EAST PALO ALTO
CITY COUNCIL
STAFF REPORT
DATE: July 18, 2023
TO: Honorable Mayor and Members of the City Council
VIA: Melvin E. Gaines, City Manager
BY: Amy Chen, Community & Economic Development Director Elena Lee, Planning Manager
SUBJECT: Ravenswood Business District / 4 Corners Specific Plan – Second Contract Amendment to Developer Reimbursement Agreements
Recommendation
That the City Council:
1. Accept the staff report regarding the status on the Ravenswood Business District/Four Corners Transit Oriented Development Specific Plan Update; and
2. Adopt a Resolution authorizing the City Manager to amend the Raimi + Associates (R+A) Contract and the related Developer Reimbursement Agreements to increase by $180,000 for a new not-to-exceed total of $2,015,137 for professional services.
Alignment with City Council Strategic Plan
This recommendation is primarily aligned with:
• Promote Housing, Economic and Workforce Development
• Ensure Our Financial and Organizational Health
Executive Summary
Staff is providing background and an explanation to the City Council regarding a budget amendment to the R+A contract and related Developer Reimbursement Agreements. This amendment is needed to complete the update to the existing Plan’s standards and policies, advance key Plan items towards successful implementation, and to complete all legally required Supplemental Environmental Impact Report (SEIR)/California Environmental Quality Act (CEQA) analysis.
Background
At the City Council Study Session on February 25, 20201, the City Council recommended exploring a focused update to the RBD/Four Corners TOD Specific Plan (“Specific Plan”).
Although the overall vision of the plan would generally remain the same, the Specific Plan update analyzes the impacts of allowing an increased amount of office development and housing in the Specific Plan area. The key objectives for the Specific Plan update are to:
• Evaluate the relative impacts and benefits of allowing more office/R&D (research and development) square footage and define policies that address 1) traffic and trip reduction; 2) wet utility infrastructure, 3) fiscal revenues; 4) gentrification or indirect displacement and housing affordability, and 5) local jobs; • Develop a clear framework and program to promote community needs and receive community benefits;
• Articulate urban design standards and zoning standards that create a new, “complete” neighborhood; and
• Maintain the vision of the existing plan of “transforming the area into a vibrant, walkable, mixed-use destination with a significant increase in employment, institutional uses, and moderate increase in housing.”
• An additional key objective related to Plan implementation has been identified during the course of the update process: define financing options for construction and maintenance of key infrastructure improvements.
On September 15, 2020, the City Council authorized the City to enter into a contract with Raimi + Associates (R+A), in an amount not to exceed $1,326,829 to provide the analysis, community engagement, and environmental review necessary for the City Council to consider an amendment to the Ravenswood Business District (RBD) Specific Plan and potentially increase the amount of development approved in the EIR. The staff report linked online2 details the phases of the analysis and the scope of work. The table below summarizes the RBD budget with R+A:
Table 1
Total Base Cost $990,129
10% Contingency $99,000
(Loop Road SEIR + Computer Infrastructure Models) Total Optional Cost $237,700
Base + Contingency + Optional $1,326,829
On October 6, 20203, the City Council authorized the City to enter into Developer Reimbursement Agreements (DRA) with certain developers within the RBD to fund a share of the associated costs for the environmental review portion of the R+A contract. Although certain developers are funding a portion of the R+A contract, the City Council maintains full land use authority regarding decisions about the RBD and entering into developer reimbursement agreements does not commit the City to amend the RBD or any project approvals.
As previously directed by the City Council, it is expected that developers who required an amendment to the RBD Specific Plan for their projects to advance will be obligated to fund a share of the associated costs for: 1) the environmental review portion of the R+A contract; and 2) reimbursement of the City’s initial investment in data refresh, engagement, and amendments to the Specific Plan.
With that direction from City Council, the following cost split was included as two parts of the original R+A consulting contract that was executed on January 11, 2021 in an amount not to exceed $ 1,326,829. The term of the agreement commenced on September 15, 2020 and the contract was approved for three years. The table below describes the two parts of the initial R+A contract:
Table 2
Part Entity Activities Cost
Estimate
Mechanism
A City of East
Palo Alto
Data refresh,
analysis, community
engagement
$490,164 Paid initially by City
General Fund, later
reimbursed through
approved projects
B Large RBD
Developers
Environmental
Review
$737,665 (with
optional
tasks)
Paid directly through preexisting Developer
Reimbursement Account
(DRA)
Contingency $99,000 May be applied to either
part of the contract
Total Approved $1,326,829
To date, the City Council has held eight meetings or special study sessions to discuss the Specific Plan Update. At the November 18, 2021 meeting4, City Council directed staff to study two potential maximum office/R&D development scenarios:
• Scenario 1 would allow up to 2.82 million square feet of office/R&D space and up to 1,350 housing units.
• Scenario 2 would allow up to 3.35 million square feet of office/R&D space and up to 1,600 housing units.
With these recommendations from City Council, staff have revised the R + A scope of work and budget and on January 18, 20225, City Council authorized the City Manager to amend the R+A agreement and increase the contract by $508,308. The following table summarizes the first approved contract amendment:
Table 3
Contracts Activities Cost
Estimate
Mechanism
Initial Data refresh, analysis,
community
engagement
Environmental
Review
Contingency
$1,326,829 Paid initially by City General
Fund, later reimbursed
through approved projects
Paid directly through preexisting Developer
Reimbursement Account
(DRA)
1st
Amendment
Analysis of two
scenarios and more
public engagement
$508,308 Paid initially by City General
Fund, later reimbursed
through approved projects
Amended Total $1,835,137
The purpose of this staff report is to describe the need for 2nd contract amendment to complete the update to the existing Plan’s standards and policies, advance key Plan items towards successful implementation, and to complete all legally required Supplemental Environmental Impact Report (SEIR)/California Environmental Quality Act (CEQA) analysis.
Analysis
As mentioned above, based on Council direction and community input, the Specific Plan and SEIR analyzes two potential maximum office/R&D development scenarios:
• Scenario 1 would allow up to 2.82 million square feet of office/R&D space and up to 1,350 housing units.
• Scenario 2 would allow up to 3.35 million square feet of office/R&D space and up to 1,600 housing units.
Before the SEIR receives its final certification, the City Council will need to select which scenario (or a hybrid alternative) will become the final development capacity reflected in the Final SEIR and approved under CEQA. Direction may be given at a future study session, but the ultimate selection of which scenario would be made at the time of SEIR certification and action on the project at a hearing prior to the final certification hearing.
Budget Amendment
Staff is proposing an amendment in the amount of $180,000 be added to the Developer Reimbursement Agreements that support the Specific Plan Update. This amendment is needed to finish the update of the existing Plan’s standards and policies, advance key Plan items towards successful implementation, and complete legally required SEIR/CEQA analysis.
The table below shows the tasks that comprise this amendment and the consultant responsible.
Table 4
Final Budget Amendment Estimate Total
Meetings and Coordination
Project Coordination & Meetings (R+A) $ 15,500
Council/Planning Commission Study Sessions (R+A) $ 20,000 Traffic Engineering Support (Hexagon) $ 20,000
Utility Engineering Support (Schaaf + Wheeler) $ 16,400 EIR Coordination (David J Powers) $ 15,000
$ 86,900
Specific Plan Updates
Admin Draft Work on Specific Plan Policies (R+A) $ 25,000 TDM Implementation Guidelines (Hexagon) $ 12,000
$ 37,000
CEQA/SEIR Analysis
Air Quality Work (David J Powers) $ 4,900
AQ/GHG/Noise Support (Illingworth & Rodkin) $ 6,400
Additional VMT Modeling (Hexagon) $ 6,000
WSA (Schaaf + Wheeler) $ 26,700
Biological Analysis (HT Harvey) $ 2,800
$ 46,800
Subtotal $ 170,700
Sub Management $ 7,700
Office/Accounting $ 1,600
TOTAL $ 180,000
The amendment scope is broken down into three categories: 1) Meetings and coordination, 2) Specific Plan Updates, and 3) CEQA/SEIR Analysis.
1) Meetings and Coordination
• Project Coordination and Meetings (R+A) – The prime consultant, R+A, coordinates monthly check-ins with the developer group, meets with outside agencies including the San Francisquito Creek Joint Powers Authority, and is the lead coordinator for the Specific Plan update.
• Council/Planning Commission Study Sessions (R+A) – There have been seven study sessions to date since the start of the Specific Plan update in September 2020.
This amended budget for R+A will support upcoming study sessions including this coming July 25 session. R+A will help produce staff reports and presentations for these Council sessions. Future study sessions are anticipated this Fall, which could also be joint meetings with the Planning Commission.
• Traffic Engineering Support (Hexagon) – Hexagon will attend coordination meetings, City Council Study Sessions, and provide continued transportation engineering support to the project.
• Utility Engineering Support (Schaaf + Wheeler) – There has been discussions around early phase wet utility improvements. Schaaf & Wheeler will prepare for and attend up to four virtual meetings with the project team that may include meetings with individual land developers to discuss our analyses and results from our technical studies. Schaaf & Wheeler will prepare for and attend up to two group virtual meetings with the project team to discuss technical study results. • EIR Coordination (David J Powers) – Meetings with City staff and R+A team to discuss EIR approach and technical studies, coordination regarding the water supply assessment, tribal consultation meetings, and discussions regarding the approach to construction impacts.
2) Specific Plan Updates
• Admin Draft Work on Specific Plan Policies (R+A) – The complexity of the Admin draft of the Specific Plan has required additional time to be dedicated towards solving project-level issues, such as the street design for Bay Road. This was not anticipated by the project team during the original scoping process or the previous budget amendment scoping. Key chapters of the Specific Plan, including new chapters on Community Benefits and Parks/Open Space, need to be developed or updated. • TDM Implementation Guidelines (Hexagon) – A citywide Transportation Demand Management (TDM) Ordinance was adopted in EPA on June 1, 2021. It was anticipated that developers in the RBD would need to come together to develop a tailored strategy to reduce transportation demand in and out of the RBD. Hexagon will work with the R+A team and City staff to develop a stand-alone TDM Implementation Guidelines for the RBD. The guidelines will provide additional context/background, and will explain in more detail the TDM requirements including how the TDM Program will be implemented and monitored.
3) CEQA/SEIR Analysis
• Air Quality Analysis (David J Powers) – The SEIR was scoped to include a programlevel analysis of construction impacts related to air quality since at the time the scope was prepared, construction details were not available to complete a project-level construction analysis. Based on a revised approach recently discussed with the City, the SEIR will now include project-level analyses of the construction air quality impacts of two future development projects within the Plan area. Other future projects in the Plan area would be required to complete a project-specific construction analysis under a separate scope. The project-specific construction analysis will require additional coordination with the developers regarding construction assumptions and a more detailed construction analysis in the SEIR. (Note that the project-specific construction analyses to be included in the Specific Plan Update SEIR would be prepared under a separate scope/contract with the individual project developers). Future developments would be able to tier from this analysis (assuming construction is consistent with the assumptions used in the SEIR). Illingworth & Rodkin will support the project-level air quality analysis, complete additional noise analyses based on revisions to the cumulative traffic volumes, and attend project meetings as provided by the budget. • Additional Vehicle Miles Traveled (VMT) Modeling (Hexagon) – In order to accurately reflect impacts, Hexagon must calculate existing and total VMT to analyze the potential Air Quality/Greenhouse Gas impacts of the two development scenarios. To model the total VMT in the Plan area (which includes existing development), Hexagon must calculate the existing VMT for the Specific Plan area, so that only the AQ and GHG emissions resulting from the net increase in VMT are disclosed. • Water Supply Assessment (WSA) (S+W) – The project’s original scope included a more general “water supply assessment” which was completed by S+W as part of the Utilities Impact Study (and concluded at a high level that there is sufficient water supply for both RBD scenarios). However, this effort did not meet all the statutory requirements of State law SB 610, which applies to any 'project' with more than 500 units or equivalent non-residential impact. Much of the background work needed for the official WSA is complete but there is additional analysis that is needed to be CEQA compliant (such as analysis of single and multiple dry year conditions, and details on the City's water rights contracts).
• Biological Analysis (HT Harvey). The Biological Resources Report for the Specific Plan Update will be updated to account for the analysis of potential impacts of the Loop Road, based on the latest information regarding the road’s location and design, on sensitive habitat.
Next Steps and Timeline
As mentioned at the last RBD Study Session held on April 25, 2023, another study session discussion of the proposed TDM strategies and policies for the Specific Plan Area will be held on July 25, 2023. The Public Draft of the updated Specific Plan is scheduled to be released in the Fall. The public draft of the Supplemental Environmental Impact Report (DSEIR) related to this project is scheduled to be released in late October for a 45-day review period. After the close of public comments, the Planning Commission (PC) will convene and City staff will request PC’s recommendation on the Final SEIR and updated Specific Plan (tentatively scheduled for early December). Following the Planning Commission, the City Council hearings on the adoption of the Plan and certification of the SEIR will begin (estimated for early 2024).
Fiscal Impact
To fund the remaining work on the Specific Plan Update, City staff is pursuing this amendment to the R+A contract and the related DRA’s. The total amendment of $180,000, will be divided amongst the three participating developers (Sand Hill, Harvest, and Emerson). Therefore, there would be no fiscal impact to the City for this amendment.
As a reminder, the R+A contract is split into two parts: Part 1) Data Refresh, Analysis, Community Engagement, and Part 2) CEQA Environmental Review. The City has funded Part 1 work, while developers have funded Part 2 work.
The City Council appropriated $1,097,472 in funds to cover Part 1 of the R+A contract ($490,164 initially, and the $99,000 contingency) and then added $508,308 amendment on January 18, 2022. Three developers (Sand Hill, Harvest, and Emerson) have contributed installments towards the reimbursement of the environmental review portion (Part 2) of the R+A contract. Any project that benefits from a future update to the RBD Specific Plan will be required to reimburse the City for Part 1 on a basis proportional to that project’s entitled square footage. All past Developer contributions to Part 2 will be included in (and credited against) the calculation of a project’s total Plan Preparation Fee.
The table below outlines this proposed budget amendment and the initial contract and 1st amendment.
Table 5
Contracts Activities City Developers Totals
Initial
Contract
• Part 1: Data
refresh, analysis,
community
engagement
$490,164
• Part 2:
Environmental
Review
$737,665
• Contingency $99,000
Initial Contract
Totals
$589,164 $737,665 $1,326,829
1st
Amendment
• Analysis of two
scenarios and
more public
engagement
$508,308
1st Amendment
Totals
$1,097,472 $737,665 $1,835,137
2nd
Amendment
• Meetings and
coordination
• Specific Plan
Updates
• CEQA/SEIR
Analysis
$180,000
2nd Amendment
Totals
$1,097,472 $917,665 $2,015,137
To codify the developer obligations in regards to this 2nd RBD Specific Plan amendment, City staff in conjunction with the City Attorney will update the City’s standard Developer Reimbursement Agreement (DRA) and issue revised installments before any of this scope can be initiated. To mitigate the City’s risk of incurring costs associated with the RBD Specific Plan update, applicable reimbursements will be due in accordance with the City’s project approval process. The Conditions of Approval (COA) will require the developer to pay the proportionate reimbursement amount of the City’s investment, as calculated per the above example, within ten (10) business days of the project approval.
Public Notice
The public was provided notice of this agenda item by posting the City Council agenda on the City’s official bulletin board outside City Hall and making the agenda and report available at the City’s website and at City Hall located at 2415 University Avenue, East Palo Alto. Additionally, the public was provided electronic advance notice of the study session through a notification sent from the City’s email contact database which contains hundreds of resident and stakeholder emails.
Environmental
The proposed action does not constitute a “project” with the meaning of the California Environmental Quality Act (“CEQA”) pursuant to CEQA Guidelines sections 15378(b)(4) and (5) in that it is a governmental fiscal, organizational or administrative activity that will not result in direct or indirect changes in the environment. No action or decision on the Project will occur at this study session. As discussed above, a draft Supplemental Environmental Impact Report is under preparation for the proposed Specific Plan update.
When the DSEIR public comment period begins later this year (approximately in October 2023), a Notice of Availability (NOA) will be distributed as required by CEQA law, and the document will be posted on the project website. After the 45-day public comment period ends, the City will consider and respond to substantive comments received on the draft SEIR and compile a response to comments document. Once the responses and revisions are complete, a final SEIR will be released, consisting of the response to comments document and the draft SEIR. The final SEIR will be considered by the City Council for certification in compliance with CEQA.
Attachments
1. Resolution