Agenda Report
Fullerton City Council
MEETING DATE: DECEMBER 6, 2022
TO: CITY COUNCIL / SUCCESSOR AGENCY
SUBMITTED BY: SUNAYANA THOMAS, INTERIM DIRECTOR OF COMMUNITY AND ECONOMIC DEVELOPMENT PREPARED BY: SUNAYANA THOMAS, INTERIM DIRECTOR OF COMMUNITY AND ECONOMIC DEVELOPMENT
ELIZABETH HULL, BEST BEST & KRIEGER
SUBJECT: PUBLIC HEARING CONSIDERING DISPOSITION AND DEVELOPMENT AGREEMENT BY AND BETWEEN THE CITY OF FULLERTON AND WESTPARK INVESTMENTS, LLC AND TA PARTNERS FOR THE SALE OF A PROPERTY LOCATED AT 212 EAST SANTA FE AVENUE, FULLERTON, CA (APN 033-030-18) AND FINDING THAT THIS ACTION IS PURSUANT TO CEQA GUIDELINES SECTION 15070 ______________________________________________________________________
SUMMARY
The City is the owner of approximately 2.05 acres of real property at 212 East Santa Fe Avenue. On December 4, 2018, the City entered into an Exclusive Negotiation Agreement (ENA), with the Developer, West Park Investments, LLC and Parkwest Contractors to develop a portion of a City owned public parking lot at the southwest corner of East Santa Fe Avenue and South Pomona, into an upscale boutique hotel.
Since the August 2021 ENA Extension, the project has been modified to construct 140 residential units, 124 room hotel, 3,570 square feet of retail, 3,570 square foot restaurant and 412 parking stalls (City, Residential and Hotel parking).
RECOMMENDATION
Open the public hearing and receive testimony from the public regarding the proposed sale of the Property; Close the public hearing and, if any protest was received regarding the sale of the Property, overrule the protest by a 4/5 majority vote; Adopt Resolution No. 2022-XX.
RESOLUTION NO. 2022-XX – A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF FULLERTON, CALIFORNIA, APPROVING THE DISPOSITION AND DEVELOPMENT AGREEMENT BY AND BETWEEN THE CITY OF FULLERTON AND WESTPARK INVESTMENTS, LLC AND TA PARTNERS FOR THE SALE OF PROPERTY LOCATED AT 212 EAST SANTA FE AVENUE, FULLERTON, CALIFORNIA (APN 033-030-018), AUTHORIZING THE CITY MANAGER TO TAKE ALL ACTIONS NECESSARY TO EFFECTUATE THIS ACTION AND FINDING THAT THIS ACTION IS PURSUANT TO CEQA GUIDELINES SECTION 15070, AN INITIAL STUDY/MITIGATED NEGATIVE DECLARATION
CITY MANAGER REMARKS
If the project is approved by the City Council the estimated direct impact to the City is approximately $799,000 in annual revenues. If successful the project is projected to provide increased economic vitality in the Fullerton downtown region.
PRIORITY POLICY STATEMENT
This item matches the following Priority Policy Statement:
Fiscal and Organizational Stability.
FISCAL IMPACT
Based on the 2022 CBRE analysis provided by the developer, the proposed project is anticipated to have a significant fiscal impact to the City of Fullerton through visitor spending, tax revenue and jobs.
In a representative year, the proposed subject hotel development will have an estimated economic impact of approximately $799,000. In a representative year, the proposed subject hotel will have an estimated economic impact, including both direct and indirect visitor spending of approximately $31,899,000. The City would receive additional TOT tax revenue of approximately $650,000 to $800,000 annually which would place the hotel in the upper bracket of TOT producing hotels in the City. It is conservatively estimated that 233 new local jobs will be created for the proposed hotel.
The analysis of the total tax revenues for the City of Fullerton is limited to measurable tax revenues which include transient occupancy tax (TOT), direct sales tax, business tax, and property tax revenues at the proposed subject project in Downtown Fullerton.
Upon the sale of property, the City would receive $1,400,000 in net revenue.
DISCUSSION
On December 4, 2018, the City entered into an Exclusive Negotiation Agreement (ENA), with the Developer, Parkwest Contractors and West Park Investments, LLC to develop a portion of the site as an upscale boutique hotel on a public parking lot.
On November 19, 2019, September 15, 2020 and August 17, 2021, the City Council approved the first, second and third amendment(s) to the ENA extending the period of exclusive negotiations by 12 months, each year, to allow for additional time to complete the analysis of various components of the Project. The last amended negotiation period is scheduled to terminate on December 31, 2022.
The project has been modified to construct 140 residential units, 124 room hotel, 3,570 square feet of retail, 3,570 square foot restaurant and 412 parking stalls (City, Residential and Hotel parking).
On November 15, 2022, the City Council adopted Resolution No. XX declaring its intent to sell the Property and setting a public hearing for the proposed sale on December 6, 2022.
Before the City Council this evening is the Disposition and Development Agreement (“DDA”) which includes the following substantive deal points:
Open escrow immediately following approval by City Council Close escrow no later than December 29, 2022
Earnest Money Deposit of $100,000
Site shall be operated as subject to a written franchise agreement with a major nationally recognized hotel brand for less than 10 years from the issuance of the Certificate of Occupancy Purchase Price is $1,400,000
Escrow Holdback of $500,000 to address the discovery of any Hazardous Substances discovered on the Property during grading Developer covenants to construct the project consistent with the entitlements and the DDA pursuant to the Schedule of Performance Post-Closing Conditions:
Developer shall use best efforts to entitle the project within 120 days of close of escrow and failure to obtain entitlements within 180 days is a default.
Developer shall use best efforts to submit complete development plans to the City within 180 days of receiving entitlements and failure to obtain within 240 days of receiving entitlements is a default.
If Developer fails to obtain entitlements or submit completed development plans pursuant to the Schedule of Performance the City is entitled to retake possession of the property.
Developer has agreed to indemnify the City for actions related to the project or the approval of the DDA.
Developer has entered into a series of covenants related to maintaining the property on the tax rolls, payment in lieu of sales tax, maintenance of the Property, maintaining the hotel flag and antidiscrimination provisions.
Outside completion date for the project is October 21, 2026.
ANTICIPATED ENTITLEMENT PROCESS (2023)
The property has a General Plan designation as Fullerton Transportation Center Specific Plan and is located within the Fullerton Transportation Center (FTC). The FTC Specific Plan envisioned creating a sustainable transit-oriented neighborhood near the Santa Fe Train Depot and focus growth and development around the train depot to link land use and transit. The main goals of the FTC Specific Plan are to:
Create buildings, public spaces, streets and infrastructure that contribute to a sustainable built environment; Create a mixed-use neighborhood that contributes toward a sustainable Downtown economy; Create a mixed-use and transit-oriented neighborhood that contributes to a sustainable natural environment; and Develop and promote a framework for a sustainable community lifestyle. The Specific Plan also encourages the inclusion of affordable housing in proximity to public transit and new employment opportunities and intended to accommodate a portion of the City’s housing obligation related to the Regional Housing Needs Assessment (RHNA).
The property is within the FTC Specific Plan and would be subject to Major Site Plan Review and possibly Conditional Use Permit (CUP) for a restaurant with on-site alcohol service. The developer conducted a public meeting on October 19, 2022, with roughly 15 members of the public in attendance. Additional public outreach and formal public hearing processes are anticipated to commence in early 2023. The project is going through preliminary review with City Staff related to the proposed project and continues to be modified through comments received by the community and Council/Commission members as well as Staff.
CEQA
This proposed sale of the Property has been environmentally reviewed pursuant to the provisions of the California Environmental Quality Act (Public Resources Code Sections 21000, et seq (“CEQA”)), the State CEQA Guidelines (California Code of Regulations, Title 14, Sections 15000, et seq) and the City’s Local CEQA Guidelines. The Project’s Initial Study/Mitigated Negative Declaration (IS/MND) was prepared pursuant to California Environmental Quality Act (CEQA) (Public Resources Code §§21000-21177) and State CEQA Guidelines §15063 requirements.
The IS/MND and supporting documentation were made available for public review pursuant to State CEQA Guidelines §15070. Seven comment letters were filed with concerns about Environmental Impacts from State and Public Agencies, Union Representatives, and a local resident. Formal responses to these comment letters are incorporated into the Final IS/MND.
Attachments:
Attachment 1 – PowerPoint Presentation
Attachment 2 – Draft Disposition and Development Agreement Attachment 3 – Resolution No. 2022-XX
cc City Manager Eric J. Levitt
Disposition and Development Agreement – Westpark Investments and TA Partners December 6, 2022 - Page PAGE \* MERGEFORMAT 2