By Michael Feinstein. Inside/Outside. June 03, 2015
The proposed City project at 4th/5th/Arizona presents unique planning opportunities for our community, first because we the public own the land. As a result, through our local government, we get to decide what gets built there. When the City compiled multiple parcels, it also gave us great flexibility to dream and plan.
At tonight’s ‘float up’ discussion at the Planning Commission, public input is sought on the proposed Development Agreement. A similar ‘float up’ will follow in August at the City Council.
Mix of uses
You can’t get far in Santa Monica without talking about jobs/housing balance. It’s been a significant part of our community dialogue for decades. Rezoning in 1988 to create the Special Office District (leading to the Water Garden) was a watershed moment in local development history. The perception of too much office space (and/or not enough housing) in the proposed neighboring Hines/Bergamot Transit Village project was part of what brought it down in 2014.
This 148-foot high project would include 195 hotel rooms, 206,800 square feet of office space, 40,000 square feet of retail space, 48 affordable residential units, 12,000 square feet of cultural space, 51,000 square feet of public open space, and 1,143 parking spaces within a four-level subterranean parking garage.
Worth investigating is whether the incremental cost to add more affordable units as part of this project is potentially much less than starting over off-site. There is a floor proposed to be 1/2 housing and 1/2 commercial office. An alternative could be to double the amount of affordable housing in the entire project from 48 to 96 units by changing the proposed office space on that floor into housing. This would positively affect jobs/housing balance, and lessen traffic impacts.
The developer argues that this mix of hotel, office, retail and residential allows them to pay to build the project, to provide the public benefits and to pay a ground lease and taxes that help retire the city’s $3 million plus annual payment through 2040.
One way to finance this office-to-housing shift could be to defer for period of years, a portion of that ground lease to finance those extra units. Analysis could determine whether this would be more economical than to try to buy new land and build additional affordable housing elsewhere in the downtown in the future
There are also many who argue we should have no office space at all, pointing to the City’s overall jobs/housing imbalance and traffic woes. If some version of the project is built, less office space is probably more, but the presence of some can be a positive, because of the foot traffic and customer base it provides during the daytime/evening, both within the project and in the surrounding area. Others argue for a shit from office to hotel. However it is achieved – especially at nighttime, having people coming and going through the public spaces in the project is a good thing in an urban area.
The proposed underground parking in this project implements part of an overall City Downtown Parking Plan and land use strategy, that includes taking down parking structure #3 across street along 4th St. next to Wells Fargo and putting new modern movie theaters in its place (the city is currently negotiating with ArcLight theaters to become the tenant). Parking from structure #3 would be moved underground across the street as part of the City project.
This opens up an interesting potential domino effect. Part of the concept behind new city parking south of the Expo Station (including the gained new space by the likely southward realignment of the existing 4th Street off-ramp to Olympic Dr.), is creating parking next to the freeway as a tool for people to exit, park and walk into downtown — instead of driving there to look for parking.
How could that combine with the 4th/5th/Arizona project? The City can take down parking structure #1 on the west side of 4th Street just south of Wilshire, and can cumulatively replace those spaces in the City project at 4th/5th/Arizona and in the freeway adjacent structure at 4th Street.
This overall shift in the locus of downtown parking towards the freeway and underneath 4th/5th/Arizona would ease the congestion burden on 4th street, which a lot of residents use to commute to work (and will use to get to the Expo light rail station at 4th/Colorado.)
The land use and income-producing aspect of this domino then could be to use the site where parking structure #1 is now to meet municipal needs, including potentially more affordable housing in our downtown, which would help us meet state Housing Element goals, lessen commute demands and relieve pressure to redevelop existing neighborhoods (and displace existing residents).
There are many residents who want nothing higher than the existing 84-foot height limit. Others would support something somewhat taller than 84 feet, in exchange for a great design and enough community benefits — but it depends upon how much higher. City polling on downtown heights polled about 2:1 against excessive heights. A 148-foot structure could invite a referendum. Whether that happens and whether it would be successful, would also depend upon when this project is heard in relationship to the three hotel/condo projects proposed between 195 feet and 325 feet along Ocean Avenue., and how the community responds to those.
It’s a challenge to propose a project that can do many things and pencil. This developer has a long reputation in this community as a straight shooter. But developers usually have a plan B. It would be interesting to see how something would pencil — and what would be the trade-offs —of something two to three stories lower than is proposed, and with less office and more housing.
There is a fair debate about whether the site should be developed as proposed in the Development Agreement, with open and varied public spaces on multiple upper levels, or as a street level park, as many community members have advocated for.
Instead of the mix of uses and public benefits proposed in the Development Agreement, this would mean a new park costing $120 million just to buy the land – of which the City would still owe approximately $90 million in payments through 2042. However, without the proposed project, the City would no longer have a guaranteed income stream to pay off that remaining outstanding debt, which the proposed project would do. Currently the City has been making those payments by negotiating every six months with the State of California, to allow the City’s previous Redevelopment Agency (RDA) funds to be applied towards this debt. But unlike the City’s other RDA obligations, the state has not issued a Statement of Final Determination, about whether the City can continue to apply its prior RDA funds towards this debt. If not, and if there is no income-generating park there, any remaining portion of the outstanding $90 million debt will become a new $3 million a year obligation upon the City’s general fund, squeezing out multiple other communities priorities.
In addition to potentially finding a new funding source for that $90 million, the need would still remain to build the 339 underground parking spaces there planned in the Downtown Parking Study. This underground parking, priced at approximately 50,000 per underground parking space, would cost approximately another $17 million, with further additional costs for however many extra parking spaces the new park would require. Then there would be the further costs to build the new park, program it and police it at night — plus the costs to buy out the banks currently located along 4th St from their long-term leases and relocate them. Currently there is the possibility to include them on the project site and thus not have to pay to relocate them.
Based upon this analysis, the City would be have to come up with at least a new $30-$50 million to build and operate the park — plus potentially the additional $90 million of future lost RDA funds, depending upon what the State decides — none for which the City currently has an identified funding source for. This new demand could also then compete with raising funds through a bond measure to partially pay to restore the Civic Auditorium and build the long-planned adjacent park there at 4th/Pico. Ironically, many of those who seek a park at 4th/5th/Arizona, also want to preserve as much open green park space for the planned park at 4th/Pico, while minimizing the amount of space in the new park eaten up by new income-generating commercial development to pay to restore the Civic Auditorium and build the park.
But to do all of this – i.e. to greatly minimize commercial development at 4th/Pico in order to maximize open, green space there, and to have a large central park at 4th/5th/Arizona – would probably lead to a very large bond measure, combining the $30-$50 million for a new park at 4th/5th/Arizona (plus potentially the $90 million more if RDA funds are lost), and then potentially several tens of millions of dollars more for the 4th/Pico park and the Civic Auditorium restoration. At this point, its worth asking whether if the public is going to have to bond $30-$50 million (plus potentially $90 million more) to put a park at 4th/5th/Arizona, whether it wouldn’t make more sense instead to gain the multi-level downtown public spaces planned in the 4th/5th/Arizona project, then have those new bonded funds dedicated instead to gain new green park space by capping as much as possible of the I-10 freeway between Ocean Ave. and 4th St. Then if the City is fortunate enough that the State allows the remaining outstanding $90 million debt at 4th/5th/Arizona to be paid out of the City’s past RDA funds, then parts of the $90 million gained from the project’s ground leases and taxes could be used to pencil out a shorter project with more affordable housing and less office space there, and/or to further fund capping the 1-10 freeway and putting new open park space there.
These are just some of the choices and trade-offs that need debating. There is enormous potential to meet community needs with such a contiguous urban parcel.
We don’t know how high of a project the City Council will ultimately approve. But hopefully the public process for this project will meet new heights, through active listening and dialogue among all sides, and that we come out with something on the other side that will be worthy of our greatness as a community.
Michael Feinstein is a former Santa Monica Mayor (2000-2002) and City Councilmember (1996-2004). He can be reached via Twitter @mikefeinstein
‘Inside/Outside‘ is a periodic column about civic affairs Feinstein writes for the Daily Press, that takes advantage of his experience inside and outside of government.