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CITY COUNCIL AGENDA REPORT
City of Anaheim
PLANNING AND BUILDING DEPARTMENT
DATE: MARCH 26, 2024
FROM: PLANNING AND BUILDING DEPARTMENT
SUBJECT: PERFORMANCE TIMELINES FOR DEVELOPMENT
AGREEMENT NO. 99-01 FOR THE ANAHEIM
GARDENWALK PROJECT
ATTACHMENT (Y/N): YES ITEM # 15
GOVERNMENT CODE § 84308 APPLIES: YES
RECOMMENDATION:
That the City Council, by separate Resolutions:
1) Establish new performance timelines for GardenWalk Hotel I, LLC to commence construction of Hotel 2 on or before November 12, 2025 and complete construction of Hotel 2 no later than May 12, 2028 and determine that the previously approved Pointe Anaheim Initial Study and Mitigated Negative Declaration (IS/MND), and associated Addenda, are the appropriate environmental documentation for this request; and
2) Establish new performance timelines for Westgate Resorts Anaheim, LLC to obtain building permits on or before April 15, 2025 and complete construction and open for business no later than twenty-four months after commencement of construction and determine that the previously approved Pointe Anaheim Initial Study and Mitigated Negative Declaration (IS/MND), and associated Addenda, are the appropriate environmental documentation for this request.
DISCUSSION:
A Development Agreement is a contract between the city and property owner that provides certainty to the developer that the approved project will be exempt from future changes to zoning laws and requires the developer to provide benefits to the city in exchange for the certainty. In June 1999, the city of Anaheim and Pointe Anaheim, LLC executed Development Agreement No. 99-01 (Agreement), which governs the development of the Anaheim GardenWalk Project (Project). The Agreement is included as Attachment 3.
Performance Timelines for Development Agreement No. 99-01 for the Anaheim GardenWalk Project March 26, 2024
The Project is a specialty retail, dining, and entertainment center integrated with multiple hotels and a transportation center, on approximately 20.3-acres, located between Katella Avenue and Disney Way west of Clementine Street. At full build-out, the project would consist of up to 439,600 square feet of retail, dining, and entertainment uses; a 3,200-space parking structure and transportation center; three hotels with up to 1,266 hotel rooms (including up to 400 vacation ownership units); and up to 216,820 square feet of hotel accessory uses. Attachment 4 provides a Map Exhibit identifying the project area and each component of the project.
Following the execution of the Agreement, the original developer, Pointe Anaheim, LLC, and its successors in interest, subsequently assigned the Agreement to other responsible parties: STC GardenWalk LLC; GardenWalk Hotel I, LLC; and Westgate Resorts Anaheim, LLC. These three parties are each the property owner for their respective components of the Project. In addition, the City Council approved subsequent amendments to the Agreement in February 2002, December 2004, January 2006, April 2006, March 2010, July 2011, August 2011, June 2013, and June 2019. In general, the amendments included modifications to the scope of the development based on market realities and extended performance dates to reflect anticipated construction timetables.
Pursuant to the Agreement, the City Council is required to determine annually if the property owners have complied in good faith with the terms and conditions of the Agreement.
Demonstration of good faith compliance includes conformance with all terms and timing schedules set forth in the Agreement. At the December 5, 2023 City Council meeting, the City Council determined that the Project is not in compliance with the terms and conditions of Development Agreement No. 99-01 for the 2023 review period, and directed staff to provide notice to the applicant of the Council’s intent to establish new development timeframes at a future public hearing. Resolution No. 82R-565, which governs the consideration of development agreements, requires the public hearing to be set within 45 days of the notice to the applicant.
The public hearing was scheduled for January 23, 2024 and subsequently continued to the March 26, 2024 City Council meeting, at the request of the remaining responsible parties: GardenWalk Hotel I, LLC and Westgate Resorts Anaheim, LLC.
STC GardenWalk, LLC is responsible for the retail, dining, and entertainment center, the transportation center, and the parking structure components of the Project. These components of the Project were constructed and there are no outstanding obligations under the Agreement for STC GardenWalk, LLC.
GardenWalk Hotel I, LLC is responsible for the development of two hotels within the Anaheim GardenWalk Project. Construction of the first hotel, the 466-room JW Marriott Anaheim Resort, was completed and opened in August 2020. The Agreement, which the City Council previously extended by one year due to the COVID-19 pandemic, required the second hotel to commence construction by November 12, 2023, and open by May 12, 2026. GardenWalk Hotel I, LLC has submitted a letter (Attachment 5) requesting that the timeframe to begin construction be extended to November 12, 2025 and the timeframe to complete construction be extended to May 12, 2028. As GardenWalk Hotel I, LLC indicates in their letter of request, high interest rates and doubled financing costs have caused delays in development of the second hotel. The Agreement for GardenWalk Hotel I, LLC is focused on construction phase. It does not include a milestone to Performance Timelines for Development Agreement No. 99-01 for the Anaheim GardenWalk Project March 26, 2024
obtain building permits, and none is proposed, consistent with the existing terms. Prior to commencing construction, approval of a Final Site Plan application and building permits are required. The extension, if approved, provides approximately 20 months from this Council action for these approvals to be obtained and for construction to be initiated.
Westgate Resorts Anaheim, LLC is responsible for the development of a 399-unit vacation ownership resort, which the developer will construct on top of the existing parking structure. The Agreement required the developer to obtain a building permit on December 27, 2019. The Agreement, which the City Council previously extended by two years due to the COVID-19 pandemic, requires that the developer complete construction and open for business by December 27, 2023. Although the developer previously obtained building permits in December 2019, they have since expired and changes are proposed necessitating the review of a new Final Site Plan application in addition to the issuance of new building permits. Westgate Resorts Anaheim, LLC has submitted a letter (Attachment 6) requesting that the timeframe to obtain a building permit be extended to April 15, 2025 and the completion and opening date be extended to two years after the commencement of construction. The applicant cites challenges since the pandemic included meeting the standards of a national hotel “flag” and certification and design of new and innovative building types. The Agreement for Westgate Resorts Anaheim, LLC is focused on being permit-ready to start the construction phase and its completion. It does not include a milestone to begin construction, and none is proposed, consistent with the existing terms. The extension, if approved, provides approximately 12 months from this Council action for these approvals to be obtained.
Environmental Impact Analysis: An Initial Study in support of a Mitigated Negative Declaration (“IS/MND”) was previously prepared and adopted in June 1999 to evaluate the environmental impacts of the Project and to identify necessary mitigation pursuant to the requirements of the California Environmental Quality Act (“CEQA”). Addenda were previously prepared and adopted in 2001, 2006, 2011, 2013, and 2015. Since the adoption of the Pointe Anaheim IS/MND and associated Addenda, neither the Project nor the circumstances under which it will be undertaken have changed. Additionally, there is no new information of substantial importance that the city, as Lead Agency, did not know and could not have known previously. The establishment of new performance timelines will not increase the unit count, or otherwise increase the intensity of the project. Therefore, additional environmental review is not required pursuant to CEQA Guidelines Section 15162.
Conclusion: Staff believes that the additional time requests are reasonable given current market conditions and project scopes and will assist both parties in providing high quality projects that will enhance the Anaheim GardenWalk and overall Resort area.
Staff determined that there would be no new environmental impacts associated with the approval of this request to extend performance timelines beyond those identified and disclosed by the city, as the Lead Agency, in the previous approved environmental analysis. Therefore, staff recommends approval of this request to establish new performance timelines for GardenWalk Hotel I, LLC and Westgate Resorts Anaheim, LLC.
Performance Timelines for Development Agreement No. 99-01 for the Anaheim GardenWalk Project March 26, 2024
IMPACT ON BUDGET:
There is no budgetary impact. The applicants are paying the costs associated with this hearing.
Respectfully submitted,
Ted White
Deputy City Manager/ Director of Planning and Building
Attachments:
1. Resolution (GardenWalk Hotel I, LLC)
2. Resolution (Westgate Resorts Anaheim, LLC)
3. Development Agreement 99-01 and Amendments
4. Location Map Exhibit
5. GardenWalk Hotel I, LLC Letter of Request
6. Westgate Resorts Anaheim, LLC Letter of Request