Loading...
CC 2015-02-10_11c MOU with NKT Commercial - S_Courtland and GrandTO: FROM: BY: SUBJECT: DATE: MEMORANDUM CITY COUNCIL TERESA MCCLISH~;MMUNITY DEVELOPMENT DIRECTOR MATTHEW DOWNING~SISTANT PLANNER CONSIDERATION OF A MEMORANDUM OF UNDERSTANDING WITH NKT COMMERCIAL REGARDING DEVELOPMENT OF THE VACANT LOT AT THE SOUTHWEST CORNER OF EAST GRAND AVENUE AND SOUTH COURTLAND STREET FEBRUARY 10, 2015 RECOMMENDATION: It is recommended the City Council approve a Memorandum of Understanding (MOU) with NKT Commercial regarding negotiating a Development Agreement for the development of a mixed use project on the vacant lot at the southwest corner of East Grand Avenue and South Courtland Street and provide general direction to staff and the developer. IMPACT ON FINANCIAL AND PERSONNEL RESOURCES: There will be an unknown, but potentially significant amount of staff time associated with the negotiation and preparation of a Development Agreement. BACKGROUND: Several development proposals have been submitted for the subject property in the last fifteen (15) years. Most recently, at the regular meeting of December 9, 2014, the City Council reviewed a proposed commercial and residential project, considered all the facts and public testimony, took tentative action to deny the proposed project without prejudice, and directed staff to return with a resolution with appropriate findings supporting the denial. At the regular meeting of January 13, 2015, the City Council moved to continue the project's consideration to a date uncertain to allow an opportunity for the developer and the City to identify an appropriate path forward and/or mechanism that would result in an economically viable project that meets the City's vision and development standards for the site. ANALYSIS OF ISSUES: During the January 13, 2015 Council meeting, several preliminary ideas were discussed by the Council, including the development of an MOU. The purpose of the MOU would be to show that both the City and the developer are interested in and committed to Item 11.c. - Page 1 CITY COUNCIL CONSIDERATION OF A MEMORANDUM OF UNDERSTANDING WITH NKT COMMERCIAL REGARDllNG DEVELOPMENT OF THE VACANT LOT AT THE SOUTHWEST CORNER OF EAST GRAND AVENUE AND SOUTH COURTLAND STREET FEBRUARY 10, 2015 PAGE2 identifying an acceptable path-forward that would result in a project meeting three (3) key goals: 1. Provide NKT Commercial with sufficient flexibility to induce investment related to a project; 2. Generate economic revitalization of the East Grand Avenue corridor through a high quality gateway development project; and 3. Preserve the adjacent neighborhood's residential character. Based upon the Council's discussion on January 13, the subject, non-binding MOU was developed, which sets forth a general framework for the parameters and terms to be negotiated, hopefully resulting in a Development Agreement between the property owner and the City in accordance with California Government Code Sections 65864 et seq. and Arroyo Grande Municipal Code Section 16.16.150. It is important to note that even with this non-binding MOU, the property owner could decide to pursue a separate land use entitlement before the Development Agreement is negotiated. ALTERNATIVES: The following alternatives are provided for the Council's consideration: 1. Approve the proposed MOU; 2. Modify as appropriate and approve the MOU; 3. Do not approve the MOU; or 4. Provide direction to staff. ADVANTAGES: Adopting the MOU shows the City's commitment to finding the appropriate path toward obtaining a viable commercial project that will generate economic revitalization of the East Grand Avenue corridor, while preserving the adjacent neighborhood's residential character. It also provides the property owner flexibility to induce investment in the property. DISADVANTAGES: The MOU is non-binding and negotiations for a Development Agreement may fail. However, approving the MOU is a show of good faith that the City is truly interested in achieving a development on the site. ENVIRONMENTAL REVIEW: In accordance with the California Environmental Quality Act (CEQA), the State CEQA Guidelines, and the Arroyo Grande Procedures for the Implementation of CEQA, staff has determined that adopting the prepared MOU is exempt from environmental review in accordance with Section 15061 (b )(3) of the CEQA Guidelines that states the activity is covered by the general rule that CEQA applies only to projects which have the potential for causing a significant effect on the environment. Item 11.c. - Page 2 CITY COUNCIL CONSIDERATION OF A MEMORANDUM OF UNDERSTANDING WITH NKT COMMERCIAL REGARDllNG DEVELOPMENT OF THE VACANT LOT AT THE SOUTHWEST CORNER OF EAST GRAND AVENUE AND SOUTH COURTLAND STREET FEBRUARY 10, 2015 PAGE3 PUBLIC NOTIFICATION AND COMMENTS: The agenda was posted at City Hall on February 5, 2015. The agenda and staff report were posted on the City's website on February 6, 2015. Item 11.c. - Page 3 MEMORANDUM OF UNDERSTANDING REGARDING NEGOTIATION OF DEVELOPMENT AGREEMENT FOR MIXED USE PROJECT THIS MEMORANDUM OF UNDERSTANDING ("MOU") dated as of this __ day of January, 2015, is by and between the City of Arroyo Grande ("City"), a municipal corporation, and NKT Commercial, LLC, a California limited liability company ("Property Owner'') (each individually a "Party" and, collectively, the "Parties"), RECITALS WHEREAS, Property Owner is the owner of real property consisting of approximately 4.47 acres identified as Subarea 3 of the Berry Gardens Specific Plan located in the City of Arroyo Grande, State of California and legally described in Exhibit A, attached hereto and incorporated herein by this reference (hereinafter referred to as the "Property"); and WHEREAS, Property Owner and City desire to facilitate the development and construction of a mixed use (commercial and office/residential) project on the property (the "Project") in order to accomplish three shared important goals: 1) Provide NKT with sufficient flexibility to induce investment related to the Project; 2) Generate economic revitalization of the Grand Avenue corridor through a high quality Gateway development project; and 3) Preserve the adjacent neighborhood's residential character; and WHEREAS, in furtherance of the Project, Property Owner and City desire to reach a Development Agreement in accordance with the provisions contained in California Government Code Sections 65864 et seq. and Arroyo Grande Municipal Code Section 16.16.150; and WHEREAS, prior to executing a Development Agreement, the Parties wish to enter into this non-binding MOU to set forth a framework for the parameters and terms to be negotiated. NOW, THEREFORE, in consideration of the foregoing and other good and valuable consideration, the receipt and sufficiency of which is acknowledged, City and Property Owner agree as follows: Section 1. Recitals. The above recitals are hereby incorporated into the body of this MOU as though set forth in full herein. Section 2. Preservation of City and Property Owner Discretion. By execution of this MOU, City is not committing itself to or agreeing to undertake any acts or activities requiring the subsequent independent exercise of authority or discretion of City or any body or department thereof. Property Owner is not committing itself to or agreeing to undertake any acts or activities. Execution of this MOU is merely an agreement to enter 1 Item 11.c. - Page 4 into a period of good faith negotiations according to the terms hereof, reserving final discretions and approval by the City and Property Owner as to any Development Agreement, Project Entitlements (as defined below), and all necessary and required proceedings and decisions in connection therewith relating to the Project. Nothing in this MOU creates a binding obligation, and no binding agreement will exist unless the Parties sign a final and definitive agreement. Each Party expressly acknowledges and agrees that this MOU creates no obligation on the part of any Party to: (i) enter into a Development Agreement; (ii) grant any approvals or authorizations required for the Project; (iii) agree to any specific terms or obligations; or (iv) proceed with the development of the Property. All of the terms set forth in this MOU are preliminary in nature and subject to approval by the City and Property Owner and memorialization in an executed Development Agreement. The Parties acknowledge that the Project may be revised as the environmental and planning processes proceed. In particular, the Parties further acknowledge the following statutory and local ordinance requirements which must be complied with in order for the Project to proceed: a. The provisions of the California Environmental Quality Act, Public Resources Code Sections 21000 et seq. ("CEQA"), including but not limited to project alternatives or mitigation measures, as well as the alternative of not going forward with the Project; b. The provisions of Government Code Sections 65864 et seq. and Arroyo Grande Municipal Code Section 16.16.150 relating to the approval of development agreements, including the requirement for public hearings and requiring that certain findings be made; c. The provisions of Government Code Sections 65300 et seq. and Arroyo Grande Municipal Code Section 16.16.020 relating to the approval of general plan amendments. d. The provisions of Government Code Sections 65450 et seq. and Arroyo Grande Municipal Code Section 16.16.030 relating to the approval of specific plan amendments. e. The provisions of Government Code Sections 66410 et seq. and Arroyo Grande Municipal Code Section 16.20.10 et seq. relating to divisions of land. f. The provisions of Government Code Sections 65901 and Arroyo Grande Municipal Code Section 16.16.050 relating to conditional use permits. Section 3. Good Faith Negotiation of a Development Agreement. During the term of this MOU, Property Owner and City shall negotiate in good faith the terms and conditions of the Development Agreement, subject to the retained discretion described in Section 2, above. Any such Development Agreement resulting from negotiations 2 Item 11.c. - Page 5 hereunder shall only become effective after, and if, the Development Agreement has been considered and approved by the City in accordance with Government Code Sections 65864 et seq. and Arroyo Grande Municipal Code Section 16.16.150 and approved by Property Owner. If such Development Agreement is approved and executed by City and Property Owner, it shall thereafter govern the rights and obligations of the Parties with respect to the Project. Best efforts will be exercised by both the City and Property Owner to complete the referenced Development Agreement within 60 days of the adoption of this MOU. It is contemplated that the Development Agreement will include the following terms: a. Term. The term of the Development Agreement will be negotiated but in no event shall the term be for a period less than 3 years, and it shall also include provisions to comply with the requirement in Government Code Section 65865.1 relating to periodic review of the Development Agreement. b. Project Development. The Development Agreement will include the specifics regarding the Project that Property Owner would agree to develop and construct. Alternative 1 is expected to include the following: (1) No less than 70% of the land area will be developed with commercial uses and supporting parking with parking not less than required by the City municipal code, including allowable reductions, and no more than 30% of the land area will be developed with high density residential units, continuing care retirement community units, (or similar assisted living facilities) and supporting parking, either with apartments for rent, assisted living units for hire or rental, or residential units for sale with a density of no less than 20 units per acre; (2) Any stand alone office or residential/retirement or assisted living development will be at the rear of the Project, away from East Grand Avenue, and may only commence after building construction has commenced on the front portion of the Project and after all public improvements that are the responsibility of the Property Owner have been completed; (3) Commercial building square footage is estimated to be approximately 55,000 square feet if the Project is entirely commercial, and in no case less than 38,500 square feet; (4) No individual buildings may exceed 40,000 square feet; (5) Commercial buildings may include office, including medical use, and other commercial uses identified in the City municipal code; however, the office use must be located behind and/or above retail and may not exceed 55% of the land area; 3 Item 11.c. - Page 6 (6) No less than two retail commercial buildings shall be located on East Grand Avenue; (7) Vertical mixed use is strongly encouraged but not a requirement of the Project; (8) The Project architecture will be consistent with the Berry Gardens Specific Plan, the Design Guidelines and Standards for Mixed-Use Districts, and the East Grand Avenue Enhancement Plan, or as agreed to by the City and Property Owner. Alternative 2 is expected to consist of the project that was reviewed by City Council o.n December 9, 2014, as modified by a minimum of 5,000 s.f. of additional commercial or office space and a corresponding reduction of area devoted to single family detached housing, or continuing care retirement community units, (or similar assisted living facilities) and supporting parking. It is recognized and acknowledged that the Project descriptions contained in this MOU are not complete at this point. The Development Agreement shall include provisions relating to the density and intensity of use, maximum height and size of proposed buildings which shall be consistent with this MOU, a plan of development and provisions for reservation or dedication of land for public purposes. c. City Approvals. The Project is anticipated to require the following review: Staff Advi,sory Committee, Architectural Review Committee, Traffic Commission, Planning Commission and City· Council. The Project is anticipated to require the following approvals and entitlements: Mitigated Negative Declaration, Specific Plan Amendment, Vesting Tentative Tract Map and Conditional Use Permit. d. Project Public Improvement Requirements. Anticipated improvements to streets and the intersection will be limited to the improvements contained in the prior conditions of approval for the MH1 and NKT project. e. Development Impact Fees and Reimbursement for Costs incurred by the City. The timing of payment of applicable development impact fees shall occur following entitlement at the time of issuance of a permit for construction activities on the site, as permitted in the City municipal code. In addition, a Specific Plan Amendment will be required. Property Owner agrees to pay the costs incurred by the City in preparing the revised Specific Plan. Section 4. Notices. To be effective, all notices, requests, demands, and other communications required or permitted under this MOU shall be in writing and shall be delivered either in person or by certified mail, postage prepaid, return receipt requested. Notice is deemed effective on delivery if served personally on the Party to whom notice 4 Item 11.c. - Page 7 is to be given and delivery is confirmed by a receipt. Notice is deemed effective on the second day after mailing if mailed to the Party to whom notice is to be given, by first class mail, registered or certified, return receipt requested, postage prepaid, and properly addressed as set forth below. Any correctly addressed notice that is refused, unclaimed, or undeliverable because of an act or omission of the Party to be notified shall be deemed effective as of the first date that said notice was refused, unclaimed, or deemed undeliverable by the postal authorities. The addresses for purposes of giving notice are as set forth below but each Party may change its address by written notice in accordance with this paragraph. If to Property Owner: lfto CITY: NKT Commercial, LLC Attn: Nicholas Tompkins 684 Higuera Suite 8 San Luis Obispo, Ca. 93401 City of Arroyo Grande Attn: City Manager 300 E. Branch Street Arroyo Grande, CA 93420 Section 5. Authorizations. All officers and individuals executing this and other documents on behalf of the respective Parties do hereby certify and warrant that they have the capacity and have been duly authorized to so execute said documents on behalf of the entity so indicated. Section 6. Headings and Captions. The captions and headings of this MOU are inserted for convenience only and shall not be deemed a part of this MOU and shall not be used in interpreting this MOU or in determining any of the rights or obligations of the Parties. Section 7. Severability. If any term, provision, covenant, or condition of this MOU shall be or become illegal, invalid, null, void, unenforceable, or against public policy, in whole or in part, or shall be held by any court of competent jurisdiction to be illegal, invalid, null, or void, or against public policy, the term, provision, covenant, or condition shall be deemed severable, and the remaining provisions of this MOU shall remain in full force and effect and shall not be affected, impaired, or invalidated. The term, provision, covenant, or condition that is so invalidated, voided, or held to be unenforceable shall be modified or changed by the Parties to the extent possible to carry out the intentions and directives set forth in this MOU. Section 8. Counterpart Execution. This MOU may be executed in any number of counterparts, each of which shall be an original, but all of which together shall constitute one and the same instrument. Section 9. Entire Agreement. This MOU constitutes the final, complete, and exclusive statement of the terms of the MOU between the Parties pertaining to the MOU and 5 Item 11.c. - Page 8 supersedes all prior and contemporaneous agreements, promises, representations, warranties, understandings, or undertakings by either of the Parties, either oral or written, of any character or nature. No Party has been induced to enter into this MOU, nor is any Party relying on, any representation or warranty outside those expressly set forth herein. Section 10. Ambiguities. Each Party and its counsel have participated fully in the preparation, review and revision of this MOU. Any rule of construction to the effect that ambiguities are to be resolved against the drafting Party shall not apply in interpreting this MOU. IN WITNESS WHEREOF, the Parties have executed this Memorandum of Understanding which shall be deemed effective as of the first date set forth above. CITY OF ARROYO GRANDE JIM HILL, MAYOR ATTEST: KELLY WETMORE, CITY CLERK APPROVED AS TO CONTENT: BOB McFALL INTERIM CITY MANAGER APPROVED AS TO FORM: TIMOTHY J. CARMEL, CITY ATTORNEY NKT COMMERCIAL, LLC NICHOLAS TOMPKINS, MANAGING MEMBER 6 Item 11.c. - Page 9 THIS PAGE INTENTIONALLY LEFT BLANK Item 11.c. - Page 10