City Council
Report
City Council Meeting: July 14, 2022
Agenda Item: 12.A
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To: Mayor and City Council
From: David Martin, Director, City Planning
Subject: Adoption of Resolutions and Introduction and First Reading of an Ordinance to adopt the Ocean Avenue Project Development Agreement Recommended Action
It is recommended that the Council take the following actions:
1. Affirm that the Ocean Avenue Project is exempt from CEQA pursuant to Section 15182 of the California Environmental Quality Act (CEQA) Guidelines;
2. Adopt a resolution certifying the Final Environmental Impact Report (EIR) prepared for the project in accordance with CEQA;
3. Adopt a resolution adopting a Statement of Overriding Considerations to support approval of the Development Agreement based upon the Final EIR and other information provided in the record and adopting a Mitigation Monitoring and Reporting Program;
4. Adopt a resolution amending the 1992 Local Coastal Program Land Use Plan (LUP) for consistency with the 2010 General Plan and 2017 Downtown Community Plan standards for the project site; and
5. Introduce an ordinance for first reading to adopt Development Agreement 13DEV-004 for the Ocean Avenue Project.
Executive Summary
The City Council is asked to consider a proposed Development Agreement for a mixeduse development at the northeast corner of Santa Monica Boulevard and Ocean Avenue (“Ocean Avenue Project”). The project is designed by world-renowned architect Frank Gehry and presents a carefully studied and creative integration of iconic architecture for new construction and adaptive reuse of historic buildings; hotel, dining, and retail uses; a Cultural Uses Campus designed to present world-class exhibitions and programs; housing for a range of income levels and household sizes; and a variety 2 of 52
of publicly accessible open spaces, including a rooftop observation deck that provides a publicly accessible 360° viewpoint of the Santa Monica Bay and beyond.
A development agreement is a contract between the City and a developer that authorizes the type and amount of development that may occur within a specific period of time. Development agreements provide developers with guaranteed development rights in exchange for community benefits. A development agreement must comply with the General Plan but can establish different development standards than provided by zoning regulations. A development agreement can provide greater opportunity to advance local planning policies compared to standard planning entitlements. It is similar to other public review processes where the City Council makes the final decision with the exception that the City Council has more discretion in imposing conditions and requirements on the project since development agreements are negotiated contracts.
The proposed Ocean Avenue Project Development Agreement is provided as Attachment D.
The Applicant, M. David Paul Associates and Worthe Real Estate Group, submitted the Development Agreement application in February 2013 and the project has undergone an extensive City and community review process. Most recently, on May 18, 2022, the Ocean Avenue Project Rendering
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Planning Commission made its unanimous recommendation to approve the project and outlined a series of project refinements for Council’s consideration, many of which the Applicant and staff support, and are reflected in the final project presented for Council’s consideration.
The proposed project is consistent with the City’s 2010 General Plan Land Use and Circulation Element (LUCE) and 2017 Downtown Community Plan (DCP) development parameters and negotiated community benefit priorities identified for the property which is identified as one of three Established Large Sites in the Downtown.
The development site is approximately two acres in size and located at the corner of Santa Monica Boulevard and Ocean Avenue with frontage through to Second Street.
The project presented with this report has been significantly revised and refined in response to community input conducted over the past nine years; updated land use regulations and policy objectives; City review of the circulation, complex historic preservation plan, and overall project design; and community benefit negotiations.
The 2017 Downtown Community Plan codified a rigorous public process for projects on three Established Large Sites to request consideration up to a height limit of 130 feet, subject to a Development Agreement, requirements for additional environmental review, and submittal of a detailed account of how the project meets the community benefit priorities identified for the project site in the DCP: cultural facilities, historic preservation, and affordable housing. Based on this framework, the proposed Development Agreement states the process and timing construction and provides the development standards, conditions, infrastructure, and negotiated community benefits required for the proposed project.
The project proposes a total of approximately 316,750 square feet (SF) of Floor Area, of which 243,630 SF is above grade, 4,940 SF is outdoor dining, and 68,180 SF is below grade. The project Floor Area Ratio (FAR) is 2.95, which is 25.5% less than the DCP’s maximum 4.0 FAR permitted for the site. Building heights vary between 53’ and a maximum of 130’. The project includes on-site repositioning and rehabilitation of two 4 of 52
City-designated Landmarks that would be carefully integrated with the new Cultural Uses Campus. The Project also proposes re-routing of a portion of First Court alley through the project site to allow for a Pedestrian Mall on the southern portion of First Court adjacent to Santa Monica Boulevard. Key project components include the following:
• 120-room full-service hotel, including meeting/banquet space and spa; • 100 residential apartments, inclusive of:
o 11 rent-controlled units;
o 25 deed-restricted affordable units; and
o 64 market-rate units;
• An approximately 35,500 SF Cultural Uses Campus that includes a new museum building and the preservation, adaptive reuse, and on-site repositioning of two designated City Landmark Buildings;
• Approximately 36,100 SF of retail, restaurant, commercial space; • Pedestrian-oriented ground level open spaces;
• An approximately 5,000 SF publicly accessible rooftop observation deck; and • 285 subterranean parking spaces.
As discussed more fully in this report, substantial community benefits have been negotiated as part of the proposed project. The Development Agreement includes a negotiated community benefits package that has a conservative estimated value of $53.3 million. These community benefits align with the six priorities identified in the Downtown Community Plan and the site-specific benefits preferred for a development agreement project on the property.
The construction and commitment to operate a world-class Cultural Uses Campus and provide associated educational and community programming is an extraordinary community benefit that would serve to expand Santa Monica’s art and cultural offerings in a meaningful way for the life of the Project, and the project would contribute to the 5 of 52
City’s economic vitality in a significant way for many years to come. Other community benefits include the preservation and adaptive reuse of two designated Landmark Buildings, deed-restricted affordable housing units, sustainability features, local hiring program, internship program, a contribution to support economic equity initiatives, and publicly accessible open space.
The project was analyzed in accordance with the California Environmental Quality Act and this analysis is contained in the project’s Final Environmental Impact Report (FEIR) (SCH No. 2018121060). An amendment to the 1992 Local Coastal Program Land Use Plan is necessary for consistency with 2010 General Plan and 2017 Downtown Community Plan parameters applicable to the project site.
Key Issues for Consideration
The Council should consider the following key issues in its review of the proposal:
• Whether the proposed project’s negotiated community benefits and mix of uses are consistent with LUCE placemaking objectives that reflect Santa Monica’s values of economic vitality, sustainability, housing for all, historic preservation, outstanding architecture, and safe and efficient all-mode mobility. • The degree to which the project features and negotiated community benefits are consistent with the Downtown Community Plan’s standards for an Established Large Site and the goals and policies that support Downtown as a high-quality, mixed-use district offering expanded opportunities for housing, jobs, arts and culture, and community/visitor gathering places.
• Whether the project appropriately preserves and integrates the two City Landmark Buildings into the Cultural Uses Campus.
• Whether the project supports the City’s public objectives for increasing economic investment, job creation, and City revenue generation to support community services and needs.
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Project Site Information
The project site is approximately 82,500 SF in area and consists of eleven parcels bounded by Ocean Avenue to the west, Santa Monica Boulevard to the south, Second Street to the east, and existing commercial buildings to the north, including 1333 Ocean Avenue (Gussie Moran House) and 1332 Second Street. The project site is separated by First Court with approximately 350 feet of frontage on the east side of Ocean Avenue, 320 feet on the north side of Santa Monica Boulevard, and 200 feet of frontage on the west side of Second Street.
As outlined on Table 1, there are four buildings on the project site: three commercial buildings (1327, 1333, and 1337 Ocean Avenue) and one mixed-use commercial and residential building at 101 Santa Monica Boulevard with 19 units that will be replaced as part of the project. There is a surface parking lot on the project site at the corner of Santa Monica Boulevard and Second Street.
1333 Ocean Avenue – Landmark Victorian Residence
The circa 1906 structure located at 1333 Ocean Avenue was designated a City Landmark in August 2001 based on its qualities as a rare example of Queen Anne style Victorian architecture that serves as an important contributor to Ocean Avenue’s character and reflects the City’s early residential development pattern along Ocean Avenue at the turn of the twentieth century.
1337 Ocean Avenue – Landmark Spanish Colonial Revival-Style Commercial Building The Spanish Colonial Revival Style building located at 1337 Ocean Avenue was originally built with apartments above a ground level commercial space in 1926. The structure was designated a City Landmark in August 2004 as an early and excellent example of a mixed-use building along Ocean Avenue that reflects the period of development in the City when commercial development expanded to Ocean Avenue, a primarily residential street at the time. The building was also designated based on its architectural quality and its proximity to the two other early twentieth century Landmark structures on the block: the Victorian building and Gussie Moran House located at 1333 and 1323 Ocean Avenue.
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Table 1.
Zoning District
Downtown Community Plan: Ocean Transition (OT)
Bayside Commercial (BC); and Established Large Sites Overlay Parcel Area (SF):
11 parcels
(82,500 SF)
Existing On-Site
Improvements &
Historic Resources
Inventory Status
(Year Built):
1327 Ocean Avenue: Commercial building (1951)
1333 Ocean Avenue: Victorian style commercial building (1906) Designated City Landmark
1337 Ocean Avenue: Spanish Colonial Revival commercial building (1926) Designated City Landmark
101 Santa Monica Blvd: Commercial/19-unit residential building (1925) 129 Santa Monica Blvd: Surface parking lot
CEQA SCH No. 2018121060 Environmental Impact Report (EIR) Adjacent Zoning &
Land Uses & Building
Heights:
North and South: Ocean Transition; commercial
North and East; Bayside Commercial; commercial
West: Open Space: Palisades Park commercial buildings ranging from 20-60 feet in height; commercial and residential buildings ranging in height from 90-180 feet.
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Downtown Community Plan Framework
This section summarizes the Downtown Community Plan’s policy and regulatory framework that has served as the foundation for City review and Development Agreement negotiations since the Applicant’s submittal was revised to comply with the adopted 2017 DCP.
Some of the key DCP priorities include:
• Amplifying the role of historic preservation and adaptive reuse of historic buildings;
• Prioritizing new housing for all household sizes and income levels; • Supporting a vibrant and expanded mix of commercial and cultural uses; • Creating more open spaces and a more pedestrian-oriented Downtown; and • Supporting safe and efficient mobility throughout the district.
Established Large Site Overlay
The DCP established a structured and rigorous public process for projects on three Established Large Sites to request consideration up to a height limit of 130 feet with 9 of 52
additional floor area, subject to a Development Agreement, additional environmental review, and the provision of significant priority community benefits outlined in the DCP:
• Publicly Accessible Open Space • Cultural Institutions • Affordable Housing • Historic Preservation
• Mobility and Circulation
The DCP requires conformance with site-specific development standards for each of the three Established Large Sites if an applicant proposes a Development Agreement for a project over the DCP’s Tier 2 standards. More discussion about the project’s consistency with DCP development parameters and priority community benefits identified for the project site is provided later in this report.
Background on Project Timeline and Process
Original Submittal - 2013
The public review process for the Applicant’s proposal included numerous steps to engage community members and policy makers on the Ocean Avenue Project following 10 of 52
the submittal of the Development Application in February 2013 for a project that proposed a 22-story (244’) central tower element, a hotel, commercial uses, 24 rental units and 22 condominium units, and rehabilitation of two designated City Landmark Buildings as components of a proposed museum campus. The Applicant hosted a Community Meeting in March 2013 to introduce the proposed project which was followed by the Architectural Review Board’s conceptual discussion of the proposal in August 2013.
Revised Project - 2018
Per Council direction, City review of the project was put on hold pending completion of the Downtown Community Plan which was subsequently adopted in July 2017. The Applicant submitted revised project plans in December 2017 that addressed early feedback, as well as programmatic changes (eliminating condominiums, increasing the overall number of housing units, and increasing the proposed number of deed-restricted affordable units) and design concept revisions compliant with the DCP’s new Established Large Sites Overlay regulations. The Applicant hosted a second Community Meeting to introduce this new project design in January 2018.
Courtesy Presentations and Council Direction to Proceed with Negotiations - 2018 Courtesy discussions regarding the new project design were held by the Architectural Review Board and the Landmarks Commission in February and March 2018. The Planning Commission held its preliminary concept discussion in May 2018.
The City Council discussed the project and gave authorization to staff to proceed with project negotiations and environmental review in June 2018.
A public Scoping Meeting was held by the City in January 2019 to gather community input on the potential impacts areas to study in the project’s Environmental Impact Report (EIR). A summary of comments from the three preliminary concept discussions is provided as Attachment B.
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In summary, the Architectural Review Board, Landmarks Commission, and Planning Commission each provided comments in support of the new project design and continuing study and improvement of the project concept because it provides an important cultural facility as a community benefit and offers a beautiful design that represents the Applicant team’s thoughtful study of the site and the relationship between building height and open space, with an emphasis on the pedestrian experience.
Architectural Review Board members expressed interest in seeing the architectural design concept developed further to create a project that will prove to be a landmark of the 21st Century. Board and Commission members underscored the need for a project of the highest caliber that integrates the two Landmark Buildings but also creates a stronger architectural identity for the museum campus.
Planning Commissioners also stated that additional study would be required to ensure the project has an efficient and effective circulation plan for all modes that fits the Downtown’s complex mobility network and that sustainability will be an important component of the project. There was also preliminary discussion on how the project would satisfy the DCP’s community benefit priority for affordable housing and underscored that the project must be a place for people of all ages (programming, site planning, cultural campus, residential component, mix of uses).
Landmarks Commissioners expressed support for the new project concept and noted that through the ongoing process of design development, greater specificity will be needed regarding the treatment plan for the Landmark Buildings in compliance with the Secretary of the Interior’s Standards. Commissioners agreed that there is an opportunity to carefully and appropriately integrate the Landmark properties and treat them in a manner that would “breathe new life” into the buildings, with a priority on providing public access to the buildings. Several Commission members also discussed whether the Landmark Buildings should be integrated into the project with limited exterior interventions/changes versus an imaginative treatment that responds more directly to the project’s contemporary architectural language. Commissioners agreed that the 12 of 52
unique capabilities of the architect in handling the Landmarks are a welcome component of the project and that there should be expressive design elements integrated into the plan for the Landmark Buildings.
Formal Planning Commission Recommendation – May 2022
Planning Commission’s formal recommendation hearing was held on May 18, 2022.
The Commission unanimously recommended cerification of the Enviornmental Impact Report and approval of the project. The Commission’s recommendations provide a series of refinements to the project but do not change the fundamental project vision, site design, mix of uses, or community benefits.
Attachment C to this reports provides the full text of the Planning Commission’s recommended modifications to Development Agreement terms, the proposed Local Coastal Plan amendment, and Final EIR. A summary of these modifications is provided.
There is also a brief discussion of the subset of Planning Commission recommendations not supported by staff. The Applicant has agreed to all modifications supported by staff; the Development Agreement and associated project materials presented with this report reflect incoporation of these recommendations.
Planning Commission Recommendations Supported by Staff
1. Enhanced Sustainability Measures:
a. Add the following new subsection is recommended to Development Agreement 2.7.11(c):
Developer shall report demand for EV chargers to the City as part of its annual Development Agreement compliance reporting required by Development Agreement Section 10.2. If demand for EV chargers increases beyond the number required in Development Agreement Section 2.7.11(c)(i), then Developer shall first install EV chargers in all or some of the EV ready spaces required by 2.7.11(c)(ii) and then in all or some of the raceway/conduit spaces required by Development Agreement 13 of 52
2.7.11(c)(iii) to the extent necessary to accommodate the additional demand. If demand for EV chargers increases beyond this 53% of vehicle spaces, then Developer shall be required to install additional EV chargers to meet the additional demand.
b. The Planning Commission recommended that the project include a practical water efficiency plan to reduce water consumption.
2. Bicycle Parking: Provide at least one of the stairways from the B1 level on the Second Street Parcel shall have a bicycle channel/runnel to the ground level to facilitate walking a bicycle up/down the stairway.
3. Enhance/Clarify Treatment of Historic Buildings:
a. Amplify the terms for restoration of character-defining features of the two designated Landmark Buildings in the event that additional work is recommended by the qualified historic preservation professional who is overseeing the project.
b. Clarify that the Project Applicant shall use good faith efforts to secure the voluntary cooperation of the owner of the adjacent Landmark property in allowing the Project Applicant to comply with the requirements of the mitigation measure to protect the structure during project construction. c. State that no fences, walls or hedges are allowed in the setback/open space area between the Queen Anne Landmark and Ocean Avenue or the Spanish Colonial Revival Landmark and Ocean Avenue.
d. Clarify that any member of the Landmarks Commission may be appointed to participate in the future ARB design review hearing(s), not just the Commission’s licensed architect.
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4. Residential Unit Liveability: Confirm that all bedrooms in residential units shall have at least one window.
5. Construction Period: Require that during construction, the Project Applicant will use industry standard methods to monitor the effects of the construction on Palisades Park.
6. Environmental Review:
a. Revise the resolution adopting the Statement of Overriding Considerations to explain that the EIR’s determination of a significant transportation impact is based on the “level of service” methodology and that, pursuant to SB 743, the City uses the “vehicle miles traveled” methodology for projects commencing CEQA review after the City adopted its VMT screening criteria and thresholds in June 2020.
b. The Planning Commission recommended that their resolution recommending certification of the Final EIR also clearly state that the project is exempt from CEQA.
7. Deed-Restricted Affordable Housing: Include revised language presented in the Planning Commission’s supplemental staff report clarifying terms pertaining to the five deed-restricted Moderate Income units negotiated as a community benefit.
8. Economic Equity/Opportunity Initiative: Remove the staff-recommended reference to clean and safe Downtown initiatives as a potential way to utilize the $250,000 Economic Equity and Opportunity Contribution community benefit:
a. The City shall utilize this contribution to support economic equity and opportunity initiatives, or clean and safe Downtown initiatives, including but not limited to seed funding for economic opportunity initiatives to 15 of 52
support local entrepreneurs from disadvantaged communities, investments in community partnerships and non-profit organizations that support economic equity and opportunity initiatives, and other initiatives as determined by the City or as developed through current and future community processes. The City shall deposit such monies into a separate restricted account to be used exclusively for the economic equity and opportunity initiatives as described above through guidelines established by the City or through current and future community processes.
Planning Commission Recommendations Not Supported by Staff
1. Additional Floor Area Reduction: Agreement Section 6.1(b) states the design review process cannot result in a reduction of Floor Area greater than 2% of the total project Floor Area. The Planning Commission recommended language that would allow the Landmarks Commission or Architectural Review Board to potentially increase the maximum amount of floor area that can be eliminated through the design review process, provided that reduction occurs to the Cultural Use Campus lobby.
More specifically, the Planning Commission recommended the following in order to create more flexibility to evaluate the way the new construction integrates with the two Landmark Buildings:
• Reduction in size of the Cultural Uses Campus lobby up to 200 square feet shall not count against design review constraints on reduction of floor area for the Cultural Use component so long as it does not negatively impact feasibility or programming.
Staff does not support this recommendation because the Development Agreement already addresses the maximum amount of Floor Area than can be reduced through the design review process (up to 2% of the total Project Floor Area). Potential changes to the size or configuration of the Cultural Uses 16 of 52
Campus lobby that may be required as part of the design review process can fit within this parameter.
2. Use of Transportation Infrastructure Contribution: In order to support future mobility improvements along Ocean Avenue and in the Downtown, the Planning Commission made a recommendation regarding potential allocation of a portion of the project’s estimated $2.25 Million Transportation Infrastructure (TIF) Contribution negotiated for the project. More specifically, the Planning Commission recommended the following:
• In the absence of an alternative source of funding, up to 25% of the Enhanced Transportation Impact Fee shall be prioritized for the study and/or improvement of multimodal mobility on Ocean Avenue and circulation in the downtown area.
Transportation Infrastructure Contribution funds may be negotiated as part of a development agreement to support specific capital projects (e.g., Expo light rail station imrovements) or other projects that have been prioritized though the City’s adopted land use and circulation plans, capital improvement project (CIP) review, and budget process. An example is the City’s October 13, 2020 adoption of an amendment to the City’s Bike Action Plan that provides a Citywide FiveYear Protected Bikeway Vision. The Plan identifies Ocean Avenue between Pico Boulevard and Montana Avenue as a priority corridor for implementation of a protected bikeway within the five-year time horizon.
While Planning Commission’s language would direct funds to such a project, staff does not recommend making a decision on geographic priorties or areas for use of the project’s Transportation Infrastructure Contribution funds through this Development Agreement. It is important to maintain the City’s flexibility to direct funding sources to the full range of multimodal improvements needed in the City, which could include improvements on Ocean Avenue and in the Downtown. 17 of 52
3. Admission for the Publicly Accessible Rooftop Observation Deck: As part of community benefit negotiations for the publicly accessible rooftop observation deck, the Applicant has proposed to support Santa Monica public schools by charging up to $1.00 per person, subject to annual CPI adjustment, for access to the rooftop observation deck so long as 100% of the net income (i.e., income less expenses) is donated to the Santa Monica Education Foundation, a California nonprofit public benefit corporation, or successor entity.
As detailed more fully in Attachment C, the Planning Commission recommends modifying this term to eliminate the $1.00 charge and its annual CPI adjustment.
Instead, the Commission recommends that the “Developer may request a voluntary donation from the public for access to the rooftop observation deck…”.
Staff supports the Applicant’s original proposal to charge up to $1.00 subject to annual CPI adjustment, provided that 100% of the net income is donated to support public schools. A shift to a voluntary donation would not be consistent with the Applicant’s commitment to support local public education through this project community benefit.
4. 1992 Local Coastal Program Land Use Plan (LUP) Amendment: In order to emphasize that the Ocean Avenue Project proposes significantly less Floor Area than the maximum FAR allowed for the Project Site, the Planning Commission recommends additional language as part of the Applicant’s proposed 1992 LUP amendment stating that the project’s 2.95 FAR is “…well within the maximum 4.0 FAR for this site in the City’s Downtown Community Plan and Local Coastal Program Update Land Use Plan, Final Draft, October 2018”.
Staff does not recommend inclusion of this additonal language. The City’s October 2018 Local Coastal Program LUP has not been reviewed and approved by the California Coastal Commission and therefore is not recognized by the Coastal Commission as an official regulatory document used to review projects within Santa Monica.
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Project Description and Analysis
The project’s design concept, massing plan, and residential component has also evolved substantially since the project was originally submitted in 2013. During the public review process, the City has also conducted a parallel, comprehensive review of the project and worked with the Applicant in furtherance of the following three key principles:
• Facilitate a high-quality project that is consistent with publicly-vetted land use policies and goals and significantly advances Santa Monica’s values of economic vitality, sustainability, housing for all, historic preservation, outstanding architecture, and safe and efficient all-mode mobility. • Negotiate substantial community benefits that are consistent with the DCP’s priorities to create more opportunities to experience art and culture in Santa Monica, create new community/visitor gathering places, provide more affordable housing, and preserve and highlight Santa Monica’s historic character. • Facilitate economic investment, job creation, and City revenue generation to support community services in Santa Monica as our local economy remains in the initial phase of recovery from the effects of the COVID-19 pandemic.
Summary of Project Components
The following is a summary of the proposed floor area allocation and mix of uses. The proposed project is a mixed-use hotel, cultural, retail and residential development that consists of the following key components, in conformance with the DCP’s Established Large Sites Overlay regulations and other policies and standards:
• Approximately 316,500 gross square feet, comprised of the following key uses:
o ~122,400 SF hotel
o ~36,110 SF commercial/retail/restaurant
o ~117,700 SF residential
o ~35,500 SF Cultural Uses Campus;
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• 120 room full-service hotel with spa, meeting and banquet space; • 100 residential rental units, comprised of the following (including replacement of the 19 existing units on site):
o 11 rent-controlled units
o 25 deed-restricted affordable units
▪ If there are more than 11 existing units with tenants who want to move back into the project and do not income-qualify for a deedrestricted affordable unit, then up to five of these Moderate Income units will first be made available for occupancy by a Displaced Tenant in accordance with the terms established by the Rent Control Board and Development Agreement. The deed restriction for Moderate Income Households would apply to each of these five units if and when the unit is not occupied by a Displaced Tenant. o 64 market-rate units;
• Ground-floor restaurant/retail/commercial space along Ocean Avenue, Santa Monica Boulevard, and Second Street;
• An approximately 35,500 SF Cultural Uses Campus that includes a new museum building, ground level publicly accessible open space along Ocean Avenue, and the preservation, adaptive reuse, and on-site repositioning of two designated City Landmark Buildings;
• Publicly accessible rooftop observation deck, approximately 5,000 SF in size; • Ground level pedestrian paseos throughout site, including establishment of a Pedestrian Mall on a section of First Court and providing a vehicle access alternative with egress to Second Street;
• 285 subterranean parking spaces, including EV chargers and EV ready spaces; 20 of 52
• 231 bicycle parking spaces (short and long-term).
2017 DCP Standards for
Established Large Sites
2017 DCP
Standard
Proposed Project
Maximum Building Height 130’ New building heights
(excluding permitted
projections) range from
53’ to a maximum 130’
(12 stories)
~60’ Museum Building
130’ Hotel Building
~58” Corner Building
~53’/97’/106’ Second
Street Building
~62’ Santa Monica Blvd
Building
Maximum Floor Area Ratio (FAR) for the
Project Site
4.0 2.95
~25% less proposed floor
area compared to
DCP maximum
(~ 86,625 SF less)
Minimum Open Space 50% of parcel area
(comprised of 25%
at ground level &
25% unrestricted)
~66% of parcel area
(comprised of 27.5% at
ground level & 38% above
ground level)
Components of City Review
Staff’s review of the proposed project began with evaluating the design concept presented with the original submittal and then again after the DCP was approved. City review was focused on the overall mix of uses, the schematic site plan with attention paid to vehicle circulation and pedestrian orientation, the massing strategy employed for the site, and the conceptual approach for treatment of Landmark Buildings. Over the past two years, staff’s role has shifted to coordinating all aspects of the City’s technical review, including circulation/mobility, establishment of the proposed pedestrian mall and the plan for rerouting vehicle and services access to Second Street, other aspects related to public works/utilities/right-of-way, the historic preservation plan, sustainability measures, and vehicle trip reduction measures. As presented later in this report, staff and the Applicant team have also spent significant time on development agreement and 21 of 52
community benefit negotiations, principally focused on the community benefit Cultural Uses Campus and deed-restricted affordable housing.
The following sections provide a snapshot of some of the key issues that staff and the Applicant team have worked through on the site plan in preparation for hearings on the Development Agreement.
Design Concept, Site Planning, Open Space
The proposed project on the approximately 82,500 SF project site has been shaped by extensive study of the following factors:
• Site conditions and the property’s relationship to Palisades Park and the bluffs; • The building/context and block pattern surrounding the site; • The historic setting along Ocean Avenue with its concentration of historic resources reflecting Downtown’s early development patterns along Ocean Avenue, and
• The functional needs associated with a mixed-use project with lodging, residential, dining and retail/commercial, and a Cultural Uses Campus designed for galleries and exhibition space.
The project’s overall scale, massing strategy, site design, and architectural expression work together to create an inviting, pedestrian-oriented, creative plan that provides a compelling mixed of uses for residents and visitors alike, and successfully integrates modern architecture with historic features in a way that fits the broader Downtown Santa Monica context. The site plan also incorporates publicly accessible open space and rooftop view deck that complement the project and provide new opportunities to experience Ocean Avenue.
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Areas of focus have included the following and are incorporated into the project plans:
• The Applicant’s plan balances the maximum height of 130’ per the DCP with varying building heights and with gathering spaces at both the ground level and upper building levels to provide the project with a strong level of pedestrian orientation, visual permeability, relationship to neighborhood character, and connection to the bluffs, views of the bay, and open space provided at Palisades Park.
• The massing strategy for the project pays special attention to the relationship between the two existing historic buildings and the new museum building that form the Cultural Uses Campus. The design also includes four distinct residential building forms to better reflect the block pattern found further east along Santa Monica Boulevard.
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• The project incorporates buildings along Santa Monica Boulevard and Second Street that have been shaped and modulated at the ground level to further improve pedestrian travel through the site to a variety of programmed areas and to/from Ocean Avenue.
• The open space plan creates gathering spaces that are well-integrated with the historic and new architecture that form the Cultural Uses Campus and provides ample landscape and pedestrian amenities.
• The proposed Pedestrian Mall that would be established on a north/south section of First Court from Santa Monica Boulevard (approximately 160’ in length including the existing sidewalk) to provide connection to an east/west paseo leading to Ocean Avenue and the Cultural Uses Campus.
• The organization of vehicular circulation and key pedestrian entrances to the hotel, residential buildings, dining/retail/commercial spaces achieves an uninterrupted pedestrian environment along Ocean Avenue and Santa Monica Boulevard with consolidated vehicle driveways only at First Court at Arizona Avenue and on Second Street.
Finally, while not an analytical tool or development standard used in the DCP, the Applicant has provided an average building height analysis for the project to demonstrate how ground level open space and a variety of building scales affect the relationship between height, density, and design. The Applicant’s conceptual average building height analysis indicates that while a maximum height of 130’ is proposed, only 10% of the total site area would be constructed to that height – and the average building height for the site as a whole would be 48’-1”.
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New and Replacement Housing
A total of 100 residential rental units with a mix of unit types (studios, one-bedroom, two-bedroom, and three-bedroom) are proposed as part of the project. There are a total of 19 studio and one-bedroom units on site that are subject to the City’s rent control law (Article XVIII of the City Charter). These 19 units would be replaced with eight deedrestricted affordable units and 11 rent-controlled units, as discussed further below.
These 19 units will also be subject to the Rent Control Board’s regulations regarding removal and replacement, including the requirements for Displaced Tenants, and in accordance with the Development Agreement.
The Downtown Community Plan specifies that for projects filed before November 2016 that are designed in excess of Tier 11 development standards and provide on-site affordable housing units, the baseline requirement for deed-restricted affordable units is 20% of the total number of residential units, subject to DCP unit mix and affordability requirements. Based on the Applicant’s proposal for 100 rental units in the project, the City has negotiated for a total of 25% of the 100 residential units (25 units), to be deedrestricted affordable units for a 99-year term.
The proposed 100 residential units are comprised of the following:
• 25 deed-restricted affordable apartments
o 4 units @ 30% Income Households
o 4 units @ 50% Income Households
o 6 units @ 80% Income Households
o 11 units @ Moderate Income Households
▪ If there are more than 11 existing units with tenants who want to move back into the project and do not income-qualify for a deedrestricted affordable unit, then up to five of these Moderate Income units will first be made available for occupancy by a Displaced 1 The DCP implements a modified version of the LUCE Tiering system, which provides different entitlement processes for projects of certain sizes and/or land uses. Typically, Tier 1 development standards for Floor Area Ratio and height are referred to as “base” projects. Additional City review and project requirements are associated with Tier 2/Tier 3 development standards which are higher than Tier
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Tenant in accordance with the terms established by the Rent Control Board and Development Agreement. The deed restriction for Moderate Income Households would apply to each of these five units if and when the unit is not occupied by a Displaced Tenant. • 11 replacement rent-controlled apartments
• 64 market-rate apartments
Treatment of Historic Resources
The project design proposes to preserve and incorporate the two designated Landmark Buildings as part of the Cultural Uses Campus. This approach will create a strong historic and contemporary presence along Ocean Avenue. Through the process of project review, including consideration of the Landmarks Commission’s courtesy feedback provided in 2018, the concept design for the Cultural Uses Campus has been improved. The focus has been on how the two historic buildings are physically and visually integrated with the new museum building and how each of the buildings will still retain an individual presence.
The Spanish Colonial Revival Landmark Building is proposed for on-site relocation to the north edge of the site next to the neighboring Landmark Gussie Moran House. The Queen Anne style Victorian Landmark Building would also be relocated/shifted to the south from its current location to form the south wing of the entry lobby for the Cultural Uses Campus.
As noted in the updated Historic Resources Conformance Report that is part of the project application, the Spanish Colonial Revival Landmark was designated in part because it is associated with the expansion of the downtown commercial district in the 1920s. The designation of this building describes its relationship to the Gussie Moran House (1323 Ocean Avenue, built circa 1891), and the Victorian Landmark Building on the subject property. By retaining the two Landmark Buildings and incorporating them into the Cultural Uses Campus, this historic pattern of development on Ocean Avenue is 27 of 52
retained and provides a visual representation of the historic appearance of Ocean Avenue in the 1920s.
The Applicant team has continued to study the two Landmark Buildings and the project with a focus on how to most successfully preserve, protect, and adaptively reuse these buildings to ensure that sufficient integrity of location, setting, design, materials, workmanship, feeling, and association is retained. The Applicant and the City’s preservation consultants have provided recommendations that are consistent with the Secretary of the Interior’s Standards for the Treatment of Historic Properties. These recommendations form the basis of the preservation requirements that have been incorporated into the plan, including:
• On-site repositioning of the two Landmarks;
• Modifications on secondary elevations to connect the historic buildings to the new construction; and
• The use of historic photographs and physical evidence to guide the work of carefully restoring certain exterior building features that are from both building’s historic period of significance.
The Development Agreement outlines the Landmarks Commission’s formal role in reviewing a Certificate of Appropriateness for the treatment of the two City Landmark Buildings and the Cultural Uses Campus building. Sheet A9-111 of the project plans also shows the area of the plan that is subject to Landmarks Commission review, with the remainder of the project subject to design review conducted by the Architectural Review Board.
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Circulation, Vehicle & Bicycle Parking, Transportation Demand Management City review of the circulation plan for the project has been focused on the locations and functionality of the different access points provided for pedestrians, bicycles, and for different user groups of the subterranean garage (e.g., museum visitors, employees, hotel guests, residents). The proposed project incorporates three subterranean levels at the property with approximately 285 parking spaces to serve all user groups. The site plan reflects the extensive work between City staff and the Applicant on the specific dimensions and functionality of the plan for alternative access on private property. City review focused on the layout of the rerouted alley to ensure it provides efficient and safe circulation for all parties who will use First Court and the rerouted alley on private property leading to Second Street, including hotel guests and visitors to the property who will utilize First Court to enter and exit the project’s subterranean garage. Staff has 29 of 52
also reviewed the plan to ensure that emergency services and trash and recycling services can be accommodated efficiently and safely.
Proposed Pedestrian Mall
The Pedestrian Mall Law of 1960, California Streets and Highways Code Sections 11000 et seq. (the “Pedestrian Mall Law”), authorizes municipalities to close streets to vehicular traffic and establish pedestrian malls. The City used this law to establish the Third Street Mall in 1963 to create a pedestrian zone that has added to the vitality and vibrancy of Downtown Santa Monica, and it has served the public interest and not unduly inconvenienced vehicular traffic.
The proposed Pedestrian Mall is proposed to be established on the north/south section of First Court from Santa Monica Boulevard (approximately 160’ in length including the existing sidewalk) and would provide connection to an east/west paseo leading to Ocean Avenue. The establishment of this Pedestrian Mall in conjunction with the project would require a separate action of the City Council.
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On April 24, 2022 the City Council adopted Resolution No. 11420 (CCS) declaring its intent to establish a Pedestrian Mall along a southern portion of First Court between Santa Monica Boulevard and Arizona Avenue and also set a public hearing for September 27, 2022 to consider the establishment of this proposed Pedestrian Mall.
This public hearing for the Pedestrian Mall would only be held if the Council approves the project and Development Agreement.
Passenger Loading, Valet Service, Parking
Staff has also focused on the plan for passenger loading in the subterranean garage to work in concert with the Applicant’s proposed valet operation on Ocean Avenue that would serve the project’s hotel and other commercial uses. More specifically, the Development Agreement allows the Applicant to apply for a valet permit for its future operation on Ocean Avenue for hotel guests’ first arrival and for other visitors who are 31 of 52
accessing the project’s dining and retail uses. Valet operations would follow the same route to the project’s subterranean garage to park a vehicle in the garage and return it to visitors of the project’s dining and retail uses via Second Street and Santa Monica Boulevard. After their first arrival to the hotel, hotel guests would need to pick up and drop off their vehicle using the valet service in the subterranean garage. Museum visitors arriving by car would not use the valet service and would use First Court via Arizona Avenue to access the subterranean garage. The Applicant acknowledges that City reserves the exclusive right to utilize and manage the public right-of-way in a manner that may preclude on-street valet in the future.
A total of approximately 231 bicycle parking spaces (both long-term and short-term) will be provided in locations both at-grade and in the subterranean garage for employees, hotel guests, residents, and visitors. The parking garage would provide vehicle spaces that are equipped with EV chargers and with EV ready infrastructure and based on the Planning Commission’s recommendation, in the future, the Applicant will be required to increase the number of EV chargers and EV infrastructure based on demand generated by project patrons and residents.
Transportation Demand Management (TDM)
The Development Agreement includes the requirement to implement a TDM Program that would reduce single-occupancy vehicle trips and parking demand generated by the proposed project. Measures include, but are not limited to, a transportation information center, a 2.2 average vehicle ridership (AVR) target, unbundled parking, transportation allowances for employees and residents equivalent to 100% of the cost of a monthly regional transit pass, showers and lockers for employees who bike to work, short-term visitor bike parking, long-term resident and commercial bike parking, and active participation in a Transportation Management Organization. The proposed TDM measures are further detailed in Exhibit H of the Development Agreement. 32 of 52
Sustainable Design Features
As detailed more fully in Sections 2.7 and 2.8 of the Development Agreement, a significant component of the Applicant’s proposal is its incorporation of sustainable design features. The Applicant’s sustainability plan was initially discussed with its 2013 application. Over the years, the City’s technical codes have changed to require greater water and energy savings as baseline requirements. The Applicant’s proposal has been modified to respond to these regulatory changes. The Development Agreement includes a number of important conservation requirements, some of which remain above and beyond the City’s reach codes and are identified as community benefits while other components are identified as project features consistent with existing Code requirements. Some of these components include the following:
• LEED v4 Platinum certification for the project as a whole. • Contract with the Clean Power Alliance, or successor entity, for electrical service for the project under the 100% Green Power tier (which is sourced entirely from wind, solar and geothermal sources) at all times such tier is offered as a service option by the electric utility provider.
• Solar infrastructure on new construction.
• Compliance with new Recycled Water Ordinance requiring use of non-potable water for applicable uses at the project site:
o Inclusion of dual plumbing/use of recycled water for all uses approved by County (e.g. toilet flushing, cooling tower, landscaping). o Pay City to extend the non-potable water distribution main across Ocean Avenue; the Applicant will extend the main to project site. • Water neutrality through inclusion of low flow fixtures and payment of in-lieu fee. • On-site capture and reuse of rainwater.
• In addition to the energy conservation measures included as project features in Section 2.7, the project, except for the energy for the electric vehicle charging infrastructure, shall be designed to use and shall achieve 15% less energy than 33 of 52
required by the 2019 California Energy Code. This requirement shall be satisfied prior to issuance of the project’s building permit.
• EV charging stations and infrastructure:
o EV chargers in ten percent (10%) of vehicle parking spaces. o Infrastructure to make an additional 4.5% of vehicle parking spaces EV Ready (breaker, wiring, panel capacity, receptacle and raceways and associated conductors capable of accommodating 208/240-volt dedicated branch circuits).
o Raceways/conduits and associated conductors capable of accommodating 208/240-volt dedicated branch circuits in an additional
38.5% of vehicle parking spaces.
• Bicycle parking and bicycle repair station.
• Shower and locker facilities for employees who commute via active means of transportation.
Alcohol Service
As part of the project, the Applicant is proposing to dispense alcohol consistent with the conditions provided in Exhibit E-1 to the Development Agreement and in the licensed areas shown in Exhibit E-2 to the Development Agreement. Staff’s review of the proposal focused on maintaining consistency with the hotel’s customary operations, requiring additional measures as necessary, and providing uniform updated conditions applicable to all programmatic elements of the project.
Community Benefits
Pursuant to a development agreement, the City can negotiate community benefits within the bounds of its police power and statutory authority. The following discussion presents a summary of each community benefit category that has been negotiated by the City and Applicant based on Council-identified priorities, and other feedback received from both the Planning Commission and community during the public review 34 of 52
process. Section 2.8 of the Development Agreement sets forth the negotiated community benefits for the project. The Applicant focused its community benefit proposal on the three priority community benefits identified by the Downtown Community Plan’s Established Large Sites designation for the property: cultural institutions, historic preservation, and affordable housing. The Applicant has also proposed additional priority community benefit categories outlined in Chapter 2 of the DCP for other types of projects subject to negotiation, including water and energy conservation and local hiring and has also negotiated in good faith on the additional community benefits introduced by staff.
Where possible, the cost assigned to community benefits has been estimated to conservatively monetize the value of the benefit. The Development Agreement includes a negotiated community benefits package that has an estimated value of $53.3M. There are also a number of important and significant community benefits the Applicant is providing that, at this time, do not have a monetized value identified. Table 2 below summarizes this estimated total value of the community benefits package and also identifies the project’s enhanced development impact fees that are structured as contributions to provide more flexibility for how the City may allocate these funds for programs and capital projects within each assigned category. 35 of 52
Table 2. Ocean Avenue Project 7/14/2022
Community Benefits - One-Time Contributions
Base Fee FY22-23 Estimate
(FY21-22 plus 8.5%
per April 2022 ENR CCI) City Recommendation
Affordable Housing Commercial Linkage Fee Contribution $396,579 $400,000 Transportation Infrastructure Contribution $2,253,745 $2,255,000 Parks and Recreation Contribution $2,159,505 $2,160,000 Early Childhood Initiatives Contribution $997,223 $1,000,000 Economic Equity/Opportunity Contribution $0 $250,000
$5,807,052 $6,065,000
Community Benefits - Other Monetized Items*
Cultural Uses Campus and Historic Preservation - construction hard costs* $43,220,000 Publicly-Accessible Rooftop Viewing Deck - construction hard costs* $4,064,000 One-time cost of extending recycled water infrastructure across Ocean Avenue to project site TBD Note: *Monetized values do not include land costs, soft costs or CPI escalation.
Total Value of Monetized Community Benefits $53,349,000 Operational Community Benefit - Annual Cost
Developer's Requirement to Operate & Maintain the Cultural Uses Campus - Estimated Annual Cost in 2022 Dollars
Subsidize up to the full cost of
operations on an annual basis
for the Life of the Project
$1,850,000
(this cost is not included in the Total Value
of Monetized Community Benefits above)
Other Non-Monetized Community Benefits
Five additional deed-restricted affordable housing units Santa Monica Residents & Youth Cultural Uses Campus Admission Discounts & Waivers Free-of-Charge Public School Cultural Uses Campus Field Trips & Transportation Implementation of Education and Community Programming Plan TDM Program
Internship Program
Local Hiring Program
Equal Opportunity Subcontracting
Water conservation and energy conservation features
1) Cultural Uses Campus (Development Agreement Section 2.8.3) Section 2.8.3 of the Development Agreement outlines the terms for the Applicant’s obligation to construct, operate, and maintain a Cultural Uses Campus. The Cultural Uses Campus must be a minimum of 33,725 square feet of Floor Area, including a minimum of 18,550 square feet of Floor Area in the Cultural Uses Building that is open to the public and devoted to Cultural Facilities uses. As the principal community benefit for the project, this minimum area has been established to set a baseline guarantee for what part of the campus will be devoted to Cultural Facilities uses and open to the public. This minimum size does not include area devoted to Cultural Accessory Uses 36 of 52
such as the planned food and beverage service and retail component of the Cultural Uses Campus, ancillary office space, and/or archive/storage space.
For the Life of the Project, the Cultural Uses Campus is generally required to be open to the public a minimum of six (6) days per week, provide community programming, have discounted admission/entry rates for students/youth and Santa Monica residents, one free day per month when the entry/admission fee is waived for Santa Monica residents (i.e. “free day” for residents), and offer annual field trip opportunities for Santa Monica public schools and youth-serving non-profit organizations free of charge. The Development Agreement obligates the Developer to use income generated from other uses within the Project, if necessary, to subsidize the Cultural Facilities.
The Cultural Uses Campus will be designed to attract and exhibit works of significant local, international, established and emerging artists, including architects. The Applicant has proposed that for a minimum of 15 years, the Cultural Uses Campus will showcase exclusive pieces from archives of Frank O. Gehry. This requirement does not restrict the ability to exhibit works from other artists during this time period.
As noted in the introduction of this report, the construction and commitment to operate a world-class Cultural Uses Campus and provide associated educational and community programming is an extraordinary community benefit that would serve to expand Santa Monica’s art and cultural offerings in a meaningful way and, with the project as whole, make a significant contribution to support the City’s economic vitality for many years to come. Furthermore, a developer-constructed and operated cultural facility addresses a significant community interest that the City would not be able to fund at this time.
The Cultural Uses Campus will be operated and maintained for the Life of the Project (i.e. the useful life of the building). A conservative estimate of non-escalated hard costs for the construction of the Cultural Uses Campus, including the preservation and rehabilitation of the two Landmarks Buildings, is approximately $43 million. This does not include the Developer’s cost to operate/maintain the facility and programming. 37 of 52
2) Deed-Restricted Affordable Housing Units (Development Agreement Section 2.8.1) Affordable housing is one of the three Downtown Community Plan priority community benefits for the Established Large Site overlay applicable to the subject property.
Accordingly, the Applicant proposes to satisfy the project’s minimum 20-unit affordable housing obligation (per the DCP’s project requirements set forth in SMMC Section
9.10.070) and provide an additional five deed-restricted affordable units for Moderate Income Households as a community benefit. If there are more than 11 existing units with tenants who want to move back into the project and do not income-qualify for a deed-restricted affordable unit, then up to five of these Moderate Income units will first be made available for occupancy by a Displaced Tenant in accordance with the terms established by the Rent Control Board and Development Agreement. The deed restriction for Moderate Income Households would apply to each of these five units if and when the unit is not occupied by a Displaced Tenant.
In total, the proposed project would provide 25% of the total number of residential units as deed-restricted affordable units for a 99-year period. There would also be a total of 11 rent-controlled units that are designated as such to replace the existing units on site (the remaining eight replacement units would also be deed-restricted affordable units).
Finally, of the 100 residential units, there would be a total of 64 market-rate units provided. Staff supports this overall housing proposal as one important component of the entire community benefit package that has been negotiated for the project. 3) Historic Preservation (Development Agreement Section 2.8.2) Historic Preservation is one of the three Downtown Community Plan priority community benefits for the Established Large Site overlay designation for the subject property.
Consistent with both LUCE and DCP priorities, The Landmark Victorian Building and the Landmark Spanish Colonial Revival Building will be preserved, rehabilitated, and repositioned on the parcel as part of the Cultural Uses Campus under the terms of the Development Agreement and as a community benefit.
A detailed work plan has been reviewed for consistency with the Secretary of the Interior’s Standards for the Treatment of Historic Properties in order to rehabilitate and 38 of 52
protect the two Landmark Buildings and will ensure that they retain their historical significance as historic resources while being incorporated into the Project’s Cultural Uses Campus for public enjoyment. All rehabilitation and restoration work shall be subject to a Certificate of Appropriateness process and will be guided by a qualified historic preservation professional who meets the Secretary of the Interior’s Professional Qualification Standards.
As noted above, a conservative estimate of non-escalated direct costs for the construction of the Cultural Uses Campus, including the preservation and rehabilitation of the two Landmarks Buildings, is approximately $43 million. The Applicant will be required to submit a performance bond to ensure completion of the scope of work directly associated with the preservation and rehabilitation of the two Landmark Buildings.
4) Publicly Accessible Open Space and Rooftop Observation Deck (Development Agreement Section 2.8.4)
The project provides Publicly Accessible Open Space as shown in project plans and as shown on Development Agreement Exhibit G. The total area to be provided is approximately 16,800 SF (12,000 SF at the ground level and 4,800 square feet at the Publicly Accessible Rooftop Observation Deck), The Publicly Accessible rooftop observation deck will be owned, operated, and maintained by the Applicant at a maintenance standard equivalent to or greater than the standard for the project’s private ground-level open space. The charge of a $1.00 entry fee is proposed with 100% of net income donated to the Santa Monica Education Foundation. A conservative estimate of non-escalated direct costs for the construction of the rooftop observation deck, separate from the cost of construction for the hotel building, is $4.06 million. 5) Sustainable Design/Features (Development Agreement Sections 2.8.5 to 2.8.9,
2.8.17)
The negotiated sustainability elements are intended to ensure that the project meets the highest levels of sustainability possible for the project. The following summarizes the 39 of 52
project’s sustainability elements that have been specifically identified as above-code requirements and therefore a community benefit. An estimate of the monetary value of the Applicant’s sustainability community benefits has not yet been determined. The sustainability community benefits are detailed more fully in the Development Agreement and described in summary below:
LEED Status
The project will be designed and constructed to achieve a minimum LEED® Platinum certification as established by the LEED® Rating System (v4). 100% Green Power
Contract with the Clean Power Alliance, or successor entity, for electrical service for the project under the 100% Green Power tier (which is sourced entirely from wind, solar and geothermal sources) at all times such tier is offered as a service option by the electric utility provider.
On-site Capture of Rainwater/Reuse of Greywater
Project landscaping for all the Buildings shall be irrigated with greywater, stormwater, rainwater, recycled water and/or other approved non-potable water supply.
Recycled Water Infrastructure Improvements
The Applicant will also need to pay the cost for the City to construct a connection to the existing recycled water line located on the west side of Ocean Avenue to the project specifically for on-site landscaping and all other County-approved uses of non-potable water. After the City extends the non-potable water distribution main across Ocean Avenue, the Applicant shall extend the main to the project site pursuant to specifications provided by City in order to service the project.
Energy Conservation Measures
In addition to the energy conservation measures included as project features in Development Agreement Section 2.7.11, the project, except for the energy for the 40 of 52
electric vehicle charging infrastructure, shall be designed to use and shall achieve 15% less energy than required by the 2019 California Energy Code. 6) Economic Equity/Opportunity Contribution (Development Agreement Section 2.8.13) A monetary contribution in the amount of $250,000 shall be utilized to support economic equity and opportunity initiatives including but not limited to seed funding to support local entrepreneurs from disadvantaged communities, investments in community partnerships and non-profit organizations that support economic equity and opportunity initiatives, and other programs as determined by the City or as developed through current and future community processes. The City shall deposit such monies into a separate restricted account to be used exclusively for the economic equity and opportunity initiatives as described above through guidelines established by the City or through current and future community processes.
7) Local Hiring Program (Development Agreement Section 2.8.10) The Project would include local hiring provisions for construction-related and permanent employment. The Applicant and commercial tenants would be required to follow certain steps to ensure that the greatest opportunity for interviewing local residents and employees is provided. All hiring decisions would continue to remain at the discretion of the Applicant and commercial tenants. Through the negotiation process, the concept of Priority for Targeted Job Applicants was modified compared to previous development agreements to expand the definition of “First Priority” as follows: “Any resident of a household with no greater than 80% Median Income that resides within the Low and Moderate Income Areas identified in Figure 3-12 of the City of Santa Monica’s 2013- 2021 Housing Element or any resident who resides in Santa Monica’s 90404 zip code (Pico Neighborhood).”
8) Internship Program (Development Agreement Section 2.8.11) The Project would include a requirement for an Internship Program whereby the hotel would make available at least two (2) internships within the Hotel Uses during each school year (which for this purpose includes the following summer) to students who attend a high school in Santa Monica or Santa Monica College. The internship shall be 41 of 52
paid at the City’s minimum wage unless a student requests an unpaid internship in order to obtain school credit(s) or such internship.
The Applicant will inform City’s Director of Community Development, Santa Monica High School, Santa Monica College, Virginia Avenue Park Advisory Board, Virginia Avenue Park Youth Employment Services, and at least one provider of affordable housing in Santa Monica (e.g. Community Corporation of Santa Monica) of the availability of, and selection criteria for, such internship prior to the start of each school year. The Applicant shall also participate annually in Hospitality Training Academy, or any successor entity, internship fair/events to advertise the availability of the hotel internship. The Applicant shall select interns in accordance with its normal practice of hiring the most qualified candidate and shall make a good faith effort to hire residents of the 90404 zip code (Pico Neighborhood) as the first priority and other Santa Monica residents as the second priority when most qualified or equally qualified as other applicants who are not residents of the 90404 zip code or Santa Monica residents, as applicable. 9) Gehry Partners as Architect (Development Agreement Section 2.8.16) The Applicant understands, acknowledges, and agrees that City has materially relied upon the Applicant’s representation that Gehry Partners will continue to be the lead design architect for the Ocean Avenue Project, including the Cultural Uses Campus, through issuance of the Project’s Certificate of Occupancy, and that this representation is deemed by the City and Applicant as a community benefit.
This is an important component of the project; in particular because of the expertise and extensive experience Gehry Partners has with designing world-renowned museums in other U.S. cities and in cities internationally. This contribution of knowledge and depth of experience will be invaluable to achieving the highest quality design and construction of both the Cultural Uses Campus and the Ocean Avenue Project as a whole. 10) Equal Opportunity Subcontracting (Development Agreement Section 2.8.14) The following language shall be included in all construction contracts between the Developer and its contractors for the Project:
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“The Contractor shall not discriminate on the basis of race, gender, religion, national origin, ethnicity, sexual orientation, age, or disability in the solicitation, selection, hiring, or treatment of subcontractors, vendors, or suppliers. The Contractor shall provide equal opportunity for subcontractors that are qualified and experienced in performing the scope of work required for a project of the Project’s quality and complexity to participate in subcontracting opportunities. The Contractor understands and agrees that violation of this clause shall be considered a material breach of the contract and may result in contract termination or other contract remedies.” At least thirty (30) days before recruitment of subcontractors by any of Developer’s construction contractors, Developer shall submit documentation to the Community Development Director, evidencing its construction contractors’ outreach about bid opportunities to enhance participation by all classes of subcontractors, vendors, or suppliers who are qualified and experienced to perform the scope of work required for a project of the Project’s quality and complexity, including, without limitation, women business enterprises, minority business enterprises, and local business enterprises.
The scope of documentation shall be reasonably determined by the Community Development Director.
11) Impact Fee Contributions
The Development Agreement includes development impact fees that are escalated
8.5% compared to adopted fees that are required by the Municipal Code for FY2021-22.
The following summarizes these impact fee amounts that are being required as contributions so that there is more flexibility regarding use of the funds for programs and the timing of expenditures. This will allow the City to use these funds more effectively to meet programmatic activities and capital programs within each impact fee area:
• Transportation Infrastructure (TIF) Contribution: payment in the amount of $2,255,000 would replace the TIF Development Impact Fee. 43 of 52
• Affordable Housing Commercial Linkage Fee Contribution: payment in the amount of $400,000 would replace the Affordable Housing Commercial Linkage Fee.
• Contribution for Early Childhood Initiatives Contribution: payment in the amount of $1,000,000 would replace the Child Care Linkage Program ordinance requirement for the project. The City shall utilize this contribution to support early childhood initiatives including but not limited to infant, toddler and pre-school tuition subsidies; family support and parent engagement strategies; home visitation programs; facility and playground improvements and kindergarten readiness models. The City shall deposit such monies into a separate restricted account to be used exclusively for the early childhood initiatives as described above through guidelines to be established by the City. • Parks and Recreation Fee Contribution: A monetary contribution in the amount of $2,160,000 and would replace the Parks and Recreation Development Impact Fee. The funds shall be used by the City for parks and recreation projects and programs.
Economic Analysis
The City contracted HR&A Advisors, Inc. to prepare economic analyses for the project consisting of a Fiscal Impact Analysis and Economic Impact Analysis, and a peer review of the Applicant’s Financial Feasibility Analysis. The economic analyses are intended to provide a fuller picture of the project’s economic value to the City and its fiscal impacts (both positive and negative) to the City. The following is a summary of those analyses, which are attached to this report as Attachments J and K.
Economic Impact Analysis
HR&A estimated the net economic impacts of the Project using the most current (2019) version of the widely used IMPLAN input-output model software with data specific to the five ZIP Codes that comprise the City’s boundaries. Therefore, it should be noted that 44 of 52
these estimates are based on pre-COVID-19 pandemic assumptions. The analysis estimated the economic impact of the project in the following areas:
• One-time construction-related economic impacts based on hard construction costs data provided by the Applicant
o Approximately 2,217 total jobs required to complete construction of the project (approximately equivalent to 739 individuals employed on average at any time during the anticipated three year construction period). o $258.3 million in total economic output
• Annual operations-related economic impacts based on estimates of hotel operative revenues, on-site retail sales, and household spending from the housing units. HR&A also estimated the economic impacts of the existing hotel in order to estimate the net new impacts resulting from the project’s implementation.
o Approximately 615 total net new jobs
o $59.8 million in net annual economic output
Fiscal Impact Analysis
The project’s fiscal impact to the City was evaluated and measured in terms of revenue and cost impacts to the City’s General Fund. The fiscal impact is calculated by subtracting the anticipated costs to the City generated by the project from the anticipated revenues (various taxes) generated by the project. HR&A modeled the net fiscal impacts at the first year of stabilized operation (estimated for this analysis to be 2025).
• In the first year of stabilized operations, HR&A estimates that the project’s net fiscal impact to the City’s General Fund would be approximately $6.2 million ($3.44 million net new).
The increase in annual positive fiscal impacts is largely due to increased property taxes and transient occupancy tax generated by the project’s new lodging. 45 of 52
Financial Feasibility Review of Proposed Project
Community benefits achieved through development agreements have a long-standing history in Santa Monica, dating back to 1982. Negotiated community benefits can fund or provide a number of different improvements, ranging from affordable and middleincome housing to targeted streetscape enhancements. Negotiated community benefits may be used in conjunction with other funding and financing mechanisms where appropriate. Within the Downtown Community Plan, development agreements are required for projects within the Established Large Site Overlay.
As development agreements are negotiated on a case-by-case basis, financial and economic analyses are prepared to help understand how the negotiated community benefits affect the financial feasibility of proposed projects. The location, size and type of project, and its mix of uses can vary widely and therefore, the financial feasibility, range, and magnitude of benefits will similarly vary. Financial feasibility analyses are only one consideration in the overall approach to evaluating community benefits. The analyses are intended as an informational tool for decision-making and are not intended to be used for establishing a set dollar value scale of required community benefits based on entrepreneurial profit. It is also important to note that the analyses are rough approximations contingent on various assumptions. Therefore, to the maximum extent possible, the Downtown Community Plan seeks to establish a policy-based approach to setting transparent and consistent expectations for negotiated community benefits.
The City contracted HR&A Advisors to conduct a peer review of the Applicant’s confidential financial feasibility analyses. The financial feasibility analysis attached to this staff report provides an assessment of project feasibility using the Applicant’s profit margin metric. It should be noted that HR&A’s analysis represents the state of negotiations at the time the review was completed and thus it does not incorporate all aspects of the recommended community benefits in the draft development agreement.
The financial feasibility analysis provided by Applicant, even without the specified community benefits, shows a profit margin that is well below the minimum acceptable real estate industry benchmark for a development of this type (estimated at 12%). 46 of 52
As further discussed in Attachment J, HR&A’s independent review of the Applicant’s financial feasibility analysis suggests that the Applicant may be making conservative assumptions about the cost to operate the Cultural Use Campus because the project otherwise appears infeasible, based on the IRR calculated by the applicant’s feasibility model. As a result, the analysis suggests that the Cultural Use Campus would be operationally subsidized in perpetuity by transferring this obligation to any future owners and operators of the rest of the project, thereby reducing the Project’s overall value.
One factor raised in the analysis addresses the level of the ongoing operational subsidy necessary for the Cultural Uses Campus. For the purposes of discussion, HR&A’s analysis presents an additional scenario where the ongoing operation of the Cultural Uses Campus has a neutral effect on net operating income based on the assumption that the Applicant may secure a source of funding for annual operating costs instead of providing a full subsidy of this cost offset by other revenue derived from the project uses (e.g., hotel and commercial). This scenario would result in reduced operational cost and a resulting increase in investment return from 7.7% to 12%. This in turn would result in profit margins that would be higher than represented by the Applicant in the full and ongoing subsidy scenario, though still below the industry-accepted profit margin threshold of 13% to 15% for a development of this type.
General Plan and Downtown Community Plan Consistency
The proposed project has been reviewed for consistency with the 2010 LUCE, 2017 Downtown Community Plan, and Local Coastal Program, and guidance should also be sought from other City adopted documents including the Bicycle Action Plan, Open Space Element, and Urban Forest Master Plan. Attachment H provides an analysis of the project’s consistency with relevant General Plan and DCP goals and policies.
Summary analysis of the project’s consistency with DCP development standards is provided below.
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Downtown Community Plan Development Parameters
As discussed in the Background section of this report, the Downtown Community Plan was adopted by the Council in July 2017 to implement the LUCE’s detailed vision, goals, and policies for Santa Monica’s expanded Downtown District. DCP development standards and project requirements implement and align with the LUCE and comprehensively address housing, jobs, mobility, historic preservation, public open space, infrastructure, and art and culture into the plan framework.
The DCP identifies three sites in the Downtown that, given parcel size and development standards, could potentially provide significant community benefits associated with circulation, open space, preservation, affordable housing, and cultural facilities that would otherwise not be anticipated from smaller projects. These significant enhancements are identified as part of an overall strategy for potential economic and functional improvements to address anticipated future needs in the Downtown.
The DCP requires conformance with site-specific development standards for each of the three Established Large Sites. For the Ocean Avenue Project site, the plan specifies the following:
1. Maximum building height: 130’
• No building heights are proposed over 130’
2. Maximum floor area ratio (FAR): 4.0
• Project Floor Area Ratio is 2.95
3. Minimum open space: 50% of total parcel area comprised of 25% located at the ground floor and 25% without a regulated location
• 27.5% open space provided at ground level and 38% above ground level The DCP identifies affordable housing, cultural institutions, and historic preservation as the priority community benefits desired for this project site. 48 of 52
1992 Local Coastal Program Land Use Plan Amendment
An amendment to the City’s 1992 Local Coastal Program Land Use Plan (LUP) is necessary for the proposed project. Although the City Council adopted an updated Local Coastal Program Land Use Plan on October 9, 2018, that Land Use Plan has not been certified by the California Coastal Commission. At this time, the 1992 PartiallyCertified Land Use Plan needs to be amended to be consistent with the 2010 LUCE and 2017 Downtown Community Plan and the adopted development parameters for the Established Large Sites Overlay applicable to the subject property.
More specifically, the 1992 LUP land use designation applicable to the subject property (Subarea 3B – Ocean Avenue North of the Pier) was at the time consistent with the City’s 1984 General Plan Oceanfront District’s maximum 2.75 FAR and 45’ building height. However, as outlined below, this LUP amendment is necessary for consistency with the City’s current 2010 General Plan and 2017 Downtown Community Plan.
Attachment E provides the resolution for this LUP amendment.
Partially-Certified
1992 LUP
Council-Adopted
2010 LUCE and 2017 DCP
Proposed Amendments to Partially-Certified
1992 LUP
The Hotel Parcel is
located in the 1992
Partially-Certified
LUP's subarea 3B
(Ocean Avenue
North of the Pier).
The 1992 PartiallyCertified LUP
Policy 67 provides
a maximum height
of 45 feet and FAR
of 2.0 for the
subject property.
2010 LUCE:
LUCE Policy D1.5 designates the
Property as one of seven sites in
the Downtown District to focus
new investment given its
accessibility to transit and ability
to accommodate mixed-use
development, contribute to the
pedestrian-oriented environment,
and support substantial
community benefits.
2017 DCP:
The Hotel Parcel is located in the
Downtown District and
Established Large Site Overlay
with a maximum building height of
130’ and 4.0 FAR
New Policy XX. Add a new policy to the 1992
LUP as follows: If the properties located on the
north side of Santa Monica Boulevard between
Ocean Avenue and Second Street commonly
referred to as 129 Santa Monica Boulevard, 101
Santa Monica Boulevard, 1327 Ocean Avenue,
1333 Ocean Avenue, 1337 Ocean Avenue (the
“Established Large Site”) are redeveloped as a
comprehensive project pursuant to a
development agreement, then the development
standards in Policies 67 and 71 and the
corresponding development intensities shown on
Map 15 shall not apply to such new project on
the Established Large Site, and the project shall
instead not exceed 130 feet, with no limitation on
the number of stories, and a cumulative
maximum 2.95 F.A.R across the Established
Large Site.
Environmental Analysis
This staff report recommends the Council take three actions regarding the environmental review prepared for the Ocean Avenue Project:
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1. Affirm that the Ocean Avenue Project is exempt from CEQA pursuant to Section 15182 of the California Environmental Quality Act (CEQA) Guidelines;
2. Adopt a resolution certifying the Final Environmental Impact Report (EIR) prepared for the project in accordance with CEQA; and
3. Adopt a resolution adopting a Statement of Overriding Considerations to support approval of the Development Agreement based upon the Final EIR and other information provided in the record and adopting a Mitigation Monitoring and Reporting Program.
The summary discussion to support these actions is provided in Attachment O. The required resolutions are provided as Attachment F and Attachment G. The weblink to the Final EIR is provided as Attachment N.
Public Outreach
Hearing notices for the City Council’s review of the project were mailed 14 days prior to the hearing date to all residents and property owners within 750 feet of the subject property and mailed to community members who have previously attended meetings or requested to be placed on the project mailing list. A notice was also published in the Santa Monica Daily Press a minimum of fourteen days in advance of the public hearing on June 27, 2022. Staff has received community feedback and questions in advance of the both the Planning Commission’s May 18, 2022 discussion and the Council’s July 14, 2022 hearing. The following is a summary of comments and questions received:
Summary of Community Comments
Concerns and Questions Support
• Concerns about traffic, construction,
and noise.
• Questions about anticipated timing of
construction.
• Support expressed for more access to
arts and culture in Santa Monica.
• Support expressed for the Cultural
Uses Campus.
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Summary of Community Comments
Concerns and Questions Support
• Concerns about the project blocking
neighboring and nearby buildings’
views of the ocean and mountains.
• The hotel building should be no taller
than 110’ so views are not blocked
from nearby buildings or shift 130’
height to the building on Second Street.
• Rent-controlled units should be
provided on the top three floors of the
tallest building.
• Question about whether the City has
conducted any geotechnical analysis
pertaining to bluff stability. Studies
should be done using new information
gleaned from the landslides/building
collapses in Florida.
• Concern about allowing tourists who do
not have a stake in the community to
have access to the upper floors of the
building with the best views.
• Residents who live in nearby buildings
whose view will be blocked should get
the first chance to purchase and/or rent
units on the upper floors.
• The corner building should not have
highly reflective materials that create
glare.
• Stated the opinion that the historic and
contemporary architecture does not
work well together.
• Concern about loss of surface parking
lots on project site; parking lots are
used by patrons of nearby businesses.
• Support for project and opportunities
to involve youth and generate support
for local public schools.
• Support expressed for innovative and
community-focused projects like
Ocean Avenue Project.
• Support for having a creative and high
quality project design in Santa Monica.
• Support for having a Frank Gehry
designed museum in Santa Monica
that will provide for educational
opportunities and access to important
works from his archives/collection.
• The project will add a level of class
and character that downtown Santa
Monica desperately needs right now.
• The project will generate muchneeded revenue for the City to provide important services that are needed
now.
• The project provides the City with
benefits that are specific and defined,
robustly supported financially, and
informed by professional expertise.
• Stated the opinion that this project is a
gift to the community that will keep
giving to the community and also
engage and provide educational
opportunities for Santa Monica schools
and youth.
• The project’s hotel and new
shops/restaurants will have substantial
economic and fiscal impacts. As the
City is just re-emerging from the
COVID-19 pandemic, it is more
important than ever to approve
projects that will generate revenue for
our local economy.
• Project demonstrates context sensitive
design, represents the highest level of
development excellence, a focus on
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Summary of Community Comments
Concerns and Questions Support
placemaking, iconic design that is also
respectful of the historic structures on
site, sustainability, and affordable
housing.
Financial Impact and Budget Action
Based on the fiscal impact analysis provided by HR&A, it is estimated that if the project is approved, net fiscal impacts at the first year of stabilized operation (estimated to be 2025) to the City’s General Fund would be approximately $6.2 million ($3.44 million net new).
In addition, the project would provide one-time monetary contributions prior to issuance of a building permit for the project totaling $6,065,000 million. These one-time payments are required pursuant to the proposed Development Agreement:
• Enhanced Affordable Housing Commercial Linkage Fee Contribution in the amount of $400,000 (Four Hundred Thousand Dollars).
• Enhanced Transportation Infrastructure Contribution in the amount of $2,255,000 (Two Million, Two Hundred Fifty Five Thousand Dollars). • Parks and Recreation Fee Contribution in the amount of $2,160,000 (Two Million, One Hundred Sixty Thousand Dollars).
• Early Childhood Initiatives Contribution in the amount of $1,000,000 (One Million Dollars).
• Economic Equity/Opportunity Fund Contribution in the amount of $250,000 (Two Hundred Fifty Thousand Dollars).
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Prepared By: Roxanne Tanemori, Principal Planner
Approved Forwarded to Council
Attachments:
A. Attachment A OAP Project Plans 7-14-2022 Part 1 of 3 B. Attachment A OAP Project Plans 7-14-2022 Part 2 of 3 C. Attachment A OAP Project Plans 7-14-2022 Part 3 of 3 D. Attachment B Public Notice_Planning Commission Letters_Prelim Concept Discussions 2018
E. Attachment C Planning Commission Recommendations 5-18-2022 F. Attachment D Ordinance Development Agreement 7-14-2022 Part 1 to exhibit F G. Attachment D Ordinance Development Agreement 7-14-2022 Part 2 to exhibits G-P
H. Attachment E Resolution Amending 1992 LUP 7-14-2022
I. Attachment F Resolution Certifying Final EIR 7-14-2022 J. Attachment G Resolution Adopt SOC and MMRP 7-14-2022 K. Attachment H General Plan Consistency Analysis Ocean Avenue Project L. Attachment I Recommended Findings for Approval Ocean Avenue Project M. Attachment J HR&A Ocean Ave Project Financial Feasibility Findings 7-14-2022 N. Attachment K HR&A Economic and Fiscal Impact Analysis Ocean Ave Project 7- 14-2022
O. Attachment L Applicant Chattel Conformance Review Part 1 of 3 P. Attachment L Applicant Chattel Conformance Review Part 2 of 3 Q. Attachment L Applicant Chattel Conformance Review Part 3 of 3 R. Attachment M Applicant CBRE Economic and Fiscal Impact Ocean Avenue Project
S. Attachment N Link to Ocean Avenue Project EIR
T. Attachment O Environmental Analysis for Ocean Avenue Project U. Written Comments