CITY OF POMONA
COUNCIL REPORT
February 26, 2024
To: Honorable Mayor and Members of the City Council
From: Anita D. Gutierrez, City Manager
Submitted By: Kirk Pelser, Economic Development Director SUBJECT: SELECTION OF A DEVELOPMENT TEAM FOR THE DOWNTOWN DEVELOPMENT OPPORTUNITY SITE AND DIRECTION TO PREPARE AN EXCLUSIVE NEGOTIATION AGREEMENT RECOMMENDATION:
It is recommended that the City Council take the following action:
Select the Development Team of Village Partners/Arteco Partners/National CORE (Development Team) to move forward in the Downtown Development Opportunity Site Process and direct staff to bring back an Exclusive Negotiation Agreement (ENA) for Approval with the Selected Development Team EXECUTIVE SUMMARY:
The City of Pomona/Vehicle Parking District (VPD) owns Parking Lots 6 & 7 and adjacent vacant property and one commercial building, collectively the Downtown Development Opportunity Site (the “Development Site”). This Development Site had previously been committed to a proposed Maya Cinema project, which ultimately proved infeasible and the related sales agreement with Maya was terminated in 2021. In March of 2022, the Council approved a Request for Qualifications/Proposals (RFQ/P) process with the intent of selecting an experienced development partner to acquire the Development Site and to develop it in a manner that is consistent with Pomona’s vision for the downtown as expressed in the adopted General Plan and The Downtown Pomona Specific Plan. Sale of the Development Site must also comply with the requirements of the State’s Surplus Land Act, which provides for an exemption if a site can accommodate development that will yield at least 300 residential units, with not less than 25% of the units restricted to low or very-low income households. The RFQ/P process initially yielded three responses, which the Council then reduced to two finalists. Staff is now recommending that the Council select the Development Team of Village Partners/Arteco Partners/National CORE to move forward to the next phase, which is negotiation of a DDA.
FISCAL IMPACT:
There is no fiscal impact in selecting the Development Team for the Downtown Development Opportunity Site. All of the subject property is owned by the City and are part of the Vehicle Parking District land inventory. Should the subject property ultimately be sold as a result of this process, the sales proceeds will be deposited into the Vehicle Parking District fund account.
DISCUSSION:
The City currently owns and operates 25 Vehicle Parking District parking lots throughout the Downtown. The District was created between 1951 and 1958, as separate districts and later amended and combined. The District was created to provide equitable and adequate parking to all Downtown businesses, property owners and stakeholders. Since its inception, the character, land uses, boundaries and businesses in the area have changed and/or evolved. Businesses and land uses in certain areas of the Downtown that once required public parking no longer exist, uses have changed, or businesses provide their own private parking.
The City Council has expressed a desire to see new and innovative mixed-use development in the Downtown. The subject Development Site is comprised of Parking Lots 6 & 7, adjacent vacant property and one commercial building and was previously intended for development of a multi-screen cinema project with ancillary commercial retails uses. The previously planned cinema project proved infeasible and in 2021 the Council terminated the related prior agreement to sell the property. In an effort to accommodate new development, the Council directed staff to prepare a competitive RFQ/P process with the intent of selecting a highly qualified and experienced development partner to acquire the Development Site and to articulate a vision and scope for its development in a manner consistent with Pomona’s General Plan and the Downtown Specific Plan.
The sale of surplus land by a City is largely governed by the State’s Surplus Land Act (SLA) as found in Government Code Section 54220 et seq. In 2019, Assembly Bill No. 1486 was adopted, which amended certain sections of the Surplus Land Act relating to the sale of surplus property. These amendments went into effect on January 1, 2020. The SLA defines surplus land as “land owned in fee simple by any local agency for which the local agency’s governing body takes formal action in a regular public meeting declaring that the land is “surplus” and not necessary for the agency’s use”. The declaration process is required to be supported by written findings. Additionally, AB 1486 amends the SLA by prohibiting local agencies from negotiating land sales and leases of surplus land prior to sending out “Notices of Availability” to designated entities which must including the following:
• California Department of Housing and Community Development (HCD) • Local public entities within the jurisdiction where the surplus land is located. • Developers who have notified HCD of their interest in developing affordable housing on surplus land.
However, the SLA does provide exemptions in certain circumstances for sale of surplus land, including surplus land that is put out to open, competitive bid by a local agency, provided all entities identified in subdivision (a) of Section 54222 will be invited to participate in the competitive bid process, for … [a] mixed-use development that is more than one acre in area, that includes not less than 300 housing units, and that restricts at least 25% of the residential units to lower income households, as defined in Section 50079.5 of the Health and Safety Code, with an affordable sales price or an affordable rent, as defined in Sections 50052.5 and 50053 of the Health and Safety Code, for a minimum of 55 years for rental housing and 45 years for ownership housing” (Government Code section 54221(f)(1)(F)(ii)) (the “SLA Exemption”).
The subject Development Site can accommodate the above described requirements for exemption to the SLA process and the RFQ/P expressly incorporated the applicable requirements.
The Table below lists all of the parcels that comprise the Development Site.
Site Address
APN
Site Name
Zoning
Square Feet
400 W. 2nd St
8341-003-902
“Gist” Building
Specific Plan
4,471
8341-003-903
Vacant land
Specific Plan
2,957
8341-003-904
Vacant Land
Specific Plan
2,515
8341-003-905
Vacant Land
Specific Plan
5,367
8341-003-906
Vacant Land
Specific Plan
2,657
8341-003-907
Vacant Land
Specific Plan
5,261
8341-003-908
Vacant Land
Specific Plan
2,300
8341-003-909
Vacant Land
Specific Plan
5,246
8341-003-901
Public Parking Lot # 6
Specific Plan
30,855
8341-004-902
Public Parking Lot # 7
Specific Plan
31,324
When approving the RFQ/P in March 2022, the Council adopted Resolution No. 2022-53 (Attachment No. 4), declaring the subject property as exempt surplus property per Government Code 54221. This process included a required Notice of Availability, which was sent via email to all parties then registered with the State Department of Housing & Community Development (HCD).
The RFQ/P was created with input from the City Attorney and from our real estate consultant, Keyser Marston Associates (KMA) and represents an industry “best practice” approach for selecting a highly qualified development partner with demonstrated experience in articulating, and successfully implementing, a downtown mixed-use development. Staff and KMA have worked with the two finalists to refine their respective proposals and related financial proformas.
Both teams put forth thoughtful conceptual project site plans and designs that were admirably responsive to the RFQ/P objectives and both proposals have a mixture of market rate and affordable housing, as contemplated by our RFQ/P requirements and as required by the SLA Exemption being utilized. However, the proposal from the second finalist, (The Michaels Organization) is not feasible as a single phase project. Instead they propose to first build the affordable component and then proceed, speculatively, at a later time with the market rate portion. This would result in non-compliance with SLA Section 54222Exemption being utilized, which, again requires that a minimum of 300 residential units be built. Accordingly, staff and KMA are recommending that the Council select the select the Development Team of Village Partners/Arteco Partners/National CORE to move forward to the next phase, which is the negotiation of an Exclusive Negotiation Agreement. Additional details and analysis can be found in KMA’s Memorandum (Attachment No. 2).
ENVIRONMENTAL ANALYSIS:
The proposed action is not subject to CEQA. Selecting a developer to negotiate the terms of a DDA with is not part of a project that has been identified, negotiated, designed or funded. The recommend City Council action should not be interpreted as an approval or a pre-commitment to approve, now or in the future the disposition of the City’s interest in the Development Site to any party on any particular term, or for any particular purpose. Any proposed disposition of the subject property will require future discretionary action of the City Council. As such, the recommended action to the City Council will not result in a direct or indirect physical change in the environment and does not in and of itself constitute a project pursuant to CEQA guidelines Section 15378.
COUNCIL PRIORITIES & GOALS:
City Council Priority 2: Economic Development – Goal J: Encourage the development and maintenance of quality housing opportunities for all.
Prepared by:
_____________________________
Kirk Pelser
Economic Development Director
ATTACHMENT(S):
Attachment No. 1 – Development Team Proposal Summary
Attachment No. 2 - KMA Memorandum
Attachment No. 3 - March 21, 2022 Agenda Report
Attachment No. 4 – Resolution No. 2022-53
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Selection of a Development Team for The Downtown Development Opportunity Site