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SR 07-11-2017 5A Ci ty Council Report City Council Meeting : July 11, 2017 Agenda Item: 5.A 1 of 56 To: Mayor and City Council From: David Martin, Director , Administration Subject: The Final Public Hearing Draft Downtown Community Plan and Associated Amendments to the Land use and Circulation Element, Civic Center Specific Plan, Zoning Ordinance, SMMC Chapter 9.53 and SMMC Article 8. Recommended Action Upon completion of public testimony at the July 10 Public Hearing on the Final Public Hearing Draft of the Downtown Community Plan and Final Environmental Impact Report, s taff recommends that the City Co uncil review and take action to make final changes to the following: 1. Final Public Hearing Draft Downtown Community Plan; 2. Downtown Community Plan Final Environmental Impact Report; 3. Associated amendments to the Land Use and Circulation Element; 4. Associated a mendments to the Civic Center Specific Plan; 5. Associated amendments to the Zoning Ordinance; 6. Associated amendments to SMMC Chapter 9.53 (Transportation Demand Management); 7. Associated amendments to Article 8, Section 8.08.060 (Building Regulations) Staff f urther recommends that Council direct staff to return on July 25, 2017 with resolutions to certify the EIR, adopt a Statement of Overriding Considerations, adopt the DCP, amend the LUCE, amend the CCSP, and first reading of an ordinance amending the Zoning Ordinance, SMMC Chapter 9.53, and SMMC Chapter 8.08, incorporating all changes made by majority vote of the Council after the public hearing. Executive Summary This report presents for adoption the final Downtown Community Plan (DCP), which provides a c omprehensive vision to guide the evolution of Santa Monica’s Downtown until 2030. Based on the direction of the Land Use and Circulation Element to develop a Specific Plan for Downtown, the DCP establishes a balanced framework of policies, standards and a ctions that support the various roles that Downtown plays as a residential neighborhood, a regional job center, an international tourist destination and a community living room. 2 of 56 Spanning nearly six years in development, work on the DCP has been extensive a nd far -reaching, touching thousands of people who live, work or visit the Downtown. Throughout this timeframe, people have followed the trajectory of this comprehensive planning document through multiple versions and have passionately advocated for a rang e of outcomes that speak to the diversity of perspectives within our community. The Final DCP is the culmination of this engaging dialogue, and a record of the City’s effort to balance the myriad priorities of a community that aspires to achieve the best outcome for our central heart of commercial, cultural and entertainment activity. There has largely been support for the Plan’s overall approach. However, a plan of this significance inevitably highlights diverse views on the shape and scope of future new development in our community, including those who argue that the plan would allow too much growth in our Downtown and those who maintain it would overly restrict the supply of new housing. Beyond those philosophical differences, three specific issues bea r particular attention that are highlighted for Council consideration in Chapter 3 of this report. The DCP has been endorsed by the Planning Commission, the Housing Commission, the Recreation and Parks Commission, the Arts Commission, the Landmarks Commiss ion, the Architectural Review Board and the Social Services Commission. In particular, the Planning Commission held six meetings to take extensive public testimony and review in detail the final draft released on April 12 th of this year. Staff has endors ed virtually all of the Planning Commission’s recommendations and incorporated them into our recommendations to the Council in this report. The Commission also carefully reviewed the Final Environmental Impact Report and recommends its certification by the Council. 3 of 56 This report provides a synopsis of the final regulatory and policy framework that will guide all future public and private investment in the Downtown, and provides detail on Plan highlights surrounding housing production, historic preserva tion, the creation of public spaces, and mobility changes. It describes in general terms the six -year outreach effort to bend Plan concepts towards agreement, and highlights several challenging “spotlight issues” that remain for the Council to weigh -in on. The Plan also includes an Implementation and Monitoring Plan, which involves sequencing recommended changes over time and deploying resources to the areas of greatest need. Importantly, 4 of 56 the Monitoring Plan includes a cap on development as a measure to co ntrol the pace of change and ensure that it is in accordance with LUCE and DCP goals. Since the release of the Draft DCP in April 2016, staff has conducted or attended over 50 public meetings to present the Plan. Feedback, comments and questions have been generated from neighborhood groups, individuals, business organizations, trade professionals, and nearly all of the City’s Boards and Commissions, including six recent hearings before the Planning Commission . The Final Plan has been modified based on this input, as summarized in this report and detailed in an attached list. The Downtown Community Plan is organized for readability and visual access to the key concepts that make up the Plan. The Plan is composed of 6 Chapters and an Appendix . The following s ummarizes the Plan’s six chapters: Chapter 1: Introduction Introduces the vision for Downtown Santa Monica, and provides background for the development of the principles that guide the Plan’s goals and policies. This chapter is useful to the reader who wi shes to understand the larger planning context and anticipated outcomes over the 20 -year time horizon of the Downtown Community Plan. Chapter 2A: Downtown Districts This chapter introduces the Downtown’s seven land use districts and provides information on the community’s priorities for benefits that would stem from new developments. The process and structure of the DCP entitlement system is also described in this chapter. Chapter 2B: Community, Culture, Prosperity Describes the Plan’s overarching comm itment to developing a long -term, sustainable community in the Downtown. Provides detail on strategies for increasing housing production, and maintaining and enhancing Downtown’s existing diversity of businesses and economic health into the future. This su bstantive chapter also outlines the importance of building upon the existing public art and event program to nurture cultural 5 of 56 activities, including an anchor museum, live music and performances, theater and cinema and other creative enterprises. Chapter 2 C: Historic Preservation History plays a central role in Downtown’s character. This chapter underlines the importance of Downtown’s historic resources, which includes City Designated historic resources and potential historic resources, and describes the pr otections that are provided in the DCP to retain important or character -defining buildings, as well as incentives that make adaptive reuse an attractive option to redevelopment. Chapter 2D: Pathways and Public Spaces Sidewalks form the framework for pede strian movement through the City, often to public places for gathering, recreation or entertainment. This chapter strengthens the relationship between sidewalks and public spaces with guidance for design, orientation, and access. Importantly, this chapter outlines strategies for increasing public space offerings Downtown. Chapter 2E: Supportive Infrastructure This chapter examines the condition of existing utilities in the Downtown and provides strategies for implementing improvements necessary for realiz ing the Plan’s vision and supporting the projected increase in residents. Chapter 3: Access and Mobility People get to - and move throughout - the Downtown in many different ways. This chapter looks at Downtown circulation as a network of interconnected p arts and defines a coordinated set of actions related to design, operations, management and innovation. These include changes to both private property and property owned and managed by the City of Santa Monica. Chapter 4: Standards and Regulations 6 of 56 For pr operty owners and designers, this Chapter defines the standards regulating site changes for new and renovated buildings. Standards and requirements outline allowable density, building height, modulation, open space and sidewalk widths. Chapter 5: Desig n Guidelines Instructive design guidelines provide a framework for high -quality urban design, including building design and public open space. Chapter 6: Implementation Actions Outlines the funding and financing options for implementing the Downtown Commu nity Plan, and provides a comprehensive phasing recommendation for the combined actions. This chapter also describes the development cap and a monitoring program that will allow the City and community to evaluate the impact of Plan policies. Appendix The build -out analysis developed for the Environmental Impact Report provides an understanding of what is likely to change over the next 20 years (Attachment D). This information is also captured in the interactive website: www.smgov.net/Departments/PCD/SeeDow ntown2030/ Consistent with the requirements of the California Environmental Quality Act (CEQA) and CEQA Guidelines, a Program Environmental Impact Report (EIR) was prepared for the DCP. The Program EIR analyzed the potential environmental effects associa ted with the DCP and identified mitigation measures necessary to reduce significant impacts. Additionally, the Program EIR analyzes alternatives to the DCP, including a No Project Alternative and a Reduced Project (Tier 2 only) Alternative. The Final EIR concludes that although there would be significant and unavoidable impacts, the DCP (with 3.2 million sf cap) would achieve the goals of No Net New PM Peak Hour Trips by 2030, and would reduce per capita vehicles miles traveled (VMT) and greenhouse gas em issions. Background 7 of 56 The Downtown Community Plan is a roadmap guiding the evolution of Downtown Santa Monica, a 229 -acre area identified by the City’s Land Use and Circulation Element (LUCE) as bounded by Wilshire Boulevard and the I -10 Freeway, and betwee n Lincoln Boulevard and Ocean Avenue. Taking into account that only 4% of the City lies within Downtown (roughly half a square mile), the DCP lays out a framework that integrates housing, jobs, mobility, historic preservation, public open space, infrastruc ture, and art and culture into a comprehensive long -term Plan. When adopted, the DCP will guide decision -makers and City departments, property owners and developers, as well as local stakeholder groups who provide services and programs to benefit the healt h and vitality of Downtown Santa Monica and all those who live, work or play here. Creation of the DCP The path that the DCP has taken to get to this final phase began with the adoption of the LUCE in 2010. The LUCE set forth goals and policies for an e xpanded Downtown and called for a Specific Plan (the DCP) to propose strategies and standards to create the conditions for a sustainable urban lifestyle. This vision included expanding cultural 8 of 56 arts offerings, and adding both intimate and larger open space s to the growing residential community. The vision addressed traffic, congestion and pedestrian safety by suggesting upgrades to streetscapes, optimizing the circulation network and integrating the Expo Light Rail into the physical fabric of the community in order meet the needs of all people navigating the Downtown. Priority was assigned to public improvements that would enhance the pedestrian experience and to standards and programs that would foster trip reduction by encouraging transit, walking, and bik ing as well as Transportation Demand Management (TDM) measures. The planning effort has been guided by substantial community participation and the involvement of the City’s Boards and Commissions, including the City Council. Throughout the workshops and discussions, public hearings and events, stakeholders have worked assiduously to shape the DCP into a balanced framework that supports residents, business owners, employees, non -profits, property owners and other community stakeholders. Since initiating t he planning process in 2012, several iterations of the DCP have been introduced, including:  September 2013: Downtown Specific Plan Framework . This document included a compilation of the primary components of the Plan including all of the issues that had b een discussed to that date. The Framework became the basis of a project description for the Program Environmental Impact Report.  February 2014: Draft Downtown Specific Plan . The first release of a comprehensive Downtown Specific Plan came a year later, add ing greater detail to the concepts included in the Framework, and weaving together regulatory proposals with policy. The Draft Downtown Specific Plan underwent a major revision and restructuring process in winter 2016.  February 2016: Draft Downtown Communi ty Plan . The second full -length version of the Plan was released in February 2016 under a new title of “Downtown Community Plan.” This effort was conducted to recognize the overarching desire to nurture a long -term community within Downtown’s boundaries, and to make sure that every Santa Monica resident feels welcome in the Downtown. The 9 of 56 revision included an overhaul of the document that resulted in reformatting, reorganization, and text streamlining. The Plan was also made more action - oriented, tying key initiatives to phasing periods and responsible parties both within and outside City government.  April 2017: Final Public Hearing Draft Downtown Community Plan . The final Public Hearing version of the Plan was released on April 12 th at a public event at th e Civic Center’s East Wing. This updated edition comes on the heels of a full year of extended community outreach, and includes several substantial changes from the 2016 text. Over the course of April and May of 2017, the Planning Commission provided com ments and recommended changes, which are enumerated in the Addenda (Attachment B). Throughout the various versions of the DCP, the City Council and Boards and Commissions have provided continuous feedback to further refine the Plan’s core tenets and to pr ovide detail in areas where specificity strengthened standards, policies or actions. The City Council (February 28,2012, July 9, 2013 and October 13, 2015) and Planning Commission (March 16, 2011, January 11, 2012, March 28, 2012, July 11, 2012, December 5, 2012, January 23, 2013, March 6, 2013, July 17, 2013, August 7, 2013, November 2, 2013, November 3, 2015, March 2, 2016, March 3, 2016, November 16, 2016, December 7, 2016, April 25, 2017, May 10, 2017, May 11, 2017, May 17, 2017, May 18, 2017, May 31, 2017 ) have held public hearings and provided significant input into the planning process, shaping the concepts and strategies over the last 5 years. Throughout the planning period, the planning team’s communication approach has been fluid to integrate as many perspectives as possible through a variety of means. These include public workshops, focus groups, presentations to neighborhood organizations, online surveys, a dedicated interactive project website www.downtownsmplan.org and a variety of fun event s such as walking tours, farmer’s market exhibitions and community celebrations for major milestones. Below is a list of meetings and events that have been conducted with the participation of several thousand people. MEETINGS CONDUCTED ON THE DCP 10 of 56 11 of 56 Dis cussion The Final Downtown Community Plan (Attachment A) presents a vision for Downtown Santa Monica that includes a prioritization for over 2,500 new housing units, as well as new public spaces, a further diversification of art and cultural offerings, a p rominent role for historic preservation, and a multi -faceted approach to enhancing Downtown’s pedestrian environment through building setbacks and improved streetscapes, to name but a few. Designed to be a relatively lower -scale 5 -7 story Downtown, the DC P envisions that change will happen incrementally and be accompanied by infrastructure investments, including enhancements to the mobility network, that support the needs of a growing population. Refining the LUCE Vision The 2010 LUCE defined newly expan ded boundaries for Downtown. The LUCE brought in all areas west of Lincoln Boulevard into the planning boundary to increase Downtown’s footprint and to concentrate desired housing, jobs and community -serving uses near the terminus of the Expo light rail. Noting the inherent challenges faced by Downtown to maintain Santa Monica’s small -town vibrancy and flavor, the LUCE directed the City and community to develop a Specific Plan “to determine the appropriate range of building heights in the district and add ress the need for open space, affordable and workforce housing, pedestrian access from areas south of the Downtown core, the linkages from Downtown to the Beach and the incorporation of the Downtown Light Rail Station into the fabric of the Downtown. (LUCE Policy D14.1)” 12 of 56 After six years of Plan development, outreach and public discussions, the DCP has struck a balance to meet the challenges identified in the LUCE. The DCP creates the conditions for a lively pedestrian -oriented mix of uses and activities, including new housing options that are complemented by services and public spaces to create a complete neighborhood. It further strengthens Downtown’s identity by safeguarding City designated historic resources and potential historic resources through a c omprehensive preservation approach, and marries this to the creation of “new landmarks” that will 13 of 56 spring from flexible development standards that inspire creativity and innovation at a scale that is consistent with Santa Monica’s contemporary urban form. L astly, the DCP continues to rely on the concept that pedestrians come first in Downtown Santa Monica. Addressing the full range of mobility in the Downtown relies on building on the investments already in place and strategic investment in infrastructure an d programs to the meet the transportation needs of Downtown. As a comprehensive document, the DCP provides substantial policy guidance on all of the elements mentioned above, such that the Council and its Boards and Commissions will have a framework for m aking decisions about public investments, or judging the merit of proposals that are submitted by private individuals who wish to effect any manner of change Downtown. Significantly, the DCP also provides a suite of actions that the City itself will use t o develop departmental and interagency workplans around infrastructure upgrades, public space enhancement, economic development, historic preservation, and mobility. These actions, implemented in coordination with a monitoring program that includes a cap o n the volume of development evaluated under the Plan’s EIR, will guide city leaders to carefully steward the evolution of Downtown in a manner that is consistent with the long -term goals of the community for sustainability, resilience and well -being. This report summarizes the core components of the Downtown Community Plan and provides information on the substantive outreach process, as well as input from the Planning Commission and other Boards and Commission that have weighed -in on the final draft. For clarity, the report is organized into the following three chapters: 1. THE DOWNTOWN COMMUNITY PLAN A. Urban Design and Land Use Strategy: The strategy for Downtown’s urban form and land use pattern informs all subsequent planning concepts. This section describe s how the overall strategy relates to the Plan’s development standards and land use regulations. B. Key Concepts : Seven foundational themes provide the context for the Downtown Community Plan’s narrative, which point to community priorities such 14 of 56 as housing, p reservation, economic vitality, public space, mobility and community wellbeing. This section provides high -level information about what the Plan is about. C. Monitoring and Implementation : Implementation and monitoring of the Plan is a shared responsibility o f the City in partnership with other public and private entities. This section describes the sequencing of proposed activities, and discusses the Plan’s monitoring program, which includes a cap on development consistent with the EIR’s findings and the LUC E citywide goal of “no net new pm peak hour trips.” 2. PLAN DEVELOPMENT AND FEEDBACK A. Community Outreach : Half a decade of community outreach has significantly shaped the core strategies and recommendations of the DCP, and has led to refinements that reflect the broad consensus of many thousands of people. This section reports on the overall outreach effort, and touches on the changes to the Plan the resulted from the advocacy of interested groups and individuals. B. Environmental Analysis : This section provides a summary of the DCP Environmental Impact Report. C. Planning Commission Comments : Over the course of the planning process, the Planning Commission met over twenty times to discuss various aspects of the DCP. This section provides a summation of the Planning Commission’s final recommendations to the City Council. 3. COUNCIL CONSIDERATIONS A. Spotlight Items for Council Consideration : While the DCP attempts to provide a consensus -based framework for immediate implementation, several outstanding issues require Counci l discussion. This section highlights the handful of remaining concerns and contentious issues for Council to weigh -in on. B. Amendments and Zoning Changes : A series of coordinated amendments to the LUCE, Civic Center Specific Plan and Zoning Ordinance must be made to implement the DCP. This section provides an overview of the necessary changes. 15 of 56 CHAPTER 1: THE DOWNTOWN COMMUNITY PLAN A. Urban Design and Land Use Strategy For the past century, Downtown Santa Monica’s built environment has responded to various er as of change. From its infancy as a crossroads of commerce and civic life, to its present day role as bustling local hangout and job/tourist center Downtown’s buildings stand as a record of human endeavor, and as a reflection of the zoning standards that each subsequent generation implemented to guide the urban form priorities of the day. This incremental approach is responsible for the great diversity of building heights Downtown, which range from one -story brick and mortar structures to taller twenty -on e -story glass and steel buildings. The DCP acknowledges the interplay between the old and new as a necessary ingredient to Downtown’s authenticity, and presents an urban design strategy to safeguard the identifiable historic core within the Bayside Cons ervation District, and transfer unused development potential to the areas immediately served by the Expo Light Rail. The 5 -7 story height profile proposed by the DCP is framed by 4 -story transition zones that gradually reduce height and scale at Downtown’s outer edges where it abuts the residential neighborhoods of Wilmont and Mid -City, and where views of the Pacific Ocean open up on Ocean Avenue. 16 of 56 The development standards for the Plan’s six land use districts (Bayside Conservation, Neighborhood Villag e, Transit Adjacent, Lincoln Transition, Wilshire Transition, Ocean Transition) derive from the urban design strategy and provide equilibrium between the community’s desire to protect the historic scale of Downtown’s central walking area centered on the Th ird Street Promenade with the need to accommodate additional residential and commercial activities in areas that are regionally connected by transit. 17 of 56 Downtown Land Use Districts Land Use Downtown’s vibrancy is attributed to its unique mix of shops , restaurants, offices, institutions, health and well -being centers, entertainment venues, markets, apartments, and dozens of other offerings that are used daily by locals, employees and visitors. As the expanded boundaries of Downtown begin to transition into a mixed -use environment, the DCP provides a logical structure for regulating land uses in a way that is complimentary to the urban design strategy by directing the most intensive pedestrian -oriented uses to the historic core and transit area, and limi ting the presence of larger more regionally -sized commercial uses adjacent to residential areas. 18 of 56 This framework supports the DCP’s Land Use Regulations, which are finely -tuned to balance the Downtown’s various roles as urban neighborhood, regional job center and visitor destination. Urban Form and Building Design Santa Monica is renowned as a center of innovation and creativity, often leading the region - if not the nation – on issues of sustainability, community enrichment and urban policy. These pr actices are woven throughout many adopted City documents, such as the Zoning Ordinance, that influence building design both in our commercial areas as well as in our residential neighborhoods. In Downtown, the City has the opportunity to embody these prin ciples in a new urban typology that celebrates architectural expression through flexible design standards. The 19 of 56 DCP departs from the rigid formulas of the past several decades that have produced “wedding cake” buildings, and instead employs a suite of perc entage -based modulation requirements that allow for an architectural concept to drive building design. These standards, which ensure a consistent pedestrian -scaled streetwall, interior access to light and air, and communal open spaces for building resident s, provide designers with a comfortable canvas for exemplary architecture while empowering planners and reviewing bodies with sufficient criteria to evaluate the merit of individual projects. In response to comments received from the design community duri ng the Planning Commission’s deliberations on the draft DCP, avenues for alternative compliance or modifications to standards along with strategic exemptions from standards for single lot projects were added to the Planning Commission’s recommended changes . The Architectural Review Board (ARB) discussed the Downtown Community Plan at both their June 5, 2017 and June 19, 2017 meetings and generally endorsed the urban design strategy and urban form approach. There was a robust exchange of ideas including di scussion of design standards, modulation standards and design guidelines, the Bayside Conservation District and attention to potential historic resources and Landmark properties, open space provisions, as well as other aspects of the plan. The ARB Subcommi ttee also made many specific recommendations, identifying conflicts within the plan that needed clarification, and highlighting technical architectural items to be addressed with greater precision. These items have been addressed in the staff - recommended Addenda (Attachment C). The ARB is generally supportive of the Downtown Community plan presented. The ARB had a particular interest and concern regarding the modulation standards and were focused on ensuring the adopted standards do not prevent or hinder innovation and/or excellence in design. To that end, the ARB would like to support the following implementation actions:  Add to Chapter 6, Implementation Actions a report on whether the development standards have resulted in desired outcomes. The chang e is recommended on Page 249, Item 5A, Enforcement of Project Entitlements, “Review the design 20 of 56 quality of downtown project to ensure diverse design typologies, innovation and quality design.”  The Board strongly endorses the use of resources such as the Dow ntown Santa Monica Inc. Ambassador Program and outreach to private property owners regarding possible management partnerships to ensure successful outdoor spaces are incorporated into existing and new projects.  The Board also endorses the action to develop a Neighborhood Conservation Overlay District (NCOD) in the Bayside Conservation District (BSCD). Staff has added the ARB’s proposed implementation action to the staff -recommended Addenda. Since the June ARB meetings, the Board’s DCP subcommittee submitt ed a recommendation to add a special alternative stepback option for all Districts. The proposal would allow “forms, geometries, and skins such as layered facades and brise - soleils that do not fit the modulation standards but generally conform to the inte nt for three -dimensional design and to ensure light and air into buildings and down to the street to be considered on a case -by -case basis through discretionary review.” To this point, staff notes that the Plan already allows for architectural projections beyond the building frontage line for 2/3 of the façade and therefore, believes the forms and geometries contemplated by the ARB subcommittee would be accommodated within the Plan’s allowable projections. Key Concepts The Downtown Community Plan is a Ho using Plan The Downtown Community Plan’s primary responsibility is to respond to the direction of the LUCE to encourage the growth of the residential population Downtown. This strategic land use emphasis is intended to accommodate the unmet demand for new housing in Santa Monica by directing the production of over 2,500 new units to an area that is rich with public transportation options and where higher densities can support a more sustainable development pattern. The primacy of housing development is high lighted in the DCP by policy and Plan standards that provide incentives to encourage the production of new housing units, both market -rate and affordable to 21 of 56 people of lower incomes. The Housing Commission supports the DCP’s approach to housing production. Housing Incentives  Floor Area Ratio (FAR) Bonus: housing projects have access to an additional 0.5 FAR bonus over commercial projects of a similar size.  Height Bonus on Lincoln and Wilshire Boulevards: housing projects on Lincoln and Wilshire Boulevard ma y achieve the maximum permitted height of the districts, whereas commercial projects are subject to a 10 -foot reduction from the maximum permitted height.  PC RECOMMENDED: Process Incentives: entitlements for housing projects enjoy higher development review thresholds than their commercial counterparts. o Housing projects up to 60,000 square feet (on lots no greater than 15,000 square feet) throughout the Downtown shall be processed through an Administrative Approval. o Tier 3 housing projects up to 90,000 sq uare feet in the Transit Adjacent District shall be processed through a Development Review Permit. Affordable Housing Requirements In addition to the housing incentives that are provided in the DCP’s Standards and Regulations, affordable housing productio n will be stimulated by new requirements for Tier 2 and non -negotiated Tier 3 projects. These requirements were determined based upon feasibility analyses prepared by HR&A (Attachment I).  Uniform Affordable Housing Requirement by Height: the DCP proposes a modified framework for affordable housing, compared to existing regulations, that requires a single percentage of on -site or off -site housing, depending on the proposed height of the project.  Increased On -site Affordable Housing Requirements: the DCP r equires a greater percentage of deed -restricted affordable units than currently required. 22 of 56  Augmented Off -Site Affordable Housing Requirements: projects that wish to satisfy their Affordable Housing requirement off -site of the market -rate project will be sub ject to an even higher percentage of deed -restricted affordable units than the on -site equivalent. Based on the Planning Commission’s review of the DCP Affordable Housing proposal, the distance that an off -site project can be located from its related mark et -rate project has been expanded to anywhere within the Downtown, or within one -quarter mile of the market rate project.  Mandated Affordable Income Level Mix: based upon the proportionate household income levels in the Housing Element Regional Housing Nee ds Assessment and requirements of Proposition R, the revised DCP includes a new requirement to provide a mix of income levels within the total affordable units required for the project so that each project provides units affordable to extremely low, very l ow, low and moderate incomes. Exemptions for 100% Affordable Housing Projects  PC RECOMMENDED: Administrative Approval Threshold: 100% Affordable Housing projects up to 75 units may be approved administratively.  PC RECOMMENDED: Floor Area Ratio (FAR) Bonus : 100% Affordable housing projects in the Neighborhood Village have access to an additional 0.5 FAR bonus and 10 feet of additional height. The DCP projects an estimated minimum of 2,500 new units produced over the next 15 - 20 years, which represents a dou bling of the residential population that emerged over the past three decades. Most of the new housing projects will include a healthy mix of unit sizes and affordability levels based on the DCP’s policy direction and project requirements. It is important t o note that 2,500 new units is a projection, not an absolute number, and could be increased upwards due to market forces that favor housing production over other land uses, such as commercial office or retail. The DCP’s housing strategy and project requir ements were reviewed by the Housing Commission at meetings on June 15, 2017 and June 20, 2017. The Housing 23 of 56 Commission endorses most aspects of the DCP’s housing approach including incentives for 100% affordable housing projects. However, the Housing Comm ission recommends that additional project or process requirements be contemplated further. Many of these recommendations include changes to proposed measures in the Plan including  Eliminating CUP requirement for SRO projects  Rejecting the process incentive s for housing projects recommended by the Planning Commission  Prohibiting any offsite affordable housing within 500 feet of the I -10 freeway  Ensuring that the Housing Element Quantified Objective and Proposition R production requirements have been met befo re middle -income units (130%- 180% AMI as indicated in DCP) could be considered in development agreement negotiations The inclusion of SRO projects as a permitted use is a change that will be reflected in the use table. The streamlined process for typical housing projects recommended by the Planning Commission was based on the need to create a clear and predictable process for housing projects as compared to commercial projects. To provide context to the location of offsite affordable housing, the Plannin g Commission discussed the limitation of residential uses within 500 feet of the I -10 freeway but did not impose any locational restrictions. Further, much of the Transit Adjacent district is within 500 feet of the I -10 freeway. Development agreement neg otiations are conducted on a case -by -case basis so there would be no obligation to include any middle -income units. The Housing Commission also made several recommendations that extend beyond the scope of what has been in the public discourse or in propos als presented by staff or the community, including:  A graduated affordable housing requirement that escalates up to 35% based on allowable height and FAR thresholds  Eliminating any office or retail uses above the ground floor for new buildings, with except ions for areas that the Council deems appropriate. 24 of 56  Applying project requirements (i.e. affordability mix and average bedroom factor) to offsite 100% affordable housing projects with an exemption from the requirements only if necessary to obtain other forms of public financing  Biennial review of DCP Affordable Housing and AHPP requirements to determine if new incentives or requirements should be instituted  Encouraging ground floor residential units to have a preference for low -income disabled persons and art ists, subject to City Attorney review regarding any fair housing implications  Reviewing the entire AHPP now for consistency with Prop R income targeting and rent limits and revise the affordability requirements outside of Downtown based upon new feasibilit y studies similar to that conducted for the DCP  Increasing deed -restriction terms on affordable units from 55 years to the life of the project  Identifying publically -owned land as a potential resource to achieve affordable housing goals Staff appreciates the thoughtful detail that the Housing Commission put into their recommendations, some of which fall outside of the regulatory framework of the DCP in terms of deed restriction term limits and the framework of the AHPP. Staff defers to Council on the sub ject of modified affordable housing requirements, but notes that a careful balance has been struck within the DCP between project requirements, fees, and process. Any recommendation must also be supported by the HR&A feasibility analysis. The elimination of office or retail space above the ground floor may appear attractive as a means to create housing projects but prohibiting office and retail above the ground floor must be carefully considered in balance with other uses that are vital to the City’s econ omy, social services network, or other important land uses that create a complete community. The draft DCP proposes that offsite affordable housing projects must be owned in whole or part and operated by a non -profit housing provider. It is likely that these providers 25 of 56 will seek public financing that will dictate the affordability requirements of the project, which is why the DCP exempts 100% affordable housing projects from the project requirements for Tier 2 and Tier 3 projects. However, there may be an instance where an offsite affordable housing project is completely privately financed. In this case, the project would still be required to comply with the definition of a 100% affordable housing project per Section 9.52.020.0050 of the Zoning Ordinanc e (25% of units affordable to 60% income households with remainder affordable to 80% income households). From a policy perspective, the net result is more affordable housing units and therefore, flexibility should be provided in how the offsite affordable housing is achieved. With respect to preference for artists, a new policy has also been included to explore accommodating artists within ground floor residential units provided the classifications do not result in unintended discriminatory impacts. Th e DCP includes a monitoring requirement that would produce a report concurrent with the LUCE monitoring. The monitoring report would include data presented as part of the Proposition R annual reports. Staff does not support a requirement that the DCP aff ordable housing requirements be reviewed every two years as there may not be sufficient data points to inform such a study. The Preservation of Existing Buildings is Strongly Supported Preserving the historic scale and character of Downtown’s beloved walk ing areas is a central objective of the DCP’s change strategy, which seeks to carefully retain many older structures that evoke nostalgia for Santa Monica’s colorful past. The DCP improves upon previous historic preservation policies, and provides substan tial support for adaptive reuse. A six -step approach outlines a variety of economic and technical incentives. Adaptive Reuse Incentives Exemptions from standard development requirements have been added to the DCP that create economic and technical incen tives for owners of properties identified as City Designated Historic Resources or as potential historic resources. Several examples include exemptions from development standards, such as parking, open space, and 26 of 56 certain use regulations that would create b arriers to adaptive reuse. It should be noted that other technical incentives are available such as the California Historical Building Code, which recognizes older buildings often need alternative methods in meeting fire and life safety requirements. P rotections for Historic Resources A new protection included in the DCP is an action to submit the Downtown Historic Resource Inventory (HRI) to the State Office of Historic Preservation, which would mean that all HRI -listed properties are considered presum ptive historic resources under the California Environmental Quality Act (CEQA). CEQA requires that exterior alterations to historic resources comply with the Secretary of the Interior’s Standards for the Treatment of Historic Properties. If alterations ar e not in conformance or demolition 27 of 56 is proposed, more detailed environmental review of the proposed project would be required, possibly including an Environmental Impact Report. Several new process changes are also included in the DCP to facilitate the con servation of City Designated Historic Resources and potential historic resources Downtown. These include modified demolition screening procedures that require Landmarks Commission review of demolition permits for structures more than 40 years old and clear ance of the required 75 -day waiting period before any Planning application can be submitted. This new procedure would serve as a means to identify potential historic resources prior to the submittal of an application, which would be complemented with an a ssociated amendment to SMMC Article 8 (Building Regulations) to increase the lifespan for demolition applications. Future actions to support this process change include updating the Landmarks Ordinance to provide alternative pathways to designation and th e creation of a Neighborhood Conservation Overlay District within the Bayside Conservation District to identify design features that provide visual identity to 2 nd and 4 th Streets. Special standards for the Bayside Conservation District include eliminating the open space requirements and relaxed modulation requirements in order to clearly define the traditional streetwall of 2 nd and 4 th Streets. The Landmarks Commission reviewed the DCP’s approach to Historic Preservation at their June 12, 2017 meeting an d supports the approach subject to the following recommended changes:  Specify possible funding sources for historic preservation  Assure that the existing provisions in the Municipal Code for expediting plan check occur in practice  Increase outreach and pub lic education regarding historic preservation  Amend Policy HP2.4 to read, “Adaptive reuse of older building should be considered for new construction and rehabilitation projects, when the scale, materials or method of construction evokes Downtown’s history , and where the façade building contributes to a continuous streetscape.” 28 of 56 Staff supports the Landmarks Commission’s recommendations and has added relevant changes to the recommended Addenda. Going forward, staff will continue to look for opportunities to r ealize existing incentives for historic preservation, and to help expand outreach on this subject. New Public and Open Spaces are Prioritized throughout Downtown Because Downtown was largely developed as a commercial district it contains very few dedicated public spaces where groups can congregate. While many of the existing parks or public spaces that are utilized by Downtown residents and visitors are located nearby in other districts (e.g. Tongva Park, Palisades Park, Reed Park); within Downtown, only t he public right of way, and places like the Third Street Promenade, Santa Monica Place, and the Santa Monica Main Library serve as Downtown’s dedicated public open space offerings. Recognizing this, the community overwhelmingly identified the maintenance, enhancement or creation of public space as the #1 priority for Downtown’s evolution. The DCP looks at the public space network comprehensively, and acknowledges that a nuanced approach that involves both City and private interests must be considered. To this end, the Plan emphasizes the role that private development must play to add new public spaces to Downtown. The DCP identifies key sites where development has been proposed and where negotiations with property owners may yield significant public op en space. Similarly, the Public Space plan includes existing publically -accessible spaces (“POPs”) that should be redesigned to promote better access and programming, perhaps incentivized with a small modicum of new floor area. Management and oversight o f these spaces is paramount, and will require the involvement of City staff, DTSM and private property owners. Based on outreach, smaller scale public spaces such as pocket parks, courtyards and plazas are preferred over larger open spaces such as a centr al park or recreation fields. Additionally, the quality of Downtown’s streetscapes is to be improved to emphasize their role as public spaces and the opportunity they provide to further pedestrianize the 29 of 56 area through wider sidewalks, a larger more verdan t urban forest, and street furnishings that would make the walking experience more enjoyable. Private Open Space in Housing Projects A new feature of the DCP’s zoning standards is the requirement for typical housing projects to provide on -site open spa ce for residents’ use. Depending on the size of the project area, a project is required to dedicate 20 -25% of the total lot area to courtyards, rooftop gardens, balconies and other open space types, and of this percentage one - quarter must be designed for communal use. Single -lot projects are exempt from these standards. The Recreation and Parks Commission (RPC) reviewed the DCP’s Public Space approach at their December 15, 2016 meeting and subsequently provided a letter 30 of 56 expressing unanimous support for th e various approaches and policies surrounding the creation or enhancement of public open spaces Downtown. The RPC conditioned their support on several recommendations, including:  That the DCP maximize every opportunity to create open space, including tru e green space, courtyards, plazas and paseos;  That the DCP identify parcels that would be suitable for acquisition for open space use;  That the DCP include policies reflecting the need to work with private property owners to activate empty plazas;  That gro und floor open space be included in all residential projects;  That projects subject to DAs provide substantial open space benefits and that property owners should be held accountable for maintaining open space amenities to the highest levels. Nearly all o f the RPC’s recommendations have been addressed and incorporated into the final draft DCP. The one exception is the recommendation to require ground floor open space, which was not integrated into the final plan as it would conflict with the broader urban design strategy to maintain a consistent streetwall at the ground floor. Encouraging Economic Vitality is Important to Downtown’s Future Downtown is a major employment center (approx. 25,000 jobs) and a revenue generator that supports the many programs, s ervices and activities that residents citywide have come to enjoy. While constituting only 4.5% of the City, Downtown’s generates over a third of the total sales tax revenues for Santa Monica, and another third of all hotel room revenues citywide. Additio nally, fees collected from development to fund park maintenance, childcare programs, urban runoff projects, and transportation enhancements are largely drawn from projects located in Downtown. The combination of these elements has helped Downtown, and the city as a whole, weather challenging financial crises such as the Great Recession. 31 of 56 Given its prominence as Silicon Beach and a major tourist destination, one of Downtown’s inherent tensions is the degree to which it caters to locals, employees and visit ors alike. The challenge ahead is to ensure that it remains a place for everyone, and that opportunities for economic diversity are embraced. The DCP weaves together policies and standards that create a “local business -friendly” environment that can prov ide space for a broad mix of job opportunities in new and expanding industries whether they be creative office and co -working spaces, retail, dining and entertainment, or hospitality. The Promenade is further supported through a variety of exemptions from design standards to allow for greater flexibility, and through a change to several regulations that currently restrict uses. Going forward, an Action of the DCP is to work with Public Works and DTSM, Inc. on a Promenade improvement project to enhance its infrastructure, lighting and right -of -way features. In the course of outreach, a clear preference emerged to support the creative economy, and to expand opportunities for local entrepreneurialism with small and medium -sized businesses. To this end, the d raft DCP includes a variety of changes from the zoning ordinance that are intended to reduce regulatory barriers for small businesses and typical changes of use. These include relaxed parking standards and less restrictive use regulations that ensure groun d floor uses reflect the appropriate level of activity based on adjacency to residential uses. The Downtown Santa Monica Inc. Board of Directors (DTSM) conducted a comprehensive review of the draft DCP and while there is agreement on many of the key app roaches, there remains concern regarding the distribution of heights and densities across Downtown and the effect on housing production. DTSM highlighted six key recommendations for the Council’s consideration:  Increase height and FAR in the BC and NV dis tricts to 84 feet and FAR of 4.0 and to 60 feet and FAR of 2.75 for both sides of the Lincoln Transition district.  Provide streamlined process for granting flexibility from all aspects of retail space design and configuration standards to respond to the sh ifting retail environment. 32 of 56  Include a clear vision for a new state -of -the -art movie theater on the site of either Parking Structure #1 or #3.  Support for allowing ground floor office in midblock locations in the Neighborhood Village district as demand may n ot be sufficient to support retail in these locations resulting in vacancies detrimental to the neighborhood.  Include a clear statement on improvements to vehicle circulation with inclusion of a Vehicle Action Plan, similar in scope to Bike and Pedestrian Action Plans.  Consider flexibility in desired widths for sidewalk zones in order to accommodate space for outdoor dining. As discussed later in the report highlighting issues for Council consideration, policy options are presented to address housing produ ction and ground floor office in Neighborhood Village midblock locations. The proposed heights and FARs in the Plan have been carefully crafted within the context of the urban design strategy to place the highest intensities closest to the Expo Station an d to balance new development with the existing character of Downtown. DTSM’s recommendations on a modification process for retail configuration are already included in the draft Plan. Language regarding support for movie theaters is also included in the Addenda. The sidewalk widths in the Plan are provided as conceptual illustrations and will be more comprehensively reviewed as part of the follow -up action to create a Downtown Streetscape Manual for how the public right -of -way is used and managed. As di scussed in the following section, the Plan proposes a comprehensive Mobility approach that addresses improvements for all modes. A New Model for Mobility: Improving Today, Preparing for the Future A new model for mobility includes making more transportati on options attractive, convenient, affordable, and safer so that people feel they can circulate without driving alone. It is an evolution of how people get to Downtown, and how they experience traveling within Downtown. The creation of parking structures may have revived 33 of 56 Downtown, Expo service has provided a new transit option, while the future is expected to include travel by driverless vehicles. The ‘park once, pedestrians first’ mantra has been a guiding tenet for the past 30 years in Downtown. Recent ly Expo light rail service, pedestrian scramble intersections, a bike center, bicycle lanes and bike share have been introduced to Downtown. The next phase will likely see more changes related to car service (Lyft, Uber, taxi), increasing demand for curb s pace, and technology. Success of the area is tied to the success of the pedestrian environment – continuing to be a place that residents and visitors both want to walk from place to place. Transportation in Downtown is as diverse as the people who trave l there. Downtown is a place that welcomes the service workers who make it function, as much as resident visitors and tourists – who may take a bus, ride the train, drive with friends, or take a tour bus. People come in buses, carpools, on foot and by bike and walk throughout the district. Providing a quality transportation experience requires flexibility to make it more effective for all of these roadway users. This includes measuring our performance in making streets serve people first, and prioritizing m odes that are more efficient. A new focus in the DCP is the quickly -evolving technology influence on transportation, including electric vehicles, autonomous vehicles and transit service provided by private organizations. Since the inception of the develo pment of this plan, car services, have gained widespread acceptance. The City’s response must be internal, by shaping choices so that the convenient option also meets community values, and external, by actively participating in the field of changing techno logy. The plan includes recommendations to work with businesses to provide micro -transit, to use technology to provide on -demand transit service, to focus on community priorities such as equitable access to autonomous vehicles, and to participate in region al transportation technology efforts. A new model for mobility requires changes to policies, new investments, different requirements for property owners, adapting business practices, and partnership with the Santa Monica community. 34 of 56 Art and Cultural Offeri ngs Create New Opportunities Downtown The demand for new and more diverse art, cultural and entertainment activities is increasing Downtown. To establish Downtown’s identity as a major cultural center, the City must carefully consider new opportunities for cultural engagement to stretch Downtown’s vibrancy. Building from the traditionally retail -centered economic base, events, major artworks, unique creative expressions and live music will infuse the street and public spaces to strengthen Santa Monica’s as a cultural destination. Additional entertainment choices Downtown, particularly nighttime venues, will provide residents, employees and visitors with a wider array of destination experiences than in the past, such as live performance spaces for theater and live music. The Arts Commission supports the DCP’s approach to Art and Culture. The DCP’s land use regulations now permit a larger range of art and cultural uses than historically permitted in the past. The Plan includes an invitation to potential museu m operators to work with the City to locate a museum Downtown, and identifies several locations where major works of public art could be located. At its November 21, 2016 meeting the Arts Commission enthusiastically supported the inclusion of arts and cul ture into the DCP, and offered the several recommendations, which have largely been incorporated into the final Plan:  Encourage policies and public/private partnerships that promote robust artistic activities throughout downtown, in businesses, open spac es and vacant storefronts.  Support Creative Placemaking efforts that enhance other city goals, such as mobility and activating open spaces.  Wherever possible, the DCP should ease restrictions and streamline procedures to facilitate pop -up art interventio ns in underutilized spaces.  Encourage the development of public and public/private open space, and provide incentives for artists and arts groups to work with City Cultural Affairs staff to develop and implement art and Creative Placemaking programs downt own. 35 of 56  Position Downtown Santa Monica as a cultural destination  Expand options for live music and the performing arts in downtown facilities and businesses.  Of the affordable housing that is produced Downtown, 10% of the units should be designed and set a side for artist housing or live/work units. The DCP directly addresses all of the recommendations of the Arts Commission through its policy framework and subsequent implementation actions with the exception of the Arts Commission’s recent request that ar tist housing or live/work units be included as part of the DCP’s affordable housing requirements. Additional refinements have been recorded in the recommended Addenda that reflect specific direction on certain actions. Community Wellbeing The City’s Wel lbeing Project looks beyond traditional performance measures or economic indicators and uses a new method to gain an understanding of how all of these factors interact and affect residents’ quality of life. The core of the project is the Wellbeing Index, w hich provides the City with a snapshot of its current wellbeing strengths and needs by analyzing data collected from residents, city departments and social media to gain a robust understanding of how the people of Santa Monica are doing across multiple mea sures known to influence wellbeing. The Wellbeing Index demonstrates that Downtown residents benefit from many positive dimensions, such as access to healthy food, proximity to culturally enriching experiences and institutions, use and enjoyment of Down town’s outdoor spaces, and frequent use of the many mobility options provided. However, the Index also points to areas of concern that highlight the growing pains of a residential neighborhood in its infancy. The metrics for stress, stability and life/wor k balance all register slightly higher Downtown than any other neighborhood in the city. One indicator of particular concern to the planning team reveals that Downtown residents do not feel connected to one another in the way that fosters community, trust among neighbors, and social 36 of 56 interaction. Tying the results of the Index to Plan policies and standards strengthens the logic for prioritizing affordable housing, public open space, new neighborhood serving uses, youth and senior services, and many others. The Social Services Commission submitted their recommendations to the Planning Commission on April 26, 2017. Specifically, the Social Services Commission recommended the use of the Wellbeing Project data to guide development agreement negotiations and be used as a tool to advance a diverse and multigenerational Downtown community, support for affordable housing, and specificity for policies supporting wraparound community and social services to serve the Downtown community. Recommendations that develop ment projects include setasides for affordable/low -cost office space and community rooms could not be included due to lack of nexus between such requirements and new development; however, such amenities could be included in negotiated projects. Many of th e Social Services Commission’s recommendations were included in the Planning Commission’s final recommendation on the DCP. B. IMPLEMENTING AND MONITORING THE PLAN Implementation of the DCP will be a shared responsibility. Chapter 6 outlines all actions in t he Plan along with a relative estimate of cost, responsibility, timing, and potential funding sources (Table 6.1 of the draft Plan). This can used as a budgeting tool and also as a means to support grant applications. Table 6.1 demonstrates that implemen tation of the DCP will be a shared responsibility dependent on not only City leadership but also coordination with community partnerships and cooperation from private entities. The DCP monitoring report will be prepared concurrent with the LUCE 5 -year Me asuring and Monitoring Report. One key area that will be monitored is the development cap of 3.2M square feet of net new floor area in Downtown. This development cap represents the amount of new development that could occur that would still allow achieve ment of the LUCE goal of No Net New PM Peak Hour Trips. 37 of 56 Any project proposal that exceeds the cap would not be able to be approved until additional environmental analysis and amendments have been completed. There are also other indicators to monitor the performance of the DCP listed on Page 247 -249 of the draft Plan. CHAPTER 2: PLAN DEVELOPMENT A. COMMUNITY OUTREACH Many years of outreach have marked the development of the DCP. Interdepartmental staff and the planning team have worked with community stakeho lders and the City’s Boards and Commissions to tackle challenging issues in search of consensus, and have listened intently to the perspectives brought forward by the many voices involved in shaping the Plan. Beginning in 2012, outreach on the DCP has tak en on many forms, from workshops on Emerging Themes, Community Benefits, and Urban form, to stakeholder interviews and meetings with the Planning Commission and City Council. In total, seven workshops were held to drill into Plan concepts and generate fee dback from the community. At the onset of 2016, staff re -engaged the community on a variety of topics to move closer towards consensus and to refine the Plan. 2016 Outreach and Engagement Beginning shortly after the Planning Commission’s March 2 nd , 2016 m eeting, staff launched an unprecedented outreach campaign to community groups and local organizations, employing the City’s Office of Communications as a partner in diversifying the input opportunities and in reaching new voices within the community. The o utreach tools and platforms used to engage thousands of people were expansive and yielded greater detail about the community’s preference for things like open space, art and culture, mobility, jobs and housing and historic preservation. Importantly, the ou treach also demonstrated that there are a great many perspectives on height, development and planning for large sites that have the ability to support much desired amenities. 38 of 56 A detailed breakdown of the 2016 outreach and supporting documentation is prov ided in the November 16, 2016 Planning Commission staff report. Below is a snapshot of last year’s outreach by the numbers:  1,200 people provided feedback on Downtown priorities in workshops, focus groups and online  Over 40 community presentations were gi ven to local groups and organizations in both English and Spanish  7 community conversation focus groups were held at the Main Public Library and at Senior Residences Downtown  3 public workshops were held on the subjects of Placemaking, Preservation and Ch ange and Mobility  3 Downtown walking tours were co -hosted by the planning team and the Santa Monica Conservancy  4.6 million social media impressions were recorded on facebook, twitter and instagram  8,700 unique visits to the DCP website, www.downtownsmplan .org Leading up to the release of the 2017 Final Draft Downtown Community Plan, staff held several events to provide a broad overview into the content of the Plan and to establish a rapport with interested community members who sought clarifications on ke y subjects or who had questions about the collective vision for Downtown’s future. B. ENVIRONMENTAL ANALYSIS In accordance with the California Environmental Quality Act (CEQA), a Program Environmental Impact Report (EIR) was prepared that analyzed the poten tial environmental effects associated with the DCP. The Draft Program EIR was circulated for a 90 day public review period beginning on February 3, 2016 (exceeding the minimum 45 -day public review as required by Section 15067 of the CEQA Guidelines). 39 of 56 In a ddition, a Recirculated Draft EIR was circulated for a 45 -day public review period in February 2017 to reflect changes that were made to the draft DCP. Comments on the Draft EIR and Recirculated Draft EIR included public concerns about development in Down town, the Miramar established large site, height, traffic, aesthetics, and neighborhood character. The Final EIR provides written responses to all comments received on the Draft EIR and Recirculated Draft EIR. Some minor text changes and clarification were also included in the Final EIR. The Final EIR analyzes the effect of potential land use changes that could occur in the Downtown through 2030 as a result of the implementation of the DCP, including review of the range of impacts between two different bui ldout scenarios. Scenario A (High Scenario) would entail higher FARs for sites in the Downtown with variation by district, and represents the City Council’s outside parameters for EIR analysis established during the August 13, 2013 meeting, which includes FARs up to 5.0 for the established large sites. Scenario B has a lower range of FARs, with up to 4.0 FAR for the established large sites. Scenario B represents a maximum cap of 3.22 million sf of net new floor area in the Downtown. The Final EIR identifie s significant and unavoidable impacts for air quality, construction effects, construction noise, cultural resources, and traffic. Specifically because the details of specific future projects occurring in the Downtown are unknown, the Final EIR concludes th at construction -related air emissions and noise (vibration) would be significant and unavoidable. Furthermore, although the DCP would establish greater preservation policies and standards, the Final EIR concludes that historic impacts would be significant and unavoidable since individual projects could involve the demolition or alteration of a historic resource. Additionally, due to the City’s stringent thresholds for traffic and the existing levels of traffic in Downtown, the Final EIR identifies significa nt and unavoidable impacts with respect to traffic (automobile delay). Aesthetic impacts of the DCP, including those due to building height, are considered less than significant pursuant to Section 21099 of the CEQA Statute, which states that aesthetic imp acts of 40 of 56 residential, mixed use, and employment center projects in transit priority areas are considered less than significant. Most importantly, the Final EIR concludes that Scenario B of the DCP (with 3.2 million sf cap) would achieve the goals of No Ne t New PM Peak Hour Trips by 2030, and would reduce per capita vehicles miles traveled (VMT) and greenhouse gas emissions, which is consistent with the intent of SB743 and upcoming changes to CEQA. Additionally, as noted in the Final EIR, the DCP implements the sustainability and greenhouse gas reduction goals and policies established in the City’s LUCE, Sustainable City Plan, Climate Action Plan, and SCAG’s Regional Transportation Plan/Sustainable Communities Strategy. The DCP is based on a vision of suppor ting and enhancing the Downtown as a multi -modal district that is fully integrated with the Downtown Station of the Expo LRT. The DCP also emphasizes new land uses in areas proximate to the Downtown Station to minimize vehicle trip generation, vehicle mile s traveled, and associated GHG emissions. Additionally, the Plan would enhance multi -modal relationships, calling for new connections and circulation improvements for all modes as well as aggressive TDM measures such as employer trip reduction plans and su bsidized transit passes or transportation allowances for residents and employees. Collectively, the standards, policies, and programs in the DCP would support sustainability and GHG reduction goals established by the State, region, and City. As required u nder CEQA Guidelines Section 15126.6(a), the Final EIR includes a discussion and evaluation of "a reasonable range of alternatives to the project, or to the location of the project, which would feasibly obtain most of the basic objectives of the project bu t would avoid or substantially lessen any of the significant effects of the project, and evaluate the comparative merits of the alternatives." The EIR provides a robust analysis of the DCP as well the following alternatives. The alternatives analysis provi des City decision -makers with a reasonable range of alternatives to consider to reduce or avoid impacts.  Alternative 1 – No Project Alternative;  Alternative 2 – Reduced Project (Elimination of Tier 3) Alternative; 41 of 56  Alternative 3 – 4 th /5 th Streets On -Way S treets Circulation Plan;  Alternative 4 – Expanded One -way Streets Circulation Plan; and  Alternative 5 – Hotel/Tourism -focused Land Use Mix Alternative. CEQA Guidelines Section 15126.6 requires that an EIR identify the Environmentally Superior Alternat ive to the proposed project from among the alternatives analyzed. If the No Project Alternative is found to be environmentally superior alternative, the EIR also identifies an Environmentally Superior Alternative from among the other alternatives. For a br oad policy document such as the DCP, the potential exists that there may not be a clear Environmentally Superior Alternative. An alternative may have some reduced impact levels and other impacts that are greater than the project, while another alternative reduces different impacts. Although CEQA does not provide specific guidance in this matter, where a project has lower impacts in a majority of resource areas and/or substantially lower impacts in especially critical resource areas, this can support a findi ng that that alternative is environmentally superior. Alternative 2 (Elimination of Tier 3 Projects) would reduce transportation -related impacts on intersections; however, elimination of Tier 3 developments would substantially reduce community benefits a nd substantial affordable housing and multi -modal transportation investment opportunities within the Downtown, potentially resulting in increased vehicles miles traveled. Therefore, in comparing an incremental reduction in the severity of significant impac ts with the achievement of Project goals and objectives, the EIR determined that the implementation of Scenario B of the DCP would be the environmentally superior alternative. Implementation of Scenario B would incrementally reduce potential environmental impacts relative to Scenario A, but implementation of Scenario B would also still achieve all of the goals and objectives of the DCP. The Final EIR was presented to Planning Commission for review in April 2017, who recommended certification of the Final E IR. Adoption of the DCP would require Council certification of the Final EIR, and adoption of a Statement of Overriding Considerations and the mitigation measures identified in the Final EIR. Mitigation measures are identified in the Final EIR in the are as of Air Quality, Biological Resources, Construction 42 of 56 Effects (Air Quality), Cultural Resources, Hazards/Hazardous Materials, Public Services, Utilities, and Transportation and Circulation. To ensure that these measures are properly enacted, a mitigation monitoring program is necessary and will be enforced during the construction and operation of the project. C. PLANNING COMMISSION COMMENTS ON THE PLAN During the months of April and May 2017 the Planning Commission held six public hearings to discuss the D CP (April 25, May 10, May 11, May 17, May 18 and May 31) and its Program Environmental Impact Report. These meetings, which spanned over 40 hours of discussion, also provided the opportunity for the community to comment on the Plan’s content, and for staff to clarify concepts. The Commission recommended adoption of the DCP with specific amendments and modifications that are listed in Exhibit B to the adopting resolution (Attachment B). The modifications largely pertain to key development standards and Plan policy that encourage the production of housing, as well as the range and location of land uses that are desired for the area. Housing Production Among the productive clarifications to design standards, mobility actions, open space creation and well -bein g targets, the Planning Commission’s most impactful recommendations were to increase several housing -related process thresholds to further stimulate housing production Downtown. Hence, the Commission has recommended that typical mixed -use housing projects up to 60,000 square feet, on lots no greater than 15,000 square feet, be processed ministerially through an Administrative Approval, which would greatly reduce the time necessary to process a development application. In the Transit Adjacent District, the only area in Downtown that has a Tier 3 option, the Commission recommends a Development Review Permit process for housing projects up to 90,000 square feet. This process threshold represents the amount of maximum allowable floor area that could result fr om a project located on a three -lot site of 22,500 square feet. The Planning Commission’s recommendation was based on overall consensus that this area can support greater densities on account of proximity to the Expo Light Rail. 43 of 56 Comparison of DCP to Plan ning Commission recommendations for Housing Project Review Process Permit Type DCP (April 2017) Planning Commission Administrative Approval Less than 30,000 SF Project on lots up to 15,000 SF (typically results in projects less than 60,000 SF) Developme nt Review Permit All Tier 2 Tier 3 30,000 - 60,000 SF Tier 2 on lots over 15,000 SF Tier 3 on lots over 15,000 SF and up to 90,000 SF Development Agreement Tier 3 over 60,000 SF Tier 3 over 90,000 SF Established Large Site Standards and Process Lastly , the Commission spent considerable time discussing the DCP’s options for the Established Large Sites, three sites within Downtown that - given their parcel size - could potentially provide significant community benefits for circulation, open space and cul tural facilities that would otherwise not be anticipated from smaller projects. The inclusion of these sites into the Plan sparked the most extensive and spirited debate among Planning Commissioners. There was consideration of various modifications to the staff recommendation. In the end, without majority support for any particular approach to these sites, the Commission narrowly recommended (4 -3 straw vote) the removal of the Established Large Site Overlay, which provides unique height and FAR standards for these sites. Commissioners who favored including the Established Large Site Overlay sought to establish the DCP as a comprehensive planning tool that creates clear parameters and expectations for projects on the three sites. The Commissioners also supported a transparent and rigorous public review process that requires a development agreement, additional environmental review, and includes special application requirements for the applicant to demonstrate how the project meets the DCP’s objectives. T he Commission discussed potentially reducing the maximum height to approximately 100 feet with a setback from Ocean Avenue. These Commissioners expressed concern about 44 of 56 reviewing Specific Plan amendments for individual projects soon after adoption of the D CP. Commissioners who did not favor including the Established Large Site Overlay supported having the height and FAR standards in Chapter 4, Table 4.2 apply to all Downtown projects. These Commissioners expressed concern that District height limits shoul d not be exceeded and authorizing greater height and FAR in the Plan would signal that increased height is acceptable. There was a desire to ensure that the appropriate form in Downtown is established first through the DCP’s base standards and not influen ced by community benefits and project amenities. These Commissioners agreed that applicants for each project should submit Specific Plan Amendments for review on a project -by -project basis. Similarly, the Commission rejected a selection of process opti ons that would have required voter approval or a supermajority of Council to effect changes to the adopted DCP. The Commission was nearly unanimous (6 -1 straw vote) in the belief that Council authority is sufficient to render decisions related to Plan ame ndments, and that the referendum process established in State law provides appropriate opportunities for voters to challenge Council’s legislative actions. Access and Mobility The Planning Commission has actively provided feedback on the Access and Mobili ty chapter specific actions and overall approach. Following discussion with the Commission, the Plan now calls for preparing for emerging technologies that serves the community’s vision, strengthens the plans consistency with Vision Zero, and updates parki ng policies that the Commission has since suggested amending. The Commission strongly communicated a desire to not only be forward -thinking but aggressive with implementation, as reflected in the errata sheet recommended by the Commission. The DCP addres ses steps to ensure how technology can best be used to make Downtown’s existing transportation network work better for people. The Plan includes an approach to making travel information easier to access through real -time information 45 of 56 for transit service, bi ke share availability, travel times, and parking availability. A methodological use of information on parking and travel patterns can also be used to plan for and manage peak travel periods, which allow for having the right amount of people working at the right times to assist travelers and deployment of the most effective changes needed during peak travel periods. Technology is increasing the viability of shared rides, microtransit or privately owned transit, autonomous vehicles, and widespread acceptance of electric vehicles. The DCP provides direction on how technology can be integrated with transportation in Downtown and how Santa Monica can participate in guiding the development of these technologies in the region. Parking Climate change, traffic con gestion, and changing usage patterns necessitate shifting parking policies. The Commission has affirmed the right -sizing and right -placing by having a discreet amount of new parking primarily on the periphery of Downtown. There has also been support for st udying and then supporting private parking availability for the public. Parking related changes suggested to Council by the Planning Commission include:  Creating a new parking district in the Zoning Ordinance specifically for the Downtown that supports p reservation of buildings through greater flexibility when a use changes. The DCP parking requirements recommend a universal parking rate of 1 space per 500 square feet for all retail and restaurant uses under 5,000 square feet, parking rates are similarly adjusted for residential units. (Zoning Ordinance Amendments)  Enabling the phased development of up to 800 public parking spaces in peripheral locations to address future demand without incentivizing additional vehicle trips downtown (Action AM3.6C)  Pursui ng the elimination of 600 public parking spaces within the Bayside Conservation District within 10 years of adoption of the plan. (New AM3.6 Action) 46 of 56  Re -evaluating private parking requirements after 1,500 new parking spaces have been entitled (Action AM3.5G )  Establishing demand -sensitive variable parking pricing, time -limits and marketing. (AM3.6A)  Encouraging use of convenient parking for short -term use through pricing and time restrictions, including installation of meters on 6 th and 7 th Streets. (new AM3.6B)  Completing the expansion of the Parking In -Lieu Fee program to include all properties in the DCP boundaries by 2019. (Action AM4.5F)  Requiring that new public parking must be built entirely outside of the Bayside Conservation District, including on pro jects that may overlap with that district, such as the city -owned 4 th /5 th /Arizona site (new AM3.6 action) The Planning Commission also made a number of recommendations in regards to bicycling, walking and resident access including aggressive implementatio n timelines. Specific recommendations include:  Creation of protected bike facilities on Ocean Avenue, 2ne Street, and Broadway (Action AM4.3B)  Minimizing the closure of bike and pedestrian facilities due to construction and providing clear and direct alte rnates when closure is necessary. (Actions AM1.2E and AM1.2F)  Pursuing the creation of a Santa Monica resident transportation pass or credit usable for select mobility services and parking access Downtown, especially during off -peak periods. (Action 4.1K) CHAPTER 3: COUNCIL CONSIDERATION A. SPOTLIGHT ISSUES FOR COUNCIL CONSIDERATION This section of the report identifies several “spotlight” issues for Council consideration that were raised in the course of the Planning Commission’s deliberations on the DCP. 47 of 56 Housing Production The DCP provides for ample housing production over the life of the Plan through a variety of process and technical incentives that are designed to steer development towards the creation of new residential units. These incentives include a .5 FAR bonus for housing projects over their commercial counterparts, as well as some additional height in the transition zones. Coupled with project requirements for new Affordable Housing, the DCP housing production incentives create the condition to achieve the forecasted minimum of 2,500 new units within the next 15 years. The possibility for additional square footage for housing exists within the volume of development contemplated in the Plan’s EIR, potentially adding up to roughly 3,100 new units if less commercial, medical or institutional uses are proposed than originally forecasted. Recent criticism of the DCP’s housing approach has raised the specter of the nationwide housing crisis with many proponents demanding higher heights and densities t han currently proposed or even studied in the EIR. Public testimony and correspondence point to a sentiment that Santa Monica must do more to provide housing to those in need, even though the City is well on track to achieve or surpass its Regional Housin g Needs Assessment (RHNA) number given by the Southern California Association of Governments (SCAG), and that Downtown has the highest allowable FARs in the entire City. During the Planning Commission hearings, the Commission recommended several process a nd technical incentive changes that fast -track housing projects Downtown, such as an Administrative Approval process for typical two -lot projects that typically result in projects of approximately 5 -6 stories and 60 units. The Commission also recommended a more permissive administrative threshold for 100% Affordable Housing projects and height and FAR increases for 100% Affordable Housing in the Neighborhood Village District. For Council Consideration : Should the Council wish to go beyond the DCP’s recomm ended “housing -first” strategy, the following options are presented for consideration: 48 of 56 Option 1 : Increase process thresholds by which more housing projects would qualify for streamlined entitlements. Option 2 : Further reduction in height and FAR for commer cial projects (e.g. 10’ and 0.5 FAR). Option 3 : Require all projects on sites of greater than 15,000 square feet to have at least 50% of the floor area be residential uses, except for hotels, movie theaters, auto dealers, public infrastructure, and the Thi rd Street Promenade. Option 4 : Increasing the height and FAR standards, subject to additional environmental evaluation Table of Supporting and Opposing Arguments for Each Policy Alternative Option Supporting Argument Opposing Argument 1  Provides signifi cant time incentives for developers to seek housing  Creates certainty for community and developer  Perception of reduction in opportunities for public participation 2  Would clearly establish preference for housing projects by further reducing height and FA R for commercial projects  Overall reduction in height and FAR for commercial projects was done for neighborhood transitions but implementing this strategy in Downtown core could have unintended consequence of affecting Downtown economic vitality 3  Guarant ees that any larger project would be required to have 50% residential use, prohibiting strictly office and retail projects (exempting hotels, movie theaters, auto dealers, public infrastructure, and buildings on the Third Street Promenade.  Blanket standard that prescribes land use mix and reduces flexibility in land use decisions  Proscriptive approach instead of providing incentives 4  Could result in potentially more than 2,500 new housing units if FAR standards are increased  Would not result in substanti ally more housing units  Inconsistent with urban design strategy proposed in DCP and widely discussed and endorsed by the community 49 of 56 Staff Recommendation Staff recommends further process incentives be considered as described in Option 1, as they would prov ide clear project requirements with predictable timelines established in DCP. The Planning Commission recommended that an Administrative Approval process would be appropriate for projects on sites no greater than 15,000 square feet. The Commission also r ecommended that a Development Review Permit would be appropriate for Tier 3 projects no greater than 90,000 square feet in the Transit Adjacent District. This was intended to allow typical housing projects that are similar in size and scale to housing pro jects that already exist in the Downtown leaving larger projects subject to Planning Commission review. As a further process incentive, Council could establish a higher threshold for Administrative Approvals (AA) that would provide predictability to app licants with respect to number of housing units authorized, amount of affordable housing units required, affordability level of units, open space requirements, and certainty in applicable development standards. The Administrative Approval (AA) process pro vides certainty that the project will be approved if it meets all of the DCP’s project requirements. This class of housing projects would be required to obtain a recommendation from the ARB before the AA could be approved and would still need to obtain fi nal approval on the project design from the ARB. This process is similar to the procedural incentives that were formerly in place for Downtown in the 1990s that resulted in the production of approximately 2,500 housing units over the course of three decad es. The significant difference is the DCP has a variety of development standards in place that are intended to ensure that projects not only complement Downtown’s existing character but also contribute to the implementation of Downtown as a vibrant, walkab le place that welcomes a diverse population of all income levels. Established Large Sites The Planning Commission’s narrow recommendation to remove the Established Large Site Overlay from the DCP points to the divergence of opinions surrounding tall build ings in Downtown Santa Monica. Outreach to the community on this subject was 50 of 56 balanced at opposite ends, with roughly 50% in favor and another 50% opposed. Those in favor of the Overlay, which would allow three projects to propose building heights up to 1 30’ within an established planning framework, argued that the potential benefits for open space, historic preservation, and mobility outweighed potential negative impacts associated with shade/shadow and scale. Those opposed to the Overlay expressed conce rn that Santa Monica’s identity as a low -scale coastal community would be compromised by tall buildings, and further – that the DCP’s standards should reflect a level playing field for all development, and not single out a few exceptions. For Council Cons ideration : Should the DCP include the Established Large Site Overlay, which would authorize consideration of height up to 130 feet and additional FAR on three sites in Downtown? Staff Recommendation on Height for Established Large Sites The concept of the Established Large Site Overlay presented in the draft DCP seeks to establish clear expectations in terms of maximum height, appropriate FAR, and open space requirements for three sites in Downtown. The proposal also establishes a rigorous review process that requires a development agreement application and includes additional environmental review and a comprehensive application that demonstrates how the project meets DCP priorities. No Specific Plan Amendment would be required. As legislative actions, d evelopment agreements would be subject to the voter approval process already established in State law. Staff believes that there are site -specific reasons why allowing for additional height would lead to superior outcomes for future development on these s ites. Staff also believes that imposing a clear maximum height for future projects on those sites provides clarity and coherence to protect the integrity of the overall plan that would be absent if property owners/developers could seek consideration for e ssentially unlimited heights for projects on those sites – or could seek additional heights on sites where positive trade -offs simply do not apply. Allowing the projects to move forward with the 130’ height would allow flexibility for more ground level pu blic space, preservation of 51 of 56 historic buildings and features (currently on two of the three sites) and the opportunity for more distinctive and functional architectural massing, modulation and design. Options for Established Large Site Floor Area Ratio (F AR) Each of the Established Large Sites have individual FAR parameters, which dictate the mass and scale of the projects. While the proposed height of these projects has been the focus of discussions, the projects’ FARs also have the potential to directly influence the project and community benefits that could be achieved on these three sites. Should Council seek options for exploring revised FARs for these sites, staff proposes three options for consideration: Option 1: Maintain the DCP’s existing individu al FAR parameters for the Established Large Sites, which were originally presented in the 2014 version of the DCP, and in all subsequent drafts leading up to the final DCP. Were this option to be adopted, it would reflect the original development parameter s that have been consistently discussed throughout the multi -year public process of creating the DCP and the proposals that have been submitted to the City by the applicants. Option 2: Modify the DCP’s FAR parameters such that all three Established Large S ites would be subject to a universal 3.0 FAR, which represents an average of the development potential across all three sites provided by the DCP’s base development standards for each Zoning District. Were this option to be adopted, it would reduce develop ment potential for two of the three sites and ensure that the development of all three Established Large Sites would not exceed the theoretical development potential of the total land area of all three sites were these parcels developed in a series of typi cal two - or three -lot projects as opposed to the larger block -level projects that have been proposed. Option 3: Modify the DCP’s FAR parameters such that the FAR for each of the three sites would be limited to the maximum FAR established for each Zoning Di strict averaged across the whole site. Were this option to be adopted, it would reduce development potential for two of the three sites, which in turn may limit certain aspects of the proposed projects. 52 of 56 Comparison between three FAR options for the Establ ished Large Sites Site Project Site Area OPTION 1 Established Large Site Overlay FAR OPTION 2 Established Large Site Uniform 3.0 FAR OPTION 3 Established Large Site Maximum FAR by Zone 1133 Ocean Avenue 191,664 sf FAR=3.0 572,889 sf FAR=3.0 572,8 89 sf FAR: 2.75 (OT) [AVG = 2.75 FAR] 191,664 x 2.75 = 527,076 sf TOTAL: 527,076 sf 101 Santa Monica Blvd 82,500 sf FAR=4.0 343,176 sf FAR=3.0 247,500 sf FAR: 3.5 (BC) Split Zone 2.75(OT) [AVG = 3.0 FAR] 31,010 x 3.5 = 108,535 sf 51,490 x 2.75 = 141,598 sf TOTAL: 250,133 sf 4 th /5 th and Arizona 112,000 sf FAR=3.5 392,000 sf FAR=3.0 336,000 sf FAR: 3.5 (BC) Split Zone 3.25 (NV) [AVG = 3.4 FAR] 56,000 x 3.5 = 196,000 sf 56,000 x 3.25 = 182,000 sf TOTAL: 378,00 0 sf If the Established Large Site Overlay is not included in the DCP, the three sites would be required to comply with the height and FAR standards established in the development standards table. Where there are split zones, the separate development st andards for the portion of the property within each applicable zoning district would apply. As a result, applicants would need to submit Specific Plan Amendments for each individual project. Commercial Office Restrictions Because the DCP takes a “housing -first” approach, commercial office uses in Downtown’s active and transitional areas are limited predominantly to upper floors or at 53 of 56 the rear of a project. The one area of the Downtown where commercial offices are permitted at the ground floor is in the N eighborhood Village District, where many existing ground floor offices, such as the Chamber of Commerce, are currently located. At its final hearing on the DCP, the Planning Commission voted to recommend that commercial office in the Neighborhood Village be limited to upper floors or at the rear of a project. Staff is concerned that this recommendation will render many existing offices non -conforming. Additionally, staff is concerned that there is not enough retail demand to justify the elimination of gro und floor office (which includes “walk -in clientele”), and could have the unwelcome effect of producing vacant storefronts. For Council Consideration : Should the Planning Commission’s recommendation to eliminate all ground floor office from the Plan be a dopted? If not, the following option is recommended by staff: 1. Permit ground floor office in the Neighborhood Village District between 4 th and 7 th Court in mid -block parcels. Staff Recommendation Based on an existing land use survey of the Neighborhood Vil lage District, offices currently make up approximately 45% of the ground floor street frontage. The Planning Commission’s recommendation would make all of these ground floor uses non - conforming and replace them with potentially residential or retail uses as change occurs. A 2015 Downtown market outlook report that was used as a point of comparison for the Buildout Analysis demonstrated limits to the amount of retail space that could be feasibly supported in the DCP boundaries. The land use strategy in th e DCP establishes the Neighborhood Village District as an area of mixed activity where non -active uses such as residential and office uses could be allowed on the ground floor in mid -block locations only. More active retail and restaurant spaces are strat egically targeted for corner locations. The existing retail spaces in these mid -block locations have historically been difficult to lease and the ground floor non -active uses would likely have better compatibility with the residential uses that are antici pated in the district. 54 of 56 B. AMENDMENTS TO RELATED DOCUMENTS Various associated amendments to the Land Use and Circulation Element, Civic Center Specific Plan, and Zoning Ordinance are necessary to implement the goals and policies of the draft DCP. Upon recei ving direction from Council’s deliberations on the Plan, staff anticipates bringing these associated resolutions and ordinances to Council for formal action on July 25, 2017. LUCE Amendment The LUCE is proposed to be amended to reflect the elimination of Tier 3 on Lincoln Boulevard and within the Wilshire Transition district. CCSP Amendment The CCSP is proposed to be amended to remove the Colorado Avenue Special Use District. This change is necessary to eliminate overlap and the potential for conflicting regulations between the DCP and CCSP boundaries. Zoning Ordinance Amendments The DCP will be incorporated by reference into the Zoning Ordinance. Where there is a conflict between the Zoning Ordinance and DCP, the DCP shall prevail. Where the DCP is si lent, the provisions of the Zoning Ordinance shall apply. There are also a number of zoning ordinance amendments that are associated with the DCP that are being proposed to complement the standards of the draft DCP. These include the following:  Fence, W all, Hedge height limits – establish fence, wall and hedge standards within the Downtown Community Plan area  Demolition Requirements – requires that demolition application screening and 75 -day period are cleared before an application may be accepted for fi ling  Parking o Establish parking maximums o New parking requirements 55 of 56 o Incorporate parking in -lieu fee  Outdoor dining standards – clarify the name of the outdoor dining standards and clarify that the City Manager may promulgate guidelines necessary to implement outdoor dining requirements Associated with the above Zoning Ordinance amendments are anticipated amendments to Division 6 (Land Use and Zoning Related Provisions) and Article 8 (Building Regulations). These include a 100% transportation allowance for n onresidential projects and nonresidential components of mixed -use projects based upon Downtown’s higher average vehicle ridership (AVR) target of 2.2 and voter approval procedures for development agreements, if applicable. An amendment to SMMC Section 8.0 8.060 is proposed to extend the expiration time limits for demolition applications to accommodate the new demolition review procedures. These proposed amendments are attached to this staff report to inform Council’s consideration of the DCP. Financial Im pacts & Budget Actions There is no immediate financial impact or budget action necessary as a result of the recommended action. Prepared By: Jing Yeo, Planning Manager Approved Forwarded to Council Attachments: A. Attachment A - Final Public Hearing Draft Downtown Community Plan (April 2017) B. Attachment B - Changes to the DCP as adopted by Planning Commission on May 31, 2017 as Exhibit B to Resolution 17 -006 (PCS) C. Attachment C - Changes to DCP as further proposed by staff 56 of 56 D. Attachment D - Downtown Community Plan Final EIR and Appendices E. Attachment E - LUCE Amendments as Reco mmended by Planning Commission F. Attachment F - CCSP Amendments as Recommended by Planning Commission G. Attachment G - Proposed Associated Amendments to Zoning Ordinance H. Attachment H - Proposed Div 6 ZO Amendment & SMMC Article 8 Amendment I. Attachment I - HR&A Feasibliity Analyses, 2016 & 2017 J. Attachment J - AECOM Market Outlook Analysis, January 2016 K. Attachment K - DCP Buildout Analysis Memo, August 2016 L. Planning Commission Meeting May 31, 2017 M. Planning Commission Meeting, May 18, 2017 N. Planning Commission Meeting, May 17, 2017 O. Planning Commission Meeting, May 11, 2017 P. Planning Commission Meeting, May 10, 2017 Q. Planning Commission Meeting, April 26, 2017 R. Planning Commission Meeting, December 7, 2016 S. Planning Commission Meeting, November 16, 2016 T. Written Comments Continued from 07 -10 -17 U. Supplemental Staff Report Continued from 7/10/17 V. Written Comments received on 7/11/17 W. Powerpoint Presentation X. Powerpoint Presentation with Council Changes 1 ATTACHMENT B CHANGES TO DOWNTOWN COMMUNITY PLAN AS RECOMMENDED BY PLANNING COMMISSION ON MAY 31, 2017 DOWNTOWN COMMUNITY PLAN ADDENDA SHEET This addenda sheet contains corrections, clarifications, and changes to the published text of the DCP and represents changes recommended by the Planning Commission and staff. The proposed corrections, clarifications, and changes to the DCP are listed with their locations an d their corrections. There may be errors, clarifications and changes that carry over to multiple areas within the plan, all of which will be addressed and amended. PLANNING COMMISSION RECOMMENDED CHANGES The following recommended changes to the DRAFT Down town Community Plan result from Planning Commission deliberations and further staff analysis. No Page Number Item Recommended Change Staff Response 1. 28 -29 Change language of Section 2A.4 DCP ENTITLEMENT AND TIER SYSTEM to conform to recommended entitlement thresholds “Base” Projects Typically, developments that conform to Tier 1 standards are referred to as “base” projects. Base projects must meet minimum project requirements for setbacks, design and open space, and pay adopted fees for items su ch as affordable housing, trip reduction, cultural arts and child -care fees. Projects that provide the required percentage of Affordable Housing Production Program (AHPP) onsite are allowed an additional floor of housing for a maximum of three stories and 39 feet. Housing Projects Tier 1 up to 29,999 sq. ft. Housing projects up to 29,999 square feet that conform to Tier 1 standards Any project on Agree 2 No Page Number Item Recommended Change Staff Response a building site up to 15,000 sq. ft. may be processed through an Administrative Approval. Commercial Projects Tier 1 up to 14,999 sq. ft. Commercial projects up to 14,999 square feet that conform to Tier 1 standards may be processed through an Administrative Approval. Development Review Projects All Tier 2 and certain Tier 3 housing projects are permitted by Development Review Permit (DRP), allowing typical mixed -use housing projects to be approved through discretionary review and a Planning Commission public hearing that gives community members a venue to share thoughts and input on proposed proj ects. By law, Planning Commission decisions are appealable to the City Council. The project requirements for Tier 2 and non -negotiated Tier 3 housing projects are unique to Downtown. This system of project requirements is intended to incentivize and plac e a priority on the development of housing in 3 No Page Number Item Recommended Change Staff Response Downtown, implement affordable housing requirements that result in a greater number and a more diverse unit mix, and ensure greater discretionary review for commercial projects. Two types of projects qualify f or Development Review Permits within the DCP. Housing Projects Tier 2. Tier 2 housing projects are considered non -negotiated discretionary projects. These projects are required to comply with affordable housing requirements and affordability mix as establ ished in Chapter 4, Standards and Regulations, 9.10.070 and must also contribute augmented fees at Tier 2 levels. Tier 3. In the Transit Adjacent Zone only, housing projects between 30,000 - 60 90 ,000 square feet that conform to Tier 3 height standards are considered non - negotiated discretionary projects. These projects are required to comply with affordable housing 4 No Page Number Item Recommended Change Staff Response requirements and affordability mix as established in Chapter 4, Standards and Regulations, 9.10.070 and must also contribute augmented fees at Tier 3 levels. 2. 28 Modify Table 2A.2 DCP Entitlement Thresholds to allow two -lot housing projects and housing projects up to 90,000 square feet in the Transit Adjacent District to be processed by Administrative Approval Housing Project Administrative Approval Projects on lots up to 15,00 0 sf Less than 30,000 sf Development Review Permit All Tier 2 up to 60,000 sf Tier 3: 30 60 ,000 - 60 90 ,000 sf Development Agreement Tier 3 greater than 60 90 ,000 sf Agree 5 No Page Number Item Recommended Change Staff Response 3. 30 Change language of Section 2A.4 DCP ENTITLEMENT AND TIER SYSTEM to conform to recommended entitlement thresholds Development Agreement Projects 1. Housing Projects within Transit Adjacent District. Tier 3. Residential projects greater than 60 90 ,000 square feet that conform to Tier 3 height and FAR standards shall be required to be processed through a development agreement. Agree 4. 31 Add new policy to clarify intent of ground floor land use strategy Policy LU1.4 Promote the distribution of land uses such that the most activ e uses are provided in the historic core and areas served by transit, while the least active uses are provided in the transition areas adjacent to residential neighborhoods. Agree 5. 40 Include narrative in Community, Culture, Prosperity (Chapter 2B) about exemptions for 100% Affordable Housing projects Special Incentives for 100% Affordable Housing Projects To incentivize the production of affordable housing, 100% Affordable projects are provided the following incentives : • Administrative Approval up to 75 units • Height and FAR bonuses in the Neighborhood Village District Agree 6 No Page Number Item Recommended Change Staff Response 6. 92 Amend language on Ocean Avenue signature sidewalk to accommodate improvements for all modes of mobility, not just pedestrians. Despite being the widest sidewalk in Downtown, the east side of Ocean Avenue could yet be expanded between Colorado and Broadway to accommodate pedestrian , bike or transit demand associated with access to the Pier. However, at times this wide sidewalk feels isolated due to a lack of active ground floors. C hapter 4, Standards and Regulations addresses ways to activate Ocean Avenue through building use and frontage design, but proposed enhancements to the sidewalk can also help to enliven the area. An improved streetscape might include: innovative furnishing, outdoor dining locations, lighting, consolidated valet operations , and wayfinding signage to other destinations , protected bikeways, additional bike racks, curbside pick -up/drop - off and transit improvements . In this way, Ocean Avenue facilitates better connection between the Pier and Expo Light Rail Station and to the rest of Downtown via the Colorado Esplanade or to the Civic Center via Tongva Park. Agree. 7. 94 Amend language on Wilshire Avenue signature sidewalk to accommodate improvements for all mod es of mobility, not just pedestrians. Though Wilshire Boulevard is the grand street of Los Angeles, at this termination point the roadway space is not as highly utilized by automobiles, and vehicle trips drop off significantly west of 4th Street. Thus, an opportunity exists to provide Agree. 7 No Page Number Item Recommended Change Staff Response terminus to the Boulevard by either creating an esplanade experience to better connect the Promenade to Palisades Park and Ocean Avenue. Widening the sidewalk and improving the interface between Wilshire and Third Street would allow for expanded outdoor dining, public art, or by enhancing the roadway with transit stops, tour and local bus access, street vendors, protected bikeways, bike racks, bike share stations , and other outdoor activity, or a combination, thereby providing the grand culmination at the Pacific Ocean that Wilshire Boulevard deserves. 8. 100 Amend Action PPS1.1A to shorten timeframe for implementation Action PPS1.1A Develop a Downtown Streets Manual for Planning, Public Works and private development to follow when changes to the public right -of -way are considered as part of a capital project, or a redevelopment effort. Lead Agencies: PCD, PW Timeframe: Mid Short -Term Agree 8 No Page Number Item Recommended Change Staff Response 9. 153 Split Action AM1.1C into two actions. Adjust timeframe of actions. Change numbering of AM1.1D to AM1.1E Action AM1.1C Widen sidewalks and make operational changes at driveways and intersections to accommodate changing pedestrian demand. Lead Agency: PCD Supporting Agencies: PW Timeframe: Long -Term Action AM1.1D Make operational changes at driveways and intersections to accommodate changing pedestrian demand. Lead Agency: PCD Supporting Agencies: PW Timeframe: Long Short -Term AM1.1 D E Agree 10. 153 Split Action AM1.2E into two actions. Adjust timeframe of actions. Action AM1.2E Develop protocols for minimizing Minimize temporary disruption of sidewalks and bikeways , and provide direct and well -marked alternative routes when closures are necessary . Lead Agencies: PW, PCD Supporting Agency: DTSM Timeframe: Ongoing Short - Term Action AM1.2 E F Minimize temporary disruption of sidewalks and bikeways, and P p rovide direct and well - marked alternative routes when closures are necessary. Lead Agencies: PW, PCD Supporting Agency: DTSM Timeframe: Ongoing Agree 9 No Page Number Item Recommended Change Staff Response 11. 158 Change Action AM3.3D to short - term. Action AM3.3D Improve pedestrian and bike facilities on the Main Street, Fourth Street and Lincoln Boulevard bridges. Lead Agency: PCD Supporting Agencies: PW, Caltrans Timeframe: Mid Short -Term Agree. 12. 159 Amend Action AM3.6A Action AM3.6A Establish parking pricing incentives including demand -sensitive variable parking pricing , time -limits and marketing to encourage area employees to park near the periphery of Downtown . Agree 13. 159 Delete Action AM3.6B Maintain higher on -street parking rates to reflect its increased convenience and desired turnover, and expand the program to 5 th , 6 th and 7 th Streets. Agree 14. 159 Add New Action AM3.6B Encourage use of convenient parking for short -term use through pricing and time restrictions, including installation of meters on 6 th and 7 th Streets. Lead Agency : PCD Timeframe: Short -Term Agree 15. 159 Add New Action AM3.6H Pursue the reduction of 600 public parking spaces in the Bayside Conservation District by 2027 . Lead Agency : PCD Timeframe: Long -Term Agree. 10 No Page Number Item Recommended Change Staff Response 16. 159 Add Action AM3.5G to re - evaluate parking ratios after 1,500 new parking spaces have been entitled Action 3.5G Re -evaluate private property parking requirements after 1,500 new parking spaces have been approved . Lead Agency: PCD Timeframe: Ongoing Agree. 17. 159 Amend Policy 3.6 Use pricing, concentration, time restrictions, and location as tools to manage vehicle congestion in Downtown and make Downtown accessible for short -term users . Agree 18. 159 Address where new public parking should be allowed. Action AM3.6G : Publicly provided parking shall be built entirely outside of the Bayside Conservation Land Use District , including building sites that are partially within the District . , r R eplacement of parking already within this district is allowed .. Lead Agency: PCD Timeframe: Ongoing Agree 19. 162 Strengthen statement of where buffered bike lanes should be; shorten time frame AM4.3B Enhance protection of bike facilities on Ocean Avenue and evaluate the potential for other streets to convert to protected or Create buffered protected bike facilities such as Arizona Avenue, 6 th and 7 th Streets on Ocean Avenue, 2 nd Street and Broadway and along pathways that connect residents to popular Downtown destinations such as the library and farmers ’ market . Install the first pilot segment in 2018. Lead Agency: PCD Timeline: Short -term Optimistic that design, funding or changes will be in place by 2019, may be limiting to remove streets that may have space for the street reconfigurations 11 No Page Number Item Recommended Change Staff Response 20. 162 Provide direction to address residents bicycling to Downtown AM4.3A Eliminate bicycle network gaps in Downtown including Broadway bike lane west of 6 th Street and connections to the Expo Light Rail station. Give special attention to bikeways for residents to and from popular Downtown destinations. Agree 21. 162 Add new action regarding residential bus access to Downtown. AM 4.2 H Prioritize bus connectivity between Downtown and other Santa Monica residential neighborhoods. Agree but subject to coordination with Big Blue Bus. 22. 163 Add action AM3.5G to begin the process of updating the in -lieu fee program. Action AM 3.5G : Update the Downtown Parki ng In -Lieu Fee program by July 2019. Lead Agency : PCD Timeframe: Mid -Term Agree. 23. 165, Ch. 4 Add new bullet to Section 9.10.010 • Provide opportunities for a high level of architectural innovation and creativity to enhance the Downtown as a place of beauty and sophistication. Agree 24. 165, Ch. 4 Remove bullet point on the “beach area” • Maintain and enhance the beach area as an important visitor -serving destination with lodging, restaurants, shopping, and recreation that support it as a regional, national, and international tourist destination. Agree 12 No Page Number Item Recommended Change Staff Response 25. 165, Ch. 4 Add in missing bullet point for existing language, “Maintain Downtown’s competitive…” • Maintain Downtown’s competitive advantage as a premier local and regional shopping, dining, and entertainment destination, and support its evolution to respond to changing market conditions. Agree 26. 165, Ch. 4 Split bullet on housing into two statements to enhance language supporting families • Increase housing for all income levels and for all household sizes and types, including families and seniors.encourage a mix of uses that promote convenience, economic vitality, fiscal stability, and a pleasant quali ty of life. • Encourage a mix of uses that promote convenience, economic vitality, fiscal stability, and a pleasant quality of life. Agree 27. 165, Ch. 4 Add statement about supporting residential communities and families to the Development Standards preamble Encourage a mix of uses; open space, educational, cultural amenities; and services that support and strengthen Downtown’s residential community and family orientation. Agree. This supports the Plan’s emphasis on nurturing community. 28. 170 Move Lan d Use Table 4.1 to the Zoning Ordinance Move to the Zoning Ordinance. DCP Section 9.10.040 becomes “Reserved” Agree 29. 170 (& throughout) Rename MUB to “Lincoln Transition” Rename MUB on Lincoln Blvd to Lincoln Transition. Change throughout document and in associated maps and figures. Agree to clarify for property owners and planning staff, and not to confuse with MUB regulations that cover other areas of the City 13 No Page Number Item Recommended Change Staff Response 30. 171 Table 4.1: Child Care and Early Education Facilities in NV Child Care and Early Education Facilities, NV: L(3) P Agree 31. 172 Table 4.1: Schools, Public or Private in TA Schools , Public or Private, TA: L(1) P Agree 32. 176 Modify the limitation for Offices in the Neighborhood Village District to restrict office to rear of property or upper floors Use Classification NV Business and Professional L(3 1 ), L(5)/CUP Creative L(3 1 ), L(5)/CUP Medical and Dental L(3 1 ), L(5)/CUP Walk -In Clientele L(3 1 ), L(5)/CUP Staff has concerns over this recommended change. Existing office uses would be rendered non - conforming. 33. 177 Table 4.1: Building Materials Sales and Services in MUB Building Materials Sales and Services: - P Agree 34. 179 Add clarifying language to limitation #5 Permitted if within buildings existing as of the date this Ordinance is effective . Permitted within new buildings , except: • No individual ground floor tenant space shall occupy more than 7,500 square feet of floor area and/or exceed 50 linear feet of ground floor street frontage without a Conditional Use Permit. • Ground floor tenant spaces in the Santa Monica Place are not subject to size limitations. Agree 14 No Page Number Item Recommended Change Staff Response 35. 180 Modify Table 9.10.050 Application Thresholds Table to allow two -lot housing projects to be processed by Administrative Approval and to require ARB concept review prior to issuance of Administrative Approval Housing Project Administrative Approval Projects on lots up to 15,00 0 sf Less than 30,000 sf Development Review Permit All Tier 2 up to 60,000 sf Tier 3: 30 60 ,000 - 60 90 ,000 sf Development Agreement Tier 3 greater than 60 90 ,000 sf Agree 36. 180 Add 100% Affordable Housing Thresholds to 9.10.050 C . Affordable Housing Exemption. The following types of projects are exempt from Development Review Permit requirements: 1. 100% Affordable Housing Projects of 75 units or less. Agree 37. 180 Require ARB concept review prior to issuance of Administrative Approval. B. Administrative Approval Review Procedures. Following receipt of a recommendation from the Architectural Review Board, the Director shall issue a decision on the Administrative Approval in accordance with SMMC Chapter 9.39. Agree 38. 181 Modify Table 4.2 Development NV Agree 15 No Page Number Item Recommended Change Staff Response Standards to incorporate height and FAR bonus for 100% Affordable Housing projects in the Neighborhood Villag e District 100% Affordable housing Maximum FAR Tier 2 –3.75 Maximum Building Height (ft.) Tier 2 –70’ 39. 184 Add reference to Table 4.2 for Bicycle Parking zoning ordinance section in Additional Standards SMMC Section 9.28.140, Bicycle Parking Agree. 40. 185 Add requirement for common open space in private projects. 4. 25% of the overall open space required for a project must be designed as common open space . Renumber subsequent open space standards Agree. 41. 186 Clarify preamble for Building Modulation Standards In order to modulate building mass and express a design concept , new buildings or additions to existing buildings shall be designed in three dimensions on the front and sides to ensure light and air into buildings and down to the stree t. Agree 42. 186 & 187 Stepback increase for 84’ districts: #2b, 3b 2b. Districts with 84 feet maximum allowable height limit. Minimum required stepbacks from the building frontage line are established above the ground floor. The Minimum Required Stepback Above the Ground Floor and below Staff recommends using 5 foot stepbacks as opposed to PC Recommended 6 foot setback for consistency in built form and other architectural considerations 16 No Page Number Item Recommended Change Staff Response 60 feet shall be 15% of the front façade area. Stepbacks shall be a minimum of 3 5 feet and are not required to be open to the sky. Projections into the required stepbacks are permitted pursuant to 9.10.120(A). 3b. Districts with 84 feet maximum allowable height limit. Minimum required stepbacks from the building frontage line are established f or the upper levels of proposed buildings. The Minimum Upper Level Stepback above 60 feet shall be 35% of the front façade area. Stepbacks shall be a minimum of 3 5 feet and are not required to be open to the sky. Projections into the required stepbacks are permitted pursuant to 9.10.120(A). Will adjust model views for final DCP. 43. 186 & 187 Stepback increase for 60’ districts: #2a, 3a 2. Minimum Required Stepbacks Above Ground Floor. a. Districts with 50 feet or 60 feet maximum allowable height limit. Minimum required stepbacks from the building frontage line are established above the ground floor. Th e Minimum Required Agree. Will adjust model views for final DCP. 17 No Page Number Item Recommended Change Staff Response Stepback Above the Ground Floor and below 39 feet shall be 15% of the front façade area. Stepbacks shall be a minimum of 3 5 feet and are not required to be open to the sky. Projections into the required stepbacks are permitted pursuant to 9.10.120(A). 3. Minimum Upper Level Stepbacks. a. Bayside Conservation District and Districts with 50 feet or 60 feet maximum allowable height limit. Minimum required stepbacks from the building frontage line are established for the upper le vels of proposed buildings. The Minimum Upper Level Stepback above 39 feet shall be 35% of the front façade area. Stepbacks shall be a minimum of 3 5 feet and are not required to be open to the sky. Projections into the required stepbacks are permitted pursuant to 9.10.120(A). 18 No Page Number Item Recommended Change Staff Response 44. 188 Modify Side Interior Stepback Requirement 5. Minimum Side Interior Stepback. A minimum of 15% of the exposed side interior building façade area above 39 feet shall be setback a minimum of 5 feet from the side property line. Agree. Will adjust model views for final DCP. 45. 188 Add Alternative Compliance for Minimum Side Interior Stepback 6. Alternative Side Interior Stepback Compliance for All Districts In order to provide flexibility for compliance with the side interior stepback requirements in subsection C(5), in all districts the side interior stepback may be reduced to 12 ” provided that the open space requirements established in 9.10.060 B(1 ) are increa sed to the following . Lot width of 50 feet or less None Lot width between 51 and 150 feet 25% total. Lot width greater than 150 feet 30% total. Agree. 46. 188 Modify Maximum Unbroken Primary Façade Length Maximum Unbroken Primary Facade Length. c. For facades that are greater than 150’, a break of 10% of the façade length, with a 5 foot minimum depth, is required . T his dimension Agree. 19 No Page Number Item Recommended Change Staff Response can be broken into two breaks, provided each break is greater than 5 feet in width. For projects with lot widths of greater th an 150 feet, a building wall facing the street having a length greater than 150 feet shall have a minimum of The one significant break must that extend s from above the ground for 60 percent of the height of the project. The break is not required to be continuous. A significant break is a recess or projection with a minimum of 10 feet width and 5 feet deep from the building frontage line. The significan t break shall not be counted in the building modulation requirements established by (C)(2) and (C)(3). 47. 191 Change building setback from 15’ to 14’ or 2 nd Street (between Broadway and Santa Monica) and 4 th Street (between Broadway and Wilshire) Amend map and change key to reflect: 2 nd street between Broadway and Santa Monica and 4 th Street between Broadway and Wilshire: 14 feet wide. Agree. 48. 192 Clarify section title PEDESTRIAN - ORIENTED /ACTIVE DESIGN STANDARDS Agree 49. 192 Clarify sub -header 2. Active Design (Applicable to New Development Only)Pedestrian -Oriented Frontage Design for New Development Agree 20 No Page Number Item Recommended Change Staff Response 50. 192 #2a, clarify applicability of minimum depth for GF commercial. a. Where commercial space is provided, a A minimum of 50’ depth of ground floor commercial space shall be provided in the Mixed -Use Boulevard, Neighborhood Village, and Wilshire Transition Districts. Agree 51. 193 Clarify sub -header 3. Pedestrian -Oriented Ground Floor Design (Applicable to for New and Existing Development ) Agree 52. 193 Add standard to Pedestrian - Oriented Design to limit linear street frontage of leasing galleries d. Leasing galleries associated with a housing project shall not exceed 20 linear feet of ground floor street frontage. Re -letter subsequent standards e -i. Agree 53. 193 #3d, separate untinted glass and reflective/mirrored glass into separate standards. Renumber subsequent standards e. Clear untinted glass shall be used at the ground floor level to allow maximum visual access to the interior of buildings. Mirrored and highly reflective glass shall not be permitted at any level of the structure. e. Mirrored and highly reflective glas s shall not be permitted at any level of the structure. Renumber subsequent standards e. through i. Agree 21 No Page Number Item Recommended Change Staff Response 54. 193 #3bi, replace language on street - facing facades at ground floor level i. Variations in visual interest designed to be experienced by the pedestrian point of view ,, Articulated façades at the ground floor street frontage, which may include, but not necessarily require, such measures as, change of materials in a complimentary manner, sensitive composition and juxtaposition of openings and solid wall and/or building frame and projecting elements such as awnings and marquees to provide shade and shelter; Agree 55. 195 Add section “G” on Auto Dealers to the end of the development standards. G. AUTO DEALERS Other than the maximum allowable FAR and height prescribed by Table 4.2 of this Plan, expansions to, or the redevelopment of, auto dealerships existing as of July 6, 2010 shall not be required to comply with any of this Plan's development standards or its design guidelines contained in this C hapter 4 and Chapter 5. Instead, for expansions or redevelopment of existing auto dealerships in the Urban Auto Dealership Format, the applicable standards shall be those contained in SMMC Section 9.31.070 (Automobile/Vehicle Sales, Leasing and Storage) a nd Section 9.10.070 of this Plan. The Development Review Threshold contained in SMMC Section 9.31.070(C)(5) applicable to auto dealership projects involving the replacement or expansion of an existing auto Agree. 22 No Page Number Item Recommended Change Staff Response dealer facility shall apply (in - lieu of those cont ained elsewhere in this Plan). Except for Tier 3 projects, development agreements shall not be required for the expansion or redevelopment of auto dealerships existing as of July 6, 2010. The special rules for FAR calculation contained in SMMC Section 9.31.070(C)(4) shall govern . 56. 200 Remove concept of Established Large Site overlay and concept of voter approval or Council supermajority from DCP 9.10.080 ESTABLISHED LARGE SITES OVERLAY Projects within the Established Large Sites Overlay will be processed as a development agreement. These projects must provide, at minimum, Tier 3 project requirements and community benefits. Additional onsite uses, features, fees, programs or benefits expe cted for these projects are described in Chapter 2, Downtown Districts . Projects within Established Large Sites shall only be required to comply with development standards for Height Limit, Maximum Floor Area, and Open Space as required by 9.10.080. Heig ht Limit. The maximum height for the Downtown is 84’. Projects on Established Large Sites may be authorized up to an absolute height limit of 130’ subject to the following requirements: Shall be processed through a development agreement [OPTIONS FOR PUBLI C DISCUSSION] For Council Consideration 23 No Page Number Item Recommended Change Staff Response OPTION A: Voter Approval required (may be changed with approval of Specific Plan Amendment by future Council) OPTION B: Voter Approval as approved through ballot measure (will require placing ballot measure on special election or next general election) OPTION C: Supermajority Approval of the City Council (requires Charter Amendment) Additional environmental review to the extent not analyzed in the Downtown Community Plan Final EIR. Shade and Shadow analysis of the project’s impacts on adjacent uses Include in the application submittal comprehensive responses to how the project meets each of the priorities described in the Downtown Districts Chapter Maximum Floor Area. 1133 Ocean Avenue shall have a maximum Floor Area Ratio of 3.0. 101 Santa M onica Boulevard shall have a maximum Floor Area Ratio of 4.0. 4 th Street/Arizona Avenue shall have a maximum Floor Area Ratio of 3.5. Open Space Requirements. 50% of total parcel area comprised of the following: 25% located at Ground Floor and 25% witho ut a regulated location. 9.10.090 VOTER APPROVAL OF SPECIFIC PLAN AMENDMENTS. 24 No Page Number Item Recommended Change Staff Response [OPTIONS FOR PUBLIC DISCUSSION] OPTION A: Specific Plan Amendments for building height or FAR within 7 years after the effective date of the Plan shall require voter approval (may be changed with approval of Specific Plan Amendment by future Council) OPTION B: Specific Plan Amendments for building height or FAR within 7 years after the effective date of the Plan shall require voter approval as approved through ballot measure (will require placing ballot measure on special elections or next general election) OPTION C: Specific Plan Amendments for building height or FAR within 7 years after the effective date of the Plan shall require supermajority approval of the Council (requ ires Charter Amendment) 57. 248 Amend the “Vehicle Parking Inventory” category of information for monitoring and reporting. c(vi): Vehicle Parking Inventory. An estimate of the off -street vehicle parking spaces in Downtown , including known private off - street parking facilities that make data available . Agree. 25 STAFF RECOMMENDED CHANGES The following recommended changes to the DRAFT Downtown Community Plan result from public comment, correspondence with stakeholders and s taff review. No. Page Number Item Recommended Change 1. 23 Modify text to include the correct number of landmarks in the Bayside Conservation District The Bayside Conservation district has four eleven City Landmarks and several identified as potentially eligible for designation. 2. 29 Modify “middle -class housing” in Table 2A.3 Middle -Class Income Housing 3. 30 Amend Table 2A.4 to remove erroneous notation of Established Large Site 710 Broadway Affordable Housing, Public Open Space 4. 30 Clarify that the community benefits listed in Table 2A.3 are a suggested baseline of expected benefits. All development agreement projects are expected to provide community benefits that contribute to Downtown’s priorities and fees in excess of Tier 3 fee requirements. Table 2A.3 provides guidelines to priority areas that should guide development agreement negotiations. These priority areas are a baseline for further negotiation. 5. 31 Modify Policy LU1.1 Accommodate the development of public, civic and private uses that contributes to the quality of life and wellbeing of residents of all ages and abilities and the sense of a “complete neighborhood,” including such uses as arts and cultural facilities, chil dcare facilities, parks, senior and youth facilities and meeting facilities, while adhering to the desired scale and character of development. 6. 31 Add new Policy LU1.4 Leverage the availability of citywide and neighborhood -level data sources, including bu t not limited to those available through the Santa Monica Wellbeing Project, to advance a diverse and thriving multigenerational Downtown community. 26 No. Page Number Item Recommended Change 7. 32 Modify LU7.2 Require that community benefit uses for which additional building height and density are awarded granted are aligned with available citywide and neighborhood -level wellbeing data, are consistent with the community’s priorities and exceed those that are normally required through the base standards of the Downtown Community Plan. 8. 45 Add language to strengthen support for new cinemas As cinemas evolve, Santa Monica should continue to provide new new state of the art entertainment venues. 9. 62 Expand on Downtown historic resources language Downtown’s remaining historic resources consist of 76 75 properties resources listed on the City’s Historic Resources Inventory that appear eligible for local designation , of which 24 27 are already properties with City - designated historic resources. There are 4 8 remaining resources that appear individually eligible for local designation . 10. 66 Modification to adaptive reuse language. Encouraging adaptive reuse helps preserve and conserve the historic building stock and promotes sustainable use of materials. At a minimum, historic facades extant historic fabric should be maintained and/or rehabilitated and the scale and character of ad ditions must be compatible with the historic building. 11. 67 Expand on NCOD language with new bullet point (to be placed second). Neighborhood Conservation Overlay District (NCOD): The NCOD is a zoning tool for a specific geographic area that can be used to maintain existing character. The NCOD will expand upon special consideration given to properties listed on the Historic Resources Inventory under category 6L, which are properties not considered eligible for future designation but which still contribute to the character of the district because of extant materials, building elements, proportions, or scale. Building from the special standards applicable to the Bayside Conservation District, the NCOD will encompass the Bayside Conservation District and ide ntify 27 No. Page Number Item Recommended Change unifying design features such as dominant rhythms for structural bays or windows, cornice lines, materials, texture, and landscaping. 12. 70 Modify list of HRI properties to correct erroneous citation 631 Colorado Ave Broadway 13. 71 Add action HP1.2C HP1.2C Explore waiver of outdoor dining license fees for City -designated historic resources. Lead Agency: PCD Supportive Agency: HED Timeframe: Short -term 14. 71 Amend HP1.1B to clarify that the update to the Landmarks Ordinance also includes process changes. Action HP1.1B Update the City’s Landmark s Ordinance (SMMC 9.56), including the addition of a refined process,to refine a process and criteria for the designation of different classifications of historic resources. Lead Agency: PCD Supporting Agency: CAO Timeframe: Short -term 15. 71 Amend Action HP1.2A to clarify that this applies to all project applications that involve historic reso urces and ensure appropriate consideration for all HRI listed properties Action HP1.2A Use the HRI as a planning tool to ensure consideration is given to a property’s historic potential and contribution to the historic character of Downtown when any new de velopment involving a historic resource, including those with a 6L status, is proposed to ensure appropriate efforts towards designation, protection or adaptive reuse are made. Lead Agency: PCD Timeframe: Ongoing 16. 71 Expand upon Action HP1.5A to clarify alternative means to improving energy efficiency of historic structures. Action HP1.5A Provide information and incentives for improving energy efficiency of historic structures, such as the Secretary of the Interior’s Guidelines for Sustainability in Historic Properties , with guidance to avoid removal of historic features such as windows . Lead Agency: PCD Supporting Agency: OSE Timeframe: Short -Term 28 No. Page Number Item Recommended Change 17. 72 Amend Action HP1.6B Action HP1.6B Promote and p P ermit use of the California State Historic Buildin g Code for HRI -listed properties. Lead Agency: PCD Timeframe: Ongoing 18. 72 Amend Action HP1.6B. to promote use of the CHBC. Action HP1.6B Permit Promote and expedite use of the California State Historic Building Code for HRI -listed properties. Lead Agency: PCD Timeframe: Ongoing 19. 72 Amend Action HP1.6F to ensure that historic resources of status codes of 5 or better are captured Action HP1.6F When an application is submitted for projects that involve on HRI - listed properties with a status code of category 5 or better 5S3 , encourage the applicant to seek courtesy feedback from the Landmarks Commission. Lead Agency: PCD Timeframe: Ongoing 20. 73 Delete Action HP2.3B Delete the action. Renumber subsequent action: Action HPS.3 C B 21. 73 Add New Action HP2.2C Action HP2.2C: Develop a process for distributing funds collected for community benefits for historic preservation. Lead Agency: PCD Timeframe: Mid -Term 22. 73 Modify Policy HP2.4 to clarify when adaptive reuse should be considered Policy HP2.4 Adaptive reuse of older buildings or facades should be considered for new construction and rehabilitation projects, when the scale, materials or method of construction evokes Downtown’s history , and where the façade contributes to a continuous streetscape . 23. 73 Expand upon Action HP3.1A to explore including historic preservation in the Tier 2 community benefits requirements Action HP3.1A Evaluate the potential for community benefits from all discretionary development to contribute toward Downtown preservation programs. Lead Agency: PCD Timeframe: Mid Short -Term 24. 100 & 101 Add CCS as supporting agency to various Public Space related actions Action PPS1.1A Action PPS1.3A Action PPS1.4 A Action PPS1.5A Action PPS1.5B 29 No. Page Number Item Recommended Change 25. 101 Modify Action PPS2.1A Partner with interested property owners to develop new publicly accessible open green spaces or plazas as identified in Section 2D.1.B New Public Spaces , such that no site in the Downtown area is more than a 2 ½ minute walk (1/8 mile) from open air, publicly accessibl e , and programmable at - grade open space. 26. 153 Add pedestrian oriented lighting to alleys Action1.2B Install pedestrian scaled lighting in phases throughout the Downtown. Work with property owners to provide complementary sidewalk and all ey illumination. 27. 153 Better address timeline of implementation. AM1.1B Require frontage line setbacks on private property to expand usable space for people walking. Timeline: Ongoing Short -Term 28. 153 Better address timeline of implementation. AM1.1D Regularly collect and evaluate information about people walking Downtown. Timeline: Ongoing Short -Term 29. 154 Action AM1.4D Invest in amenities, including seating, water fountains, pet watering stations , and landscaping and publicly accessible bathrooms. 30. 154 Better address timeline of implementation. AM1.3A Promote walking in Downtown as a recreational and social activity, linked to well - being and the district's unique experience, in marketing materials. Timeline: Ongoing Short -Term 31. 154 Better address timeline of implementation. AM1.3B Maintain pedestrian wayfinding throughout Downtown that identifies points of interest and major transportation connections. Timeline: Ongoing Short -Term 32. 154 Better address timeline of implementation. AM1.3G Pilot creati ve physical installations and activities that surprise and delight people walking, such as parklets. Timeline: Ongoing Medium -Term 30 No. Page Number Item Recommended Change 33. 155 Require transportation allowance for employees Action AM2.1F: Require all new development to implement 100 percent employee transportation allowance programs. Lead Agency: PCD Supporting Agencies: Metro, BBB, TMO Timeframe: Short Term 34. 155 Better address timeline of implementation. AM1.4F Coordinate projects so that when a street is resurfaced, improvements called for in City policy documents are incorporated. Timeline: Ongoing Short -Term 35. 155 Better address timeline of implementation. AM2.1B Expand GoSaMo Transportation Management 0rganization (TM0) to market and promote trip reduction programs, policies, products, and services, and develop a sustainable long -term operations plan. Timeline: Ongoing Short -Term 36. 155 Better address timeline of implementation. AM2.1E Develop a platform to monitor the performance of employer TDM programs and mode share to identify what works and identify new opportunities to fill gaps, such as a regional commuter service. Track performance of employee non -S0V travel annually. Timeline: Ongoing Medium -Term 37. 155 Better address timeline of implementation. AM2.2A Develop a framework for regularly collecting and evaluating visitor and customer travel mode share data. Timeline: Ongoing Medium -Term 38. 156 Better address timeline of implementation. AM2.2G Refine consumer marketing messages targeted at youth and senior travel through the GoSaMo consumer marketing programs. Timeline: Ongoing Short -Term 39. 156 Better address timeline of implementation. AM2.2H Facilitate "seamless" journey combinations between travel modes and overlapping options to meet many user needs. Look at virtual and physical integration, open data, services and products. Timeline: Ongoing Medium -Term 31 No. Page Number Item Recommended Change 40. 156 Better address timeline of implementation. AM2.2I Equip Downtown Santa Monica, Inc. ambassadors to provide robust travel and mobility information. Timeline: Ongoing Short -Term 41. 156 Better address timeline of implementation. AM2.3 C Require development projects to support multi -modal public infrastructure, implement project and employer TDM measu res, pay development impact fees, and provide additional circulation benefits. Timeline: Ongoing Short -Term 42. 156 Remove duplicative action AM2.2C Actively market and promote mobility options to visitors. 43. 156 Better address timeline AM2.2D E ncourage the provision of visitor and customer -focused incentives for non - SOV travel with increased incentives for the busiest times in Downtown. Timeline: Short -Term Medium -Term 44. 156 Clarify Action AM2.2E D evelop and implement strategies and marketing for regional and long distance mobility options to visitors to avoid car use within Santa Monica . Promote Santa Monica’s public transit accessibility to other Los Angeles attractio ns, and bike -friendly environment. 45. 156 Misspelling AM2.2F Integrate active living and well -being into Downtown’s mobility marketing. 46. 156 Clarify Action AM2.3B Develop requirements for Facilitate the provision of shared mobility facilities in developments such as car share, bike share and ride share. 47. 156 Clarify Action AM2.3C Require development projects to support multi -modal public infrastructure, implement project and employer TDM measures, pay development impact fees, and provide additional circulation benefits. 48. 157 Better address timeline of implementation. AM3.1C Manage vehicle speeds through design and enforcement. Timeline: Ongoing Short -Term 32 No. Page Number Item Recommended Change 49. 157 Clarify Action AM3.2A Develop and deploy special management protocols for multi -modal circulation during special events and peak periods, and collect data to inform operations. 50. 157 Clarify Action Action AM3.1E Expand use of Lincoln Boulevard as an entry into Downtown and new peripheral parking location to relieve pressure on congestion points. 51. 158 Better address timeline of implementation. AM3.5A Require shared parking be open to all drivers, regardless of whether they are destined for a building, with the same parking prices, restrictions and privileges as building occupants. Pursue mechanisms to address management, zoning ordinance changes, signage, access controls and overall integration of parking on private property with city -owned parking facilities. Timeline: Ongo ing Medium -Term 52. 158 Add Street Suffix AM3.3E Monitor conditions on 0lympic Drive and consider peak hour or permanent use of curb lanes for vehicle traffic between 4 th Street and 0cean Avenue to create additional east and westbound through -lanes. 53. 158 Clarify Action AM3.4A Maintain Install dynamic parking wayfinding that directs drivers to available spaces efficiently, with signage located at all highway and major boulevard entrances Downtown. 54. 158 Clarify Action AM3.3A Create a Gateway Master Plan that examines feasibility of full or partial freeway capping to i n crease public space and improve mobility, connectivity, and multi - modal transit access through new streets and pathways, including: • Connections through the publicly - owned site adjacent to the Downtown Expo station • Signalized crossings on 4th and 5th Streets 33 No. Page Number Item Recommended Change • Freeway crossings between 0cean Avenue and Lincoln Boulevard Timeframe: Long Short -Term $$$ 55. 158 Change timeframe of Action AM3.3C to Mid -Term. AM3.3C Study Lincoln Boulevard I - 10/PCH interchange improvement options. Timeframe: Long Mid -Term 56. 158 Delete Action AM3.4B AM3.4B Locate public parking facilities at the periphery of the district to reduce trip distance and congestion in the Downtown core. 57. 159 Better address timeline of implementation. AM3.5B Invest in maintenance of the existing public parking supply to extend its useful life. Timeline: Ongoing Short -Term 58. 159 Better address timeline of implementation. AM3.5D Provide flexibility in meeting required parking through unbundled parking, shared parking, in -lieu fees and off -site parking for changes of use in existing buildings. Timeline: Ongoing Short -Term 59. 159 Better address timeline of implementation. AM3.6D Evaluate pri cing impacts on vehicle congestion especially during peak periods. Timeline: Ongoing Medium -Term 60. 159 Better address timeline of implementation. AM3.6E Pursue using the increased revenue generated as parking fees rise to exclusively fund transportation improvements Downtown. Timeline: Ongoing Short -Term 61. 159 Better address timeline of implementation. AM3.6F Coordinate marketing of transportation options and parking pricing for Downtown and the beach in order to facilitate public access. Timeline: Ongoing Short -Term 34 No. Page Number Item Recommended Change 62. 159 Amend Action AM3.5B to permit the sharing of non - residential parking in the in -lieu fee district. Renumber. Change to Short - Term. AM3.5 B C Expand the parking in -lieu fee district to reflect current Downtown boundaries with an appropriate fee and flexible expenditure plan. Seek to maximize participation in the program for non - residential uses so that new parking spaces can be utilized and shared efficiently. Timeframe: Mid Short -Term 63. 159 Renumber Action AM3.5E, and clarify language. Change to Short -Term. AM3.5 D E Develop a handbook for private property representatives to assist in about how to creat e ing publicly -available parking such as that addresses revenue control equipment function, pedestrian access, payment options, utilization tracking and differentiation by user, real -time data and signage. Timeframe: Mid Short -Term 64. 159 Renumber action AM3.5F, and clarify language. Change to Short -Term AM3.5 E F Evaluate Identify what management systems are needed to facilitate maximize shared parking ., I i dentify options, estimate staff and resources needs, and propose a strategy that can increase the efficient use of existing parking. Timeframe: Mid Short -Term 65. 159 Removed action AM3.5B Invest in maintenance of the existing public parking supply to extend its useful life. 66. 159 Added and removed language to clarify action AM3.5 C D Provide Establish regulations that support flexibility in meeting required parking through unbundled parking, shared parking, in -lieu fees payments and off -site parking . for changes of use in existing buildings. 67. 159 Reworded language to clarify action AM3.6F Develop C c oordinate d marketing of transportation options and parking pricing for Downtown and the beach in order to facilitate public access. 35 No. Page Number Item Recommended Change 68. 160 Better address timeline of implementation. AM4.1A Expand and diversify GoSaMo outreach and marketing efforts to increase awareness and sustained utilization of mobility options, and leverage investments in facilities and services. Timeline: Ongoing Short -Term 69. 160 Consolidate and Clarify Actions AM 3.7A Develop a coordinated curbside management strategy and monitor performance. Provide that prioritizes sustainable and high capacity mobility modes and addresses: • flexibility to respond to unique situations like the Expo station, and priority for sustainable and high capacity mobility modes. • Curb space for new mobility modes such as bike corrals, ride sharing, EVs, car share and shuttles. • Taxi stand and rideshare drop -off and pick -up locations near major destinations. Monitor performance and revise periodically to address changing demand. 70. 160 Consolidate in to AM3.7A AM3.7B Create curb space for new mobility modes as part of a coordinated approach such as bike corrals, ride sharing, shared EVs, car share and shuttles. 71. 160 Consolidate into AM3.7A AM3.7E Define taxi stand and rideshare drop -off and pick -up locations focusing primarily on major destinations and revise periodically to address changing demand. 72. 160 Clarify Action AM4.1B Expand Provide bike share, car share, car -pool, and van -pool, shared rides shuttle and transit service, in downtown, in locations that are visible and identifiable. 73. 160 Clarify Action AM3.7C Enforce Provide on - and off -street passenger loading retulations to reduce conflicts with opportunities that allow convenient drop -off and pick -up without delaying public transit and other road users. Review off -street passenger loading requirements as demands change. 36 No. Page Number Item Recommended Change 74. 160 Clarify Action AM3.7D Limit on -street commercial loading to early morning hours if alley - accessed loading is not sufficient. Work to reduce Enforce regulations limiting double parking of delivery vehicles in the travel lanes and bicycle lanes. 75. 160 Renumber Action AM3.7G and change timeframe from Long to Mid. AM3.7 E G Pilot test smaller delivery vehicles and/or human powered transport, including cargo bikes, for goods distribution. Timeframe: Long Mid -Term 76. 160 Amend action AM4.1C: change timeframe to short - term, 2019.Clarify that circulator routes will be short -distance and cost competitive. Change lead to PCD and supporting to DTSM and SMTT. AM4.1C Study the feasibility of a circulator that provides serves short -distance trips at a competitive price and service level by 2019 that addresses the needs of res idents accessing Downtown . per passenger and coordinates with Big Blue Bus service. Lead: DTSM PCD Supporting: PCD DTSM, SMTT Timeframe: Short Long -Term 77. 161 Better address timeline of implementation. AM4.1I Facilitate and assist businesses interested in pooling resources to create transportation amenities (bike valet, guaranteed ride home, shuttles, etc.). Timeline: Ongoing Short -Term 78. 161 Better address timeline of implementation. AM4.1J Utilize National Association of City Transportation 0fficials (NAC T0) or city - specific design guidelines for roadway design and streetscape elements. Timeline: Ongoing Short -Term 79. 161 Clarify Action AM4.1F Update City policies and procedures regarding transportation for hire services (taxi, pedicab, etc) to address new types and increased demand for connections near the Expo station . Prioritize low and no -emission vehicles , and shared rides , and transit connections . 80. 161 Clarify Action AM4.1D Develop an appealing mobility iconic transportation options map for Downtown coordinated with the wayfinding system with corresponding online applications . 37 No. Page Number Item Recommended Change 81. 161 Delete Action AM4.1E Consider all transportation options and their prices to ensure that sustainable and high -capacity modes are competitively priced and positions to be the most convenient. 82. 161 Better address timeline and partners AM4.4E Pursue regional express transit service to high demand employer and visitor destinations outside Santa Monica with regional partners and funders. Lead Agency: PCD Supporting Agencies: Police BBB , HED Timeframe: Short -term Medium -term 83. 161 Combined with AM4.1.G AM1.4G Work with emergency services and Public Works to promote human -scaled streets with equipment and operational changes (such as modified vehicles and substations) to continue to provide adequate services and emergency response. 84. 161 Clarify Action AM4.1G Develop uniform guidance on street maintenance, street design, and operations that encourages human -scaled streets for walking and biking (i.e. modified vehicles and substations for service, integrated equipment, scheduling).management that pays special attention to sustainable and higher capacity modes such as walking, bicycling and transit . 85. 161 Clarify Action AM4.2B Ensure Provide bus stops have with real -time arri val signs, better seating and lighting. Consider additional rider amenities such as charging and destination information. 86. 161 Renumber Action Am4.1K AM4.1 H K Evaluate what management systems are needed to facilitate shared parking, identify options, estimate staff and resources needs, and propose a strategy that can increase the efficient use of existing parking. 87. 161 Removed action AM4.1I Facilitate and assist businesses interested in pooling resources to create transportation amenities (bike valet, guaranteed ride home, shuttles, etc.). 38 No. Page Number Item Recommended Change 88. 161 Removed action AM4.1J Utilize National Association of City Transportation 0fficials (NACT0) or city - specific design guidelines for roadway design and streetscape elements. 89. 161 Better address timeline of implementation. AM4.2A Maintain bus stops in locations that encourage ridership, support system operations and reduce delays from stopping and loading. Incorporate concerns of seniors, disabled and transferring riders. Timeline: Ongoing Short -Term 90. 162 Better address timeline of implementation. AM4.2E Support youth and teen use of transit Downtown through engagement, amenities and incentives. Timeline: Ongoing Short -Term 91. 162 Better address timeline of implementation.; remove redundancy with AM1.2F AM4.3D Increase enforcement of bike lane blockage by valet and delivery vehicles ; minimize temporary closures of bike facilities and provide direct alternate routing . Timeline: Ongoing Short -Term 92. 162 Clarify Action AM4.2D Consider providing BBB service o n Lincoln Boulevard in Downtown area. Adjust dedicated bus lanes and facilities to align with highest demand BBB service areas , such as Fourth Street . Consider providing BBB service on Lincoln Boulevard in Downtown area . 93. 162 Typo AM4.2F Pursue the siting of a Metro rider relief application center in Downtown to facilitate applications for reduced transit fares. 94. 162 Clarify Action AM4.3E Expand Create consolidated bike parking to meet growing demand, including high capacity and service facilities like th e Bike Center, and bike parking corrals to preserve sidewalk space for pedestrians. 95. 162 Delete Action AM4.4A Continuously expand travel information to residents, visitors and employees through coordinated outreach, signage, marketing, maps and digital co mmunications. 96. 162 Removed action AM4.2E Support youth and teen use of transit Downtown through engagement, amenities and incentives. 39 No. Page Number Item Recommended Change 97. 163 Better address timeline of implementation. AM4.5A Require new development to provide physical and/or programmatic improvements, and include additional circulation improvements as primary community benefits. Timeline: Ongoing Short -Term 98. 163 Better address timeline of implementation. AM4.5D Provide Require private property access via alleys. Maintain updated regulations for loading of goods and people that consider changing technologies and trends and emergency vehicle access. Timeline: Ongoing Short -Term 99. 163 Clarify Action AM4.5C Facilitate collaboration among individual employer and developer TDM efforts to pool resources for greater impact through the Transportation Management Organization . 100. 163 Renumber Action AM4.4B AM4.4B 4A Create Transit Screen displays at 10 sites to distribute access to transit information, and raise awareness of options. 101. 163 Amend langage for Action AM4.5E AM4.5E Seek Pilot solutions to reduce the impact of commercial delivery on network function such as coordinated times, restricted hours, mandatory alley access and additional enforcement. 102. 163 Renumber Action AM4.4C AM4.4 B C Strengthen connections from the Pier, including water -based mobility options. 103. 163 Renumber Action AM4.4D AM4.4 D C Advocate for extension of the Subway to the Sea so that it extends fully to Downtown Santa Monica. 104. 163 Clarify that Action AM4.5B is implemented through revisions to development standards, as needed. AM4.5B Distribute Revise development standards as needed to create short -term bike parking, bike rooms, bike share and car share on private property throughout Downtown. 40 No. Page Number Item Recommended Change 105. 164 Better address timeline of implementation. AM5.1D Pursue improvements that reduce exposure to crashes and conflicts such as: • Consolidated curb cuts • Driveway access from the alley • Shorter pedestrian crossing distances • Protected bikeways • Leading or dedicated pedestrian signal phases • Removal of yi elding left turns Timeline: Ongoing Short -Term 106. 164 Better address timeline of implementation. AM5.2A Identify areas with higher crash numbers and c C onduct routine enforcement of unsafe driving practices in areas with high crash rates . Timeline: Ongoing Short -Term 107. 164 Address frequency AM5.1E Continue to assess and repair damaged sidewalks quickly on a regular schedule , taking into consideration the volume of usage. Timeframe: Short -Term On -Going 108. 164 Clarify Action AM5.2C Educate drivers and enforce laws Develop driver education outreach, and conduct enforcement operations to reduce blockage of loading zones, transit stops and lanes, bike lanes and crosswalks. 109. 164 Clarify Action AM5.3A Implement ongoing Develop and regularly distribute public information and marketing campaigns to encourage mutual respect among all road users. 110. 164 Shorten/clarify language of Action AM5.1B AM5.1B Use design and administrative techniques to influence speeds of passenger vehicles when in free flow conditions, to increase the ability for vehicles manage travel speeds to avoid collision and reduce severity of injuries when crashes occur, in coordination with emergency personnel. 41 No. Page Number Item Recommended Change 111. 164 Added language to clarify action AM5.1D Identify priority locations to P p ursue improvements that reduce exposure to crashes and conflicts such as: • Consolidated curb cuts • Driveway access from the alley • Shorter pedestrian crossing distances • Protected bikeways • Leading or dedicated pe destrian signal phases • Removal of yielding left turns 112. 164 Better address timeline of implementation. AM5.1A Evaluate crash data regularly, identify appropriate and effective countermeasures and implement feasible modifications to reduce exposure. Timeline: Ongoing Short -Term 113. 164 Better address timeline of implementation. AM5.1C Maintain pavement markings, replace aging signs, upgrade crosswalks and add lighting to enhance visibility and increase safety. Timeline: Ongoing Short -Term 114. 165 Include language to Development Standards Purpose to encourage interaction between building and landscape design. • Ensure that new development enhances pedestrian activity by improving the connections to and attractiveness of the public realm and by providing place s, including open space, s for relaxation, shopping, living, and dining. 115. 165 Better address timeline of implementation. AM5.3B Modify signal timing to favor pedestrians with consideration of emergency response. Use new traffic engineering practices as they become available to create a safer travel environment. Timeline: Ongoing Short -Term 116. 165 Better address timeline of implementation. AM6.1C Continue the City's General Bikeshare Feed Specification and General Transit Feed Specification efforts. Consider releasing additional transportation data streams as they become available (ride - sharing, employer shuttles, demand - response services, connected vehicles, etc.). Timeline: Ongoing Short -Term 42 No. Page Number Item Recommended Change 117. 165 Better address timeline of implementation. AM6.1D A s vehicle -to -infrastructure, vehicle -to -vehicle, and vehicle -to - human communication improves, look for opportunities to collect data to inform and improve system performance. Timeline: Ongoing Medium -Term 118. 165 Include reduced VMT as a goal for incorporating new technologies, Action AM5.3C AM5.3C Monitor and incorporate new vehicle technology that fosters sustainable, shared mobility and that can reduce VMT and improve access, efficiency and safety for all roadway users. 119. 165 Rephrase Action AM 6.2A AM6.2A Explore automated transit vehicles and the use of electric or low - emissions fleets to reduce carbon emissions. Partner with regional transit providers, cities and other potential partners to explore automated transit vehicles and the use of el ectric or low - emissions fleets to reduce carbon emissions.. 120. 166 Better address timeline of implementation. AM6.2E Participate in regional efforts and interagency groups to share knowledge, build consistency between systems, develop harmonious policy and share in problem - solving for issues that cross jurisdictional boundaries such as data systems, safety, and mobility services. Timeline: Ongoing Short -Term 121. 166 Clarify language to include scope of parking AM6.3B Monitor on -street and off -street parking occupancy and utilization to guide decision making and pricing to ensure efficient parking utilization. 122. 166 Clarify Action AM6.2B Work with local employers, business representatives and other agencies on the provision creation of micro -transit pi lots and/or or demand -response services. 43 No. Page Number Item Recommended Change 123. 166 Change timeframe of Action AM6.2D to Short -Term. AM6.2D Establish a transportation innovations team to actively monitor transportation technology and communication advances and new services and evaluate for appropriateness in Downtown. Timeframe: Long Short -Term 124. 166 Change timeframe of Action AM6.2F to Short -Term. AM6.2F Develop a practice to routinely scope projects to be ready for future technology and mobility changes, such as zero -emission technologies, automation, ITS, and new mobility service models. Timeframe: Long Short -Term 125. 166 Amend Action AM6.2G to include connected vehicles. Change to Short - Term. AM6.2G Establish an autonomous and connected vehicles working committee that engages with representatives from local and regional private industry, research institutions, and community stakeholders, to recommend policies and testing activities in support of Downtown Santa Monica goals. Areas of focus for the task force could include: • A ssess the potential benefits and impacts of automated and connected vehicles for Santa Monica • Identify local policies, codes and laws that might inhibit the use of new mobility options, investigate best practices and recommend changes. • Work with transit agencies to reevaluate their fleet and management plans in order to incorporate the impacts of automated vehicles. • Protect the safety of people walking, on bikes and in construction zones or unusual conditions • Equitable access to automated vehicles • Communications and data infrastructure readiness • Increase sharing of rides and vehicles, and decrease single ownership and parking demand • Integrate in fleet vehicles and transit services • Increase EV an d very low -emissions 44 No. Page Number Item Recommended Change vehicles • Decrease vehicle miles traveled • Create hubs for driverless vehicle pick up and navigation. Timeframe: Long Short -Term 126. 166 Better address timeline of implementation. AM6.3A Conduct biennial citywide and Downtown vehicle, pedestrian, and bicycle trip counts and track data trends. Timeline: Ongoing Short -Term 127. 167 Better address timeline of implementation.; clarify that will also continue in the future AM6.3C Develop and regularly publish a downtown mobility report card that captures a snapshot of system performance over time, such as mode share, program evaluation and customer service. Timeline: Ongoing Short -Term 128. 167 Better address timeline of implementation. AM6.4F Market available EV resources and provide information to local residents, property owners and business owners. Timeline: Ongoing Medium -Term 129. 167 Clarify Action AM6.4C Pilot EV charging through streetlights , meters or other existing street furniture. 130. 167 Specify electric vehicles Action6.4D Update parking policies and practices to promote efficient electric -vehicle charging station use and mobility. 131. 167 Better address timeline of implementation. AM 6.4E Promote advanced energy technologies like energy storage and solar photovoltaic (PV) to augment electric vehicle charging. Timeline: Ongoing Short -Term 132. 168 Remove discussion of Land Use Regulations from 9.10.020 9.10.020 Types of Regulations Types of Regulations. This Chapter includes five three types of regulations that control the use and development of property in the Downtown Community Plan area: Land Use Regulations . The Zoning Districts created in this Chapter and shown on Illustration 4.1 (“Downtown Districts”) permit many of the uses that have been traditional ly allowed in the Downtown. However, certain new uses have been added to reflect the 45 No. Page Number Item Recommended Change needs of the expanding Downtown residential, employee, and visitor populations. These regulations specify the land uses that are permitted or conditionally permitted in ea ch Zoning District, and include special limitations, if any, applicable to specific uses. 133. 168 Clarify relationship between DCP and Zoning Ordinance with respect to land use regulations. 9.10.030 Applicability and Relationship to Santa Monica Municipal Code and Other Regulations Applicability. The Downtown Community Plan establishes the area’s regulations and standards and shall guide all land use and development and circulation -related decision -making processes for the Plan area. Relationship to Santa Monica Municipal Code and Other Regulations. General . If provisions in the Downtown Community Plan and Article 9 of the Santa Monica Municipal Code (“Zoning Ordinance”) are in conflict, the provisions in the Downtown Community Plan shall be applied. Where land use regulations, development standards, administrative regulations, and general terms and definitions are not specifically addressed by the Downtown Community Plan, Article 9 of the Santa Monica Municipal Code (“Zoning Ordinanc e”) shall be applied. Land use regulations for DCP land use districts may be found in Chapter 9.10 of the Zoning Ordinance. 46 No. Page Number Item Recommended Change 134. 180 Modify text to reduce restrictiveness of neighborhood commercial requirement in housing project definition. 9.10.050 b. Mixed -use developments consisting of residential and nonresidential uses in which nonresidential uses that do not exceed 25% of the total building square footage and are limited to neighborhood commercial uses and to the first floor of buildings that ar e two or more stories. As used in this paragraph, “neighborhood commercial” means small - scale or specialty stores that furnish goods and services primarily to residents of the neighborhood. 135. 181 Modify Table 4.2 to clarify WT FAR and Height WT FAR, Tier 2: 2.25 1.75 WT FAR, Tier 2 – with Housing 2.25 WT Height, Tier 2: 50’ 40’ WT Height, Tier 2 – with Housing 50’ 136. 181 Modify Table 4.2 to clarify FAR on Lincoln Boulevard East/West Lincoln East, Tier 2: 1.75 Lincoln East, Tier 2 – With Housing: 2.25 Lincoln West, Tier 2: 2.25 Lincoln West, Tier 2 – With Housing: 2.75 137. 181 Amend Table 4.2 to correct reference for additional regulations for Tier 2 -Tier 3 projects Section 9.10.060 9.10.070 (Project Requirements) 138. 183 Reduce height of rear setback adjacent to alley Rear Adjacent to Alley: 2’ for first 17’ 16’ of building height 139. 185 Modify 9.10.060 B(2) to clarify that open space is based on lot width The minimum area required for open space is expressed as a percentage of the buildable area (i.e. remaining parcel after required setbacks) and is based on Building Type lot width . Unless otherwise noted, this open space may be public or private. 140. 185 Modify 9.10.060B(4) to clarify when setbacks count towards open space requirement. 4. Ground floor building setbacks resulting from compliance with subsection (D) shall not be counted towards compliance with this requirement. Building setbacks that exceed the minimum requirement may be included towards compliance with this requirement, provided any overhanging encroachments have a minimum vertical clearance equivalent to the minimum or maximum ground floor height requirement. 47 No. Page Number Item Recommended Change 141. 185 Exclude single -lot projects from the courtyard width ratio requirement of the Open Space standards. 6. For lot widths greater than 50’ in width, t T he maximum height to width ratio of any Courtyard is 1.7:1 (e.g. a Courtyard within a 60’ tall structure must have a minimum dimension of 35’). Where sides of a Courtyard are unequal in height, they may be averaged to determine the effective height. The minimum Courtyard dimension on any side shall be 20 feet. 142. 185 Clarify that DCP open space requirements supersede section 9.21.090 of the Zoning Ordinance B. OPEN SPACE 1. Minimum Open Space Requirements, per (B)(2) The open space requirements established in this subsection B supersede the open space requirements established in section 9.21.090 of the Zoning Ordinance. 143. 186 Modify 9.10.060 B(8) to clarify when maximum unbroken primary face length may count toward open space requirements 8. Breaks in buildings required by Maximum Unbroken Primary Facade Length of subsection (C)(6), shall count toward Open Space Requirements if it connects to an interior open space . The 1.7:1 height to width ratio does not apply to these Breaks. 144. 186 Exempt building entries required to be recessed from the 70% build -to line requirement. 1. Build -To Line. Buildings with nonresidential uses on the ground floor and not facing a residential district shall be constructed at the buildin g frontage line for 70 percent of linear street frontage. Building entries required to be recessed due to technical codes may be counted towards this requirement. This requirement may be waived or modified subject to a discretionary approval upon finding t hat a) an alternative configuration can be approved based on the findings in section 9.43.020, Minor Modifications and the objectives of the DCP Design Guidelines b) the alternative configuration meets the objectives of the DCP Design Guidelines : Renumber subsequent findings . 48 No. Page Number Item Recommended Change 145. 189 Clarify that Urban “Large Format” building type is not limited to “L” or “U” shapes Urban “Large Format” Type. A building defined by its simple square, “L” or “U” shape that allows for large scale retail, office, or entertainment uses of at least 40,000 square feet per floor for a single tenant, like a grocery or department store. For a quality pedestrian realm, parking is accommodated below ground or is integrated into the building so that it is not visible from the street. Unlike “Big Boxes” in more suburban areas, these typically have storefronts, that create a pedestrian scaled environment, and they may have other uses above, like office or residential. 146. 191 Add new subsection to D. Building Frontage Line to per mit single -, corner lots to project 30% of their frontage to the property line. D. BUILDING FRONTAGE LINE 1. Corner Lots with Lot Width of 50’ or Less. Up to 30% of the ground floor building frontage that is parallel to the street side property line may project into the required setback to accommodate mechanical rooms, utilities , required parking garage access , and other essential building functions . 147. 192 Eliminate duplicate standard c. A minimum of 65% of a required Active Commercial Frontage shall be transparent and include windows, doors, and other openings. Renumber subsequent standard. 148. 192 Modify subsection E to clarify that intent of section is for ground floor pedestrian orientation and exempt 100% affordable housing projects from pedestrian - oriented/active design standards See Planning Commission changes for title change. E. PEDESTRIAN -ORIENTED DESIGN STANDARDS. Active Frontages are Ground floor pedestrian orientation is Ground floor pedestrian orientation is required for all projects throughout the Downtown and shall be designed to accommodate commercial uses and activities ., subject to the following :100% Affordable Housing projects are exempt from the provision s of this subsection (E). 49 No. Page Number Item Recommended Change 149. 193 Modify Pedestrian - Oriented Design standard 3(a) to provide flexibility a. No more than 15% 20% of a building’s street -level frontage, but in no case exceeding 25’75’, may be continuously blank or featureless. 150. 194 Amend Historic Preservation standard F(3) to be consistent with ZO language Height Limits for Tier 2 Projects on City - Designated Historic Resource Parcels. Tier 2 projects as part of a project that preserves on parcels that contain a City - Designated Historic Resource may extend up to the Tier 3 height maximum of the underlying district provided the project complies with all other Tier 2 thresholds and requirements and that the project is consistent with the Secretary of the Interior’s Standards for the Treatment of Historic Properties and the project design preserves the setting and views of the character - defining features of the on -site City - Designated Historic Resource. 151. 197 Change title of 9.10.070 9.10.070 PROJECT REQUIREMENTS FOR HOUSING AND ALL OTHER PROJECTS . 152. 197 Modify purpose of project requirements 9.10.070 PROJECT REQUIREMENTS FOR HOUSING AND ALL OTHER PROJECTS. Purpose. The purpose of this section is to establish and describe regulations for implementing policies of the General Plan intended to establish a base height and Floor Area Ratio (FAR) to be known as Tier 1. New development is allowed to exceed the base height and FAR of Tier 1 in return for the provision of additional project requirements that enhance Santa Monica’s highly valued community character. More specifically, these regulations will implement LUCE policies which require that as development is approved above the base FAR and height, it must be accompanied by a range of community benefits from four pri ority categories: Affordable Housing, Trip Reduction and Traffic Management, Community Physical Improvements, and Social and Cultural Facilities. In addition to promoting the development of additional on - site affordable housing and to maintaining existing City programs that provide incentives for the production of affordable 50 No. Page Number Item Recommended Change housing, these requirements are intended to reduce the additional burdens more intense development allowed by the General Plan will impose on the City by requiring applicants to pay add itional fees to mitigate project impacts or, in specific instances, allowing applicants to incorporate features into their projects. 153. 198 Change off -site affordable housing maximum distance to be consistent with AHPP requirements. 9.10.070 PROJECT REQUIREMENTS C1.a.i.(3), and C1.a.ii.(3) the location of the offsite location units shall be within the boundaries of the Downtown or within a one -quarter mile radius of the market rate units. 500 feet 154. 199 Add Commercial Linkage Fee Re quirement for Housing Projects 5. Affordable Housing Commercial Linkage Fee. a. All Tier 2 and Tier 3 less than 90,000 SF. Applicants proposing non -residential portions of housing projects shall pay a housing mitigation fee 23% above the base fee as required by SMMC Chapter 9.68, Affordable housing Commercial Linkage Fee Program for t hat po r tion of the floor area above the maximum Tier 1 floor area allowed by this Plan. 155. 200 Clarify maximum height limits considered for Established Large Sites. A. Height Limit. The maximum height for the Downtown is 84’. Projects on Established Large Sites may be authorized up to an absolute height limit of 130’ subject to the following requirements: 156. 201 Modify General Regulations (9.10.120) to increase maximum length of habitable space projections. 4. Combined Length o f Habitable and Non - Habitable Spaces. The total combined length of projections into the building frontage line should not exceed 65% of the building face to which they are attached. However, no more than 40 50 % of this combined length may be Habitable Projecting Space. 157. 201 Add a new Minor Modification to allow for additional flexibility from modulation standards that do not have Alternative Compliance measures. 9.10.110 Modifications to standards A.1 Minor Modifications d. Modulation Standards. Up to 10% of the required façade area to be modulated and required depth of minimum stepback for any modulation standard without an alternative compliance option. 51 No. Page Number Item Recommended Change 158. 202 Add language to define “Façade” for use in building modulation standards H. Façade . The face of the exterior wall of a building exposed to public view or that wall view ed by persons not within the building. The portion of any exterior elevation of a building extending vertically from the grade to the top of roof and horizontally across the entire width of the building elevation. 159. 202 Modify Floor Area Ratio definition to clarify that FAR exemption for POPS are allowed only if a POPS program is established F. Floor Area Ratio . See SMMC Section 9.04.090, Determining Floor Area Ratio. The following shall not be included when calculating a project’s floor area ratio (FAR): a fter the establishment of a POPS program described in Action PPS2.1C, structures under 6 7 50 square feet at existing Publically - Accessible Private Open Spaces (POPS) are exempt from Floor Area Ratio calculations. 160. 205 Include language to Design Guidelines’ Objectives to encourage interaction between building and landscape design. Objective 3 : Create visual interest and variety in building and landscape design along every street. 161. 205 Enhance discussion of Architectural Style in Design Guidelines 5.1.A ARCHITECTURAL STYLE There is no preferred style or historic period for buildings in the Downtown area. All buildings should demonstrate an architectural concept/idea to provide coherence and integrity to the design. However, where an Historic Architectura l Style is proposed, the applicant should document how the proposed building is in keeping with that style, particularly in regards to: overall massing, overhangs, expressions of structure, wall thickness, materials and other details. 162. 206 Modify detail on window guidelines. 5.1.C GROUND FLOOR P ERMEABILITY Window and Entry g. Upper -story Residential windows should be operable and are typically smaller than ground floor windows . h. Lintels, transoms, sills, shutters, special trim detail and/or heavy duty mullions should be encouraged to enhance window elements. Windows should be detailed 52 No. Page Number Item Recommended Change consistent with the project design to provide a sense of human scale, proportion, texture, shade and shadow. i. If exterior shutters are used, they should be sized and mo unted appropriately to fit the window, with appropriate hardware even if non -operable. 163. 206 Modify detail on storefront guidelines. Storefronts j. A transition between storefronts, such as a change in plane, addition of a column or other vertical trim ele ment should be provided between storefronts. k. Transoms, which can accommodate a business address, should be incorporated above entry doors. i. Entry doors should be commercial grade with clear glazing framed in metal, wood or frameless. m. Building and store entries should be clear to the predestrian. Consider using awnings, canopies, architectural lighting, and pedestrian signage to articulate shop entrances. 164. 207 Modify detail on interior courtyards guidelines. Interior Courtyards When pr ovided, interior courtyards should be designed to encourage common and shared use by residents. Consider including the following amenities include : a. Seating and planting areas. • Landscape is a necessary component to soften outdoor space in an urban setting. • Planters shall be designed to enhance the usable space. Large, tall planters can prevent ptimal use of open space by making the space feel crowded. 18” high planters are optimal as edges can be used as seat walls. • Low walls and steps may be used for seati ng. • Landscaping should include shade trees or shading devices, where space permits. 53 No. Page Number Item Recommended Change Planters should not be so tall as to fill the courtyard usable space. 18” high planters are optimal as edges can be used as seat walls. 165. 208 Modify 5.1.E Façade Articulation, Colors and Materials (a) Recommended materials are those durable and quality materials that give the building a sense of authenticity, weight, texture, and mass, such as: Precast concrete or poured -in -place concrete, unitized ceramic panels, high quality metal panels, brick (full or face brick), cementitious panel siding, wood panel plank or siding, green walls green walls , smooth plaster, tile, terrazzo, stone veneer and low reflectivity glass and other durable, high quality materials should be used. 166. 208 Add a design guideline for historic facades under section 5.1.E Façade Articulation, Massing Offsets Massing Offsets d. When adaptively reusing a historic structure or incorporating a historic façade into new construction, new floor levels above the cornice of the original façade should be set back sufficiently to preserve the street presence of the original façade. 167. 208 Amend Façade Articulation guidelines to clarify that design concept should be cohesive. 5.1E FAÇADE ARTICULATION Massing Offsets b. Regular breaks along the building façade should create a visual rhythm along the street with offsets, recesses, stepped façades, varying materials or colors, and architectural ornaments such as balconies, awnings, projections, etc., while ensuri ng a pleasing composition as a whole. 168. 208 Clarify guidelines for Colors and Materials 5.1E FAÇADE ARTICULATION Colors and Materials Changes of exterior color, texture or material should be accompanied by may be used to highlight changes in plane or occur at an inside corner. 169. 208 Modify detail on massing offset guidelines. 5.1.E FAÇADE ARTICUL ATION Massing Offsets a. Breaks in building are utilized to reinforce the architectural idea and provide appropriate mass and scale. Break the building mass with differing heights and widths to avoid monolithic buildings. 54 No. Page Number Item Recommended Change 170. 208 Modify detail on color and materials guidelines. Colors and Materials Changes of exterior color, texture or material can be used to reinforce the architectural formal idea and are best should be accompanied by changes in plane or occur at an inside corner. 171. 210 Modify detail on lighting guidelines. 5.1.F ARCHITECTURAL LIGHTING b. Decorative lighting should could be added at shop front entrances and window displays to activate pedestrian realm at night. c. Light fixtures should complement the style and age of the building. 172. 213 Modify detail on landscaping guidelines. Landscaping Landscaping is a necessary component of outdoor space in an urban setting. Because landscaping has a significant impact on the experience, texture and temperature of an open space, it needs to be appropriate to the intended use of the space, and be comfortable, attra ctive and complement the usable space and surrounding architecture. 173. 207, 213 Modify guidelines dealing with raised planters 5.1.c GROUND FLOOR PERMEABILITY Interior Courtyards Planters shall be designed to enhance the usable space. Large, tall planters can prevent optimal use of open space by making the space feel crowded. 18” high planters are optimal as edges can be used as seat walls. 5.2A PUBLIC SPACE GUIDELINES Landscaping Planters shall be designed to enhance the usable space. Large, tall planters can prevent optimal use of open space by making the space feel crowded. 18” high planters are optimal as edges can be used as seat walls. 55 No. Page Number Item Recommended Change 174. 218 -232 Remove all language on potential site locations, and replace existing guidelines for landscaping a nd public art to simply say “Yes”. Potential Location(s): Landscaping: Yes Public Art: Yes Addenda Sheet Downtown Community Plan 7.10.17 1 ATTACHMENT C CHANGES TO DOWNTOWN COMMUNITY PLAN AS FURTHER PROPOSED BY STAFF SINCE MAY 31, 2017 DOWNTOWN COMMUNITY PLAN ADDENDA SHEET This addenda sheet contains corrections, clarifications, and changes to the publi shed text of the DCP and represents changes recommended by the Planning Comm ission and additional changes proposed by staff since Planning Commission’s action on May 31, 2017, which are in highlighted text. These changes were precipitated by further ou treach to various Boards and Commissions. The proposed corrections, clarifications, and cha nges to the DCP are listed with their locations and their corrections. There may be errors, cla rifications and changes that carry over to multiple areas within the plan, all of which will be ad dressed and amended. PLANNING COMMISSION RECOMMENDED CHANGES The following recommended changes to the DRAFT Downtown Communi ty Plan result from Planning Commission deliberations and further staff analysis. No Page Number Item Recommended Change Staff Response 1. 28-29 Change language of Section 2A.4 DCP ENTITLEMENT AND TIER SYSTEM to conform to recommended entitlement thresholds “Base” Projects Typically, developments that conform to Tier 1 standards are referred to as “base” projects. Base projects must meet minimum project requirements for setbacks, design and open space, and pay adopted fees for items such as affordable housing, trip reduction, cultural arts and child-care fees. Projects that provide the required percentage of Affordable Housing Production Program (AHPP) onsite are allowed an additional floor of housing for a maximum of three stories and 39 feet. Housing Projects Tier 1 up to 29,999 sq. ft. Housing projects up to 29,999 square feet that conform to Tier 1 standards Any project on a building site up to 15,000 sq. ft. may be processed through an Administrative Approval. Agree Addenda Sheet Downtown Community Plan 7.10.17 2 No Page Number Item Recommended Change Staff Response Commercial Projects Tier 1 up to 14,999 sq. ft. Commercial projects up to 14,999 square feet that conform to Tier 1 standards may be processed through an Administrative Approval. Development Review Projects All Tier 2 and certain Tier 3 housing projects are permitted by Development Review Permit (DRP), allowing typical mixed-use housing projects to be approved through discretionary review and a Planning Commission public hearing that gives community members a venue to share thoughts and input on proposed projects. By law, Planning Commission decisions are appealable to the City Council. The project requirements for Tier 2 and non-negotiated Tier 3 housing projects are unique to Downtown. This system of project requirements is intended to incentivize and place a priority on the development of housing in Downtown, implement affordable housing requirements that result in a greater number and a more diverse unit mix, and ensure greater discretionary review for commercial projects. Two types of projects qualify for Development Review Permits within the DCP. Addenda Sheet Downtown Community Plan 7.10.17 3 No Page Number Item Recommended Change Staff Response Housing Projects Tier 2. Tier 2 housing projects are considered non-negotiated discretionary projects. These projects are required to comply with affordable housing requirements and affordability mix as established in Chapter 4, Standards and Regulations, 9.10.070 and must also contribute augmented fees at Tier 2 levels. Tier 3. In the Transit Adjacent Zone only, housing projects between 30,000- 6090 ,000 square feet that conform to Tier 3 height standards are considered non- negotiated discretionary projects. These projects are required to comply with affordable housing requirements and affordability mix as established in Chapter 4, Standards and Regulations, 9.10.070 and must also contribute augmented fees at Tier 3 levels. 2. 28 Modify Table 2A.2 DCP Entitlement Thresholds to allow two-lot housing projects and housing projects up to 90,000 square feet in the Transit Adjacent District to Housing Project Administrative Approval Projects on lots up to 15,000 sf Less than 30,000 sf Agree Addenda Sheet Downtown Community Plan 7.10.17 4 No Page Number Item Recommended Change Staff Response be processed by Administrative Approval Development Review Permit All Tier 2 up to 60,000 sf Tier 3: 3060 ,000 - 6090 ,000 sf Development Agreement Tier 3 greater than 6090 ,000 sf 3. 30 Change language of Section 2A.4 DCP ENTITLEMENT AND TIER SYSTEM to conform to recommended entitlement thresholds Development Agreement Projects 1. Housing Projects within Transit Adjacent District. Tier 3. Residential projects greater than 6090 ,000 square feet that conform to Tier 3 height and FAR standards shall be required to be processed through a development agreement. Agree 4. 31 Add new policy to clarify intent of ground floor land use strategy Policy LU1.4 Promote the distribution of land uses such that the most active uses are provided in the historic core and areas served by transit, while the least active uses are provided in the transition areas adjacent to residential neighborhoods. Agree 5. 40 Include narrative in Community, Culture, Prosperity (Chapter 2B) about exemptions for 100% Affordable Housing projects Special Incentives for 100% Affordable Housing Projects To incentivize the production of affordable housing, 100% Affordable projects are provided the following incentives :  Administrative Approval up to 75 units  Height and FAR bonuses in the Neighborhood Village District Agree Addenda Sheet Downtown Community Plan 7.10.17 5 No Page Number Item Recommended Change Staff Response 6. 92 Amend language on Ocean Avenue signature sidewalk to accommodate improvements for all modes of mobility, not just pedestrians. Despite being the widest sidewalk in Downtown, the east side of Ocean Avenue could yet be expanded between Colorado and Broadway to accommodate pedestrian , bike or transit demand associated with access to the Pier. However, at times this wide sidewalk feels isolated due to a lack of active ground floors. Chapter 4, Standards and Regulations addresses ways to activate Ocean Avenue through building use and frontage design, but proposed enhancements to the sidewalk can also help to enliven the area. An improved streetscape might include: innovative furnishing, outdoor dining locations, lighting, consolidated valet operations , and wayfinding signage to other destinations , protected bikeways, additional bike racks, curbside pick-up/drop- off and transit improvements . In this way, Ocean Avenue facilitates better connection between the Pier and Expo Light Rail Station and to the rest of Downtown via the Colorado Esplanade or to the Civic Center via Tongva Park. Agree. 7. 94 Amend language on Wilshire Avenue signature sidewalk to accommodate improvements for all modes of Though Wilshire Boulevard is the grand street of Los Angeles, at this termination point the roadway space is not as highly utilized by automobiles, and vehicle trips drop off significantly Agree. Addenda Sheet Downtown Community Plan 7.10.17 6 No Page Number Item Recommended Change Staff Response mobility, not just pedestrians. west of 4th Street. Thus, an opportunity exists to provide terminus to the Boulevard by either creating an esplanade experience to better connect the Promenade to Palisades Park and Ocean Avenue. Widening the sidewalk and improving the interface between Wilshire and Third Street would allow for expanded outdoor dining, public art, or by enhancing the roadway with transit stops, tour and local bus access, street vendors, protected bikeways, bike racks, bike share stations, and other outdoor activity, or a combination, thereby providing the grand culmination at the Pacific Ocean that Wilshire Boulevard deserves. 8. 100 Amend Action PPS1.1A to shorten timeframe for implementation Action PPS1.1A Develop a Downtown Streets Manual for Planning, Public Works and private development to follow when changes to the public right-of-way are considered as part of a capital project, or a redevelopment effort. Lead Agencies: PCD, PW Timeframe: MidShort -Term Agree Addenda Sheet Downtown Community Plan 7.10.17 7 No Page Number Item Recommended Change Staff Response 9. 153 Split Action AM1.1C into two actions. Adjust timeframe of actions. Change numbering of AM1.1D to AM1.1E Action AM1.1C Widen sidewalks and make operational changes at driveways and intersections to accommodate changing pedestrian demand. Lead Agency: PCD Supporting Agencies: PW Timeframe: Long-Term Action AM1.1D Make operational changes at driveways and intersections to accommodate changing pedestrian demand. Lead Agency: PCD Supporting Agencies: PW Timeframe: LongShort -Term AM1.1 DE Agree 10. 153 Split Action AM1.2E into two actions. Adjust timeframe of actions. Action AM1.2E Develop protocols for minimizing Minimize temporary disruption of sidewalks and bikeways , and provide direct and well-marked alternative routes when closures are necessary . Lead Agencies: PW, PCD Supporting Agency: DTSM Timeframe: Ongoing Short- Term Action AM1.2 EF Minimize temporary disruption of sidewalks and bikeways, and Pp rovide direct and well- marked alternative routes when closures are necessary. Lead Agencies: PW, PCD Supporting Agency: DTSM Timeframe: Ongoing Agree Addenda Sheet Downtown Community Plan 7.10.17 8 No Page Number Item Recommended Change Staff Response 11. 158 Change Action AM3.3D to short- term. Action AM3.3D Improve pedestrian and bike facilities on the Main Street, Fourth Street and Lincoln Boulevard bridges. Lead Agency: PCD Supporting Agencies: PW, Caltrans Timeframe: MidShort -Term Agree. 12. 159 Amend Action AM3.6A Action AM3.6A Establish parking pricing incentives including demand-sensitive variable parking pricing , time-limits and marketing to encourage area employees to park near the periphery of Downtown . Agree 13. 159 Delete Action AM3.6B Action AM3.6B Maintain higher on-street parking rates to reflect its increased convenience and desired turnover, and expand the program to 5 th , 6 th and 7 th Streets. Renumber following actions. Agree 14. 159 Add New Action AM3.6B Encourage use of convenient parking for short-term use through pricing and time restrictions, including installation of meters on 6 th and 7 th Streets. Lead Agency : PCD Timeframe: Short-Term Agree 15. 159 Add New Action AM3.6H Pursue the reduction of 600 public parking spaces in the Bayside Conservation District by 2027. Lead Agency : PCD Timeframe: Long-Term Agree. Addenda Sheet Downtown Community Plan 7.10.17 9 No Page Number Item Recommended Change Staff Response 16. 159 Add action AM3.5C to begin the process of updating the in-lieu fee program. Action AM 3.5 C : Update the Downtown Parking In-Lieu Fee program by July 2019. Lead Agency : PCD Timeframe: Mid-Term Agree. 17. 159 Add Action AM3.5G to re- evaluate parking ratios after 1,500 new parking spaces have been entitled Action 3.5G Re-evaluate private property parking requirements after 1,500 new parking spaces have been approved . Lead Agency: PCD Timeframe: Ongoing Agree. 18. 159 Amend Policy 3.6 Use pricing, concentration, time restrictions, and location as tools to manage vehicle congestion in Downtown and make Downtown accessible for short-term users . Agree 19. 159 Add Action AM3.6G Action AM3.6G : Publicly provided parking shall be built entirely outside of the Bayside Conservation Land Use District , including building sites that are partially within the District. , rR eplacement of parking already within this district is allowed .. Lead Agency: PCD Timeframe: Ongoing Agree 20. 162 Provide direction to address residents bicycling to Downtown AM4.3A Eliminate bicycle network gaps in Downtown including Broadway bike lane west of 6 th Street and connections to the Expo Light Rail station. Give special attention to bikeways for residents to and from popular Downtown destinations. Agree Addenda Sheet Downtown Community Plan 7.10.17 10 No Page Number Item Recommended Change Staff Response 21. 162 Strengthen statement of where buffered bike lanes should be; shorten time frame AM4.3B Enhance protection of bike facilities on Ocean Avenue and evaluate the potential for other streets to convert to protected or Create buffered protected bike facilities such as Arizona Avenue, 6 th and 7 th Streets on Ocean Avenue, 2 nd Street and Broadway and along pathways that connect residents to popular Downtown destinations such as the library and farmers ’ market . Install the first pilot segment in 2018. Lead Agency: PCD Timeline: Short-term Optimistic that design, funding or changes will be in place by 2019, may be limiting to remove streets that may have space for the street reconfigurations 22. 162 Add new action AM4.2H regarding residential bus access to Downtown. AM 4.2 H Prioritize bus connectivity between Downtown and other Santa Monica residential neighborhoods. Agree but subject to coordination with Big Blue Bus. 23. 165, Ch. 4 Add new bullet to Section 9.10.010  Provide opportunities for a high level of architectural innovation and creativity to enhance the Downtown as a place of beauty and sophistication. Agree 24. 165, Ch. 4 Remove bullet point on the “beach area”  Maintain and enhance the beach area as an important visitor-serving destination with lodging, restaurants, shopping, and recreation that support it as a regional, national, and international tourist destination. Agree 25. 165, Ch. 4 Add in missing bullet point for existing language,  Maintain Downtown’s competitive advantage as a premier local and Agree Addenda Sheet Downtown Community Plan 7.10.17 11 No Page Number Item Recommended Change Staff Response “Maintain Downtown’s competitive…” regional shopping, dining, and entertainment destination, and support its evolution to respond to changing market conditions. 26. 165, Ch. 4 Split bullet on housing into two statements to enhance language supporting families  Increase housing for all income levels and for all household sizes and types, including families and seniors.encourage a mix of uses that promote convenience, economic vitality, fiscal stability, and a pleasant quality of life.  Encourage a mix of uses that promote convenience, economic vitality, fiscal stability, and a pleasant quality of life. Agree 27. 165, Ch. 4 Add statement about supporting residential communities and families to the Development Standards preamble Encourage a mix of uses; open space, educational, cultural amenities; and services that support and strengthen Downtown’s residential community and family orientation. Agree. This supports the Plan’s emphasis on nurturing community. 28. 170 Move Land Use Table 4.1 to the Zoning Ordinance Move to the Zoning Ordinance. DCP Section 9.10.040 becomes “Reserved” Agree 29. 170 (& throughout) Rename MUB to “Lincoln Transition” Rename MUB on Lincoln Blvd to Lincoln Transition. Change throughout document and in associated maps and figures. Agree to clarify for property owners and planning staff, and not to confuse with MUB regulations that cover other areas of the City Addenda Sheet Downtown Community Plan 7.10.17 12 No Page Number Item Recommended Change Staff Response 30. 171 Table 4.1: Child Care and Early Education Facilities in NV Child Care and Early Education Facilities, NV: L(3) P Agree 31. 172 Table 4.1: Schools, Public or Private in TA Schools , Public or Private, TA: L(1) P Agree 32. 176 Modify the limitation for Offices in the Neighborhood Village District to restrict office to rear of property or upper floors Use Classification NV Business and Professional L(31 ), L(5)/CUP Creative L(31 ), L(5)/CUP Medical and Dental L(31 ), L(5)/CUP Walk-In Clientele L(31 ), L(5)/CUP Staff has concerns over this recommended change. Existing office uses would be rendered non- conforming. 33. 177 Table 4.1: Building Materials Sales and Services in MUB Building Materials Sales and Services: - P Agree 34. 179 Add clarifying language to limitation #5 Permitted if within buildings existing as of the date this Ordinance is effective . Permitted within new buildings , except:  No individual ground floor tenant space shall occupy more than 7,500 square feet of floor area and/or exceed 50 linear feet of ground floor street frontage without a Conditional Use Permit. Ground floor tenant spaces in the Santa Monica Place are not subject to size limitations. Agree Addenda Sheet Downtown Community Plan 7.10.17 13 No Page Number Item Recommended Change Staff Response 35. 180 Modify Table 9.10.050 Application Thresholds Table to allow two-lot housing projects to be processed by Administrative Approval and to require ARB concept review prior to issuance of Administrative Approval Housing Project Administrative Approval Projects on lots up to 15,000 sf Less than 30,000 sf Development Review Permit All Tier 2 up to 60,000 sf Tier 3: 3060 ,000 - 6090 ,000 sf Development Agreement Tier 3 greater than 6090 ,000 sf  Agree 36. 180 Add 100% Affordable Housing Thresholds to 9.10.050 C . Affordable Housing Exemption. The following types of projects are exempt from Development Review Permit requirements: 1. 100% Affordable Housing Projects of 75 units or less. Agree 37. 180 Require ARB concept review prior to issuance of Administrative Approval. B. Administrative Approval Review Procedures. Following receipt of a recommendation from the Architectural Review Board, the Director shall issue a decision on the Administrative Approval in accordance with SMMC Chapter 9.39. Agree Addenda Sheet Downtown Community Plan 7.10.17 14 No Page Number Item Recommended Change Staff Response 38. 181 Modify Table 4.2 Development Standards to incorporate height and FAR bonus for 100% Affordable Housing projects in the Neighborhood Village District NV 100% Affordable housing Maximum FAR Tier 2 –3.75 Maximum Building Height (ft.) Tier 2 –70’ Agree 39. 184 Add reference to Table 4.2 for Bicycle Parking zoning ordinance section in Additional Standards SMMC Section 9.28.140, Bicycle Parking Agree. 40. 185 Add requirement for common open space in private projects. 4. 25% of the overall open space required for a project must be designed as common open space. Renumber subsequent open space standards Agree. 41. 186 Clarify preamble for Building Modulation Standards In order to modulate building mass and express a design concept , new buildings or additions to existing buildings shall be designed in three dimensions on the front and sides to ensure light and air into buildings and down to the street. Agree Addenda Sheet Downtown Community Plan 7.10.17 15 No Page Number Item Recommended Change Staff Response 42. 186 & 187 Stepback increase for 84’ districts: #2b, 3b 2b. Districts with 84 feet maximum allowable height limit. Minimum required stepbacks from the building frontage line are established above the ground floor. The Minimum Required Stepback Above the Ground Floor and below 60 feet shall be 15% of the front façade area. Stepbacks shall be a minimum of 3 5 feet and are not required to be open to the sky. Projections into the required stepbacks are permitted pursuant to 9.10.120(A). 3b. Districts with 84 feet maximum allowable height limit. Minimum required stepbacks from the building frontage line are established for the upper levels of proposed buildings. The Minimum Upper Level Stepback above 60 feet shall be 35% of the front façade area. Stepbacks shall be a minimum of 3 5 feet and are not required to be open to the sky. Projections into the required stepbacks are permitted pursuant to 9.10.120(A). Staff recommends using 5 foot stepbacks as opposed to PC Recommended 6 foot setback for consistency in built form and other architectural considerations Will adjust model views for final DCP. 43. 186 & 187 Stepback increase for 60’ districts: #2a, 3a 2. Minimum Required Stepbacks Above Ground Floor. a. Districts with 50 feet or 60 feet maximum allowable height Agree. Will adjust model views for final DCP. Addenda Sheet Downtown Community Plan 7.10.17 16 No Page Number Item Recommended Change Staff Response limit. Minimum required stepbacks from the building frontage line are established above the ground floor. The Minimum Required Stepback Above the Ground Floor and below 39 feet shall be 15% of the front façade area. Stepbacks shall be a minimum of 3 5 feet and are not required to be open to the sky. Projections into the required stepbacks are permitted pursuant to 9.10.120(A). 3. Minimum Upper Level Stepbacks. a. Bayside Conservation District and Districts with 50 feet or 60 feet maximum allowable height limit. Minimum required stepbacks from the building frontage line are established for the upper levels of proposed buildings. The Minimum Upper Level Stepback above 39 feet shall be 35% of the front façade area. Stepbacks shall be a minimum of 3 5 feet and are not required to be open to the sky. Projections into the required stepbacks are permitted pursuant to 9.10.120(A). Addenda Sheet Downtown Community Plan 7.10.17 17 No Page Number Item Recommended Change Staff Response 44. 188 Modify Side Interior Stepback Requirement 5. Minimum Side Interior Stepback. A minimum of 15% of the exposed side interior building façade area above 39 feet shall be setback a minimum of 5 feet from the side property line. Agree. Will adjust model views for final DCP. 45. 188 Add Alternative Compliance for Minimum Side Interior Stepback 6. Alternative Side Interior Stepback Compliance for All Districts In order to provide flexibility for compliance with the side interior stepback requirements in subsection C(5), in all districts the side interior stepback may be reduced to 12” provided that the open space requirements established in 9.10.060 B(1) are increased to the following. Lot width of 50 feet or less None Lot width between 51 and 150 feet 25% total. Lot width greater than 150 feet 30% total. Agree. 46. 188 Modify Maximum Unbroken Primary Façade Length Maximum Unbroken Primary Facade Length. c. For facades that are greater than 150’, a break of 10% of the façade length, with a 5 foot minimum depth, is required. This dimension can be Agree. Addenda Sheet Downtown Community Plan 7.10.17 18 No Page Number Item Recommended Change Staff Response broken into two breaks, provided each break is greater than 5 feet in width. For projects with lot widths of greater than 150 feet, a building wall facing the street having a length greater than 150 feet shall have a minimum of Theone significant break mustthat extend s from above the ground for 60 percent of the height of the project. The break is not required to be continuous. A significant break is a recess or projection with a minimum of 10 feet width and 5 feet deep from the building frontage line. The significant break shall not be counted in the building modulation requirements established by (C)(2) and (C)(3). 47. 191 Change building setback from 15’ to 14’ or 2 nd Street (between Broadway and Santa Monica) and 4 th Street (between Broadway and Wilshire) Amend map and change key to reflect: 2 nd street between Broadway and Santa Monica and 4 th Street between Broadway and Wilshire: 14 feet wide. Agree. 48. 192 Clarify section title PEDESTRIAN- ORIENTED /ACTIVE DESIGN STANDARDS Agree 49. 192 Clarify sub-header 2. Active Design (Applicable to New Development Only)Pedestrian-Oriented Frontage Design for New Development Agree Addenda Sheet Downtown Community Plan 7.10.17 19 No Page Number Item Recommended Change Staff Response 50. 192 #2a, clarify applicability of minimum depth for GF commercial. a. Where commercial space is provided, aA minimum of 50’ depth of ground floor commercial space shall be provided in the Mixed-Use Boulevard, Neighborhood Village, and Wilshire Transition Districts. Agree 51. 193 Clarify sub-header 3. Pedestrian-Oriented Ground Floor Design (Applicable tofor New and Existing Development ) Agree 52. 193 Add standard to Pedestrian- Oriented Design to limit linear street frontage of leasing galleries d. Leasing galleries associated with a housing project shall not exceed 20 linear feet of ground floor street frontage. Re-letter subsequent standards e-i. Agree 53. 193 #3d, separate untinted glass and reflective/mirrored glass into separate standards. Renumber subsequent standards e. Clear untinted glass shall be used at the ground floor level to allow maximum visual access to the interior of buildings. Mirrored and highly reflective glass shall not be permitted at any level of the structure. e. Mirrored and highly reflective glass shall not be permitted at any level of the structure. Renumber subsequent standards e. through i. Agree 54. 193 #3bi, replace language on street- facing facades at ground floor level i. Variations in visual interest designed to be experienced by the pedestrian point of view,, Articulated façades at the ground floor street frontage, which may include, Agree Addenda Sheet Downtown Community Plan 7.10.17 20 No Page Number Item Recommended Change Staff Response but not necessarily require, such measures as, change of materials in a complimentary manner, sensitive composition and juxtaposition of openings and solid wall and/or building frame and projecting elements such as awnings and marquees to provide shade and shelter; Addenda Sheet Downtown Community Plan 7.10.17 21 No Page Number Item Recommended Change Staff Response 55. 195 Add section “G” on Auto Dealers to the end of the development standards. G. AUTO DEALERS Other than the maximum allowable FAR and height prescribed by Table 4.2 of this Plan, expansions to, or the redevelopment of, auto dealerships existing as of July 6, 2010 shall not be required to comply with any of this Plan's development standards or its design guidelines contained in this Chapter 4 and Chapter 5. Instead, for expansions or redevelopment of existing auto dealerships in the Urban Auto Dealership Format, the applicable standards shall be those contained in SMMC Section 9.31.070 (Automobile/Vehicle Sales, Leasing and Storage) and Section 9.10.070 of this Plan. The Development Review Threshold contained in SMMC Section 9.31.070(C)(5) applicable to auto dealership projects involving the replacement or expansion of an existing auto dealer facility shall apply (in- lieu of those contained elsewhere in this Plan). Except for Tier 3 projects, development agreements shall not be required for the expansion or redevelopment of auto dealerships existing as of July 6, 2010. The special rules for FAR calculation contained in SMMC Section 9.31.070(C)(4) shall govern. Agree. 56. 200 Remove concept of Established Large 9.10.080 ESTABLISHED LARGE SITES OVERLAY For Council Consideration Addenda Sheet Downtown Community Plan 7.10.17 22 No Page Number Item Recommended Change Staff Response Site overlay and concept of voter approval or Council supermajority from DCP Projects within the Established Large Sites Overlay will be processed as a development agreement. These projects must provide, at minimum, Tier 3 project requirements and community benefits. Additional onsite uses, features, fees, programs or benefits expected for these projects are described in Chapter 2, Downtown Districts . Projects within Established Large Sites shall only be required to comply with development standards for Height Limit, Maximum Floor Area, and Open Space as required by 9.10.080. Height Limit. The maximum height for the Downtown is 84’. Projects on Established Large Sites may be authorized up to an absolute height limit of 130’ subject to the following requirements: Shall be processed through a development agreement [OPTIONS FOR PUBLIC DISCUSSION] OPTION A: Voter Approval required (may be changed with approval of Specific Plan Amendment by future Council) OPTION B: Voter Approval as approved through ballot measure (will require placing ballot measure on special election or next general election) OPTION C: Supermajority Approval of the City Council (requires Charter Amendment) Addenda Sheet Downtown Community Plan 7.10.17 23 No Page Number Item Recommended Change Staff Response Additional environmental review to the extent not analyzed in the Downtown Community Plan Final EIR. Shade and Shadow analysis of the project’s impacts on adjacent uses Include in the application submittal comprehensive responses to how the project meets each of the priorities described in the Downtown Districts Chapter Maximum Floor Area. 1133 Ocean Avenue shall have a maximum Floor Area Ratio of 3.0. 101 Santa Monica Boulevard shall have a maximum Floor Area Ratio of 4.0. 4 th Street/Arizona Avenue shall have a maximum Floor Area Ratio of 3.5. Open Space Requirements. 50% of total parcel area comprised of the following: 25% located at Ground Floor and 25% without a regulated location. 9.10.090 VOTER APPROVAL OF SPECIFIC PLAN AMENDMENTS. [OPTIONS FOR PUBLIC DISCUSSION] OPTION A: Specific Plan Amendments for building height or FAR within 7 years after the effective date of the Plan shall require voter approval (may be changed with approval of Specific Plan Amendment by future Council) OPTION B: Specific Plan Amendments for building height or FAR within 7 years Addenda Sheet Downtown Community Plan 7.10.17 24 No Page Number Item Recommended Change Staff Response after the effective date of the Plan shall require voter approval as approved through ballot measure (will require placing ballot measure on special elections or next general election) OPTION C: Specific Plan Amendments for building height or FAR within 7 years after the effective date of the Plan shall require supermajority approval of the Council (requires Charter Amendment) 57. 248 Amend the “Vehicle Parking Inventory” category of information for monitoring and reporting. c(vi): Vehicle Parking Inventory. An estimate of the off-street vehicle parking spaces in Downtown , including known private off- street parking facilities that make data available . Agree. Addenda Sheet Downtown Community Plan 7.10.17 25 STAFF RECOMMENDED CHANGES The following recommended changes to the DRAFT Downtown Communi ty Plan result from public comment, correspondence with stakeholders and staff revi ew. No. Page Number Item Recommended Change 1. 20 Change name of land use district from Mixed-Use Boulevard (MUB) to Lincoln Transition (LT) 2A.1.A MIXED-USE BOULEVARDLINCOLN TRANSITION (LT) 2. 23 Modify text to include the correct number of landmarks in the Bayside Conservation District The Bayside Conservation district has four eleven City Landmarks and several identified as potentially eligible for designation. 3. 28 Remove reference to Table 2A.2 from text The DCP entitlement system differentiates between housing projects and commercial projects, and relies upon process thresholds to create distinct entitlement pathways for each project type, which are summarized in Chapter 4, 9.10.050, Application Thresholds Table and provided as a reference in Table 2A.2 below. 4. 28 Delete Table 2A.2 DCP Entitlement Thresholds ENTITLEMENT PROCESS HOUSING COMMERCIAL Base Projects – Administrative Approval Tier 1 projects up to 29,999 sq. ft. Tier 1 projects up to 14,999 sq. ft. Development Review Permit All Tier 2 projects Tier 3 projects 60,000 sq. ft. or less Tier 2 projects between 15,000-30,000 sq. ft. Development Agreement Tier 3 projects greater than 60,000 sq. ft. All projects greater than 30,000 sq. ft. Addenda Sheet Downtown Community Plan 7.10.17 26 No. Page Number Item Recommended Change 5. 29 Modify “middle- class housing” in Table 2A.3 Middle-ClassIncome Housing 6. 30 Amend Table 2A.4 to remove erroneous notation of Established Large Site The DCP entitlement system differentiates between housing projects and commercial projects, and relies upon process thresholds to create distinct entitlement pathways for each project type, which are summarized in Chapter 4, 9.10.050, Application Thresholds Table and provided as a reference in Table 2A.2 below . Downtown housing projects are strongly encouraged to support a strong and economically diverse residential neighborhood component to Downtown vitality. These are consequently provided more generous floor area thresholds than their commercial counterpart. Housing projects are defined in Chapter 4, Standards and Regulations, 9.10.050. 710 Broadway Affordable Housing, Public Open Space 7. 30 Clarify that the community benefits listed in Table 2A.3 are a suggested baseline of expected benefits. All development agreement projects are expected to provide community benefits that contribute to Downtown’s priorities and fees in excess of Tier 3 fee requirements. Table 2A.3 provides guidelines to priority areas that should guide development agreement negotiations. These priority areas are a baseline for further negotiation. 8. 31 Modify Policy LU1.1 Accommodate the development of publi c, civic and private uses that contributes to the quality of life and wellbeing of residents of all ages and abilities and the sense of a “complete neighborhood,” including such uses as arts and cultural facilities, childcare facilities, parks, senior and youth facilities and meeting facilities, while adhering to the desired scale and character of development. 9. 31 Add new Policy LU1.4 Leverage the availability of citywide and neighborhood-level data sources, including but not limited to those available through the Santa Monica Wellbeing Project, to advance a diverse and thriving multigenerational Downtown community. Addenda Sheet Downtown Community Plan 7.10.17 27 No. Page Number Item Recommended Change 10. 32 Modify LU7.2 Require that community benefit uses for which additional building height and density are awarded granted are aligned with available citywide and neighborhood-level wellbeing data, are consistent with the community’s priorities and exceed those that are normally required through the base standards of the Downtown Community Plan. 11. 37 Modify language on Bedroom Mix Requirements Bedroom Mix Requirements (see Chapter 4, Standards and Regulations) Tier 2 and Tier 3 “average bedroom factor” requirements will result in a larger diversity of units within Downtown. Tier 2 and Tier 3 projects must incorporate a minimum average of 1.2 bedrooms in their unit mix, regardless of project size. 12. 37 Modify language regarding Incentives for Housing to be consistent with Housing project definition Incentives for Housing Construction (see Chapter 4, Standards and Regulations) To encourage the production of housing Downtown, projects proposing more than 50 percent residential uses above the groundthat meet the definition of “Housing Project” as defined in Section 9.10.050 floor may qualify for a floor area ratio bonus of 0.5 FAR. 13. 40 Modify language regarding Deed- Restricted Affordable Housing As new residential and commercial projects are proposed, the Affordable Housing Production Program (AHPP), under Municipal Code Section 9.64.050, is applicable tothe DCP’s modified project requirements will generate additional deed-restricted units either onsite, off-site or through linkage fees to build affordable housing. With the State’s elimination of Redevelopment Agency funding, building new deed-restricted affordable housing Downtown will increasingly rely on requirements applicable to new development and on partnerships using Federal, State and local funding sources that emerge to fill the gap. Some additional units may be obtained through the development agreement negotiation process on a site-by-site basis, particularly on large properties. 14. 40 Remove reference to AHPP Affordable Housing Requirements (see Chapter 4, Standards and Regulations) Addenda Sheet Downtown Community Plan 7.10.17 28 No. Page Number Item Recommended Change Tier 2 and Tier 3 housing projects are required to provide an augmented percentage of onsite or offsite deed-restricted below-market unitsunits in accordance with the AHPP . 15. 45 Add language to strengthen support for new cinemas As cinemas evolve, Santa Monica should continue to provide new new state of the art entertainment venues. 16. 52-56 Add DTSM, Inc. as Supporting Agency to several Actions in the Community, Culture and Prosperity Chapter Action CCP3.1B Supporting Agency: DTSM Action CCP7.1A Supporting Agency: DTSM 17. 52 Modify language of Action CCP1.1A Action CCP1.1A Adopt DCP which anticipates up toat least 2500 new units in the Downtown area. 18. 52 Delete Action Action CCP1.2A Require Tier 2 and Tier 3 projects to provide an increased average bedroom factor of at least 1.2 Lead Agency: PCD Timeframe: Ongoing Renumber following actions. 19. 52 Clarify Policy CCP1.3 Encourage negotiated projects to address the need for a continuum of housing from very-low income to units that would offer stabilized rents for households with incomes at 130% to 180% of Area Median Income (AMI) 20. 53 Modify language for Action CCP3.2A Action CCP3.2A Monitor demand for Downtown’s twice weekly farmers’ markets to identify need for expansion of Downtown’s twice weekly marketsor alternate locations . Lead Agency: HED Timeframe: Ongoing 21. 53 Modify language for Action CCP3.2B Action CCP3.2B Through the public art planning process, rR eview city regulations and procedures to encourage additional outdoor dining opportunities and to identify obstacles to sidewalk/courtyard standards. Lead Agency: PCD Supporting Agencies: HED, DTSM, CAO Timeframe: Short-Term 22. 54 Modify language for Action CCP4.1C Action CCP4.1C Revaluate event and activity guidelines and regulations and management policies to identify potential for more joint Addenda Sheet Downtown Community Plan 7.10.17 29 No. Page Number Item Recommended Change sponsorship of events on the Third Street Promenade and other public spaces between the City and non-governmental agencies, such as DTSM. Lead Agency: CAO Supporting Agencies: CCS, DTSM Timeframe: Mid-Term 23. 55 Modify language for Action CCP6.1A Action CCP6.1A Identify and create special streamlined review procedure and conditions of approval for live theater, and live entertainment in below-grade spacesdesigned in a manner to mitigate hours of operation , noise, public safety and other potential adverse impacts. Lead Agencies: PCD Timeframe: Mid-Term 24. 56 Modify language for Action CCP7.3C Action CCP7.3C Provide ongoing support to City partners to hold additional fine arts events and competitions for temporary installations in Downtown locations throughout the year , as identified in the Public Art Plan . Lead Agency: CCS Supporting Agency: DTSM Timeframe: Ongoing 25. 56 Add Policy CCP7.5 Policy CCP7.5 Explore accommodating artists within ground floor residential units provided that these classifications do not result in any unintended discriminatory impacts. 26. 62 Expand on Downtown historic resources language Downtown’s remaining historic resources consist of 76 75 propertiesresources listed on the City’s Historic Resources Inventory that appear eligible for local designation , of which 24 27 are already properties with City-designated historic resources. There are 48 remaining resources that appear individually eligible for local designation . 27. 66 Modification to adaptive reuse language. Encouraging adaptive reuse helps preserve and conserve the historic building stock and promotes sustainable use of materials. At a minimum, historic facades extant historic fabric should be maintained and/or rehabilitated and the scale and character of additions must be compatible with the historic building. 28. 66 Remove language about height exemptions for City Bayside Conservation District Special Standards Addenda Sheet Downtown Community Plan 7.10.17 30 No. Page Number Item Recommended Change parking structures in Bayside Conservation District Special standards applicable to the Bayside Conservation District recognize that Downtown’s historic core is a unique place. Compared to existing height regulations, the maximum allowable height has been lowered to 60 feet except for City-operated parking structures on 2 nd and 4 th Streets . 29. 67 Expand on NCOD language with new bullet point (to be placed second). Neighborhood Conservation Overlay District (NCOD): The NCOD is a zoning tool for a specific geographic area that can be used to maintain existing character. The NCOD will expand upon special consideration given to properties listed on the Historic Resources Inventory under category 6L, which are properties not considered eligible for future designation but which still contribute to the character of the district because of extant materials, building elements, proportions, or scale. Building from the special standards applicable to the Bayside Conservation District, the NCOD will encompass the Bayside Conservation District and identify unifying design features such as dominant rhythms for structural bays or windows, cornice lines, materials, texture, and landscaping. 30. 70 Modify list of HRI properties to correct erroneous citation 631 Colorado AveBroadway 31. 71 Add action HP1.2C HP1.2C Explore waiver of outdoor dining license fees for City-designated historic resources. Lead Agency: PCD Supportive Agency: HED Timeframe: Short-term 32. 71 Amend HP1.1B to clarify that the update to the Landmarks Ordinance also includes process changes. Action HP1.1B Update the City’s Landmark s Ordinance (SMMC 9.56), including the addition of a refined process,to refine a process and criteria for the designation of different classifications of historic resources. Lead Agency: PCD Supporting Agency: CAO Timeframe: Short-term 33. 71 Amend Action HP1.2A to clarify that this applies to all project Action HP1.2A Use the HRI as a planning tool to ensure consideration is given to a property’s historic potential and contribution to the historic character of Downtown when any new Addenda Sheet Downtown Community Plan 7.10.17 31 No. Page Number Item Recommended Change applications that involve historic resources and ensure appropriate consideration for all HRI listed properties development involving a historic resource, including those with a 6L status, is proposed to ensure appropriate efforts towards designation, protection or adaptive reuse are made. Lead Agency: PCD Timeframe: Ongoing 34. 71 Expand upon Action HP1.5A to clarify alternative means to improving energy efficiency of historic structures. Action HP1.5A Provide information and incentives for improving energy efficiency of historic structures, such as the Secretary of the Interior’s Guidelines for Sustainability in Historic Properties , with guidance to avoid removal of historic features such as windows . Lead Agency: PCD Supporting Agency: OSE Timeframe: Short-Term 35. 72 Amend Action HP1.6B. to promote use of the CHBC. Action HP1.6B Permit Promote and expedite use of the California State Historic Building Code for HRI-listed properties. Lead Agency: PCD Timeframe: Ongoing 36. 72 Amend Action HP1.6F to ensure that historic resources of status codes of 5 or better are captured Action HP1.6F When an application is submitted for projects that involve on HRI- listed properties with a status code of category 5 or better5S3 , encourage the applicant to seek courtesy feedback from the Landmarks Commission. Lead Agency: PCD Timeframe: Ongoing 37. 73 Add DTSM, Inc. as Supporting Agency to several Actions in the Historic Preservation Chapter HP2.2A Supporting Agency: DTSM HP2.3C Supporting Agency: DTSM 38. 73 Modify language to Action HP2.3A Action HP2.3A Work with the Santa Monica Conservancy to update and expand its “Downtown Walking Tour” brochure and explore digital and other interactive methods of presenting information about Downtown’s historic resources . Encourage broad distribution of these materials by other community organizations.this brochure by Downtown Santa Monica, Inc., the Convention and Visitors Bureau, Santa Monica College, and other organizations. Lead Agency: PCD Addenda Sheet Downtown Community Plan 7.10.17 32 No. Page Number Item Recommended Change Supporting Agency: DTSM Timeframe: Ongoing 39. 73 Delete Action Delete the action. Renumber following ac tion: Action HP2.3 CB 40. 73 Add New Action HP2.2C Action HP2.2C Develop a process for distributing funds collected for community benefits for historic preservation. Lead Agency: PCD Timeframe: Mid-Term 41. 73 Modify Policy HP2.4 to clarify when adaptive reuse should be considered Policy HP2.4 Adaptive reuse of older buildings or facades should be considered for new construction and rehabilitation projects, when the scale, materials or method of construction evokes Downtown’s history , and where the building contributes to a continuous streetscape . 42. 73 Expand upon Action HP3.1A to explore including historic preservation in the Tier 2 community benefits requirements Action HP3.1A Evaluate the potential for community benefits from all discretionary development to contribute toward Downtown preservation programs. Lead Agency: PCD Timeframe: MidShort -Term 43. 82 Delete unnecessary content about public/private partnerships 4th/5th and Arizona The multi-year community vision process for this City-owned property has identified a number of desired community benefits, including the permanent addition of a seasonal community ice rink that would occupy a large public gathering space. During warmer weather, this public space could be programmed with events and activities in conjunction with the Promenade. This project will be required to follow the entitlement process proposed in Chapter 2A, Downtown Districts for Established Large Sites. 44. 83 Delete reference to Courtyard dimensions. Courtyards. Courtyards are unroofed areas that are completely or mostly enclosed by the walls of a large building. They often serve as gathering space and/or outdoor dining spaces with potential for scheduled performances, fairs or movie screenings. Space needs vary by venue , but should be a minimum of 50 feet in width . Addenda Sheet Downtown Community Plan 7.10.17 33 No. Page Number Item Recommended Change 45. 85 Modify area description for Craft/Artisan Fairs Craft/Artisan Fair . Wide-open spaces, like unused plazas or parking lots, provide an opportunity for temporary events and festivals. Pop-up booths, tables and vendor carts can easily turn a quiet corner into a bustling marketplace. This use could be accommodated in an area of approximately 4,000-12,000 square feet. 46. 91 Correct Parklet detail regarding Public Availability Public Availability Determined by building ownerPublically Accessible 47. 96 Remove reference to double allee of trees on Lincoln Blvd. Signature Sidewalk Attractive streetscape amenities such as a double alee of street trees, decorative lighting, pedestrian-oriented ground floors and bus service accommodation, will encourage people to walk to the station. 48. 100 & 101 Add CCS as supporting agency to various Public Space related actions Action PPS1.1A Action PPS1.3A Action PPS1.4A Action PPS1.5A Action PPS1.5B 49. 101-102 Add DTSM as supporting agency to various Public Space related actions Action PPS2.1A Action PPS2.1B Action PPS2.1C Action PPS2.2B 50. 101 Modify Action PPS2.1A Action PPS 2.1A Partner with interested property owners to develop new publicly accessible open green spaces or plazas as identified in Section 2D.1.B New Public Spaces , such that no site in the Downtown area is more than a 2 ½ minute walk (1/8 mile) from open air, publicly accessibl e , and programmable at-grade open space. 51. 102 Modify language to Action PPS4.3A Action PPS4.3B Evaluate and prioritize necessary capital improvement and infrastructure upgrades to the Third Stree Promenade. Explore the reclassification of the Third Street Promenade to a unique pedestrian street to facilitate special events and uses. Lead Agencies: PCD, PW , DTSM Addenda Sheet Downtown Community Plan 7.10.17 34 No. Page Number Item Recommended Change Supporting Agency: CAO Timeframe: Mid-Term 52. 116-117 Add DTSM as supporting agency to various Infrastructure actions Action SI6.5A Action SI7.1B Action SI7.1C 53. 153-167 Add DTSM as supporting agency to various Access and Mobility related actions ActionAM1.2A Action AM3.1G Action AM3.2A Action AM3.7D Action AM5.1C Action AM5.1D 54. 154 Add DTSM as Co- Lead Agency to Action AM1.4B Action AM1.4B Develop an improvement program for the Third Street Promenade that maintains its iconic role in the Downtown. Lead Agency: PW, DTSM Supporting Agencies: PCD, CCS, DTSM, HED 55. 153 Misspelling Action AM1.1A Design and manage sidewalks to accommodate multiple pedestrians walking together. Consolidat eion or remove street furniture and other infrastructure to expand capacity. 56. 153 Better address timeline of implementation. Action AM1.1B Require frontage line setbacks on private property to expand usable space for people walking. Timeline: Ongoing Short-Term 57. 153 Better address timeline of implementation. Action AM1.1D Regularly collect and evaluate information about people walking Downtown. Timeline: Ongoing Short-Term 58. 153 Add pedestrian oriented lighting to alleys Action AM1.2B Install pedestrian scaled lighting in phases throughout the Downtown. Work with property owners to provide complementary sidewalk and alley illumination. 59. 154 Better address timeline of implementation. Action AM1.3A Promote walking in Downtown as a recreational and social activity, linked to well-being and the district's unique experience, in marketing materials. Timeline: Ongoing Short-Term 60. 154 Better address timeline of implementation. Action AM1.3B Maintain Create pedestrian wayfinding throughout Downtown that identifies points of interest and major transportation connections. Timeline: Ongoing Short-Term Addenda Sheet Downtown Community Plan 7.10.17 35 No. Page Number Item Recommended Change 61. 154 Better address timeline of implementation. Action AM1.3G Pilot creative physical installations and activities that surprise and delight people walking, such as parklets. Timeline: Ongoing Medium-Term 62. 154 Reduce Redundancy Action AM1.4A Implement Signature Sidewalks. Renumber subsequent actions. 63. 154 Clarify Action Action AM1.4C Require new construction and public right-of-way maintenance projects to reduce redundant equipment and to design solutions that meet multiple user needs with a priority on people traveling on the facility roadway users . 64. 154 Clarify Action Action AM1.4D Invest in amenities, including seating, water fountains, pet watering stations , and landscaping and publicly accessible bathrooms. 65. 155 Better address timeline of implementation. Action AM1.4F Coordinate projects so that when a street is resurfaced, improvements called for in City policy documents are incorporated. Timeline: Ongoing Short-Term 66. 155 Delete and Combined with AM4.1.G Action AM1.4G Work with emergency services and Public Works to promote human-scaled streets with equipment and operational changes (such as modified vehicles and substations) to continue to provide adequate services and emergency response. Renumber following actions. 67. 155 Address frequency AM2.1A Expand employer TDM education, outreach and program auditing. Timeline: Short-term Ongoing 68. 155 Better address timeline of implementation. Action AM2.1B Expand GoSaMo Transportation Management 0rganization (TM0) to market and promote trip reduction programs, policies, products, and services, and develop a sustainable long-term operations plan. Timeline: Ongoing Short-Term 69. 155 Clarify Action AM2.1D Promote and f Facilitate the utilization of ride matching platforms to support carpooling and vanpooling Addenda Sheet Downtown Community Plan 7.10.17 36 No. Page Number Item Recommended Change 70. 155 Better address timeline of implementation. Action AM2.1E Develop a platform to monitor the performance of employer TDM programs and mode share to identify what works and identify new opportunities to fill gaps, such as a regional commuter service. Track performance of employee non-S0V travel annually. Timeline: Ongoing Medium-Term 71. 155 Clarify Action; Better address timeline of implementation Action AM2.1F: Require all new development to implement 100 percent employee transportation allowance programs. Lead Agency: PCD Supporting Agencies: Metro, BBB, TMO Timeframe: Short Term 72. 155 Better address timeline of implementation. Action AM2.2A Develop a framework for regularly collecting and evaluating visitor and customer travel mode share data. Timeline: Ongoing Medium-Term 73. 155 Clarify Action AM2.2B Develop protocol to r Require events to provide bike valet, coordinate shared ride access, encourage transit use and promote easy access for pedestrians and bicyclists. 74. 156 Remove duplicative action Action AM2.2C Actively market and promote mobility options to visitors. Renumber subsequent actions. 75. 156 Better address timeline of implementation Action AM2.2D Encourage the provision of visitor and customer-focused incentives for non-SOV travel with increased incentives for the busiest times in Downtown. Timeline: Short-Term Medium-Term 76. 156 Clarify Action Action AM2.2E Develop and implement strategies and marketing for regional and long distance mobility options to visitors to avoid car use within Santa Monica. Promote Santa Monica’s public transit accessibility to other Los Angeles attractions, and bike-friendly environment. 77. 156 Misspelling Action AM2.2F Integrate active living and well - being into Downtown’s mobility marketing. 78. 156 Better address timeline of implementation. Action AM2.2G Refine consumer marketing messages targeted at youth and senior travel through the GoSaMo consumer marketing programs. Timeline: Ongoing Short-Term Addenda Sheet Downtown Community Plan 7.10.17 37 No. Page Number Item Recommended Change 79. 156 Better address timeline of implementation. Action AM2.2H Facilitate "seamless" journey combinations between travel modes and overlapping options to meet many user needs. Look at virtual and physical integration, open data, services and products. Timeline: Ongoing Medium-Term 80. 156 Better address timeline of implementation. Action AM2.2I Equip Downtown Santa Monica, Inc. ambassadors to provide robust travel and mobility information. Timeline: Ongoing Short-Term 81. 156 Clarify Action Action AM2.3B Develop requirements for Facilitate the provision of shared mobility facilities in developments such as car share, bike share and ride share. 82. 156 Better address timeline of implementation. Action AM2.3C Require development projects to support multi-modal public infrastructure, implement project and employer TDM measures, pay development impact fees, and provide additional circulation benefits. Timeline: Ongoing Short-Term 83. 156 Clarify Action Action AM2.3C Require development projects to support multi-modal public infrastructure, implement project and employer TDM measures, pay development impact fees, and provide additional circulation benefits. 84. 157 Better address timeline of implementation. Action AM3.1C Manage vehicle speeds through design and enforcement. Timeline: Ongoing Short-Term 85. 157 Remove duplication of peripheral location reference, clarify action Action AM3.1E Expand Install signs to encourage use of Lincoln Boulevard as an entry into Downtown and new peripheral parking location to relieve pressure on congestion points. 86. 157 Clarify Action; Clarify Agencies Action AM3.2A Develop and deploy special management protocols for multi-modal circulation during special events and peak periods, and collect data to inform operations. Supporting Agencies: PW, Police, BBB , DTSM. 87. 158 Clarify Action Action AM3.3A Create a Gateway Master Plan that examines feasibility of full or partial freeway capping to i n crease public space and improve mobility, connect ivity, and multi-modal transit access through new streets and pathways, including: • Connections through the publicly-owned site adjacent to the Downtown Expo station Addenda Sheet Downtown Community Plan 7.10.17 38 No. Page Number Item Recommended Change • Signalized crossings on 4th and 5th Streets • Freeway crossings between 0cean Avenue and Lincoln Boulevard Timeframe : LongShort -Term $$$ 88. 158 Better Address timeline of implementation. Action AM3.3C Study Lincoln Boulevard I- 10/PCH interchange improvement options. Timeframe: LongMid -Term 89. 158 Add Street Suffix Action AM3.3E Monitor conditions on 0lympic Drive and consider peak hour or permanent use of curb lanes for vehicle traffic between 4 th Street and Ocean Avenue to create additional east and westbound through-lanes . 90. 158 Clarify Action Action AM3.4A Maintain Install dynamic parking wayfinding that directs drivers to available spaces efficiently, with signage located at all highway and major boulevard entrances Downtown. 91. 158 Delete Action Action AM3.4B Locate public parking facilities at the periphery of the district to reduce trip distance and congestion in the Downtown core. Renumber following actions. 92. 158 Better address timeline of implementation. Action AM3.5A Require shared parking be open to all drivers, regardless of whether they are destined for a building, with the same parking prices, restrictions and privileges as building occupants. Pursue mechanisms to address management, zoning ordinance changes, signage, access controls and overall integration of parking on private property with city-owned parking facilities. Timeline: Ongoing Medium-Term 93. 159 Clarify Action; Better Address Timeline of implementation. Action AM3.5 BC Expand the parking in-lieu fee district to reflect current Downtown boundaries with an appropriate fee and flexible expenditure plan . Seek to maximize participation in the program for non-residential uses so that new parking spaces can be utilized and shared efficiently. Timeframe: MidShort -Term 94. 159 Delete action Action AM3.5B Invest in maintenance of the existing public parking supply to extend its useful life. Renumber following actions. Addenda Sheet Downtown Community Plan 7.10.17 39 No. Page Number Item Recommended Change 95. 159 Clarify action Action AM3.5 CD Provide Establish regulations that support flexibility in meeting required parking through unbundled parking, shared parking, in-lieu fees payments and off-site parking . for changes of use in existing buildings. 96. 159 Clarify action, better address timeline of implementation. Action AM3.5D Provide Establish regulations that support flexibility in meeting required parking through unbundled parking, shared parking, in-lieu fees payments and off-site parking for changes of use in existing buildings. Timeline: Ongoing Short-Term 97. 159 Clarify Action; Better address timeline of implementation Action AM3.5 DE Develop a handbook for private property representatives to assist inabout how to creat eing publicly-available parking such as that addresses revenue control equipment function, pedestrian access, payment options, utilization tracking and differentiation by user, real-time data and signage. Timeframe : MidShort -Term 98. 159 Clarify Action; Better address timeline of implementation Action AM3.5 EF Evaluate Identify what management systems are needed to facilitate maximize shared parking ., Ii dentify options, estimate staff and resources needs, and propose a strategy that can increase the efficient use of existing parking. Timeframe: MidShort -Term 99. 159 Better address timeline of implementation. Action AM3.6D Evaluate pricing impacts on vehicle congestion especially during peak periods. Timeline: Ongoing Medium-Term 1 00. 159 Better address timeline of implementation. Action AM3.6E Pursue using the increased revenue generated as parking fees rise to exclusively fund transportation improvements Downtown. Timeline: Ongoing Short-Term 1 01. 159 Clarify Action; Better address timeline of implementation. Action AM3.6F Develop Cc oordinate d marketing of transportation options and parking pricing for Downtown and the beach in order to facilitate public access. Timeline: Ongoing Short-Term 1 02. 160 Clarify Policy Policy AM3.7 Manage curb space to increase transportation options, prioritize shared and public transit, and fairly strategically allocate this valuable resource. Addenda Sheet Downtown Community Plan 7.10.17 40 No. Page Number Item Recommended Change 1 03. 160 Consolidate and Clarify Actions Action AM 3.7A Develop a coordinated curbside management strategy and monitor performance. Provide that prioritizes sustainable and high capacity mobility modes and addresses:  flexibility to respond to unique situations like the Expo station, and priority for sustainable and high capacity mobility modes.  Curb space for new mobility modes such as bike corrals, ride sharing, EVs, car share and shuttles.  Taxi stand and rideshare drop-off and pick- up locations near major destinations. Monitor performance and revise periodically to address changing demand. 1 04. 160 Consolidated Action Action AM3.7B Create curb space for new mobility modes as part of a coordinated approach such as bike corrals, ride sharing, shared EVs, car share and shuttles. 1 05. 160 Clarify Action Action AM3.7C Enforce Provide on- and off- street passenger loading retulations to reduce conflicts with opportunities that allow convenient drop-off and pick-up without delaying public transit and other road users. Review off-street passenger loading requirements as demands change. 1 06. 160 Clarify Action  Action AM3.7D Limit on-street commercial loading to early morning hours if alley- accessed loading is not sufficient. Work to reduce Enforce regulations limiting double parking of delivery vehicles in the travel lanes and bicycle lanes. 1 07. 160 Renumber Action; Better address timeline of implementation. Action AM3.7 EG Pilot test smaller delivery vehicles and/or human powered transport, including cargo bikes, for goods distribution. Timeframe: LongMid -Term 1 08. 160 Clarify Action Action AM4.1B Expand Provide bike share, car share, car-pool, and van-pool, shared rides shuttle and transit service, in downtown, in locations that are visible and identifiable. 1 09. 160 Clarify Action; Better address timeline of implementation; Update agencies. Action AM4.1C Study the feasibility of a circulator that provides serves short-distance trips at a competitive price and service level by 2019 that addresses the needs of residents accessing Downtown . per passenger and coordinates with Big Blue Bus service. Addenda Sheet Downtown Community Plan 7.10.17 41 No. Page Number Item Recommended Change Lead: DTSMPCD Supporting: PCDDTSM, SMTT Timeframe: ShortLong -Term 1 10. 161 Clarify Action Action AM4.1D Develop an appealing mobility iconic transportation options map for Downtown coordinated with the wayfinding system with corresponding online applications. 1 11. 161 Delete Action Action AM4.1E Consider all transportation options and their prices to ensure that sustainable and high-capacity modes are competitively priced and positions to be the most convenient. Renumber following actions. 1 12. 161 Clarify Action Action AM4.1F Update City policies and procedures regarding transportation for hire services (taxi, pedicab, etc) to address new types and increased demand for connections near the Expo station. Prioritize low and no- emission vehicles , and shared rides , and transit connections . 1 13. 161 Clarify Action Action AM4.1G Develop uniform guidance on street maintenance, street design, and operations that encourages human-scaled streets for walking and biking (i.e. modified vehicles and substations for service, integrated equipment, scheduling).management that pays special attention to sustainable and higher capacity modes such as walking, bicycling and transit. 1 14. 161 Renumber Action AM4.1K Action AM4.1 HK Evaluate what management systems are needed to facilitate shared parking, identify options, estimate staff and resources needs, and propose a strategy that can increase the efficient use of existing parking. 1 15. 161 Better address timeline of implementation. Action AM4.1I Facilitate and assist businesses interested in pooling resources to create transportation amenities (bike valet, guaranteed ride home, shuttles, etc.). Timeline: Ongoing Short-Term 1 16. 161 Better address timeline of implementation. Action AM4.1J Utilize National Association of City Transportation 0fficials (NACT0) or city- specific design guidelines for roadway design and streetscape elements. Timeline: Ongoing Short-Term Addenda Sheet Downtown Community Plan 7.10.17 42 No. Page Number Item Recommended Change 1 17. 161 Delete action Action AM4.1I Facilitate and assist businesses interested in pooling resources to create transportation amenities (bike valet, guaranteed ride home, shuttles, etc.). Renumber following actions. 1 18. 161 Delete action Action AM4.1J Utilize National Association of City Transportation 0fficials (NACT0) or city- specific design guidelines for roadway design and streetscape elements. Renumber following actions. 1 19. 161 Clarify Action Action AM4.2B Ensure Provide bus stops have with real-time arrival signs, better seating and lighting. Consider additional rider amenities such as charging and destination information. 1 20. 161 Better address timeline of implementation. Action AM4.2A Maintain bus stops in locations that encourage ridership, support system operations and reduce delays from stopping and loading. Incorporate concerns of seniors, disabled and transferring riders. Timeline: Ongoing Short-Term 1 21. 162 Clarify Action Action AM4.2D Consider providing BBB service on Lincoln Boulevard in Downtown area. Adjust dedicated bus lanes and facilities to align with highest demand BBB service areas , such as Fourth Street . Consider providing BBB service on Lincoln Boulevard in Downtown area . 1 22. 162 Delete action Action AM4.2E Support youth and teen use of transit Downtown through engagement, amenities and incentives. Renumber following actions. 1 23. 162 Typo Action AM4.2F Pursue the siting of a Metro rider relief application center in Downtown to facilitate applications for reduced transit fares. 1 24. 162 Better address timeline of implementation.; remove redundancy with AM1.2F Action AM4.3D Increase enforcement of bike lane blockage by valet and delivery vehicles; minimize temporary closures of bike facilities and provide direct alternate routing. Timeline: Ongoing Short-Term 1 25. 162 Clarify Action Action AM4.3E Expand Create consolidated bike parking to meet growing demand, including high capacity and service facilities like the Bike Center, and bike parking corrals to preserve sidewalk space for pedestrians. Addenda Sheet Downtown Community Plan 7.10.17 43 No. Page Number Item Recommended Change 1 26. 162 Delete Action Action AM4.4A Continuously expand travel information to residents, visitors and employees through coordinated outreach, signage, marketing, maps and digital communications. Renumber following actions. 1 27. 163 Better address timeline and partners Action AM4.4E Pursue regional express transit service to high demand employer and visitor destinations outside Santa Monica with regional partners and funders. Lead Agency: PCD Supporting Agencies: Police BBB , HED Timeframe: Short-term Medium-term 1 28. 163 Better address timeline of implementation. Action AM4.5A Require new development to provide physical and/or programmatic improvements, and include additional circulation improvements as primary community benefits. Timeline: Ongoing Short-Term 1 29. 163 Better address timeline of implementation. Action AM4.5D Provide Require private property access via alleys. Maintain updated regulations for loading of goods and people that consider changing technologies and trends and emergency vehicle access. Timeline: Ongoing Short-Term 1 30. 163 Clarify Action Action AM4.5C Facilitate collaboration among individual employer and developer TDM efforts to pool resources for greater impact through the Transportation Management Organization . 1 31. 163 Renumber Action AM4.4B Action AM4.4B 4A Create Transit Screen displays at 10 sites to distribute access to transit information, and raise awareness of options. 1 32. 163 Clarify Action Action AM4.5E SeekPilot solutions to reduce the impact of commercial delivery on network function such as coordinated times, restricted hours, mandatory alley access and additional enforcement. 1 33. 163 Renumber Action Action AM4.4 BC Strengthen connections from the Pier, including water-based mobility options. 1 34. 163 Renumber Action Action AM4.4 DC Advocate for extension of the Subway to the Sea so that it extends fully to Downtown Santa Monica . Addenda Sheet Downtown Community Plan 7.10.17 44 No. Page Number Item Recommended Change 1 35. 163 Clarify Action Action AM4.5B DistributeRevise development standards as needed to create short-term bike parking, bike rooms, bike share and car share on private property throughout Downtown. 1 36. 164 Better address timeline of implementation. Action AM5.1A Evaluate crash data regularly, identify appropriate and effective countermeasures and implement feasible modifications to reduce exposure. Timeline: Ongoing Short-Term 1 37. 164 Clarify Action Action AM5.1B Use design and administrative techniques to influence speeds of passenger vehicles when in free flow conditions, to increase the ability for vehiclesmanage travel speeds to avoid collision and reduce severity of injuries when crashes occur, in coordination with emergency personnel. 1 38. 164 Better address timeline of implementation. Action AM5.1C Maintain pavement markings, replace aging signs, upgrade crosswalks and add lighting to enhance visibility and increase safety. Timeline: Ongoing Short-Term 1 39. 164 Clarify Action; Better address timeline of implementation Action AM5.1D Identify priority locations to Pp ursue improvements that reduce exposure to crashes and conflicts such as: • Consolidated curb cuts • Driveway access from the alley • Shorter pedestrian crossing distances • Protected bikeways • Leading or dedicated pedestrian signal phases • Removal of yielding left turns Timeline: Ongoing Short-Term 1 40. 164 Clarify Action; Better address timeline of implementation. Action AM5.1E Continue to assess and repair damaged sidewalks quickly on a regular schedule , taking into consideration the volume of usage. Timeframe: Short-Term On-Going 1 41. 164 Better address timeline of implementation. Action AM5.2A Identify areas with higher crash numbers and cC onduct routine enforcement of unsafe driving practices in areas with high crash rates . Timeline: Ongoing Short-Term 1 42. 164 Clarify Action Action AM5.2C Educate drivers and enforce laws Develop driver education outreach, and Addenda Sheet Downtown Community Plan 7.10.17 45 No. Page Number Item Recommended Change conduct enforcement operations to reduce blockage of loading zones, transit stops and lanes, bike lanes and crosswalks. 1 43. 164 Clarify Action Action AM5.3A Implement ongoing Develop and regularly distribute public information and marketing campaigns to encourage mutual respect among all road users. 1 44. 165 Better address timeline of implementation. Action AM5.3B Modify signal timing to favor pedestrians with consideration of emergency response. Use new traffic engineering practices as they become available to create a safer travel environment. Timeline: Ongoing Short-Term 1 45. 165 Clarify Action Action AM5.3C Monitor and incorporate new vehicle technology that fosters sustainable, shared mobility and that can reduce VMT and improve access, efficiency and safety for all roadway users. 1 46. 165 Better address timeline of implementation. Action AM6.1C Continue the City's General Bikeshare Feed Specification and General Transit Feed Specification efforts. Consider releasing additional transportation data streams as they become available (ride- sharing, employer shuttles, demand-response services, connected vehicles, etc.). Timeline: Ongoing Short-Term 1 47. 165 Better address timeline of implementation. Action AM6.1D As vehicle-to-infrastructure, vehicle-to-vehicle, and vehicle-to- human communication improves, look for opportunities to collect data to inform and improve system performance. Timeline: Ongoing Medium-Term 1 48. 165 Clarify Action Action AM6.2A Explore automated transit vehicles and the use of electric or low- emissions fleets to reduce carbon emissions. Partner with regional transit providers, cities and other potential partners to explore automated transit vehicles and the use of electric or low- emissions fleets to reduce carbon emissions.. 1 49. 166 Clarify Action Action AM6.2B Work with local employers, business representatives and other agencies on the provision creation of micro-transit pilots and/or or demand-response services. Addenda Sheet Downtown Community Plan 7.10.17 46 No. Page Number Item Recommended Change 1 50. 166 Better address timeline of implementation. Action AM6.2D Establish a transportation innovations team to actively monitor transportation technology and communication advances and new services and evaluate for appropriateness in Downtown. Timeframe: LongShort -Term 1 51. 166 Better address timeline of implementation. Action AM6.2E Participate in regional efforts and interagency groups to share knowledge, build consistency between systems, develop harmonious policy and share in problem- solving for issues that cross jurisdictional boundaries such as data systems, safety, and mobility services. Timeline: Ongoing Short-Term 1 52. 166 Better address timeline of implementation. Action AM6.2F Develop a practice to routinely scope projects to be ready for future technology and mobility changes, such as zero-emission technologies, automation, ITS, and new mobility service models. Timeframe: LongShort -Term 1 53. 166 Clarify Action; Better address timeline of implementation. Action AM6.2G Establish an autonomous and connected vehicles working committee that engages with representatives from local and regional private industry, research institutions, and community stakeholders, to recommend policies and testing activities in support of Downtown Santa Monica goals. Areas of focus for the task force could include: • Assess the potential benefits and impacts of automated and connected vehicles for Santa Monica • Identify local policies, codes and laws that might inhibit the use of new mobility options, investigate best practices and recommend changes. • Work with transit agencies to reevaluate their fleet and management plans in order to incorporate the impacts of automated vehicles. • Protect the safety of people walking, on bikes and in construction zones or unusual conditions • Equitable access to automated vehicles • Communications and data infrastructure readiness • Increase sharing of rides and vehicles, and Addenda Sheet Downtown Community Plan 7.10.17 47 No. Page Number Item Recommended Change decrease single ownership and parking demand • Integrate in fleet vehicles and transit services • Increase EV and very low-emissions vehicles • Decrease vehicle miles traveled • Create hubs for driverless vehicle pick up and navigation. Timeframe: LongShort -Term 1 54. 166 Better address timeline of implementation. Action AM6.3A Conduct biennial citywide and Downtown vehicle, pedestrian, and bicycle trip counts and track data trends. Timeline: Ongoing Short-Term 1 55. 166 Clarify Action Action AM6.3B Monitor on-street and off-street parking occupancy and utilization to guide decision making and pricing to ensure efficient parking utilization. 1 56. 167 Clarify Action; Better address timeline of implementation. Action AM6.3C Develop and regularly publish a downtown mobility report card that captures a snapshot of system performance over time, such as mode share, program evaluation and customer service. Timeline: Ongoing Short-Term 1 57. 167 Clarify Action Action AM6.4C Pilot EV charging through streetlights , meters or other existing street furniture. 1 58. 167 Clarify Action Action 6.4D Update parking policies and practices to promote efficient electric-vehicle charging station use and mobility. 1 59. 167 Better address timeline of implementation. Action AM 6.4E Promote advanced energy technologies like energy storage and solar photovoltaic (PV) to augment electric vehicle charging. Timeline: Ongoing Short-Term 1 60. 167 Better address timeline of implementation. Action AM6.4F Market available EV resources and provide information to local residents, property owners and business owners. Timeline: Ongoing Medium-Term 1 61. 165, Ch. 4 Include language to Development Standards Purpose to encourage interaction between building and landscape design. Ensure that new development enhances pedestrian activity by improving the connections to and attractiveness of the public realm and by providing place s, including open space, s for relaxation, shopping, living, and dining. Addenda Sheet Downtown Community Plan 7.10.17 48 No. Page Number Item Recommended Change 1 62. 168 Remove discussion of Land Use Regulations from 9.10.020 9.10.020 Types of Regulations Types of Regulations. This Chapter includes five three types of regulations that control the use and development of property in the Downtown Community Plan area: Land Use Regulations . The Zoning Districts created in this Chapter and shown on Illustration 4.1 (“Downtown Districts”) permit many of the uses that have been traditionally allowed in the Downtown. However, certain new uses have been added to reflect the needs of the expanding Downtown residential, employee, and visitor populations. These regulations specify the land uses that are permitted or conditionally permitted in each Zoning District, and include special limitations, if any, applicable to specific uses. 1 63. 168 Clarify relationship between DCP and Zoning Ordinance with respect to land use regulations. 9.10.030 Applicability and Relationship to Santa Monica Municipal Code and Other Regulations Applicability. The Downtown Community Plan establishes the area’s regulations and standards and shall guide all land use and development and circulation-related decision- making processes for the Plan area. Relationship to Santa Monica Municipal Code and Other Regulations. General . If provisions in the Downtown Community Plan and Article 9 of the Santa Monica Municipal Code (“Zoning Ordinance”) are in conflict, the provisions in the Downtown Community Plan shall be applied. Where land use regulations, development standards, administrative regulations, and general terms and definitions are not specifically addressed by the Downtown Community Plan, Article 9 of the Santa Monica Municipal Code (“Zoning Ordinance”) shall be applied. Land use regulations for DCP land use districts may be found in Chapter 9.10 of the Zoning Ordinance. 1 64. 180 Modify text to reduce restrictiveness of neighborhood commercial requirement in 9.10.050 b. Mixed-use developments consisting of residential and nonresidential uses in which nonresidential uses that do not exceed 25% of the total building square footage and are limited to neighborhood commercial uses and Addenda Sheet Downtown Community Plan 7.10.17 49 No. Page Number Item Recommended Change housing project definition. to the first floor of buildings that are two or more stories. As used in this paragraph, “neighborhood commercial” means small-scale or specialty stores that furnish goods and services primarily to residents of the neighborhood. 1 65. 181 Modify Table 4.2 to clarify WT FAR and Height WT FAR, Tier 2: 2.25 1.75 WT FAR, Tier 2 – with Housing 2.25 WT Height, Tier 2: 50’ 40’ WT Height, Tier 2 – with Housing 50’ 1 66. 181 Modify Table 4.2 to clarify FAR on Lincoln Boulevard East/West Lincoln East, Tier 2: 1.75 Lincoln East, Tier 2 – With Housing: 2.25 Lincoln West, Tier 2: 2.25 Lincoln West, Tier 2 – With Housing: 2.75 1 67. 181 Amend Table 4.2 to correct reference for additional regulations for Tier 2-Tier 3 projects  Section 9.10.060 9.10.070 (Project Requirements) 1 68. 183 Reduce height of rear setback adjacent to alley Rear Adjacent to Alley: 2’ for first 17’ 16’ of building height 1 69. 185 Modify 9.10.060 B(2) to clarify that open space is based on lot width The minimum area required for open space is expressed as a percentage of the buildable area (i.e. remaining parcel after required setbacks) and is based on Building Typelot width . Unless otherwise noted, this open space may be public or private. 1 70. 185 Modify 9.10.060B(4) to clarify when setbacks count towards open space requirement. 4. Ground floor building setbacks resulting from compliance with subsection (D) shall not be counted towards compliance with this requirement. Building setbacks that exceed the minimum requirement may be included towards compliance with this requirement, provided any overhanging encroachments have a minimum vertical clearance equivalent to the minimum or maximum ground floor height requirement. 1 71. 185 Exclude single-lot projects from the courtyard width ratio requirement of the Open Space standards. 6. For lot widths greater than 50’ in width, t T he maximum height to width ratio of any Courtyard is 1.7:1 (e.g. a Courtyard within a 60’ tall structure must have a minimum dimension of 35’). Where sides of a Courtyard are unequal in height, they may be averaged to determine the effective height. The minimum Courtyard dimension on any side shall be 20 feet. Addenda Sheet Downtown Community Plan 7.10.17 50 No. Page Number Item Recommended Change 1 72. 185 Clarify that DCP open space requirements supersede section 9.21.090 of the Zoning Ordinance B. OPEN SPACE 1. Minimum Open Space Requirements, per (B)(2) The open space requirements established in this subsection B supersede the open space requirements established in section 9.21.090 of the Zoning Ordinance. 1 73. 186 Modify 9.10.060 B(8) to clarify when maximum unbroken primary face length may count toward open space requirements 8. Breaks in buildings required by Maximum Unbroken Primary Facade Length of subsection (C)(6), shall count toward Open Space Requirements if it connects to an interior open space . The 1.7:1 height to width ratio does not apply to these Breaks. 1 74. 186 Exempt building entries required to be recessed from the 70% build-to line requirement. 1. Build-To Line. Buildings with nonresidential uses on the ground floor and not facing a residential district shall be constructed at the building frontage line for 70 percent of linear street frontage. Building entries required to be recessed due to technical codes may be counted towards this requirement. This requirement may be waived or modified subject to a discretionary approval upon finding that a) an alternative configuration can be approved based on the findings in section 9.43.020, Minor Modificationsand the objectives of the DCP Design Guidelines b) the alternative configuration meets the objectives of the DCP Design Guidelines: Renumber subsequent findings . 1 75. 189 Clarify that Urban “Large Format” building type is not limited to “L” or “U” shapes Urban “Large Format” Type. A building defined by its simple square, “L” or “U” shape that allows for large scale retail, office, or entertainment uses of at least 40,000 square feet per floor for a single tenant, like a grocery or department store. For a quality pedestrian realm, parking is accommodated below ground or is integrated into the building so that it is not visible from the street. Unlike “Big Boxes” in more suburban areas, these typically have storefronts, that create a pedestrian scaled environment, and they may have other uses above, like office or residential. Addenda Sheet Downtown Community Plan 7.10.17 51 No. Page Number Item Recommended Change 1 76. 191 Add new subsection to D. Building Frontage Line to permit single-, corner lots to project 30% of their frontage to the property line. D. BUILDING FRONTAGE LINE 1. Corner Lots with Lot Width of 50’ or Less. Up to 30% of the ground floor building frontage that is parallel to the street side property line may project into the required setback to accommodate mechanical rooms, utilities, required parking garage access, and other essential building functions. 1 77. 192 Eliminate duplicate standard c. A minimum of 65% of a required Active Commercial Frontage shall be transparent and include windows, doors, and other openings. Renumber subsequent standard. 1 78. 192 Modify subsection E to clarify that intent of section is for ground floor pedestrian orientation and exempt 100% affordable housing projects from pedestrian- oriented/active design standards See Planning Commission changes for title change. E. PEDESTRIAN-ORIENTED DESIGN STANDARDS. Active Frontages are Ground floor pedestrian orientation is Ground floor pedestrian orientation is required for all projects throughout the Downtown and shall be designed to accommodate commercial uses and activities ., subject to the following :100% Affordable Housing projects are exempt from the provisions of this subsection (E). 1 79. 193 Modify Pedestrian- Oriented Design standard 3(a) to provide flexibility a. No more than 15% 20% of a building’s street-level frontage, but in no case exceeding 25’75’, may be continuously blank or featureless. 1 80. 194 Amend Historic Preservation standard F(3) to be consistent with ZO language Height Limits for Tier 2 Projects on City- Designated Historic Resource Parcels. Tier 2 projects as part of a project that preserveson parcels that contain a City-Designated Historic Resource may extend up to the Tier 3 height maximum of the underlying district provided the project complies with all other Tier 2 thresholds and requirements and that the project is consistent with the Secretary of the Interior’s Standards for the Treatment of Historic Properties and the project design preserves the setting and views of the Addenda Sheet Downtown Community Plan 7.10.17 52 No. Page Number Item Recommended Change character-defining features of the on-site City- Designated Historic Resource. 1 81. 197 Change title of 9.10.070 9.10.070 PROJECT REQUIREMENTS FOR HOUSING AND ALL OTHER PROJECTS . 1 82. 197 Modify purpose of project requirements 9.10.070 PROJECT REQUIREMENTS. Purpose. The purpose of this section is to establish and describe regulations for implementing policies of the General Plan intended to establish a base height and Floor Area Ratio (FAR) to be known as Tier 1. New development is allowed to exceed the base height and FAR of Tier 1 in return for the provision of additional project requirements that enhance Santa Monica’s highly valued community character. More specifically, these regulations will implement LUCE policies which require that as development is approved above the base FAR and height, it must be accompanied by a range of community benefits from four priority categories: Affordable Housing, Trip Reduction and Traffic Management, C ommunity Physical Improvements, and Social and Cultural Facilities. In addition to promoting the development of additional on-site affordable housing and to maintaining existing City programs that provide incentives for the production of affordable housing, these requirements are intended to reduce the additional burdens more intense development allowed by the General Plan will impose on the City by requiring applicants to pay additional fees to mitigate project impacts or, in specific instances, allowing applicants to incorporate features into their projects. 1 83. 197, 198 Change off-site affordable housing maximum distance to be consistent with AHPP requirements. 9.10.070 PROJECT REQUIREMENTS C1.a.i.(3), and C1.a.ii.(3) the location of the offsite location units shall be within the boundaries of the Downtown or within a one-quarter mile radius of the market rate units. 500 feet 1 84. 197, 198 Amend language in Section 9.10.070(C)(1)(a)(i) and (ii) to clarify 1. Housing . All Tier 2 and qualifying Tier 2 projects must meet the following requirements: Addenda Sheet Downtown Community Plan 7.10.17 53 No. Page Number Item Recommended Change conditions applicable to offsite affordable housing. a. Affordable Housing . Subject to the modifications contained in this Section 9.10.070, all of the affordable units shall comply with the provisions of Chapter 9.64. Applicants proposing residential and mixed-use projects shall incorporate the following: i. Tier 2 up to 50 feet – 15% of the total number of units in the project shall be deed-restricted as on-site affordable housing units. Any fractional affordable housing unit that results from this formula shall be provided as a whole affordable housing unit (i.e., any fraction shall be rounded up to the next larger integer). Affordable housing units may be provided offsite pursuant to Section 9.64.060 except that the total number of affordable housing units shall be increased to 20% of the total number of units in the project . The offsite affordable housing units shall meet the following conditions:, if: (1) the affordable housing units are owned in whole or part and operated by a non-profit housing provider for the life of the project; (2) the Final Construction Permit Sign Off or Certificate of Occupancy for the affordable units is issued prior to or concurrently with the Tier 2 project; and (3) the location of the offsite units shall be within the boundaries of the Downtown or within a one- quarter mile radius of the market rate units. ii. Tier 2 up to 60 feet and Tier 3 less than 90,000 square feet – 20% of the total number of units in the project shall be deed-restricted as on-site affordable housing units. Addenda Sheet Downtown Community Plan 7.10.17 54 No. Page Number Item Recommended Change Any fractional affordable housing unit that results from this formula shall be provided as a whole affordable housing unit (i.e., any fraction shall be rounded up to the next larger integer). Affordable housing units may be provided offsite pursuant to Section 9.64.060 except that the total number of affordable housing units shall be increased to 25% of the total number of units in the project . The offsite affordable housing units shall meet the following conditions:, if: (1) the affordable housing units are owned in whole or part and operated by a non-profit housing provider for the life of the project; (2) the Final Construction Permit Sign Off or Certificate of Occupancy for the affordable units is issued prior to or concurrently with the Tier 2 project; and (3) the location of the offsite units shall be within the boundaries of the Downtown or within a one- quarter mile radius of the market rate units. 1 85. 199 Add Commercial Linkage Fee Requirement for Housing Projects 5. Affordable Housing Commercial Linkage Fee. a. All Tier 2 and Tier 3 less than 90,000 SF. Applicants proposing non-residential portions of housing projects shall pay a housing mitigation fee 23% above the base fee as required by SMMC Chapter 9.68, Affordable housing Commercial Linkage Fee Program for that portion of the floor area above the maximum Tier 1 floor area allowed by this Plan. 1 86. 200 Clarify maximum height limits considered for Established Large Sites. A. Height Limit. The maximum height for the Downtown is 84’. Projects on Established Large Sites may be authorized up to an absolute height limit of 130’ subject to the following requirements: Addenda Sheet Downtown Community Plan 7.10.17 55 No. Page Number Item Recommended Change 1 87. 201 Modify General Regulations (9.10.120) to increase maximum length of habitable space projections. 4. Combined Length of Habitable and Non- Habitable Spaces. The total combined length of projections into the building frontage line should not exceed 65% of the building face to which they are attached. However, no more than 4050 % of this combined length may be Habitable Projecting Space. 1 88. 201 Add a new Minor Modification to allow for additional flexibility from modulation standards that do not have Alternative Compliance measures. 9.10.110 Modifications to standards A.1 Minor Modifications d. Modulation Standards. Up to 10% of the required façade area to be modulated and required depth of minimum stepback for any modulation standard without an alternative compliance option. 1 89. 202 Add language to define “Façade” for use in building modulation standards H. Façade . The face of the exterior wall of a building exposed to public view or that wall viewed by persons not within the building. The portion of any exterior elevation of a building extending vertically from the grade to the top of roof and horizontally across the entire width of the building elevation. 1 90. 202 Modify Floor Area Ratio definition to clarify that FAR exemption for POPS are allowed only if a POPS program is established F. Floor Area Ratio . See SMMC Section 9.04.090, Determining Floor Area Ratio. The following shall not be included when calculating a project’s floor area ratio (FAR): after the establishment of a POPS program described in Action PPS2.1C, structures under 67 50 square feet at existing Publically- Accessible Private Open Spaces (POPS) are exempt from Floor Area Ratio calculations. 1 91. 205 Include language to Design Guidelines’ Objectives to encourage interaction between building and landscape design. Objective 3 : Create visual interest and variety in building and landscape design along every street. 1 92. 205 Enhance discussion of Architectural Style in Design Guidelines 5.1.A ARCHITECTURAL STYLE There is no preferred style or historic period for buildings in the Downtown area. All buildings should demonstrate an architectural concept/idea to provide coherence and integrity to the design. However, where an Historic Architectural Style is proposed, the Addenda Sheet Downtown Community Plan 7.10.17 56 No. Page Number Item Recommended Change applicant should document how the proposed building is in keeping with that style, particularly in regards to: overall massing, overhangs, expressions of structure, wall thickness, materials and other details. 1 93. 206 Modify minimum distance where mid- block passage could be considered 5.1B PEDESTRIAN ACCESS Paseos and Pedestrian Passages Parcels longer than 400 300 feet should be developed with a mid-block pedestrian passage or open space. 1 94. 206 Modify detail on window guidelines. 5.1.C GROUND FLOOR PERMEABILITY Window and Entry g. Upper-storyResidential windows should be operable and are typically smaller than ground floor windows . h. Lintels, transoms, sills, shutters, special trim detail and/or heavy duty mullions should be encouraged to enhance window elements. Windows should be detailed consistent with the project design to provide a sense of human scale, proportion, texture, shade and shadow. i. If exterior shutters are used, they should be sized and mounted appropriately to fit the window, with appropriate hardware even if non-operable. 1 95. 206 Modify detail on storefront guidelines. Storefronts j. A transition between storefronts, such as a change in plane, addition of a column or other vertical trim element should be provided between storefronts. k. Transoms, which can accommodate a business address, should be incorporated above entry doors. i. Entry doors should be commercial grade with clear glazing framed in metal, wood or frameless. m. Building and store entries should be clear to the predestrian. Consider using awnings, canopies, architectural lighting, and pedestrian signage to articulate shop entrances. 1 96. 207 Modify detail on interior courtyards guidelines. Interior Courtyards When provided, interior courtyards should be designed to encourage common and shared Addenda Sheet Downtown Community Plan 7.10.17 57 No. Page Number Item Recommended Change use by residents. Consider including the following amenitiesinclude : a. Seating and planting areas.  Landscape is a necessary component to soften outdoor space in an urban setting.  Planters shall be designed to enhance the usable space. Large, tall planters can prevent ptimal use of open space by making the space feel crowded. 18” high planters are optimal as edges can be used as seat walls.  Low walls and steps may be used for seating.  Landscaping should include shade trees or shading devices, where space permits. Planters should not be so tall as to fill the courtyard usable space. 18” high planters are optimal as edges can be used as seat walls. 1 97. 208 Modify 5.1.E Façade Articulation, Colors and Materials (a) Recommended materials are those durable and quality materials that give the building a sense of authenticity, weight, texture, and mass, such as: Precast concrete or poured-in-place concrete, unitized ceramic panels, high quality metal panels, brick (full or face brick), cementitious panel siding, wood panel plank or siding, green walls green walls , smooth plaster, tile, terrazzo, stone veneer and low reflectivity glass and other durable, high quality materials should be used. 1 98. 208 Add a design guideline for historic facades under section 5.1.E Façade Articulation, Massing Offsets Massing Offsets d. When adaptively reusing a historic structure or incorporating a historic façade into new construction, new floor levels above the cornice of the original façade should be set back sufficiently to preserve the street presence of the original façade. 1 99. 208 Modify detail on massing offset guidelines. 5.1.E FAÇADE ARTICULATION Massing Offsets Breaks in building are utilized to reinforce the architectural idea and provide appropriate mass and scale. Break the building mass with differing heights and widths to avoid monolithic buildings. 2 00. 208 Amend Façade Articulation 5.1E FAÇADE ARTICULATION Massing Offsets Addenda Sheet Downtown Community Plan 7.10.17 58 No. Page Number Item Recommended Change guidelines to clarify that design concept should be cohesive. Regular breaks along the building façade should create a visual rhythm along the street with offsets, recesses, stepped façades, varying materials or colors, and architectural ornaments such as balconies, awnings, projections, etc., while ensuring a pleasing composition as a whole. 2 01. 208 Modify detail on color and materials guidelines. Colors and Materials Changes of exterior color, texture or material can be used to reinforce the architectural formal idea and are best should be accompanied by changes in plane or occur at an inside corner. 2 02. 210 Modify detail on lighting guidelines. 5.1.F ARCHITECTURAL LIGHTING b. Decorative lighting should could be added at shop front entrances and window displays to activate pedestrian realm at night. c. Light fixtures should complement the style and age of the building. 2 03. 213 Modify detail on landscaping guidelines. Landscaping Landscaping is a necessary component of outdoor space in an urban setting. Because landscaping has a significant impact on the experience, texture and temperature of an open space, it needs to be appropriate to the intended use of the space, and be comfortable, attractive and complement the usable space and surrounding architecture. 2 04. 207, 213 Modify guidelines dealing with raised planters 5.1.c GROUND FLOOR PERMEABILITY Interior Courtyards Planters shall be designed to enhance the usable space. Large, tall planters can prevent optimal use of open space by making the space feel crowded. 18” high planters are optimal as edges can be used as seat walls. 5.2A PUBLIC SPACE GUIDELINES Landscaping Planters shall be designed to enhance the usable space. Large, tall planters can prevent optimal use of open space by making the space feel crowded. 18” high planters are optimal as edges can be used as seat walls. Addenda Sheet Downtown Community Plan 7.10.17 59 No. Page Number Item Recommended Change 2 05. 216 Correct max height of POPs structure Height The height of any permanent structure that is added into an existing POPS should generally be limited to 20 15 feet. In some instances, small portions of the structure may exceed that height, particularly where the roof of the structure can be occupied for seating. a. 2 06. 218-225 Remove “Potential Locations” from all 5.3 Public Space Types descriptions Potential Location(s): Boys and Girls Club site, or Fred Segal site Along 5 th Street or 4 th Street at Arizona Along 6 th and 7 th Street Along Lincoln Blvd. 5 th and 4 th Street Roof of Public Parking Structure or other public building Lincoln Blvd, Wilshire Blvd, Broadway, Arizona Ave Through the 4 th /5 th Arizona Site and through the Expo Station Area site b. Colorado Ave between 4 th Street and Ocean Avenue and Wilshire Boulevard between 4 th Street and Ocean Avenue 2 07. 218-232 Remove all language on potential site locations, and replace existing guidelines for landscaping and public art to simply say “Yes”. Potential Location(s): Landscaping: Yes Public Art: Yes 2 08. 218-232 Remove dimensional requirements for all 5.3 Public Space Types and 5.4 Open Space Amenities Size: Minimum XXXX 2 09. 220 Clarify Public Availability of Courtyard Public Availability: Determined by building owner or by negotiated contract 2 10. 221 Clarify Public Availability of Pocket Park Public Availability: Sunrise to sundown or determined by owner or by negotiated contract 2 11. 222 Clarify Public Availability of Sun Deck/View Terrace Public Availability: Open during business hours or as determined by property owner or by negotiated contract Addenda Sheet Downtown Community Plan 7.10.17 60 No. Page Number Item Recommended Change 2 12. 223 Clarify Public Availability of Parklet Public Availability: Determined by Parklet sponsorPublically Accessible 2 13. 249 Add new monitoring requirement to review success of design standards 3. Enforcement of Project Entitlements Review the design quality of Downtown projects to ensure diverse design typologies, innovation and quality design. 2 14. 249 Add Visitor Mode Share as a monitoring element Mode Share Visitors An estimate of the percentage of overnight visitors and day visitors using a particular type of transportation. 2 15. 249 Add Vision Zero as a monitoring element Vision Zero The number of roadway users who have died or had serious injuries. 1 ATTACHMENT E (Proposed Redline Modifications) PROPOSED AMENDMENTS TO THE LAND USE AND CIRCULATION ELEMENT AS RECOMMENDED BY T HE PLANNING COMMISSION ON MAY 31 , 2017 CHAPTER – PAGE(S) PROPOSED AMENDMENTS TO THE LAND USE AND CIRCULATION ELEMENT Chapter 2.1 – Land Use Policy and Designations Mixed -Use Boulevard Development Parameters 1 2.1 – 37 Amend development parameters for 100% residential above the ground floor projects proposed at Tier 2 - above base with community benefits - on the east and wes t sides of Lincoln Boulevard and on Wilshire Boulevard west of Lincoln Boulevard to ensure consistency with the Mixed -Use Boulevard development standards set forth in the Downtown Community Plan. 2 2.1 – 38 2.1 – 39 Amend development parameters for all o ther projects proposed at Tier 2 - above base with community benefits - on the east and west sides of Lincoln Boulevard and on Wilshire Boulevard west of Lincoln Boulevard to ensure consistency with the Mixed -Use Boulevard development standards set forth i n the Downtown Community Plan. ------------------------------------------------------------------------------------------------------------------------------------------ 100% Residential above the ground floor TIER 1 – BASE HEIGHT • The base height in t he Mixed -Use Boulevard District is 32 feet (2 stories) with a 1.5 FAR. A project will receive a 7 -foot height bonus above the 32 -foot base height, allowing for an additional floor of housing, by building the required affordable housing units in accordance with the percentage requirements specified in the City’s Affordable Housing Production Program for the project as a whole (see Figures 6 and 7). A Tier 1 project is ministerial up to the discretionary review threshold established by the Zoning Ordinance. TIER 2 - ABOVE BASE - WITH COMMUNITY BENEFITS • Subject to a discretionary review process, projects that provide community benefits may request a height up to 50 feet and 2.25 FAR. (see Figure 8) 2 • Within the Downtown Community Plan area on the east side of Lincoln Boulevard, subject to a discretionary review process, projects that provide community benefits may request a height up to 50 feet and 2.2 5 FAR. • Within the Downtown Community Plan area on the west side of Lincoln Boulevard, subject to a discretiona ry review process, projects that provide community benefits may request a height up to 60 feet and 2.75 FAR. • Within the Downtown Community Plan area on Wilshire Boulevard west of Lincoln Boulevard, subject to a discretionary review process, projects that provide community benefits may request a height up to 50 feet and 2.25 FAR TIER 3 - ABOVE BASE - WITH ADDITIONAL COMMUNITY BENEFITS • Subject to a discretionary review process, projects that provide additional community benefits, may request a height of 55 feet and 2.75 FAR if the project is located in an area designated Mixed -Use Boulevard on Lincoln Boulevard, south of Wilshire Bouelvard; on Wilshire Boulevard west of Lincoln; or within the area bounded by Colorado Avenue, Olympic Boulevard, 20th Street, and Cloverfield Boulevard. 100% Affordable Housing projects and projects which preserve a City -designated Landmark or Structure of Merit may request this additional height and FAR in all areas designated Mixed -Use Boulevard. (see Figure 9) Projects may als o request a height up to 60 feet with a corresponding percentage decrease in FAR over 55’. All Other Projects TIER 1 – BASE HEIGHT • The base height in the Mixed -Use Boulevard District is 32 feet (2 stories) with a 1.5 FAR. A project will receive a 3 -foot height bonus above the 32 -foot base height, allowing for an additional floor of housing, by building the required affordable housing units in accordance with the percentage requirements specified in the City’s Affordable Housing Production Program for the project as a whole (see Figures 6 and 7). A Tier 1 project is ministerial up to the discretionary review threshold established by the Zoning Ordinance. TIER 2 – ABOVE BASE WITH COMMUNITY BENEFITS • Subject to a discretionary review process, projects that provide community benefits may request a height up to 45 feet and 2.25 FAR. (see Figure 8) • Within the Downtown Community Plan area on the east side of Lincoln Boulevard, subject to a discretionary review process, as required by the Downtown Community Plan , projects that provide community benefits may request a height up to 40 feet and 1 .7 5 FAR. • Within the Downtown Community Plan area on the west side of Lincoln Boulevard and on Wilshire Boulevard west of Lincoln Boulevard, subject to a discretionary revie w process or 3 development agreement, as required by the Downtown Community Plan, projects that provide community benefits may request a height up to 50 feet and 2.25 FAR. • Within the Downtown Community Plan area on Wilshire Boulevard west of Lincoln Boulevar d, subject to a discretionary review process, projects that provide community benefits may request a height up to 4 0 feet and 1 .7 5 FAR . TIER 3 – ABOVE BASE – WITH ADDITIONAL COMMUNITY BENEFITS • Subject to a discretionary review process, projects that prov ide additional community benefits, may request a height of 55 feet and 2.75 FAR if the project is located in an area designated Mixed -Use Boulevard on Lincoln Boulevard, south of Wilshire Boulevard; on Wilshire Boulevard west of Lincoln ; or within the area bounded by Colorado Avenue, Olympic Boulevard, 20th Street, and Cloverfield Boulevard. 100% Affordable Housing projects and projects which preserve a City -designated Landmark or Structure of Merit may request this additional height and FAR in all areas de signated Mixed -Use Boulevard. (see Figure 9). • Proposals above the base height must provide the City with enumerated community benefits as identified in the “Five Priority Categories of Community Benefits” section of this chapter. Housing and mixed -use hou sing projects will be required to provide a percentage of affordable units either on - or off -site. Other projects will contribute applicable project mitigation fees for the purpose of addressing affordable housing requirements. ALL TIERS • One hundred perc ent affordable housing projects will continue to be provided existing incentives, including: building height not to exceed the allowable maximum height limit at the highest tier, inclusive of any development bonus for affordable housing; reduced parking re quirements; flexibility in providing a reduction in required ground floor pedestrian -oriented uses, which may also include community services, arts, and similar uses, as applicable; and administrative review of affordable housing projects (up to a maximum of 80% of median income only) with 50 units or less. • New or remodeled buildings on property adjacent to the boulevard shall have a minimum façade height to ensure the visual definition of the boulevard’s open space, to be defined in the zoning ordinance. (see Figure 10) • Maximum height of the building façade adjacent to the property line along the boulevard or the intersecting side street shall be defined in the zoning ordinance. (see Figures 8 and 9) • Above the maximum streetwall height, the building shal l step back from the boulevard in a manner that will minimize the visual bulk of the overall building as viewed from the public sidewalks and roadway and ensure maximum light, air and sense of openness for the general 4 public. Guidelines or standards for t he building mass above the streetwall shall be established in the zoning ordinance.(see Figures 8 and 9) • Buildings that share a property line with a residentially -designated property are required to be setback at least 10 feet from the abutting residentia l property line. Further, to assure privacy and access to sunlight and air for the adjacent residential use, all new buildings and additions to existing buildings shall not project, except for permitted projections, beyond a building envelope commencing at 25 feet in height above the property line abutting the residential property or where there is an alley abutting the residentially -designated property, the centerline of the alley, and from that point, extending at a 45 -degree angle from vertical towards t he interior of the site.(see Figure 11) • For any existing auto dealers that expand without using the urban auto dealership format, a discretionary process will be required. 1 ATTACHMENT F PROPOSED AMENDMENTS TO THE CIVIC CENTER SPECIFIC PLAN AS RECOMMENDED BY THE PLANNING COMMISSION ON MAY 31, 2017 PAGE(S) PROPOSED AMENDMENTS TO THE CIVIC CENTER SPECIFIC PLAN Various Amend Civic Center Specific Plan Area boundaries an d general description to remove references to the Colorado Avenue Special Use District in order to incorporate the geographic area into the Downtown Community Plan. i Amend Table of Contents to reflect changes in text. ii Amend Civic Center Specif ic Plan boundary map to remove the Colorado Avenue Special Use District. 1 Remove references to private property/sites in the Colorado Avenue Special Use District; amend text des cribing boundaries and size of the Civic Center Specific Plan Area. 4 Prov ided additional text to describe 2017 plan update to implement the Downtown Community Plan. 7 Amend Civic Center Specific Plan Illustrative Plan to remove the Colorado Avenue Special Use District and references to features/properties in the area. 10 Ame nd Civic Center Open Space Plan to remove the Colorado Avenue Special Use District. 12 Amend Civic Center Specific Plan Open Space Maps to remove the Colorado Avenue Special Use District. 15 Amend Civic Center Specific Plan Linkages Diagram to remove t he Colorado Avenue Special Use District. 31 Amend the Civic Center Specific Plan Vehicular Circulation to remove the Colorado Avenue Special Use District. 33 Amend the Civic Center Specific Plan Transit Map to remove the Colorado Avenue Special Use Dis trict. 38 Amend the Civic Center Specific Plan Main/Second Street Corridor map to remove the Colorado Avenue Special Use District. 46 Amend Civic Center Specific Plan development standards Special Use Districts Map to remove the Colorado Avenue Special Use District. 47 Amend text to cite four Special Use Districts are in the Civic Center Specific Plan Area. 49 Amend Civic Center Specific Plan Public Open Space Program Map to remove Colorado Avenue Special Use District. 50 Remove Colorado Avenue fro m Proposed Building Program table, Table 1. 2 PAGE(S) PROPOSED AMENDMENTS TO THE CIVIC CENTER SPECIFIC PLAN 69 -71 Remove subsection on development standards for the Colorado Avenue Special Use District. 72 Correct formatting error: move three Open Spac e Policies to other policies on Page 25. 81 Amend text to delete Implementation/Regulatory Program for Colorado Avenue Special Use District. 83 Delete references in Improvement Program for Sears site and Colorado Avenue public right of way. 85 -86 Rev ise Land Use and Circulation Elements Consistency and Development Standards text to remove references for Sears site in the Colorado Avenue Special Use District. 1 ATTACHMENT G PROPOSED AMENDMENTS TO THE ZONING ORDINANCE AS RECOMMENDED BY THE PLANNING COMMISSION ON MAY 31, 2017 SMMC SECTION(S) PAGE(S) PROPOSED AMENDMENTS TO THE ZONING ORDINANCE 1 9.10 2.41 Specifies that development standards for the Downtown Co mmunity Plan Area are prescribed in the Downtown Community Plan which are incorporated by reference and also specifies that where Zoning Ordinance provisions are not specifically addressed by the Downtown Community Plan, the Zoning Ordinance shall apply. 2 9.10.005 2.41 - 2.53 Land use regulations for the Downtown Districts are prescribed in Table 9.10.005. 3 9.21.050(A)(4) 3.8 Specifies maximum allowable height and placement of fences, walls, and hedges in the Downtown Community Plan Area. 4 9.25.040(F) 3.47 Requires 75 -day Landmarks Commission review period for a demolition permit application for any building over 40 years old prior to filing an application subject to Planning Commission, Architectural Review Board, or Zoning Administrator review. 5 9 .28.040(A)(5)(e) 3.68 Specifies the maximum amount of required parking within the Downtown Community Plan Area is regulated by Section 9.28.060 and establishes that parking voluntarily provided in excess of those quantities shall be dedicated for the City’s exclusive use commencing and terminating at the City’s option. 6 9.28.060 3.70 - 3.79 Specifies maximum amount of required parking by use within the Downtown Community Plan Area. 7 9.28.190(B) 3.99 Establishes alternative compliance for meeting on - site parking requirements through payment of an in -lieu fee within the City’s Downtown Parking Assessment District. 8 9.31.200(I) 3.148 Specifies that design guidelines for the Third Street Promenade are applicable and specifies that the City Manager or his o r her designee may establish additional guidelines for outdoor dining and seating. 2 1. Modify the following language in SMMC Section 9.10 (p. 2.41): 3 2. Modify the following language in SMMC Section 9.10.005 (p. 2.41): 4 5 6 7 8 9 10 11 12 13 14 15 16 3. Modify the following language in SMMC Section 9.21.050(A)(4) (p. 3.8): 17 4. Modify the following language in SMMC Section 9.25.040(F) (p. 3.47): 18 5. Modify the following language in SMMC Section 9.28.040(A)(5)(e) (p. 3.68): 19 20 6. Modify the following language in SMMC Section 9.28.060 (p. 3.70 -3.79): 21 22 23 24 25 26 27 28 7. Modify the following language in SMMC Section 9.28.190(B) (p. 3.99): 29 30 8. Modify the following language in SMMC Section 9.31.200(I) (p. 3.148): ATTACHMENT H PROPOSED AMENDMENTS TO SMMC CHAPTER 9.53 (TRANSPORTATION DEMAND MANAGEMENT) AND SMMC ARTICLE 8 (BUILDING REGULATIONS) PROPOSED AMENDMENTS TO SMMC CHAPTER 9.53 OF THE ZONING ORDINANCE SMMC SECTION(S) PAGE(S) PROPOSED AMENDMENTS TO THE ZONING ORDINANCE 1 9.53.130 (B)(2)(viii) Content of Developer TDM Plan 6.38 With the Downtown Community Plan area, the transportation allowance shall equal 100% of the current cost of a monthly regional transit pass of the employee’s choice. Modify the following language in SMMC Section 9.53.130(B)(2)(viii) (p. 6.38): PROPOSED AMENDMENTS TO SMMC ARTICLE 8 SMMC SECTION(S) PAGE(S) PROPOSED AMENDMENTS TO THE ZONING ORDINANCE 1 SMMC Section 8.08.060 (h(1)(C) With the Downtown Community Plan area, an application for a demolition permit for a building or structure over 40 years of old shall be valid for three years from the date the application is filed. Expiration of Application for Permit. (1) A permit application shall expire if no permit is issued within one year after the date the permit application is filed, except as provided below. (A) An application for a demolition permit for the demolition of residential buildings and structures, w hich are subject to the replacement project requirements of the City’s Zoning Ordinance, shall expire if no permit is issued within two years following the date the application is filed. (B) An application for a permit for a project subject to the construction rate program of the City’s Zoning Ordinance shall not expire while that project remains on the waiting list for a building permit. (C) An application for a demolition permit for a building or structure in which the original permit was i ssued more than 40 years before the date of filing of the demolition permit application shall expire if no permit is issued within three years following the date the application is filed. (2) No action may be taken on an application after expiration . Plans and other data submitted for review may thereafter be returned to the applicant or purged by the Building Officer. To obtain a permit, applicants shall submit a new application, new submittal documents and pay a new plan review fee. All applicable standards in effect at the time of the new application shall then apply to the project. Incremental Tier 2 & Tier 3 Development Fees Analysis for the Santa Monica Downtown Community Plan Update November 2016 HR&A Advisors, Inc. HR&A Advisors, Inc.Downtown Tiers 2 & 3 Fee Analysis |2 HR&A analyzed “feasible” development fees for incremental floor area increases applicable to Tier 2 and Tier 3 projects under Draft Downtown Community Plan Update standards. •Development fees tested include : o Parks and Recreation Fee o Affordable Housing Linkage Fee o Transportation Impact Fee •The analysis builds on HR&A’s completed analysis for the base fees (2013 - 2014 )and Citywide Tier 2 fees outside of Downtown (2014 ),which were adopted by the City Council . •This analysis tests supportable fee levels for three prototypical Tier 2 and Tier 3 developments ,pursuant to the Draft Downtown Community Plan Update,all of which are mixed -use projects that contain the same amount of ground - floor retail space .Above the ground floor,the prototypes include : o Office (“Transit -Adjacent”) o Market Rate +Affordable Rental Residential (“Transit -Adjacent”) o Market Rate +Affordable Rental Residential (“Mixed Use Boulevard”) HR&A Advisors, Inc.Downtown Tiers 2 & 3 Fee Analysis |3 The three development prototypes for testing are based on physical parameters provided by City staff, supplemented by other HR&A assumptions. Office/Retail (Transit Adjacent) Residential/Retail (Transit Adjacent) Residential/Retail (Mixed Use Boulevard) Site Area (SF)15,000 15,000 15,000 Height (Feet)84 84 60 Total FAR 3.50 4.00 2.75 Net Floor Area (SF)52,500 60,000 41,250 Gross Bldg.SF 59,830 70,230 48,750 Total Retail SF 5,000 5,000 5,000 Total Office SF 47,500 -- Total Units 1 -68 45 Source: City of Santa Monica 1 Affordable housing share of total units is assumed to be 5% for Tier 1, 7.5% for Tier 2, and 10% for Tier 3. Net Tier 1 SF 15,000 17,500 15,000 Net Tier 2 SF 19,500 33,000 18,250 Net Tier 3 SF 18,000 9,500 8,000 HR&A Advisors, Inc.Downtown Tiers 2 & 3 Fee Analysis |4 To determine the upper limit of feasible fee increases on incremental floor area in Tier 2 and Tier 3 prototypes in the Downtown, HR&A prepared detailed financial feasibility models for each prototype. Illustrative Development Program Total Development Cost (TDC) -Hard Costs -Soft Costs (As % of Hard Costs) -Construction Financing Costs Net Operating Income (NOI) -Revenues -Expenses (As % of Revenues) Project Returns Return on Cost = NOI/TDC Developer Profit Margin = (NOI/Cap Rate) -Sale Costs -TDC Financial Feasibility Model •As with the previous analyses,HR&A prepared static pro forma models to systematically test the financial feasibility implications of increased fees for each prototype . •HR&A used two industry -accepted metrics to determine financial feasibility :1 ) return on total cost and 2 )developer profit margin . •This analysis reflects more favorable real estate market conditions than in HR&A’s 2013 -14 analyses,but tempers these conditions somewhat for the long term . •The first part of the current analysis assumes a uniform percentage increase for all three fees . HR&A Advisors, Inc.Downtown Tiers 2 & 3 Fee Analysis |5 Revenue and project value assumptions are based on current market conditions, but are adjusted to account for likely market changes. Use Monthly Rent (2016$)Cap Rate Office $4.55 PSF (Modified Gross)5.7% Retail $6.00 PSF (NNN)5.9% Market Rate Apt.$3,300 -5,000 (per unit)4.8% Affordable Apt.$340 -486 (per unit)4.8% •This analysis recognizes the City’s fee increases will be in place for several years and therefore should not be predicated on unusually strong current market conditions. •On average, actual reported Downtown Santa Monica rents are 5 -15% higher than those shown above. •Reported cap rates are as much as 250 basis points lower than those shown above. Sources: HR&A analysis of CoStar rent data, City of Santa Monica 2015 Affordable Housing Rent Schedule, Real Estate Research Corporation Q1 2016 cap rate data. HR&A Advisors, Inc.Downtown Tiers 2 & 3 Fee Analysis |6 Since HR&A’s 2013 -14 analyses, rents have increased for all product types; this analysis captures only a portion of actual rent growth. Use Monthly Rent 2014 Analysis 1 Monthly Rent 2016 Analysis Office $4.30 PSF (NNN)$4.55 PSF (Modified Gross) Retail $5.25 PSF (NNN)$6.00 PSF (NNN) Market Rate Apt.$2,000 -3,800 (per unit)$3,300 -5,000 (per unit) Source: HR&A analysis of CoStar, City of Santa Monica 2015 Affordable Housing Rent Schedule 1 Rents shown for Downtown prototypes only. •For new buildings, reported rents in Downtown range from: •Office: $3.45 -5.25 PSF •Retail: $3.50 -8.50 PSF •Residential: $3,300 -7,600 per unit •It is likely that any new, near -term development will command rents at the higher end of the ranges shown above. HR&A Advisors, Inc.Downtown Tiers 2 & 3 Fee Analysis |7 RERC -reported cap rates for the LA area have decreased for all product types since 2014, dramatically increasing project values. Use Cap Rates 2014 Analysis Cap Rates 2016 Analysis Office 6.4%5.7% Retail 6.6%5.9% Residential 5.3%4.8% Source: HR&A analysis of CoStar, Real Estate Research Corporation Q3 2013 and Q1 2016 data •For new buildings, reported cap rates in Downtown range from: •Office: 4.0 -5.0% •Retail: 3.0 -4.5% •Residential: 2.4 -3.8% •However, these reported rates are based on very few recent transactions. Cap rates provided by RERC reflect average conditions across the Los Angeles area, and may be better suited for long -term fee -setting purposes. HR&A Advisors, Inc.Downtown Tiers 2 & 3 Fee Analysis |8 HR&A assumed all Downtown prototypes would be built as Type V (wood -frame) construction over a concrete ground -floor podium. Prototype Tier 1 Tier 2 Tier 3 Office/Retail Land Cost 2 $410 $190 $125 Hard/Soft/Financing Cost $470 $450 $470 Total Development Cost $880 $640 $595 Lower -Density Residential/ Retail Land Cost 2 $400 $190 $155 Hard/Soft/Financing Cost $395 $330 $335 Total Development Cost $795 $520 $490 Higher -Density Residential/ Retail Land Cost 2 $350 $125 $110 Hard/Soft/Financing Cost $380 $315 $320 Total Development Cost $730 $440 $430 Sources: Marshall & Swift, HR&A Advisors 1 Inclusive of parking costs and, for this comparison only, includes just Tier 1 fees for all prototypes. 2 Land cost is assumed to be $500 per square foot of land area, per analysis of sale transactions reflected in recent Value -Enhanc ement Analyses conducted for the City, rather than supportable land costs derived from residual land value analysis, as previously inc luded in HR&A’s 2013 -14 analyses, in order to eliminate one more analysis variable. Development Costs per Building Gross Square Foot 1 HR&A Advisors, Inc.Downtown Tiers 2 & 3 Fee Analysis |9 HR&A analyzed the feasible fee increases for incremental Tier 2 and Tier 3 floor areas, by land use, in each Downton prototype. Sources: City of Santa Monica, HR&A Advisors Downtown Tier 2 and 3 Parks and Recreation, Affordable Housing Linkage & Transportation Impact Fees Tier 3 SF Tier 1 SF Floors 5 -6 Floors 3 -4 Floors 1 -2 Tier 1 Fees x x %1 x Tier 2 SF + + Total Parks and Recreation, Affordable Housing Linkage & Transportation Impact Fees Tier 1 Fees Tier 1 Fees 1 Tier 3 fees have previously been negotiated case -by -case. 2 Tier 2 Fees outside Downtown have been set at 14% higher than Tier 1 Fees. Base Fee Rate Share of SF x %2 x HR&A Advisors, Inc.Downtown Tiers 2 & 3 Fee Analysis |10 HR&A used two industry -accepted metrics to determine financial feasibility: return on development cost and developer profit margin. Illustrative Development Program Total Development Cost (TDC) -Hard Costs -Soft Costs (As % of Hard Costs) -Construction Financing Costs Net Operating Income (NOI) -Revenues -Expenses (As % of Revenues) Project Returns Return on Cost = NOI/TDC Developer Profit Margin = (NOI/Cap Rate) -Sale Costs -TDC Financial Feasibility Model •A prototype with higher fees would be considered “financially feasible”if it meets a minimum : o Return on Cost of 0 .75 %higher than the applicable weighted average cap rate,which aligns with the range of 0 .75 %to 1 .0 %factor used in HR&A’s 2013 -14 analyses . o Developer Profit Margin of 12 .5 %,which is the midpoint of the 10 .0 %to 15 .0 %range used in the 2014 Citywide fees analysis,and more conservative than the 10 .0 %minimum used in the 2013 -14 analyses . HR&A Advisors, Inc.Downtown Tiers 2 & 3 Fee Analysis |11 Based on these feasibility thresholds, fees on incremental Tier 2 floor area could be uniformly increased by 23% above Tier 1 fees , and by 703% on incremental Tier 3 floor area . Tier 2 Tier 3 Fee Increase (% over Tier 1 Across All Fees)23%703% Office/Retail Profit Margin 12.5%12.5% ROC Spread 0.8%0.8% Feasible?Yes Yes Lower -Density Residential/ Retail (Mixed Use Blvd.) Profit Margin 23.5%25.4% ROC Spread 1.5%1.6% Feasible?Yes Yes Higher -Density Residential/ Retail (Transit Adjacent) Profit Margin 33.7%34.7% ROC Spread 2.4%2.4% Feasible?Yes Yes •The office/retail scenario is the only prototype subject to all three fees , and is the limiting factor for uniform fee increases across all three prototypes. HR&A Advisors, Inc.Downtown Tiers 2 & 3 Fee Analysis |12 Incremental Tier 2 floor area in the Downtown can support higher uniform fee increases over Tier 1 than previously determined for Tier 2 projects Citywide; incremental Tier 3 floor area can support even higher uniform fee increases. But, supportable Downtown Tier 3 fees would exceed maximum allowable fees in two of the impact fee nexus studies (shown in red ). 1 PSF fees are rounded to the nearest $0.10. 2 Fees only apply to market rate residential units. 3 Per City Nexus Studies: EPS, 2013; RSG, 2013; and Nelson/Nygaard , 2012. Adopted Tier 1 – Base 1 Adopted Tier 2 – Citywide 1 Tier 2 - Downtown 1 Tier 3 - Downtown 1 Maximum Allowable Fee 3 Fee Increase (Over Tier 1)0%14%23%703% Parks & Recreation 0 -1 BRs (x unit)2 $4,232 $4,824 $5,205 $33,976 $16,554 2 + BRs (x unit)2 $6,816 $7,771 $8,384 $54,724 $26,661 Retail (x NSF )$1.50 $1.70 $1.90 $12.20 $6.00 Office (x NSF)$2.40 $2.70 $2.90 $19.00 $9.20 Affordable Housing Linkage Retail (x NSF)$10.00 $11.40 $12.30 $80.00 $195.10 Office (x NSF)$11.50 $13.10 $14.10 $92.00 $224.10 Transport. Impact (Area 1) Residential (x unit)2 $2,774 $3,162 $3,412 $22,269 $4,290 Retail (x NSF)$22.40 $25.50 $27.60 $179.90 $34.70 Office (x NSF)$10.40 $11.80 $12.70 $83.00 $16.00 HR&A Advisors, Inc.Downtown Tiers 2 & 3 Fee Analysis |13 Stated another way, for the two fee categories that are limited by their nexus studies, the differences between maximum supportable Tier 3 fees and the maximum allowable fees results in “surplus feasibility potential” –i.e., developer return that exceeds the minimum required to attract investment capital. •“Surplus feasibility potential”can be interpreted as the additional cost above the maximum allowable nexus study fee that a Downtown development can bear,while still meeting acceptable financial returns . •Assuming that Parks and Recreation and Transportation Impact fees were increased to their maximum justifiable level,there could be potential to translate this “surplus feasibility potential”into other City policy priorities without affecting financial feasibility . •Currently,one of the City’s highest priorities is affordable housing ;for illustrative purposes HR&A translated this “surplus feasibility potential”into affordable housing units . HR&A Advisors, Inc.Downtown Tiers 2 & 3 Fee Analysis |14 For the two residential/retail prototypes only , fees on incremental Tier 2 floor area could be increased by 1,358% and 2033%, over Tier 1 fees, and by 1,915% and 2,400% on incremental Tier 3 floor area over Tier 1 fees, for the lower -and higher -density prototypes, respectively. Tier 2 Tier 3 Fee Increase (% over Tier 1 Across All Fees)1,358%1,915% Lower -Density Residential/ Retail (Mixed Use Blvd.) Profit Margin 14.4%15.1% ROC Spread 0.8%0.8% Feasible?Yes Yes Fee Increase (% over Tier 1 Across All Fees)2,033%2,400% Higher -Density Residential/ Retail (Transit Adjacent) Profit Margin 14.8%15.3% ROC Spread 0.8%0.8% Feasible?Yes Yes HR&A Advisors, Inc.Downtown Tiers 2 & 3 Fee Analysis |15 The Downtown residential/retail prototypes incur only two of the three fees analyzed, and can thus support even higher uniform fee increases over Tier 1. Fee amounts that exceed the maximum allowable are shown in red . 1 Fees only apply to market rate residential units. 2 Per City Nexus Studies: EPS, 2013; and Nelson/Nygaard , 2012. Adopted Tier 1 – Base Adopted Tier 2 – Citywide Tier 2 - Downtown Tier 3 - Downtown Maximum Allowable Fee 3 Fee Increase (Over Tier 1)0%14%1,358%1,915% Parks & Recreation 0 -1 BRs (x unit)1 $4,232 $4,824 $61,712 $85,280 $16,554 2 + BRs (x unit)1 $6,816 $7,771 $99,398 $137,359 $26,661 Transport. Impact (Area 1) Residential (x unit)1 $2,774 $3,162 $40,448 $55,895 $4,290 Lower -Density Residential/Retail (Mixed Use Blvd.) Supportable Fees HR&A Advisors, Inc.Downtown Tiers 2 & 3 Fee Analysis |16 The higher -density residential/retail prototype (Transit Adjacent) can support the highest uniform Tier 2 and 3 fees of the three prototypes. Fee amounts that exceed the maximum allowable are shown in red . 1 Fees only apply to market rate residential units. 2 Per City Nexus Studies: EPS, 2013; and Nelson/Nygaard , 2012. Adopted Tier 1 – Base Adopted Tier 2 – Citywide Tier 2 - Downtown Tier 3 - Downtown Maximum Allowable Fee 3 Fee Increase (Over Tier 1)0%14%2,033%2,400% Parks & Recreation 0 -1 BRs (x unit)1 $4,232 $4,824 $90,255 $105,798 $16,554 2 + BRs (x unit)1 $6,816 $7,771 $145,371 $170,407 $26,661 Transport. Impact (Area 1) Residential (x unit)1 $2,774 $3,162 $59,156 $69,344 $4,290 Higher -Density Residential/Retail (Transit Adjacent) Supportable Fees HR&A Advisors, Inc.Downtown Tiers 2 & 3 Fee Analysis |17 Translating surplus feasibility to affordable housing indicates that Tier 2 and 3 residential/retail prototypes could support approximately 17% to 33% of their respective units as affordable, depending on project density and affordability level, in addition to maximum allowable Parks & Recreation and TIF fees. Affordability Level Base Assumption Mixed Use Blvd. (Lower -Density) Transit Adjacent (Higher -Density) Tier 2 Tier 3 Tier 2 Tier 3 Tier 2 Tier 3 Extremely Low Income 7.5%10%17%21%27%29% Very Low Income --19%23%29%32% Low Income --19%26%32%33% Tier 2 & 3 Residential Prototype Affordable Housing Feasibility Capacity (As a Percentage of All Units) HR&A Advisors, Inc.Downtown Tiers 2 & 3 Fee Analysis |18 Summary of Conclusions The analysis of three prototypical developments is based on current real estate market conditions,but uses somewhat more conservative rent and cap rate assumptions ,to reflect long -term City policies . This analysis relies on similar financial feasibility metrics as in HR&A’s 2013 -14 development fees analyses . Fee credits for assumed existing retail uses in each prototype reduces total fee amounts ,particularly for TIF . The mixed -use office and retail prototype is the only prototype subject to all three fees,and therefore this prototype is the limiting factor for uniform percentage fee increases . Incremental Tier 2 floor area fees could be increased by up to 23 %in the Downtown Community Plan area,and by up to 703 %for incremental Tier 3 floor area, compared with Tier 1 fees,before causing the mixed -use office and retail prototype to become financially infeasible . HR&A Advisors, Inc.Downtown Tiers 2 & 3 Fee Analysis |19 Summary of Preliminary Conclusions •Supportable net fees for the Tier 2 mixed -use office and retail prototype could total up to $737 ,000 ,and up to $4 .5 million for the Tier 3 version of this prototype in Downtown .Theses same percentage fee increases would result in lower fee amounts for the other prototypes ,because only the Parks &Recreation and TIF Fees apply . •The Tier 2 residential/retail prototypes and all Tier 3 prototypes can support fees beyond the maxima allowable per the respective fee nexus studies,which suggests there is surplus feasibility potential available to support other City policy priorities . •For illustrative purposes,surplus value potential could be translated into higher percentages of affordable housing .Tier 2 and 3 residential/retail projects Downtown could provide 17 %to 33 %of total units per project as affordable housing after incurring the maximum allowable fees ,depending on Downtown subarea, affordability level and Tier . HR&A Advisors, Inc. | Los Angeles | New York | Washington, D.C. | Dallas PRO FORMA TABLE OF CONTENTS The following pro formas detail HR&A ’s financial analysis of three prototypical projects within the Santa Monica Downtown Community Plan area in order to test increases to certain Tier 2 and 3 fees.  Pro Forma A : Uniform 23% Tier 2 and 703% Tier 3 Fee Increases on All Prototypes  Pro Forma B : Uniform 1,358% Tier 2 and 1,915% Tier 3 Fee Increases on Mixed -Use Blvd Prototype  Pro Forma C : Uniform 2,033% Tier 2 and 2,400% Tier 3 Fee Increases on Res. Transit -Adjacent Prototype  Pro Forma D : Extremely Low Income Affordable Housing Increase Over Parks/Rec & TIF Nexus Study Maxima  Pro Forma E : Very Low Income Affordable Housing Increase Over Parks/Rec & TIF Nexus Study Maxima  Pro Forma F : Low Income Affordable Housing Increase Over Parks/Rec & TIF Nexus Study Maxima Draft Work Product - Not for Public Distribution Pro Forma A Uniform 23% Tier 2 and 703% Tier 3 Fee Increases on All Prototypes Summary Results Program Summary (see Sheet A) Prototype Name Office/RetailOffice/RetailResidential/RetailResidential/RetailResidential/RetailResidential/Retail LocationTransit-AdjacentTransit-AdjacentTransit-AdjacentTransit-AdjacentMixed BoulevardMixed Boulevard LUCE Tier232323 Permit Requirement # Parcels1 1 1 1 1 1 Bldg. Height (Feet)52 72 62 72 50 60 Stories (#)4 6 5 6 4 5 Site Area (SF)15,000 15,000 15,000 15,000 15,000 15,000 Gross Bldg. Area (SF)39,833 59,833 59,347 70,229 39,587 48,751 Floor Area Ratio (FAR) - Gross Area2.66 3.99 3.96 4.68 2.64 3.25 Floor Area Ratio (FAR) - Net Area2.30 3.50 3.37 4.00 2.22 2.75 Net Leasable Areas Residential (SF)- - 45,500 55,000 28,250 36,250 Market Rate Units- - 52 61 33 40 Affordable Units- - 5 7 3 5 Total Units- - 57 68 36 45 Retail (SF)5,000 5,000 5,000 5,000 5,000 5,000 Office (SF)29,500 47,500 - - - - Hotel (SF)- - - - - - Development Costs (see Sheets B&C&D) Land Costs7,500,000 $ 7,500,000 $ 7,500,000 $ 7,500,000 $ 7,500,000 $ 7,500,000 $ Hard Costs12,783,854 $ 19,302,782 $ 13,214,575 $ 15,428,898 $ 9,242,655 $ 11,087,057 $ Soft Costs2,818,451 $ 7,688,517 $ 2,867,456 $ 4,035,215 $ 1,923,720 $ 2,854,148 $ Net Parks/Recreation Fee76,477 $ 441,503 $ 297,784 $ 780,191 $ 183,704 $ 560,482 $ Net Affordable Housing Linkage Fee364,692 $ 2,136,099 $ -$ -$ -$ -$ Net Transportation Impact Fee295,676 $ 1,894,606 $ 121,401 $ 366,202 $ 48,923 $ 238,091 $ Other City Costs (see Sheet E)489,790 $ 711,566 $ 554,900 $ 646,612 $ 391,494 $ 465,993 $ Other Soft Costs2,328,661 $ 6,976,951 $ 2,312,557 $ 3,388,603 $ 1,532,226 $ 2,388,156 $ Financing Costs2,486,199 $ 3,711,808 $ 2,646,982 $ 3,034,545 $ 2,047,709 $ 2,361,020 $ Total Development Cost25,588,504 $ 38,203,107 $ 26,229,013 $ 29,998,658 $ 20,714,084 $ 23,802,225 $ per GSF$642$638$442$427$523$488 Net Operating Income (NOI) (see Sheet E) Residential-Market Rate Effective Gross Income-$ -$ 2,408,820 $ 2,850,000 $ 1,525,320 $ 1,861,620 $ Less: Operating Expenses-$ -$ (780,000)$ (915,000)$ (495,000)$ (600,000)$ Net Operating Income-$ -$ 1,628,820 $ 1,935,000 $ 1,030,320 $ 1,261,620 $ Residential-Affordable Effective Gross Income-$ -$ 24,492 $ 34,404 $ 13,992 $ 24,492 $ Less: Operating Expenses-$ -$ (75,000)$ (105,000)$ (45,000)$ (75,000)$ Net Operating Income-$ -$ (50,508)$ (70,596)$ (31,008)$ (50,508)$ Retail Effective Gross Income342,000 $ 342,000 $ 342,000 $ 342,000 $ 342,000 $ 342,000 $ Less: Operating Expenses(10,260)$ (10,260)$ (10,260)$ (10,260)$ (10,260)$ (10,260)$ Net Operating Income331,740 $ 331,740 $ 331,740 $ 331,740 $ 331,740 $ 331,740 $ Office Effective Gross Income1,661,322 $ 2,675,010 $ -$ -$ -$ -$ Less: Operating Expenses(249,198)$ (401,252)$ -$ -$ -$ -$ Net Operating Income1,346,545 $ 2,168,165 $ -$ -$ -$ -$ Total Net Operating Income1,678,285 $ 2,499,905 $ 1,910,052 $ 2,196,144 $ 1,331,052 $ 1,542,852 $ Project Component Values (see Sheet F) Residential-Market Rate NOI-$ -$ 1,628,820 $ 1,935,000 $ 1,030,320 $ 1,261,620 $ Cap Rate4.80%4.80%4.80%4.80%4.80%4.80% Value-$ -$ 33,933,750 $ 40,312,500 $ 21,465,000 $ 26,283,750 $ Residential-Affordable NOI-$ -$ -$ -$ -$ -$ Cap Rate4.80%4.80%4.80%4.80%4.80%4.80% Value-$ -$ -$ -$ -$ -$ Retail NOI331,740 $ 331,740 $ 331,740 $ 331,740 $ 331,740 $ 331,740 $ Cap Rate5.90%5.90%5.90%5.90%5.90%5.90% Value5,622,712 $ 5,622,712 $ 5,622,712 $ 5,622,712 $ 5,622,712 $ 5,622,712 $ Office NOI1,346,545 $ 2,168,165 $ -$ -$ -$ -$ Cap Rate5.70%5.70%5.70%5.70%5.70%5.70% Value23,623,596 $ 38,037,982 $ -$ -$ -$ -$ Total Project Value29,246,308 $ 43,660,694 $ 39,556,462 $ 45,935,212 $ 27,087,712 $ 31,906,462 $ Developer Returns Developer Profit Total Project Value29,246,308 $ 43,660,694 $ 39,556,462 $ 45,935,212 $ 27,087,712 $ 31,906,462 $ Less: Total Development Cost(25,588,504)$ (38,203,107)$ (26,229,013)$ (29,998,658)$ (20,714,084)$ (23,802,225)$ Profit3,657,804 $ 5,457,587 $ 13,327,449 $ 15,936,554 $ 6,373,628 $ 8,104,237 $ % of Value 12.5%12.5%33.7%34.7%23.5%25.4% Profit No Fees4,394,649 $ 9,929,795 $ 13,746,633 $ 17,082,947 $ 6,606,255 $ 8,902,809 $ Feasible? (i.e. = or > 12.5%)YESYESYESYESYESYES Return on Total Development Cost NOI1,678,285 $ 2,499,905 $ 1,910,052 $ 2,196,144 $ 1,331,052 $ 1,542,852 $ Total Development Cost(25,588,504)$ (38,203,107)$ (26,229,013)$ (29,998,658)$ (20,714,084)$ (23,802,225)$ Return on Cost 6.56%6.54%7.28%7.32%6.43%6.48% Return on Cost No Fees 6.75%7.41%7.40%7.61%6.50%6.71% Feasible? (i.e. = or > 0.75% + Weighted Cap)YESYESYESYESYESYES Weighted Cap Rate 5.73%5.72%4.91%4.89%4.97%4.93% Page 1 of 7 HR&A Advisors, Inc. Pro Forma A. Downtown Santa Monica Tier 2 and 3 Uniform Fee Increase Analysis All Prototypes/Summary 11/1/2016 Draft Work Product - Not for Public Distribution Pro Forma A Uniform 23% Tier 2 and 703% Tier 3 Fee Increases on All Prototypes A. Physical Parameter s Prototype Name Office/RetailOffice/RetailResidential/RetailResidential/RetailResidential/RetailResidential/Retail LocationTransit-AdjacentTransit-AdjacentTransit-AdjacentTransit-AdjacentMixed BoulevardMixed Boulevard LUCE Area LUCE Tier232323 Permit Requirement # Parcels1 1 1 1 1 1 Bldg. Height (Feet)52 72 62 72 50 60 Stories (#)4 6 5 6 4 5 Land Area (SF)15,000 15,000 15,000 15,000 15,000 15,000 Gross Bldg. Area (SF)1 39,833 59,833 59,347 70,229 39,587 48,751 Floor Area Ratio (FAR)-Gross Area 1 2.7 4.0 4.0 4.7 2.6 3.3 Floor Area Ratio (FAR)-Net Area2.3 3.5 3.4 4.0 2.2 2.75 Net Leasable Areas (SF)1 34,500 52,500 50,500 60,000 33,250 41,250 Residential 2 - - 45,500 55,000 28,250 36,250 Retail5,000 5,000 5,000 5,000 5,000 5,000 Office29,500 47,500 Hotel- - - - # Hotel Rooms- - - - - - Residential Unit Mix Office SF29,500 47,500 - - - - Retail SF5,000 5,000 5,000 5,000 5,000 5,000 Hotel SF- - - - - - Residential SF-Target- - 45,500 55,000 28,250 36,250 Market Rate Studio (SF)- - 600 600 600 600 1-BR (SF)- - 700 700 700 700 2-BR (SF)- - 950 950 950 950 3-BR (SF)1,300 1,300 1,300 1,300 Studio (# units)- - 5 7 3 4 1-BR (# units)- - 32 34 21 23 2-BR (# units)- - 10 12 6 9 3-BR (# units)5 8 3 4 Subtotal (# units)- - 52 61 33 40 Affordable 3 Studio (SF)500 500 500 500 1-BR (SF)- - 600 600 600 600 2-BR (SF)- - 850 850 850 850 3-BR (SF)1,080 1,080 1,080 1,080 Studio (# units)1 1 1 1 1-BR (# units)- - 2 3 1 2 2-BR (# units)- - 1 2 1 1 3-BR (# units)- - 1 1 - 1 Subtotal (# units)- - 5 7 3 5 Total Units- - 57 68 36 45 Parking Residential Market Rate (wtd. avg. per unit)4 - - 1.10 1.11 1.09 1.11 Affordable (avg. per unit)- - 1.10 1.14 1.00 1.10 Subtotal Spaces (#)- - 68 82 42 54 Subtotal Plus Guest Spaces (#)- - 75 90 46 59 Retail- - 6 8 3 6 Spaces/500 SF1 1 1 1 1 1 Subtotal Spaces (#)10 10 10 10 10 10 Office Spaces/500 SF1.0 1.0 1.0 1.0 1.0 1.0 Subtotal Spaces (#)59 95 - - - - Hotel Spaces/Guest Room0.75 0.75 0.75 0.75 0.75 0.75 Subtotal Spaces (#)- - - - - - Total Spaces Number69 105 85 100 56 69 Gross Area/Space (SF)-Surface300 300 300 300 300 300 Gross Area/Space (SF)-Subt.350 350 350 350 350 350 Total Parking Area (SF)24,150 36,750 29,750 35,000 19,600 24,150 # Surface- - - - - - # Subt. Levels Total1.6 2.5 2.0 2.3 1.3 1.6 Spaces/Levels 1-269 86 85 86 56 69 Spaces/Levels 3-5- 19 - 14 - - Construction Period (months)18 18 18 18 18 18 Gross Floor Area by Story Site Area15,000 15,000 15,000 15,000 15,000 15,000 Total Gross Bldg. Area39,833 59,833 59,347 70,229 39,587 48,751 Total Floors4 6 5 6 4 5 Floor 15,556 5,556 5,727 5,727 5,727 5,727 Floor 211,111 11,111 14,318 14,318 11,455 11,455 Floor 311,111 11,111 14,318 14,318 10,882 10,882 Floor 410,556 10,556 12,600 12,600 10,023 10,023 Floor 5- 10,000 10,882 10,882 - 9,164 Floor 6- 10,000 - 10,882 - - Total Gross Floor Area39,833 59,833 59,347 70,229 39,587 48,751 FAR-Gross Area2.66 3.99 3.96 4.68 2.64 3.25 Net Floor Area by Story Floor 15,000 5,000 5,000 5,000 5,000 5,000 Floor 210,000 10,000 12,500 12,500 10,000 10,000 Floor 310,000 10,000 12,500 12,500 9,500 9,500 Floor 49,500 9,500 11,000 11,000 8,750 8,750 Floor 5- 9,000 9,500 9,500 - 8,000 Floor 6- 9,000 - 9,500 - - Total34,500 52,500 50,500 60,000 33,250 41,250 Net/Gross Floor Area Overall86.6%87.7%85.1%85.4%84.0%84.6% 1 Per guidance provided by City Planning staff and adjusted for Tier 1 and Tier 2 scenarios by HR&A based on efficiency factors for Tier 3 scenarios 2 Based on unit mix and net leasable floor area by unit type, per City Planning Staff and HR&A. 4 Assumes 0.5 spaces/studio; 1.0 spaces/1-BR unit; and 1.5 spaces/2- & 3-BR units. 3 Assumes 5% for extremely low-income households in Tier 1 scenarios, 7.5% for extremely low-income households in Tier 2 scenar ios, and 10% for extremely low-income households in Tier 3 scenarios. Page 2 of 7 HR&A Advisors, Inc. Pro Forma A. Downtown Santa Monica Tier 2 and 3 Uniform Fee Increase Analysis All Prototypes/A-Program 11/1/2016 Draft Work Product - Not for Public Distribution Pro Forma A Uniform 23% Tier 2 and 703% Tier 3 Fee Increases on All Prototypes B. Development Cost s Prototype Name Office/RetailOffice/RetailResidential/Retai l Residential/Retai l Residential/Retai l Residential/Retai l Location Transit-AdjacentTransit-AdjacentTransit-AdjacentTransit-AdjacentMixed BoulevardMixed Boulevard Land Area 15,000 15,000 15,000 15,000 15,000 15,000 Gross Bldg. Area (SF)39,833 59,833 59,347 70,229 39,587 48,751 Net Leasable Areas (SF) Residential - - 45,500 55,000 28,250 36,250 Retail 5,000 5,000 5,000 5,000 5,000 5,000 Office 29,500 47,500 - - - - Hotel - - - - - - Hotel Rooms - - - - - - Subterranean Parking (spaces)69 105 85 100 56 69 1-2 Levels 69 86 85 86 56 69 3-5 Levels - 19 - 14 - - 188#125#126#107#189#154 Land Cos t 7,500,000 $ 7,500,000 $ 7,500,000 $ 7,500,000 $ 7,500,000 $ 7,500,000 $ Hard Cost 1 Construction Type VVVVVV Building Construction/GSFVaries$185$186$151$149$157$154 Demo/On-Site Improvements$10per Land Area150,000 $ 150,000 $ 150,000 $ 150,000 $ 150,000 $ 150,000 $ Off-Site Improvements$100,000Allowance100,000 $ 100,000 $ 100,000 $ 100,000 $ 100,000 $ 100,000 $ Building Core & ShellVaries7,369,167 $ 11,128,938 $ 8,961,322 $ 10,464,050 $ 6,215,168 $ 7,507,632 $ Retail Tenant Improvements$70x Net Leasable SF350,000 $ 350,000 $ 350,000 $ 350,000 $ 350,000 $ 350,000 $ Office Tenant Improvements$60x Net Leasable SF1,770,000 $ 2,850,000 $ -$ -$ -$ -$ Hotel FF&E$25,000x Rooms-$ -$ -$ -$ -$ -$ Subterranean Parking Surface$5,000per Space-$ -$ -$ -$ -$ -$ 1-2 Levels$37,000per Space2,553,000 $ 3,171,429 $ 3,145,000 $ 3,171,429 $ 2,072,000 $ 2,553,000 $ 3-4 Levels$42,000per Space-$ 810,000 $ -$ 600,000 $ -$ -$ Contingenc y 4%x Subtotal Hard Cost s 491,687 $ 742,415 $ 508,253 $ 593,419 $ 355,487 $ 426,425 $ Subtotal Hard Costs 12,783,854 $ 19,302,782 $ 13,214,575 $ 15,428,898 $ 9,242,655 $ 11,087,057 $ Soft Costs 2 Net Parks/Recreation FeeSee Sheet D76,477 $ 441,503 $ 297,784 $ 780,191 $ 183,704 $ 560,482 $ Net Affordable Housing Linkage FeeSee Sheet D364,692 $ 2,136,099 $ -$ -$ -$ -$ Net TIF FeeSee Sheet D295,676 $ 1,894,606 $ 121,401 $ 366,202 $ 48,923 $ 238,091 $ Other City Permits & FeesSee Sheet C489,790 $ 711,566 $ 554,900 $ 646,612 $ 391,494 $ 465,993 $ A&E/Other Professionals6%x Hard Costs767,031 $ 1,158,167 $ 792,875 $ 925,734 $ 554,559 $ 665,223 $ Marketing/Leasing Commissions Residential$7.50x Net Leasable SF-$ -$ 341,250 $ 412,500 $ 211,875 $ 271,875 $ Retail/Office$3.00x Net Leasable SF103,500 $ 157,500 $ 15,000 $ 15,000 $ 15,000 $ 15,000 $ Legal & Accounting1%x Hard Costs127,839 $ 193,028 $ 132,146 $ 154,289 $ 92,427 $ 110,871 $ Taxes & Insurance1%x Hard Costs127,839 $ 193,028 $ 132,146 $ 154,289 $ 92,427 $ 110,871 $ Pre-Opening Expenses$4.00x Net Leasable SF-$ -$ -$ -$ -$ -$ Developer Fee3%x Hard Costs383,516 $ 579,083 $ 396,437 $ 462,867 $ 277,280 $ 332,612 $ Contingenc y 3%x Subtotal Soft Cost s 82,091 $ 223,937 $ 83,518 $ 117,531 $ 56,031 $ 83,131 $ Subtotal Soft Costs 2,818,451 $ 7,688,517 $ 2,867,456 $ 4,035,215 $ 1,923,720 $ 2,854,148 $ Subtotal Land + Hard + Softs Cost s 23,102,305 $ 34,491,299 $ 23,582,031 $ 26,964,113 $ 18,666,375 $ 21,441,205 $ Financing Costs 3 Loan Term (months)18 Average Loan Balance65.00% Construction Loan Interest Rate6.50% Construction Loan Interest1,464,109 $ 2,185,886 $ 1,494,511 $ 1,708,851 $ 1,182,981 $ 1,358,836 $ Construction Loan Fees3.00%693,069 $ 1,034,739 $ 707,461 $ 808,923 $ 559,991 $ 643,236 $ Capitalized Project Valueper Sheet E Permanent Loan Percent x Value75.00% Permanent Loan Fee s 1.50%329,021 $ 491,183 $ 445,010 $ 516,771 $ 304,737 $ 358,948 $ Subtotal Financing Costs2,486,199 $ 3,711,808 $ 2,646,982 $ 3,034,545 $ 2,047,709 $ 2,361,020 $ Total Development Cos t Land +Hard + Soft + Financing 25,588,50 4 $ 38,203,10 7 $ 26,229,01 3 $ 29,998,65 8 $ 20,714,08 4 $ 23,802,22 5 $ per GSF 642.39 $ 638.50 $ 441.96 $ 427.16 $ 523.25 $ 488.24 $ 1 83% x calculated values, per Marshall & Swift Commercial Cost Estimator, May 2016; HR&A Advisors, Inc., to account for certai n hard costs and soft costs accounted for separately. 2 Per HR&A's experience with similar projects. 3 Per RealtyRates mortgage rates and terms survey for Q1 2016. Assumptions Page 3 of 7 HR&A Advisors, Inc. Pro Forma A. Downtown Santa Monica Tier 2 and 3 Uniform Fee Increase Analysis All Prototypes/B-Dev Costs 11/1/2016 Draft Work Product - Not for Public Distribution Pro Forma A Uniform 23% Tier 2 and 703% Tier 3 Fee Increases on All Prototypes C. City Fees & Permit Cost s Prototype Name Office/RetailOffice/RetailResidential/Retai l Residential/Retai l Residential/Retai l Residential/Retai l Location Transit-AdjacentTransit-AdjacentTransit-AdjacentTransit-AdjacentMixed BoulevardMixed Boulevard Land Area 15,000 15,000 15,000 15,000 15,000 15,000 Gross Bldg. Area (SF)39,833 59,833 59,347 70,229 39,587 48,751 Residential Units Market Rate Studios - - 5 7 3 4 1-BR - - 32 34 21 23 2-BR - - 10 12 6 9 3-BR - - 5 8 3 4 Affordable Studios - - 1 1 1 1 1-BR - - 2 3 1 2 2-BR - - 1 2 1 1 3-BR - - 1 1 - 1 Residential (Net Leasable SF)- - 45,500 55,000 28,250 36,250 Retail (Net Leasable SF)5,000 5,000 5,000 5,000 5,000 5,000 Office (Net Leasable SF)29,500 47,500 - - - - Hotel (Net Leasable SF)- - - - - - New Affordable Hsg. Linkage Fee 1 N/AN/A364,692 $ 2,136,099 $ -$ -$ -$ -$ New Parks Fee 1 N/AN/A76,477 $ 441,503 $ 297,784 $ 780,191 $ 183,704 $ 560,482 $ New TIF Fee 1 N/AN/A295,676 $ 1,894,606 $ 121,401 $ 366,202 $ 48,923 $ 238,091 $ Planning Permits 2 Development Review$17,738per project-$ -$ -$ -$ -$ -$ Development Agreement$25,000per project-$ -$ -$ -$ -$ -$ Architectural Review Board$3,588per project3,588 $ 3,588 $ 3,588 $ 3,588 $ 3,588 $ 3,588 $ CEQA Categorical Exemptio n $15,648per projec t 15,648 $ 15,648 $ 15,648 $ 15,648 $ 15,648 $ 15,648 $ Subtota l 19,236 $ 19,236 $ 19,236 $ 19,236 $ 19,236 $ 19,236 $ Other Requirements 3 Arts Fee New Residential/Commercial1.00%x $200/SF79,667 $ 119,666 $ 118,693 $ 140,457 $ 79,174 $ 97,502 $ Tenant Improvements1.00%x $50/SF17,250 $ 26,250 $ 2,500 $ 2,500 $ 2,500 $ 2,500 $ Child Care Fee Market Rate Residential$142.40per unit-$ -$ 6,693 $ 7,547 $ 4,272 $ 5,126 $ Retail$4.84x leasable area24,200 $ 24,200 $ 24,200 $ 24,200 $ 24,200 $ 24,200 $ Office$6.76x leasable area199,420 $ 321,100 $ -$ -$ -$ -$ Hotel$3.39x leasable area-$ -$ -$ -$ -$ -$ School Facilities Fee Residential$3.48x leasable area-$ -$ 158,340 $ 191,400 $ 98,310 $ 126,150 $ Commercial$0.56x leasable are a 19,320 $ 29,400 $ 2,800 $ 2,800 $ 2,800 $ 2,800 $ Subtota l 339,857 $ 520,61 6 $ 313,22 6 $ 368,90 4 $ 211,25 6 $ 258,278 $ Bldg./Construction Permits 2 Plan Check Residential 4+ stories$533.14$0.98x leasable area-$ -$ 44,968 $ 54,246 $ 28,122 $ 35,935 $ Commercial <10K SF$511.91$1.36x leasable area14,112 $ 14,112 $ 7,312 $ 7,312 $ 7,312 $ 7,312 $ Commercial >10K SF/4 stories$0.41x leasable area9,964 $ 17,285 $ -$ -$ -$ -$ Mechanical$778per project$778$778$778$778$778$778 Electrical$778per project$778$778$778$778$778$778 Plumbing$778per project$778$778$778$778$778$778 Building Permits/Inspections Multi-family 4+ Stories130.37$1.10x leasable area-$ -$ 49,971 $ 60,377 $ 31,075 $ 39,839 $ Commercial 1-Story124.75$1.28x leasable area12,890 $ 12,890 $ 6,507 $ 6,507 $ 6,507 $ 6,507 $ Commercial 4+ stories$0.80x leasable area19,485 $ 33,800 $ -$ -$ -$ -$ Tenant Improvements <10K SF132.54$0.38x leasable area3,981 $ 3,981 $ 2,057 $ 2,057 $ 2,057 $ 2,057 $ Tenant Improvements >10K SF$0.30x leasable area7,294 $ 12,652 $ -$ -$ -$ -$ Geotechnical Report s $2,655per projec t 2,655 $ 2,655 $ 2,655 $ 2,655 $ 2,655 $ 2,655 $ Subtota l 72,71 5 $ 99,710 $ 115,80 5 $ 135,489 $ 80,063 $ 96,640 $ Utility Fees 2 Water Meter 3 $4,2913/4" meter per project4,291 $ 4,291 $ 4,291 $ 4,291 $ 4,291 $ 4,291 $ Fireline Meter 3 $26,8164" meter per project26,816 $ 26,816 $ 26,816 $ 26,816 $ 26,816 $ 26,816 $ Wastewater Capital Facilities Studio/1-BR Units$1,168per unit-$ -$ 46,720 $ 53,728 $ 30,368 $ 35,040 $ 2-BR Units$1,557per unit-$ -$ 17,127 $ 21,798 $ 10,899 $ 15,570 $ 3-BR Units$1,947per unit-$ -$ 7,785 $ 12,456 $ 4,671 $ 6,228 $ Commercial$779 per 1,000 leasable S F 26,876 $ 40,898 $ 3,895 $ 3,895 $ 3,895 $ 3,895 $ Subtota l 57,982 $ 72,00 4 $ 106,633 $ 122,983 $ 80,939 $ 91,839 $ per GSF $19.72$43.56$11.40$14.42$11.13$14.44 1 Based on current fee rates; see Sheet D for Tier sensitivity calculation details. 2 Per FY 2015-16 City fee schedules. 3 Includes meter and capital facilities charges. Assumptions Page 4 of 7 HR&A Advisors, Inc. Pro Forma A. Downtown Santa Monica Tier 2 and 3 Uniform Fee Increase Analysis All Prototypes/C-City Cost Detail 11/1/2016 Draft Work Product - Not for Public Distribution Pro Forma A Uniform 23% Tier 2 and 703% Tier 3 Fee Increases on All Prototypes D. Parks/Recreation, Afforable Housing Linkage, and Transportation Impact Fees Prototype Name Office/RetailOffice/RetailResidential/RetailResidential/RetailResidential/RetailResidential/Retail Location Transit-AdjacentTransit-AdjacentTransit-AdjacentTransit-AdjacentMixed BoulevardMixed Boulevard Land Area 15,000 15,000 15,000 15,000 15,000 15,000 Gross Bldg. Area (SF)39,833 59,833 59,347 70,229 39,587 48,751 Residential Units - - 57 68 36 45 Market Rate Studios - - 5 7 3 4 1-BR - - 32 34 21 23 2-BR - - 10 12 6 9 3-BR - - 5 8 3 4 Affordable Studios - - 1 1 1 1 1-BR - - 2 3 1 2 2-BR - - 1 2 1 1 3-BR - - 1 1 - 1 Residential (Net Leasable SF)- - 45,500 55,000 28,250 36,250 Retail (Net Leasable SF)5,000 5,000 5,000 5,000 5,000 5,000 Office (Net Leasable SF)29,500 47,500 - - - - Hotel (Net Leasable SF)- - - - - - Adopted Parks/Recreation Fe e X% x Adopted Fees Tier 1Tier 2Tier 3 Market Rate Housing100%123%803% 0-1 BRs100%123%803%$4,231.93per unit-$ -$ 178,968 $ 374,119 $ 115,193 $ 259,440 $ 2+ BRs100%123%803%$6,816.30per unit-$ -$ 122,626 $ 409,882 $ 72,321 $ 304,852 $ Affordable Housing100%123%803%$0per unit-$ -$ -$ -$ -$ -$ Retail100%123%803%$1.52x leasable area7,619 $ 7,619 $ 7,619 $ 7,619 $ 7,619 $ 7,619 $ Office100%123%803%$2.36x leasable area80,287 $ 445,313 $ -$ -$ -$ -$ Hotel100%123%803%$3.18x leasable area-$ -$ -$ -$ -$ -$ Subtotal Fee 87,906 $ 452,932 $ 309,21 3 $ 791,620 $ 195,13 3 $ 571,911 $ Less: Fee on Existing SF Retail100%123%803%$1.52x leasable area(11,429)$ (11,429)$ (11,429)$ (11,429)$ (11,429)$ (11,429)$ Office100%123%803%$2.36x leasable area -$ -$ -$ -$ -$ -$ Net Fee 76,477 $ 441,50 3 $ 297,78 4 $ 780,191 $ 183,70 4 $ 560,482 $ Adopted Affordable Housing Linkage Fee X% x Adopted Fees 100%123%803% Retail100%123%803%$9.97x leasable area49,857 $ 49,857 $ 49,857 $ 49,857 $ 49,857 $ 49,857 $ Office100%123%803%$11.46x leasable area389,620 $ 2,161,027 $ -$ -$ -$ -$ Subtotal Fee 439,477 $ 2,210,88 4 $ 49,857 $ 49,857 $ 49,857 $ 49,857 $ Less: Fee on Existing SF Retail100%123%803%$9.97x leasable area(74,785)$ (74,785)$ (74,785)$ (74,785)$ (74,785)$ (74,785)$ Office100%123%803%$11.46x leasable area-$ -$ -$ -$ -$ -$ Net Fee 364,692 $ 2,136,099 $ -$ -$ -$ -$ TIF Fees X% x Adopted Fees 100%123%803% Market Rate-Area 1100%123%803%$2,773.75per unit-$ -$ 177,409 $ 422,210 $ 104,931 $ 294,099 $ Market Rate-Area 2100%123%803%$3,520.52per unit-$ -$ -$ -$ -$ -$ Affordable100%123%803%$0.00per unit-$ -$ -$ -$ -$ -$ Retail-Area 1100%123%803%$22.40x leasable area112,017 $ 112,017 $ 112,017 $ 112,017 $ 112,017 $ 112,017 $ Retail-Area 2100%123%803%$32.11x leasable area-$ -$ -$ -$ -$ -$ Office-Area 1100%123%803%$10.35x leasable area351,684 $ 1,950,614 $ -$ -$ -$ -$ Office-Area 2100%123%803%$11.52x leasable area-$ -$ -$ -$ -$ -$ Hotel-Area 1 & 2100%123%803%$3.84x leasable area-$ -$ -$ -$ -$ -$ Subtotal 463,701 $ 2,062,631 $ 289,426 $ 534,227 $ 216,948 $ 406,116 $ Reduction for Existing Retail A llowance(168,025 )$ (168,025 )$ (168,025 )$ (168,025 )$ (168,025 )$ (168,025 )$ NET TIF Fee 295,67 6 $ 1,894,60 6 $ 121,401 $ 366,202 $ 48,923 $ 238,091 $ Combined New Fees 736,84 5 $ 4,472,208 $ 419,18 5 $ 1,146,39 3 $ 232,627 $ 798,57 3 $ Assumptions Assumptions Assumptions Page 5 of 7 HR&A Advisors, Inc. Pro Forma A. Downtown Santa Monica Tier 2 and 3 Uniform Fee Increase Analysis All Prototypes/D-Fee Sensitivities 11/1/2016 Draft Work Product - Not for Public Distribution Pro Forma A Uniform 23% Tier 2 and 703% Tier 3 Fee Increases on All Prototypes E. Net Operating Income Prototype Name Office/RetailOffice/RetailResidential/RetailResidential/RetailResidential/RetailResidential/Retail Location Transit-AdjacentTransit-AdjacentTransit-AdjacentTransit-AdjacentMixed BoulevardMixed Boulevard Land Area 15,000 15,000 15,000 15,000 15,000 15,000 Gross Bldg. Area (SF)39,833 59,833 59,347 70,229 39,587 48,751 Residential Units - - 57 68 36 45 Market Rate - - 52 61 33 40 Studio - - 5 7 3 4 1-BR - - 32 34 21 23 2-BR - - 10 12 6 9 3-BR 5 8 3 4 Affordable - - 5 7 3 5 Studio - - 1 1 1 1 1-BR - - 2 3 1 2 2-BR - - 1 2 1 1 3-BR - - 1 1 - 1 Retail (Net Leasable SF)5,000 5,000 5,000 5,000 5,000 5,000 Office (Net Leasable SF)29,500 47,500 - - - - Hotel (Net Leasable SF)- - - - - - Parking Spaces 69 105 85 100 56 69 Residential - - 68 82 42 54 Retail 10 10 10 10 10 10 Office 59 95 - - - - Hotel 000000 For-Rent Residential- Market Rate 1 Studio Rent/Unit/MonthVaries$3,300$3,300$3,300$3,300$3,300$3,300 1-BR Rent/Unit/MonthVaries$3,800$3,800$3,800$3,800$3,800$3,800 2-BR Rent/Unit/MonthVaries$4,300$4,300$4,300$4,300$4,300$4,300 3-BR Rent/Unit/MonthVaries$5,000$5,000$5,000$5,000$5,000$5,000 Units Income/Year -$ -$ 2,473,200 $ 2,926,800 $ 1,566,000 $ 1,911,600 $ Other Income100.00 $ x Unit-$ -$ 62,400 $ 73,200 $ 39,600 $ 48,000 $ Gross Income -$ -$ 2,535,600 $ 3,000,000 $ 1,605,600 $ 1,959,600 $ Less: Vacancy & Collection Los s 5.0%x Gross Income-$ -$ (126,780 )$ (150,000 )$ (80,280)$ (97,980)$ Effective Gross Income (EGI)-$ -$ 2,408,820 $ 2,850,000 $ 1,525,320 $ 1,861,620 $ Less: Operating Expenses (incl. reserve) 1 15,000 $ x Unit-$ -$ (780,000)$ (915,000)$ (495,000)$ (600,000)$ Net Operating Income -$ -$ 1,628,820 $ 1,935,000 $ 1,030,320 $ 1,261,620 $ For-Rent Residential - Affordable (VL)3 Studio Rent/Unit/Month 340 $ 340 $ 340 $ 340 $ 340 $ 340 $ 1-BR Rent/Unit/Month 389 $ 389 $ 389 $ 389 $ 389 $ 389 $ 2-BR Rent/Unit/Month 437 $ 437 $ 437 $ 437 $ 437 $ 437 $ 3-BR Rent/Unit/Month 486 $ 486 $ 486 $ 486 $ 486 $ 486 $ Units Income/Year -$ -$ 24,492 $ 34,404 $ 13,992 $ 24,492 $ Other Income0.0%x Units Income-$ -$ -$ -$ -$ -$ Gross Income -$ -$ 24,492 $ 34,404 $ 13,992 $ 24,492 $ Less: Vacancy & Collection Los s 0.0%x Gross Income-$ -$ -$ -$ -$ -$ Effective Gross Income (EGI)-$ -$ 24,492 $ 34,404 $ 13,992 $ 24,492 $ Less: Operating Expenses (inc. reserve) 1 15,000 $ x Unit-$ -$ (75,000)$ (105,000)$ (45,000)$ (75,000)$ Net Operating Income -$ -$ (50,508)$ (70,596)$ (31,008)$ (50,508)$ Retail 2 Average Rent/SF/Month (NNN)Varies6.00 $ 6.00 $ 6.00 $ 6.00 $ 6.00 $ 6.00 $ Gross Rental Income/Year360,000 $ 360,000 $ 360,000 $ 360,000 $ 360,000 $ 360,000 $ Less: Vacancy & Collection Los s 5.0%x Gross Income(18,000)$ (18,000)$ (18,000)$ (18,000)$ (18,000)$ (18,000)$ Effective Gross Income (EGI)342,000 $ 342,000 $ 342,000 $ 342,000 $ 342,000 $ 342,000 $ Less: Unreimbursed Operating Expenses3.0%x EGI(10,260)$ (10,260)$ (10,260)$ (10,260)$ (10,260)$ (10,260)$ Net Operating Income331,740 $ 331,740 $ 331,740 $ 331,740 $ 331,740 $ 331,740 $ Office 2 Average Rent/SF/Month (MG)4.55 $ 4.55 $ 4.55 $ 4.55 $ 4.55 $ 4.55 $ Gross Rental Income/Year1,610,700 $ 2,593,500 $ -$ -$ -$ -$ Parking Income 4 $2,223Wtd. Avg./Space/Yr.131,157 $ 211,185 $ -$ -$ -$ -$ Less: Vacancy & Collection Los s 5.0%x Gross Income(80,535)$ (129,675 )$ -$ -$ -$ -$ Effective Gross Income (EGI)1,661,322 $ 2,675,010 $ -$ -$ -$ -$ Less: Operating Expenses15.0%x EGI(249,198)$ (401,252)$ -$ -$ -$ -$ Less: Parking Expens e 50.0%x Parking Income(65,579)$ (105,593 )$ -$ -$ -$ -$ Net Operating Income1,346,545 $ 2,168,165 $ -$ -$ -$ -$ Total Net Operating Income1,678,28 5 $ 2,499,90 5 $ 1,910,052 $ 2,196,14 4 $ 1,331,052 $ 1,542,852 $ 1 Per HR&A's experience with similar projects. 2 Per HR&A review of third-party market data (i.e. CoStar Group data for similar, recently constructed buildings in the Downtow n Community Plan area). 3 Per City's 2015 rent schedule. 4 Assumes $200/month reserved (10% of supply); $165/month unreserved (85%); and $500/month daily use (5%). Assumptions Page 6 of 7 HR&A Advisors, Inc. Pro Forma A. Downtown Santa Monica Tier 2 and 3 Uniform Fee Increase Analysis All Prototypes/E-Net Ops Income 11/1/2016 Draft Work Product - Not for Public Distribution Pro Forma A Uniform 23% Tier 2 and 703% Tier 3 Fee Increases on All Prototypes F. Returns Prototype Name Office/RetailOffice/RetailResidential/RetailResidential/RetailResidential/RetailResidential/Retail LocationTransit-AdjacentTransit-AdjacentTransit-AdjacentTransit-AdjacentMixed BoulevardMixed Boulevard Land Area 15,000 15,000 15,000 15,000 15,000 15,000 Gross Bldg. Area (SF)39,833 59,833 59,347 70,229 39,587 48,751 Residential Units Market Rate Studio - - 5 7 3 4 1-BR - - 32 34 21 23 2-BR - - 10 12 6 9 3-BR - - 5 8 3 4 Affordable Studio - - 1 1 1 1 1-BR - - 2 3 1 2 2-BR - - 1 2 1 1 3-BR - - 1 1 - 1 Retail (Net Leasable SF)5,000 5,000 5,000 5,000 5,000 5,000 Office (Net Leasable SF)29,500 47,500 - - - - Hotel (Net Leasable SF)- - - - - - Project Value Residential-Market Rate Net Operating IncomeFrom Sheet E-$ -$ 1,628,820 $ 1,935,000 $ 1,030,320 $ 1,261,620 $ Cap Rate 1 4.80% ValueNOI/Cap Rate-$ -$ 33,933,750 $ 40,312,500 $ 21,465,000 $ 26,283,750 $ Residential-Affordable Net Operating IncomeFrom Sheet E-$ -$ -$ -$ -$ -$ Cap Rate 1 4.80% ValueNOI/Cap Rate-$ -$ -$ -$ -$ -$ Retail Net Operating IncomeFrom Sheet E331,740 $ 331,740 $ 331,740 $ 331,740 $ 331,740 $ 331,740 $ Cap Rate 1 5.90% ValueNOI/Cap Rate5,622,712 $ 5,622,712 $ 5,622,712 $ 5,622,712 $ 5,622,712 $ 5,622,712 $ Office Net Operating IncomeFrom Sheet E1,346,545 $ 2,168,165 $ -$ -$ -$ -$ Cap Rate 1 5.70% ValueNOI/Cap Rate23,623,596 $ 38,037,982 $ -$ -$ -$ -$ Total Project Value29,246,308 $ 43,660,694 $ 39,556,462 $ 45,935,212 $ 27,087,712 $ 31,906,462 $ Developer Returns Developer Profit Total Project ValueFrom above29,246,308 $ 43,660,694 $ 39,556,462 $ 45,935,212 $ 27,087,712 $ 31,906,462 $ Less: Total Development Cos t From Sheet B(25,588,504 )$ (38,203,107 )$ (26,229,013 )$ (29,998,658 )$ (20,714,084 )$ (23,802,225 )$ Profit 3,657,804 $ 5,457,587 $ 13,327,449 $ 15,936,554 $ 6,373,628 $ 8,104,237 $ % of Value 12.5%12.5%33.7%34.7%23.5%25.4% Return on Total Development Cost NOIFrom Sheet E1,678,285 $ 2,499,905 $ 1,910,052 $ 2,196,144 $ 1,331,052 $ 1,542,852 $ Total Development CostFrom Sheet B(25,588,504)$ (38,203,107)$ (26,229,013)$ (29,998,658)$ (20,714,084)$ (23,802,225)$ Return on Cost 6.56%6.54%7.28%7.32%6.43%6.48% 1 Based on Real Estate Research Corporation cap rate data for Q1 2016. Assumptions Page 7 of 7 HR&A Advisors, Inc. Pro Forma A. Downtown Santa Monica Tier 2 and 3 Uniform Fee Increase Analysis All Prototypes/F-Returns 11/1/2016 Draft Work Product - Not for Public Distribution Pro Forma B Uniform 1,358% Tier 2 and 1,915% Tier 3 Fee Increases on Mixed-Use Blvd Prototype Summary Results Program Summary (see Sheet A) Prototype Name Residential/RetailResidential/Retail LocationMixed BoulevardMixed Boulevard LUCE Tier23 Permit Requirement # Parcels1 1 Bldg. Height (Feet)50 60 Stories (#)4 5 Site Area (SF)15,000 15,000 Gross Bldg. Area (SF)39,587 48,751 Floor Area Ratio (FAR) - Gross Area2.64 3.25 Floor Area Ratio (FAR) - Net Area2.22 2.75 Net Leasable Areas Residential (SF)28,250 36,250 Market Rate Units33 40 Affordable Units3 5 Total Units36 45 Retail (SF)5,000 5,000 Office (SF)- - Hotel (SF)- - Development Costs (see Sheets B&C&D) Land Costs7,500,000 $ 7,500,000 $ Hard Costs9,242,655 $ 11,087,057 $ Soft Costs4,195,840 $ 5,867,693 $ Net Parks/Recreation Fee1,611,888 $ 2,473,113 $ Net Affordable Housing Linkage Fee-$ -$ Net Transportation Impact Fee826,681 $ 1,251,232 $ Other City Costs (see Sheet E)391,494 $ 465,993 $ Other Soft Costs3,804,346 $ 5,401,701 $ Financing Costs2,259,869 $ 2,642,411 $ Total Development Cost23,198,364 $ 27,097,161 $ per GSF$586$556 Net Operating Income (NOI) (see Sheet E) Residential-Market Rate Effective Gross Income1,525,320 $ 1,861,620 $ Less: Operating Expenses(495,000)$ (600,000)$ Net Operating Income1,030,320 $ 1,261,620 $ Residential-Affordable Effective Gross Income13,992 $ 24,492 $ Less: Operating Expenses(45,000)$ (75,000)$ Net Operating Income(31,008)$ (50,508)$ Retail Effective Gross Income342,000 $ 342,000 $ Less: Operating Expenses(10,260)$ (10,260)$ Net Operating Income331,740 $ 331,740 $ Office Effective Gross Income-$ -$ Less: Operating Expenses-$ -$ Net Operating Income-$ -$ Total Net Operating Income1,331,052 $ 1,542,852 $ Project Component Values (see Sheet F) Residential-Market Rate NOI1,030,320 $ 1,261,620 $ Cap Rate4.80%4.80% Value21,465,000 $ 26,283,750 $ Residential-Affordable NOI-$ -$ Cap Rate4.80%4.80% Value-$ -$ Retail NOI331,740 $ 331,740 $ Cap Rate5.90%5.90% Value5,622,712 $ 5,622,712 $ Office NOI-$ -$ Cap Rate5.70%5.70% Value-$ -$ Total Project Value27,087,712 $ 31,906,462 $ Developer Returns Developer Profit Total Project Value27,087,712 $ 31,906,462 $ Less: Total Development Cost(23,198,364)$ (27,097,161)$ Profit3,889,348 $ 4,809,301 $ % of Value 14.4%15.1% Profit No Fees6,327,917 $ 8,533,645 $ Feasible? (i.e. = or > 12.5%)YESYES Return on Total Development Cost NOI1,331,052 $ 1,542,852 $ Total Development Cost(23,198,364)$ (27,097,161)$ Return on Cost 5.74%5.69% Return on Cost No Fees 6.41%6.60% Feasible? (i.e. = or > 0.75% + Weighted Cap)YESYES Weighted Cap Rate 4.97%4.93% Page 1 of 8 HR&A Advisors, Inc. Pro Forma B. Downtown Santa Monica Tier 2 and 3 Mixed Use Boulevard Prototype Analysis/Summary 11/1/2016 Draft Work Product - Not for Public Distribution Pro Forma B Uniform 1,358% Tier 2 and 1,915% Tier 3 Fee Increases on Mixed-Use Blvd Prototype A. Physical Parameter s Prototype Name Residential/RetailResidential/Retail LocationMixed BoulevardMixed Boulevard LUCE Area LUCE Tier23 Permit Requirement # Parcels1 1 Bldg. Height (Feet)50 60 Stories (#)4 5 Land Area (SF)15,000 15,000 Gross Bldg. Area (SF)1 39,587 48,751 Floor Area Ratio (FAR)-Gross Area 1 2.6 3.3 Floor Area Ratio (FAR)-Net Area2.2 2.75 Net Leasable Areas (SF)1 33,250 41,250 Residential 2 28,250 36,250 Retail5,000 5,000 Office Hotel # Hotel Rooms- - Residential Unit Mix Office SF- - Retail SF5,000 5,000 Hotel SF- - Residential SF-Target28,250 36,250 Market Rate Studio (SF)600 600 1-BR (SF)700 700 2-BR (SF)950 950 3-BR (SF)1,300 1,300 Studio (# units)3 4 1-BR (# units)21 23 2-BR (# units)6 9 3-BR (# units)3 4 Subtotal (# units)33 40 Affordable 3 Studio (SF)500 500 1-BR (SF)600 600 2-BR (SF)850 850 3-BR (SF)1,080 1,080 Studio (# units)1 1 1-BR (# units)1 2 2-BR (# units)1 1 3-BR (# units)- 1 Subtotal (# units)3 5 Total Units36 45 Parking Residential Market Rate (wtd. avg. per unit)4 1.09 1.11 Affordable (avg. per unit)1.00 1.10 Subtotal Spaces (#)42 54 Subtotal Plus Guest Spaces (#)46 59 Retail3 6 Spaces/500 SF1 1 Subtotal Spaces (#)10 10 Office Spaces/500 SF1.0 1.0 Subtotal Spaces (#)- - Hotel Spaces/Guest Room0.75 0.75 Subtotal Spaces (#)- - Total Spaces Number56 69 Gross Area/Space (SF)-Surface300 300 Gross Area/Space (SF)-Subt.350 350 Total Parking Area (SF)19,600 24,150 # Surface- - # Subt. Levels Total1.3 1.6 Spaces/Levels 1-256 69 Spaces/Levels 3-5- - Construction Period (months)18 18 Gross Floor Area by Stor y Site Area15,000 15,000 Total Gross Bldg. Area39,587 48,751 Total Floors4 5 Floor 15,727 5,727 Floor 211,455 11,455 Floor 310,882 10,882 Fl oor 4 10 ,023 10 ,023 Fl oor 5 - 9 ,164 Fl oor 6 - - Total Gross Floor Area39,587 48,751 FAR-Gross Are a 2.64 3.25 Net Floor Area by Story Floor 15,000 5,000 Floor 210,000 10,000 Floor 39,500 9,500 Fl oor 4 8 ,750 8 ,750 Fl oor 5 - 8 ,000 Fl oor 6 - - Total33,250 41,250 Net/Gross Floor Area Overall84.0%84.6% 4 Assumes 0.5 spaces/studio; 1.0 spaces/1-BR unit; and 1.5 spaces/2- & 3-BR units. 3 Assumes 5% for extremely low-income households in Tier 1 scenarios, 7.5% for extremely low-income households in Tier 2 scenarios, and 10% for extremely low-income households in Tier 3 scenarios. 1 Per guidance provided by City Planning staff and adjusted for Tier 1 and Tier 2 scenarios by HR&A based on efficiency factors for Tier 3 scenarios 2 Based on unit mix and net leasable floor area by unit type, per City Planning Staff and HR&A. Page 2 of 8 HR&A Advisors, Inc. Pro Forma B. Downtown Santa Monica Tier 2 and 3 Mixed Use Boulevard Prototype Analysis/A-Program 11/1/2016 Draft Work Product - Not for Public Distribution Pro Forma B Uniform 1,358% Tier 2 and 1,915% Tier 3 Fee Increases on Mixed-Use Blvd Prototype B. Development Costs Prototype Name Residential/RetailResidential/Retail Location Mixed BoulevardMixed Boulevard Land Area 15,000 15,000 Gross Bldg. Area (SF)39,587 48,751 Net Leasable Areas (SF) Residential 28,250 36,250 Retail 5,000 5,000 Office - - Hotel - - Hotel Rooms - - Subterranean Parking (spaces)56 69 1-2 Levels 56 69 3-5 Levels - - 189#154 Land Cost 7,500,000 $ 7,500,000 $ Hard Cost 1 Construction Type VV Building Construction/GSFVaries$157$154 Demo/On-Site Improvements$10per Land Area150,000 $ 150,000 $ Off-Site Improvements$100,000Allowance100,000 $ 100,000 $ Building Core & ShellVaries6,215,168 $ 7,507,632 $ Retail Tenant Improvements$70x Net Leasable SF350,000 $ 350,000 $ Office Tenant Improvements$60x Net Leasable SF-$ -$ Hotel FF&E$25,000x Rooms-$ -$ Subterranean Parking Surface$5,000per Space-$ -$ 1-2 Levels$37,000per Space2,072,000 $ 2,553,000 $ 3-4 Levels$42,000per Space-$ -$ Contin g enc y 4%x Subtotal Hard Cost s 355,48 7 $ 426,42 5 $ Subtotal Hard Costs 9,242,655 $ 11,087,057 $ Soft Costs 2 Net Parks/Recreation FeeSee Sheet D1,611,888 $ 2,473,113 $ Net Affordable Housing Linkage FeeSee Sheet D-$ -$ Net TIF FeeSee Sheet D826,681 $ 1,251,232 $ Other City Permits & FeesSee Sheet C391,494 $ 465,993 $ A&E/Other Professionals6%x Hard Costs554,559 $ 665,223 $ Marketing/Leasing Commissions Residential$7.50x Net Leasable SF211,875 $ 271,875 $ Retail/Office$3.00x Net Leasable SF15,000 $ 15,000 $ Legal & Accounting1%x Hard Costs92,427 $ 110,871 $ Taxes & Insurance1%x Hard Costs92,427 $ 110,871 $ Pre-Opening Expenses$4.00x Net Leasable SF-$ -$ Developer Fee3%x Hard Costs277,280 $ 332,612 $ Contin g enc y 3%x Subtotal Soft Cost s 122,20 9 $ 170,90 4 $ Subtotal Soft Costs 4,195,840 $ 5,867,693 $ Subtotal Land + Hard + Softs Costs 20,938,495 $ 24,454,750 $ Financing Costs 3 Loan Term (months)18 Average Loan Balance65.00% Construction Loan Interest Rate6.50% Construction Loan Interest1,326,977 $ 1,549,820 $ Construction Loan Fees3.00%628,155 $ 733,643 $ Capitalized Project Valueper Sheet E Permanent Loan Percent x Value75.00% Permanent Loan Fee s 1.50%304,73 7 $ 358,94 8 $ Subtotal Financing Costs2,259,869 $ 2,642,411 $ Total Development Cost Land +Hard + Soft + Financing 23,198,364 $ 27,097,161 $ per GSF 586.01 $ 555.83 $ 2 Per HR&A's experience with similar projects. 3 Per RealtyRates mortgage rates and terms survey for Q1 2016. Assumptions 1 83% x calculated values, per Marshall & Swift Commercial Cost Estimator, May 2016; HR&A Advisors, Inc., to account for certai n hard costs and soft costs accounted for separately. Page 3 of 8 HR&A Advisors, Inc. Pro Forma B. Downtown Santa Monica Tier 2 and 3 Mixed Use Boulevard Prototype Analysis/B-Dev Costs 11/1/2016 Draft Work Product - Not for Public Distribution Pro Forma B Uniform 1,358% Tier 2 and 1,915% Tier 3 Fee Increases on Mixed-Use Blvd Prototype C. City Fees & Permit Costs Prototype Name Residential/RetailResidential/Retail Location Mixed BoulevardMixed Boulevard Land Area 15,000 15,000 Gross Bldg. Area (SF)39,587 48,751 Residential Units Market Rate Studios 3 4 1-BR 21 23 2-BR 6 9 3-BR 3 4 Affordable Studios 1 1 1-BR 1 2 2-BR 1 1 3-BR - 1 Residential (Net Leasable SF)28,250 36,250 Retail (Net Leasable SF)5,000 5,000 Office (Net Leasable SF)- - Hotel (Net Leasable SF)- - New Affordable Hsg. Linkage Fee 1 N/AN/A-$ -$ New Parks Fee 1 N/AN/A1,611,888 $ 2,473,113 $ New TIF Fee 1 N/AN/A826,681 $ 1,251,232 $ Planning Permits 2 Development Review$17,738per project-$ -$ Development Agreement$25,000per project-$ -$ Architectural Review Board$3,588per project3,588 $ 3,588 $ CEQA Categorical Exemption$15,648per project15,648 $ 15,648 $ Subtotal 19,236 $ 19,236 $ Other Requirements 3 Arts Fee New Residential/Commercial1.00%x $200/SF79,174 $ 97,502 $ Tenant Improvements1.00%x $50/SF2,500 $ 2,500 $ Child Care Fee Market Rate Residential$142.40per unit4,272 $ 5,126 $ Retail$4.84x leasable area24,200 $ 24,200 $ Office$6.76x leasable area-$ -$ Hotel$3.39x leasable area-$ -$ School Facilities Fee Residential$3.48x leasable area98,310 $ 126,150 $ Commercial$0.56x leasable area2,800 $ 2,800 $ Subtotal 211,256 $ 258,278 $ Bldg./Construction Permits 2 Plan Check Residential 4+ stories$533.14$0.98x leasable area28,122 $ 35,935 $ Commercial <10K SF$511.91$1.36x leasable area7,312 $ 7,312 $ Commercial >10K SF/4 stories$0.41x leasable area-$ -$ Mechanical$778per project$778$778 Electrical$778per project$778$778 Plumbing$778per project$778$778 Building Permits/Inspections Multi-family 4+ Stories130.37$1.10x leasable area31,075 $ 39,839 $ Commercial 1-Story124.75$1.28x leasable area6,507 $ 6,507 $ Commercial 4+ stories$0.80x leasable area-$ -$ Tenant Improvements <10K SF132.54$0.38x leasable area2,057 $ 2,057 $ Tenant Improvements >10K SF$0.30x leasable area-$ -$ Geotechnical Reports$2,655per project2,655 $ 2,655 $ Subtotal 80,063 $ 96,640 $ Utility Fees 2 Water Meter 3 $4,2913/4" meter per project4,291 $ 4,291 $ Fireline Meter 3 $26,8164" meter per project26,816 $ 26,816 $ Wastewater Capital Facilities Studio/1-BR Units$1,168per unit30,368 $ 35,040 $ 2-BR Units$1,557per unit10,899 $ 15,570 $ 3-BR Units$1,947per unit4,671 $ 6,228 $ Commercial$779 per 1,000 leasable SF3,895 $ 3,895 $ Subtotal 80,939 $ 91,839 $ per GSF $30.77$35.22 1 Based on current fee rates; see Sheet D for Tier sensitivity calculation details. 2 Per FY 2015-16 City fee schedules. 3 Includes meter and capital facilities charges. Assumptions Page 4 of 8 HR&A Advisors, Inc. Pro Forma B. Downtown Santa Monica Tier 2 and 3 Mixed Use Boulevard Prototype Analysis/C-City Cost Detail 11/1/2016 Draft Work Product - Not for Public Distribution Pro Forma B Uniform 1,358% Tier 2 and 1,915% Tier 3 Fee Increases on Mixed-Use Blvd Prototype D. Parks/Recreation, Afforable Housing Linkage, and Transportation Impact Fee s Prototype Name Residential/RetailResidential/Retail Location Mixed BoulevardMixed Boulevard Land Area 15,000 15,000 Gross Bldg. Area (SF)39,587 48,751 Residential Units 36 45 Market Rate Studios 3 4 1-BR 21 23 2-BR 6 9 3-BR 3 4 Affordable Studios 1 1 1-BR 1 2 2-BR 1 1 3-BR - 1 Residential (Net Leasable SF)28,250 36,250 Retail (Net Leasable SF)5,000 5,000 Office (Net Leasable SF)- - Hotel (Net Leasable SF)- - Adopted Parks/Recreation Fee X% x Adopted Fees Tier 1Tier 2Tier 3 Market Rate Housing100%1458%2015% 0-1 BRs100%1458%2015%$4,231.93per unit906,281 $ 1,204,439 $ 2+ BRs100%1458%2015%$6,816.30per unit709,417 $ 1,272,484 $ Affordable Housing100%1458%2015%$0per unit-$ -$ Retail100%1458%2015%$1.52x leasable area7,619 $ 7,619 $ Office100%1458%2015%$2.36x leasable area-$ -$ Hotel100%1458%2015%$3.18x leasable area-$ -$ Subtotal Fee 1,623,317 $ 2,484,542 $ Less: Fee on Existing SF Retail100%1458%2015%$1.52x leasable area(11,429)$ (11,429)$ Office100%1458%2015%$2.36x leasable area -$ -$ Net Fee 1,611,888 $ 2,473,113 $ Adopted Affordable Housing Linkage Fe e X% x Adopted Fees 100%1458%2015% Retail100%1458%2015%$9.97x leasable area49,857 $ 49,857 $ Office100%1458%2015%$11.46x leasable area-$ -$ Subtotal Fee 49,857 $ 49,857 $ Less: Fee on Existing SF Retail100%1458%2015%$9.97x leasable area(74,785)$ (74,785)$ Office100%1458%2015%$11.46x leasable area-$ -$ Net Fee -$ -$ TIF Fees X% x Adopted Fees 100%1458%2015% Market Rate-Area 1100%1458%2015%$2,773.75per unit882,689 $ 1,307,240 $ Market Rate-Area 2100%1458%2015%$3,520.52per unit-$ -$ Affordable100%1458%2015%$0.00per unit-$ -$ Retail-Area 1100%1458%2015%$22.40x leasable area112,017 $ 112,017 $ Retail-Area 2100%1458%2015%$32.11x leasable area-$ -$ Office-Area 1100%1458%2015%$10.35x leasable area-$ -$ Office-Area 2100%1458%2015%$11.52x leasable area-$ -$ Hotel-Area 1 & 2100%1458%2015%$3.84x leasable area-$ -$ Subtotal 994,706 $ 1,419,257 $ Reduction for Existing RetailAllowance(168,025)$ (168,025)$ NET TIF Fee 826,681 $ 1,251,232 $ Combined New Fees 2,438,569 $ 3,724,345 $ Assumptions Assumptions Assumptions Page 5 of 8 HR&A Advisors, Inc. Pro Forma B. Downtown Santa Monica Tier 2 and 3 Mixed Use Boulevard Prototype Analysis/D-Fee Sensitivities 11/1/2016 Draft Work Product - Not for Public Distribution Pro Forma B Uniform 1,358% Tier 2 and 1,915% Tier 3 Fee Increases on Mixed-Use Blvd Prototype E. Net Operating Income Prototype Name Residential/RetailResidential/Retail Location Mixed BoulevardMixed Boulevard Land Area 15,000 15,000 Gross Bldg. Area (SF)39,587 48,751 Residential Units 36 45 Market Rate 33 40 Studio 3 4 1-BR 21 23 2-BR 6 9 3-BR 3 4 Affordable 3 5 Studio 1 1 1-BR 1 2 2-BR 1 1 3-BR - 1 Retail (Net Leasable SF)5,000 5,000 Office (Net Leasable SF)- - Hotel (Net Leasable SF)- - Parking Spaces 56 69 Residential 42 54 Retail 10 10 Office - - Hotel 00 For-Rent Residential- Market Rate 1 Studio Rent/Unit/MonthVaries$3,300$3,300 1-BR Rent/Unit/MonthVaries$3,800$3,800 2-BR Rent/Unit/MonthVaries$4,300$4,300 3-BR Rent/Unit/MonthVaries$5,000$5,000 Units Income/Year 1,566,000 $ 1,911,600 $ Other Income100.00 $ x Uni t 39,600 $ 48,000 $ Gross Income 1,605,600 $ 1,959,600 $ Less: Vacancy & Collection Los s 5.0%x Gross Income(80,280)$ (97,980)$ Effective Gross Income (EGI)1,525,320 $ 1,861,620 $ Less: Operating Expenses (incl. reserve) 1 15,000 $ x Unit(495,000)$ (600,000)$ Net Operating Income1,030,320 $ 1,261,620 $ For-Rent Residential - Affordable (VL)3 Studio Rent/Unit/Month 340 $ 340 $ 1-BR Rent/Unit/Month 389 $ 389 $ 2-BR Rent/Unit/Month 437 $ 437 $ 3-BR Rent/Unit/Month 486 $ 486 $ Units Income/Year 13,992 $ 24,492 $ Other Income0.0%x Units Incom e -$ -$ Gross Income 13,992 $ 24,492 $ Less: Vacancy & Collection Los s 0.0%x Gross Income-$ -$ Effective Gross Income (EGI)13,992 $ 24,492 $ Less: Operating Expenses (inc. reserve) 1 15,000 $ x Unit(45,000)$ (75,000)$ Net Operating Income (31,008)$ (50,508)$ Retail 2 Average Rent/SF/Month (NNN)Varies6.00 $ 6.00 $ Gross Rental Income/Year360,000 $ 360,000 $ Less: Vacancy & Collection Los s 5.0%x Gross Income(18,000)$ (18,000)$ Effective Gross Income (EGI)342,000 $ 342,000 $ Less: Unreimbursed Operating Expenses3.0%x EGI(10,260)$ (10,260)$ Net Operating Income 331,740 $ 331,740 $ Office 2 Average Rent/SF/Month (MG)4.55 $ 4.55 $ Gross Rental Income/Year-$ -$ Parking Income 4 $2,223Wtd. Avg./Space/Yr.-$ -$ Less: Vacancy & Collection Los s 5.0%x Gross Income-$ -$ Effective Gross Income (EGI)-$ -$ Less: Operating Expenses15.0%x EGI-$ -$ Less: Parking Expens e 50.0%x Parking Incom e -$ -$ Net Operating Income -$ -$ Total Net Operating Income1,331,052 $ 1,542,852 $ 1 Per HR&A's experience with similar projects. 3 Per City's 2015 rent schedule. 4 Assumes $200/month reserved (10% of supply); $165/month unreserved (85%); and $500/month daily use (5%). Assumptions 2 Per HR&A review of third-party market data (i.e. CoStar Group data for similar, recently constructed buildings in the Downtow n Community Plan area). Page 6 of 8 HR&A Advisors, Inc. Pro Forma B. Downtown Santa Monica Tier 2 and 3 Mixed Use Boulevard Prototype Analysis/E-Net Ops Income 11/1/2016 Draft Work Product - Not for Public Distribution Pro Forma B Uniform 1,358% Tier 2 and 1,915% Tier 3 Fee Increases on Mixed-Use Blvd Prototype F. Returns Prototype Name Residential/RetailResidential/Retail LocationMixed BoulevardMixed Boulevard Land Area 15,000 15,000 Gross Bldg. Area (SF)39,587 48,751 Residential Units Market Rate Studio 3 4 1-BR 21 23 2-BR 6 9 3-BR 3 4 Affordable Studio 1 1 1-BR 1 2 2-BR 1 1 3-BR - 1 Retail (Net Leasable SF)5,000 5,000 Office (Net Leasable SF)- - Hotel (Net Leasable SF)- - Project Value Residential-Market Rate Net Operating IncomeFrom Sheet E1,030,320 $ 1,261,620 $ Cap Rate 1 4.80% ValueNOI/Cap Rate21,465,000 $ 26,283,750 $ Residential-Affordable Net Operating IncomeFrom Sheet E-$ -$ Cap Rate 1 4.80% ValueNOI/Cap Rate-$ -$ Retail Net Operating IncomeFrom Sheet E331,740 $ 331,740 $ Cap Rate 1 5.90% ValueNOI/Cap Rate5,622,712 $ 5,622,712 $ Office Net Operating IncomeFrom Sheet E-$ -$ Cap Rate 1 5.70% ValueNOI/Cap Rate-$ -$ Total Project Value27,087,712 $ 31,906,462 $ Developer Returns Developer Profit Total Project ValueFrom above27,087,712 $ 31,906,462 $ Less: Total Development CostFrom Sheet B(23,198,364)$ (27,097,161)$ Profit 3,889,348 $ 4,809,301 $ % of Value 14.4%15.1% Return on Total Development Cost NOIFrom Sheet E1,331,052 $ 1,542,852 $ Total Development CostFrom Sheet B(23,198,364)$ (27,097,161)$ Return on Cost 5.74%5.69% 1 Based on Real Estate Research Corporation cap rate data for Q1 2016. Assumptions Page 7 of 8 HR&A Advisors, Inc. Pro Forma B. Downtown Santa Monica Tier 2 and 3 Mixed Use Boulevard Prototype Analysis/F-Returns 11/1/2016 Draft Work Product - Not for Public Distribution Pro Forma C Uniform 2,033% Tier 2 and 2,400% Tier 3 Fee Increases on Res. Transit-Adjacent Prototype Summary Results Program Summary (see Sheet A) Prototype Name Residential/RetailResidential/Retail LocationTransit-AdjacentTransit-Adjacent LUCE Tier23 Permit Requirement # Parcels1 1 Bldg. Height (Feet)62 72 Stories (#)5 6 Site Area (SF)15,000 15,000 Gross Bldg. Area (SF)59,347 70,229 Floor Area Ratio (FAR) - Gross Area3.96 4.68 Floor Area Ratio (FAR) - Net Area3.37 4.00 Net Leasable Areas Residential (SF)45,500 55,000 Market Rate Units52 61 Affordable Units5 7 Total Units57 68 Retail (SF)5,000 5,000 Office (SF)- - Hotel (SF)- - Development Costs (see Sheets B&C&D) Land Costs7,500,000 $ 7,500,000 $ Hard Costs13,214,575 $ 15,428,898 $ Soft Costs9,702,190 $ 12,198,004 $ Net Parks/Recreation Fee4,034,754 $ 5,382,864 $ Net Affordable Housing Linkage Fee-$ -$ Net Transportation Impact Fee3,020,094 $ 3,688,567 $ Other City Costs (see Sheet E)554,900 $ 646,612 $ Other Soft Costs9,147,290 $ 11,551,392 $ Financing Costs3,285,175 $ 3,796,745 $ Total Development Cost33,701,940 $ 38,923,647 $ per GSF$568$554 Net Operating Income (NOI) (see Sheet E) Residential-Market Rate Effective Gross Income2,408,820 $ 2,850,000 $ Less: Operating Expenses(780,000)$ (915,000)$ Net Operating Income1,628,820 $ 1,935,000 $ Residential-Affordable Effective Gross Income24,492 $ 34,404 $ Less: Operating Expenses(75,000)$ (105,000)$ Net Operating Income(50,508)$ (70,596)$ Retail Effective Gross Income342,000 $ 342,000 $ Less: Operating Expenses(10,260)$ (10,260)$ Net Operating Income331,740 $ 331,740 $ Office Effective Gross Income-$ -$ Less: Operating Expenses-$ -$ Net Operating Income-$ -$ Total Net Operating Income1,910,052 $ 2,196,144 $ Project Component Values (see Sheet F) Residential-Market Rate NOI1,628,820 $ 1,935,000 $ Cap Rate4.80%4.80% Value33,933,750 $ 40,312,500 $ Residential-Affordable NOI-$ -$ Cap Rate4.80%4.80% Value-$ -$ Retail NOI331,740 $ 331,740 $ Cap Rate5.90%5.90% Value5,622,712 $ 5,622,712 $ Office NOI-$ -$ Cap Rate5.70%5.70% Value-$ -$ Total Project Value39,556,462 $ 45,935,212 $ Developer Returns Developer Profit Total Project Value39,556,462 $ 45,935,212 $ Less: Total Development Cost(33,701,940)$ (38,923,647)$ Profit5,854,522 $ 7,011,565 $ % of Value 14.8%15.3% Profit No Fees12,909,370 $ 16,082,996 $ Feasible? (i.e. = or > 12.5%)YESYES Return on Total Development Cost NOI1,910,052 $ 2,196,144 $ Total Development Cost(33,701,940)$ (38,923,647)$ Return on Cost 5.67%5.64% Return on Cost No Fees 7.17%7.36% Feasible? (i.e. = or > 0.75% + Weighted Cap)YESYES Weighted Cap Rate 4.91%4.89% Page 1 of 8 HR&A Advisors, Inc. Pro Forma C. Downtown Santa Monica Tier 2 and 3 Residential Transit-Adjacent Prototype Analysis/Summary 11/1/2016 Draft Work Product - Not for Public Distribution Pro Forma C Uniform 2,033% Tier 2 and 2,400% Tier 3 Fee Increases on Res. Transit-Adjacen t Prototyp e A. Physical Parameter s Prototype Name Residential/Retai l Residential/Retai l LocationTransit-AdjacentTransit-Adjacent LUCE Area LUCE Tier23 Permit Requirement # Parcels1 1 Bldg. Height (Feet)62 72 Stories (#)5 6 Land Area (SF)15,000 15,000 Gross Bldg. Area (SF)1 59,347 70,229 Floor Area Ratio (FAR)-Gross Area 1 4.0 4.7 Floor Area Ratio (FAR)-Net Area3.4 4.0 Net Leasable Areas (SF)1 50,500 60,000 Residential 2 45,500 55,000 Retail5,000 5,000 Office Hotel- - # Hotel Rooms- - Residential Unit Mi x Office SF- - Retail SF5,000 5,000 Hotel SF- - Residential SF-Target45,500 55,000 Market Rate Studio (SF)600 600 1-BR (SF)700 700 2-BR (SF)950 950 3-BR (SF)1,300 1,300 Studio (# units)5 7 1-BR (# units)32 34 2-BR (# units)10 12 3-BR (# units )5 8 Subtotal (# units)52 61 Affordable 3 Studio (SF)500 500 1-BR (SF)600 600 2-BR (SF)850 850 3-BR (SF)1,080 1,080 Studio (# units)1 1 1-BR (# units)2 3 2-BR (# units )1 2 3-BR (# units )1 1 Subtotal (# units)5 7 Total Units57 68 Parking Residential Market Rate (wtd. avg. per unit)4 1.10 1.11 Affordable (avg. per unit)1.10 1.14 Subtotal Spaces (#)68 82 Subtotal Plus Guest Spaces (#)75 90 Retail6 8 Spaces/500 SF1 1 Subtotal Spaces (#)10 10 Office Spaces/500 SF1.0 1.0 Subtotal Spaces (#)- - Hotel Spaces/Guest Room0.75 0.75 Subtotal Spaces (#)- - Total Spaces Number85 100 Gross Area/Space (SF)-Surface300 300 Gross Area/Space (SF)-Subt.350 350 Total Parking Area (SF)29,750 35,000 # Surface- - # Subt. Levels Total2.0 2.3 Spaces/Levels 1-285 86 Spaces/Levels 3-5 - 14 Construction Period (months)18 18 Gross Floor Area by Story Site Area15,000 15,000 Total Gross Bldg. Area59,347 70,229 Total Floors5 6 Floor 15,727 5,727 Floor 214,318 14,318 Floor 314,318 14,318 Floor 4 12,600 12,600 Floor 5 10,882 10,882 Floor 6 - 10,882 Total Gross Floor Area59,347 70,229 FAR-Gross Area3.96 4.68 Net Floor Area by Story Floor 15,000 5,000 Floor 212,500 12,500 Floor 312,500 12,500 Floor 4 11,000 11,000 Floor 5 9,500 9,500 Floor 6 - 9,500 Total50,500 60,000 Net/Gross Floor Area Overall85.1%85.4% 4 Assumes 0.5 spaces/studio; 1.0 spaces/1-BR unit; and 1.5 spaces/2- & 3-BR units. 3 Assumes 5% for extremely low-income households in Tier 1 scenarios, 7.5% f o extremely low-income households in Tier 2 scenarios, and 10% for extremely low-income households in Tier 3 scenarios. 1 Per guidance provided by City Planning staff and adjusted for Tier 1 and Tier 2 scenarios by HR&A based on efficiency factors for Tier 3 scenarios. 2 Based on unit mix and net leasable floor area by unit type, per City Planning Staff and HR&A. Page 2 of 8 HR&A Advisors, Inc. Pro Forma C. Downtown Santa Monica Tier 2 and 3 Residential Transit-Adjacent Prototype Analysis/A-Program 11/1/2016 Draft Work Product - Not for Public Distribution Pro Forma C Uniform 2,033% Tier 2 and 2,400% Tier 3 Fee Increases on Res. Transit-Adjacent Prototype B. Development Costs Prototype Name Residential/RetailResidential/Retail Location Transit-AdjacentTransit-Adjacent Land Area 15,000 15,000 Gross Bldg. Area (SF)59,347 70,229 Net Leasable Areas (SF) Residential 45,500 55,000 Retail 5,000 5,000 Office - - Hotel - - Hotel Rooms - - Subterranean Parking (spaces)85 100 1-2 Levels 85 86 3-5 Levels - 14 126#107# Land Cost 7,500,000 $ 7,500,000 $ Hard Cost 1 Construction Type VV Building Construction/GSFVaries$151$149 Demo/On-Site Improvements$10per Land Area150,000 $ 150,000 $ Off-Site Improvements$100,000Allowance100,000 $ 100,000 $ Building Core & ShellVaries8,961,322 $ 10,464,050 $ Retail Tenant Improvements$70x Net Leasable SF350,000 $ 350,000 $ Office Tenant Improvements$60x Net Leasable SF-$ -$ Hotel FF&E$25,000x Rooms-$ -$ Subterranean Parking Surface$5,000per Space-$ -$ 1-2 Levels$37,000per Space3,145,000 $ 3,171,429 $ 3-4 Levels$42,000per Space-$ 600,000 $ Contin g enc y 4%x Subtotal Hard Cost s 508,25 3 $ 593,41 9 $ Subtotal Hard Costs 13,214,575 $ 15,428,898 $ Soft Costs 2 Net Parks/Recreation FeeSee Sheet D4,034,754 $ 5,382,864 $ Net Affordable Housing Linkage FeeSee Sheet D-$ -$ Net TIF FeeSee Sheet D3,020,094 $ 3,688,567 $ Other City Permits & FeesSee Sheet C554,900 $ 646,612 $ A&E/Other Professionals6%x Hard Costs792,875 $ 925,734 $ Marketing/Leasing Commissions Residential$7.50x Net Leasable SF341,250 $ 412,500 $ Retail/Office$3.00x Net Leasable SF15,000 $ 15,000 $ Legal & Accounting1%x Hard Costs132,146 $ 154,289 $ Taxes & Insurance1%x Hard Costs132,146 $ 154,289 $ Pre-Opening Expenses$4.00x Net Leasable SF-$ -$ Developer Fee3%x Hard Costs396,437 $ 462,867 $ Contin g enc y 3%x Subtotal Soft Cost s 282,58 8 $ 355,282 $ Subtotal Soft Costs 9,702,190 $ 12,198,004 $ Subtotal Land + Hard + Softs Costs 30,416,765 $ 35,126,902 $ Financing Costs 3 Loan Term (months)18 Average Loan Balance65.00% Construction Loan Interest Rate6.50% Construction Loan Interest1,927,662 $ 2,226,167 $ Construction Loan Fees3.00%912,503 $ 1,053,807 $ Capitalized Project Valueper Sheet E Permanent Loan Percent x Value75.00% Permanent Loan Fee s 1.50%445,01 0 $ 516,771 $ Subtotal Financing Costs3,285,175 $ 3,796,745 $ Total Development Cost Land +Hard + Soft + Financing 33,701,940 $ 38,923,647 $ per GSF 567.88 $ 554.24 $ 2 Per HR&A's experience with similar projects. 3 Per RealtyRates mortgage rates and terms survey for Q1 2016. Assumptions 1 83% x calculated values, per Marshall & Swift Commercial Cost Estimator, May 2016; HR&A Advisors, Inc., to account for certai n hard costs and soft costs accounted for separately. Page 3 of 8 HR&A Advisors, Inc. Pro Forma C. Downtown Santa Monica Tier 2 and 3 Residential Transit-Adjacent Prototype Analysis/B-Dev Costs 11/1/2016 Draft Work Product - Not for Public Distribution Pro Forma C Uniform 2,033% Tier 2 and 2,400% Tier 3 Fee Increases on Res. Transit-Adjacent Prototype C. City Fees & Permit Costs Prototype Name Residential/RetailResidential/Retail Location Transit-AdjacentTransit-Adjacent Land Area 15,000 15,000 Gross Bldg. Area (SF)59,347 70,229 Residential Units Market Rate Studios 5 7 1-BR 32 34 2-BR 10 12 3-BR 5 8 Affordable Studios 1 1 1-BR 2 3 2-BR 1 2 3-BR 1 1 Residential (Net Leasable SF)45,500 55,000 Retail (Net Leasable SF)5,000 5,000 Office (Net Leasable SF)- - Hotel (Net Leasable SF)- - New Affordable Hsg. Linkage Fee 1 N/AN/A-$ -$ New Parks Fee 1 N/AN/A4,034,754 $ 5,382,864 $ New TIF Fee 1 N/AN/A3,020,094 $ 3,688,567 $ Planning Permits 2 Development Review$17,738per project-$ -$ Development Agreement$25,000per project-$ -$ Architectural Review Board$3,588per project3,588 $ 3,588 $ CEQA Categorical Exemption$15,648per project15,648 $ 15,648 $ Subtotal 19,236 $ 19,236 $ Other Requirements 3 Arts Fee New Residential/Commercial1.00%x $200/SF118,693 $ 140,457 $ Tenant Improvements1.00%x $50/SF2,500 $ 2,500 $ Child Care Fee Market Rate Residential$142.40per unit6,693 $ 7,547 $ Retail$4.84x leasable area24,200 $ 24,200 $ Office$6.76x leasable area-$ -$ Hotel$3.39x leasable area-$ -$ School Facilities Fee Residential$3.48x leasable area158,340 $ 191,400 $ Commercial$0.56x leasable area2,800 $ 2,800 $ Subtotal 313,226 $ 368,904 $ Bldg./Construction Permits 2 Plan Check Residential 4+ stories$533.14$0.98x leasable area44,968 $ 54,246 $ Commercial <10K SF$511.91$1.36x leasable area7,312 $ 7,312 $ Commercial >10K SF/4 stories$0.41x leasable area-$ -$ Mechanical$778per project$778$778 Electrical$778per project$778$778 Plumbing$778per project$778$778 Building Permits/Inspections Multi-family 4+ Stories130.37$1.10x leasable area49,971 $ 60,377 $ Commercial 1-Story124.75$1.28x leasable area6,507 $ 6,507 $ Commercial 4+ stories$0.80x leasable area-$ -$ Tenant Improvements <10K SF132.54$0.38x leasable area2,057 $ 2,057 $ Tenant Improvements >10K SF$0.30x leasable area-$ -$ Geotechnical Reports$2,655per project2,655 $ 2,655 $ Subtotal 115,805 $ 135,489 $ Utility Fees 2 Water Meter 3 $4,2913/4" meter per project4,291 $ 4,291 $ Fireline Meter 3 $26,8164" meter per project26,816 $ 26,816 $ Wastewater Capital Facilities Studio/1-BR Units$1,168per unit46,720 $ 53,728 $ 2-BR Units$1,557per unit17,127 $ 21,798 $ 3-BR Units$1,947per unit7,785 $ 12,456 $ Commercial$779 per 1,000 leasable SF3,895 $ 3,895 $ Subtotal 106,633 $ 122,983 $ per GSF $60.24$61.73 1 Based on current fee rates; see Sheet D for Tier sensitivity calculation details. 2 Per FY 2015-16 City fee schedules. 3 Includes meter and capital facilities charges. Assumptions Page 4 of 8 HR&A Advisors, Inc. Pro Forma C. Downtown Santa Monica Tier 2 and 3 Residential Transit-Adjacent Prototype Analysis/C-City Cost Detail 11/1/2016 Draft Work Product - Not for Public Distribution Pro Forma C Uniform 2,033% Tier 2 and 2,400% Tier 3 Fee Increases on Res. Transit-Adjacent Prototyp e D. Parks/Recreation, Afforable Housing Linkage, and Transportation Impact Fee s Prototype Name Residential/RetailResidential/Retail Location Transit-AdjacentTransit-Adjacent Land Area 15,000 15,000 Gross Bldg. Area (SF)59,347 70,229 Residential Units 57 68 Market Rate Studios 5 7 1-BR 32 34 2-BR 10 12 3-BR 5 8 Affordable Studios 1 1 1-BR 2 3 2-BR 1 2 3-BR 1 1 Residential (Net Leasable SF)45,500 55,000 Retail (Net Leasable SF)5,000 5,000 Office (Net Leasable SF)- - Hotel (Net Leasable SF)- - Adopted Parks/Recreation Fe e X % x Adopted Fee s Tier 1Tier 2Tier 3 Market Rate Housing100%2133%2500% 0-1 BRs100%2133%2500%$4,231.93per unit2,135,103 $ 2,617,543 $ 2+ BRs100%2133%2500%$6,816.30per unit1,903,461 $ 2,769,131 $ Affordable Housing100%2133%2500%$0per unit-$ -$ Retail100%2133%2500%$1.52x leasable area7,619 $ 7,619 $ Office100%2133%2500%$2.36x leasable area-$ -$ Hotel100%2133%2500%$3.18x leasable area-$ -$ Subtotal Fee 4,046,183 $ 5,394,293 $ Less: Fee on Existing SF Retail100%2133%2500%$1.52x leasable area(11,429)$ (11,429)$ Office100%2133%2500%$2.36x leasable area -$ -$ Net Fee 4,034,75 4 $ 5,382,86 4 $ Adopted Affordable Housing Linkage Fe e X % x Adopted Fee s 100%2133%2500% Retail100%2133%2500%$9.97x leasable area49,857 $ 49,857 $ Office100%2133%2500%$11.46x leasable area-$ -$ Subtotal Fee 49,857 $ 49,857 $ Less: Fee on Existing SF Retail100%2133%2500%$9.97x leasable area(74,785)$ (74,785)$ Office100%2133%2500%$11.46x leasable area-$ -$ Net Fee -$ -$ TIF Fees X % x Adopted Fee s 100%2133%2500% Market Rate-Area 1100%2133%2500%$2,773.75per unit3,076,102 $ 3,744,575 $ Market Rate-Area 2100%2133%2500%$3,520.52per unit-$ -$ Affordable100%2133%2500%$0.00per unit-$ -$ Retail-Area 1100%2133%2500%$22.40x leasable area112,017 $ 112,017 $ Retail-Area 2100%2133%2500%$32.11x leasable area-$ -$ Office-Area 1100%2133%2500%$10.35x leasable area-$ -$ Office-Area 2100%2133%2500%$11.52x leasable area-$ -$ Hotel-Area 1 & 2100%2133%2500%$3.84x leasable area-$ -$ Subtotal 3,188,119 $ 3,856,592 $ Reduction for Existing RetailAllowance(168,025)$ (168,025)$ NET TIF Fee 3,020,09 4 $ 3,688,567 $ Combined New Fees 7,054,848 $ 9,071,431 $ Assumptions Assumptions Assumptions Page 5 of 8 HR&A Advisors, Inc. Pro Forma C. Downtown Santa Monica Tier 2 and 3 Residential Transit-Adjacent Prototype Analysis/D-Fee Sensitivities 11/1/2016 Draft Work Product - Not for Public Distribution Pro Forma C Uniform 2,033% Tier 2 and 2,400% Tier 3 Fee Increases on Res. Transit-Adjacent Prototype E. Net Operating Income Prototype Name Residential/RetailResidential/Retail Location Transit-AdjacentTransit-Adjacent Land Area 15,000 15,000 Gross Bldg. Area (SF)59,347 70,229 Residential Units 57 68 Market Rate 52 61 Studio 5 7 1-BR 32 34 2-BR 10 12 3-BR 5 8 Affordable 5 7 Studio 1 1 1-BR 2 3 2-BR 1 2 3-BR 1 1 Retail (Net Leasable SF)5,000 5,000 Office (Net Leasable SF)- - Hotel (Net Leasable SF)- - Parking Spaces 85 100 Residential 68 82 Retail 10 10 Office - - Hotel 00 For-Rent Residential- Market Rate 1 Studio Rent/Unit/MonthVaries$3,300$3,300 1-BR Rent/Unit/MonthVaries$3,800$3,800 2-BR Rent/Unit/MonthVaries$4,300$4,300 3-BR Rent/Unit/MonthVaries$5,000$5,000 Units Income/Year2,473,200 $ 2,926,800 $ Other Income100.00 $ x Uni t 62,400 $ 73,200 $ Gross Income 2,535,600 $ 3,000,000 $ Less: Vacancy & Collection Los s 5.0%x Gross Income(126,780)$ (150,000)$ Effective Gross Income (EGI)2,408,820 $ 2,850,000 $ Less: Operating Expenses (incl. reserve) 1 15,000 $ x Unit(780,000)$ (915,000)$ Net Operating Income1,628,820 $ 1,935,000 $ For-Rent Residential - Affordable (VL)3 Studio Rent/Unit/Month 340 $ 340 $ 1-BR Rent/Unit/Month 389 $ 389 $ 2-BR Rent/Unit/Month 437 $ 437 $ 3-BR Rent/Unit/Month 486 $ 486 $ Units Income/Year 24,492 $ 34,404 $ Other Income0.0%x Units Incom e -$ -$ Gross Income 24,492 $ 34,404 $ Less: Vacancy & Collection Los s 0.0%x Gross Income-$ -$ Effective Gross Income (EGI)24,492 $ 34,404 $ Less: Operating Expenses (inc. reserve) 1 15,000 $ x Unit(75,000)$ (105,000)$ Net Operating Income(50,508)$ (70,596)$ Retail 2 Average Rent/SF/Month (NNN)Varies6.00 $ 6.00 $ Gross Rental Income/Year360,000 $ 360,000 $ Less: Vacancy & Collection Los s 5.0%x Gross Income(18,000)$ (18,000)$ Effective Gross Income (EGI)342,000 $ 342,000 $ Less: Unreimbursed Operating Expenses3.0%x EGI(10,260)$ (10,260)$ Net Operating Income331,740 $ 331,740 $ Office 2 Average Rent/SF/Month (MG)4.55 $ 4.55 $ Gross Rental Income/Year-$ -$ Parking Income 4 $2,223Wtd. Avg./Space/Yr.-$ -$ Less: Vacancy & Collection Los s 5.0%x Gross Income-$ -$ Effective Gross Income (EGI)-$ -$ Less: Operating Expenses15.0%x EGI-$ -$ Less: Parking Expens e 50.0%x Parking Incom e -$ -$ Net Operating Income -$ -$ Total Net Operating Income1,910,052 $ 2,196,144 $ 1 Per HR&A's experience with similar projects. 3 Per City's 2015 rent schedule. 4 Assumes $200/month reserved (10% of supply); $165/month unreserved (85%); and $500/month daily use (5%). Assumptions 2 Per HR&A review of third-party market data (i.e. CoStar Group data for similar, recently constructed buildings in the Downtown Community Plan area). Page 6 of 8 HR&A Advisors, Inc. Pro Forma C. Downtown Santa Monica Tier 2 and 3 Residential Transit-Adjacent Prototype Analysis/E-Net Ops Income 11/1/2016 Draft Work Product - Not for Public Distribution Pro Forma C Uniform 2,033% Tier 2 and 2,400% Tier 3 Fee Increases on Res. Transit-Adjacent Prototype F. Returns Prototype Name Residential/RetailResidential/Retail LocationTransit-AdjacentTransit-Adjacent Land Area 15,000 15,000 Gross Bldg. Area (SF)59,347 70,229 Residential Units Market Rate Studio 5 7 1-BR 32 34 2-BR 10 12 3-BR 5 8 Affordable Studio 1 1 1-BR 2 3 2-BR 1 2 3-BR 1 1 Retail (Net Leasable SF)5,000 5,000 Office (Net Leasable SF)- - Hotel (Net Leasable SF)- - Project Value Residential-Market Rate Net Operating IncomeFrom Sheet E1,628,820 $ 1,935,000 $ Cap Rate 1 4.80% ValueNOI/Cap Rate33,933,750 $ 40,312,500 $ Residential-Affordable Net Operating IncomeFrom Sheet E-$ -$ Cap Rate 1 4.80% ValueNOI/Cap Rate-$ -$ Retail Net Operating IncomeFrom Sheet E331,740 $ 331,740 $ Cap Rate 1 5.90% ValueNOI/Cap Rate5,622,712 $ 5,622,712 $ Office Net Operating IncomeFrom Sheet E-$ -$ Cap Rate 1 5.70% ValueNOI/Cap Rate-$ -$ Total Project Value39,556,462 $ 45,935,212 $ Developer Returns Developer Profit Total Project ValueFrom above39,556,462 $ 45,935,212 $ Less: Total Development CostFrom Sheet B(33,701,940)$ (38,923,647)$ Profit 5,854,522 $ 7,011,565 $ % of Value 14.8%15.3% Return on Total Development Cost NOIFrom Sheet E1,910,052 $ 2,196,144 $ Total Development CostFrom Sheet B(33,701,940)$ (38,923,647)$ Return on Cost 5.67%5.64% 1 Based on Real Estate Research Corporation cap rate data for Q1 2016. Assumptions Page 7 of 8 HR&A Advisors, Inc. Pro Forma C. Downtown Santa Monica Tier 2 and 3 Residential Transit-Adjacent Prototype Analysis/F-Returns 11/1/2016 Draft Work Product - Not for Public Distribution Pro Forma D Extremely Low Income Affordable Housing Increase Over Parks/Rec & TIF Nexus Study Maxima Summary Results Program Summary (see Sheet A) Prototype Name Residential/RetailResidential/RetailResidential/RetailResidential/Retail LocationTransit-AdjacentTransit-AdjacentMixed BoulevardMixed Boulevard LUCE Tier2323 Permit Requirement # Parcels1 1 1 1 Bldg. Height (Feet)62 72 50 60 Stories (#)5 6 4 5 Site Area (SF)15,000 15,000 15,000 15,000 Gross Bldg. Area (SF)59,347 70,229 39,587 48,751 Floor Area Ratio (FAR) - Gross Area3.96 4.68 2.64 3.25 Floor Area Ratio (FAR) - Net Area3.37 4.00 2.22 2.75 Net Leasable Areas Residential (SF)45,500 55,000 28,250 36,250 Market Rate Units43 50 30 37 Affordable Units16 20 6 10 Total Units59 70 36 47 Retail (SF)5,000 5,000 5,000 5,000 Office (SF)- - - - Hotel (SF)- - - - Development Costs (see Sheets B&C&D) Land Costs7,500,000 $ 7,500,000 $ 7,500,000 $ 7,500,000 $ Hard Costs13,298,221 $ 15,428,898 $ 9,242,655 $ 11,164,017 $ Soft Costs3,219,737 $ 3,923,932 $ 2,150,645 $ 2,795,929 $ Net Parks/Recreation Fee616,884 $ 835,906 $ 400,510 $ 612,710 $ Net Affordable Housing Linkage Fee-$ -$ -$ -$ Net Transportation Impact Fee128,862 $ 203,337 $ 54,664 $ 118,044 $ Other City Costs (see Sheet E)561,158 $ 645,721 $ 389,263 $ 468,824 $ Other Soft Costs2,658,579 $ 3,278,211 $ 1,761,382 $ 2,327,106 $ Financing Costs2,621,003 $ 2,939,118 $ 2,044,978 $ 2,337,513 $ Total Development Cost26,638,961 $ 29,791,948 $ 20,938,278 $ 23,797,459 $ per GSF$449$424$529$488 Net Operating Income (NOI) (see Sheet E) Residential-Market Rate Effective Gross Income1,989,300 $ 2,322,180 $ 1,378,260 $ 1,708,860 $ Less: Operating Expenses(645,000)$ (750,000)$ (450,000)$ (555,000)$ Net Operating Income1,344,300 $ 1,572,180 $ 928,260 $ 1,153,860 $ Residential-Affordable Effective Gross Income78,144 $ 97,968 $ 29,160 $ 48,408 $ Less: Operating Expenses(240,000)$ (300,000)$ (90,000)$ (150,000)$ Net Operating Income(161,856)$ (202,032)$ (60,840)$ (101,592)$ Retail Effective Gross Income342,000 $ 342,000 $ 342,000 $ 342,000 $ Less: Operating Expenses(10,260)$ (10,260)$ (10,260)$ (10,260)$ Net Operating Income331,740 $ 331,740 $ 331,740 $ 331,740 $ Office Effective Gross Income-$ -$ -$ -$ Less: Operating Expenses-$ -$ -$ -$ Net Operating Income-$ -$ -$ -$ Total Net Operating Income1,514,184 $ 1,701,888 $ 1,199,160 $ 1,384,008 $ Project Component Values (see Sheet F) Residential-Market Rate NOI1,344,300 $ 1,572,180 $ 928,260 $ 1,153,860 $ Cap Rate4.80%4.80%4.80%4.80% Value28,006,250 $ 32,753,750 $ 19,338,750 $ 24,038,750 $ Residential-Affordable NOI-$ -$ -$ -$ Cap Rate4.80%4.80%4.80%4.80% Value-$ -$ -$ -$ Retail NOI331,740 $ 331,740 $ 331,740 $ 331,740 $ Cap Rate5.90%5.90%5.90%5.90% Value5,622,712 $ 5,622,712 $ 5,622,712 $ 5,622,712 $ Office NOI-$ -$ -$ -$ Cap Rate5.70%5.70%5.70%5.70% Value-$ -$ -$ -$ Total Project Value33,628,962 $ 38,376,462 $ 24,961,462 $ 29,661,462 $ Developer Returns Developer Profit Total Project Value33,628,962 $ 38,376,462 $ 24,961,462 $ 29,661,462 $ Less: Total Development Cost(26,638,961)$ (29,791,948)$ (20,938,278)$ (23,797,459)$ Profit6,990,001 $ 8,584,514 $ 4,023,184 $ 5,864,003 $ % of Value 20.8%22.4%16.1%19.8% Profit No Fees7,735,747 $ 9,623,757 $ 4,478,358 $ 6,594,756 $ Feasible? (i.e. = or > 12.5%)YESYESYESYES Return on Total Development Cost NOI1,514,184 $ 1,701,888 $ 1,199,160 $ 1,384,008 $ Total Development Cost(26,638,961)$ (29,791,948)$ (20,938,278)$ (23,797,459)$ Return on Cost 5.68%5.71%5.73%5.82% Return on Cost No Fees 5.85%5.92%5.85%6.00% Feasible? (i.e. = or > 0.75% + Weighted Cap)YESYESYESYES Weighted Cap Rate 4.91%4.89%4.97%4.93% Page 1 of 8 HR&A Advisors, Inc. Pro Forma D. Extemely Low Income Affordable Housing Percentage Increase after Nexus Maxima Analysis/Summary 11/1/2016 Draft Work Product - Not for Public Distribution Pro Forma D Extremely Low Income Affordable Housing Increase Over Parks/Rec & TIF Nexus Study Maxima A. Physical Parameter s Prototype Name Residential/RetailResidential/RetailResidential/RetailResidential/Retail LocationTransit-AdjacentTransit-AdjacentMixed BoulevardMixed Boulevard LUCE Area LUCE Tier2323 Permit Requirement # Parcels1 1 1 1 Bldg. Height (Feet)62 72 50 60 Stories (#)5 6 4 5 Land Area (SF)15,000 15,000 15,000 15,000 Gross Bldg. Area (SF)1 59,347 70,229 39,587 48,751 Floor Area Ratio (FAR)-Gross Area 1 4.0 4.7 2.6 3.3 Floor Area Ratio (FAR)-Net Area3.4 4.0 2.2 2.75 Net Leasable Areas (SF)1 50,500 60,000 33,250 41,250 Residential 2 45,500 55,000 28,250 36,250 Retail5,000 5,000 5,000 5,000 Office Hotel- - # Hotel Rooms- - - - Residential Unit Mix Office SF- - - - Retail SF5,000 5,000 5,000 5,000 Hotel SF- - - - Residential SF-Target45,500 55,000 28,250 36,250 Market Rate Studio (SF)600 600 600 600 1-BR (SF)700 700 700 700 2-BR (SF)950 950 950 950 3-BR (SF)1,300 1,300 1,300 1,300 Studio (# units)4 6 2 4 1-BR (# units)27 29 21 22 2-BR (# units)8 9 5 8 3-BR (# units)4 6 2 3 Subtotal (# units)43 50 30 37 Affordable Studio (SF)500 500 500 500 1-BR (SF)600 600 600 600 2-BR (SF)850 850 850 850 3-BR (SF)1,080 1,080 1,080 1,080 Studio (# units)1 3 1 1 1-BR (# units)9 9 3 6 2-BR (# units)5 5 1 2 3-BR (# units)1 3 1 1 Subtotal (# units)16 20 6 10 Total Units59 70 36 47 Parking Residential Market Rate (wtd. avg. per unit)3 1.09 1.09 1.08 1.09 Affordable (avg. per unit)1.16 1.13 1.08 1.10 Subtotal Spaces (#)70 82 42 55 Subtotal Plus Guest Spaces (#)77 90 46 61 Retail19 23 6 11 Spaces/500 SF1 1 1 1 Subtotal Spaces (#)10 10 10 10 Office Spaces/500 SF1.0 1.0 1.0 1.0 Subtotal Spaces (#)- - - - Hotel Spaces/Guest Room0.75 0.75 0.75 0.75 Subtotal Spaces (#)- - - - Total Spaces Number87 100 56 71 Gross Area/Space (SF)-Surface300 300 300 300 Gross Area/Space (SF)-Subt.350 350 350 350 Total Parking Area (SF)30,450 35,000 19,600 24,850 # Surface- - - - # Subt. Levels Total2.0 2.3 1.3 1.7 Spaces/Levels 1-286 86 56 71 Spaces/Levels 3-51 14 - - Construction Period (months)18 18 18 18 Gross Floor Area by Story Site Area15,000 15,000 15,000 15,000 Total Gross Bldg. Area59,347 70,229 39,587 48,751 Total Floors5 6 4 5 Floor 15,727 5,727 5,727 5,727 Floor 214,318 14,318 11,455 11,455 Floor 314,318 14,318 10,882 10,882 Floor 412,600 12,600 10,023 10,023 Floor 510,882 10,882 - 9,164 Floor 6- 10,882 - - Total Gross Floor Area59,347 70,229 39,587 48,751 FAR-Gross Area3.96 4.68 2.64 3.25 Net Floor Area by Story Floor 15,000 5,000 5,000 5,000 Floor 212,500 12,500 10,000 10,000 Floor 312,500 12,500 9,500 9,500 Floor 411,000 11,000 8,750 8,750 Floor 59,500 9,500 - 8,000 Floor 6- 9,500 - - Total50,500 60,000 33,250 41,250 Net/Gross Floor Area Overall85.1%85.4%84.0%84.6% 2 Based on unit mix and net leasable floor area by unit type, per City Planning Staff and HR&A. 3 Assumes 0.5 spaces/studio; 1.0 spaces/1-BR unit; and 1.5 spaces/2- & 3-BR units. 1 Per guidance provided by City Planning staff and adjusted for Tier 1 and Tier 2 scenarios by HR&A based on efficiency factors for Tier 3 scenarios Page 2 of 8 HR&A Advisors, Inc. Pro Forma D. Extemely Low Income Affordable Housing Percentage Increase after Nexus Maxima Analysis/A-Program 11/1/2016 Draft Work Product - Not for Public Distribution Pro Forma D Extremely Low Income Affordable Housing Increase Over Parks/Rec & TIF Nexus Study Maxima B. Development Costs Prototype Name Residential/RetailResidential/RetailResidential/RetailResidential/Retail Location Transit-AdjacentTransit-AdjacentMixed BoulevardMixed Boulevard Land Area 15,000 15,000 15,000 15,000 Gross Bldg. Area (SF)59,347 70,229 39,587 48,751 Net Leasable Areas (SF) Residential 45,500 55,000 28,250 36,250 Retail 5,000 5,000 5,000 5,000 Office - - - - Hotel - - - - Hotel Rooms - - - - Subterranean Parking (spaces)87 100 56 71 1-2 Levels 86 86 56 71 3-5 Levels 1 14 - - 126107189154 Land Cost 7,500,000 $ 7,500,000 $ 7,500,000 $ 7,500,000 $ Hard Cost 1 Construction Type VVVV Building Construction/GSFVaries$151$149$157$154 Demo/On-Site Improvements$10per Land Area150,000 $ 150,000 $ 150,000 $ 150,000 $ Off-Site Improvements$100,000Allowance100,000 $ 100,000 $ 100,000 $ 100,000 $ Building Core & ShellVaries8,961,322 $ 10,464,050 $ 6,215,168 $ 7,507,632 $ Retail Tenant Improvements$70x Net Leasable SF350,000 $ 350,000 $ 350,000 $ 350,000 $ Office Tenant Improvements$60x Net Leasable SF-$ -$ -$ -$ Hotel FF&E$25,000x Rooms-$ -$ -$ -$ Subterranean Parking Surface$5,000per Space-$ -$ -$ -$ 1-2 Levels$37,000per Space3,171,429 $ 3,171,429 $ 2,072,000 $ 2,627,000 $ 3-4 Levels$42,000per Space54,000 $ 600,000 $ -$ -$ Contingency4%x Subtotal Hard Costs511,470 $ 593,419 $ 355,487 $ 429,385 $ Subtotal Hard Costs 13,298,221 $ 15,428,898 $ 9,242,655 $ 11,164,017 $ Soft Costs 2 Net Parks/Recreation FeeSee Sheet D616,884 $ 835,906 $ 400,510 $ 612,710 $ Net Affordable Housing Linkage FeeSee Sheet D-$ -$ -$ -$ Net TIF FeeSee Sheet D128,862 $ 203,337 $ 54,664 $ 118,044 $ Other City Permits & FeesSee Sheet C561,158 $ 645,721 $ 389,263 $ 468,824 $ A&E/Other Professionals6%x Hard Costs797,893 $ 925,734 $ 554,559 $ 669,841 $ Marketing/Leasing Commissions Residential$7.50x Net Leasable SF341,250 $ 412,500 $ 211,875 $ 271,875 $ Retail/Office$3.00x Net Leasable SF15,000 $ 15,000 $ 15,000 $ 15,000 $ Legal & Accounting1%x Hard Costs132,982 $ 154,289 $ 92,427 $ 111,640 $ Taxes & Insurance1%x Hard Costs132,982 $ 154,289 $ 92,427 $ 111,640 $ Pre-Opening Expenses$4.00x Net Leasable SF-$ -$ -$ -$ Developer Fee3%x Hard Costs398,947 $ 462,867 $ 277,280 $ 334,921 $ Contingency3%x Subtotal Soft Costs93,779 $ 114,289 $ 62,640 $ 81,435 $ Subtotal Soft Costs 3,219,737 $ 3,923,932 $ 2,150,645 $ 2,795,929 $ Subtotal Land + Hard + Softs Costs 24,017,958 $ 26,852,830 $ 18,893,300 $ 21,459,946 $ Financing Costs 3 Loan Term (months)18 Average Loan Balance65.00% Construction Loan Interest Rate6.50% Construction Loan Interest1,522,138 $ 1,701,798 $ 1,197,363 $ 1,360,024 $ Construction Loan Fees3.00%720,539 $ 805,585 $ 566,799 $ 643,798 $ Capitalized Project Valueper Sheet E Permanent Loan Percent x Value75.00% Permanent Loan Fees1.50%378,326 $ 431,735 $ 280,816 $ 333,691 $ Subtotal Financing Costs2,621,003 $ 2,939,118 $ 2,044,978 $ 2,337,513 $ Total Development Cost Land +Hard + Soft + Financing 26,638,961 $ 29,791,948 $ 20,938,278 $ 23,797,459 $ per GSF 448.87 $ 424.21 $ 528.92 $ 488.14 $ 2 Per HR&A's experience with similar projects. 3 Per RealtyRates mortgage rates and terms survey for Q1 2016. Assumptions 1 83% x calculated values, per Marshall & Swift Commercial Cost Estimator, May 2016; HR&A Advisors, Inc., to account for certai n hard costs and soft costs accounted for separately. Page 3 of 8 HR&A Advisors, Inc. Pro Forma D. Extemely Low Income Affordable Housing Percentage Increase after Nexus Maxima Analysis/B-Dev Costs 11/1/2016 Draft Work Product - Not for Public Distribution Pro Forma D Extremely Low Income Affordable Housing Increase Over Parks/Rec & TIF Nexus Study Maxima C. City Fees & Permit Costs Prototype Name Residential/RetailResidential/RetailResidential/RetailResidential/Retail Location Transit-AdjacentTransit-AdjacentMixed BoulevardMixed Boulevard Land Area 15,000 15,000 15,000 15,000 Gross Bldg. Area (SF)59,347 70,229 39,587 48,751 Residential Units Market Rate Studios 4 6 2 4 1-BR 27 29 21 22 2-BR 8 9 5 8 3-BR 4 6 2 3 Affordable Studios 1 3 1 1 1-BR 9 9 3 6 2-BR 5 5 1 2 3-BR 1 3 1 1 Residential (Net Leasable SF)45,500 55,000 28,250 36,250 Retail (Net Leasable SF)5,000 5,000 5,000 5,000 Office (Net Leasable SF)- - - - Hotel (Net Leasable SF)- - - - New Affordable Hsg. Linkage Fee 1 N/AN/A-$ -$ -$ -$ New Parks Fee 1 N/AN/A616,884 $ 835,906 $ 400,510 $ 612,710 $ New TIF Fee 1 N/AN/A128,862 $ 203,337 $ 54,664 $ 118,044 $ Planning Permits 2 Development Review$17,738per project-$ -$ -$ -$ Development Agreement$25,000per project-$ -$ -$ -$ Architectural Review Board$3,588per project3,588 $ 3,588 $ 3,588 $ 3,588 $ CEQA Categorical Exemption$15,648per project15,648 $ 15,648 $ 15,648 $ 15,648 $ Subtotal 19,236 $ 19,236 $ 19,236 $ 19,236 $ Other Requirements 3 Arts Fee New Residential/Commercial1.00%x $200/SF118,693 $ 140,457 $ 79,174 $ 97,502 $ Tenant Improvements1.00%x $50/SF2,500 $ 2,500 $ 2,500 $ 2,500 $ Child Care Fee Market Rate Residential$142.40per unit5,554 $ 6,266 $ 3,987 $ 4,842 $ Retail$4.84x leasable area24,200 $ 24,200 $ 24,200 $ 24,200 $ Office$6.76x leasable area-$ -$ -$ -$ Hotel$3.39x leasable area-$ -$ -$ -$ School Facilities Fee Residential$3.48x leasable area158,340 $ 191,400 $ 98,310 $ 126,150 $ Commercial$0.56x leasable area2,800 $ 2,800 $ 2,800 $ 2,800 $ Subtotal 312,087 $ 367,623 $ 210,971 $ 257,994 $ Bldg./Construction Permits 2 Plan Check Residential 4+ stories$533.14$0.98x leasable area44,968 $ 54,246 $ 28,122 $ 35,935 $ Commercial <10K SF$511.91$1.36x leasable area7,312 $ 7,312 $ 7,312 $ 7,312 $ Commercial >10K SF/4 stories$0.41x leasable area-$ -$ -$ -$ Mechanical$778per project$778$778$778$778 Electrical$778per project$778$778$778$778 Plumbing$778per project$778$778$778$778 Building Permits/Inspections Multi-family 4+ Stories130.37$1.10x leasable area49,971 $ 60,377 $ 31,075 $ 39,839 $ Commercial 1-Story124.75$1.28x leasable area6,507 $ 6,507 $ 6,507 $ 6,507 $ Commercial 4+ stories$0.80x leasable area-$ -$ -$ -$ Tenant Improvements <10K SF132.54$0.38x leasable area2,057 $ 2,057 $ 2,057 $ 2,057 $ Tenant Improvements >10K SF$0.30x leasable area-$ -$ -$ -$ Geotechnical Reports$2,655per project2,655 $ 2,655 $ 2,655 $ 2,655 $ Subtotal 115,805 $ 135,489 $ 80,063 $ 96,640 $ Utility Fees 2 Water Meter 3 $4,2913/4" meter per project4,291 $ 4,291 $ 4,291 $ 4,291 $ Fireline Meter 3 $26,8164" meter per project26,816 $ 26,816 $ 26,816 $ 26,816 $ Wastewater Capital Facilities Studio/1-BR Units$1,168per unit52,560 $ 57,232 $ 31,536 $ 39,712 $ 2-BR Units$1,557per unit20,241 $ 21,798 $ 9,342 $ 15,570 $ 3-BR Units$1,947per unit6,228 $ 9,342 $ 3,114 $ 4,671 $ Commercial$779 per 1,000 leasable SF3,895 $ 3,895 $ 3,895 $ 3,895 $ Subtotal 114,030 $ 123,373 $ 78,993 $ 94,954 $ per GSF $11.63$12.09$11.21$12.04 1 Based on current fee rates; see Sheet D for Tier sensitivity calculation details. 2 Per FY 2015-16 City fee schedules. 3 Includes meter and capital facilities charges. Assumptions Page 4 of 8 HR&A Advisors, Inc. Pro Forma D. Extemely Low Income Affordable Housing Percentage Increase after Nexus Maxima Analysis/C-City Cost Detail 11/1/2016 Draft Work Product - Not for Public Distribution Pro Forma D Extremely Low Income Affordable Housing Increase Over Parks/Rec & TIF Nexus Study Maxima D. Parks/Recreation, Afforable Housing Linkage, and Transportation Impact Fees Prototype Name Residential/RetailResidential/RetailResidential/RetailResidential/Retail Location Transit-AdjacentTransit-AdjacentMixed BoulevardMixed Boulevard Land Area 15,000 15,000 15,000 15,000 Gross Bldg. Area (SF)59,347 70,229 39,587 48,751 Residential Units 59 70 36 47 Market Rate Studios 4 6 2 4 1-BR 27 29 21 22 2-BR 8 9 5 8 3-BR 4 6 2 3 Affordable Studios 1 3 1 1 1-BR 9 9 3 6 2-BR 5 5 1 2 3-BR 1 3 1 1 Residential (Net Leasable SF)45,500 55,000 28,250 36,250 Retail (Net Leasable SF)5,000 5,000 5,000 5,000 Office (Net Leasable SF)- - - - Hotel (Net Leasable SF)- - - - Adopted Parks/Recreation Fee X% x Adopted Fees Tier 1Tier 2Tier 3 Market Rate Housing100%100%100% 0-1 BRs100%391%391%$4,231.93per unit340,544 $ 465,978 $ 257,428 $ 349,388 $ 2+ BRs100%391%391%$6,816.30per unit280,150 $ 373,738 $ 146,892 $ 267,132 $ Affordable Housing100%100%100%$0per unit-$ -$ -$ -$ Retail100%394%394%$1.52x leasable area7,619 $ 7,619 $ 7,619 $ 7,619 $ Office100%100%100%$2.36x leasable area-$ -$ -$ -$ Hotel100%100%100%$3.18x leasable are a -$ -$ -$ -$ Subtotal Fee 628,313 $ 847,335 $ 411,939 $ 624,139 $ Less: Fee on Existing SF Retail100%394%394%$1.52x leasable area(11,429)$ (11,429)$ (11,429)$ (11,429)$ Office100%100%100%$2.36x leasable are a -$ -$ -$ -$ Net Fee 616,884 $ 835,906 $ 400,510 $ 612,710 $ Adopted Affordable Housing Linkage Fee X% x Adopted Fees 100%100%100% Retail100%100%100%$9.97x leasable area49,857 $ 49,857 $ 49,857 $ 49,857 $ Office100%100%100%$11.46x leasable are a -$ -$ -$ -$ Subtotal Fee 49,857 $ 49,857 $ 49,857 $ 49,857 $ Less: Fee on Existing SF Retail100%100%100%$9.97x leasable area(74,785)$ (74,785)$ (74,785)$ (74,785)$ Office100%100%100%$11.46x leasable are a -$ -$ -$ -$ Net Fee -$ -$ -$ -$ TIF Fees X% x Adopted Fees 100%100%100% Market Rate-Area 1100%155%155%$2,773.75per unit184,870 $ 259,345 $ 110,672 $ 174,052 $ Market Rate-Area 2100%100%100%$3,520.52per unit-$ -$ -$ -$ Affordable100%100%100%$0.00per unit-$ -$ -$ -$ Retail-Area 1100%155%155%$22.40x leasable area112,017 $ 112,017 $ 112,017 $ 112,017 $ Retail-Area 2100%100%100%$32.11x leasable area-$ -$ -$ -$ Office-Area 1100%100%100%$10.35x leasable area-$ -$ -$ -$ Office-Area 2100%100%100%$11.52x leasable area-$ -$ -$ -$ Hotel-Area 1 & 2100%100%100%$3.84x leasable are a -$ -$ -$ -$ Subtotal 296,887 $ 371,362 $ 222,689 $ 286,069 $ Reduction for Existing Retai A llowanc e (168,025)$ (168,025)$ (168,025)$ (168,025)$ NET TIF Fee 128,862 $ 203,337 $ 54,664 $ 118,044 $ Combined New Fees 745,746 $ 1,039,243 $ 455,174 $ 730,754 $ Assumptions Assumptions Assumptions Page 5 of 8 HR&A Advisors, Inc. Pro Forma D. Extemely Low Income Affordable Housing Percentage Increase after Nexus Maxima Analysis/D-Fee Sensitivities 11/1/2016 Draft Work Product - Not for Public Distribution Pro Forma D Extremely Low Income Affordable Housing Increase Over Parks/Rec & TIF Nexus Study Maxima E. Net Operating Income Prototype Name Residential/RetailResidential/RetailResidential/RetailResidential/Retail Location Transit-AdjacentTransit-AdjacentMixed BoulevardMixed Boulevard Land Area 15,000 15,000 15,000 15,000 Gross Bldg. Area (SF)59,347 70,229 39,587 48,751 Residential Units 59 70 36 47 Market Rate 43 50 30 37 Studio 4 6 2 4 1-BR 27 29 21 22 2-BR 8 9 5 8 3-BR 4 6 2 3 Affordable 16 20 6 10 Studio 1 3 1 1 1-BR 9 9 3 6 2-BR 5 5 1 2 3-BR 1 3 1 1 Retail (Net Leasable SF)5,000 5,000 5,000 5,000 Office (Net Leasable SF)- - - - Hotel (Net Leasable SF)- - - - Parking Spaces 87 100 56 71 Residential 70 82 42 55 Retail 10 10 10 10 Office - - - - Hotel 0000 For-Rent Residential- Market Rate 1 Studio Rent/Unit/MonthVaries$3,300$3,300$3,300$3,300 1-BR Rent/Unit/MonthVaries$3,800$3,800$3,800$3,800 2-BR Rent/Unit/MonthVaries$4,300$4,300$4,300$4,300 3-BR Rent/Unit/MonthVaries$5,000$5,000$5,000$5,000 Units Income/Year2,042,400 $ 2,384,400 $ 1,414,800 $ 1,754,400 $ Other Income100.00 $ x Uni t 51,600 $ 60,000 $ 36,000 $ 44,400 $ Gross Income 2,094,000 $ 2,444,400 $ 1,450,800 $ 1,798,800 $ Less: Vacancy & Collection Los s 5.0%x Gross Income(104,700)$ (122,220)$ (72,540)$ (89,940)$ Effective Gross Income (EGI)1,989,300 $ 2,322,180 $ 1,378,260 $ 1,708,860 $ Less: Operating Expenses (incl. reserve) 1 15,000 $ x Unit(645,000)$ (750,000)$ (450,000)$ (555,000)$ Net Operating Income1,344,300 $ 1,572,180 $ 928,260 $ 1,153,860 $ For-Rent Residential - Affordable (VL)3 Studio Rent/Unit/Month 340 $ 340 $ 340 $ 340 $ 1-BR Rent/Unit/Month 389 $ 389 $ 389 $ 389 $ 2-BR Rent/Unit/Month 437 $ 437 $ 437 $ 437 $ 3-BR Rent/Unit/Month 486 $ 486 $ 486 $ 486 $ Units Income/Year 78,144 $ 97,968 $ 29,160 $ 48,408 $ Other Income0.0%x Units Incom e -$ -$ -$ -$ Gross Income 78,144 $ 97,968 $ 29,160 $ 48,408 $ Less: Vacancy & Collection Los s 0.0%x Gross Income-$ -$ -$ -$ Effective Gross Income (EGI)78,144 $ 97,968 $ 29,160 $ 48,408 $ Less: Operating Expenses (inc. reserve) 1 15,000 $ x Unit(240,000)$ (300,000)$ (90,000)$ (150,000)$ Net Operating Income(161,856)$ (202,032)$ (60,840)$ (101,592)$ Retail 2 Average Rent/SF/Month (NNN)Varies6.00 $ 6.00 $ 6.00 $ 6.00 $ Gross Rental Income/Year360,000 $ 360,000 $ 360,000 $ 360,000 $ Less: Vacancy & Collection Los s 5.0%x Gross Income(18,000)$ (18,000)$ (18,000)$ (18,000)$ Effective Gross Income (EGI)342,000 $ 342,000 $ 342,000 $ 342,000 $ Less: Unreimbursed Operating Expenses3.0%x EGI(10,260)$ (10,260)$ (10,260)$ (10,260)$ Net Operating Income331,740 $ 331,740 $ 331,740 $ 331,740 $ Office 2 Average Rent/SF/Month (MG)4.55 $ 4.55 $ 4.55 $ 4.55 $ Gross Rental Income/Year-$ -$ -$ -$ Parking Income 4 $2,223Wtd. Avg./Space/Yr.-$ -$ -$ -$ Less: Vacancy & Collection Los s 5.0%x Gross Income-$ -$ -$ -$ Effective Gross Income (EGI)-$ -$ -$ -$ Less: Operating Expenses15.0%x EGI-$ -$ -$ -$ Less: Parking Expens e 50.0%x Parking Incom e -$ -$ -$ -$ Net Operating Income -$ -$ -$ -$ Total Net Operating Income1,514,184 $ 1,701,888 $ 1,199,160 $ 1,384,008 $ 1 Per HR&A's experience with similar projects. 2 Per HR&A review of third-party market data (i.e. CoStar Group data for similar, recently constructed buildings in the Downtow n Community Plan area). 3 Per City's 2015 rent schedule. 4 Assumes $200/month reserved (10% of supply); $165/month unreserved (85%); and $500/month daily use (5%). Assumptions Page 6 of 8 HR&A Advisors, Inc. Pro Forma D. Extemely Low Income Affordable Housing Percentage Increase after Nexus Maxima Analysis/E-Net Ops Income 11/1/2016 Draft Work Product - Not for Public Distribution Pro Forma D Extremely Low Income Affordable Housing Increase Over Parks/Rec & TIF Nexus Study Maxima F. Returns Prototype Name Residential/RetailResidential/RetailResidential/RetailResidential/Retail LocationTransit-AdjacentTransit-AdjacentMixed BoulevardMixed Boulevard Land Area 15,000 15,000 15,000 15,000 Gross Bldg. Area (SF)59,347 70,229 39,587 48,751 Residential Units Market Rate Studio 4 6 2 4 1-BR 27 29 21 22 2-BR 8 9 5 8 3-BR 4 6 2 3 Affordable Studio 1 3 1 1 1-BR 9 9 3 6 2-BR 5 5 1 2 3-BR 1 3 1 1 Retail (Net Leasable SF)5,000 5,000 5,000 5,000 Office (Net Leasable SF)- - - - Hotel (Net Leasable SF)- - - - Project Value Residential-Market Rate Net Operating IncomeFrom Sheet E1,344,300 $ 1,572,180 $ 928,260 $ 1,153,860 $ Cap Rate 1 4.80% ValueNOI/Cap Rate28,006,250 $ 32,753,750 $ 19,338,750 $ 24,038,750 $ Residential-Affordable Net Operating IncomeFrom Sheet E-$ -$ -$ -$ Cap Rate 1 4.80% ValueNOI/Cap Rate-$ -$ -$ -$ Retail Net Operating IncomeFrom Sheet E331,740 $ 331,740 $ 331,740 $ 331,740 $ Cap Rate 1 5.90% ValueNOI/Cap Rate5,622,712 $ 5,622,712 $ 5,622,712 $ 5,622,712 $ Office Net Operating IncomeFrom Sheet E-$ -$ -$ -$ Cap Rate 1 5.70% ValueNOI/Cap Rate-$ -$ -$ -$ Total Project Value33,628,962 $ 38,376,462 $ 24,961,462 $ 29,661,462 $ Developer Returns Developer Profit Total Project ValueFrom above33,628,962 $ 38,376,462 $ 24,961,462 $ 29,661,462 $ Less: Total Development CostFrom Sheet B(26,638,961)$ (29,791,948)$ (20,938,278)$ (23,797,459)$ Profit 6,990,001 $ 8,584,514 $ 4,023,184 $ 5,864,003 $ % of Value 20.8%22.4%16.1%19.8% Return on Total Development Cost NOIFrom Sheet E1,514,184 $ 1,701,888 $ 1,199,160 $ 1,384,008 $ Total Development CostFrom Sheet B(26,638,961)$ (29,791,948)$ (20,938,278)$ (23,797,459)$ Return on Cost 5.68%5.71%5.73%5.82% 1 Based on Real Estate Research Corporation cap rate data for Q1 2016. Assumptions Page 7 of 8 HR&A Advisors, Inc. Pro Forma D. Extemely Low Income Affordable Housing Percentage Increase after Nexus Maxima Analysis/F-Returns 11/1/2016 Draft Work Product - Not for Public Distribution Pro Forma E Very Low Income Affordable Housing Increase Over Parks/Rec & TIF Nexus Study Maxima Summary Results Program Summary (see Sheet A) Prototype Name Residential/RetailResidential/RetailResidential/RetailResidential/Retail LocationTransit-AdjacentTransit-AdjacentMixed BoulevardMixed Boulevard LUCE Tier2323 Permit Requirement # Parcels1 1 1 1 Bldg. Height (Feet)62 72 50 60 Stories (#)5 6 4 5 Site Area (SF)15,000 15,000 15,000 15,000 Gross Bldg. Area (SF)59,347 70,229 39,587 48,751 Floor Area Ratio (FAR) - Gross Area3.96 4.68 2.64 3.25 Floor Area Ratio (FAR) - Net Area3.37 4.00 2.22 2.75 Net Leasable Areas Residential (SF)45,500 55,000 28,250 36,250 Market Rate Units42 48 30 36 Affordable Units17 23 7 11 Total Units59 71 37 47 Retail (SF)5,000 5,000 5,000 5,000 Office (SF)- - - - Hotel (SF)- - - - Development Costs (see Sheets B&C&D) Land Costs7,500,000 $ 7,500,000 $ 7,500,000 $ 7,500,000 $ Hard Costs13,254,541 $ 15,472,578 $ 9,281,135 $ 11,202,497 $ Soft Costs3,185,296 $ 3,875,383 $ 2,156,206 $ 2,776,411 $ Net Parks/Recreation Fee600,337 $ 792,707 $ 400,510 $ 596,163 $ Net Affordable Housing Linkage Fee-$ -$ -$ -$ Net Transportation Impact Fee124,563 $ 194,739 $ 54,664 $ 113,745 $ Other City Costs (see Sheet E)553,372 $ 645,578 $ 390,431 $ 466,488 $ Other Soft Costs2,631,924 $ 3,229,805 $ 1,765,775 $ 2,309,924 $ Financing Costs2,606,269 $ 2,922,985 $ 2,049,090 $ 2,331,845 $ Total Development Cost26,546,106 $ 29,770,946 $ 20,986,431 $ 23,810,753 $ per GSF$447$424$530$488 Net Operating Income (NOI) (see Sheet E) Residential-Market Rate Effective Gross Income1,942,560 $ 2,225,280 $ 1,378,260 $ 1,662,120 $ Less: Operating Expenses(630,000)$ (720,000)$ (450,000)$ (540,000)$ Net Operating Income1,312,560 $ 1,505,280 $ 928,260 $ 1,122,120 $ Residential-Affordable Effective Gross Income138,024 $ 188,568 $ 56,376 $ 89,424 $ Less: Operating Expenses(255,000)$ (345,000)$ (105,000)$ (165,000)$ Net Operating Income(116,976)$ (156,432)$ (48,624)$ (75,576)$ Retail Effective Gross Income342,000 $ 342,000 $ 342,000 $ 342,000 $ Less: Operating Expenses(10,260)$ (10,260)$ (10,260)$ (10,260)$ Net Operating Income331,740 $ 331,740 $ 331,740 $ 331,740 $ Office Effective Gross Income-$ -$ -$ -$ Less: Operating Expenses-$ -$ -$ -$ Net Operating Income-$ -$ -$ -$ Total Net Operating Income1,527,324 $ 1,680,588 $ 1,211,376 $ 1,378,284 $ Project Component Values (see Sheet F) Residential-Market Rate NOI1,312,560 $ 1,505,280 $ 928,260 $ 1,122,120 $ Cap Rate4.80%4.80%4.80%4.80% Value27,345,000 $ 31,360,000 $ 19,338,750 $ 23,377,500 $ Residential-Affordable NOI-$ -$ -$ -$ Cap Rate4.80%4.80%4.80%4.80% Value-$ -$ -$ -$ Retail NOI331,740 $ 331,740 $ 331,740 $ 331,740 $ Cap Rate5.90%5.90%5.90%5.90% Value5,622,712 $ 5,622,712 $ 5,622,712 $ 5,622,712 $ Office NOI-$ -$ -$ -$ Cap Rate5.70%5.70%5.70%5.70% Value-$ -$ -$ -$ Total Project Value32,967,712 $ 36,982,712 $ 24,961,462 $ 29,000,212 $ Developer Returns Developer Profit Total Project Value32,967,712 $ 36,982,712 $ 24,961,462 $ 29,000,212 $ Less: Total Development Cost(26,546,106)$ (29,770,946)$ (20,986,431)$ (23,810,753)$ Profit6,421,606 $ 7,211,766 $ 3,975,031 $ 5,189,459 $ % of Value 19.5%19.5%15.9%17.9% Profit No Fees7,146,506 $ 8,199,212 $ 4,430,205 $ 5,899,366 $ Feasible? (i.e. = or > 12.5%)YESYESYESYES Return on Total Development Cost NOI1,527,324 $ 1,680,588 $ 1,211,376 $ 1,378,284 $ Total Development Cost(26,546,106)$ (29,770,946)$ (20,986,431)$ (23,810,753)$ Return on Cost 5.75%5.65%5.77%5.79% Return on Cost No Fees 5.91%5.84%5.90%5.97% Feasible? (i.e. = or > 0.75% + Weighted Cap)YESYESYESYES Weighted Cap Rate 4.91%4.89%4.97%4.93% Page 1 of 8 HR&A Advisors, Inc. Pro Forma E. Very Low Income Affordable Housing Percentage Increase after Nexus Maxima Analysis/Summary 11/1/2016 Draft Work Product - Not for Public Distribution Pro Forma E Very Low Income Affordable Housing Increase Over Parks/Rec & TIF Nexus Study Maxima A. Physical Parameter s Prototype Name Residential/RetailResidential/RetailResidential/RetailResidential/Retail LocationTransit-AdjacentTransit-AdjacentMixed BoulevardMixed Boulevard LUCE Area LUCE Tier2323 Permit Requirement # Parcels1 1 1 1 Bldg. Height (Feet)62 72 50 60 Stories (#)5 6 4 5 Land Area (SF)15,000 15,000 15,000 15,000 Gross Bldg. Area (SF)1 59,347 70,229 39,587 48,751 Floor Area Ratio (FAR)-Gross Area 1 4.0 4.7 2.6 3.3 Floor Area Ratio (FAR)-Net Area3.4 4.0 2.2 2.75 Net Leasable Areas (SF)1 50,500 60,000 33,250 41,250 Residential 2 45,500 55,000 28,250 36,250 Retail5,000 5,000 5,000 5,000 Office Hotel- - # Hotel Rooms- - - - Residential Unit Mix Office SF- - - - Retail SF5,000 5,000 5,000 5,000 Hotel SF- - - - Residential SF-Target45,500 55,000 28,250 36,250 Market Rate Studio (SF)600 600 600 600 1-BR (SF)700 700 700 700 2-BR (SF)950 950 950 950 3-BR (SF)1,300 1,300 1,300 1,300 Studio (# units)3 5 2 3 1-BR (# units)27 29 21 22 2-BR (# units)9 9 5 9 3-BR (# units)3 5 2 2 Subtotal (# units)42 48 30 36 Affordable Studio (SF)500 500 500 500 1-BR (SF)600 600 600 600 2-BR (SF)850 850 850 850 3-BR (SF)1,080 1,080 1,080 1,080 Studio (# units)3 4 1 2 1-BR (# units)8 9 4 5 2-BR (# units)3 6 1 2 3-BR (# units)3 4 1 2 Subtotal (# units)17 23 7 11 Total Units59 71 37 47 Parking Residential Market Rate (wtd. avg. per unit)3 1.11 1.09 1.08 1.11 Affordable (avg. per unit)1.09 1.13 1.07 1.09 Subtotal Spaces (#)69 83 43 56 Subtotal Plus Guest Spaces (#)76 91 47 62 Retail19 26 7 12 Spaces/500 SF1 1 1 1 Subtotal Spaces (#)10 10 10 10 Office Spaces/500 SF1.0 1.0 1.0 1.0 Subtotal Spaces (#)- - - - Hotel Spaces/Guest Room0.75 0.75 0.75 0.75 Subtotal Spaces (#)- - - - Total Spaces Number86 101 57 72 Gross Area/Space (SF)-Surface300 300 300 300 Gross Area/Space (SF)-Subt.350 350 350 350 Total Parking Area (SF)30,100 35,350 19,950 25,200 # Surface- - - - # Subt. Levels Total2.0 2.4 1.3 1.7 Spaces/Levels 1-286 86 57 72 Spaces/Levels 3-50 15 - - Construction Period (months)18 18 18 18 Gross Floor Area by Story Site Area15,000 15,000 15,000 15,000 Total Gross Bldg. Area59,347 70,229 39,587 48,751 Total Floors5 6 4 5 Floor 15,727 5,727 5,727 5,727 Floor 214,318 14,318 11,455 11,455 Floor 314,318 14,318 10,882 10,882 Floor 412,600 12,600 10,023 10,023 Floor 510,882 10,882 - 9,164 Floor 6- 10,882 - - Total Gross Floor Area59,347 70,229 39,587 48,751 FAR-Gross Area3.96 4.68 2.64 3.25 Net Floor Area by Story Floor 15,000 5,000 5,000 5,000 Floor 212,500 12,500 10,000 10,000 Floor 312,500 12,500 9,500 9,500 Floor 411,000 11,000 8,750 8,750 Floor 59,500 9,500 - 8,000 Floor 6- 9,500 - - Total50,500 60,000 33,250 41,250 Net/Gross Floor Area Overall85.1%85.4%84.0%84.6% 2 Based on unit mix and net leasable floor area by unit type, per City Planning Staff and HR&A. 3 Assumes 0.5 spaces/studio; 1.0 spaces/1-BR unit; and 1.5 spaces/2- & 3-BR units. 1 Per guidance provided by City Planning staff and adjusted for Tier 1 and Tier 2 scenarios by HR&A based on efficiency factors for Tier 3 scenarios Page 2 of 8 HR&A Advisors, Inc. Pro Forma E. Very Low Income Affordable Housing Percentage Increase after Nexus Maxima Analysis/A-Program 11/1/2016 Draft Work Product - Not for Public Distribution Pro Forma E Very Low Income Affordable Housing Increase Over Parks/Rec & TIF Nexus Study Maxima B. Development Costs Prototype Name Residential/RetailResidential/RetailResidential/RetailResidential/Retail Location Transit-AdjacentTransit-AdjacentMixed BoulevardMixed Boulevard Land Area 15,000 15,000 15,000 15,000 Gross Bldg. Area (SF)59,347 70,229 39,587 48,751 Net Leasable Areas (SF) Residential 45,500 55,000 28,250 36,250 Retail 5,000 5,000 5,000 5,000 Office - - - - Hotel - - - - Hotel Rooms - - - - Subterranean Parking (spaces)86 101 57 72 1-2 Levels 86 86 57 72 3-5 Levels 0 15 - - 126107189154 Land Cost 7,500,000 $ 7,500,000 $ 7,500,000 $ 7,500,000 $ Hard Cost 1 Construction Type VVVV Building Construction/GSFVaries$151$149$157$154 Demo/On-Site Improvements$10per Land Area150,000 $ 150,000 $ 150,000 $ 150,000 $ Off-Site Improvements$100,000Allowance100,000 $ 100,000 $ 100,000 $ 100,000 $ Building Core & ShellVaries8,961,322 $ 10,464,050 $ 6,215,168 $ 7,507,632 $ Retail Tenant Improvements$70x Net Leasable SF350,000 $ 350,000 $ 350,000 $ 350,000 $ Office Tenant Improvements$60x Net Leasable SF-$ -$ -$ -$ Hotel FF&E$25,000x Rooms-$ -$ -$ -$ Subterranean Parking Surface$5,000per Space-$ -$ -$ -$ 1-2 Levels$37,000per Space3,171,429 $ 3,171,429 $ 2,109,000 $ 2,664,000 $ 3-4 Levels$42,000per Space12,000 $ 642,000 $ -$ -$ Contingency4%x Subtotal Hard Costs509,790 $ 595,099 $ 356,967 $ 430,865 $ Subtotal Hard Costs 13,254,541 $ 15,472,578 $ 9,281,135 $ 11,202,497 $ Soft Costs 2 Net Parks/Recreation FeeSee Sheet D600,337 $ 792,707 $ 400,510 $ 596,163 $ Net Affordable Housing Linkage FeeSee Sheet D-$ -$ -$ -$ Net TIF FeeSee Sheet D124,563 $ 194,739 $ 54,664 $ 113,745 $ Other City Permits & FeesSee Sheet C553,372 $ 645,578 $ 390,431 $ 466,488 $ A&E/Other Professionals6%x Hard Costs795,272 $ 928,355 $ 556,868 $ 672,150 $ Marketing/Leasing Commissions Residential$7.50x Net Leasable SF341,250 $ 412,500 $ 211,875 $ 271,875 $ Retail/Office$3.00x Net Leasable SF15,000 $ 15,000 $ 15,000 $ 15,000 $ Legal & Accounting1%x Hard Costs132,545 $ 154,726 $ 92,811 $ 112,025 $ Taxes & Insurance1%x Hard Costs132,545 $ 154,726 $ 92,811 $ 112,025 $ Pre-Opening Expenses$4.00x Net Leasable SF-$ -$ -$ -$ Developer Fee3%x Hard Costs397,636 $ 464,177 $ 278,434 $ 336,075 $ Contingency3%x Subtotal Soft Costs92,776 $ 112,875 $ 62,802 $ 80,866 $ Subtotal Soft Costs 3,185,296 $ 3,875,383 $ 2,156,206 $ 2,776,411 $ Subtotal Land + Hard + Softs Costs 23,939,837 $ 26,847,961 $ 18,937,341 $ 21,478,908 $ Financing Costs 3 Loan Term (months)18 Average Loan Balance65.00% Construction Loan Interest Rate6.50% Construction Loan Interest1,517,187 $ 1,701,490 $ 1,200,154 $ 1,361,226 $ Construction Loan Fees3.00%718,195 $ 805,439 $ 568,120 $ 644,367 $ Capitalized Project Valueper Sheet E Permanent Loan Percent x Value75.00% Permanent Loan Fees1.50%370,887 $ 416,056 $ 280,816 $ 326,252 $ Subtotal Financing Costs2,606,269 $ 2,922,985 $ 2,049,090 $ 2,331,845 $ Total Development Cost Land +Hard + Soft + Financing 26,546,106 $ 29,770,946 $ 20,986,431 $ 23,810,753 $ per GSF 447.31 $ 423.92 $ 530.13 $ 488.42 $ 1 83% x calculated values, per Marshall & Swift Commercial Cost Estimator, May 2016; HR&A Advisors, Inc., to account for certai n hard costs and soft costs accounted for separately. 2 Per HR&A's experience with similar projects. 3 Per RealtyRates mortgage rates and terms survey for Q1 2016. Assumptions Page 3 of 8 HR&A Advisors, Inc. Pro Forma E. Very Low Income Affordable Housing Percentage Increase after Nexus Maxima Analysis/B-Dev Costs 11/1/2016 Draft Work Product - Not for Public Distribution Pro Forma E Very Low Income Affordable Housing Increase Over Parks/Rec & TIF Nexus Study Maxima C. City Fees & Permit Cost s Prototype Name Office/Retai l Office/Retai l Office/Retai l Residential/Retai l Residential/Retai l Residential/Retai l Residential/Retai l Residential/Retai l Residential/Retai l Location Transit-AdjacentTransit-AdjacentTransit-AdjacentTransit-AdjacentTransit-AdjacentTransit-AdjacentMixed BoulevardMixed BoulevardM ixed Boulevard Land Area 15,000 15,000 15,000 15,000 15,000 15,000 15,000 15,000 15,000 Gross Bldg. Area (SF)18,167 39,833 59,833 21,546 59,347 70,229 18,682 39,587 48,751 Residential Units Market Rate Studios - - - 1 3 5 1 2 3 1-BR - - - 13 27 29 9 21 22 2-BR - - - 1 9 9 1 5 9 3-BR - - - 1 3 5 1 2 2 Affordable Studios - - - - 3 4 - 1 2 1-BR - - - 1 8 9 1 4 5 2-BR - - - - 3 6 - 1 2 3-BR - - - - 3 4 - 1 2 Residential (Net Leasable SF)- - - 12,500 45,500 55,000 10,000 28,250 36,250 Retail (Net Leasable SF)5,000 5,000 5,000 5,000 5,000 5,000 5,000 5,000 5,000 Office (Net Leasable SF)10,000 29,500 47,500 - - - - - - Hotel (Net Leasable SF)- - - - - - - - - New Affordable Hsg. Linkage Fee 1 N/AN/A89,717 $ 313,274 $ 634,279 $ -$ -$ -$ -$ -$ -$ New Parks Fee 1 N/AN/A19,814 $ 65,882 $ 132,030 $ 69,070 $ 600,337 $ 792,707 $ 52,142 $ 400,510 $ 596,163 $ New TIF Fee 1 N/AN/A47,474 $ 249,264 $ 539,014 $ -$ 124,563 $ 194,739 $ -$ 54,664 $ 113,745 $ Planning Permits 2 Development Review$17,738per project-$ -$ -$ -$ -$ -$ -$ -$ -$ Development Agreement$25,000per project-$ -$ -$ -$ -$ -$ -$ -$ -$ Architectural Review Board$3,588per project3,588 $ 3,588 $ 3,588 $ 3,588 $ 3,588 $ 3,588 $ 3,588 $ 3,588 $ 3,588 $ CEQA Categorical Exemption$15,648per project15,648 $ 15,648 $ 15,648 $ 15,648 $ 15,648 $ 15,648 $ 15,648 $ 15,648 $ 15,648 $ Subtotal 19,236 $ 19,236 $ 19,236 $ 19,236 $ 19,236 $ 19,236 $ 19,236 $ 19,236 $ 19,236 $ Other Requirements 3 Arts Fee New Residential/Commercial1.00%x $200/SF36,333 $ 79,667 $ 119,666 $ 43,092 $ 118,693 $ 140,457 $ 37,364 $ 79,174 $ 97,502 $ Tenant Improvements1.00%x $50/SF7,500 $ 17,250 $ 26,250 $ 2,500 $ 2,500 $ 2,500 $ 2,500 $ 2,500 $ 2,500 $ Child Care Fee Market Rate Residential$142.40per unit-$ -$ -$ 2,136 $ 5,554 $ 6,123 $ 1,566 $ 3,987 $ 4,842 $ Retail$4.84x leasable area24,200 $ 24,200 $ 24,200 $ 24,200 $ 24,200 $ 24,200 $ 24,200 $ 24,200 $ 24,200 $ Office$6.76x leasable area67,600 $ 199,420 $ 321,100 $ -$ -$ -$ -$ -$ -$ Hotel$3.39x leasable area-$ -$ -$ -$ -$ -$ -$ -$ -$ School Facilities Fee Residential$3.48x leasable area-$ -$ -$ 43,500 $ 158,340 $ 191,400 $ 34,800 $ 98,310 $ 126,150 $ Commercial$0.56x leasable area8,400 $ 19,320 $ 29,400 $ 2,800 $ 2,800 $ 2,800 $ 2,800 $ 2,800 $ 2,800 $ Subtotal 144,033 $ 339,857 $ 520,616 $ 118,228 $ 312,087 $ 367,480 $ 103,230 $ 210,971 $ 257,99 4 $ Bldg./Construction Permits 2 Plan Check Residential 4+ stories$533.14$0.98x leasable area-$ -$ -$ 12,741 $ 44,968 $ 54,246 $ 10,299 $ 28,122 $ 35,935 $ Commercial <10K SF$511.91$1.36x leasable area14,112 $ 14,112 $ 14,112 $ 7,312 $ 7,312 $ 7,312 $ 7,312 $ 7,312 $ 7,312 $ Commercial >10K SF/4 stories$0.41x leasable area2,034 $ 9,964 $ 17,285 $ -$ -$ -$ -$ -$ -$ Mechanical$778per project$778$778$778$778$778$778$778$778$778 Electrical$778per project$778$778$778$778$778$778$778$778$778 Plumbing$778per project$778$778$778$778$778$778$778$778$778 Building Permits/Inspections Multi-family 4+ Stories130.37$1.10x leasable area-$ -$ -$ 13,823 $ 49,971 $ 60,377 $ 11,084 $ 31,075 $ 39,839 $ Commercial 1-Story124.75$1.28x leasable area12,890 $ 12,890 $ 12,890 $ 6,507 $ 6,507 $ 6,507 $ 6,507 $ 6,507 $ 6,507 $ Commercial 4+ stories$0.80x leasable area3,977 $ 19,485 $ 33,800 $ -$ -$ -$ -$ -$ -$ Tenant Improvements <10K SF132.54$0.38x leasable area3,981 $ 3,981 $ 3,981 $ 2,057 $ 2,057 $ 2,057 $ 2,057 $ 2,057 $ 2,057 $ Tenant Improvements >10K SF$0.30x leasable area1,489 $ 7,294 $ 12,652 $ -$ -$ -$ -$ -$ -$ Geotechnical Reports$2,655per project2,655 $ 2,655 $ 2,655 $ 2,655 $ 2,655 $ 2,655 $ 2,655 $ 2,655 $ 2,655 $ Subtotal 43,471 $ 72,715 $ 99,710 $ 47,430 $ 115,80 5 $ 135,489 $ 42,249 $ 80,063 $ 96,640 $ Utility Fees 2 Water Meter 3 $4,2913/4" meter per project4,291 $ 4,291 $ 4,291 $ 4,291 $ 4,291 $ 4,291 $ 4,291 $ 4,291 $ 4,291 $ Fireline Meter 3 $26,8164" meter per project26,816 $ 26,816 $ 26,816 $ 26,816 $ 26,816 $ 26,816 $ 26,816 $ 26,816 $ 26,816 $ Wastewater Capital Facilities Studio/1-BR Units$1,168per unit-$ -$ -$ 17,520 $ 47,888 $ 57,232 $ 12,848 $ 32,704 $ 37,376 $ 2-BR Units$1,557per unit-$ -$ -$ 1,557 $ 18,684 $ 23,355 $ 1,557 $ 9,342 $ 17,127 $ 3-BR Units$1,947per unit-$ -$ -$ 1,557 $ 4,671 $ 7,785 $ 1,557 $ 3,114 $ 3,114 $ Commercial$779 per 1,000 leasable SF11,685 $ 26,876 $ 40,898 $ 3,895 $ 3,895 $ 3,895 $ 3,895 $ 3,895 $ 3,895 $ Subtotal 42,791 $ 57,982 $ 72,00 4 $ 55,635 $ 106,24 4 $ 123,373 $ 50,963 $ 80,161 $ 92,618 $ per GSF $16.35$18.55$20.90$11.16$11.42$11.97$11.54$11.24$11.90 1 Based on current fee rates; see Sheet D for Tier sensitivity calculation details. 2 Per FY 2015-16 City fee schedules. 3 Includes meter and capital facilities charges. Assumptions Page 4 of 8 HR&A Advisors, Inc. Pro Forma E. Very Low Income Affordable Housing Percentage Increase after Nexus Maxima Analysis/C-City Cost Detail 11/1/2016 Draft Work Product - Not for Public Distribution Pro Forma E Very Low Income Affordable Housing Increase Over Parks/Rec & TIF Nexus Study Maxima D. Parks/Recreation, Afforable Housing Linkage, and Transportation Impact Fees Prototype Name Residential/RetailResidential/RetailResidential/RetailResidential/Retail Location Transit-AdjacentTransit-AdjacentMixed BoulevardMixed Boulevard Land Area 15,000 15,000 15,000 15,000 Gross Bldg. Area (SF)59,347 70,229 39,587 48,751 Residential Units 59 71 37 47 Market Rate Studios 3 5 2 3 1-BR 27 29 21 22 2-BR 9 9 5 9 3-BR 3 5 2 2 Affordable Studios 3 4 1 2 1-BR 8 9 4 5 2-BR 3 6 1 2 3-BR 3 4 1 2 Residential (Net Leasable SF)45,500 55,000 28,250 36,250 Retail (Net Leasable SF)5,000 5,000 5,000 5,000 Office (Net Leasable SF)- - - - Hotel (Net Leasable SF)- - - - Adopted Parks/Recreation Fee X% x Adopted Fees Tier 1Tier 2Tier 3 Market Rate Housing100%100%100% 0-1 BRs100%391%391%$4,231.93per unit323,997 $ 449,431 $ 257,428 $ 332,841 $ 2+ BRs100%391%391%$6,816.30per unit280,150 $ 347,086 $ 146,892 $ 267,132 $ Affordable Housing100%100%100%$0per unit-$ -$ -$ -$ Retail100%394%394%$1.52x leasable area7,619 $ 7,619 $ 7,619 $ 7,619 $ Office100%100%100%$2.36x leasable area-$ -$ -$ -$ Hotel100%100%100%$3.18x leasable are a -$ -$ -$ -$ Subtotal Fee 611,766 $ 804,136 $ 411,939 $ 607,592 $ Less: Fee on Existing SF Retail100%100%100%$1.52x leasable area(11,429)$ (11,429)$ (11,429)$ (11,429)$ Office100%100%100%$2.36x leasable are a -$ -$ -$ -$ Net Fee 600,337 $ 792,707 $ 400,510 $ 596,163 $ Adopted Affordable Housing Linkage Fee X% x Adopted Fees 100%100%100% Retail100%100%100%$9.97x leasable area49,857 $ 49,857 $ 49,857 $ 49,857 $ Office100%100%100%$11.46x leasable are a -$ -$ -$ -$ Subtotal Fee 49,857 $ 49,857 $ 49,857 $ 49,857 $ Less: Fee on Existing SF Retail100%100%100%$9.97x leasable area(74,785)$ (74,785)$ (74,785)$ (74,785)$ Office100%100%100%$11.46x leasable are a -$ -$ -$ -$ Net Fee -$ -$ -$ -$ TIF Fees X% x Adopted Fees 100%100%100% Market Rate-Area 1100%155%155%$2,773.75per unit180,571 $ 250,747 $ 110,672 $ 169,753 $ Market Rate-Area 2100%100%100%$3,520.52per unit-$ -$ -$ -$ Affordable100%100%100%$0.00per unit-$ -$ -$ -$ Retail-Area 1100%155%155%$22.40x leasable area112,017 $ 112,017 $ 112,017 $ 112,017 $ Retail-Area 2100%100%100%$32.11x leasable area-$ -$ -$ -$ Office-Area 1100%100%100%$10.35x leasable area-$ -$ -$ -$ Office-Area 2100%100%100%$11.52x leasable area-$ -$ -$ -$ Hotel-Area 1 & 2100%100%100%$3.84x leasable are a -$ -$ -$ -$ Subtotal 292,588 $ 362,764 $ 222,689 $ 281,770 $ Reduction for Existing Retai A llowanc e (168,025)$ (168,025)$ (168,025)$ (168,025)$ NET TIF Fee 124,563 $ 194,739 $ 54,664 $ 113,745 $ Combined New Fees 724,900 $ 987,446 $ 455,174 $ 709,908 $ Assumptions Assumptions Assumptions Page 5 of 8 HR&A Advisors, Inc. Pro Forma E. Very Low Income Affordable Housing Percentage Increase after Nexus Maxima Analysis/D-Fee Sensitivities 11/1/2016 Draft Work Product - Not for Public Distribution Pro Forma E Very Low Income Affordable Housing Increase Over Parks/Rec & TIF Nexus Study Maxima E. Net Operating Income Prototype Name Residential/RetailResidential/RetailResidential/RetailResidential/Retail Location Transit-AdjacentTransit-AdjacentMixed BoulevardMixed Boulevard Land Area 15,000 15,000 15,000 15,000 Gross Bldg. Area (SF)59,347 70,229 39,587 48,751 Residential Units 59 71 37 47 Market Rate 42 48 30 36 Studio 3 5 2 3 1-BR 27 29 21 22 2-BR 9 9 5 9 3-BR 3 5 2 2 Affordable 17 23 7 11 Studio 3 4 1 2 1-BR 8 9 4 5 2-BR 3 6 1 2 3-BR 3 4 1 2 Retail (Net Leasable SF)5,000 5,000 5,000 5,000 Office (Net Leasable SF)- - - - Hotel (Net Leasable SF)- - - - Parking Spaces 86 101 57 72 Residential 69 83 43 56 Retail 10 10 10 10 Office - - - - Hotel 0000 For-Rent Residential- Market Rate 1 Studio Rent/Unit/MonthVaries$3,300$3,300$3,300$3,300 1-BR Rent/Unit/MonthVaries$3,800$3,800$3,800$3,800 2-BR Rent/Unit/MonthVaries$4,300$4,300$4,300$4,300 3-BR Rent/Unit/MonthVaries$5,000$5,000$5,000$5,000 Units Income/Year 1,994,400 $ 2,284,800 $ 1,414,800 $ 1,706,400 $ Other Income100.00 $ x Uni t 50,400 $ 57,600 $ 36,000 $ 43,200 $ Gross Income 2,044,800 $ 2,342,400 $ 1,450,800 $ 1,749,600 $ Less: Vacancy & Collection Los s 5.0%x Gross Income(102,240)$ (117,120)$ (72,540)$ (87,480)$ Effective Gross Income (EGI)1,942,560 $ 2,225,280 $ 1,378,260 $ 1,662,120 $ Less: Operating Expenses (incl. reserve) 1 15,000 $ x Unit(630,000)$ (720,000)$ (450,000)$ (540,000)$ Net Operating Income1,312,560 $ 1,505,280 $ 928,260 $ 1,122,120 $ For-Rent Residential - Affordable (VL)3 Studio Rent/Unit/Month 567 $ 567 $ 567 $ 567 $ 1-BR Rent/Unit/Month 648 $ 648 $ 648 $ 648 $ 2-BR Rent/Unit/Month 729 $ 729 $ 729 $ 729 $ 3-BR Rent/Unit/Month 810 $ 810 $ 810 $ 810 $ Units Income/Year 138,024 $ 188,568 $ 56,376 $ 89,424 $ Other Income0.0%x Units Incom e -$ -$ -$ -$ Gross Income 138,024 $ 188,568 $ 56,376 $ 89,424 $ Less: Vacancy & Collection Los s 0.0%x Gross Income-$ -$ -$ -$ Effective Gross Income (EGI)138,024 $ 188,568 $ 56,376 $ 89,424 $ Less: Operating Expenses (inc. reserve) 1 15,000 $ x Unit(255,000)$ (345,000)$ (105,000)$ (165,000)$ Net Operating Income (116,976)$ (156,432)$ (48,624)$ (75,576)$ Retail 2 Average Rent/SF/Month (NNN)Varies6.00 $ 6.00 $ 6.00 $ 6.00 $ Gross Rental Income/Year360,000 $ 360,000 $ 360,000 $ 360,000 $ Less: Vacancy & Collection Los s 5.0%x Gross Income(18,000)$ (18,000)$ (18,000)$ (18,000)$ Effective Gross Income (EGI)342,000 $ 342,000 $ 342,000 $ 342,000 $ Less: Unreimbursed Operating Expenses3.0%x EGI(10,260)$ (10,260)$ (10,260)$ (10,260)$ Net Operating Income 331,740 $ 331,740 $ 331,740 $ 331,740 $ Office 2 Average Rent/SF/Month (MG)4.55 $ 4.55 $ 4.55 $ 4.55 $ Gross Rental Income/Year-$ -$ -$ -$ Parking Income 4 $2,223Wtd. Avg./Space/Yr.-$ -$ -$ -$ Less: Vacancy & Collection Los s 5.0%x Gross Income-$ -$ -$ -$ Effective Gross Income (EGI)-$ -$ -$ -$ Less: Operating Expenses15.0%x EGI-$ -$ -$ -$ Less: Parking Expens e 50.0%x Parking Incom e -$ -$ -$ -$ Net Operating Income -$ -$ -$ -$ Total Net Operating Income1,527,324 $ 1,680,588 $ 1,211,376 $ 1,378,284 $ 1 Per HR&A's experience with similar projects. 2 Per HR&A review of third-party market data (i.e. CoStar Group data for similar, recently constructed buildings in the Downtow n Community Plan area). 3 Per City's 2015 rent schedule. 4 Assumes $200/month reserved (10% of supply); $165/month unreserved (85%); and $500/month daily use (5%). Assumptions Page 6 of 8 HR&A Advisors, Inc. Pro Forma E. Very Low Income Affordable Housing Percentage Increase after Nexus Maxima Analysis/E-Net Ops Income 11/1/2016 Draft Work Product - Not for Public Distribution Pro Forma E Very Low Income Affordable Housing Increase Over Parks/Rec & TIF Nexus Study Maxima F. Returns Prototype Name Residential/RetailResidential/RetailResidential/RetailResidential/Retail LocationTransit-AdjacentTransit-AdjacentMixed BoulevardMixed Boulevard Land Area 15,000 15,000 15,000 15,000 Gross Bldg. Area (SF)59,347 70,229 39,587 48,751 Residential Units Market Rate Studio 3 5 2 3 1-BR 27 29 21 22 2-BR 9 9 5 9 3-BR 3 5 2 2 Affordable Studio 3 4 1 2 1-BR 8 9 4 5 2-BR 3 6 1 2 3-BR 3 4 1 2 Retail (Net Leasable SF)5,000 5,000 5,000 5,000 Office (Net Leasable SF)- - - - Hotel (Net Leasable SF)- - - - Project Value Residential-Market Rate Net Operating IncomeFrom Sheet E1,312,560 $ 1,505,280 $ 928,260 $ 1,122,120 $ Cap Rate 1 4.80% ValueNOI/Cap Rate27,345,000 $ 31,360,000 $ 19,338,750 $ 23,377,500 $ Residential-Affordable Net Operating IncomeFrom Sheet E-$ -$ -$ -$ Cap Rate 1 4.80% ValueNOI/Cap Rate-$ -$ -$ -$ Retail Net Operating IncomeFrom Sheet E331,740 $ 331,740 $ 331,740 $ 331,740 $ Cap Rate 1 5.90% ValueNOI/Cap Rate5,622,712 $ 5,622,712 $ 5,622,712 $ 5,622,712 $ Office Net Operating IncomeFrom Sheet E-$ -$ -$ -$ Cap Rate 1 5.70% ValueNOI/Cap Rate-$ -$ -$ -$ Total Project Value32,967,712 $ 36,982,712 $ 24,961,462 $ 29,000,212 $ Developer Returns Developer Profit Total Project ValueFrom above32,967,712 $ 36,982,712 $ 24,961,462 $ 29,000,212 $ Less: Total Development CostFrom Sheet B(26,546,106)$ (29,770,946)$ (20,986,431)$ (23,810,753)$ Profit 6,421,606 $ 7,211,766 $ 3,975,031 $ 5,189,459 $ % of Value 19.5%19.5%15.9%17.9% Return on Total Development Cost NOIFrom Sheet E1,527,324 $ 1,680,588 $ 1,211,376 $ 1,378,284 $ Total Development CostFrom Sheet B(26,546,106)$ (29,770,946)$ (20,986,431)$ (23,810,753)$ Return on Cost 5.75%5.65%5.77%5.79% 1 Based on Real Estate Research Corporation cap rate data for Q1 2016. Assumptions Page 7 of 8 HR&A Advisors, Inc. Pro Forma E. Very Low Income Affordable Housing Percentage Increase after Nexus Maxima Analysis/F-Returns 11/1/2016 Draft Work Product - Not for Public Distribution Pro Forma F Low Income Affordable Housing Increase Over Parks/Rec & TIF Nexus Study Maxima Summary Results Program Summary (see Sheet A) Prototype Name Residential/RetailResidential/RetailResidential/RetailResidential/Retail LocationTransit-AdjacentTransit-AdjacentMixed BoulevardMixed Boulevard LUCE Tier2323 Permit Requirement # Parcels1 1 1 1 Bldg. Height (Feet)62 72 50 60 Stories (#)5 6 4 5 Site Area (SF)15,000 15,000 15,000 15,000 Gross Bldg. Area (SF)59,347 70,229 39,587 48,751 Floor Area Ratio (FAR) - Gross Area3.96 4.68 2.64 3.25 Floor Area Ratio (FAR) - Net Area3.37 4.00 2.22 2.75 Net Leasable Areas Residential (SF)45,500 55,000 28,250 36,250 Market Rate Units41 48 30 35 Affordable Units19 24 7 12 Total Units60 72 37 47 Retail (SF)5,000 5,000 5,000 5,000 Office (SF)- - - - Hotel (SF)- - - - Development Costs (see Sheets B&C&D) Land Costs7,500,000 $ 7,500,000 $ 7,500,000 $ 7,500,000 $ Hard Costs13,341,901 $ 15,516,258 $ 9,281,135 $ 11,202,497 $ Soft Costs3,171,989 $ 3,873,133 $ 2,156,206 $ 2,749,450 $ Net Parks/Recreation Fee573,685 $ 782,602 $ 400,510 $ 569,511 $ Net Affordable Housing Linkage Fee-$ -$ -$ -$ Net Transportation Impact Fee120,263 $ 194,739 $ 54,664 $ 109,445 $ Other City Costs (see Sheet E)561,794 $ 648,693 $ 390,431 $ 471,264 $ Other Soft Costs2,610,195 $ 3,224,440 $ 1,765,775 $ 2,278,187 $ Financing Costs2,604,943 $ 2,925,517 $ 2,049,090 $ 2,321,621 $ Total Development Cost26,618,833 $ 29,814,908 $ 20,986,431 $ 23,773,568 $ per GSF$449$425$530$488 Net Operating Income (NOI) (see Sheet E) Residential-Market Rate Effective Gross Income1,892,400 $ 2,219,580 $ 1,378,260 $ 1,614,240 $ Less: Operating Expenses(615,000)$ (720,000)$ (450,000)$ (525,000)$ Net Operating Income1,277,400 $ 1,499,580 $ 928,260 $ 1,089,240 $ Residential-Affordable Effective Gross Income184,356 $ 234,504 $ 67,668 $ 117,840 $ Less: Operating Expenses(285,000)$ (360,000)$ (105,000)$ (180,000)$ Net Operating Income(100,644)$ (125,496)$ (37,332)$ (62,160)$ Retail Effective Gross Income342,000 $ 342,000 $ 342,000 $ 342,000 $ Less: Operating Expenses(10,260)$ (10,260)$ (10,260)$ (10,260)$ Net Operating Income331,740 $ 331,740 $ 331,740 $ 331,740 $ Office Effective Gross Income-$ -$ -$ -$ Less: Operating Expenses-$ -$ -$ -$ Net Operating Income-$ -$ -$ -$ Total Net Operating Income1,508,496 $ 1,705,824 $ 1,222,668 $ 1,358,820 $ Project Component Values (see Sheet F) Residential-Market Rate NOI1,277,400 $ 1,499,580 $ 928,260 $ 1,089,240 $ Cap Rate4.80%4.80%4.80%4.80% Value26,612,500 $ 31,241,250 $ 19,338,750 $ 22,692,500 $ Residential-Affordable NOI-$ -$ -$ -$ Cap Rate4.80%4.80%4.80%4.80% Value-$ -$ -$ -$ Retail NOI331,740 $ 331,740 $ 331,740 $ 331,740 $ Cap Rate5.90%5.90%5.90%5.90% Value5,622,712 $ 5,622,712 $ 5,622,712 $ 5,622,712 $ Office NOI-$ -$ -$ -$ Cap Rate5.70%5.70%5.70%5.70% Value-$ -$ -$ -$ Total Project Value32,235,212 $ 36,863,962 $ 24,961,462 $ 28,315,212 $ Developer Returns Developer Profit Total Project Value32,235,212 $ 36,863,962 $ 24,961,462 $ 28,315,212 $ Less: Total Development Cost(26,618,833)$ (29,814,908)$ (20,986,431)$ (23,773,568)$ Profit5,616,379 $ 7,049,054 $ 3,975,031 $ 4,541,644 $ % of Value 17.4%19.1%15.9%16.0% Profit No Fees6,310,327 $ 8,026,395 $ 4,430,205 $ 5,220,599 $ Feasible? (i.e. = or > 12.5%)YESYESYESYES Return on Total Development Cost NOI1,508,496 $ 1,705,824 $ 1,222,668 $ 1,358,820 $ Total Development Cost(26,618,833)$ (29,814,908)$ (20,986,431)$ (23,773,568)$ Return on Cost 5.67%5.72%5.83%5.72% Return on Cost No Fees 5.82%5.92%5.96%5.88% Feasible? (i.e. = or > 0.75% + Weighted Cap)YESYESYESYES Weighted Cap Rate 4.91%4.89%4.97%4.93% Page 1 of 8 HR&A Advisors, Inc. Pro Forma F. Low Income Affordable Housing Percentage Increase after Nexus Maxima Analysis/Summary 11/1/2016 Draft Work Product - Not for Public Distribution Pro Forma F Low Income Affordable Housing Increase Over Parks/Rec & TIF Nexus Study Maxima A. Physical Parameter s Prototype Name Residential/RetailResidential/RetailResidential/RetailResidential/Retail LocationTransit-AdjacentTransit-AdjacentMixed BoulevardMixed Boulevard LUCE Area LUCE Tier2323 Permit Requirement # Parcels1 1 1 1 Bldg. Height (Feet)62 72 50 60 Stories (#)5 6 4 5 Land Area (SF)15,000 15,000 15,000 15,000 Gross Bldg. Area (SF)1 59,347 70,229 39,587 48,751 Floor Area Ratio (FAR)-Gross Area 1 4.0 4.7 2.6 3.3 Floor Area Ratio (FAR)-Net Area3.4 4.0 2.2 2.75 Net Leasable Areas (SF)1 50,500 60,000 33,250 41,250 Residential 2 45,500 55,000 28,250 36,250 Retail5,000 5,000 5,000 5,000 Office Hotel- - # Hotel Rooms- - - - Residential Unit Mix Office SF- - - - Retail SF5,000 5,000 5,000 5,000 Hotel SF- - - - Residential SF-Target45,500 55,000 28,250 36,250 Market Rate Studio (SF)600 600 600 600 1-BR (SF)700 700 700 700 2-BR (SF)950 950 950 950 3-BR (SF)1,300 1,300 1,300 1,300 Studio (# units)3 5 2 4 1-BR (# units)27 30 21 21 2-BR (# units)8 8 5 7 3-BR (# units)3 5 2 3 Subtotal (# units)41 48 30 35 Affordable 3 Studio (SF)500 500 500 500 1-BR (SF)600 600 600 600 2-BR (SF)850 850 850 850 3-BR (SF)1,080 1,080 1,080 1,080 Studio (# units)1 3 1 1 1-BR (# units)12 12 4 6 2-BR (# units)5 6 1 4 3-BR (# units)1 3 1 1 Subtotal (# units)19 24 7 12 Total Units60 72 37 47 Parking Residential Market Rate (wtd. avg. per unit)4 1.10 1.08 1.08 1.09 Affordable (avg. per unit)1.13 1.13 1.07 1.17 Subtotal Spaces (#)71 84 43 56 Subtotal Plus Guest Spaces (#)78 92 47 62 Retail21 27 7 14 Spaces/500 SF1 1 1 1 Subtotal Spaces (#)10 10 10 10 Office Spaces/500 SF1.0 1.0 1.0 1.0 Subtotal Spaces (#)- - - - Hotel Spaces/Guest Room0.75 0.75 0.75 0.75 Subtotal Spaces (#)- - - - Total Spaces Number88 102 57 72 Gross Area/Space (SF)-Surface300 300 300 300 Gross Area/Space (SF)-Subt.350 350 350 350 Total Parking Area (SF)30,800 35,700 19,950 25,200 # Surface- - - - # Subt. Levels Total2.1 2.4 1.3 1.7 Spaces/Levels 1-286 86 57 72 Spaces/Levels 3-52 16 - - Construction Period (months)18 18 18 18 Gross Floor Area by Story Site Area15,000 15,000 15,000 15,000 Total Gross Bldg. Area59,347 70,229 39,587 48,751 Total Floors5 6 4 5 Floor 15,727 5,727 5,727 5,727 Floor 214,318 14,318 11,455 11,455 Floor 314,318 14,318 10,882 10,882 Floor 412,600 12,600 10,023 10,023 Floor 510,882 10,882 - 9,164 Floor 6- 10,882 - - Total Gross Floor Area59,347 70,229 39,587 48,751 FAR-Gross Area3.96 4.68 2.64 3.25 Net Floor Area by Story Floor 15,000 5,000 5,000 5,000 Floor 212,500 12,500 10,000 10,000 Floor 312,500 12,500 9,500 9,500 Floor 411,000 11,000 8,750 8,750 Floor 59,500 9,500 - 8,000 Floor 6- 9,500 - - Total50,500 60,000 33,250 41,250 Net/Gross Floor Area Overall85.1%85.4%84.0%84.6% 2 Based on unit mix and net leasable floor area by unit type, per City Planning Staff and HR&A. 3 Assumes 0.5 spaces/studio; 1.0 spaces/1-BR unit; and 1.5 spaces/2- & 3-BR units. 1 Per guidance provided by City Planning staff and adjusted for Tier 1 and Tier 2 scenarios by HR&A based on efficiency factors for Tier 3 scenarios Page 2 of 8 HR&A Advisors, Inc. Pro Forma F. Low Income Affordable Housing Percentage Increase after Nexus Maxima Analysis/A-Program 11/1/2016 Draft Work Product - Not for Public Distribution Pro Forma F Low Income Affordable Housing Increase Over Parks/Rec & TIF Nexus Study Maxima B. Development Costs Prototype Name Residential/RetailResidential/RetailResidential/RetailResidential/Retail Location Transit-AdjacentTransit-AdjacentMixed BoulevardMixed Boulevard Land Area 15,000 15,000 15,000 15,000 Gross Bldg. Area (SF)59,347 70,229 39,587 48,751 Net Leasable Areas (SF) Residential 45,500 55,000 28,250 36,250 Retail 5,000 5,000 5,000 5,000 Office - - - - Hotel - - - - Hotel Rooms - - - - Subterranean Parking (spaces)88 102 57 72 1-2 Levels 86 86 57 72 3-5 Levels 2 16 - - 126107189154 Land Cost 7,500,000 $ 7,500,000 $ 7,500,000 $ 7,500,000 $ Hard Cost 1 Construction Type VVVV Building Construction/GSFVaries$151$149$157$154 Demo/On-Site Improvements$10per Land Area150,000 $ 150,000 $ 150,000 $ 150,000 $ Off-Site Improvements$100,000Allowance100,000 $ 100,000 $ 100,000 $ 100,000 $ Building Core & ShellVaries8,961,322 $ 10,464,050 $ 6,215,168 $ 7,507,632 $ Retail Tenant Improvements$70x Net Leasable SF350,000 $ 350,000 $ 350,000 $ 350,000 $ Office Tenant Improvements$60x Net Leasable SF-$ -$ -$ -$ Hotel FF&E$25,000x Rooms-$ -$ -$ -$ Subterranean Parking Surface$5,000per Space-$ -$ -$ -$ 1-2 Levels$37,000per Space3,171,429 $ 3,171,429 $ 2,109,000 $ 2,664,000 $ 3-4 Levels$42,000per Space96,000 $ 684,000 $ -$ -$ Contingency4%x Subtotal Hard Costs513,150 $ 596,779 $ 356,967 $ 430,865 $ Subtotal Hard Costs 13,341,901 $ 15,516,258 $ 9,281,135 $ 11,202,497 $ Soft Costs 2 Net Parks/Recreation FeeSee Sheet D573,685 $ 782,602 $ 400,510 $ 569,511 $ Net Affordable Housing Linkage FeeSee Sheet D-$ -$ -$ -$ Net TIF FeeSee Sheet D120,263 $ 194,739 $ 54,664 $ 109,445 $ Other City Permits & FeesSee Sheet C561,794 $ 648,693 $ 390,431 $ 471,264 $ A&E/Other Professionals6%x Hard Costs800,514 $ 930,975 $ 556,868 $ 672,150 $ Marketing/Leasing Commissions Residential$7.50x Net Leasable SF341,250 $ 412,500 $ 211,875 $ 271,875 $ Retail/Office$3.00x Net Leasable SF15,000 $ 15,000 $ 15,000 $ 15,000 $ Legal & Accounting1%x Hard Costs133,419 $ 155,163 $ 92,811 $ 112,025 $ Taxes & Insurance1%x Hard Costs133,419 $ 155,163 $ 92,811 $ 112,025 $ Pre-Opening Expenses$4.00x Net Leasable SF-$ -$ -$ -$ Developer Fee3%x Hard Costs400,257 $ 465,488 $ 278,434 $ 336,075 $ Contingency3%x Subtotal Soft Costs92,388 $ 112,810 $ 62,802 $ 80,081 $ Subtotal Soft Costs 3,171,989 $ 3,873,133 $ 2,156,206 $ 2,749,450 $ Subtotal Land + Hard + Softs Costs 24,013,890 $ 26,889,391 $ 18,937,341 $ 21,451,947 $ Financing Costs 3 Loan Term (months)18 Average Loan Balance65.00% Construction Loan Interest Rate6.50% Construction Loan Interest1,521,880 $ 1,704,115 $ 1,200,154 $ 1,359,517 $ Construction Loan Fees3.00%720,417 $ 806,682 $ 568,120 $ 643,558 $ Capitalized Project Valueper Sheet E Permanent Loan Percent x Value75.00% Permanent Loan Fees1.50%362,646 $ 414,720 $ 280,816 $ 318,546 $ Subtotal Financing Costs2,604,943 $ 2,925,517 $ 2,049,090 $ 2,321,621 $ Total Development Cost Land +Hard + Soft + Financing 26,618,833 $ 29,814,908 $ 20,986,431 $ 23,773,568 $ per GSF 448.53 $ 424.54 $ 530.13 $ 487.65 $ 1 83% x calculated values, per Marshall & Swift Commercial Cost Estimator, May 2016; HR&A Advisors, Inc., to account for certai n hard costs and soft costs accounted for separately. 2 Per HR&A's experience with similar projects. 3 Per RealtyRates mortgage rates and terms survey for Q1 2016. Assumptions Page 3 of 8 HR&A Advisors, Inc. Pro Forma F. Low Income Affordable Housing Percentage Increase after Nexus Maxima Analysis/B-Dev Costs 11/1/2016 Draft Work Product - Not for Public Distribution Pro Forma F Low Income Affordable Housing Increase Over Parks/Rec & TIF Nexus Study Maxima C. City Fees & Permit Costs Prototype Name Residential/RetailResidential/RetailResidential/RetailResidential/Retail Location Transit-AdjacentTransit-AdjacentMixed BoulevardMixed Boulevard Land Area 15,000 15,000 15,000 15,000 Gross Bldg. Area (SF)59,347 70,229 39,587 48,751 Residential Units Market Rate Studios 3 5 2 4 1-BR 27 30 21 21 2-BR 8 8 5 7 3-BR 3 5 2 3 Affordable Studios 1 3 1 1 1-BR 12 12 4 6 2-BR 5 6 1 4 3-BR 1 3 1 1 Residential (Net Leasable SF)45,500 55,000 28,250 36,250 Retail (Net Leasable SF)5,000 5,000 5,000 5,000 Office (Net Leasable SF)- - - - Hotel (Net Leasable SF)- - - - New Affordable Hsg. Linkage Fee 1 N/AN/A-$ -$ -$ -$ New Parks Fee 1 N/AN/A573,685 $ 782,602 $ 400,510 $ 569,511 $ New TIF Fee 1 N/AN/A120,263 $ 194,739 $ 54,664 $ 109,445 $ Planning Permits 2 Development Review$17,738per project-$ -$ -$ -$ Development Agreement$25,000per project-$ -$ -$ -$ Architectural Review Board$3,588per project3,588 $ 3,588 $ 3,588 $ 3,588 $ CEQA Categorical Exemption$15,648per project15,648 $ 15,648 $ 15,648 $ 15,648 $ Subtotal 19,236 $ 19,236 $ 19,236 $ 19,236 $ Other Requirements 3 Arts Fee New Residential/Commercial1.00%x $200/SF118,693 $ 140,457 $ 79,174 $ 97,502 $ Tenant Improvements1.00%x $50/SF2,500 $ 2,500 $ 2,500 $ 2,500 $ Child Care Fee Market Rate Residential$142.40per unit5,411 $ 6,123 $ 3,987 $ 4,557 $ Retail$4.84x leasable area24,200 $ 24,200 $ 24,200 $ 24,200 $ Office$6.76x leasable area-$ -$ -$ -$ Hotel$3.39x leasable area-$ -$ -$ -$ School Facilities Fee Residential$3.48x leasable area158,340 $ 191,400 $ 98,310 $ 126,150 $ Commercial$0.56x leasable area2,800 $ 2,800 $ 2,800 $ 2,800 $ Subtotal 311,944 $ 367,480 $ 210,971 $ 257,709 $ Bldg./Construction Permits 2 Plan Check Residential 4+ stories$533.14$0.98x leasable area44,968 $ 54,246 $ 28,122 $ 35,935 $ Commercial <10K SF$511.91$1.36x leasable area7,312 $ 7,312 $ 7,312 $ 7,312 $ Commercial >10K SF/4 stories$0.41x leasable area-$ -$ -$ -$ Mechanical$778per project$778$778$778$778 Electrical$778per project$778$778$778$778 Plumbing$778per project$778$778$778$778 Building Permits/Inspections Multi-family 4+ Stories130.37$1.10x leasable area49,971 $ 60,377 $ 31,075 $ 39,839 $ Commercial 1-Story124.75$1.28x leasable area6,507 $ 6,507 $ 6,507 $ 6,507 $ Commercial 4+ stories$0.80x leasable area-$ -$ -$ -$ Tenant Improvements <10K SF132.54$0.38x leasable area2,057 $ 2,057 $ 2,057 $ 2,057 $ Tenant Improvements >10K SF$0.30x leasable area-$ -$ -$ -$ Geotechnical Reports$2,655per project2,655 $ 2,655 $ 2,655 $ 2,655 $ Subtotal 115,805 $ 135,489 $ 80,063 $ 96,640 $ Utility Fees 2 Water Meter 3 $4,2913/4" meter per project4,291 $ 4,291 $ 4,291 $ 4,291 $ Fireline Meter 3 $26,8164" meter per project26,816 $ 26,816 $ 26,816 $ 26,816 $ Wastewater Capital Facilities Studio/1-BR Units$1,168per unit54,896 $ 61,904 $ 32,704 $ 40,880 $ 2-BR Units$1,557per unit20,241 $ 21,798 $ 9,342 $ 17,127 $ 3-BR Units$1,947per unit4,671 $ 7,785 $ 3,114 $ 4,671 $ Commercial$779 per 1,000 leasable SF3,895 $ 3,895 $ 3,895 $ 3,895 $ Subtotal 114,809 $ 126,488 $ 80,161 $ 97,679 $ per GSF $11.49$12.01$11.24$11.91 1 Based on current fee rates; see Sheet D for Tier sensitivity calculation details. 2 Per FY 2015-16 City fee schedules. 3 Includes meter and capital facilities charges. Assumptions Page 4 of 8 HR&A Advisors, Inc. Pro Forma F. Low Income Affordable Housing Percentage Increase after Nexus Maxima Analysis/C-City Cost Detail 11/1/2016 Draft Work Product - Not for Public Distribution Pro Forma F Low Income Affordable Housing Increase Over Parks/Rec & TIF Nexus Study Maxima D. Parks/Recreation, Afforable Housing Linkage, and Transportation Impact Fees Prototype Name Residential/RetailResidential/RetailResidential/RetailResidential/Retail Location Transit-AdjacentTransit-AdjacentMixed BoulevardMixed Boulevard Land Area 15,000 15,000 15,000 15,000 Gross Bldg. Area (SF)59,347 70,229 39,587 48,751 Residential Units 60 72 37 47 Market Rate Studios 3 5 2 4 1-BR 27 30 21 21 2-BR 8 8 5 7 3-BR 3 5 2 3 Affordable Studios 1 3 1 1 1-BR 12 12 4 6 2-BR 5 6 1 4 3-BR 1 3 1 1 Residential (Net Leasable SF)45,500 55,000 28,250 36,250 Retail (Net Leasable SF)5,000 5,000 5,000 5,000 Office (Net Leasable SF)- - - - Hotel (Net Leasable SF)- - - - Adopted Parks/Recreation Fee X% x Adopted Fees Tier 1Tier 2Tier 3 Market Rate Housing100%100%100% 0-1 BRs100%391%391%$4,231.93per unit323,997 $ 465,978 $ 257,428 $ 332,841 $ 2+ BRs100%391%391%$6,816.30per unit253,498 $ 320,434 $ 146,892 $ 240,480 $ Affordable Housing100%100%100%$0per unit-$ -$ -$ -$ Retail100%394%394%$1.52x leasable area7,619 $ 7,619 $ 7,619 $ 7,619 $ Office100%100%100%$2.36x leasable area-$ -$ -$ -$ Hotel100%100%100%$3.18x leasable are a -$ -$ -$ -$ Subtotal Fee 585,114 $ 794,031 $ 411,939 $ 580,940 $ Less: Fee on Existing SF Retail100%100%100%$1.52x leasable area(11,429)$ (11,429)$ (11,429)$ (11,429)$ Office100%100%100%$2.36x leasable are a -$ -$ -$ -$ Net Fee 573,685 $ 782,602 $ 400,510 $ 569,511 $ Adopted Affordable Housing Linkage Fee X% x Adopted Fees 100%100%100% Retail100%100%100%$9.97x leasable area49,857 $ 49,857 $ 49,857 $ 49,857 $ Office100%100%100%$11.46x leasable are a -$ -$ -$ -$ Subtotal Fee 49,857 $ 49,857 $ 49,857 $ 49,857 $ Less: Fee on Existing SF Retail100%100%100%$9.97x leasable area(74,785)$ (74,785)$ (74,785)$ (74,785)$ Office100%100%100%$11.46x leasable are a -$ -$ -$ -$ Net Fee -$ -$ -$ -$ TIF Fees X% x Adopted Fees 100%100%100% Market Rate-Area 1100%155%155%$2,773.75per unit176,272 $ 250,747 $ 110,672 $ 165,453 $ Market Rate-Area 2100%100%100%$3,520.52per unit-$ -$ -$ -$ Affordable100%100%100%$0.00per unit-$ -$ -$ -$ Retail-Area 1100%155%155%$22.40x leasable area112,017 $ 112,017 $ 112,017 $ 112,017 $ Retail-Area 2100%100%100%$32.11x leasable area-$ -$ -$ -$ Office-Area 1100%100%100%$10.35x leasable area-$ -$ -$ -$ Office-Area 2100%100%100%$11.52x leasable area-$ -$ -$ -$ Hotel-Area 1 & 2100%100%100%$3.84x leasable are a -$ -$ -$ -$ Subtotal 288,288 $ 362,764 $ 222,689 $ 277,470 $ Reduction for Existing Retai A llowanc e (168,025)$ (168,025)$ (168,025)$ (168,025)$ NET TIF Fee 120,263 $ 194,739 $ 54,664 $ 109,445 $ Combined New Fees 693,948 $ 977,341 $ 455,174 $ 678,956 $ Assumptions Assumptions Assumptions Page 5 of 8 HR&A Advisors, Inc. Pro Forma F. Low Income Affordable Housing Percentage Increase after Nexus Maxima Analysis/D-Fee Sensitivities 11/1/2016 Draft Work Product - Not for Public Distribution Pro Forma F Low Income Affordable Housing Increase Over Parks/Rec & TIF Nexus Study Maxima E. Net Operating Income Prototype Name Residential/RetailResidential/RetailResidential/RetailResidential/Retail Location Transit-AdjacentTransit-AdjacentMixed BoulevardMixed Boulevard Land Area 15,000 15,000 15,000 15,000 Gross Bldg. Area (SF)59,347 70,229 39,587 48,751 Residential Units 60 72 37 47 Market Rate 41 48 30 35 Studio 3 5 2 4 1-BR 27 30 21 21 2-BR 8 8 5 7 3-BR 3 5 2 3 Affordable 19 24 7 12 Studio 1 3 1 1 1-BR 12 12 4 6 2-BR 5 6 1 4 3-BR 1 3 1 1 Retail (Net Leasable SF)5,000 5,000 5,000 5,000 Office (Net Leasable SF)- - - - Hotel (Net Leasable SF)- - - - Parking Spaces 88 102 57 72 Residential 71 84 43 56 Retail 10 10 10 10 Office - - - - Hotel 0000 For-Rent Residential- Market Rate 1 Studio Rent/Unit/MonthVaries$3,300$3,300$3,300$3,300 1-BR Rent/Unit/MonthVaries$3,800$3,800$3,800$3,800 2-BR Rent/Unit/MonthVaries$4,300$4,300$4,300$4,300 3-BR Rent/Unit/MonthVaries$5,000$5,000$5,000$5,000 Units Income/Year1,942,800 $ 2,278,800 $ 1,414,800 $ 1,657,200 $ Other Income100.00 $ x Uni t 49,200 $ 57,600 $ 36,000 $ 42,000 $ Gross Income 1,992,000 $ 2,336,400 $ 1,450,800 $ 1,699,200 $ Less: Vacancy & Collection Los s 5.0%x Gross Income(99,600)$ (116,820)$ (72,540)$ (84,960)$ Effective Gross Income (EGI)1,892,400 $ 2,219,580 $ 1,378,260 $ 1,614,240 $ Less: Operating Expenses (incl. reserve) 1 15,000 $ x Unit(615,000)$ (720,000)$ (450,000)$ (525,000)$ Net Operating Income1,277,400 $ 1,499,580 $ 928,260 $ 1,089,240 $ For-Rent Residential - Affordable (VL)3 Studio Rent/Unit/Month 680 $ 680 $ 680 $ 680 $ 1-BR Rent/Unit/Month 778 $ 778 $ 778 $ 778 $ 2-BR Rent/Unit/Month 875 $ 875 $ 875 $ 875 $ 3-BR Rent/Unit/Month 972 $ 972 $ 972 $ 972 $ Units Income/Year 184,356 $ 234,504 $ 67,668 $ 117,840 $ Other Income0.0%x Units Incom e -$ -$ -$ -$ Gross Income 184,356 $ 234,504 $ 67,668 $ 117,840 $ Less: Vacancy & Collection Los s 0.0%x Gross Income-$ -$ -$ -$ Effective Gross Income (EGI)184,356 $ 234,504 $ 67,668 $ 117,840 $ Less: Operating Expenses (inc. reserve) 1 15,000 $ x Unit(285,000)$ (360,000)$ (105,000)$ (180,000)$ Net Operating Income(100,644)$ (125,496)$ (37,332)$ (62,160)$ Retail 2 Average Rent/SF/Month (NNN)Varies6.00 $ 6.00 $ 6.00 $ 6.00 $ Gross Rental Income/Year360,000 $ 360,000 $ 360,000 $ 360,000 $ Less: Vacancy & Collection Los s 5.0%x Gross Income(18,000)$ (18,000)$ (18,000)$ (18,000)$ Effective Gross Income (EGI)342,000 $ 342,000 $ 342,000 $ 342,000 $ Less: Unreimbursed Operating Expenses3.0%x EGI(10,260)$ (10,260)$ (10,260)$ (10,260)$ Net Operating Income331,740 $ 331,740 $ 331,740 $ 331,740 $ Office 2 Average Rent/SF/Month (MG)4.55 $ 4.55 $ 4.55 $ 4.55 $ Gross Rental Income/Year-$ -$ -$ -$ Parking Income 4 $2,223Wtd. Avg./Space/Yr.-$ -$ -$ -$ Less: Vacancy & Collection Los s 5.0%x Gross Income-$ -$ -$ -$ Effective Gross Income (EGI)-$ -$ -$ -$ Less: Operating Expenses15.0%x EGI-$ -$ -$ -$ Less: Parking Expens e 50.0%x Parking Incom e -$ -$ -$ -$ Net Operating Income -$ -$ -$ -$ Total Net Operating Income1,508,496 $ 1,705,824 $ 1,222,668 $ 1,358,820 $ 1 Per HR&A's experience with similar projects. 2 Per HR&A review of third-party market data (i.e. CoStar Group data for similar, recently constructed buildings in the Downtow n Community Plan area). 3 Per City's 2015 rent schedule. 4 Assumes $200/month reserved (10% of supply); $165/month unreserved (85%); and $500/month daily use (5%). Assumptions Page 6 of 8 HR&A Advisors, Inc. Pro Forma F. Low Income Affordable Housing Percentage Increase after Nexus Maxima Analysis/E-Net Ops Income 11/1/2016 Draft Work Product - Not for Public Distribution Pro Forma F Low Income Affordable Housing Increase Over Parks/Rec & TIF Nexus Study Maxima F. Returns Prototype Name Residential/RetailResidential/RetailResidential/RetailResidential/Retail LocationTransit-AdjacentTransit-AdjacentMixed BoulevardMixed Boulevard Land Area 15,000 15,000 15,000 15,000 Gross Bldg. Area (SF)59,347 70,229 39,587 48,751 Residential Units Market Rate Studio 3 5 2 4 1-BR 27 30 21 21 2-BR 8 8 5 7 3-BR 3 5 2 3 Affordable Studio 1 3 1 1 1-BR 12 12 4 6 2-BR 5 6 1 4 3-BR 1 3 1 1 Retail (Net Leasable SF)5,000 5,000 5,000 5,000 Office (Net Leasable SF)- - - - Hotel (Net Leasable SF)- - - - Project Value Residential-Market Rate Net Operating IncomeFrom Sheet E1,277,400 $ 1,499,580 $ 928,260 $ 1,089,240 $ Cap Rate 1 4.80% ValueNOI/Cap Rate26,612,500 $ 31,241,250 $ 19,338,750 $ 22,692,500 $ Residential-Affordable Net Operating IncomeFrom Sheet E-$ -$ -$ -$ Cap Rate 1 4.80% ValueNOI/Cap Rate-$ -$ -$ -$ Retail Net Operating IncomeFrom Sheet E331,740 $ 331,740 $ 331,740 $ 331,740 $ Cap Rate 1 5.90% ValueNOI/Cap Rate5,622,712 $ 5,622,712 $ 5,622,712 $ 5,622,712 $ Office Net Operating IncomeFrom Sheet E-$ -$ -$ -$ Cap Rate 1 5.70% ValueNOI/Cap Rate-$ -$ -$ -$ Total Project Value32,235,212 $ 36,863,962 $ 24,961,462 $ 28,315,212 $ Developer Returns Developer Profit Total Project ValueFrom above32,235,212 $ 36,863,962 $ 24,961,462 $ 28,315,212 $ Less: Total Development CostFrom Sheet B(26,618,833)$ (29,814,908)$ (20,986,431)$ (23,773,568)$ Profit 5,616,379 $ 7,049,054 $ 3,975,031 $ 4,541,644 $ % of Value 17.4%19.1%15.9%16.0% Return on Total Development Cost NOIFrom Sheet E1,508,496 $ 1,705,824 $ 1,222,668 $ 1,358,820 $ Total Development CostFrom Sheet B(26,618,833)$ (29,814,908)$ (20,986,431)$ (23,773,568)$ Return on Cost 5.67%5.72%5.83%5.72% 1 Based on Real Estate Research Corporation cap rate data for Q1 2016. Assumptions Page 7 of 8 HR&A Advisors, Inc. Pro Forma F. Low Income Affordable Housing Percentage Increase after Nexus Maxima Analysis/F-Returns 11/1/2016 HR&A Advisors, Inc. | Los Angeles | New York | Dallas | Washington, D.C. | Raleigh MEMORANDUM To: Jing Yeo, City of Santa Monica From : HR&A Advisors, Inc. Date : April 10, 2017 Re : Response to Beacon Economics Review of HR&A’s Downtown Community Plan Update Tier 2 & 3 Fee Analysis T his memorandum summarizes HR&A Advisors, Inc ’s (“HR&A”) response to the Beacon Economics review of HR&A’s analysis of the upper limits of financially feasible increases to the City of Santa Monica’s (“the City”) adopted Transportation Impac t and Parks and Recreation Impact Fees that could be charged on incremental increases in floor area in mixed -use residential and retail Tier 2 and 3 prototypes located in the Downtown Community Plan a rea. Upon review of the Beacon Economics report, HR&A finds that its argument that HR&A sh ould have significant ly increase d development cost assumptions is unsubstantiated, and fails to acknowledge HR&A’s conservative revenue and project valuation assumptions. Beyond minor corrections to miscalculations related to the City’s Child Care and Wast ewater Capital Facilities fees, and one fractional subterranean parking space included in our original pro forma models, w e do not believe that the Beacon Economics report warrants any adjustments to our original financial feasibility analysis. Incorr ect Assertion that General Development Costs Were Understated First and foremost, Beacon Economics clearly overstates development costs, evidenced by the findings of its own pro forma analysis that Tier 2 and 3 prototypes are not financially feasible under current fee levels (i.e. 14 percent above Tier 1 fees). As acknowledged by Beacon Economics, these prototypes are similar to projects that are under construction, and as such the assertion th at the projects are not financially feasible is clearly incorrect . Specifically, Tier 2 projects like 1613 - 1637 Lincoln Boulevard and 1641 Lincoln Boulevard have been proposed under these fee levels. Moreov er, Tier 3 projects like 1415 5th Street and 1560 Lincoln Boulevard have agreed to pay enhanced development impact fee s of up to 35 greater than current Tier 1 levels for all floor area (HR&A’s analysis assumes that Tier 1 floor area pays Tier 1 fees, etc.). This is i n addition to providing significant additional community benefits negotiated through D evelopment A greements with the City , and providing double the amount of affordable housing they would otherwise be required to build . The developer of these two projects has agreed to pay $880,0 00 and $2.3 million, respectively, in community benefits, and HR&A estimates the opportunity cost of building additional HR&A Advisors, Inc. Response to Review of HR&A’s Downtown Tier 2 and 3 Fee Analysis | 2 affordable units and reducing the number of market rate units in these projects would reduce the capitalized value of the project by ap proximately $3.7 million and $5.3 million, respectively.1 Unsubstantiated Assertion About Low Hard Costs B eacon Economics claims that HR&A’s hard costs are understated, and unrealistically low. In general, construction costs vary significantly by project, based on design, site configuration and positioning; many of these factors also affect project revenues. To allow for a general analysis , HR&A use d prototypes developed by the Planning & Community Development Department that were intended to be representative of the scale and program of development likely to occur in the area, given recent construction, proposed projects, and the regulatory framework. Beacon Economics describes extreme p roject -specific per square foot hard cost numbers for 1560 Lincoln Boulevard and 1415 5 th Street in its report , but does not cite a data source or substantiate these figures in any way . HR&A’s review of developer -prepared Plan Check Application forms suggest that costs for these projects are between 27 and 37 percent lower than what Beacon Economics claims. Irrespective of International Building Code terminology, HR&A use d Marshall & Swift cost estimation software – a widely -used, industry -acc epted data source – to develop its construction cost assumptions, and assumed the highest class of wood frame construction for the upper floor residential component, and concrete construction for the ground -floor retail and parking podium . For each constru ction cost estimate, HR&A made adjustments per Marshall & Swift’s guidelines for building height, fire protection, elevators, location -specific costs by county, and overall building construction and materials costs by region. Given that Santa Monica’s real estate market tends to command the among the highest rents in the region, typical multifamily development in the City may include higher -quality finishes than average, which Marshall and Swift may not account for. As noted ea rlier , HR&A’s analysis used more conservative rent and cap rate assumptions than current market conditions , which would support higher construction costs than estimated by HR&A . Reliance on Land Cost Outliers Beacon Economics claim s that HR&A $500 per sq uare foot (“PSF”) of land area assumption is understated and that this estimate should be at least $250 PSF higher , based on Beacon Economics review of recent listings , select transactions, and interviews with developers . This assessment is no t well -founded, as listings represent asking prices, and are a poor indicator for actual market transactions. The one actual transaction that Beacon Economics cites, 407 Colorado Avenue, has a viable, operating retail use on site, which may increase the property price (as it includes both land and revenue -generating improvements), and is an outlier compared with other land transactions in the Downtown Community Plan a rea. As shown in Table 1, the sale price PSF of land for 407 Colorado is approximately double the price of nearly all other transac tions over the past three 1 Based on a review of the Value Enhancement Analyses (“VEAs”) prepared for 1415 5 th Street and 1560 Lincoln Boulevard , and calculating the difference in capitalized value per market rate and affordable units. HR&A used the rent, net operating income, and capitalization rate assumptions supplied in these VEAs to do so . HR&A Advisors, Inc. Response to Review of HR&A’s Downtown Tier 2 and 3 Fee Analysis | 3 years, per data retrieved from CoStar Group Inc., a respected third -party real estate data provider. Table 1 : Land Sale Comparables for All Available Transactions Since January 1, 2014 Address Land SF Sale Price Date Sold Sale Price PSF of Land 1547 6th St 7,505 $3,750,000 4/4/2014 $500 1547 7th St 7,496 $3,500,000 7/1/2015 $467 1514 7th St 7,501 $3,000,000 7/16/2015 $400 711 Colorado Ave 7,501 $3,000,000 7/16/2015 $400 1235 5th St 7,505 $5,175,000 10/26/2015 $690 407 Colorado Ave 14,810 $15,750,000 2/24/2016 $1,063 1626 Lincoln Blvd 28,070 $15,750,000 5/26/2016 $561 1448 7th St 7,496 $4,000,000 9/22/2016 $534 1427 Lincoln Blvd 7,501 $3,787,500 1/31/2017 $505 Average $569 Median $505 Average w/o 407 Colorado Ave $507 Median w/o 407 Colorado Ave $502 Table 1 also shows that the median sale price of $505 PSF for all transactions, and average and median sale prices PSF when removing 407 Colorado Ave of $507 and $502, respectively, are within one percent of HR&A’s $500 PSF assumption. Moreover, HR&A based its land cost assumption on a review of property sales comparables included in recent V alue E nhancement A nalyses (“VEA”) prepared for the City. A recent VEA record, prepared by the Natelson Dale Group for the 500 Broadway development project, shows an average $460 price PSF of land , which is less than HR&A’s rounded, conservative assumption.2 Overstated Parking Requirements Beacon Economics claims that HR&A’s assumption of 350 square feet per parking space is too low, and should be 50 square feet higher. Our assumption is consistent with our previous analys e s conducted for the City, which established the basis for these fees in the first place. Additionally, HR&A’s experience working with private developers throughout the Los Angeles area indicates that gross square f ootage per subterranean parking space in mixed -use multifamily residential over ground -floor retail buildings r anges from 300 to 400 square feet per space; HR&A assumed the middle of this range . HR&A did not account for bicycle parking or compact or tandem vehicle spaces in any of the prototyp es, any or all of which would have resulted in less parking area, and low er parking construction costs than we assumed in our pro formas. 2 Found in Appendix D of the “Value Enhancement & Fiscal Impact Analysis for 500 Broadway” prepared by The Natelson Dale Group, Inc., and dated February 25, 2016. Source: CoStar Group Inc. HR&A Advisors, Inc. Response to Review of HR&A’s Downtown Tier 2 and 3 Fee Analysis | 4 Insignificant Concerns Related to Contingency Costs; Legal & Accounting; Taxes & Insurance Beacon Economics states that HR&A’s assumptions for contingency costs; legal and accounting costs; and taxes and insurance costs are slightly understated . As with HR&A’s assumption of 350 square feet per parking space, t hese assumptions are consistent with our analys e s that supported the successful creation and implementation o f these fees in the first place . Given the number of projects that have subsequently obtained entitlement, and/or are under construction, there is no evidenc e to suggest the fee level s based on these assumptions are not feasible. Insignificant Concern Regarding First Floor Retail Beacon Economics questions HR&A’s consistent assumption of 5,000 square feet of retail on the ground -floor for all prototypes. A s these are illustrative prototypes, the amount of retail and assumed use is cons istently applied across all scenarios, and includes space required for circulation, utilities, and other non -leasable floor area. Insignificant Concern Regarding LEED Certification Costs Beaco n Economics notes that HR&A’s analysis did not included costs associated with LEED certification. LEED certification often result s in cost savings over time by way of efficient building systems and reduced levels energy consumption, which may offset or supersede up -front costs . HR&A’s analysis did not account for either the increased development costs or potential lower ongoing operational expenses , rent premiums, and other effects associated with LEED construction and certification . Correct but Very Minor Subterranean Parking Count and Fee Calculation Errors Beacon Economics correctly noted minor calculation errors in HR&A’s pro formas with respect the amount of subterranean par king that should be included in parking levels 3 through 5, as compared with levels 1 and 2, as well as the lack of application of Child Care and Wastewater Capital Facilities fee to three bedroom units. T he removal of one parking space from levels 1 and 2 and added to levels 3 through 5, together with the correct appl ic ation of the respective fees to three bedroom units, has a de minimus impact on the overall development budget and financial feasibility. Conclusion Based on the foregoing, with the exception of the minor subterranean and fee calculation corrections, Beacon Economics comments are without merit and no other changes to our analysis for the Downtown Community Plan Update are warranted. HR&A Financial Feasibility Analysis Review and Analysis Cr e d i t : “ D o w n t o w n S a n t a M o n i c a S t a t i o n ” b y A d a m M o s s . C C B Y 2 . 0 Reviewof“IncrementalTier2&Tier3DevelopmentFeasibil- ityAnalysisfortheSantaMonicaDowntownCommunityPlan Update”byHR&AAdvisors(November2016) Thispublicationwaspreparedfor: ArmbrusterGoldsmith&DelvacLLP Thispublicationwaspreparedby: BeaconEconomics ChristopherThornberg,Ph.D.RobertKleinhenz,Ph.D. FoundingPartner ExecutiveDirectorofResearch 5777WestCenturyBoulevard,Suite895 5777WestCenturyBoulevard,Suite895 LosAngeles,California90045 LosAngeles,California90045 310.571.3399 424.646.4652 Chris@BeaconEcon.com Robert@BeaconEcon.com AdamFowler HoyuChong PublicPolicyManager ResearchAssociate Adam@BeaconEcon.com Hoyu@BeaconEcon.com Forfurtherinformationaboutthispublicationpleasecontact: VictoriaPikeBond RickSmith DirectorofCommunications DirectorofBusinessDevelopment BeaconEconomics,LLC BeaconEconomics,LLC 415.457.6030 858.997.1834 Victoria@BeaconEcon.com Rick@BeaconEcon.com Orvisitourwebsiteat www.BeaconEcon.com . ReproductionofthisdocumentoranyportionthereinisprohibitedwithouttheexpressedwrittenpermissionofBeaconEco- nomics.Copyright©2017byBeaconEconomicsLLC. FinancialFeasibilityAnalysis BeaconEconomics About Beacon Economics BeaconEconomics,LLCisaleadingproviderofeconomicresearchandforecasting,industryanaly- sis,realestateconsulting,andpublicpolicy.Bydeliveringindependent,rigorousanalysiswegive ourclientstheknowledgetheyneedtomaketherightstrategicdecisions. BeaconEconomics’recentprojectexperienceillustratesthebreadthandbroadanalyticscopeof theworkwedoforrealestateindustryclientsandintheareasofhousingpolicyandrealestate development. RelatedCalifornia In2016,BeaconEconomicsconductedaneconomic,demographic,andhousingoutlookforthegreaterSan Josearea.Thereportincludedacomprehensivelanduseanalysisexamining howlandusetrendshave changedovertimeand howdifferenttypesofresidentialandnonresidentialpropertieshavecontributed tooverallassessedvalueinthelast15years. Specialattentionwasplacedonestimatinghowmuchdevel- opablelandremainsinthetwocountyregion. BuildingIndustryAssociationofSouthern California,Inc. In2016,BeaconEconomicsproducedananalysisofthe‘BuildBetterLA’ballotinitiativeintheCityofLos Angeles.Thereportincludedadata-basedsnapshotoftheCity’shousingsupplyshortageandthoroughly examinedthenewrequirementsthatwouldbeplacedonresidentialbuildersiftheinitiativepassed.This includedexaminingtheinclusionaryhousingandlaborregulationelementsoftheinitiative.Thereport concludedbydefiningtheeconomicimpactsthatvariouspartsoftheinitiativewouldhaveontheCity’s housingsupplyintothefuture. CaliforniaHomebuildingFoundation In2012,BeaconEconomicswasawardedagranttodevelopafirst-of-its-kind,comprehensivewhitepaper examiningtheshortandlongtermeffectsofhighhousingcostsinCalifornia.Thereportincludedcom- parisonstootherstates,asurveyofhomebuilders,andexaminedthesourcesofhomepricedifferentials. ThestudywasgrantedwiththeintentofusingtheresearchtocreateregulatorychangeinSacramento. BerkshirePropertyAdvisors In2012,BeaconEconomicsconductedaMulti-FamilyRealEstateEconomicMacroAnalysisthatexam- inedthedemand,supply,andmarketequilibriumconditionsofmulti-familypropertiesintheSiliconVal- ley/SanJoseregion.Theanalysisevaluatedbroadmarketconditionsandthenassessedspecificeconomic variablesthatinfluencemulti-familydemandintheregionincludinghomepriceandsalestrends,com- mercialvacancyandinvestment,foreclosures,employment,taxablesales,personalincome,andbuilding permitactivity. 3   Contents ExecutiveSummary 1 AnalysisofHR&AFeasibilityStudy 2 FinancialFeasibilityStudy 11 Appendix 15 FinancialFeasibilityAnalysis BeaconEconomics Executive Summary AttherequestofArmbrusterGoldsmith&DelvacLLP(thereinafter“Armbruster”),BeaconEconomics,LLC (thereinafter“BeaconEconomics”)hasreviewedandanalyzedthemethodologyofadevelopmentfeasibil- itystudypreparedbyHR&AAdvisors,Inc.(thereinafter“HR&A”)inNovember2016fortheCityofSanta Monica.ThisreportraisesconcernsregardingsomeoftheassumptionsandcalculationsmadebyHR&A onthefeasibilityoffuturemixed-usedevelopmentprojectsinDowntownSantaMonica. AlthoughHR&A’sassumptionsonlanduse,buildingheights,floorarearatios,testsite,andaffordable housingaregenerallyinconformitywithcurrentSantaMonicamunicipalcodesandzoningordinances, BeaconEconomicsfoundthatthefeasibilitystudyincludesunrealisticassumptionsoncosts,typeofcon- struction,andfinancialfeasibility.Specifically,BeaconEconomicsfoundthat: Overallcostassessmentisgreatlylessthanactualcosts.HR&Aestimatesthecombinedhardcost,soft cost,andfinancingcost–i.e.totaldevelopmentcost excludinglandcost -forresidential/retailbuild- ingstobearound$315persquarefootto$335persquarefoot.Incomparison,thetotaldevelopment costexcludinglandcostforthefollowingprojectsareatleasttwiceasmuchastheamountquoted byHR&A: Theprojectat14155thStreettotaldevelopmentcostexcludinglandcostisestimatedtobe$773 PSF. Theprojectat1560LincolnBlvdtotaldevelopmentcostexcludinglandcostisestimatedtobe $824PSF. HR&Agreatlyunderestimateslandcost.Basedonrecentsaleslistingsandinterviewswithdevelop- ers,landcostisatleast$250persquarefoothigherthanthe$500persquarefootquotedbyHR&A. Therehavebeenafewrecentpurchaseswherelandcostpersquarefootisatleasttwiceasmuchas the$500persquarefootquotedbyHR&A:1 407ColoradoAve,whichmeasured14,810squarefeet,wasrecentlysoldfor$15.75millionor $1,063persquarefoot. HR&AassumesallprototypebuildingsareTypeVbuildings,whicharetheleastexpensivetypeto construct,withouttakingheightandfloorrestrictionsintoaccount.Thisisnotinaccordancewith currentbuildingcodestandards.Asaresult,developmentcostissignificantlyunderestimatedinev- eryprototypescenario. Notwithstandingthereport’sreferencetoTypeVcosts,Mr.Silvernsuggestedinpublictesti- monythatthereportactuallyassumedTypeIIIconstructioncosts–similartorecentlycon- structedmixedusebuildingsindowntownSantaMonica.Whileitisaccuratethatmanydown- townprojectswouldbeTypeVconstruction,ifthereportactuallycontemplatedTypeIIIproto- 1 Landcostdatafor407ColoradoAveisprovidedintheAppendixsectionofthereport. 1 FinancialFeasibilityAnalysis BeaconEconomics typesthencostsareevenmoreunderestimatedgivenTypeIIIbuildingsaremoreexpensiveto constructthanTypeV. Tier3buildingsintheTransitAdjacentArea(thatmaybeconstructedat8storiesand84-feetin height)wouldmostlikelybeTypeIconstruction.TypeIconcretebuildingsaredesirablefrom adurabilityandquality/designstandpointascomparedtowoodframestructures(i.e.,TypeV orIII).However,TypeIisfarandawaythemostexpensiveconstructiontype.TheHR&Areport clearlydoesnotaccountforthelikelihoodthatTier3mixeduseprojectswouldbeconstructed asTypeIbuildings. HR&Aalsounderestimatescontingencycost–whichisapercentageofconstructioncostsetasidefor unpredictablechangesinthescopeofthework-at4%ofhardconstructioncost.Acomparisonwith recentfeasibilitystudiesinCaliforniaandinterviewswithdevelopersshowthatcontingencycostis around7%to10%ofhardconstructioncost. HR&A’smethodofdeterminingthenumberofparkingspacesineachsubterraneanleveldoesnot conformtoindustrystandards.Also,HR&A’ssubterraneanparkinglotsizeforeachlevelexceedsthe sizeofland. HR&AunderstatesLegal&AccountingandTaxes&Insurance,whicharepartofsoftconstruction costs,byalmost$300,000ifHR&A’ssubtotalhardcostfiguresareused. HR&Aassignsauniform5,000netsquarefeetassumptiontofirstfloorretailspace,regardlessof thetotalbuildingsquarefootage.Inaddition,inalmostallofthescenarios,thefirstfloorwouldbe 5,000squarefeet.However,additionalretailsquarefeetorothermoreparkingintensiveuses(e.g., restaurant)wouldrequireadditionalparking,potentiallyrequiringathirdparkinglevelthatwasnot accountedforintheHR&Areport. Analysis of HR&AFeasibility Study LandCostAssumption HR&Aassumeslandcosttobe$500persquarefootinDowntownSantaMonica.Insteadofderivingsupport- ablelandcostsusingresiduallandvalueanalysis,HR&Ajustifiesitsassumptionbasedonsaletransactions inrecentValue-EnhancementAnalysesthatitconductedfortheCityofSantaMonica.2 Accordingtothis methodology,thesampleincludeslandunderlong-timeownershipnotearmarkedfornewdevelopment. Asaresult,thisincludeslandthatwaspurchasedatatimewhenitwassignificantlylessexpensive,which drivesdownthelandcostcomparedtothetrueprice.Thislikelyreflectsthelandcostforlongtimehold- erswhoareunlikelytodevelopmixeduse/residentialprojects.Theseownersaremorelikelytoholdon totheirassetsandcontinuetocollectcommercialrents,orselltheirpropertytoresidentialbuildingsat goingmarketrateswhichfarexceed$500perSF. 2 HR&AAdvisors,Inc.(2016).“AttachmentE:FinancialFeasibilityAnalysis.”November2016,pp.8. 2 FinancialFeasibilityAnalysis BeaconEconomics Recentsalessuggestthatlandcostissignificantlyabove$500persquarefootinDowntownSantaMonica. Forexample,a2015listingfromCBREon1670LincolnBoulevard(whichisrightattheedgeofDowntown SantaMonicaandnexttotheI-10Freeway)advertisedthesalepriceat$693.67persquarefoot.3 This listing-ThePenguin-isahighlyconservativelandcompbecausethesiteisimprovedwithawidelyrec- ognizedhistoricbuilding,whichisidentifiedontheCity’sHistoricResourcesInventory.Inaddition,there isnodoubtthatlandcosthasincreasedsince2015.Forexample,407ColoradoAvenue,whichmeasured at14,810squarefeet,wasrecentlysoldfor$15.75millionor$1,063persquarefoot. TypeofConstructionAssumption InallhypotheticalscenariosinProFormasAthroughF,regardlessofthelocation,height,andprototype name,HR&AassumesallprojectsarebuiltasTypeV(wood-frame)constructions.TypeVconstruction materialstendtobetheleastexpensive,whereasTypeIconstructionmaterialsarethemostexpensive. Multi-storywoodconstructionisgenerallyaTypeVorTypeIIIconstructiondependingonfactorssuchas height,numberofstories,andbuildingareaperstory.TypeVconstructionistypicallywoodframewhile TypeIIIconstructionemploysmasonryorothernoncombustiblewallswithatwo-hourfirerating. 3 Theflyercanbeaccessedat https://res.cloudinary.com/cslistings/image/upload/t_cs_attachment/v1/s3/cdx.xceligent. com/Attachments/328/9544328 3 FinancialFeasibilityAnalysis BeaconEconomics InOctober2016,Californiaadoptedthe2012InternationalBuildingCode(IBC).4 Table3summarizesthe maximumallowablebuildingheightandnumberofstoriesaccordingtothe2012IBC. 4 InternationalCodeCouncil.InternationalCodes-AdoptionbyState(October2016).RetrievedFebruary14,2017.Thedocu- mentcanbeaccessedathttp://www.iccsafe.org/wp-content/uploads/stateadoptions.pdf 4 FinancialFeasibilityAnalysis BeaconEconomics AllowableBuildingHeightandNumberofStories TypeofConstruction NoApprovedSprinklerSystem WithApprovedSprinklerSystem HeightLimit(feet)StoryLimit HeightLimit(feet)StoryLimit TypeI-A Unlimited Unlimited Unlimited Unlimited TypeI-B 160 11 180 12 TypeII-A 65 4 85 5 TypeII-B 55 4 75 5 TypeIII-A 65 4 85 5 TypeIII-B 55 4 75 5 TypeIV 65 4 85 5 TypeV-A 50 3 70 4 TypeV-B 40 2 60 3 Source:InternationalBuildingCode,Chapter5,Table503,2012Edition Inaddition,IBCSection510.2permitsfive-orsix-storystructuresoveroneleveloftypicallyconcretecon- struction(TypeIA).Evenwithapprovedautomaticsprinklersystemsinplace,TypeVconstructiononly allowsconstructionprojectsuptofourstorieshigh.InHR&A’sanalysis,onlyTier2projectsmeetthelim- itationcriteriaofTypeVconstruction;aTier3projectshouldbereclassifiedasTypeIIIconstructionor asTypeV-AconstructionoveraTypeI-Aconcretepodium,orasTypeIIIconstructionoveraTypeI-A concretepodium. Furthermore,evenfortheprototypesthatcorrectlyassumeTypeVconstructionmaterial,BeaconEco- nomicsfoundthatHR&Astillunderestimatesthehardcosts.Forallresidential/retailmixed-useprojects usingTypeVconstructionmaterial,HR&Aestimatestotalhardcostaround$220to$240pergrosssquare foot.However,dataon1560LincolnBoulevard,aprojectthatiscurrentlyinplancheckusingTypeVma- terial,indicatesthatactualhardcostis$380pergrosssquarefoot.Inotherwords,actualhardcostper squarefootisatleast58%higherthanthefiguresassumedintheProFormasforTypeVprojects. Dataon14155thStreet,whichisaresidential/retailmixed-useprojectusingTypeIIIconstructionmate- rial,indicatesthathardcostis$477pergrosssquarefoot.Giventhatthelandsizeforthisprojectisap- proximately15,000squarefeetandtheprojectcontainsabout60residentialunits,thisprojectisdirectly comparabletotheprototypes,whichhavesimilarlandandresidentialassumptions.Adirectcomparison ofthehypotheticalhardcostpersquarefootversustheactualfigureshowsactualhardcostpersquare footisabout100%higherthanthefiguresassumedintheProFormasforTypeVprojects. ContingencyCostAssumption ContingencyCostisapercentageofconstructioncostsetasideforunpredictablechangesinthescopeof thework.HR&Aassumeshardcontingencycosttobe4%ofsubtotalhardcosts,whichisanunrealistically lowassumption.Table4belowsummarizesthecontingencycostassumptionsinafewrecentfeasibility studies. 5 FinancialFeasibilityAnalysis BeaconEconomics ContingencyCostAssumptions Author Location YearContingency AECOM DowntownOakland,California 2013 5%ofTotalCosts TierraWestAdvisors SantaMonica,California 2014 10%ofHardCosts StrategicEconomics LongBeach,California 2016 9.1%ofHardCosts Source:AECOM,TierraWestAdvisors,andStrategicEconomics ContingencycostsfromTierraWest(10%ofhardcost)andStrategicEconomics(9.1%ofhardcost)are bothmorethantwiceasmuchasthe4%peggedbyHR&A.AsforAECOM,itscontingencycostisbasedon totalcost-whichisusuallythesumofhardcost,softcost,landcost,andfinancingcost-insteadofhard cost.AECOM’sestimationofcontingencycostcanthereforevarysignificantlyduetomarketconditions. Nevertheless,ifhardcosttypicallymakesupslightlyover50%to70%oftotaldevelopmentcost,itcanbe assumedthatAECOM’sestimationofcontingencycostasapercentageofhardcostcanrangefrom7%to 10%. SubterraneanParkingAssumption HR&Asetsgrosssubterraneanlevelparkingspaceat350squarefeeteach,andtotalnumberofsubter- raneanparkingspacesonthefirsttwolevelsat86spacestotalor43spacesforeachlevel.Multiplying 350squarefeetby43spacesoneachlevelequals15,050squarefeet,whichexceedsthelandsizeof15,000 squarefeet.Moreimportantly,HR&A’scalculationofparkingspacesisnotinaccordancewithstandard industrypractice.Forareasonablyefficientparkinglayout,thenetusableparkingspaceisabout90%to 95%ofthegrossspace.Inaddition,350grosssquarefeetisnotarealisticassumptionasthisimpliessmall parkingspaces.Fourhundred(400)grosssquarefeetperparkingspacewouldmoreaccuratelyreflectthe currentstandard. Assuminga95%efficiencyratioand400grosssquarefeetperspace,36parkingspacesmaximumcanbe constructedateachsubterraneanparkinglevel.The95%efficiencyratioischosensothatparkingcosts remainconservative.Thishasasignificanteffectonthecalculatedparkingconstructioncostssincesub- terraneanparkingbeyondlevels1and2aremoreexpensive.InHR&A’sanalysis,subterraneanparking atthefirsttwolevelsisestimatedtobe$37,000foreachspaceandsubterraneanparkingbeyondthefirst twolevelsisestimatedtobe$42,000foreachspace–asubstantialdifferenceof$5,000perspace.There areeightdifferentparkingallocationscenariosinHR&A’sanalysisand,basedontheaboveinformation,a maximumof36spacesischosenasthisisthemostconservativecostestimate.Thetablebelowsummarizes thecomparisonbetweenHR&A’sparkingallocationandBeaconEconomics’parkingallocation. 6 FinancialFeasibilityAnalysis BeaconEconomics SubterraneanParkingSpaceAllotmentComparison AllocationScenarioTotalParkingSpaces HR&A BeaconEconomics TotalSpaces,Levels1-2TotalSpaces,Levels3-5 TotalSpaces,Levels1-2TotalSpaces,Levels3-5 1 69 69 0 69 0 2 105 86 19 72 33 3 85 85 0 72 13 4 100 86 14 72 28 5 56 56 0 56 0 6 71 71 0 71 0 7 72 72 0 72 0 8 88 86 2 72 16 Source:HR&AandCalculationsbyBeaconEconomics Furthermore,sinceparkingspaceperstallis400grosssquarefeetinsteadof350grosssquarefeet,or50 grosssquarefeetmorethanassumed,parkingcostmustbeadjustedupwardaccordingly.5 Thistranslates tothefollowingcostdifferentials: SubterraneanParkingCostComparison AllocationScenarioTotalParkingSpaces HR&A BeaconEconomics TotalCostDifference TotalSpaces,Levels1-2TotalSpaces,Levels3-5TotalCost TotalSpaces,Levels1-2TotalSpaces,Levels3-5TotalCost 1 69 $2,553,000 $0 $2,553,000 $2,917,714 $0 $2,917,714 $364,714 2 105 $3,182,000 $798,000 $3,980,000 $3,044,571 $1,584,000 $4,628,571 $648,571 3 85 $3,145,000 $0 $3,145,000 $3,044,571 $624,000 $3,668,571 $523,571 4 100 $3,182,000 $588,000 $3,770,000 $3,044,571 $1,344,000 $4,388,571 $618,571 5 56 $2,072,000 $0 $2,072,000 $2,368,000 $0 $2,368,000 $296,000 6 71 $2,627,000 $0 $2,627,000 $3,002,286 $0 $3,002,286 $375,286 7 72 $2,664,000 $0 $2,664,000 $3,044,571 $0 $3,044,571 $380,571 8 88 $3,182,000 $84,000 $3,266,000 $3,044,571 $768,000 $3,812,571 $546,571 Source:HR&AandCalculationsbyBeaconEconomics Aswiththediscussionregardingretailparkingrequirement,thecostdifferenceisfurthercompounded sincesomehardandsoftcostitems,suchascontingencycost,arecalculatedasapercentageoftotalhard costs. Legal&AccountingandTaxes&InsuranceCostAssumption HR&Aestimateslegal&accountingandtaxes&insurancefeestobe1%ofhardcostseachandtheseesti- matesappeartobeunderstated.TierraWestAdvisors,whichalsoconductedafeasibilitystudyforSanta Monica,estimatedtotalLegal&AccountingandTaxes&Insurancefeestobe3.5%ofhardcosts.Interviews withSantaMonicadevelopersrevealthattheTierraWestassumptionismoreinlinewiththeirexperience. Basedontheinformation,BeaconEconomicshasproposedtoassignLegal&AccountingcostandTaxes& Insurancecostas1.5%and2.0%oftotalhardcost,respectively.Thetablebelowpresentsacomparisonof thecostsusingthesubtotalhardcostsreportedinProFormaAoftheHR&Astudy. 5 Aproportionaladjustmentmeansthenewparkingcostperspacewouldbe$42,286and$48,000insteadof$37,000and $42,000,respectively.Costdataon1560LincolnBoulevardand14155thStreetindicatethatcostperparkingstallisestimated tobearound$56,000;HR&A’sassumedcostperstallwouldthereforebeunderstatedby34%and25%,respectively. 7 FinancialFeasibilityAnalysis BeaconEconomics SubterraneanParkingCostComparison Prototype Office/RetailOffice/RetailResidential/RetailResidential/RetailResidential/RetailResidential/Retail Location Transit-AdjacentTransit-AdjacentTransit-AdjacentTransit-AdjacentMixedUseBoulevardMixedUseBoulevard SubtotalHardCost $12,783,854 $19,302,782 $13,214,575 $15,428,898 $15,428,898 $15,428,898 HR&AAssumption Legal&Accounting(1%)$127,839 $193,028 $132,146 $154,289 $154,289 $154,289 Taxes&Insurance(1%)$127,839 $193,028 $132,146 $154,289 $154,289 $154,289 HR&ATotal $255,677 $386,056 $264,292 $308,578 $308,578 $308,578 BeaconEconomicsAssumption Legal&Accounting(1.5%)$191,758 $289,542 $198,219 $231,433 $231,433 $231,433 Taxes&Insurance(2%)$255,677 $386,056 $264,292 $308,578 $308,578 $308,578 BeaconEconomicsTotal $447,435 $675,597 $462,510 $540,011 $540,011 $540,011 Difference $191,758 $289,542 $198,219 $231,433 $231,433 $231,433 Source:HR&AandCalculationsbyBeaconEconomics ThetableindicatesthatHR&AunderestimatesLegal&AccountingandTaxes&Insurancefeesbyaround $200,000to$300,000dependingontheprototypetested.Inaddition,basedontheabovediscussionsabout variancesinconstructionmaterialcosts,contingencycosts,andsubterraneanparkingconstructioncosts, thedisparityisfurthercompoundedifrevisedsubtotalhardcostsbasedonBeaconEconomics’estimates areusedinsteadofHR&A’ssubtotalhardcosts. FirstFloor(Retail)SpaceAssumption Inallprototypes,HR&Aassignsthegroundfloorforretailandtheabovefloorsforresidentialoroffice units.Whilethisisfineinitself,HR&Aassumesretailfloorstoalwaysbe5,000netsquarefeet(or5,727 grosssquarefeet)regardlessofthetotalbuildingsquarefootage. Therigid5,000netsquarefeet–strictlyforretail–appearstobeanarbitrarychoice.However,itmight bepossiblethatretailspaceislimitedto5,000netsquarefeetinordertoavoidtriggeringthehigher parkingspaceratiorequirement,whichwouldspellanotableincreaseinconstructioncost.Alsomanyof theproposeddowntownmixedusebuildingswouldlikelyincludemoreparkingintensiveneighborhood servingusessuchasrestaurants,smallgrocerystoresorgyms.Althoughcurrently(asofFebruary2017) parkinginDowntownistobedeterminedbytheDCPandhasyettobeadopted,Table4.3fromtheDraft DCP,whichispartiallyreproducedbelow,showsaspikeinminimumparkingrequirementsforretailspace thatare5,001squarefeetormorefromonespaceper500squarefeettoonespaceper300squarefeet. Likewise,restaurantsbetween2,501to5,000wouldalsotriggerthehigher1parkingstallper300square feetminimumrequirement. 8 FinancialFeasibilityAnalysis BeaconEconomics MinimumAutomobileParkingRequirementsbyLandUse Use UseSubtype Standard RetailSales 5,000SForLess 1Spaceper500SF RetailSales 5,001SForMore 1Spaceper300SF EatingandDrinkingEstablishments 2,501-5,000SF 1Spaceper300SF Multi-familyResidential Guest 1Spaceper10Units Multi-familyResidential Studio 0.5SpaceperUnit Multi-familyResidential 1Bedroom 1SpaceperUnit Multi-familyResidential 2+Bedroom 1.5SpacesperUnit Source:SantaMonicaDraftDCPTable4.3 Thismeansifretailspaceisincreasedbyamere100squarefeetfrom5,000squarefeetto5,100squarefeet, orifmoreparkingintensiveneighborhoodservingcommercialusesareselected,theminimumparking requirementwouldincreaseby70%from10spacesto17spaces.UsingHR&A’sowncostestimateoflevel oneandtwosubterraneanparkingat$37,000perspace,thistranslatestoaconstructioncostdifferenceof $259,000.6 Moreover,thecostdifferenceisfurthercompoundedsincesomehardandsoftcostitems,such ascontingencycost,arecalculatedasapercentageoftotalhardcosts. LEEDCertificationCosts SustainabilityisacentralthemeintheLUCE,whichencouragesLEEDconstructionstandardsinorderto reducewaterandenergyuse.ThecurrentSantaMonicaMunicipalGreenBuildingOrdinancerequiresall high-risemulti-familydwellingsandnon-residential,hotel,andmotelbuildingstobedesignedtouse10% lessenergythantheallowedenergybudgetestablishedbythe2016CaliforniaEnergyCode.7 Infact,while therearecurrentlynoLEEDSrequirementforTier2projects,recentlyapprovedTier3projectshavebeen requiredtoachieveLEEDPlatinumCertificationaspartoftheDevelopmentAgreementnegotiationpro- cess.Therefore,it’sreasonabletoassumethatalargepercentageofnewdevelopmentwouldseekLEED certification,andfutureTier3projectswouldbeexpectedtoachievethehighestsustainabilitylevelof LEEDPlatinum. TherewasnodiscussionintheHR&AreportregardingcostsattributedtoLEEDcertificationortheequiv- alent.AccordingtoFundrise,anonlineinvestmentplatformforcommercialrealestate,LEEDcertification canaffectbothhardcostandsoftcost.Fundriserecommendsthat,asageneralrule,developersbudget2% ofhardcostand$150,000insoftcosts.8 NotethatthisisforgeneralLEEDcertification;thecostforLEED PlatinumCertificationsarelikelysubstantiallyhigher.Giventhevisionofurbanityandtheoverarching 6 If$42,286parkingcost(basedon400squarefeetperstall)insteadof$37,000isusedasthebasis,thistranslatestoacon- structioncostdifferenceof$296,000asopposedto$259,000. 7 See https://newsroom.smgov.net/2016/10/27/santa%2Dmonica%2Dcity%2Dcouncil%2Dvotes%2Din%2Dthe%2Dworld% 2Ds%2Dfirst%2Dzero%2Dnet%2Denergy%2Dbuilding%2Drequirement%2Dimplementation%2Dbegins%2Din%2D2017 .Posted onOctober27,2016.RetrievedonFebruary16,2017. 8 Miller,B.(2015).“RealEstate101:TheDifferenceBetweenHardandSoftConstructionCosts.”PostedJan- uary30,2015.RetrievedFebruary16,2017.Articleisaccessibleat https://fundrise.com/education/blog-posts/ real-estate-101-the-difference-between-hard-and-soft-construction-costs 9 FinancialFeasibilityAnalysis BeaconEconomics principleofsustainabilitylaidoutintheDowntownCommunityPlan,thelackofdiscussionofbicycle parkingandLEEDcertificationscostsareunusual. 10 FinancialFeasibilityAnalysis BeaconEconomics Financial Feasibility Study Basedonthecostassumptionsdiscussedintheprevioussection,BeaconEconomicshasreplicatedPro FormasAthroughFofHR&Awithrevisedcostassumptionsthatshouldmoreaccuratelyreflecttheactual costs.Therevisedcostassumptionsareasfollows: HR&AassumesallprototypebuildingsareTypeVbuildings,whicharetheleastexpensivetypeto construct,withouttakingheightandfloorrestrictionsintoaccount.Thisisnotinaccordancewith currentbuildingcodestandards.EvenforprototypesthatarecorrectlyidentifiedasTypeVprojects, hardconstructioncostsarestillsignificantlyunderestimatedcomparedtoactualhardcostsofrecent TypeVprojects.Asaresult,developmentcostissignificantlyunderestimatedineveryprototypesce- nario. Landcostpersquarefoothaschangedfrom$500PSFto$800PSF. CertainprototypeshavebeenreassignedasTypeIIIprojectsaccordingtotheInternationalBuilding Codestandards. Contingencyhardcosthaschangedfrom4percentto8percent. Thenumberofparkingstallspersubterraneanlevelhaschangedfrom43stallsto36stallsbasedon calculationdiscussedpreviouslyinthesubsectionSubterraneanParkingCostAssumption. Legal&AccountingandTaxes&Insurancecostshavechangedfromonepercentofhardcostto1.5 and2percentofhardcost,respectively. Whiletherevisedestimatedcostsarestillrelativelyconservativecomparedtoactualcostsofrecent projects,itissufficienttodemonstratethatnoneoftheseproposedprojectsareactuallyfinanciallyfea- sible.9 BasedontheTier2and3Feesincreases(ProFormasAthroughC)andtheaffordablehousing requirements(ProFormasDthroughF)outlinedintheHR&Areport,theresultsareasfollows: 9 HR&Aconsidersaprojecttobefinanciallyfeasibleifdeveloperprofitis12.5%ormoreofprojectvalue. 11 FinancialFeasibilityAnalysis BeaconEconomics ProFormaA:10 ProFormaACostandProfitComparison Prototype3 Prototype4 Prototype5 Prototype6 Tier 2 3 2 3 Type Transit-Adjacent Transit-Adjacent MixedBoulevard MixedBoulevard TotalDevelopmentCost,HR&A $26,229,013 $29,998,658 $20,714,084 $23,802,225 TotalDevelopmentCost,BeaconEconomics $35,112,612 $39,437,054 $26,666,563 $31,812,314 Difference $8,883,599 $9,438,396 $5,952,479 $8,010,089 Profitas%ofValue,HR&A 33.7%34.7%23.5%14.2% Profitas%ofValue,BeaconEconomics 8.8%11.3%-0.9%-3.1% Feasible No No No No Source:HR&AandCalculationsbyBeaconEconomics ProFormaB: ProFormaBCostandProfitComparison Prototype1 Prototype2 Tier 2 3 Type MixedBoulevard MixedBoulevard TotalDevelopmentCost,HR&A $23,198,364 $27,097,161 TotalDevelopmentCost,BeaconEconomics $29,150,844 $35,756,842 Difference $5,952,480 $8,659,681 Profitas%ofValue,HR&A 14.4%15.1% Profitas%ofValue,BeaconEconomics -10.2%-15.9% Feasible No No Source:HR&AandCalculationsbyBeaconEconomics ProFormaC: ProFormaCCostandProfitComparison Prototype1 Prototype2 Tier 2 3 Type Transit-Adjacent Transit-Adjacent TotalDevelopmentCost,HR&A $33,701,940 $38,923,647 TotalDevelopmentCost,BeaconEconomics $43,327,659 $49,156,835 Difference $9,625,719 $10,233,188 Profitas%ofValue,HR&A 14.8%15.3% Profitas%ofValue,BeaconEconomics -12.5%-10.6% Feasible No No Source:HR&AandCalculationsbyBeaconEconomics 10 ThefirsttwoprototypescorrespondtoOffice/Retail,whichareexcludedintheanalysis.OnlytheResidential/Retailpro- totypesarecompared. 12 FinancialFeasibilityAnalysis BeaconEconomics ProFormaD: ProFormaDCostandProfitComparison Prototype1 Prototype2 Prototype3 Prototype4 Tier 2 3 2 3 Type Transit-Adjacent Transit-Adjacent MixedBoulevard MixedBoulevard TotalDevelopmentCost,HR&A $26,638,961 $29,791,948 $20,938,278 $23,797,459 TotalDevelopmentCost,BeaconEconomics $36,115,855 $40,104,261 $26,849,635 $32,471,463 Difference $9,476,894 $10,312,313 $5,911,357 $8,674,004 Profitas%ofValue,HR&A 20.8%22.4%16.1%19.8% Profitas%ofValue,BeaconEconomics -19.4%-17.4%-13.3%-17.9% Feasible No No No No Source:HR&AandCalculationsbyBeaconEconomics ProFormaE: ProFormaECostandProfitComparison Prototype1 Prototype2 Prototype3 Prototype4 Tier 2 3 2 3 Type Transit-Adjacent Transit-Adjacent MixedBoulevard MixedBoulevard TotalDevelopmentCost,HR&A $26,546,106 $29,770,946 $20,986,431 $23,810,753 TotalDevelopmentCost,BeaconEconomics $36,159,715 $40,079,480 $26,910,176 $32,430,242 Difference $9,613,609 $10,308,534 $5,923,745 $8,619,489 Profitas%ofValue,HR&A 19.5%19.5%15.9%17.9% Profitas%ofValue,BeaconEconomics -18.4%-18.8%-12.4%-18.2% Feasible No No No No Source:HR&AandCalculationsbyBeaconEconomics ProFormaF: ProFormaFCostandProfitComparison Prototype1 Prototype2 Prototype3 Prototype4 Tier 2 3 2 3 Type Transit-Adjacent Transit-Adjacent MixedBoulevard MixedBoulevard TotalDevelopmentCost,HR&A $26,618,833 $29,814,908 $20,986,431 $23,773,568 TotalDevelopmentCost,BeaconEconomics $36,129,906 $40,100,318 $26,892,206 $32,399,542 Difference $9,511,073 $10,285,410 $5,905,775 $8,625,974 Profitas%ofValue,HR&A 17.4%19.1%15.9%16.0% Profitas%ofValue,BeaconEconomics -19.9%-17.1%-11.2%-19.9% Feasible No No No No Source:HR&AandCalculationsbyBeaconEconomics 13 FinancialFeasibilityAnalysis BeaconEconomics Furthermore,forProFormasAthroughC,evenifTier2andTier3feesaresetatonly14percentabove Tier1fees,orthecurrentrateforTier2feesoutsideDowntown,noneofthescenariosfromProFormaA andonescenariofromProFormaCarefinanciallyfeasible. 14 FinancialFeasibilityAnalysis BeaconEconomics Appendix Calculation Errors Thereareanumberofcalculationerrorsinterspersedthroughouttheproformas,mostofwhichunder- statecosts.BelowareselectedexcerptsfromtheHR&Areportandanexplanationforeachcalculation error. SubterraneanParking Explanation:HR&Acalculatedsubterraneanparkingcostforthefirsttwolevelstobe$3,171,429intwoof theabovescenariosfoundinScheduleBofProFormaA.Clearly,theamountcalculatedisnotdivisibleby $37,000or86.Instead,$37,000times86equals$3,182,000.Inotherwords,HR&Aunderstatesparkingcost by$10,571ineachscenario. ChildCareFee Explanation:ForthefourResidential/Retailexamples,theChildCareFeebreakdownisprovidedinthe followingtable.Thedifferenceisthesameasthenumberofthree-bedroomunits,indicatingthatHR&A neglectstotakethree-bedroomunitsintoaccount.Asaresult,figuresfortheChildCareFeeareunder- statedbybetween$570and$1,139.40. 15 FinancialFeasibilityAnalysis BeaconEconomics ChildCareFees Residential/RetailResidential/RetailResidential/RetailResidential/Retail Transit-AdjacentTransit-AdjacentMixedUseBoulevardMixedUseBoulevard TotalChildCareFee $6,693.0 $7,547.0 $4,272.0 $5,126.0 ChildCareFeeperUnit $142.4 $142.4 $142.4 $142.4 NumberofMarketUnits 47 53 30 36 MarketRateResidentialUnits Studio 5 7 3 4 1-BR 32 34 21 23 2-BR 10 12 6 9 3-BR 5 8 3 4 TotalMarketUnits 52 61 33 40 Difference 5 8 3 4 AmountUnderstated $711.8 $1,139.4 $427.2 $570.0 Source:CalculationsbyBeaconEconomics WastewaterCapitalFacilitiesFee Explanation:FiguresfortheWastewaterCapitalFacilitiesfeeforthree-bedroomunitsareunderstated between$1,170to$5,067.Theamountunderstatedisdetailedbelow. 16 FinancialFeasibilityAnalysis BeaconEconomics WastewaterCapitalFacilityFees Residential/RetailResidential/RetailResidential/RetailResidential/Retail Transit-AdjacentTransit-AdjacentMixedUseBoulevardMixedUseBoulevard TotalWastewaterCapitalFacilities $7,785 $12,456 $4,671 $6,228 WastewaterCapitalFacilityFeeperevery3-BRUnit $1,947 $1,947 $1,947 $1,947 NumberofMarketUnits 4 6 2 3 ResidentialUnits(3-BRs) MarketRate 5 8 3 4 Affordable 1 1 0 1 TotalNumberof3-BrUnits 6 9 3 5 Difference 2 3 1 2 AmountUnderstated $3,897 $5,067 $1,170 $3,507 Source:CalculationsbyBeaconEconomics ThecalculationerrorsdiscussedhereallcomesfromProFormaA.HR&Aappliesthewrongcalculations tootherproformas. Cost Data for 407 Colorado Avenue Source:ColdwellBankerRealEstateLLC 17 HR&A Advisors, Inc. | Los Angeles | New York | Dallas | Washington, D.C. | Raleigh MEMORANDUM To: Jing Yeo, City of Santa Monica From : HR&A Advisors, Inc. Date : April 10, 2017 Re : Financial Feasibility Analysis of Proposed Off -Site Affordable Housing and Water Neutrality Requirements for Downtown Tier 2 Housing Projects This memorandum summarizes HR&A Advisors, Inc ’s (“HR&A”) analysis of the financial feasibility of proposed off -site affordable housing for Downtown Tier 2 p rojects , along with a new water neutrality requirement and proposed increases to two development impact fees . This analysis supplements the work HR&A recently prepared for the City of Santa Monica (“City”) to estimate the upper limits of financially feasible incr eases to the City’s adopted Transportation Impact, Parks and Recreation Impact, and Affordable Housing Commercial Linkage Fees that could be charged on incremental increases in floor area in Tier 2 and Tier 3 developments located within the Downtown Commun ity Plan area , the findings of which were presented to the Planning Commission in November 2016 . In its previous analysis, HR&A found that Downtown Tier 2 and 3 projects can support increases in fees well above Tier 1 fees, and in some cases, above maximum justifiable fees as determined in the most recent nexus study for each fee, particularly for residential develo pments. Recognizing that fees cannot exceed their nexus study maxima, HR&A estimated the amount of “surplus feasibility potential” that could be translated into additional percentages of on -site affordable housing f or mixed -use residential over ground -floo r retail developments. Following that analysis, City staff requested that HR&A also examine the financial feasibility of greater requirements for the provision of off -site affordable housing, should a developer elect to do so rather than build the units on site, or pa y an in -lieu fee. Additionally, City staff requested that HR&A incorporate development cost s associated with an in -lieu fee that a developer might incur in accordance with a proposed water neutrality ordinance , as well as increases to the Trans portation Impact and Parks and Recreation Impact Fees above the Tier 2 fee level that now applies citywide . HR&A Advisors, Inc. Downtown Off -Site Affordable Housing and Water Neutrality Feasibility | 2 Methodology & Assumptions HR&A u sed the same modelling approach, basic cost and revenue assumptions , and financial feasibility metrics as in the preceding analytic work described above . It is also the same method HR&A employed in its previous work that supported the determination of fees included in the City’s recently -adopted Zoning Code u pdate, which involved empirical testing to establish a financially - feasible increase for the same City development fees, on a Citywide basis, for incremental Tier 2 floor area within new developments , as well as HR&A’s previous analysis that assisted the City to establish financially -feasible levels for these same fees in the first place. HR&A used two industry -accepted metrics to determine financial feasibility: 1) Return on Total Development Cost (which equals net operating income divided by total development cost); and 2) Developer P rofit M argin (capitaliz ed project value less sale costs and total development cost). In line with the 2013 -14 analyses , and based on HR&A’s experience with development projects in Santa Monica, a prototype was considered “financially feasible” if it met two minimum thresholds: ▪ R eturn on Cost equal to 0.75 percent above the applicable weighted average cap rate for the prototype’s land uses; and ▪ Developer Profit Margin of 12.5 percent. Since HR&A’s November 2016 analysis, City staff proposed eliminating the Tier 3 option for the Mixed -Use Boulevard (“MUB”) sub -district in the Downtown Community Plan , and instead modify ing allowable building heights for Tier 2 projects in the MUB sub -district to allow a maximum of 50 feet for buildings east of Lincoln Boulevard , and 60 feet for buildings west of Lincoln Boulevard . The Tier 2 and 3 MUB prototypes HR&A used in its previous analysis align with these respective parameters, and therefore HR&A did not adjust the development programs for these prototypes in this analysis. Th e “50 -foot P rototype” includes 36 units over 5,000 square feet of ground -floor retail, and the “60 -foot P rototype” includes 45 units over 5,000 square feet of ground -floor retail. As demonstrated in HR&A’s previous analysis, the two MUB residential/retail prototypes produce lower financial returns than the two Transit Adjacent (“TA”) residential/retail prototypes on a Tier - by -Tier basis (i.e. Tier 2 MUB produces lower returns than T ier 2 TA; Tier 3 MUB produces lower returns than Tier 3 TA), and therefore the two MUB prototypes are limiting factors for assessing financial feasibility . As such, HR&A tested only the two MUB prototypes in this analysis, because it logically follows that if the two MUB prototypes are financially feasible with modified City -fees and affordable housing requirements, then the two TA prototypes are also feasible. Per City staff dire ction, HR&A tested the 50 -foot P rototype assuming the number of off -site affordable units provided equal s 20 percent of total units in the 100 percent market rate project, and 2 5 percent of total units for the 100 percent market rate 60 -foot P rototype . HR&A assumed a total d evelopment cost per unit of $497,010 for the off -site affordable units, based on the Affordable Housing Linkage Fee Nexus Study prepared in 2013 by RSG . HR&A inflated the $442,337 total development cost per unit used in the 2013 nexus study to 2017 dollars using an Engineering News Record construction cost index. This is the same methodology HR&A uses to help HR&A Advisors, Inc. Downtown Off -Site Affordable Housing and Water Neutrality Feasibility | 3 the City calibrate annual adjustments to its Affordable Housing Unit Production Program fees . Per direction from City staff, HR&A rounded up any fractional units to the next whole integer. HR&A accounted for the cost of providing off -site affordable housing units for the two prototypes by multiplying the $497,010 total development cost per unit by the number of off -site affordable housing units required , per the resp ective percentages proposed by City staff , and then adding those c osts to the total development costs in cluded in the pro forma analyses for the 100 percent market rate projects. As such, HR&A conservatively did not account for any potential net operating revenues that a developer may receive from the affordable units wh en built elsewhere. Per direction from City staff , HR&A assumed a flat in -lieu fee of $45,000 per project to account for costs associated with the proposed water neutrality ordinance, and set Transportation Impact and Parks and Recreation Impact Fees a t 10 percent below their nexus study maxima . Findings & Conclusions HR&A found that both the 50 - and 60 -foot P rototype s produce a R eturn on T otal D evelopment C ost (including the off -site affordable housing costs ) of 5.8 percent , as compared with a minimum threshold of 5.7 percent, and Developer P rofit M argin s of 13 .2 and 1 4 .6 percent, respectively, as compared with a minimum threshold of 12.5 percent. B oth prototypes produce returns that exceed the required feasibility thresholds, and therefore can support the costs associated with the City staff’s proposed off -site affordable housing requirements , water neutrality ordinance , and impact fee increases . HR&A’s pro forma models with detailed calculations are included in Attachment A to this memo. ATTACHMENT A Increased Off-Site Affordable Housing Requirements Program Summary (see Sheet A ) Prototype Name Residential/RetailResidential/Retail LocationMixed BoulevardMixed Boulevard # Parcels 1 1 Bldg. Height (Feet)50 60 Stories (#)4 5 Site Area (SF)15,000 15,000 Gross Bldg. Area (SF)39,587 48,751 Floor Area Ratio (FAR) - Gross Area2.64 3.25 Floor Area Ratio (FAR) - Net Area2.22 2.75 Net Leasable Areas Residential (SF)28,250 36,250 Market Rate Units36 45 Off-Site Affordable Units8 12 Retail (SF)5,000 5,000 Office (SF)- - Hotel (SF)- - Development Costs (see Sheets B,C&D) Land Costs7,500,000 $ 7,500,000 $ Hard Costs9,242,655 $ 11,087,057 $ Soft Costs 2,291,586 $ 2,954,532 $ Net Parks/Recreation Fee473,335 $ 708,840 $ Net Transportation Impact Fee69,809 $ 137,794 $ Other City Costs (see Sheet. E)438,129 $ 515,393 $ Other Soft Costs1,853,457 $ 2,439,140 $ Financing Costs2,102,773 $ 2,405,452 $ Total Development Cost21,137,014 $ 23,947,041 $ Off-Site Affordable Housing Costs3,976,081 $ 5,964,121 $ Total Development Cost + Off-Site Affordable Housing Costs25,113,095 $ 29,911,162 $ Net Operating Income (NOI) (see Sheet. E) Residential-Market Rate Effective Gross Income1,658,700 $ 2,086,200 $ Less: Operating Expenses(540,000)$ (675,000)$ Net Operating Income1,118,700 $ 1,411,200 $ Retail Effective Gross Income342,000 $ 342,000 $ Less: Operating Expenses(10,260)$ (10,260)$ Net Operating Income331,740 $ 331,740 $ Total Net Operating Income1,450,440 $ 1,742,940 $ Project Component Values (see Sheet. F) Residential-Market Rate NOI 1,118,700 $ 1,411,200 $ Cap Rate 4.80%4.80% Value 23,306,250 $ 29,400,000 $ Retail NOI 331,740 $ 331,740 $ Cap Rate 5.90%5.90% Value 5,622,712 $ 5,622,712 $ Total Project Value28,928,962 $ 35,022,712 $ Developer Returns Developer Profit Total Project Value28,928,962 $ 35,022,712 $ Less: Total Development Cost + Off-Site Affordable Housing Costs(25,113,095)$ (29,911,162)$ Profit 3,815,867 $ 5,111,550 $ % of Value 13.2%14.6% Feasible? (i.e. = or > 12.5%)Y ES Y ES Return on Total Development Cost NOI 1,450,440 $ 1,742,940 $ Total Development Cost + Off-Site Affordable Housing Costs(25,113,095)$ (29,911,162)$ Return on Cost 5.8%5.8% Feasible? (i.e. = or > 0.75% + Weighted Cap)Y ES Y ES Weighted Cap Rate5.0%4.9% Results Summary with 20% Requirement for 50-Foot Prototype and 25% Requirement for 60-Foot Prototype Page 1 of 7 HR&A Advisors, Inc. Off-Site Affordable Housing/Summary 4/10/2017 ATTACHMENT A Sheet A Physical Parameters Prototype Name Residential/RetailResidential/Retail LocationMixed BoulevardMixed Boulevard Permit Requirement # Parcels1 1 Bldg. Height (Feet)50 60 Stories (#)4 5 Land Area (SF)15,000 15,000 Gross Bldg. Area (SF)1 39,587 48,751 Floor Area Ratio (FAR)-Gross Area 1 2.6 3.3 Floor Area Ratio (FAR)-Net Area2.2 2.75 Net Leasable Areas (SF)1 33,250 41,250 Residential 2 28,250 36,250 Retail5,000 5,000 Residential Unit Mix Retail SF5,000 5,000 Residential SF-Target28,250 36,250 Market Rate Studio (SF)600 600 1-BR (SF)700 700 2-BR (SF)950 950 3-BR (SF)1,300 1,300 Studio (# units)3 6 1-BR (# units)24 25 2-BR (# units)6 9 3-BR (# units)3 5 Total Units36 45 Required Off-Site Affordable Units 3 8 12 Parking Residential Market Rate (wtd. avg. per unit)4 1.08 1.09 Affordable (avg. per unit)- - Subtotal Spaces (#)42 54 Subtotal Plus Guest Spaces (#)46 59 Retail- - Spaces/500 SF1 1 Subtotal Spaces (#)10 10 Total Spaces Number56 69 Gross Area/Space (SF)-Surface300 300 Gross Area/Space (SF)-Subt.350 350 Total Parking Area (SF)19,600 24,150 # Subt. Levels Total1.3 1.6 Spaces/Levels 1-256 69 Spaces/Levels 3-5- - Construction Period (months)18 18 4 Assumes 0.5 spaces/studio; 1.0 spaces/1-BR unit; and 1.5 spaces/2- & 3-BR units. Sheet A Physical Parameters (con'd) Prototype Name Residential/RetailResidential/Retail LocationMixed BoulevardMixed Boulevard Gross Floor Area by Story Site Area15,000 15,000 Total Gross Bldg. Area39,587 48,751 Total Floors4 5 Floor 15,727 5,727 Floor 211,455 11,455 Floor 310,882 10,882 Floor 410,023 10,023 Floor 5- 9,164 Floor 6- - Total Gross Floor Area39,587 48,751 FAR-Gross Area2.64 3.25 Net Floor Area by Story Floor 15,000 5,000 Floor 210,000 10,000 Floor 39,500 9,500 Floor 48,750 8,750 Floor 5- 8,000 Floor 6- - Total33,250 41,250 Net/Gross Floor Area Overall84.0%84.6% 3 Assumes 20% Requirement for 50-foot prototype and 25% requirement for 60-foot prototype, with any fractional units rounded up, per City Planning staff direction. 1 Per guidance provided by City Planning staff and adjusted by HR&A based on efficiency factors. 2 Based on unit mix and net leasable floor area by unit type, per City Planning Staff and HR&A. Page 2 of 7 HR&A Advisors, Inc. Off-Site Affordable Housing/A-Program 4/10/2017 ATTACHMENT A Sheet B Development Costs Prototype Name Residential/RetailResidential/Retail Location Mixed BoulevardMixed Boulevard Land Area 15,000 15,000 Gross Bldg. Area (SF)39,587 48,751 Net Leasable Areas (SF) Residential 28,250 36,250 Retail 5,000 5,000 Subterranean Parking (spaces)56 69 1-2 Levels 56 69 3-5 Levels - - Land Cost 7,500,000 $ 7,500,000 $ Hard Cost 1 Construction Type VV Building Construction/GSF Varies$157$154 Demo/On-Site Improvements$10per Land Area150,000 $ 150,000 $ Off-Site Improvements$100,000Allowance100,000 $ 100,000 $ Building Core & Shell Varies6,215,168 $ 7,507,632 $ Retail Tenant Improvements$70x Net Leasable SF350,000 $ 350,000 $ Subterranean Parking Surface$5,000per Space-$ -$ 1-2 Levels$37,000per Space2,072,000 $ 2,553,000 $ 3-4 Levels$42,000per Space-$ -$ Contingency4%x Subtotal Hard Costs355,487 $ 426,425 $ Subtotal Hard Costs 9,242,655 $ 11,087,057 $ Soft Costs 2 Net Parks/Recreation FeeSee Sheet. D473,335 $ 708,840 $ Net TIF Fee See Sheet. D69,809 $ 137,794 $ Other City Permits & FeesSee Sheet. C438,129 $ 515,393 $ A&E/Other Professionals6%x Hard Costs554,559 $ 665,223 $ Marketing/Leasing Commissions Residential$7.50x Net Leasable SF211,875 $ 271,875 $ Retail/Office$3.00x Net Leasable SF15,000 $ 15,000 $ Legal & Accounting1%x Hard Costs92,427 $ 110,871 $ Taxes & Insurance1%x Hard Costs92,427 $ 110,871 $ Pre-Opening Expenses$4.00x Net Leasable SF-$ -$ Developer Fee3%x Hard Costs277,280 $ 332,612 $ Contingency3%x Subtotal Soft Costs66,745 $ 86,054 $ Subtotal Soft Costs 2,291,586 $ 2,954,532 $ Subtotal Land + Hard + Softs Costs 19,034,241 $ 21,541,589 $ Financing Costs 3 Loan Term (months)18 Average Loan Balance65.00% Construction Loan Interest Rate6.50% Construction Loan Interest 1,206,295 $ 1,365,198 $ Construction Loan Fees3.00%571,027 $ 646,248 $ Capitalized Project Valueper Sheet. E Permanent Loan Percent x Value75.00% Permanent Loan Fees1.50%325,451 $ 394,006 $ Subtotal Financing Costs 2,102,773 $ 2,405,452 $ Total Development Cos t Land +Hard + Soft + Financing 21,137,01 4 $ 23,947,041 $ per GSF 533.94 $ 491.21 $ Off-Site Affordable Housing Cost 4 $497,010per Unit3,976,081 $ 5,964,121 $ Total Development Cost + Off-Site Affordable Housing Costs25,113,09 5 $ 29,911,162 $ 2 Per HR&A's experience with similar projects. 3 Per RealtyRates mortgage rates and terms survey for Q1 2016. Assumptions 1 83% x calculated values, per Marshall & Swift Commercial Cost Estimator, May 2016; HR&A Advisors, Inc., to account for certai n hard costs and soft costs accounted for separately. 4 Per the City of Santa Monica's 2013 Affordable Housing Linkage Fee Nexus Study prepared by RSG, and inflated to 2017 dollars using Engineering News Record's Construction Cost Index. Page 3 of 7 HR&A Advisors, Inc. Off-Site Affordable Housing/B-Dev Costs 4/10/2017 ATTACHMENT A Sheet C Proposed New Fees, Existing City Fees & Permit Costs Prototype Name Residential/RetailResidential/Retail Location Mixed BoulevardMixed Boulevard Land Area 15,000 15,000 Gross Bldg. Area (SF)39,587 48,751 Residential Units Market Rate Studios 3 6 1-BR 24 25 2-BR 6 9 3-BR 3 5 Residential (Net Leasable SF)28,250 36,250 Retail (Net Leasable SF)5,000 5,000 New Parks Fee 1 N/AN/A473,335 $ 708,840 $ New TIF Fee 1 N/AN/A69,809 $ 137,794 $ Planning Permits 2 Development Review$17,738per project-$ -$ Development Agreement$25,000per project-$ -$ Architectural Review Board$3,588per project3,588 $ 3,588 $ CEQA Categorical Exemption$15,648per project15,648 $ 15,648 $ Subtotal 19,236 $ 19,236 $ Other Requirements 3 Arts Fee New Residential/Commercial1.00%x $200/SF79,174 $ 97,502 $ Tenant Improvements1.00%x $50/SF2,500 $ 2,500 $ Child Care Fee Market Rate Residential$142.40per unit5,126 $ 6,408 $ Retail$4.84x leasable area24,200 $ 24,200 $ Office$6.76x leasable area-$ -$ Hotel$3.39x leasable area-$ -$ School Facilities Fee Residential$3.48x leasable area98,310 $ 126,150 $ Commercial$0.56x leasable area2,800 $ 2,800 $ Subtotal 212,110 $ 259,560 $ Bldg./Construction Permits 2 Plan Check Residential 4+ stories$533.14$0.98x leasable area28,122 $ 35,935 $ Commercial <10K SF$511.91$1.36x leasable area7,312 $ 7,312 $ Commercial >10K SF/4 stories$0.41x leasable area-$ -$ Mechanical$778per project$778$778 Electrical$778per project$778$778 Plumbing$778per project$778$778 Building Permits/Inspections Multi-family 4+ Stories130.37$1.10x leasable area31,075 $ 39,839 $ Commercial 1-Story124.75$1.28x leasable area6,507 $ 6,507 $ Commercial 4+ stories$0.80x leasable area-$ -$ Tenant Improvements <10K SF132.54$0.38x leasable area2,057 $ 2,057 $ Tenant Improvements >10K SF$0.30x leasable area-$ -$ Geotechnical Reports$2,655per project2,655 $ 2,655 $ Subtotal 80,063 $ 96,640 $ Utility Fees 2 Water Meter 3 $4,2913/4" meter per project4,291 $ 4,291 $ Fireline Meter 3 $26,8164" meter per project26,816 $ 26,816 $ Wastewater Capital Facilities Studio/1-BR Units$1,168per unit31,536 $ 36,208 $ 2-BR Units$1,557per unit9,342 $ 14,013 $ 3-BR Units$1,947per unit5,841 $ 9,735 $ Commercial$779 per 1,000 leasable SF3,895 $ 3,895 $ Water Neutrality In-Lieu Fee 4 $45,000per project45,000 $ 45,000 $ Subtotal 126,720 $ 139,957 $ per GSF $12.83$13.40 1 Based on current fee rates; see Sheet D for Tier sensitivity calculation details. 2 Per FY 2015-16 City fee schedules. 3 Includes meter and capital facilities charges. 4 Per City staff direction for in-lieu fee for proposed Water Neutrality Ordinance. Assumptions Page 4 of 7 HR&A Advisors, Inc. Off-Site Affordable Housing/C-City Cost Detail 4/10/2017 ATTACHMENT A Sheet D Proposed Parks/Recreation, and Transportation Impact Fee Increases Prototype Name Residential/RetailResidential/Retail Location Mixed BoulevardMixed Boulevard Land Area 15,000 15,000 Gross Bldg. Area (SF)39,587 48,751 Residential Units - - Market Rate Studios 3 6 1-BR 24 25 2-BR 6 9 3-BR 3 5 Residential (Net Leasable SF)28,250 36,250 Retail (Net Leasable SF)5,000 5,000 Adopted Parks/Recreation Fee 352% x Adopted Fees 1 Tier 1Tier 2 Market Rate Housing100%352% 0-1 BRs100%352%$4,231.93per unit295,558 $ 397,463 $ 2+ BRs100%352%$6,816.30per unit181,587 $ 315,187 $ Affordable Housing100%352%$0per unit-$ -$ Retail100%352%$1.52x leasable area7,619 $ 7,619 $ Subtotal Fee 484,764 $ 720,269 $ Less: Fee on Existing SF Retail100%352%$1.52x leasable area(11,429)$ (11,429)$ Net Fee 473,335 $ 708,840 $ TIF Fees 139% x Adopted Fees 1 100%139% Market Rate-Area 1100%139%$2,773.75per unit125,817 $ 193,802 $ Market Rate-Area 2100%139%$3,520.52per unit-$ -$ Affordable100%139%$0.00per unit-$ -$ Retail-Area 1100%139%$22.40x leasable area112,017 $ 112,017 $ Retail-Area 2100%139%$32.11x leasable area-$ -$ Subtotal 237,834 $ 305,819 $ Reduction for Existing RetailAllowance(168,025)$ (168,025)$ NET TIF Fee 69,809 $ 137,794 $ Combined New Fees543,144 $ 846,634 $ 1 Equivalent to 90% of maximum justifiable fee per nexus studies prepared for each fee, per City staff direction. Assumptions Assumptions Page 5 of 7 HR&A Advisors, Inc. Off-Site Affordable Housing/D-Tier Fee Detail 4/10/2017 ATTACHMENT A Sheet E Net Operating Income Prototype Name Residential/RetailResidential/Retail Location Mixed BoulevardMixed Boulevard Land Area 15,000 15,000 Gross Bldg. Area (SF)39,587 48,751 Residential Units 36 45 Market Rate 36 45 Studio 3 6 1-BR 24 25 2-BR 6 9 3-BR 3 5 Retail (Net Leasable SF)5,000 5,000 Parking Spaces 56 69 Residential 42 54 Retail 10 10 For-Rent Residential- Market Rate 1 Studio Rent/Unit/MonthVaries$3,300$3,300 1-BR Rent/Unit/MonthVaries$3,800$3,800 2-BR Rent/Unit/MonthVaries$4,300$4,300 3-BR Rent/Unit/MonthVaries$5,000$5,000 Units Income/Year 1,702,800 $ 2,142,000 $ Other Income100.00 $ x Unit43,200 $ 54,000 $ Gross Income 1,746,000 $ 2,196,000 $ Less: Vacancy & Collection Loss5.0%x Gross Income(87,300)$ (109,800)$ Effective Gross Income (EGI)1,658,700 $ 2,086,200 $ Less: Operating Expenses (incl. reserve) 1 15,000 $ x Unit(540,000)$ (675,000)$ Net Operating Income 1,118,700 $ 1,411,200 $ Retail 2 Average Rent/SF/Month (NNN)Varies6.00 $ 6.00 $ Gross Rental Income/Year360,000 $ 360,000 $ Less: Vacancy & Collection Loss5.0%x Gross Income(18,000)$ (18,000)$ Effective Gross Income (EGI)342,000 $ 342,000 $ Less: Unreimbursed Operating Expenses3.0%x EGI(10,260)$ (10,260)$ Net Operating Income 331,740 $ 331,740 $ Total Net Operating Income1,450,440 $ 1,742,940 $ 1 Per HR&A's experience with similar projects. Assumptions 2 Per HR&A review of third-party market data (i.e. CoStar Group data for similar, recently constructed buildings in the Downtow n Community Plan area). Page 6 of 7 HR&A Advisors, Inc. Off-Site Affordable Housing/E-Net Ops Income 4/10/2017 ATTACHMENT A Sheet F Returns Prototype Name Residential/RetailResidential/Retail Location Mixed BoulevardMixed Boulevard Land Area 15,000 15,000 Gross Bldg. Area (SF)39,587 48,751 Residential Units Market Rate Studio 3 6 1-BR 24 25 2-BR 6 9 3-BR 3 5 Retail (Net Leasable SF)5,000 5,000 Project Value Residential-Market Rate Net Operating IncomeFrom Sheet, E1,118,700 $ 1,411,200 $ Cap Rate 1 4.80% Value NOI/Cap Rate23,306,250 $ 29,400,000 $ Retail Net Operating IncomeFrom Sheet, E331,740 $ 331,740 $ Cap Rate 1 5.90% Value NOI/Cap Rate5,622,712 $ 5,622,712 $ Total Project Value 28,928,962 $ 35,022,712 $ Developer Returns Developer Profit Total Project ValueFrom above28,928,962 $ 35,022,712 $ Less: Total Development Cost + Off-Site Affordable Housing CostsFrom Sheet. B(25,113,095)$ (29,911,162)$ Profit 3,815,867 $ 5,111,550 $ % of Value 13.2%14.6% Return on Total Development Cost NOI From Sheet. E1,450,440 $ 1,742,940 $ Total Development Cost + Off-Site Affordable Housing CostsFrom Sheet. B(25,113,095)$ (29,911,162)$ Return on Cost 5.8%5.8% 1 Based on Real Estate Research Corporation cap rate data for Q1 2016. Assumptions Page 7 of 7 HR&A Advisors, Inc. Off-Site Affordable Housing/F-Returns 4/10/2017 \ Memorandum AECOM 515 S. Flower St. Los Angeles, CA 90071 www.aecom.com 213.593.8100 t el 213.593.8608 fax To: C ity of Santa Monica From: AECOM Date: January 6 , 2016 Subject: Real Estate Conditions and Demand Projections for Site at 4 th Street and Colorado Street I . Introduction and Summary of Findings AECOM was retained by the City of Santa Monica (“City ”) to perform a variety of consulting services including market demand and site capture analysis for a site in the downtown area located at 4 th Street and Colorado Street (“s ite ”). This memo summarizes the first phase of the assignment, including baseline real estate conditions and a demand analysis for the s ite. A second phase of the engagement, not included in this memo, will include financial pro forma analyses to better unde rstand the financial viability and feasibility of the land uses analyzed in this first phase of the engagement. AECOM conduct ed a market assessment to establish the baseline market conditions for the s ite and forecast ed potential demand for office, residen tial, retail, and hotel uses over the next five and ten year periods . As part of this effort, AECOM also e stimate d the potential range of the development program with long - an d short -term absorption rates. Based on the analysis of existing supply and projected demand, as well as planned and p roposed development, AECOM develop ed on -site capture estimates for the amount of new hospitality, commercial, and residential uses (in terms of hotel keys, commercial square footage , and residential units) that could be supported at the s ite over the study period. The following analysis is focused on market potential and does not consider the development economics yet. The development economics and land value potential will be consi dered in a subsequent phase. Summary of Findings AECOM finds there is a strong demand for office, hotel, and residential uses , but does not recommend retail development on the site .  Given the City’s prominence in the Silicon Beach tech and entertainment sectors and relative lack of recent developments, office uses present one of the most significant opportunities for the s ite.  Residential demand in the area is strong, with extremely low vacancy rates and increasing rents.  The City continues to be a destination for travelers, particularly international overnight visitors, creating strong hotel demand .  Retail demand in the area is robust. However, the site is not well -positioned to meet future demand due to: o The site’s location adjacent to the freeway, which inhibits pedestrian flow . 2 o The site’s location on the opposite side of the entrance to the Third Street Promenade and Santa Monica Place . o The large upcoming supply of retail projects within Downtown, which will satisfy the vast majority of demand. Any unmet demand would be longer term. A summary of projected supportable development is shown below in Figure 1 . Figure 1 – Summary of Supportable Development for Site Land Use Support able Program Office 61,000 - 85,000 SF Residential 90 - 120 units Hotel 200 - 260 keys Source: AECOM II . Study and Market Area As referenced earlier in the memo, the s ite analyzed by AECOM is located at 4 th Street and Colorado Street in the D owntown . The larger T ransit O riented D evelopment (“TOD ”) project boundary is outlined in Figure 2 . 3 Figure 2 - Location of Site at 4th Street and Colorado Street Source: AECOM For the purposes of the analyses contained in this memo, AECOM defined primary and secondary market areas. The primary market area represents the primary competitive set for the land uses analyzed. AECOM d efines the primary market area as the area within the Santa Monica D own town S pecif ic P lan . The secondary market area is defined as the C ity itself . The City is located on the Pacific Ocean on the west side of the Count y of Los Angeles (“County ”). It is located 16 miles from downtown Los Angeles and 8 miles from Los Angeles International Airport. F inally, AECOM also examined c ounty wide data to take into account the greater regional context. Regional demand is an important component of growth and estimates of population, employment, retail demand, and tourism on a county level directly affects the demand for uses to be built on the s ite in ter ms of residential units, office jobs, retail square footage, and hotel room keys. THIRD STREET PROMENADE SANTA MONICA PLACE SANTA MONICA PIER 4 Figure 3 – Primary Market Area Source: AECOM Figure 4 – Secondary Market Area Source: AECOM 5 I II . Review of Historic and Existing Trends In order to better understand the demographic character is tics of the market , AECOM reviewed historical data to understand the current trends t hat are impacting the s ite as well as the surrounding market areas. Population and Demographic Overview  The Downtown currently captures only 5.8% of the C ity’s overall population .  Historically, the Downtown population has grown at a much faster rate than either the C ity as a whole or the county. The D owntown growth rate is in part due to the City’s focus on creating new housing opportunities in the D owntown. Figure 4 – Historic Population 2000 2010 2014 CAGR* Downtown Santa Monica 3,545 4,885 5,357 3.0% City of Santa Monica 84,078 89,736 91,730 0.6% Los Angeles County 9,519,135 9,818,605 9,969,834 0.3% Source: ESRI, AECOM *Compound annual growth rate  The percent of owner -occupied units c itywide is much higher than in the Downtown, where the vast majority of housing is comprised of multi -family apartment dwellings.  The City has historically favored multi -family development. Evidenced by high rents and low vacancies, this land use has experienced high demand. There have been limited condominium investments in the C ity in the recent past.  For the City and C ounty, house holds are expected to grow. Rates for the City are expected to be lower than rates for the County. Figure 5 – Market Area Demographics , 201 4 Median Age Households Average Household Size Percent Owner Occupied Median Household Income Downtown Santa Monica 38 3,365 1.50 4% $43,086 City of Santa Monica 41 47,836 1.87 27% $68,561 Los Angeles County 35 3,285,214 2.98 46% $53,372 Source: ESRI, AECOM Figure 6 – Projected H ousehold Growth 2008 2014 2020 2035 CAGR City of Santa Monica 46,600 47,900 49,200 51,400 0.45% Los Angeles County 3,228,000 3,367,000 3,513,000 3,852,000 0.71% Source: S outhern C alifornia A ssociation of G overnments (SCAG), AECOM 6 Employment and Economic Overview Since 2000, countywide employment peaked in 2007 before suffering job losses during the Great Recession , bottoming out in employment in 2010. Through 2013 however , job creation was positive compounded annual growth rate (“CAGR ”) of 1.9 percent. Figure 7 – Historic Employment in Los Angeles County Source: California Employment Development Department (Cal EDD), AECOM Projected employment growth varies by source of figures, as shown below in Figure 8. Figure 8 – Projected Employment Growth, 2013 -2035 Source CAGR BLS, Historic 0.85% SCAG, Projected 0.64% Cal EDD, Projected 1.45% Source: Cal EDD, Bureau of Labor Statistics (BLS ), SCAG, AECOM Note: Time frame for BLS Historical data 1970 -2013; SCAG projection 2013 -2035; Cal EDD projection 2010 -2020 The office market in the City is part of Silicon Beach, a prime location for tech and entertainment start - ups in the greater Los Angeles region. This ma rket is primarily characterized by small to mid -sized companies. Due to the low vacancy rates and limited availability of appropriate inventory , company expansion within the City is limited. Many established and growing tech companies have left the City within the past few years, include Go ogle and Yahoo. Tourism Overnight t ourism is the major driver of hotel stays . The City tourism market is i deally positioned to capture tourists traveling to beach locations a s well as business travelers visiting sites throughout the Westside. To better understand the tourism market, AECOM relied on data provided by the City ’s 2013 Tourism Economic and Fiscal Impacts report as summarized on the following page in Figure 9 . As shown, the majority of overnight visitors to the City stay in a hotel (around 70 percent). 4,116,500 4,080,000 4,230,000 3,890,000 4,110,000 3.5 4.0 4.5 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Mi l l i o n s o f J o b s 7 Figure 9 – Visitors to the City of Santa Monica 2012 2013 Total v isitors 7,311,000 7,298,857 International 4,136,567 3,880,100 percent 57% 53% US d omestic 3,174,373 3,418,800 percent 43% 47% Length of s tay (all visitors, days) 1.47 1.56 Total d ay v isitors 6,394,023 6,336,477 percent 87% 87% Total overnight v isitors 916,977 962,380 percent 13% 13% Santa Monica as main trip destination 14% 15% Per capita daily spending $141.9 $143.3 Hotel tax revenue to City (millions ) $39.3 $42.3 Vis itor retail sales tax revenue (millions ) $9.5 $9.7 Source: S anta Monica 2013 Tourism Economic and Fiscal Impacts and Visitor Profile Figure 10 – Detail of Hotel/Motel Activity of Guests in the City of Santa Monica 2012 2013 Annual Visitors 646,330 669,598 percent of all visitors 8.8% 9.2% percent of overnight visitors 70.5% 69.6% Percent of international visitors staying in hotel 11.0% 11.0% Number of international visitors staying in Hotel 455,022 426,811 Annual Spending $694,934,500 $827,667,000 Daily per -person $286 $310 Average Length of Stay 3.8 4.0 Source: Santa Monica 2013 Tourism Economic and Fiscal Impacts and Visitor Profile Section IV . Demand Analysis In order to better understand future demand, AECOM translate d initial observations about historic and current market trends and formulate d demand projections by land use. Specifically for this engagement, AECOM estimated a range of citywide market demand for office, residential, retail and hotel uses . From there, additional estimates and assumptions were made as to how much of this potential future development could occur i n the Downtown . Finally, known or anticipated future development was netted out from these proj ections in order to arrive at reasonable assumption s as to the potential capture rates and demand for each of the specific land uses on the s ite. 8 Office Market Office Market Performance Trends in the citywide and Downtown office markets are as follows:  Occupancy rates are very strong for the C ity as a whole and Downtown, with an average occupancy of over 93 percent across all office product types.  Rents and occupancy rates in the Downtown outperform competitive locations and larger market areas, including the City overall, the Westside, and the County (Figure 13 ). Figure 11 –Office Inventory and Vacancy Rates for all Types, Primary and Secondary Markets Source: CoStar Figure 12 – Details of Office Inventory and Vacancy Rates, Primary and Secondary Markets Type SF Occupancy Weighted Rent Downtown Santa Monica Class A 1.7M 92% $96 * Class B 1.7M 92% $64 Class C 0.8M 91% $56 Flex 0.03M 100% n/a City of Santa Monica Class A 8.1M 93% $63 Class B 5.0M 92% $48 Class C 2.4M 94% $46 Flex 1.1M 96% $34 Source: CoStar, AECOM * Outliers and small sample set skew Class A rents, which are otherwise similar to Class B rents Class C Class C Class B Class B Class A Class A 93.1% 93.1% 0% 20% 40% 60% 80% 100% 0 4 8 12 16 20 Downtown Santa Monica City of Santa Monica Oc c u p a n c y R a t e Of f i c e I n v e n t o r y ( M i l l i o n s ) Class C Class B Class A Overall Occupancy 9 Figure 13 – Office Rental Rates and Occupancies Source: CoStar While office market indicators are strong, there have been no deliveries of this product type in the Downtown since 2012 . The proposed mixed -use 5 th and Arizona development includes approximately 200,000 square feet located within the proposed mixed -use 5 th and Arizona development. This lack of new development can be attributed to the limited supply of readily available vacant land suitable for office use . Office Demand Based on the employment projections, there is a w ide range of dema nd potential for office uses in the D owntown . AECOM projects that o ver the next 15 years, the m idpoint of demand is 452,6 00 square feet. $53.40 $48.06 $43.83 $30.26 93.1% 50% 100% $0 $20 $40 $60 $80 $100 2000 2002 2004 2006 2008 2010 2012 2014 Oc c u p a n c y Re n t s 90% 100% 80% $40 $60 $0 $20 10 Figure 14 – City of Santa Monica and Downtown Office Demand, 15 years Low Medium High Current Employment 4,159,700 4,159,700 4,159,700 Projected Growth Rate (CAGR) 0.75% 0.90% 1.05% County Job Growth (total), 15 years 493,400 598,400 705,600 County Office Job Growth , 15 years 148,020 179,520 211,680 City Capture R ate of Coun ty J obs 3.9% 4.1% 4.3% City Of fice Job Growth, 15 years 5,800 7,400 9,100 City Office Space D emand (SF) 1,160,000 1,480,000 1,820,000 Downtown Capture R ate 27% 30% 33% Downtown Cumulative D emand, 15 years (SF) 313,200 444,000 600,600 Source: AECOM Residential Market The demand for residential units was analyzed for the D owntown. The primary market area for the residential analysis is presented in Figure 15 and includes the area to the west of the Pacific Ocean, north of Dewey Street, and south of Centinela Ave nue and 26 th Street. Figure 15 – Primary Market Area, Residential Land Use Source: REIS, AECOM 11 Historic metrics for the apartment market were compared to competitive residential markets, including Marina Del Rey/Venice, West LA/Westwood, Mar Vista, and Beverly Hills. The greater Los Angeles metro area was also compared as a benchmark for countywide trends. As shown in Figure 16 , there are very low and decreasing vacancy rates in the City , as well as across the entire region. These extremely low vacancy rates are below st ructural vacancy 1 and demonstrate high demand for rental products. Low and decreasing vacancy rates also lead to increasing rental rates. Figure 16 – Residential Vacancy Rates, Santa Monica and Competitive Markets Source: REIS In addition to vacancy rates, the absorption trends also inform the performance of the residential market. As can be seen on the following page in Figure 17 and Figure 18 , the metro area and competitive submarkets have experienced positive absorption since 2010 . This indicat es that any new units th at have come online have been rented out. Based on these metrics, AECOM concludes that demand is outpacing supply as evident by the dropping vacancy rates and increas ing rents. In the recent past, there have been approximately 200 units delivered within th e City , all of which are rental products. 1 For residential land use, structural vacancy is typically 5%. 2.9% 4.9% 2.0% 0% 2% 4% 6% 8% 10% 2009 2010 2011 2012 2013 2014Q2 Va c a n c y Santa Monica West LA/Westwood Mar Vista Marina del Rey Beverly Hills LA Metro 12 Figure 17 – Residential Absorption , Santa Monica and Competitive Markets Source: REIS Figure 18 – R esidential Absorption , Los Angeles Metro Area Source: REIS Compared to other markets, residential apartments in the City have higher rents , although rents have not increased as rapidly as other markets within the recent past ( -400 -200 0 200 400 600 800 Santa Monica West LA/Westwood Mar Vista Marina del Rey Beverly Hills 2009 2010 2011 2012 2013 2014Q1+Q2 -5,000 -2,500 0 2,500 5,000 7,500 10,000 LA Metro 2009 2010 2011 2012 2013 2014Q1+Q2 13 Figure 19 ). 14 Figure 19 – Residential Market Comparisons Effective Rent 2013 CAGR (2009 -2013) Units Santa Monica $2,350 1.4% 18,848 West LA/ Westwood $2,250 2.4% 36,175 Mar Vista $1,530 2.3% 27,727 Marina del Rey $2,200 2.4% 26,371 Beverly Hills $2,020 3.6% 41,143 LA Metro $1,460 2.1% 770,251 Source: REIS Given the strong performance of the residential market, there is a large projected supply of future projects, with 1,700 units in the pipeline . There are two projects currently under construction:  49 rental units at 702 Arizona  57 rental units at 1317 7 th Street Future projects include a mix of for -sale and for -rent products . These units are spread across 24 mixed -used projects, which are primarily resi dential buildings with ground floor retail. Residential Demand Overall, there is strong demand for residential units, as evidenced by high rents and low vacancy rates . Demand will continue to grow as the C ity population increases . Demand is driven by a nu mber of desirable attributes, including ease of access to the ocean and Santa Monica B each, regional destination retail, and public infrastructure. AECOM projects continued strong growth in the City , with Downtown demand for residential units between 1,80 0 and 2,400 units over the next 15 years . Figure 20 – Santa Monica Households Projection , 15 years Households in Santa Monica, 2014 47,900 Projected growth rate 0.45% Annual household growth 217 Cumulative household growth, 15 years 3,250 Source: AECOM , SCAG Figure 21 – Residential Demand Summary, 15 years Low Medium High Downtown capture rate 52% 61% 70% Downtown households, 15 years 1,700 2,000 2,300 Vacancy rate 95% 95% 95% Downtown demand, 15 years 1,800 2,100 2,400 Source: AECOM 15 Hotel Market AECOM e xamined the performance of the following hotels, which comprise approximately 87 percent of the transit occupancy tax for Downtown. 2  Fairmont Miramar  Shore Hotel  Georgian Hotel  Shangri -La  Holiday Inn  Huntley Hotel Overall, the performance of the hotel market is very strong:  The 957 hotel keys produce a total supply of approximately 350,000 hotel room nights a year.  Inventory has grown 1.8 percent since 1 998 and at a faster pace of 4.8 percent in the past 5 years. The most recent addition to inventory was the 164 rooms of the Shore Hotel, which was delivered in 2011 and 2012.  The growth in occupied rooms 3 between 1998 and 2013 has mirrored the long -term average for inventory, at 1.8%. However, within the past 5 years, the growth rate for this metric has been higher than inventory growth , coming in at 7.1 percent per year.  Growth in occupied rooms is a direct result of very strong and increasing occupancies, which can be observed in Figure 22 . In most recent years, o ccupancy has been at or over 80 percent , indicating high demand.  In addition to growth in occupancy, strong demand is also evident through the increasing average daily room rates (  Figure 23 ).  Rates increased between 2002 and 2008 before decreasing, however rates have fully recovered and even surpassed the rates seen during the previous peak.  Increasing room rates and increasing occupancies indicates unmet demand. 2 Per 2012 RCLCO study. No new hotels have been built in Downtown since the 2012 study. 3 The number of occupied rooms is calculated by multiplying the room inventory by the occupancy rate. 16 Figure 22 – Downtown Santa Monica Sample Set Inventory and Occupancy Source: PKF, RC LCO, AECOM Figure 23 – Downtown Santa Monica Sample Average Daily Rate, 1998 -2013 Source: PKF, AECOM Some of this demand will be met by projects in the pipeline, which currently includes approximately 900 new rooms. There are 279 rooms currently under construction across two hotels, the Courtyard and the Hampton. 648 net new rooms are currently under review or in the permitting process across five projects, including some mixed -use products. The map of current hotels and hotels in the pipeline are displayed on the map in Figure 24 . 80% 80% 81% 81% 0% 25% 50% 75% 100% 600 700 800 900 1,000 1998 2000 2002 2004 2006 2008 2010 2012 Oc c u p a n c y In v e n t o r y ( K e y s ) Keys Market Occupancy $282 $235 $249 $252 $278 $295 $150 $200 $250 $300 1998 2000 2002 2004 2006 2008 2010 2012 17 Figure 24 – Map of Current and Planned Hotels in Downtown S anta Monica Source: City of Santa Monica, AECOM Hotel Demand Summary Future hotel demand for the next 15 years was projected using a range of growth rates, anchored by historic growth rates. The strong number of international overnight visito rs , the strong recent growth in ADR, and robust pipeline indicate that projected growth could be very high. Figure 25 – Santa Moni ca Hotel Demand Projections, 15 years CAGR Total Future Room Night Demand Total Future Room Demand Total Room Demand, Cumulative (15 years) Historical Growth Rate, 2008 -2013 4.8% 706,887 1,937 980 PKF Projected CAGR 6.9% 946,741 2,594 1,640 Aggressive Growth Rate 7.6% 1,042,298 2,856 1,900 Source: PKF, AECOM THIRD STREET PROMENADE SANTA MONICA PLACE SANTA MONICA PIER 18 Figure 26 – Santa Monica Hotel Demand, 15 years Low Medium High Hotel Demand, Keys 980 1,640 1,900 Source: AECOM Retail Market To evaluate the retail market, AECOM reviewed the 2012 RCLCO study and examined key assumptions which were part of their analysis, as well as other factors, including:  Household growth  Tourism growth  Future projected supply of retail projects. In comparing the updated data to the previous conclusions and analysis , AECOM found that the current growth trend s for residents and visitors are con sistent with previous estimates . Therefore, AECOM does not recommend revising the previous estimates. Figure 27 – Retail Demand Projections Demand (SF) Local - Serving Regional - Serving Low 45,000 95,000 Midpoint 52,500 138,000 High 60,000 181,000 Source: RCLCO , AECOM AECOM also re viewed current retail projects in the City’s development pipeline. Currently, approximately 370,000 SF of total retail, dining, entertainment (RDE) is in the pipeline. Out of 29 projects that were in the pipeline at the original point of the analysis:  2 4 include a retail component;  18 residential projects include ground -floor reta il ;  Four hotel/mixed -use projects include a retail component ; and  There are two movie theater projects planned. 19 Demand projections compared to the pipeline of future supply are presented below. Figure 28 – Santa Monica Retail Demand Projection , 15 years Local -Serving Regional -Serving Entertainment Demand Range (SF) 45,000 - 60,000 95,000 -181,000 x Pipeline (SF) 134,300 105,400 131,100 Source: RCLCO, City of Santa Monica, AECOM As shown, assuming that the projects currently planned move forward, local -serving retail demand over the next 15 years will be met, with a surplus of retail beyond currently projected demand. The vast majority of re gional retail would also be satisfied with projects currently in the pipeline. Any additional demand would be towards the end of the 15 year time frame and therefore more uncertain and higher risk . Furthermore, any regional -serving retail on the s ite would suffer from the site’s location on t he back side of the Third Street Promenade and Santa Monica Place, away from current pedestrian flow. Currently, pedestrian traffic flows across the Third Street Promenade, ending with Santa Monica Place. While there is some addition retail on 4 th Street adjacent to this site, the flow of pedestrian traffic is not as strong on 4 th Street in front of the site due to the 10 Freeway. Given all of these factors, AECOM does not recommend retail for this site. In conclusion:  There is a wide range of demand for retail in the City .  There is a large volume of retail currently in the pipeline. The majority of local -serving retail will be located in residential projects; the majority of regional -serving retail will be located in large, mixed use d evelopments within hotel and office developments.  Any demand is likely to be first captured by the retail currently in the pipeline , particularly in the short to mid -term.  Although the site may be able to induce retail demand through specialty retail in t he later years of this analysis, retail is not recommended for this site due to the factors discussed and strong demand from other land uses. V . Site Demand Projections Methodology The following steps were employed to determine the likely capture of office square footage, residential units, and hotel keys recommended on the subject site: 1. Used the demand potential estimated for the Downtown and deducted the pipeline of future supply to determine the net demand; 2. Identif ied competitive s ites and asses sed general strengths and weaknesses of the subject site with respect to other development areas; 3. Estimated capture r ate and subsequent s ite demand . 20 A summary of citywide demand and pipeline is shown below in Figure 29 . Figure 29 – Demand , Pipeline, and Net Demand by Land Use in Santa Monica, 2015 -2030 years Land Use Range Midpoint Pipeline Net Demand Office 313,2 00 – 600,6 00 SF 452 ,000 SF 209,000 243,500 Residential 1,800 – 2,400 units 2,100 units 1,700 400 Hotel 980 – 1,900 keys 1,500 keys 900 600 Retail 140,000 – 241,000 SF 191,500 SF 370,800 SF - Source: AECOM Competitive Sites Sites that could present future competition were also analyzed, as they will impact the competitiveness of the site . The City currently controls two of these sites (sites 4 and 5). One site currently has a vacant Sears building (site 6). The remaining site s have currently functioning land uses ; however , they may potentially be redeveloped into a new use in the short - to medium -term. Descriptions of sites and map are found in Figure 30 and Figure 31 . Figure 30 – Overview of Competitive Sites Map Key Current Use Lot Current Building SF Development Potential 1 Boys and Girls Club 37,000 SF 0.8 acres 38,600 103,000 SF at 2.75 FAR and 60’ height 2 Whole Foods 24,000 SF 1.0 acre 12,500 87,500 SF at 3.75 FAR and 76’ height requires ground floor retail 3 Vons 104,000 SF 3.6 acres 35,800 287,942 SF at 2.75 FAR and 60’ height 4 Big Blue Bus (City Site ) 452,000 SF 10.4 acres n/a tbd 5 Subject Site 4 th Street Station (City Site ) 86,000 SF 2.0 acres n/a tbd Potential additional sites: For Co -Development: 22,000 SF (0.5 acres) Freeway Off -ramp: 24,000 SF (0.5 acres) 6 Sears 135,000 SF 3.6 acres 100,600 Historic Building 474,200 SF at 3.5 FAR, 84’ height 373,600 new SF + 100,600 SF existing Source: AECOM