SR 06-13-2017 8A
Ci ty Council
Report
City Council Meeting : June 13, 2017
Agenda Item: 8.A
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To: Mayor and City Council
From: Andy Agle, Director , Housing and Economic Development, Economic
Development Division
Subject: Bergamot Station Arts Center
Recommended Action
Staff recommends that the City Council:
1. Provide conceptual direction regarding a preliminary plan for revitalization of the
City -owned Bergamot Station Arts Center (Arts Center);
2. Authorize the City Manager to negotiate an extension of the exclusive negotiating
agreement with the Worthe Group for a period of three years, with two , o ne -year
options ;
3. Authorize the City Manager to negotiate and execute an interim, master ground
lease with the Worthe Group, for a period of three years, with two , one -year
options, pursuant to: (a) the terms included in the staff report, including that
exi sting tenants would face lease rate increases no greater than the consumer
price index during the interim period, in order to ensure stability while future plans
are developed, and (b) development of an arts center management plan in
collaboration with the Arts Commission, as further discussed in the staff report.
Executive Summary
The future of Bergamot Station, one of Santa Monica’s most prominent arts assets, has
been the subject of lengthy discussion, particularly in the context of the long -anticipate d
arrival of a regional light -rail station last year. With the expiration of the current master
lease on December 31, 2017 and the completion of the work of the Bergamot Advisory
Committee, staff seeks Council direction regarding a preliminary plan for th e Arts Center
advanced by the Worthe Real Estate Group development team (Worthe Group),
pursuant to Council’s guidelines and input from the Advisory Committee. Staff
recommends extending the exclusive negotiating agreement with the Worthe Group for
three y ears with two, one -year options to accommodate an entitlement process for
development consistent with the preliminary plan for the site. During that time, an arts
center management plan (as recommended by the Arts Commission) would be
developed to ensure the area fully realizes its potential as a community cultural asset.
Additionally, staff seeks authorization to enter into an interim, master ground lease with
the Worthe Group for a period of three years with two, one -year options to commence
on January 1 , 2018, pursuant to parameters identified in the staff report, including that
existing tenants would be offered leases with annual increases of no more than the
increase in the consumer price index for up to three years .
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Background
Bergamot Station Arts Center at 2525 Michigan Avenue consists of City -owned land
and private land. The City -owned land (Site) was purchased in 1989 with transit funds
with the goal of serving future transit needs in Santa Monica, including providing a
source of revenue for the Big Blue Bus (BBB). It was anticipated that the Site would be
reserved for future transportation -related development adjacent to a future light -rail
transit stop, but the timing for development of the light -rail line and station adjacent to
the Site was speculative at the time the Site was acquired and for many years
thereafter.
The Site consists of approximately five acres with five buildings totaling approximately
62,000 square feet of total building space that is subleased to approximately 27 small,
creative tenants, including art galleries, designers, a nonprofit theatre company, and a
café. The space was master -leased to Wayne Blank, who spearheaded its creation
(along with the adjacent private land he owned) into a unique constellation of privat e art
galleries and related arts uses, including a theater and formerly an arts museum. The
City currently receives $552,553 annually in ground rent. The master lease has had
relatively short terms since its initiation as the Los Angeles County Metropoli tan
Transportation Authority (Metro) developed and implemented plans for light -rail service
to Santa Monica along the adjacent rail right -of -way. Construction of Metro’s Exposition
light -rail line (Expo) ultimately required a portion of the Site to be sol d to Metro.
The remainder of the Site remained subject to the master lease, which expires on
December 31, 2017.
The Bergamot Station Arts Center complex also includes approximately 1.3 acres of
privately owned adjacent land with approximately 30,000 squ are feet of building space
that houses approximately ten galleries and other creative businesses. The private
portion was owned and managed by Wayne Blank, who holds the master lease to the
City -owned portion of the Arts Center. Mr. Blank sold the property in December 2016.
The Site and building layout, as well as adjacent properties, are shown in Illustration 1
below.
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Illustration 1 – Aerial Site Plan
The Bergamot Area Plan governs the privately owned and publically owned portions of
the Arts Center. I n 2011, in anticipation of the opening of the Expo line and a light -rail
station located immediately adjacent to the Arts Center, the City began planning for the
Art Center’s future as part of the Bergamot Area Plan process. Council adopted the
Bergamot Ar ea Plan in 2013. It designates the Site as a Conservation Arts Center Zone
with a total floor -to -area -ratio (FAR) of 1.0, or one times the parcel size as the total
permitted amount of development, reflecting the lowest allowed commercial density in
Santa Monica.
The Site is both highly strategic and highly sensitive for the future of both transportation
and local culture – as well as the fiscal sustainability of Big Blue Bus in a time of
dynamic change in transit economics. While some advocate for no c hanges to the
current status quo, the opening of Expo, the sale of the adjacent, privately owned
portion of Bergamot Station Arts Center, ongoing changes in the fine -art business, and
the closing of the Santa Monica Museum of Art all point to the need to p lan for the future
vitality of Bergamot Station. Pursuant to Council direction, the City issued a request for
qualifications for revitalization of the Site in July 2012, followed by a request for
proposals (RFP) in February 2013. The RFP included eight g oals for the Site, which
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were adopted as policy goals in the Bergamot Area Plan and further endorsed by
Council on March 20, 2012 (Attachment A) for guiding Bergamot’s future development.
The eight policy goals for the revitalization of the Site were as f ollows:
1. Include at least 75,000 square feet of arts -related space (equivalent to the arts -
related square footage currently on -site at that time) that is affordable to nonprofit
cultural arts organizations and for -profit art galleries, with emphasis on reta ining
existing Bergamot Station Arts Center tenants.
2. Include open space, infrastructure, and other amenities to support public access
to the light -rail station as well as improving the environment and functionality of
the Site.
3. Maximize the preservatio n of existing buildings, where feasible. Retaining the
character of the Arts Center is very important to the community and City.
4. Incorporate additional uses, which support the Site as a cultural destination,
including evening and weekend activation, an d uses that help generate revenue
for the development. These uses should include a hotel, restaurant/bar, shared
community meeting room/performance space and could include creative office
and cultural uses that will maximize market opportunities and creat e a vibrant
development.
5. Consider the LUCE (Land Use Circulation Element) parking approaches and
shared parking opportunities.
6. Produce ground lease payments for the City. It is the expectation that the lease
rates will be based upon fair market value s taking into consideration the other
development objectives.
7. Exemplify exceptional architecture and sustainable design and construction as
well as have a focused, transit -oriented development approach to design, site
layout, and view corridors.
8. Exempli fy the concepts identified in the Bergamot Area Plan process.
Three proposals were submitted in response to the RFP. On September 9, 2014,
Council selected the Worthe Group as the City’s development partner and authorized
staff to enter into exclusive ne gotiations as well as directed staff to form a community
advisory committee to help refine the conceptual plan for the Site (Attachment B).
Council did not adopt the Worthe Group’s original development proposal. The City
entered into an exclusive negotiat ion agreement (ENA) with the Worthe Group on
April 30, 2015, that is set to expire on August 30, 2017. A full record of the RFQ/RFP
process and associated documents are available at the project website:
www.smgov.net/Bergamot .
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Bergamot Station Advisory C ommittee and Guidelines
To advise on future planning for the Site, on February 10, 2015, Council approved the
creation of an eleven -member Bergamot Advisory Committee (Attachment C), which
was composed of representatives of the Bergamot Station Gallery and Cultural
Association, Santa Monica Neighborhood Council, Arts Commission, Chamber of
Commerce, and Santa Monica Travel and Tourism (Attachment D). Also at the
February 10, 2015 meeting, Council adopted a set of six guidelines for the revitalization
of th e City -owned Bergamot Station Arts Center property and defined the role of the
Bergamot Advisory Committee (Advisory Committee). The guidelines were consistent
with the project goals included in the RFP and vision of the Site as outlined in the
Bergamot Ar ea Plan. The six guidelines adopted by Council to direct the work of the
Advisory Committee were as follows:
1. The project shall seek to minimize displacement and disruption to the fine art
galleries and other creative businesses on the Site.
2. The project s hall incorporate space for additional nonprofit cultural uses.
3. The project shall support the Expo Station and bus integration through
amenities and services, including consideration of facilities such as public
restrooms.
4. The project shall incorporate a permanent home for a museum or other
significant cultural institution that can demonstrate the ability to finance tenant
improvements and ongoing operations while providing a cultural experience
that benefits the Santa Monica community.
5. The Site has cus tomarily generated $622,000 of annual ground rent. The
project shall maintain and increase that ground rent amount over time in order
to provide a consistent revenue source for the Big Blue Bus (BBB).
6. The project shall generate additional municipal rev enues that could be used
to supplement BBB funds.
Bergamot Station Advisory Committee Process and Recommendations
The Advisory Committee held its inaugural meeting on April 15, 2015, and met monthly
for a year to provide recommendations regarding the prel iminary plan for the
revitalization of the Arts Center, working within the Council guidelines for the Site.
The meetings were open to the public and conducted under Brown Act open -meeting
requirements. The Housing and Economic Development Department provid ed staff
support to the Advisory Committee and the Worthe Group attended all meetings and
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participated throughout the process. Meeting agendas, minutes, audio recordings, and
presentations were made available on the project website: www.smgov.net/Bergamot .
The Advisory Committee received presentations and diligently reviewed relevant
background information on various topics such as the Bergamot Area Plan, current uses
at the Arts Center, current and proposed BBB and Expo services to the Site, amenities
for transit users, and the City Yards Master Plan and proposed shared -parking
structure. The Advisory Committee also sought input from Wayne Blank, founder of
Bergamot Station Arts Center, and invited input from individual Bergamot tenants to
understand the e lements that help make Bergamot special, as well as the on -going
facility and operational requirements to continue to support a vibrant arts center.
Based on the review of background information, the Advisory Committee asked the
Worthe Group to review an d explain the mix of uses of the original proposal.
The original proposal that the Worthe Group submitted in response to the City’s RFP
served as a baseline for the Advisory Committee’s initial review, in order to understand
the rationale for the mix of u ses and proposed square footage attributed to each use, as
well as the economics of the proposal. The Advisory Committee also reviewed and
commented on key deliverables for the implementation and management of the Arts
Center in order to address issues suc h as construction phasing, parking management,
urban design, site management, infrastructure, overall Site improvements, and an arts -
center management plan.
The Advisory Committee discussed and adopted formal recommendations regarding
each type of use a nd the associated amount of building square footage, building height,
and general locations on the Site. In response to the Advisory Committee’s feedback
and recommendations, the Worthe Group revised and updated the preliminary plan,
acknowledging that rev italization of the Arts Center would need to be built in phases to
minimize disruption to and displacement of the existing tenants. The Advisory
Committee also determined that off -site parking would need to be constructed before
significant revitalization could occur. The opportunity to develop a shared parking
structure at the City Yards was identified as critical to the Art Center revitalization.
The Advisory Committee agreed with the need for offsite parking to replace the existing
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surface parking at th e Site in order to create attractive, flexible open space at the Site to
support art events, public art, outdoor dining, and public gathering space. The Public
Works Department has incorporated the Art Center’s parking need and shared parking
structure co ncept into the City Yards master planning process.
The Advisory Committee was unable to reach consensus on the inclusion of a hotel
within the mix of uses at the Arts Center and a majority of Advisory Committee
members (six of eleven total) ultimately vot ed against inclusion of a hotel in the project.
In addition to its review of uses and locations, the committee evaluated the financial
projections of the original proposal and revised plan. To facilitate the Advisory
Committee’s efforts, staff produced a matrix of the Arts Center key deliverables and the
Advisory Committee comments and motions made at each meeting (Attachment E).
Discussion
Following the completion of the Advisory Committee’s work, staff requested that the
Worthe Team update the prelimi nary plan and financial projections based on the
recommendations of the Advisory Committee. The Worthe Group’s revised preliminary
plan addresses most of the Advisory Committee’s recommendations regarding uses
and square footage, while preserving four of the five buildings (Buildings A, B, E,
and F). However, the Worthe Group’s revised preliminary plan includes a hotel, which
is described further in the report. The preliminary plan proposes six new buildings
(Buildings C, D, G, H, I, and M) providing addit ional space for galleries and nonprofit
cultural uses, a museum, a community center, restaurant/café space, and creative office
space, as well as a hotel that would include additional space for galleries and
restaurant/café uses. Removal of the on -site su rface parking would create over three
acres of flexible open space for cultural events, community programming, and use by
the public and tenants.
Table 1 below outlines the types of uses, associated square footage of each plan, and
compares the Worthe Gro up’s original proposal responding to the City’s RFP, the
Advisory Committee’s recommendations, and the Worthe Group’s revised plan based
on the Advisory Committee process.
Table 1 – Uses and Square Feet Summary
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Use Worthe Original
Proposal (SF)
Advisory Committee
Recommendations
(SF)
Revised Preliminary
Plan, including hotel
(SF)
Museum 21,100 21,100
9,000 above grade
12,100 below grade
21,100
9,000 above grade
12,100 below grade
Gallery, Nonprofit,
and Cultural Uses
61,600 65,700 65,700
Creative Off ice 44,000 30,000 30,000
Restaurant and Cafe 7,000 7,000 7,000
Community Space 2,000 4,000 4,000
Arts -Related Uses n/a 9,000 9,000
Bike Center 4,600 600 600
Hotel Total SF
- stories
- rooms
- gallery
- food and beverage
80,000
- 7 -story
- 120 rooms
- 3,000 SF
- 2,000 SF
None 82,600
- 7 -story
- 120 rooms
- 3,000 SF
- 2,000 SF
Buildings Preserved 4 5 4
T Building
Use Not Identified
NA 11,214 NA
Total SF
(above grade)
220,300 136,514 207,900
Total Floor -to Area
Ratio (FAR)
.98 .61 .93
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The revised preliminary plan for the Site is shown in Illustration 2 below, which denotes
the location of uses and number of floors for each building in the massing site plan.
Following the massing site plan illustration is a discussion of each type of use included
in the revised pre liminary plan for the Site, as well as a description of the Advisory
Committee’s review and recommendations.
Illustration 2 – Revised Preliminary Plan
Museum Space – Building M
The Worthe Group originally proposed the museum space to be located imme diately
adjacent to the Expo Station in a newly constructed 21,100 -square -foot, two -
story building. Based on the Advisory Committee’s review and recommendation,
the museum concept was revised to be composed of two buildings above ground
totaling 9,000 squ are feet with an additional 12,100 square feet of below -grade space to
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connect the two buildings above ground. The Advisory Committee felt that a single,
two -story building as originally proposed might create a visual and physical barrier
between the Expo Station and the Site. During the review process, the committee
recommended that the building include a minimum 1,000 square feet (up to 2,000
square feet) of food - service space for coffee and carry -out food options to serve
museum patrons, Expo riders, area workers, and local residents. Pursuant to zoning
ordinance standards, below -grade museum space would not count towards the project’s
floor -to -area ratio.
Gallery and Nonprofit Cultural Uses – Buildings A, B, C, D, E and F
The Advisory Committee eval uated the amount of existing building space at the Arts
Center utilized by gallery and cultural uses, as well as what the Worthe Group originally
proposed. The committee initially recommended that a minimum of 61,600 square feet
be dedicated to galleries and nonprofit cultural uses, excluding the museum. Later in the
process, the committee recommended increasing the amount to 65,700 square feet and
that two separate, 3,000 -square -foot spaces for nonprofit performing arts uses be a part
of the Arts Center. The committee further recommended that City Garage, the nonprofit
theatre group that is currently located at the Arts Center, be prioritized for one of the two
performing arts spaces. The committee also recommended that priority of leasing
opportunities be offered to existing tenants of the Site first, followed by tenants of the
privately owned portion of Bergamot Station when space is available. As the conceptual
site plan was revised, the gallery and nonprofit cultural uses were designated to be
located i n the existing buildings on the Site (Buildings A, B, E and F) as well as in the
ground floor of two of the new buildings proposed on the Site (Buildings C and D).
Creative Office – Building C
The proposed creative office space provides a revenue stream t o help subsidize the
museum, gallery, and nonprofit cultural spaces at the Arts Center and helps support the
ground -lease payment to the BBB. The Worthe Group’s original proposal included
44,000 square feet of creative office space in two new buildings of two stories in height
located at the southeast corner of the Site adjacent to City Yards and Agensys.
The Advisory Committee recommended that the amount of office space be reduced by
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14,000 square feet to a total of 30,000 square feet and be located in onl y one new
building (Building C). To maximize the open space and prioritize the art uses throughout
the Site, the Advisory Committee recommended that the office use be located in the two
upper floors of Building C with the 15,000 square feet on the ground f loor committed to
gallery and nonprofit cultural uses.
Restaurant and Café Spaces – Buildings G and M
The Advisory Committee recommended that the proposed enclosed restaurant and café
space of 5,000 square feet be located in the center of the Site in a n ew structure
(Building G) with the benefit of outdoor dining space in order to help activate the Arts
Center. The committee further recommended that up to 2,000 square feet of “grab -n -go”
café and coffee bar space be located in the museum building (Illustr ation 2), with the
understanding that outdoor dining space would not count toward the project’s floor -to -
area ratio.
Community Center with Adjacent Open Space – Building I
The Advisory Committee advocated for increasing the amount of building space
dedic ated for community space from the originally proposed 2,000 square feet to 4,000
square feet in a new structure (Building I). The revised preliminary plan includes a
centrally located community center with connecting open space of up to 10,000 square
feet to allow for a fluid connection of indoor/outdoor activities, including community art
exhibits, workshops, film and music events, and other events for the community. The
community center is proposed for the center of the Site, adjacent to the restaurant, in
order to serve as an overflow food venue for larger -scale events when needed.
Arts -Related Uses – Building D
The Advisory Committee recommended that the originally proposed creative office
building be redesigned into two new structures (Buildings C an d D) and that Building D
be focused on arts -related uses instead of creative office. The Advisory Committee
endorsed Building D for market -rate arts -related uses on the second floor, totaling 9,000
square feet, with the ground floor’s 9,000 square feet ded icated to gallery and nonprofit
cultural uses of which 4,100 square feet be at market rate with the remainder of the
gallery and nonprofit cultural space be provided at below market rate.
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Bike Center
The Worthe Group’s original proposal included a 4,600 -square -foot bike center to be
located in the center of the Site. The Advisory Committee expressed concerns
regarding the proposed location, size, potential demand and prospective users.
The Advisory Committee ultimately recommended a bike center of 600 sq uare feet to be
located in the shared parking structure or toward the south side of the Site near
Michigan Avenue.
Hotel – Building H
The Bergamot Area Plan identifies preferred use concepts for the Arts Center, which
includes a hotel with a restaurant or café that could serve as an amenity for the Arts
Center and larger Bergamot Area and help activate the Arts Center beyond standard
gallery operating hours. The hotel would also provide an economic benefit to the
City/BBB, even though the expected ground lease revenue would be constrained due to
the limited allowed FAR and the large amount of subsidized uses planned for the Site.
The preferred concept suggests a location at the western edge of the Site adjacent to
26 th Street. The RFQ/RFP issued for the Ar ts Center referenced the preferred use
concepts, including the hotel, which was part of all three proposals submitted for
revitalization of the Site. The Worthe Group’s original proposal included a seven -story,
120 -room, art -centric boutique hotel in the r ange of 80,000 to 83,000 square feet that
included a roof -top bar, restaurant, conference room, and ground -floor art uses with
subterranean parking spaces to serve the hotel guests and employees. The hotel’s
height was originally proposed at 86 feet, the maximum permitted height under the
Bergamot Area Plan.
The Advisory Committee spent several meetings reviewing the original proposed hotel
use and related financial projections and asked the Worthe Group to evaluate the
financial feasibility of a reduce d -scale hotel of 80 rooms and 4 to 5 stories. In response,
the Worthe Group analyzed a smaller hotel concept and determined that a hotel under
100 rooms would not be economically viable to operate or finance within the overall
project, the limited market of hotel brands that service less than 100 -room hotels and
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the inefficiencies of operating a hotel of that size. Advisory Committee member Richard
Peterson who was with the Santa Monica Travel and Tourism organization at the time
acknowledged to the commi ttee that this was his understanding of hotel operations as
well. However, the Worthe Group presented a reduced hotel concept of six stories, 100
rooms with 70,800 square feet of building area at a height between 65 feet to 75 feet.
The Advisory Committee approved the 100 -room, six -story hotel use as presented with
the understanding that it would be classified as a Tier 2 project within the zoning
policies of the Bergamot Area Plan. The proposed location of the hotel was located on
the west side of the Sit e adjacent to 26 th Street in the location of the existing T Building.
At the following Advisory Committee meeting, the committee rescinded their previous
approval upon confirming with staff that the 100 -room, six -story hotel concept of 65 -75
feet would be classified as a Tier 3 development under the Bergamot Area Plan
because it would exceed the 60 -foot height limit for Tier 2 projects. The Worthe Group
and Advisory Committee evaluated a five -story hotel with a 100 rooms, but both parties
agreed that ex panding the footprint of the hotel to achieve a 5 -story concept with 100
rooms was too impactful to the Site’s open space and view corridor. A majority of the
Advisory Committee members ultimately voted against a 65 - to 75 -foot hotel at the Site.
A major ity of the Advisory Committee had concerns regarding the hotel based primarily
on the following three elements:
that hotel construction would have severe impacts on the Arts Center businesses
and operations,
that the hotel would not be synergistic with the Arts Center, and
that the proposed height of six to seven stories would overshadow and be out of
scale with the Site.
A minority of Advisory Committee members (five of the eleven members) supported the
hotel, noting the additional services and econo mic benefits the hotel would bring to the
project, including unionized jobs for local residents, transient occupancy tax revenue to
support City and BBB operations, additional dining and nightlife amenities for nearby
residents and workers, synergies with Art Center uses including additional gallery and
event space, and proximity to the Expo station to serve transit users.
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Both hotel concepts (a six -story, 100 -room project or seven -story, 120 -room project)
evaluated included 2,000 square feet of restaura nt space and 3,000 square feet of
gallery or event space, resulting in a modest increase in both uses on the Site.
If the hotel or an alternative use/building for the proposed location is not included in the
Art Center’s preliminary plan, the T Building and its approximately 11,214 square feet of
the building space would be retained. The Advisory Committee did not evaluate or
recommend a use for the T Building space, though staff assumes that the space would
continue to be made available for gallery and n onprofit cultural uses.
Building Preservation
The Advisory Committee’s recommendations preserves five buildings (approximately
52,900 square feet of existing building space) on the Site, recognizing that the existing
A Building would be partially demolish ed by approximately half to accommodate the
new C Building. The Worthe Group’s revised preliminary plan would require demolition
of the T Building to accommodate the proposed hotel, in which case four buildings
(approximately 41,700 square feet of existing building space) would be retained.
Open Space and Parking
The Site has abundant open space which serves the Art Center as a surface parking lot
currently. The Advisory Committee recommended that the surface parking be retained
until replacement parking is built off site, with the exception of implementing modest
landscaping, open space, or other site modifications. Additionally, the committee
recommended that the Worthe Group reserve as much peripheral surface parking on -
site as needed for the existing g alleries and nonprofit cultural uses to conduct business.
The Worthe Group proposes to provide the code -required amount of parking for the Arts
Center in the proposed shared City Yards Parking Garage, while maintaining a limited
amount of on -site surface p arking for disabled parking and loading requirements. The
Worthe Group would be obligated to finance or lease the Arts Center parking in the
proposed shared City Yards Parking Garage. Once the off -site, replacement parking is
constructed, the reclaimed ope n space that totals over three acres, is envisioned to be