Cotati City Council
Agenda Staff Report
Item type: REGULAR AGENDA (ACTION)
To: City Council
Subject: CONSIDERATION OF A RESOLUTION AUTHORIZING THE
CITY MANAGER TO ENTER INTO AN EXCLUSIVE
NEGOTIATING AGREEMENT WITH FREEBIRD
DEVELOPMENT LLC FOR THE DEVELOPMENT OF CITY
OWNED PROPERTY AT 120 E COTATI AVENUE WITH
AFFORDABLE HOUSING
Date: June 25, 2024
Written by: Noah Housh, Director of Community Development Recommendation
It is recommended the City Council approve the attached resolution providing authorization to the City Manager to enter into an Exclusive Negotiating Agreement with Freebird Development LLC., subject to final review by the City Attorney, for the development of City-owned property at 120 E.Cotati Avenue with a 100-percent affordable housing project.
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 2023.
On February 13, 2024, the City council determined that the property at 120 E. Cotati Avenue was “exempt surplus land” and provided direction to staff to issue an Request for Qualifications seeking a qualified developer to partner with the City to develop 120 E. Cotati Avenue with a 100-percent affordable housing project. This RFQ was issued on March 21, 2024, to over 170 individuals and firms who have expressed interest in developing affordable housing within the State.
On April 30, 2024, City staff received a Developer Qualification statement from Freebird Development LLC, the only party to respond to the RFQ. After reviewing the statement, an internal panel of City staff determined that Freebird Development was adequately qualified and well versed in the development of affordable housing.
On May 30, 2024, City staff interviewed Freebird Development LLC ownership and their development partners and confirmed their qualifications and development acumen.
Analysis/Discussion
After reviewing the qualifications and references of Freebird Development LLC and meeting with their development and management team, City staff is supportive of moving forward with a negotiating agreement to formally partner with their team on the development of 120 E. Cotati Ave with a 100-percent affordable housing project. Freebird put together a thorough and responsive statement, addressing each element of the RFQ. Further, their concept project thoughtfully balances known community concerns such as overall building scale, massing and parking, against the goals of efficient use of the site to achieve City goals regarding housing. The Freebird team is a joint-venture of affordable housing veterans with a demonstrated ability to deliver on projects locally.
The conceptual project envisioned in the response package is a three-story, 52-unit mixed-use development. The site design includes approximately 8,200 square feet of ground floor commercial/non-residential space fronting onto La Plaza and E. Cotati Avenue, with a 56-space enclosed parking lot behind. Two stories of residential units proving a mix of size and bedroom count, served by an outdoor second floor courtyard would be constructed above. Residents would have on-site laundry and a community room provided as additional amenities. The complete response package, RFQ and draft negotiating agreement are attached for review.
It is worth noting that the property at 120 E. Cotati Avenue was purchased by the City using funding from the Affordable Housing Fund. This funding source, combined with the requirements of the Surplus Land Act, require that the City owned property be developed with affordable housing. The specific affordability levels and unit counts are subject to various factors including zoning, funding sources and development capacity of the property.
The draft Exclusive Negotiating Agreement (ENA) is attached for reference. This agreement template is based on the completed ENA between the City of Healdsburg and Freebird for a similar development in Saggio Hills. The ENA is intended to hold the property for Freebird for a defined time period and subject to certain performance standards during the due diligence and entitlement phases of the project. Ultimately, presuming the project becomes entitled, the ENA will be replaced by a Development and Disposition Agreement (DDA) which will contain the mutual project commitments between the City and the developer. On the draft ENA, the text highlighted in yellow are still subject to final discussions between staff and the developer, subject to review of the full agreement by the City Attorney.
Financial Considerations
.Engagement with a qualified development partner to develop the property at 120 E. Cotati Avenue is not anticipated to have any significant direct impacts on the general fund, in the current (FY23/24) or future fiscal year (FY24/25). The RFQ identified the City goal of minimizing subsidy of future development of the property to the granting of the property.
However, financing of affordable housing is challenging and notoriously complex, so future request for additional support of an affordable housing development project on the site may occur. Additionally, there will be some limited staff time required to support the project beyond the costs of entitlements. Lastly, it is anticipated 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 24/25 budget and will largely be cost recovery.
Environmental Issues
This action is exempt from the California Environmental Quality Act (CEQA) because entering into a negotiating agreement 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.