(Rendering courtesy City of Santa Monica)

(Rendering courtesy City of Santa Monica)

CITY HALL — Heights may be worth the benefits from the massive project proposed for Arizona Avenue Downtown, City Council decided Tuesday night.

City Hall will enter into an exclusive negotiating agreement with Metro Pacific Capital, which is proposing 448,000 square feet of office, hotel, residential, and retail space in a 148-foot-tall building on public land south of Arizona between Fourth and Fifth streets in Santa Monica.

Council unanimously chose Metro Pacific over Related California, which had proposed a taller building with more residential units but no hotel.

This is only the first step, an “engagement,” as Mayor Pam O’Connor put it, allowing City Hall to negotiate exclusively with Metro Pacific. The final agreement will still have to work its way past community scrutiny, the Architectural Review Board, Planning Commission, and, again, the council.

The 112,000-square-foot plot of land is currently occupied by ICE at Santa Monica, the seasonal outdoor ice-skating rink, and two banks.

Metro Pacific proposes 96 rental units, 225 hotel rooms, 172,000 square feet of office space, and 52,000 square feet of retail. The project could generate $6.38 million annually for City Hall, city officials said. Related’s project could have generated $4.78 million.

The floor area ratio, or the ratio between the total floor area in a development and the amount of the parcel that a building uses, is proposed at 3.75 by Metro Pacific for this project.

The project’s costs were a concern of Councilmember Ted Winterer, especially after Metro Pacific agreed to increase the number of affordable housing units. The increase was in response to council’s August request that the developer come back with more affordable housing and more specific architectural designs.

Kathy Head, a financial real estate consultant with Keyser Marston, hired by City Hall, said that based on the numbers provided by Metro Pacific, the project’s projected costs do fall within a reasonable range given its early stage.

She’s considered that the hotel revenues projected by Metro Pacific could be too bold when compared to other mix-use hotels that the company has been involved with. She called the affordable housing plan “aggressive” but “doable.”

As the scope of the project changes, she said, the finances will have to be reevaluated.

During the public comment portion of the meeting, Metro Pacific’s Principal John Warfel invited questions from council. Winterer asked him about the project’s feasibility.

He expressed concern that Metro Pacific would later claim that they couldn’t afford to construct the mixed-use building within the parameters outlined in their pitch to council.

“I want to hear you say, ‘I believe I can make it work,’” he said.

“We absolutely believe we can make it work,” Warfel responded. “We wouldn’t be here if we didn’t think we could make it work.”

Members of Unite Here Local 11, a union representing hotel workers,  backed the Metro Pacific project, noting that the developer has already reached out to the union. They discussed the possibility of the hotel being unionized.

One concern among residents during the public portion of the meeting was that all of the proposals were too tall.

Council recently voted to study the environmental impacts of 84-foot-tall Downtown buildings. Metro Pacific said that building at 84 feet would be doable, but city planners noted that it could degrade the architectural aesthetics of the design.

Though council asked Metro Pacific to produce an alternative design at 84 feet tall, most councilmembers expressed a willingness to consider a tall project given the benefits. They cited open space to accommodate the ice rink, parking reservoirs, and affordable housing as stellar benefits.

“The question is: What are the tradeoffs going to be?” asked Councilmember Gleam Davis. “One of the key things is, when we sent staff off to do this project, we gave them a fairly long list of community benefits that we wanted associated with this project … All of those things add up over time and there’s a cost associated with them.”

Davis supported studying the project at 84 feet, but she wondered how it would impact the benefits.

“I think everyone’s going to need to be prepared to say, if you want to make it shorter, what are you willing to give up?”

 

dave@smdp.com