SR-080983-RA1C,M:JJ:mmm Santa Monica, California
City Council Meeting: August 9, 1983
TO: City Council/Redevelopment Agency
FROM: City Staff
SUBJECT: Recommendation to Accept Coastal Commission
Conditions Regarding Ocean Park Redevelopment
Project and to Approve Amendments to Settlement
Documents; and Request for Authorization to Proceed
with Project Implementation
Introduction
This report transmits the California Coastal Commission's staff
report and the Commission' s subsequent letter of clarification
concerning conditions of the amended Coastal Permit recently
approved for completion of the Ocean Park Redevelopment Project.
These documents are attached as Exhibit 1. Because there is some
variance between the approved Coastal Permit and the Agency's
permit application, this report recommends that the
Council/Agency accept the Commission's conditions and modify
First Supplemental: Stipulation for Judgement, Revised Judgement,
and the Amended Sales Agreement with the Redeveloper to coincide
with Coastal Commission conditions. The revised Land Sale
Agreement recommended for Council/Agency approval is attached.
In addition to recommending actions necessary to proceed with the
implementation of the redevelopment project, this report provides
the Council/Agency with an opportunity to review and compare the
impacts of proceeding with either the Settlement Plan or the
Alternate Plan. While the Council/Agency has approximately one
year in which to formally select one plan, there are costs and
benefits associated with conducting necessary planning and
1
predevelopment activities for both options or either option
during this year long period. As staff seeks direction for
project implementation, the ramifications of the two planning
options are presented to Council/Agency for evaluation.
Background
On December 7, 1982 the Council/Agency approved a Settlement
Agreement with Pacific Dominion Property Company resolving the
litigation between the Council/Agency and the Redeveloper and
authorized the staff to file for an amended Coastal Permit. The
Settlement Agreement provided for two separate development plans,
the Settlement Plan, and, in the alternative, the Alternate Plan.
The Settlement Plan provided for the development of 150
condominiums, 55 to 70 affordable housing units, on-site, and a
total of 10.4 acres of public park area. The plan also included
major improvements to the beach involving redesign of beach
parking lots, beachfront recreational areas serving all age
groups and a parking and traffic improvement plan. The
settlement documents with Pacific Dominion provided for an
alternate, a "fall-back" plan to be utilized in the event that
the Settlement Plan is blocked by litigation.
The Alternate Plan provided for the development of 153
condominiums, rehabilitation of 80 units and construction of 55
units of affordable housing within the Ocean Park Community. The
construction of new affordable housing o£f-site is not a
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condition of the amended Coastal Permit, but is referenced in the
Settlement Agreement between the Agency and the Redeveloper. The
Beach Improvement component of the Alternate Plan provides for
landscaping of the beach parking lots, although it would allow
the Redevelopment Agency, at its discretion to implement any
level of beach improvement.
The major components of the Settlement Plan, the Alternate plan,
and the original plan, known as the Contract Plan, are compared
in the following table.
A COMPARISON OF THE SETTLEMENT ALTERNATE
AND CONTRACT PLANS
Market-Rate Housing
--Density
--Height
--Set-backs
Affordable Housing
--Onsite/Offsite
--New/Existing
--Years
--Units
Park Area
Beach Improvement
Cost
Settlement Alternate Contract
150
75
18'
On-site
New
Perpetuity
68
10.40 ac.
$4,500,000
153
83'
10'
158
92'
10'
Off-site Off-site
Existing & New Existing
Perpetuity 20
135* 80
5.89 ac. 5.89 ac.
$2,000,000 -
$1,200,000
4,500,000
* 55 of the 135 units are not required by the Coastal Commission.
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Amended Coastal Permit
The Agency and the Redeveloper jointly applied to the California
Coastal Commission for an amended Coastal Permit on December 10,
1982. On May 26, 1983, the Commission approved the amended
Coastal Permit application with conditions governing the public
improvements for both the Settlement Development Plan and the
Alternate Development Plan.
Although the scope of development approved by the Commission
conforms with the Agency's permit application, the Commission's
conditions substantially modify the timing of the commencement of
construction of public improvements and require letters of credit
to be posted to ensure that public improvements are started and
completed by dates certain. The Commission also required that
the on-site Affordable Housing Plan and the Settlement Beach
Improvement Plan be formally approved by the Commission. A
mechanism to ensure the rehabilitation of 175 Ocean Park
Boulevard involving grant of co-equal rights to the Coastal
Commission to enforce the Cooperation Agreement with the County
has also been required. These provisions were not anticipated in
the approved Settlement Agreement between the Agency and the
Redeveloper or in the permit application.
The following table displays the differences between the
development schedule for public works projects contained in the
Agency's application and the timetable approved in the amended
Coastal Permit. Exhibit II, attached, displays the schedule of
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performance on the part o£ the Agency and the Redeveloper in
considerable detail. This schedule reflects the timing o£
activities in conformance with the approved Coastal Permit.
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COMPARISON OF' APPLICA'fTON TIP1E'1'ABLE AND APPROVED TIR1ETAftL,13
APPLICA'T'ION APPROVED PB2MI1
Commence Letter of Special Commence Letter of Special
Constructi<n Credit Required Coastal Permit Construction Credit Reau~red Coastal Permit
ET'I'LF:MGNT PLAN
Park C + H Mo. 0 None C + 6 Mo. $ 500,000 !None
Beach C + 16 Mo. 0 None C + 6 Mo. $4,500,000 ' Yes
Ilousi.ng C + 16 Mo. 0 None C + 12 P1o, $3 500,000 Yes
LTERNATE PLAN
Park C + SMo. 0 None C + G ^10, 0. 500,000 None
Beach C+ 8 D1o. 0 Nona C+ 6 P1o,
$1,000,000
'None
(lousing Not obligation of City Not obligation of City
C =Commencement of Condominium Construction
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Proposed Amendment To Land Sale Agreement
The conditions to the current permit concerning timing and
necessary approvals require modification of the Land Sales
Agreement. In addition to revising the development schedule, the
recommended modifications include a provision to the effect that
the Agency must secure necessary coastal permits and post
required letters of credit before it can elect to proceed with
the Settlement Plan. The amendment also provides that the
Redeveloper has the option to post the letters of credit in the
event that the Agency fails to do so.
Implementation Issues
While the actions recommended above will bring the Agency's
approved plan into conformance with the Coastal Permit, the
Council/Agency's direction to staff for implementation of the
project involves consideration of the costs and revenues
generated by the Settlement and Alternate Plans. In addition,
the Agency must be appraised of potential unrecoverable planning
and predevelopment expenses arising from pending litigation.
Costs and Revenues
The costs of design and construction pursuant to the Settlement
Plan are projected to be $10,417,000. Comparable costs under the
Alternate Plan range from $3,000,000 to $5,920,000, depending
upon the scope of the beach improvements approved by the
Council/Agency.
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In addition to development costs, the Agency must discharge its
indebtedness to the General Fund and the CDBG program. The
cumulative cost of repayment is $3,373,439 regardless of the plan
selected.
The total revenues resulting from implementation of the
Settlement and Alternate Plans are $16,100,000 and $10,600,000
respectively. Net proceeds to the City/Agency are projected to
be $2,309,561 under the Settlement Plan and from $1,306,561 to
$3,863,561 for the Alternate Plan. Inasmuch as the Coastal
Commission has not required construction of new housing off-site
as a condition of the Alternate Plan, associated costs are not
reflected in these financial projections.
The Council/Agency should be aware that the California Housing
Finance Agency has ranked the proposed affordable housing site
relative to sites available in other cities and has indicated
that there is strong potential to obtain partial Section 8
funding for the on-site project. Should this funding be
available, the costs of providing on-site housing would be
halved. Alternatively, it is conceivable that Section 8 funding
might be reserved for another site in conformance with the
Settlement Agreement if control of a highly ranked site can be
obtained within the next month. Exhibit III details the costs
and revenues projected for the Settlement Plan and Exhibit IV
provides comparable information on the Alternate Plan.
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Status of Pending Litigation
Three lawsuits have been filed involving the Ocean Park
Redevelopment Project.
1. Marshall & Baskauskas v. Redevelopment Agency, Case No.
C 420636 was filed on August 5, 1982. The Complaint
seeks an Injunction prohibiting the implementation of
the proposed settlement of the Lincoln Property case and
compelling the Redevelopment Agency to perform the
conditions of the original Coastal Permit. The
complaint also seeks substantial civil penalties.
2. Littler & Blais v. Pacific Dominion Property Company,
Case No. CA 000773 was filed April 26, 1983. This is a
class action suit brought on behalf of owners of
condominiums in the Sea Colony II. It seeks to require
the Agency and the Redeveloper to construct a 5.89 acre
public park as described in the Subdivision Map for the
project in a manner which would not interfere with ocean
views from the Sea Colony II subdivision. The Complaint
also seeks damages of $8 Million dollars.
3. Marshall & Baskauskas v. Coastal Commission, Case No.
C461805 filed approximately July 26, 1983, and has not
yet been served on the Agency. The suit seeks to
overturn the decision of the Coastal Commission granting
a new Coastal Permit for the project.
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Potential Impacts of Litigation upon Planning and Predevelopment
Costs
Pursuant to Council/Agency direction, staff will begin to expend
funds for architectural and engineering services necessary to
construct the public improvements required by both the Settlement
and Alternate plans. To meet the development schedule, such
activities will commence within a month. As the following
Exhibit V, indicates, the total cost of predevelopment activities
for the Settlement Plan could approximate $870,000. These costs
accrue at a rate in excess of $100,000 per quarter. If
implementation of the Settlement Plan is blocked, funds expended
will not be recoverable. In directing staff to proceed with
predevelopment activities, the Agency should be aware of the
potential risk of significant unrecoverable costs.
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LXIlI13IT S: ARCHI'PHC'1'URAL AND L'NGINFiBRTNG COSTS FOR PUBLIC IMPROVGA9F.N'1'S
July - Sept . Oct. - Dec. Jan. - *.1arch April -June July -Sept. Oct. - Dec. 198.5.
Total. '83 '8.3 '84 '84 '84 '84
SE1"1'LEPIEN'1' PLAN
Beach 370,000 40,000 60,000 60,000 60,000. 60,000 60,000 .30,000
Park 50,000 7.0,000 10,000 10,000 10,000 10,000
APF012DA[3LE HOUSING 200,000 10,000 30,000 30,000 30,000 30 000 30,000 40,000
P7ARKET RA'I'F HOl1SINGx 250,000 50,000 50,000 50,000 50,000 50,000
`I'0`t'AL COSTS PIiR '
QUARTI';R 100,000 140,000 150,000 150,000 150.000 100,000 80,000
CUMULATIVP COSTS 870,000 100,000 240,000 390 000 540,000 690,000 790,000 ~ 870,000
"1'he Settlement Agreement with the Redeveloper provides that the City/Agency will be obligated to reimburse the Re~le.-eloper
for architectural costs associated with the Settlement Plan up to $250,000, in the event that the Settlement Plan i='not
implemented,
r-'
Staff recommends that the Council/Agency:
1. Accept the conditions of the amended Coastal Permit;
2. Approve the First Supplemental Stipulation for
Judgement, Revised Judgement and the Amended Sales
Agreement; and
3. Direct staff to proceed with implementation of the
project as follows:
a. Undertake planning and design activities for both
the Settlement and Alternate Plans; or
b. Proceed with implementation of the Alternate Plan.
Prepared By: John Jalili
Assistant City Manager
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. ~%~~'
Staff recommends that the Council.{~Ygen~p: ~- /~'e"~`~- '
1. Accept the conditions of the amended Coastal P
2. Approve the First Supplemental Stipulation for
Judgement, Revised Judgement and the Amended Sales
Agreements and
3. Direct Staff to proceed with the implementation of
the on-site portion of the Alternate Plan.
4. Direct Staff to prepare .within 6 months a specific
housing plan and implementation strategy, including
involvement of a non-profit corporation in the
development of off-site affordable housing and HARP.
5. Direct Staff to prepare plans and applicable cost:
estimates for various levels of beach improvement for
consideration by the Council/Agency within 6 months.
Staff recormlends that the Council./Aaenpy:
1. Accept the conditions of the amended Coastal Permit;
2. Approve the First Supplemental Stipulation for
Judgement, Revised Judgement and the Amended Sales
Agreement; and
3. Direct Staff to proceed with the implementation of
the on-site portion of the Alternate Plan.
4. Direct Staff to prepare within 6 months a specific
housing plan and implementation strategy including
involvement of a non-profit corporation in the
development of off-site affordable housing and HARP.
5. Direct Staff to prepare plans and applicable cost
estimates for various levels o£ beach improvement for
consideration by the Council/Agency within 6 months.