve Agreement with Schurgin
Development Corporation for City Participation
Development of a Full-Service Grocery Market and
Retail Project in the Pico Neighborhood
INTRODUCTION
This report requests the City Council approve an agreement with
the Schurgin Development Corporation for City participation in
the development of a retail project of approximately 65,000
square feet, including a full-service grocery market, to be
located at the northwest corner of Pico and Cloverfield
Boulevards.
BACKGROUND
The Pico neighborhood and adjacent Sunset Park neighborhood have
long been recognized as having inadequate grocery shopping
available to residents. In consideration of this problem, the
Council approved an objective in the current fiscal year budget
in the Department of Community and Economic Development which
directs the Department to "facilitate the development of a
supermarket-anchored neighborhood shopping center in the Pico
neighborhood". In an effort to meet this objective, staff has
been in communication for over a year with the owner of the
northwest corner parcel of Pico and Cloverfield Boulevards.
Smart and Final Iris was located at this site until it vacated
t ~-~,
- 1 - ~uN Z ~ 19.x.
the premises this past December. This parcel was targeted as a
possible market site because it is sufficiently large to
accommodate a full-service market as part of a larger retail
development, and because it was available for purchase. The
owner of the property was encouraged to work with the City to
find a purchaser who would be willing to establish a market. The
owner was very cooperative, placing staff in contact with several
prospective purchasers to discuss the opportunities for a market
on the site. These communications led staff into discussions
with the Schurgin Development Corporation, the party currently in
escrow on the property, to discuss the means by which a grocery
market could be developed on the site.
Unfortunately, despite the owner's cooperative attitude, the
market value of the land is too high to warrant the development
of a market; typically a grocery store operation can amortize
land costs of about $19 per square foot. This land is priced at
$47 per square foot, which is reasonable for commercially zoned
property along Pico. The high cost of land in Santa Monica is a
major factor in causing the market shortage problem in the first
place. Other communities with high land values are facing
similar problems of retaining or attracting grocery stores, which
operate on a much lower margin of profit that other retail
establishments. Thus it was clear that for the City to achieve
its goal of having a market in this area it would have to assist
the project in some fashion or find other incentives for this
type of development.
- 2 -
Project Description
The proposed project is a retail center of approximately 65,000
square feet consisting of two stories in an "L" shaped
development. The sales area grocery market portion of this
center will be a minimum of 10,000 square feet. The market will
be a full-service grocery store, which means it will sell fresh
meats and produce in addition to other grocery items. While
liquor sales will be permitted in the grocery store, the balance
of the development will not include any liquor outlets. Parking
for the project, which would meet code requirements, is provided
in one level of subterranean parking and surface parking in front
of the retail space.
The land is currently zoned C-4 and R-2, which permits this use
and the square footage proposed with a Conditional Use Permit for
the R-2 zoned portion of the property. If the agreement with
Schurgin is approved, the project will proceed through the normal
planning process of the City. Approval of the Agreement does not
constitute project approval, which will remain the discretion of
the Planning Commission or the City Council on appeal.
Schurgin Development Corporation
The Schurgin Development Corporation was established in 1976 as
developers of retail convenience and neighborhood shopping
centers. They have successful developments in eight states, but
most of their projects are located throughout California.
Schurgin has worked with many cities and redevelopment agencies
in the development of shopping centers. In 1985 Schurgin
completed its 50th shopping center.
- 3 -
Pico Nei hborhood Association Involvement
Once initial discussions made it evident that the developer was
willing to consider a market on the site, staff put the developer
in touch with representatives of the Pico Neighborhood
Association. As a result of several community meetings, the
developer agreed to pursue a full-service market on the site and
that the other retail spaces in the development would not include
any liquor outlets.
One significant result of the interaction with the neighbors
concerns parking for the project. Staff's initial position with
Schurgin was that the building should be built along the street
frontage with the parking in the rear. Schurgin reluctantly
agreed to this restriction, although stated clearly its position
that it is very difficult to make any retail, but especially a
grocery store, work without clear ample parking in front.
However, the meetings with the neighborhood contradicted the
position of staff on this point. The neighbors stressed a clear
preference for parking in front, along Pico and Cloverfield,
rather than to the rear and adjacent to an apartment building.
The neighbors believe it will enhance security, both perceived
and real, for the establishment to have the parking area clearly
visible from the street. They also feel this will buffer noise
from the adjacent neighbors. Because of the neighbors strong
opinion about the parking, staff agreed to support the developer
in placing the parking in front of the project. After the
meetings with Schurgin, the Pico neighborhood representatives
endorsed the proposed development and requested City staff to
- 4 -
work with the developer to find a way to make the market
economically feasible.
Project Financing
Typically a retail development such as this could expect to
realize rents significantly higher than the approximately
$.90/month a grocery market can be expected to pay. Thus, the
inclusion of a market in the project carries a cost to the
developer he would not otherwise bear, and in this case makes the
project less profitable and functions as a disincentive for the
developer to proceed.
To encourage the development of a market, staff began a series of
discussions with Schurgin, along with the assistance of Morrison
and Foerster, a law firm specializing in tax-exempt bond issues
which worked with the City in the issuance of the tax allocation
bonds for the Ocean Park Beach Improvement Plan, to investigate
the possibility of using such bonds to improve the economics of
the project. Ultimately, the use of such bonds was determined to
be infeasible due to restrictions in state and federal law and
the state's unwillingness so far this year to establish
allocations with which cities can issue Industrial Revenue Bonds
(IDBs). The concept of a taxable bond issue was also
investigated but was not found to be useful in improving the
economics of the project.
Staff worked with the developer to devise a method of City
participation in the project that would ensure that a market
would be developed and which would make the project sufficiently
- 5 -
desirable from a development perspective. Staff also enlisted
the assistance of the real estate consulting firm Kotin, Regan
and Mouchly to review the terms of the development. The
following participation arrangement was developed:
City Participation in the Project
The City will contribute to the project the lesser of 50~ of the
sales tax generated by the project or $300,000, as follows:
Year 1 - - $100,000
Year 2 - - $ 80,000
Year 3 - - 40% of the sales tax receipts from the previous
year
Year 4 - - 30~ of the sales tax receipts from the
previous year
Year 5 - - 20~ of the sales tax receipts from the
previous year
Year 6 - - l00 of the sales tax receipts from the
previous year
The first City payment would commence six months after the
opening of the Market. The payments extend into the sixth year
because sales tax information for a given year does not become
available until the following year.
If the market ceases to operate, all payments will cease until
the market is resumed. If the market is replaced with another
use within the first five years, the developer will repay the
City any payments it received that exceeded 500 of the sales tax
receipts from the project while the market was in operation.
- 6 -
Neighborhood Benefit
In exchange for this annual revenue, the developer agrees to
enter into a minimum five-year lease with a full-service grocery
market operator. The developer will also refund the entire City
contribution to the project to the Pico neighborhood during years
7 through 10 of the project. This developer contribution will be
as follows:
Year 7 - - 10~ of the total City contribution
Year 8 - - 20~ of the total City contribution
Year 9 - - 30~ of the total City contribution
Year 10 - - 40~ of the total City contribution.
This refund of the City contribution will go to artists or
non-profit organization(s), to be approved by the City, for arts
projects, graffiti removal or other beautification projects in
the Pico Neighborhood of the City.
If the project is sold before year 9, any outstanding balance due
from the Developer will be paid at the time of sale.
BUDGET/FINANCIAL IMPACT
This agreement will necessitate
amount not to exceed $300,000
payments totalling $180,000,
General Fund unobligated Fund
Neighborhood Reserve Account.
they are linked to the receipt
the expenditure by the City of an
over five years. The first two
must be appropriated from the
Balance to a General Fund Pico
The balance of the payments, as
of sales tax, do not need to be
- 7 -
appropriated at this time. Staff will return with budget
appropriation requests for funds as necessary.
RECOMMENDATION
It is respectfully recommended that the City Council adopt the
attached resolution approving the Agreement with Schurgin
Development Corporation. It is further recommended that the City
Council appropriate $180,000 from the General Fund unobligated
Fund Balance to a General Fund Pico Neighborhood Reserve Account
for the purpose of payment under this agreement.
Prepared by: John Jalili, City Manager
Peggy Curran, Director of Community and Economic
Development
Attachments: Resolution
Agreement
Site Map
- 8 -
FFANK '"
•n a
t ~ ~
z.~p : . Q
:s~i ~`^?
~_
:r ~ ~.i J
-~1.{1GH
I
f w 1 D
i93ar•r+ •
L'
,•
IIY• 1f76Y D
~ D ~-
B1.-VO
EFFIEL~ /
/ ~n0
/ ~.•r
~- ~ it
,, D
~/ a
/D
_ ; ~ 7 i•CA~s
/~~
IY ~
5T.
2~-4~ ._.. ny
. ' ~ 1
~ ,..~
.., ...
1 ~ 1 ~ ~
1 ' ~ •
i. ~.
~ 2
11
R.c
~-~F '
~,.• ,11
~1 • 1 `T 1
7 _1~ i-D ~ I~
a 5
z'.
~ Y
~ p6.9
G~ ~
20.9 ~
Q
9.
1 -`~ Q Z
i !49 ti
2 29-~'
~ 'A ~
~' y .
r1j ~ ~' t .~ 1t
1 ~h Y
p = D' • ~` 1•iy 1i
.• ~ ,
I
~, ~ D C I'`y
I L • ~
~' R `
2 . Y
r a
~e ~ 940
~` ~ • / i ® ti
~]e ~ 1 ~ ~
~e ti ~ ~ J i
Y ~ " -~; ti
oaf=A a
..,..,
~;'~~~~ ,~ o
IIIe` t-F ~~ , .n
i
,.d Irt /D/ DER FIELD
9 ,D,.1 G LO 6 ~~ D. ~~
M= . i
q0[~ l1 In/1
1r. llr ~ • ,11 D. l~
RD
~
*
~
1J ~ 'L R R '
a
r
s? ~~F , • ~ r!`
ar s
.
,T ~~
I
CFA ~'r
1 !RH ,
`
M i.l
•y /sriia coat
~`~ r•i
t
r
~
• ,
•
_ ~ 'I '1~ w.v i.r. ..
s 23ao
t ...
eaas
~aA~ ~ 1 I I
~1~1C
PARK `-~- ~-i- _L__LL'il_
J
VfRdfN/A AVE. ^Mw.l + J
/, ~
' /I ~/ ^, ~
(~ P ~~ •-,, y ~
,_ •
;~ ~1~- Z3AlD
/ ~ ZZ~
~ A O EYO~.. r.•-. ~ /
/
Y.,f:.
Z F '
• , d ~~~ ~ -
[~~ ~ ~ D I g"MD Z
D gyp, T rC~ i = 1
r~ •~
sT. r,l.a t. i
q ^ ~uw I ` 2IS GH p!0 1 • 7 O~RR b. •Cf i ~ ~
~i ti M 0-~ OII ~.J~ ~i ~
~Wt t°oe i~ a ~ r~`'1 Y l 1 a r ~!• F' C
1 `A N a ~ rv O ' I ~~ l~ o ~ . ]a _. _.t.s_ -fir
a a t/7! lyJ~- • M1
~ ~ --D , ,.s ~ • -21sT
~-ry}~c ,. i IIYe ! D A pyl'h h A ~ ,• • ~ • ~ i K r-... _ .v ws, nr
~d -t~ i~ ~
EXHIBIT "A"
LEGAL
OESCRIPTIO~:
PARCEL 1:
ThAT PORTION GF LOT 3 IN BLOCK 25, ERKENBRECNER SYNOICAT£ SANTA MGNICA TRACT
iN THE-CITY OF SANTa MONICa• IN ThE COUNTY OF LOS ANGELES, STATE OF --
CALIFORNIA. AS PER. MAP RECORDED Ih B00+~ b PAGES 26 AND 27 DF MAPS• IN THE
OFFICE OF THE COut~TY RECOROEk OF SAID COUNTY• DESCRIBED AS FOLLONS:
BEGINNING AT THE MOST EASTERLY CORNER OF SAID LOT; THENCE NORTHWESTERLY ALOhI
THE NORTHEAST LINE OF SAIU LUT• 252.95 FEET; THENCE SOUTHWESTERLY ANO PARALLE
WITH THE NGRTHEEST LIhE OF SAID IOTr 160 FEET; THENCE SOUTHEASTERLY TO A POIP
IN THE SOUTHEAST LInE OF SAID LOT. DISTANT 165.37 FEET SOUTHircSTERLY.FROM THE
MGST EASTERLY COP.NrR CF SAID LOT AND THE~~ICE NORTHEASTERLY 165.37 FEET 70 THE
PGIhT GF aEGINNING.
EXCEPT THE: SGUTHv;ESTEkLY 83 FtET, FRONT AND REAR OF THAT PORTION OF SAID LOT
3.
ALSG EXCEPTING THEREFROM ONE-HALF OF ALL MINERALS, OIL. GAS, ASPHALTUM AND
OTHER HYDROCARBGN SudSTAhCES NOW OR HEREAFTER IN ANO UNDER SAID LANC OR NHICH
MAY bE PROOUCtO THEREFROM AND ALL RIGHTS IN RELATION THERETO• INCLUDING THE
RIGHT TO EXTRACI SAM[ EiY Ai~Y MEANSr E3UT WITH NO RIGHT OF ENTRY UPON SA10 lAtvO
EXCEPTING BELOW A DEPTH OF 500 FEET• AS RESERVED E3Y R. J. SUTHERLAND• TRUSTcc
Ih DEED kECOk0E0 DECEMBER 29, 1959.
ALSO EXCEPTING THEREFROM GNE-HALF OF ALL MINERALSr OIL+ GAS• ASPHALTUM AND
OTHER HYDROCARBON SUBSTANCES Now GR HEREAFTER IN ANO UNDER SAID LAND OR ~tHICH
MAY BE PRGDUCEO THEREFROM AND ALL RIGHTS IN RELATION THERETG, INCLUDING THc
RIGHT TO EXTRACT SAME EY ANY MEANS. auT KITH NO RIGHT OF ENTRY UPON SAID LAhD~
EXCEPTING E3ELOw A DEPTH OF 500 FEET• AS RESERVED BY JEAN RADIS ANO MAX RADIS,
IN DEED RECORDED Oc`CEMnf:R 29. 1959.
PARCEL 2:
THAT PORTION GF 1.07 4 Itv BLOCK 25 OF THE ERiCENdRECHER SYNDICATE SANTA MONIGA
TRACT, IN THE CITY OF SANTA MOt~tICA, Ih THE COUNTY OF LOS ANGELES. STATE OF
CALIFORtiIA. AS PER tiAP RcCUR~?ED IN 60UK b PAGES 26 ANO 27 OF MAPS. IN THE
OFFICE OF THE CGU~TY RECORDER OF SAID COUNTY, MORE PARTICULARLY DESCRIBED AS
FOLLOWS:
BEGI~~tNING AT THE BUST EASTERLY CURNER OF SAID LOT; THENCE NORTHWESTERLY ALOtvG
THE NORTriEaSTERLY lINt TnEREOF• 223.62 FEET TO THE NORTHEASTERLY CORNER OF A
PORTION OF SAID LDT• COnVEYcG TO JACUR w000• BY OEEO RECORDED IN Ej00k 3215
PAG~ 122 OF UEE05; THENCE SOUTHWESTERLY PARALLEL WITH THE NORTHWESTERLY LIN:
OF SAID LGT 4, 3U5 FEET TG A POINT IN THE SOUTHWESTERLY LINE OF SAID LOT;
THENCE SOUTHEASTERLY ALONG THE SUUTHi~ESTERLY LINE, 161.4 FEET TO THE MOST
SOUTHERLY COktvER THEREOF; ANU THENCE NOKTHEASTERLY ALONG THE SOUTHEASTERLY
LINE OF SAID LOT, 311.37 FEET TO THE POINT OF BEGINNING.
EXCEPT THEREFROM THAT PORTION DESCRIEsEO AS FOLLOaS:
tr.~ _ ~ U`i3bU~5 75S
TICOR TITLE INSURArvCE COMPANY OF CALIFORNIA
CONMcNCIrvG A7 THE MUST EASTERLY CORNER OF SA10 LOT; THENCE SOUTHWESTERLY AlG!~
THE SCUTHEASTERLY LING OF SAID 107, A DISTANCE OF 21.05 FEET TO THE POINT Gr
BEGIhNI-.G; THENCE rvOkTHEASTEhIY ALONG SAID LINEr A DISTANCE OF 27.05 FEET T:,
SAID EASTERLY CUKNcR; ThEhCE rvvRTHwtSTtRIY ALONG THE NORTHEASTERLY LINE OF
SAID LOT, A DISTANCE GF 31.29 FEET; THENCC 50UTHERLY IN A t3IRECT LINE TO THE
PCIhT OF G~EGINNIhG.
ALSO EXCEPTING 7HEREFf~OM ONc-HALF OF ALL MINtRALS, OIL, GAS, ASPHALTUMS ANC
OTHER HYDROCARBON SU85TANCcS NOw GR HEREAFTER Irv AND UNDER SAIU LAND OR WHICt
MAY $~ PRODUCED THEREFROM ANO ALL RIGHTS IN RELATION THERETO. INCLUDING 7Hc
RIGHT TO ExTRACT SAME BY ANY MEANS, BUT WITH NO RIGHT OF ENTRY UPON SAID l~-tiu
EXCEPTING EsEIOw A DEPTH OF SOG FEET, AS RESERYcU BY R. J. SUTHERLAND, TRUSTcc
IN DEED RECOkOED OECEr~BER 29. 1959.
ALSO EXCEPTING THEREFROM ONE-HALF OF ALL MINERALS. OIL, GAS, ASPHALTUM AND
OTHER HYDROCARBON SUBSTANCES NO-~ OR HEREAFTER IN AND UNDER SAID LAND OR WHICH
MAY BE PRODUCED THEREFROM AND ALL RIGHTS IN RELATION THERETO, INCLUDING THE
RIGHT TO ExTRACT SAME BY ANY r'EArvS, HUT WITH NO RIGHT OF ENTRY UPON SAIU LAhJ
EXCEPTING BELOr~ A DEPTH OF SOU FtET, AS RESERVED BY JEAN RADIS ANG MAX RADIS,
IN CEED RECOkOED DECEMBER 29, 1959.
PARCEL 3:
THAT PJRTION CF LDT 4 IN FLOCK 25, ERKcNBRECHER SYNDICATE SANTA MONICA TRACT,
IN THc CITY OF SANTA MONICA, IN THE COUNTY OF lOS ANGELES, STATE OF
CALIFORNIA, AS PEP. MAP RcCURDEO Iti tiGDK 0 PAGES 26 AND 27 OF MAPS, IN THr
OFFICE OF THE CGUhTY RcCORDER OF SAID COUNTY, DESCRIBED AS FOLLOWS:
BEGINNING AT A_PGINT IN THE NORTHEASTERLY LINE OF SAID 10T, DISTANT 223.02
FEET FROM THE M05T EASTcRLY CGRfvER THEREOF; THENCE SOUTHWESTERLY PARALLEL KIT
THE NORTHWESTERLY LINE OF SAID LOTr 305 FEET TO SOUTHWESTERLY LINE OF SAID
LOT; THENCE NGRTN.+ESTERIY ALONG SAID SOUTHWESTERLY LINE, 125 FEET; THENCE
NORTHEASTERLY PARALLEL WITH THE NORTH~•ESTERLY LINE OF SAID LOT, 305 FEET Tu
THE POINT IN THE NUkTHEASTERIY LINE OF SAID LOT; THENCE SOUTHEASTERLY ALONG
SAIC NDRTHEAST~RIY IIhE, 125 FEET TG THE POINT OF BEGINNING.
EXCEPT THE NORTHEASTcRLY 150 FEET OF THE hDRTHwESTERIY 50 FELT THEREOF.
PARCEL 4:
THE NORTHEASTERLY 15U FEET OF THE NORTHEESTERLY 50 FEET OF THAT PORTIDN OF LG
4 IN BLOCK [5 OF ERKEhE.RcCHEk SYNDICATE SANTA MONICA TRACT, IN THE CITY OF
SAtrT4 MONICA, IN THE C~UrvTY OF LOS ANGELES, STATE OF CALIFORNIA, AS PcR MAF
RECORDED IN BOOK b PAGES 20 ANO 27 OF MAPS, IN THE OFFICE OF THE COUNTY
RECOROcR OF SAID COUNTY, OESCRI8E0 AS FOLL0~1S:
BEGINNING AT A Pi]INT Ih ThF rORTHEASTERLY LINE OF SAID LDT• DISTANT 223.62
FEET FRGM THE MOST EASTERLY CORNER THEREOF; THENCE SOUTHWESTERLY PARALLEL kITt
tHE NORTHWESTERLY LIN~ GF SAID LGT, 305 FEET TO THE SOUTHWESTERLY LINE OF SAI(
LOT; THENCE NORTHWESTERLY aLONG SAID SOUTHWESTERLY LINE. 125 FEET; THENCE
NGRTHWESTERLY PARALLEL tiITH THE NORTHhESTEkIY LINE OF SAID LOT. 305 FEET TO
THE POINT Ih THE f~ORTfiEASTERLY TINE OF SAID LOT; THENCE SOUTHEASTERLY ALONG
SAID NGRTHEASTERLY IIhE• 125 FEET TO THE POINT OF BEGINNING.
EF:AI;T
<.:. ..
0
N N
J
• N
N y.
• ~ ~ O
• >
o'
v
~O
Q-F~~
JFi ....
G~~ ~ ~
~ ~ ~~
5 ~ O6.\\
5`; • ~ -
k ~ i c
., Q,
'~ ~~~y0
~~6- `~ ~(
r
~~.
Cf
!:
:F
Sy• .
`~ ~
~~ ....
. ~
~'
o ~ ~-f ~
_ , =;;
~• I a
<1
0~ O
s6~'L ~ ~= ~~ ~j~
R,
a
g' 15 \\
a5~ ~ \ ~~ C
aD 5p ~ \
l'~' ~~ n ~. \~
\a
/ NO
2 S~(.
OJ
o-
eo
7 r,~,~ :s
5 ~.
-~\
Qh c N o b
ab
~ ~ ~0
b
29~
~
~I
296.8 ~
s W
0 F-
V
d
% 5o p ~ J' in
Z ~
~
N - ~
~ Q~
~ '
U ccDV J
~
W z ~
~ W
m
' ~ N
U ~
-W m a
~ v
~ Q ~ ~~
z ~'
Q
~ . .
~~ oo
W ~ ~°
V m -~
O
EXHIBIT "B"
OFF SITE IMPROVEMENTS FOR DEVELOPMENT OF RETAIL CENTER AT
NORTHWEST CORNER OF PICO AND CLOVERFIELD BOULEVARDS
THE FOLLOWING OFF-SITE IMPROVEMENTS SHALL BE PERFORMED BY AND BE
THE FULL RESPONSBILITY OF THE DEVELOPER. DEVELOPER WILL PREPARE
ALL PLANS, CONSTRUCTION STAKING AND OTHER RELATED CIVIL
ENGINEERING FUNCTIONS TO FULFILL THESE OBLIGATIONS. ALL
IMPROVEMENTS WILL BE MADE TO THE SPECIFICATIONS REQUIRED BY THE
GENERAL SERVICES DEPARTMENT OF THE CITY.
1. Excavating, grading and removing asphalt concrete, curb,
gutter, sidewalk and other structures on Pico Blvd. to
accommodate widening of Pico Blvd.;
2. Relocation or construction of new concrete catch basis 8'
back on Pico Blvd.;
3. New combined concrete curb and gutter on Pico Blvd.,
conforming to required setback for widening of Pico Blvd.;
4. New Portland cement concrete sidewalk on Pico Blvd.,
including provision for tree wells;
5. New concrete wheelchair ramps;
6. New commercial concrete driveway entrances;
7. 6" thick crushed aggregate base for 8' widening of Pico
Blvd.;
8. 8" thick new asphalt base for 8' widening of Pico Blvd.;
9. Relocation of three traffic signals and appurtenant conduits
and cable to accommodate widening of Pico Blvd., including
provision of new footings;
10. Relocation of four street lights and appurtenant conduits and
cable to accommodate widening of Pico Blvd., including
provision of new footings;
12. Planting of a minimum of eight street trees along Pico and
Cloverfield Blvds., including provision for tree wells;
13. Restriping of north half of Pico Blvd. and west half of
Cloverfield Blvd., adjacent to the property, with
thermoplastic striping.
####
Reference Contract
No. 4699 (CCS).