Cotati City Council
Agenda Staff Report
Item type: REGULAR AGENDA (ACTION)
To: City Council
Subject: CONSIDERATION OF A RESOLUTION TO DETERMINE 120 E. COTATI AVENUE AS EXEMPT SURPLUS LAND AND
DIRECTING STAFF TO MOVE FORWARD WITH ISSUANCE
OF AN REQUEST FOR QUALIFICATIONS FROM
DEVELOPERS INTERESTED IN DEVELOPING THE
PROPERTY
Date: February 13, 2024
Written by: Noah Housh, Director of Community Development Recommendation
It is recommended by the Community Development Department that the City Council adopt a resolution determining that the three parcels located at 120 E Cotati Avenue are exempt surplus land under the Surplus Land Act under Government Code 54221(f)(1)(F), adopt a motion authorizing the issuance of a separate notice that the property is exempt surplus land under Government Code 54221(f)(1)(A), and provide direction on the draft Request for Qualifications (RFQ) for developers interested in developing the property and authorize staff is issue the RFQ once finalized.
Background
In 2021, the City of Cotati approved a three-story mixed-use project consisting of 27 residential units and 10,400 square feet of commercial space on three parcels totaling 0.86 acres at 120 E.
Cotati Avenue. This project was never built.
On March 1, 2022, Steve Leonard of Northbay Housing filed an SB 35 development application proposing to develop a 5-story, 60-foot tall, 70-unit multi-family housing project on the three parcels located at 120 E Cotati Avenue.
In summer of 2023, while still in the SB 35 review process, Mr. Leonard indicated an interest in selling the property.
On December 12, 2023, following a closed session discussion, the Cotati City Council directed staff to initiate purchase of the property at 120 E. Cotati Avenue with funding sourced from the Affordable Housing Fund. The City took ownership of this property in late December 2023.
Analysis/Discussion
Surplus Land Act
Given the funding source of the purchase of 120 E. Cotati Avenue, any future development of the site sponsored by the City must include affordable housing. Therefore, staff recommends issuance of a Request for Qualifications (RFQ) to affordable housing developers who may be interested in partnering with the City to develop the site. However, the Surplus Land Act provides regulations for how agencies dispose of and inventory publicly owned properties, with the goal that any land not needed for public use be used to promote affordable housing.
Generally, under the Act, there are three types of land: land necessary for agency use, land no longer necessary for agency use but exempt from most provisions of the Act ("exempt surplus land"), and land no longer necessary for agency use that is not exempt ("surplus land").
When the land is not necessary for agency use, but prior to any action towards disposition, the local agency must declare the land as either surplus or exempt surplus land at a regular, public meeting. "Disposition" includes the sale or lease of land. The decision that the land is either surplus or exempt surplus must be supported by written findings and a copy of the written findings for an exemption must be sent to HCD by the local agency at least 30 days before the sale or lease of the land. As identified in the resolution, the City anticipates negotiating the sale or lease of the Site for the use as a housing development that meets the requirements of Government Code Section 37364, in accordance with Government Code (GC) Section 54221(f)(1)(A), or for use as a housing development on land that is put out to open, competitive bid in accordance with the normal process for non-exempt property under the Surplus Land Act.
However, it is advantageous for the City to proceed with development of the property as “exempt surplus” land, as it will provide the ability to retain mixed use and more flexible and streamlined development procedures.
Specifically, if the proposed use of the property meets the requirements under GC Section 54221(f)(1), the local agency may declare the land as “exempt surplus”, and the disposition is not subject to additional requirements under the Act. There are eleven exemptions with the anticipated exemption identifying eligible exempt projects. The envisioned mixed-use project at 120 East Cotati Avenue appears to be qualifying exempt surplus land in accordance with GC 54221(f)(1)(A) and GC 54221(f)(1)(F).
The following is a summary of the key requirements for both exemptions:
(f)(1)(A) • 80 percent of the parcel area must be used for housing • 40 percent of the units “shall be affordable to households whose incomes are equal to, or less than, 75 percent of the maximum income of lower income households, and at least half of which shall be affordable to very low-income
households.”
(f)(1)(F) • 100% affordable to “low or moderate income” families. • Ancillary “commercial ground floor uses” allowed.
• At least 75% of the units must be “lower income.”
• 55 year restrictions for rental housing.
• Requirements must be contained in a deed restriction
A full summary of potential exemptions and related requirements is attached for reference. Prior to issuance of the RFQ, the procedural requirements to deem the property as “exempt surplus land” will be initiated to ensure compliance with the Surplus Land Act and provide certainty around development requirements for potential developers interested in engaging with the City.
This includes providing HCD with the resolution determining exempt surplus land in accordance with GC 54221(f)(1)(F) and the notice of exemption under GC 54221(f)(1)(A). Both exemptions are proposed so there is more flexibility to meet the development goals of the City Council and have a viable project that can be built.
On February 5, 2024, HCD responded to City staff about the property's status under the Surplus Land Act. HCD responded that the property is eligible for an exemption if certain characteristics listed under GC 54221(f)(2) don't apply to the property. The property is not within a coastal zone, adjacent to a historical unit of the State Parks System, listed on, or determined by the State Office of Historic Preservation to be eligible for, the National Register of Historic Places, or within the Lake Tahoe region. Therefore, the attached draft resolution includes this determination.
Request for Qualifications
Once a determination regarding the appropriate disposition process is confirmed, staff intends to request interested developers provide summaries of their qualifications to develop the property at 120 E. Cotati Avenue in keeping with the goals and objectives of the City. These qualification statements will then be used to select a partner with which the City can move forward to develop the site. Staff is seeking input on the specific goals and objectives identified in the RFQ to ensure these are accurately communicated.
Specifically, staff are requesting Council input about the desired levels of affordability, the overall anticipated number of units and the implementation of the approved project design, or a new design which will require a separate entitlement process. These areas in the draft RFQ are highlighted in green.
Provided that the City Council provides direction to staff to finalize and issue the RFQ, staff will evaluate the responses from affordable housing developers and return with a recommendation to City Council.
Financial Considerations
Issuance of an RFQ to seek qualified development partners is not anticipated to have any significant direct impacts on the general fund, other that the significant staff time required to draft the documents and administer the Surplus Land Act and RFQ processes. Specifically, some project related billing from the City Attorney’s office will be necessary to ensure all requirements are met. However, all dedicated time is anticipated to be within adopted FY 23/24 budget.
Environmental Issues
This action is exempt from the California Environmental Quality Act (CEQA) because it is not a project which has a potential for resulting in either a direct physical change in the environment, or a reasonably foreseeable indirect physical change in the environment, pursuant to CEQA Guideline section 15378. Future development of the project site will require separate environmental analysis under CEQA.