1 Dmitry Galkin
From: Steven Spielberg <[email protected]> Sent: Friday, June 5, 2020 5:00 PM
To: Dmitry Galkin
Cc: James Kemper; Sonia Suresh
Subject: RE: 1318 4th St - Clarifying questions following presentation Attachments: Santa Monica - Grocery Outlet Letter regarding New Development.pdf; B-REV2.pdf; A-REV.pdf; Gallery Food Court.pdf; Diagram connecting 3rd court to Promenade.pdf; 1318 4th St-RFP Interview Follow Up-2020-06-05.pdf
EXTERNAL
Dima and Jim,
Thank you again for your continued interest in our proposal. We remain VERY enthusiastic about the possibility of working with you to create an iconic project in downtown Santa Monica. To reiterate my comments during our interview, we remain very flexible with all aspects of our proposed project. If selected, we will work with your team as well as seek input from local groups to ensure we are providing a building that will work well for the downtown community, the future residents, as well as tenants that will ultimately occupy the ground floor.
Attached you will find:
Answers to your questions
A revision of our ground floor plan demonstrating the connections to 3rd Court and the Promenade An alternative ground floor demonstrating one possible retail option and including a paseo from 3rd Court through the building to 4th Street, opening into a plaza that might include seating Areal view showing the direct connection from the Promenade through the Gallery, over 3rd Court and into our project
A letter from Grocery Outlet with additional information supporting their interest and demonstrating the location’s desirability for other grocers.
As always, we look forward to any other question you have and working with you as we move forward with the process.
Thanks again!
Steve
From: Dmitry Galkin <[email protected]>
Sent: Wednesday, May 27, 2020 7:47 PM
To: Steven Spielberg <[email protected]>
Cc: James Kemper <[email protected]>; Sonia Suresh <[email protected]> Subject: 1318 4th St ‐ Clarifying questions following presentation ADVISORY: This email is from an external sender. Thank you.
Hi Steve,
Thank you for your team’s presentation last Tuesday. The evaluation committee has a few clarifying questions for you. Please provide your answers by 5:00 pm on Friday, June 5. 2 1. Our understanding is that NPLH funding in LA County was oversubscribed and forward committed. If our understanding is incorrect, please explain why. If our understanding is correct, please identify a substitute(s) that could replace that funding source in your Sources and Uses.
2. The committee would like to understand how you will ensure the success of the ground-floor commercial use. Your project identifies a plan to use the space for a grocery store. How would you go about ensuring that the space could be successfully leased and operated for such uses? Please describe any market analysis you have completed to demonstrate that the proposed commercial space can attract and sustain the proposed uses. Additionally, the committee would like to know what you consider as a viable alternative to your team’s proposed ground-floor commercial use and how the alternative use might be successful?
3. How would you enhance the connections from the project to 3rd Court and the Promenade, as well as north-south from the project? Visuals would be appreciated.
Dima Galkin
Senior Development Analyst
City of Santa Monica
Housing Division
[email protected]
310-458-2201 x5010
Expanding the range of opportunities for all by
developing, managing and promoting quality
affordable housing and diverse communities.
18801 Ventura Boulevard, Suite 300, Tarzana, CA 91356 | (310) 526-3209 CALIFORNIA 22 Pelican Way, San Rafael, CA 94901 | (415) 258-1800 | CA Lic. 853495 HAWAII 1001 Bishop Street, #2880, Honolulu, HI 96813 | (808) 523-8826 | HI Lic. RB-16985 www.EAHHousing.org
1318 4th St
RFP Presentation Follow-Up
June 5, 2020
1. Our understanding is that NPLH funding in LA County was oversubscribed and forward committed. If our understanding is incorrect, please explain why. If our understanding is correct, please identify a substitute(s) that could replace that funding source in your Sources and Uses.
EAH concurs with the City’s understanding that NPLH funds have been forward committed through the rest of 2020. Through conversations with LACDA staff, however, we expect the next NPLH funding round to be Winter/Spring 2021. Given the time for RFP developer selection and formal execution of an agreement, we do not anticipate this timing to be an issue for the project.
While the timing and availability of NPLH funds does not appear to be an issue, we have looked at several State Housing and Community Development (HCD) programs that would be a good alternative. The HCD Transit-Oriented Development Program (TOD) aligns well with the other sources included in the pro-forma, specifically the AHSC program and the IIG program. An updated sources and uses for both proposals is included should this switch need to be made.
While the TOD program is a competitive funding source, we believe this site will score well given its proximity to the Expo Line, other existing transit infrastructure, the affordability level of the project, the proximity to a job center, and the other amenities surrounding the area.
The TOD program is funded by Proposition 1, the Veterans and Affordable Housing Bond Act of 2018. A total of $150 Million was allocated in the bill for the TOD program. The current NOFA will disburse $75 Million, so a future round is anticipated for the remainder of the funds.
Expanding the range of opportunities for all by
developing, managing and promoting quality
affordable housing and diverse communities.
18801 Ventura Boulevard, Suite 300, Tarzana, CA 91356 | (310) 526-3209 CALIFORNIA 22 Pelican Way, San Rafael, CA 94901 | (415) 258-1800 | CA Lic. 853495 HAWAII 1001 Bishop Street, #2880, Honolulu, HI 96813 | (808) 523-8826 | HI Lic. RB-16985 www.EAHHousing.org
Updated Sources and Uses
120-unit scenario
150-unit scenario
Perm Sources Uses of Funds
Source Total PU Use Total PU
Conventional Bank Loan 18,811,869 156,766 Acquisition - - LA CDA 7,000,000 58,333 Construction 54,337,697 452,814 AHSC 19,842,120 165,351 Arch & Engineering 1,924,750 16,040 IIG 3,000,000 25,000 Construction Interest & Fees 2,661,834 22,182 TOD 2,775,084 23,126 Permanent Financing 731,496 4,794
LP Capital 21,030,788 175,257 Legal 100,000 833
Deferred Fee 2,620,034 21,834 Entitlement & Permit 1,751,813 14,598 GP Equity 1,878,585 15,655 Other Soft Costs 2,192,340 18,270 Contingencies 4,912,080 40,934
Reserves 1,147,852 9,565
Developer Fees 7,198,619 59,988
Total 76,958,480 $ 641,321 $ 76,958,481 $ 641,321
Perm Sources Uses of Funds
Source Total PU Use Total PU
Conventional Bank Loan 18,427,126 122,848 Acquisition - - LA CDA 7,000,000 46,667 Construction 57,886,453 385,910 AHSC 19,972,124 133,147 Arch & Engineering 1,924,750 12,832 IIG 3,000,000 20,000 Construction Interest & Fees 4,019,409 26,796 TOD 6,977,410 46,516 Permanent Financing 772,483 4,027
LP Capital 23,074,150 153,828 Legal 100,000 667
Deferred Fee 2,353,300 15,689 Entitlement & Permit 2,101,146 14,008 GP Equity 2,558,977 17,060 Other Soft Costs 2,192,340 14,616 Contingencies 5,289,767 35,265
Reserves 1,164,461 7,763
Developer Fees 7,912,276 52,749
Total 83,363,085 $ 555,754 $ 83,363,086 $ 555,754
Expanding the range of opportunities for all by
developing, managing and promoting quality
affordable housing and diverse communities.
18801 Ventura Boulevard, Suite 300, Tarzana, CA 91356 | (310) 526-3209 CALIFORNIA 22 Pelican Way, San Rafael, CA 94901 | (415) 258-1800 | CA Lic. 853495 HAWAII 1001 Bishop Street, #2880, Honolulu, HI 96813 | (808) 523-8826 | HI Lic. RB-16985 www.EAHHousing.org
2. The committee would like to understand how you will ensure the success of the ground-floor commercial use. Your project identifies a plan to use the space for a grocery store. How would you go about ensuring that the space could be successfully leased and operated for such uses? Please describe any market analysis you have completed to demonstrate that the proposed commercial space can attract and sustain the proposed uses. Additionally, the committee would like to know what you consider as a viable alternative to your team’s proposed ground-floor commercial use and how the alternative use might be successful?
It is generally recognized that Santa Monica has been under-served by grocery stores, and that the industry trend toward larger store sizes in a community with rapidly increasing land prices has exacerbated that problem. However, when developing a redevelopment plan, it is always best to include potential tenants early in the planning process to confirm their level of interest and required store sizes.
With that in mind, we reached out early in the development of our RFP response to Grocery Outlet: a national grocery chain that is enjoying great operating success throughout the Western United States, that operates small-format stores of approximately 18,000 square feet, that embraces local community engagement, and that does not currently operate a store in Santa Monica. Further, the Vice President – Real Estate for Grocery Outlet is Pat Barber, a decades-long veteran of the grocery store industry in Southern California with deep experience in developing urban grocery stores.
In our initial conversations with Mr. Barber, we shared data and other information about the grocery store landscape in Santa Monica, including our understanding of the reasons for potential store success in the community. However, because of Mr. Barber’s deep knowledge of the trade area, including his understanding of competitor store volumes, he and the team at Grocery Outlet were keenly aware of the opportunity to be a part of this community and what the company needed to do to be a successful part of this project.
Please see the enclosed letter dated June 2, 2020 from Mr. Barber, which provides a detailed and data-driven response to the City’s questions about the potential for grocery store success in this project.
Also enclosed with this response is an Alternative Retail Plan labeled “Diagram B” by Santa Monica-based VTBS Architects, led by Jan Van Tilburg, who knows this area extremely well. Since inception, our project team has considered alternative floor layouts and design for non-grocery retail uses, which we prepared in the event that either community goals or actual tenant interest dictated a different approach for ground floor uses.
Expanding the range of opportunities for all by
developing, managing and promoting quality
affordable housing and diverse communities.
18801 Ventura Boulevard, Suite 300, Tarzana, CA 91356 | (310) 526-3209 CALIFORNIA 22 Pelican Way, San Rafael, CA 94901 | (415) 258-1800 | CA Lic. 853495 HAWAII 1001 Bishop Street, #2880, Honolulu, HI 96813 | (808) 523-8826 | HI Lic. RB-16985 www.EAHHousing.org
As shown in Diagram B, we have incorporated several development goals:
• Designed a square footage mix of flexible large and small retail spaces in order to “widen the net” for potential retail/service/entertainment/restaurant users who would be interested in being a part of this project; • Designed a “major tenant” space (Tenant #1) of approximately 10,000 square feet fronting 4th Street that can either be occupied by a single retail/entertainment user, or can be easily divided into two smaller spaces – each with visibility to 4th Street and direct access to the project Paseo described below;
• Designed three 1,500 square foot retail spaces (Tenants #2-4) that can be leased to single retail/restaurant/service users fronting 4th Street, or can be easily combined as needed to create larger spaces;
• Created a wide, well-lit, walkable “Paseo” through the project to 3rd Court and Third Street Promenade, thereby enabling direct connection between the tenants on both sides of the project;
• In order to provide additional connection to 3rd Court, we located the project’s proposed “Service/Work Non-Profit” space, along with two spaces for retail/service tenants (Tenants #5-6) adjacent to the project Paseo and the pedestrian connection point to 3rd Court.
We believe that this plan provides a flexible, viable, and well-conceived alternative to our single-tenant grocery plan and allows the project the opportunity to pivot to different ground floor commercial uses if needed.
3.How would you enhance the connections from the project to 3rd Court and the Promenade, as well as north-south from the project? Visuals would be appreciated.
To enhance the connections from the project to 3rd Court and the Promenade, we have added a rear entrance to the ground floor. As shown on diagram A-REV, this new entrance is directly across Third Court from the entrance to the existing Gallery Food Hall, which flows through to and opens onto the 3rd St. Promenade. For reference, we have also included an areal view demonstrating the direct path from the Promenade into our proposed project as well as photos of both frnt and rear entrances to the Gallery.
Per Question 2 above, we have also included a drawing of our alternate retail layout labeled BREV2. As you’ll see, that scenario creates a Paseo running directly through the building, directly connecting Third Court to 4th Street, and further enhancing the connection through the Gallery to the Promenade. Additionally, color inserts and coordinated plantings throughout the front plaza, Expanding the range of opportunities for all by
developing, managing and promoting quality
affordable housing and diverse communities.
18801 Ventura Boulevard, Suite 300, Tarzana, CA 91356 | (310) 526-3209 CALIFORNIA 22 Pelican Way, San Rafael, CA 94901 | (415) 258-1800 | CA Lic. 853495 HAWAII 1001 Bishop Street, #2880, Honolulu, HI 96813 | (808) 523-8826 | HI Lic. RB-16985 www.EAHHousing.org
the Paseo and the 3rd court exit area will create a natural flow from the 4th St entrance to the 3rd Court exit. Signage that follows the same aesthetic as the rest of Downtown Santa Monica will offer continuity with existing Downtown Santa Monica identity.
As Diagram A and B show, we are also providing a positive street-side presence on both 4th St and 3rd Court through the design of the plaza and activation of the spaces facing both roads. In Diagram B we have included tenant spaces that open to both street frontages which will attract pedestrian activity. The increased plaza area in Diagram B can also be used for potential restaurant outdoor seating creating a lively space for socializing. The angled cut of the plaza in both scenarios was intentionally added to invite people towards the front entrance. In both scenarios the retail areas will have attractive, lively, and welcoming store front design.
Abode Communities | 1149 S. Hill Street, Suite 700, Los Angeles, CA 90015 | (213) 629-2702 | abodecommunities.org June 5, 2020
Mr. James Kemper
City of Santa Monica
Housing and Economic Development Department, Housing Division 1901 Main Street, Suite B
Santa Monica, CA 90401
RE: Response to Questions
1318 Fourth Street Affordable Housing Development, RFP #243 Dear Mr. Kemper:
On behalf of Abode Communities, thank you for the opportunity to provide additional information in support our proposal for The Terraces at Fourth. The narrative below and enclosed design package provide responses to the evaluation committee’s additional three questions received from Dmitry Galkin on May 27, 2020.
1. We know that some developments use NPLH funding and noticed you did not include it. Please describe why this source was not included in the proposal? In Abode Communities’ financing strategy for The Terraces, we sought subsidy programs that had the strongest certainty of future funding availability and long‐term feasibility, allowed for flexibility in the targeted special needs population, and provided additional financial benefits for the City of Santa Monica. As such, Abode Communities’ financing strategy favored the Affordable Housing and Sustainable Communities (AHSC) program over No Place Like Home (NPLH) for the following reasons:
Funding Availability and Timing: Both NPLH and AHSC are administered through the Department of Housing and Community Development. However, NPLH is funded primarily through one‐time revenue bonds, while AHSC program funds come from the ongoing proceeds of Cap‐and‐Trade auctions and are anticipated to be a continuing source of subsidy for affordable housing and transit infrastructure. Consultation with Los Angeles County Development Authority (LACDA) staff and Abode Communities’ financial consultant, California Housing Partnership (CHPC) indicated there will only be one remaining round of NPLH, occurring in the first or second quarter of 2021.
Abode Communities
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Given overwhelming demand for the remaining funds in the program, the final round will be highly competitive and is likely to prioritize projects with completed entitlements. Abode Communities is concerned that this timeframe will not align with a robust community engagement process and the requirement to secure Coastal Commission approval. CHPC confirmed this concern and advised against relying on NPLH at this time. Abode Communities would strongly consider applying for NPLH funding if the timing aligns, although there are other factors in favor of AHSC, as discussed below.
Abode Communities also considered applying for a Capitalized Operating Subsidy Reserve (COSR) through the NPLH program. While this remains a potential strategy if other sources of rental subsidy are not available, it brings with it some concerns about the long‐term sustainability of property operations. Utilizing a COSR is more restrictive due to annual limits on subsidy drawdown and prohibitions against utilizing the funds for certain fees that are typically eligible under other rental subsidy programs. Further, the 15‐year term of the COSR, which is shorter than typical 20‐year rental subsidy contracts, can create challenges in Year 15 transitions.
Restriction on Targeted Special Needs Population: NPLH restricts special needs units to individuals with a severe mental illness. While Abode Communities anticipates serving these high‐acuity households at The Terraces on Fourth, imposing the more narrow restriction required by NPLH funding would limit our ability to serve households experiencing homelessness that do not fit within NPLH’s target population. Additional Benefit to the City: Abode Communities also chose to include AHSC funding rather than NPLH because of the additional benefits it can bring to communities through grant funds for transit projects. The AHSC program prioritizes the reduction of Green House Gas emissions through minimizing Vehicle Miles Traveled, which aligns well with the City of Santa Monica’s focus on sustainability. As discussed during Abode Communities’ May 19, 2020 interview, the AHSC program pairs capital for affordable housing projects with grants for transit infrastructure. Abode Communities would partner with the City of Santa Monica to identify sustainable transportation infrastructure and transportation‐related amenities that could be funded by an AHSC grant.
2. The committee would like to understand how you will ensure the success of the ground‐floor commercial use. Your project identifies a plan to use the space for a bookstore, café, boutique, and workshop. How would you go about ensuring that the space could be successfully leased and operated for such uses? Please describe any market analysis you have completed to demonstrate that the proposed commercial space can attract and sustain the proposed uses. Additionally, the committee would like to know what you consider as a viable alternative to your team’s proposed ground‐floor commercial use and how the alternative use might be successful? Ensuring a Successful Ground‐Floor Program
The ground‐floor commercial program proposed by Abode Communities incorporates a level of flexibility in both design and financing that well‐positions it to adapt to market uncertainty.
Abode Communities
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Delivering a successful ground‐floor commercial program begins with a responsive design informed by the expertise of the development team’s commercial broker, Cushman & Wakefield, and early outreach to potential end‐users. Tenant spaces would be designed with venting shafts to allow for future food uses, even if not included in the initial leasing plan. Design of the largest retail space intended for the independent bookstore would allow for demising it into two separate units should market demands change in the future. Similarly, the workshop space along 3rd Court would be designed as a “blank canvas” with the opportunity to shift its interior layout depending on the needs of the nonprofit end‐user.
Another key strategy in ensuring the success of the commercial program is close partnership with Abode Communities’ commercial leasing team. As discussed in Section 2.e of the proposal for The Terraces, Abode Communities will engage Cushman & Wakefield to drive the marketing and lease‐ up of the ground‐floor program. The Cushman & Wakefield team specializes in both landlord and tenant representation for urban and high‐street retail and has extensive experience throughout Santa Monica and other communities with similar market dynamics. Cushman & Wakefield’s marketing plan would include: 1) preparing a merchandising plan for each category of users; 2) distributing marketing materials highlighting the property and surrounding area, amenities, and other retailers; 3) posting signs at the property; and 4) creating a marketing website.
To encourage tenant success, once marketing commences, Cushman & Wakefield would qualify prospective tenants by the number of units within their company, the strength of their financial statements, and total management experience. Below‐market rents have been proposed to make the project accessible to local vendors that may not have as broad brick‐and‐mortar experience as is often required by traditional commercial developments and facilitate their success. Abode Communities would also consider offering an even lower teaser rate to help tenants during the ramp up period. Finally, spaces would be delivered in a vanilla shell condition with a tenant improvement allowance to lessen the financial burden at start up. Of note, the financing for the project does not assume a commercial loan, which allows for flexibility in how rents and incentives are structured as the project is not reliant on commercial income to support debt service.
Market Analysis
The proposed commercial ground‐floor program was informed through outreach to local stakeholders, discussions with potential tenants, survey of existing retail offerings, and review of market data provided by Cushman & Wakefield and available from Downtown Santa Monica, Inc. (DTSM). Stakeholder conversations included engagement with DTSM’s Chief Executive Officer, Kathleen Rawson, then‐CEO of Vroman’s Bookstore, Allison Hill, staff from Cultural Affairs, and two Downtown Santa Monica commercial developers. As discussed above, lease rates were set below market with the intention of making the project accessible to local retailers and cultural organizations.
Alternative Use
Abode Communities is confident in its ability to successfully deliver a ground‐floor commercial program that is accessible to local and independent businesses, fills a gap in Downtown Santa Monica commercial offerings, and is compatible with the residential program. In considering Abode Communities
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alternative uses, Abode Communities strives to maintain these core objectives. A potential alternative that would meet these objectives is an incubator marketplace that would serve as a space for newer local entrepreneurs, as well as more established retailers. While this is a preliminary concept, Abode Communities has had informative discussions with Citibank representatives involved in the Citi Test Kitchens initiative located at two Urbanspace markets, and retail development expert Susan Fine, who developed PopStart – a retail incubator in New York City.
Given the proximity to The Gallery food hall, Abode Communities envisions that the incubator marketplace would target non‐food vendors, although the ultimate tenancy would depend on demand. Abode Communities would retain the nonprofit workshop and consider expanding the space to serve more organizations and broader programming. To ensure success of this alternative concept, Abode Communities would engage a specialized development consultant with expertise in similar developments and seek a partnership with the City of Santa Monica and DTSM to create a vendor outreach program.
Abode Communities considered incorporating other uses identified in the RFP, such as nighttime activities or entertainment venues. However, based on our organization’s experience serving special needs populations and input from our services partner St. Joseph Center, we were concerned about the compatibility of these uses with the high‐acuity resident population targeted in the residential program. The current health and economic crisis and uncertain future of theaters and other entertainment venues further discouraged our team from pursuing these alternatives. Abode Communities continues to be confident in the proposed commercial program, but looks forward to the opportunity to adapt this program based on City input and the results of robust community engagement if selected to move forward with developing the property.
3. Please elaborate on the visuals you shared during the interview showing the connections from the project to the future plaza on 4th St, 3rd Court, and the Promenade, as well as north‐south. We are not suggesting any change to the connections, we would just like more information.
As depicted in the updated Site Connectivity diagram attached to this letter, enhancing connections through the project site is a fundamental element of Abode Communities’ development proposal for The Terraces. Parking Structure 3 is currently used as an informal mid‐block passage from commercial and parking uses on 4th Street to 3rd Court through The Gallery and onto the Promenade. The proposed ground‐floor layout of The Terraces seeks to improve and formalize this connection, as well as activate 3rd Court and improve movement around the site. A complete set of the design concept shared during the interview, including an updated version of the Site Connectivity diagram are enclosed.
Connections from the project to the future plaza on 4th Street and north‐south The project site slopes along 4th Street from north to south and from east to west. Entrances to the retail spaces are flush with the sidewalk to create a seamless transition for an intuitive street‐level experience as pedestrians walk north‐south along the 4th Street sidewalk and across the proposed crosswalk. The relocation of the crosswalk depicted in the Site Connectivity diagram better aligns with the future green space at 4th and Arizona with the entrance to The Terraces’ atrium space. The Abode Communities
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second‐floor resident center and second‐ and sixth‐floor terraces are oriented toward the future plaza to provide a further visual connection.
Connection to 3rd Court and the Promenade
The interior atrium serves as the focal point of the ground‐floor program and draws visitors into and through the project with inviting design elements that include high ceilings, light wells from the deck above, and public art. The project entrance from 3rd Court has wide continuous steps and an accessible ramp that aligns with the entrance to The Gallery food hall and then leads through to the Promenade. A two‐foot building setback along 3rd Court widens the alley and creates an opportunity for enhanced eye‐level greenery and art work. The open design of the Workshop along 3rd Court with garage‐style roll‐up doors creates additional opportunities to draw people to 3rd Court. Abode Communities met with The Gallery’s owner while developing the ground floor concept and would continue the dialogue regarding strategies to activate 3rd Court and enhance connections between the projects.
Connecting Santa Monica Blvd. and Arizona Ave. via 4th Street and 3rd Court The design concept for The Terraces seeks a balanced mixed‐use approach that maintains a commercial street frontage and ground‐level along 4th Street and fills in the gap currently created by Parking Structure 3. Pedestrian‐friendly urban design elements along 4th Street and activation of 3rd Court will encourage pedestrian activity along both, connecting activities along Santa Monica Blvd and Arizona Avenue. The overall concept envisions a vibrant and safe flow of people, reinforcing the pedestrian nature of Downtown Santa Monica.
Thank you for your continued consideration of Abode Communities’ proposal for The Terraces at Fourth.
We remain excited about the opportunity to collaborate with the City of Santa Monica and the surrounding community on this exciting and transformative development opportunity.
Sincerely,
Robin Hughes
President & Chief Executive Officer
Abode Communities
(213) 225‐2762
[email protected]
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View Looking South
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View Looking North
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Courtyard – 2nd Floor
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Terrace – Roof Level
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1 Dmitry Galkin
From: David Cacciapaglia <[email protected]>
Sent: Friday, June 5, 2020 3:01 PM
To: Dmitry Galkin
Cc: James Kemper; Daisy Miguel; Jesus Hernandez
Subject: RE: 1318 4th St - Clarifying questions following presentation Attachments: MPRE-CCSM 4th Street Ground Floor Study.pdf
EXTERNAL
Dear Mr. Galkin,
Community Corporation of Santa Monica and Metropolitan Pacific are pleased that the City of Santa Monica continues to consider our organizations as a potential partner for this development opportunity. Below, please find Community Corp’s and Metropolitan Pacific’s responses to the follow-up questions that were sent via email on May 27, 2020.
We would appreciate any updates that the evaluation committee may have in terms of timeline and the selection process. We look forward to further discussing this exciting project with the evaluation committee.
Sincerely,
Community Corporation of Santa Monica
Metropolitan Pacific
1. We know that some developments use NPLH funding and noticed you did not include it. Please describe why this source was not included in the proposal? We wanted to ensure that the approach we took to the financing of this development was as realistic as possible. To this end, our initial response to the City did not include the No Place Like Home (NPLH) funding because there is uncertainty regarding the future availability of this funding source. The Los Angeles County Development Authority staff have indicated that they do not have a definite schedule for the next NPLH funding cycle. Given this information, we had to assume that the sole opportunity to access these funds would be in the currently scheduled Spring 2021 NPLH NOFA. Given NPLH threshold requirements for readiness, our assessment is that the development will not be ready to access these funds by Spring 2021.
Furthermore, LACDA has a significant back-log of funding commitments in their pipeline that they would need to clear before issuing funds to new development opportunities. For these reasons, we chose not to assume NPLH funding in the financing strategy for the Project. Although no additional NPLH funding rounds have been announced beyond the 2021 round, the development team will continue to monitor the NPLH funding announcements. If the funding is replenished and made available, we will be prepared to submit a funding application request at that time.
2. The committee would like to understand how you will ensure the success of the ground-floor commercial use. Your project identifies a plan to use the space for a bowling alley and entertainment venue. How would you go about ensuring that the space could be successfully leased and operated for such uses? Please describe any market analysis you have completed to demonstrate that the 2 proposed commercial space can attract and sustain the proposed uses. Additionally, the committee would like to know what you consider as a viable alternative to your team’s proposed ground-floor commercial use and how the alternative use might be successful? Our anchor tenant for the commercial component of the Project is Brooklyn Bowl. We had been in discussions with Brooklyn Bowl regarding locating in Santa Monica prior to the release of the RFP, and they joined our team for our response. We believe they will be an incredible addition to the both the Downtown urban fabric and the Santa Monica entertainment scene.
Brooklyn Bowl has been trying to establish a presence on the West Coast, in particular the Los Angeles area, for over 3 years. Santa Monica is an ideal location for them, not only for the obvious attributes of the City, but also due to the complete lack of comparable entertainment venues on the westside of Los Angeles. The lack of options is mainly due to the significant cost of doing business, particularly rent, and the lack of suitable and economically attractive properties that would fit an entertainment provider’s needs. As a result, Brooklyn Bowl had been unable to locate a venue for their premises until we proposed the below grade space at the Project. Their experience in New York, Nashville, and Las Vegas in addition to their research on the Southern California entertainment markets has convinced them, and us, that Downtown Santa Monica has the demographics, visitor profile, ease of access, and lack of competitive venues necessary to establish a highly successful Southern California location. We have a signed letter of intent with Brooklyn Bowl for a twenty-year (initial term) lease and will have a fully executed lease with them prior to executing the ground lease with the City. Brooklyn Bowl has the financial strength to fully back their commitment for the entire term of the lease.
In the unlikely event that Brooklyn Bowl is unable to fulfill their lease commitment for the full term, we have identified several alternative uses for the below grade space. These uses include:
Gym
Grocery Store
Pharmacy
Sports Bar
Night Club
Screening Rooms
Media Production Rooms
Recording Studios
Event Space
Playhouse
Activity Space (trampoline, parkour, multipurpose gym, play space, etc.) Additionally, the design of the structure allows the below grade space to be tied to the street level premises and storefronts so that the basement area can be integrated with ground level operations. This will allow any use that does not require a significant amount of windows to occupy the space. Some examples of this kind of arrangement in downtown Santa Monica include Urban Outfitters, the Gap, and the former Banana Republic. The proposed Trader Joe’s in the 500 Broadway development includes 24,000 SF of below grade commercial as well. We are also aware of other urban environments where such space exists and is well utilized. Because the below grade space leases at a considerable discount to ground level space, we believe it will be relatively easy to find a replacement tenant if the need arises.
The other commercial premises proposed for our development are designed with small businesses in mind. With Brooklyn Bowl as our anchor, we will be able to consider smaller, less creditworthy tenants for 3 the balance of the commercial component of the project. There is significant demand for this kind of space at the rental rates we have used for our projections.
There is also significant demand for below market office space from non-profits in the area. We have designed the ground level commercial premises to allow for tenants to occupy the rear of the commercial spaces and use the alley for access. These alley facing premises can be leased at a discount to tenants that would otherwise not be able to afford space in the immediate area. Please see the attachment (“MPRECCSM 4th Street Ground Floor Study”) which details an option of these commercial spaces.
3. How would you enhance the connections from the project to 3rd Court and the Promenade, as well as north-south from the project? Visuals would be appreciated.
We have attached to this email (“MPRE-CCSM 4th Street Ground Floor Study”) a new design for the rear of the ground floor that includes a landscaped plaza and alley facing premises. As part of the redesign, and after discussions with Southern California Edison, we relocated the transformer and electrical switchgear rooms below grade. This allowed us to reorient the loading area and make room for a plaza at the rear of the three northern most commercial premises. With the plaza in place, we were able to add glass walls at the rear of the commercial areas and provide an inviting entrance to the back of the building, creating separate, alley facing premises that can be leased at a discount to the ground floor 4th Street facing lease rate. Please note that the dotted line on the floor plan depicting the rear facing premises is place holder. The premises can be configured in a multitude of ways and can accommodate one or more tenants. We have also added green walls to the north and south of the plaza and lighting above the alley that will serve to activate the area and increase the feeling of safety.
The landscaped plaza, green walls, and lighting, combined with the entrances to the Westside Comedy Theater and the Gallery Food Hall that are across the alley, will bring a new energy to the alley that has not been seen in Downtown. Additionally, we would like to explore the possibility of collaborating with our neighbors in using the alley after regular business hours for outdoor dining in the early evenings, further activating the alley space.
David Cacciapaglia
201 Santa Monica Boulevard
Suite 620
Santa Monica, California 90401
Direct: (310) 260-6999
Cell: (917) 301-9334
[email protected]
www.metpac.com
DRE# 01978644
From: Dmitry Galkin <[email protected]>
Sent: Wednesday, May 27, 2020 7:47 PM
To: Jesus Hernandez <[email protected]>; David Cacciapaglia <[email protected]> Cc: James Kemper <[email protected]>; Daisy Miguel <[email protected]> Subject: 1318 4th St ‐ Clarifying questions following presentation Hi Jesus and Dave,
4 Thank you for your team’s presentation last Tuesday. The evaluation committee has a few clarifying questions for you. Please provide your answers by 5:00 pm on Friday, June 5.
1. We know that some developments use NPLH funding and noticed you did not include it. Please describe why this source was not included in the proposal?
2. The committee would like to understand how you will ensure the success of the ground-floor commercial use. Your project identifies a plan to use the space for a bowling alley and entertainment venue. How would you go about ensuring that the space could be successfully leased and operated for such uses? Please describe any market analysis you have completed to demonstrate that the proposed commercial space can attract and sustain the proposed uses. Additionally, the committee would like to know what you consider as a viable alternative to your team’s proposed ground-floor commercial use and how the alternative use might be successful?
3. How would you enhance the connections from the project to 3rd Court and the Promenade, as well as north-south from the project? Visuals would be appreciated.
Dima Galkin
Senior Development Analyst
City of Santa Monica
Housing Division
[email protected]
310-458-2201 x5010