FOR THE COUNCIL MEETING OF JULY 16, 2024
COUNCIL AGENDA REPORT
TO: City Council
FROM: Interim City Manager Alex Posada
BY: Assistant City Manager Chuen Wu
SUBJECT: Adoption of a Resolution Approving a Sales and Disposition Agreement between the City of Santa Maria and Vernon Property Group, LLC for City Surplus Land in Downtown
Description:
The City Council will consider adopting a Resolution authorizing the City Manager to complete negotiations for the Sales and Disposition Agreement between the City of Santa Maria and Vernon Property Group, LLC, which includes the sale of surplus land on various parcels in Downtown.
RECOMMENDATION:
Adopt a Resolution authorizing the City Manager to complete negotiations for the Sales and Disposition Agreement between the City of Santa Maria and Vernon Property Group, LLC, for various surplus land in Downtown, including parcels identified as Lots 1 through
4. BACKGROUND:
The City Council has consistently identified the revitalization and redevelopment of Santa Maria’s downtown as a goal and priority. The City has adopted plans to establish a vision and to facilitate the redevelopment of downtown, including an update to the Downtown Specific Plan in 2015 and the adoption of the Downtown Streetscape Plan in 2019.
To further stimulate Downtown redevelopment, the City identified specific City -owned parcels for development, including the northerly parking lot adjacent to the old Fallas/Mervyn’s building and Broadway (Lot 1), the northeast and southeast corners of Main and Broadway (Lot 2 and 3, respectively), and the parking lot east of the Ruffoni building adjacent to Lincoln (Lot 4). The City and the Chamber of Commerce worked together to issue a Request for Proposals (RFP) in September 2020, and four proposals were received in response to the RFP. In January 2021, the City selected the Vernon Property Group, LLC (Vernon Group) based on their submitted project design and team qualifications.
The proposed project design included several hundred multi-family housing units, ground- floor commercial retail, and other public amenities, including plazas and open spaces (see Attachment A). This mix of housing, commercial, and gathering spaces, within close proximity to each other, meets the vision of a vibrant and pedestrian -friendly downtown. 2 In the summer of 2021, the City completed initial State Surplus La nds Act requirements, including all required notifications and good-faith negotiations.
In 2022 and 2023, City staff and Vernon Group continued to work together toward a global sales and disposition agreement (SDA) that includes all four identified City -owned lots.
The City and Vernon Group also discussed Surplus Lands Act requirements with State Housing and Community Development (HCD), including the requirement of setting aside 25 percent of all proposed housing units as income -restricted affordable housing. State HCD had initially communicated to the City that each City -owned lot would need a 25 percent housing set -aside, but after additional discussion, HCD agreed that the requirement for affordable housing could be achieved through consolidation by buil ding one affordable housing development on Lot 2.
While Lot 2 will include affordable units, Lot 1 will include most of the community amenities of commercial uses, plazas , and open spaces, thereby mitigating the displacement of open space at Perlman Park. During the past two years, Downtown Permits were approved for other projects downtown, including Heritage Walk Lofts (former Fallas/Mervyn’s), Alvin Newton Apartments (Lot 3), and Cook Street Apartments. The construction plans for both Heritage Walk Lofts and Alvin Newton Apartments are currently in review by the City. Both projects could break ground later in 2024.
DISCUSSION:
On May 7, 2024, City staff provided an overview of the project design and drawings drafted for Lot 1 and Lot 2. As mentioned, Lot 3 includes the previously approved project of Alvin Newton Apartments. Lot 4 is considered as a future option after progress on Lots 1, 2, and 3. The overall project design includes reduced parking compared to what is typically required in the City’s dev elopment standards. The Downtown Specific Plan allows for reduced parking if the project is located within close proximity to the City’s existing parking garages located at Town Center. Staff also recognizes the necessary tradeoffs for achieving the stated downtown vision of a pedestrian -friendly city center.
This tradeoff includes the addition of housing, commercial uses, and gathering spaces in exchange for land and spaces that would otherwise be used for creating parking spaces.
The development proposal incorporates an approach that maximizes the value and potential of a limited infill land area.
The proposed sales and disposition agreement includes four City -owned parcels. The proposed agreement includes project descriptions, design expectations, affor dability components, and performance measures for completion. Detailed information for each lot is as follows:
Lot 1:
Lot 1 (APN 123 -280-026) is approximately two acres in size and is currently an underutilized parking lot for Town Center West, although it is used for the weekly farmer’s market. This lot will include most of the amenities proposed for the overall Downtown revitalization project, including ample plazas, open space, and a reconstruction of Heritage Walk, which serves as a paseo extending west from Broadway. Ground floor commercial uses, including food establishments, will be integrated into these gathering 3 areas, creating an inviting destination environment where visitors can enjoy a meal and gather. The SDA requires a minimum of 20,000 square feet for commercial uses, with a minimum of 10,000 square feet for dining and food establishments. As part of a 6 -story mixed-use structure, residential uses will be built over ground floor parking and commercial uses, including 285 housing units. The SDA will require 75 condominium units out of this housing mix.
Lot 2:
Lot 2 (APN 121-224-035) is approximately 1.12 acres in size and is currently the location for Perlman Park, just south of Union Plaza Apartments. A 6-story apartment building with 150 affordable housing units is proposed on this site (Attachment B). There is recognition of a loss of park space; however, this loss is mitigated by the addition of plazas and open space on the other lots, particularly Lot 1, with new plazas and paseos. The SDA will require that the housing remain affordable to lower-income households, with a minimum overall affordability of 6 0 percent of area median income. The SDA will also require landscaped paths connecting the corner of Main and Broadway to Central Plaza Park, maintaining access for those areas north and east of proposed apartments.
Lot 3:
Lot 3 (APN: 125-320-050) is approximately 0.62 acre in size and is currently a plaza area that includes the firefighters’ and four corners’ memorials. The plaza area is north of Bank of America and west of the Town Center parking garage adjacent to Main Street. The City Council approved Alvin Newton Apartments at this location in October 2023. The project is a six -story, 75,340-square foot mixed -use building with 5,760 square feet of ground floor commercial, 82 apartment units, and an open space/plaza area for the Firefighters’ Memorial (Attachment C). This project is currently in building plan check.
Lot 4:
Lot 4 (APNs: 123 -043-007, 008, 010, 011, 013, 014) is approximately 0.84 acre in size and is currently a parking lot serving the Ruffoni building that houses various City offices, including Community Development and City Engineering. The parking lot also serves other nearby businesses fronting West Main Street. As mentioned, this lot is considered as a future option.
Summary Terms
The City proposes terms to incentivize and stimulate new development on these identified surplus lots to advance City goals of Downtown revitalization and economic development.
The terms are summarized in a table in Attachment D. The Lots are listed in the table in the order of development timing, with Lot 3 scheduled for completion first, then Lots 2 and
1. Vernon Group proposes to construct new mixed -use development, including housing (with 25 percent of the units as income -restricted affordable), commercial uses such as restaurants, and added plazas and open space. To incentivize development, the City offers the parcels at a discounted price, use of the Town Center parking structure, as well as discounts on certain fees. These concessions are subject to performance requirements, including adherence to pr oposed timing for milestones. For each lot, one year is allotted for Planning review and approval, and preparation of construction plans. 4 Six months are allotted for construction plan review and three years are allotted for construction following construction plan approval.
Based on these terms, the City will complete negotiations for the SDA and bring a complete draft of the SDA along with all necessary implementing documents back to the City Council at a future date for final approval.
ATTACHMENTS
Attachment A: Overall concept plan
Attachment B: Lot 2 plan
Attachment C: Lot 3 plan (Alvin Newton Apartments)
Attachment D: Summary Terms