City Council
Report
City Council Meeting: October 11, 2022
Agenda Item: 14.A
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To: Mayor and City Council
From: David Martin, Director, Administration
Subject: Adoption of Resolution Declaring Surplus Properties Recommended Action
Staff recommends that the City Council:
1. Declare the City-owned properties located at 1855 Main Street (APN 4290-013- 901), 1636 5th Street (APNs 4290-011-903, 4290-011-904, 4290-011-905) and Expo Line Parking Lot (APN 4290-011-909) as “surplus land” within the meaning of the Surplus Land Act (“SLA”);
2. Adopt a Resolution declaring the City-owned properties at 1855 Main Street (APN 4290-013-901) (“Civic Auditorium”), 1636 5th Street (APNs 4290-011-903, 4290-011-904, 4290-011-905) (“Apple Building”) and Expo Line Parking Lot (APN 4290-011-909) as surplus lands, if required; and authorize the City Manager or designee to take implementing actions necessary to comply with the SLA; and
3. Authorize the City Manager or designee to initiate lease negotiations for the City’s existing commercial buildings without complying with the noticing procedures under the SLA if the State Department of Housing and Community Development (HCD) determines that the SLA does not apply to proposed leasing of existing non-residential buildings without demolition.
Summary
The California Surplus Land Act (Government Code 54220 et seq.) (the “SLA”) governs the disposition of local agency-owned properties. Effective January 1, 2020, the SLA requires local agencies, including the City of Santa Monica, to prioritize affordable housing development opportunities before proceeding with any proposed sale or lease of surplus lands. “Local agency” means every city, whether organized under general law or by charter, county, city and county, and district, including school districts of any kind or class, empowered to acquire and hold real property. Under the SLA, local 2 of 7
agency-owned properties must be declared “surplus” or “exempt surplus” by the legislative body of the local agency and supported by written findings. To ensure compliance with the SLA, Council is requested to adopt a resolution (Attachment A) declaring the following City-owned properties as surplus land, subject to determination by the State Housing and Community Development (HCD) that the SLA does not apply to the leasing of existing non-residential buildings without demolition:
• Civic Auditorium at 1855 Main Street (APN: 4290-013-901) • Apple Building at 1636 5th Street (APN: 4290-011-903, 4290-011-904, 4290-011- 905) and
• Expo Line Parking Lot (APN 4290-011-909)
Discussion
The SLA was enacted pursuant to Assembly Bills (AB) 1486 and 1255. The SLA requires local agencies to formally declare publicly owned properties (that are no longer necessary for the local agency’s use) as surplus land or exempt surplus land before beginning the disposition process. Prior to the City’s ability to enter into a lease or license agreement for 5 years or longer, the City must comply with the SLA process.
Under the SLA, for properties declared as surplus land, local agencies must follow a statutory noticing and negotiation period with certain designated entities, including eligible housing sponsors defined by the California Department of Housing and Community Development (HCD). A Notice of Availability (NOA) is sent to the Eligible Entities (i.e., other public agencies and prospective affordable housing developers) that have registered with the State for specified uses, including affordable housing, parks and recreation, and schools. If an Eligible Entity is interested in the purchase or lease of the surplus land, the entity must submit in writing to the City its Notice of Intent (NOI) to purchase or lease the land within 60 days after receipt of the City’s NOA to dispose of the land.
If the City receives an NOI from any Eligible Entities, the SLA mandates a 90-day negotiation period with any designated entities that submit timely offers. If the City 3 of 7
does not receive any NOI or the negotiations with an Eligible Entity does not result in a disposition, the local agency may negotiate with any other developers or interested parties for the disposition of the surplus land.
The State Department of Housing and Community Development has provided guidance to City staff that the SLA may not apply when a local government agency leases an existing non-residential building that would not entail demolition of the building as part of the lease. As a result, City staff has asked HCD to provide a written determination regarding proposals for long term commercial leases of existing buildings if the proposed renovations do not entail “demolition” within the meaning of Santa Monica Municipal Code section 9.25.030 HCD. If HCD determines that these types of commercial leases and associated renovations are not subject to the SLA, then staff will bring these proposals to Council as negotiations proceed without proceeding with the noticing procedures under the SLA.
At its meeting on March 23, 2021, Council authorized the designation of the Apple Building as surplus land, but staff did not proceed with noticing under the SLA since the City had no immediate plans to lease the building. Recently, the City’s Economic Development Division (“EDD”) has received inquiries or proposals regarding the leasing of the Civic Auditorium and the Apple Building. EDD also anticipates future interest in redeveloping the portions of the Expo Line Parking Lot as part of a larger future redevelopment opportunity site.
1855 Main Street (Civic Auditorium Building); APN: 4290-013-901; Size: 3.7 acres The Civic Auditorium, owned by the City of Santa Monica, is largely in its original condition as constructed in 1958. Zoned as a recreational use under the City’s Civic Center Specific Plan, the Civic Auditorium is comprised of 27,000 square feet on the main floor with a capacity for up to 3,000 seated and 3,500 standing. The East Wing of the Civic Auditorium also provides 4,189 square feet and seating capacity of 500. In 2002, the City designated the Civic Auditorium as a City landmark to preserve key historic features such as the exterior façade and certain interior design elements such 4 of 7
as the configuration of the lobby, the two original staircases, the volume of the Main Hall space and several other elements noted in the landmark designation.
The City’s former Redevelopment Agency (RDA) originally prioritized $51.9 million to fund significant seismic improvements and ADA upgrades to the Civic Auditorium. In March 2009, Council approved a Request for Qualifications (RFQ) to engage a public private partnership to redevelop the Civic Auditorium. While there was high level of interest, the City received only one response. The Nederlander Organization submitted a proposal to renovate, program, and manage the Civic Auditorium, however, negotiations did not move forward due to the elimination of the RDA in 2011. As redevelopment funds were no longer available and operating the Civic Auditorium without the required seismic and ADA improvements was risky, the Civic Auditorium formally closed on June 30, 2013. Until 2020, the East Wing was used periodically to host community meetings, filming and staging but fully shuttered prior to COVID due to lack of budget and staffing
In December 2017, City staff issued a Request for Proposal (RFP) to solicit proposals for a public private partnership to redevelop the Civic Auditorium. The RFP was well received however given the significant scope of work and investments the City received only one proposal. The proposal came from an experienced development team with an entertainment and sports venue background. Negotiations with the potential developer concluded in late 2019 due to project feasibility concerns and City participation constraints. Since then, renovation plans for this property have been put on hold due to lack of City funding.
The City has started to receive renewed interest in the Civic Auditorium from prospective commercial operators. Staff now seeks designation of the Civic Auditorium as surplus land or proceeding directly with negotiations if HCD confirms that the longterm leasing of the existing facility with only interior tenant improvements is not subject to the SLA.
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1635 5th Street (Parking Lot 29); APNs: 4290-011-903, 4290-011-904, 4290-011-905; Size: 0.32 acres
At its meeting on March 23, 2021, Council adopted a resolution to declare the Cityowned property at 1635 5th Street (Apple Building) as surplus land. The parcels associated with the Apple Building and Parking Lot 29 parcels were acquired to implement the Exposition 4th Street Light Rail Terminus Station. Council authorized the purchase of the parcels at its October 24, 2006 meeting.
The Apple Building is currently vacant. Parking Lot 29, which is adjacent to the Apple Building, has an existing license agreement with EVgo Services, LLC (“EVgo”) for a 10-year term that will expire on July 13, 2031. There are currently no immediate plans for a longstanding redevelopment project at the Apple Building and Parking Lot 29 due to lack of funding, however, the City may pursue short-term interim uses until a viable long-term redevelopment opportunity is available.
Expo Line Parking Lot; APN:4290-011-909; Size: 1.09 acres This property was acquired along with the purchase of the Apple Building and Parking Lot 29 parcels as part of a land assemblage to facilitate the construction of Expo Terminus Station. Several of the parcels acquired by the City’s former Redevelopment Agency were sold to Metropolitan Transportation Authority (MTA). The City retained the Expo Line Parking Lot parcel to facilitate future transit-oriented development opportunities prioritizing affordable housing. As stated for the Apple Building and Parking Lot 29 there are currently no immediate plans to redevelop this property.
Declaring this property as surplus lands now enables the City to pursue interim uses as opportunities arise.
Future Actions
Assuming these properties are designated as surplus lands, staff will proceed with noticing procedures under the SLA prior to commencing lease negotiations for commercial uses of these properties, unless HCD determines that leasing of existing non-residential buildings without demolition is not subject to the SLA. An example of the 6 of 7
City's draft Notice of Availability (NOA) cover letter is provided as Attachment B.
Entities and organizations registered as interested developers would receive copy of the notice and would have 60 days to respond from the date of the NOA. If HCD determines that the leasing of the existing Civic Auditorium and Apple Building without demolition are not subject to the SLA, then staff will commence negotiations and return to Council for direction as to specific lease terms.
Past Council Actions
Meeting Date Description
10/24/2006 Authorization to Acquire Properties at 1632-1636 5th Street 3/23/2021 Adoption of a Resolution of Inventory of City-Owned Properties Subject to the Surplus Lands Act
Environmental Statement
The City has determined that the designation of this property as surplus does not have the potential for creating a significant effect on the environment and is therefore exempt from further review under CEQA pursuant to State CEQA Guidelines Section 15061(b)(3). Adoption of the resolution does not have the potential for resulting in either a direct physical change in the environment or a reasonably foreseeable indirect physical change in the environment, as no development is authorized by this resolution and any future disposition will require separate environmental analysis if and when the details of such disposition are known.
Financial Impacts and Budget Actions
There are no immediate financial impacts or budget actions necessary because of the recommended actions. An analysis of the specific financial impacts for each property will be presented when staff returns with interim or long-term disposition proposals for Council consideration.
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Prepared By: Nia Tang, Senior Development Analyst
Approved Forwarded to Council
Attachments:
A. 2006 10.24 Authorization to Acquire Properties at 1632-1636 5th Street (Web Link)
B. 2021 3.23 Adoption of a Resolution of Inventory of City-Owned Properties Subject to the Surplus Lands Act (Web Link)
C. Attachment A - SLA Resolution (10.11.2022 CC)
D. Attachment B - SLA Notice of Availability_Cover Letter (DRAFT) E. PowerPoint Presentation