Santa Monica City Hall (File photo)

Former City Manager Rick Cole is advocating for Council to abandon current plans for a large-scale development on city owned property downtown and instead is advising City Hall to pursue a new idea with more housing and less office space.

Cole left his position as City Manager earlier this year rather than face the consequences of massive budget cuts imposed by the coronavirus crisis. Cole said at the time that he would step aside to facilitate the restructuring of the city and he negotiated an exit package worth more than $250,000. City Attorney Lane Dilg was chosen as his interim replacement.

The Plaza project has been underway for more than 10 years, including several years of development under Cole’s watch.

In February of this year, before Cole left, Dilg recommended the city suspend negotiations with the developer after state regulators expanded the scope of California’s Surplus Land Act.

The law requires public land to be prioritized for development of affordable housing and in February, Dilg said her office proactively reached out to state lawmakers to ask for clarification about the Plaza project.

Dilg has since become City Manager and this month state regulators issued an exemption for the project but critics provided an independent legal analysis, paid for by Santa Monica Coalition for a Livable City, that questioned whether the State’s ruling would withstand a court challenge.

“The developer’s agreement with the city to negotiate over this property expired years ago, but the developer wants to pretend that the agreement is still in force, even though for more than four years Council has not been asked to approve any agreement extending negotiations. These arguments fundamentally misrepresent the law regarding contracts between public entities and private developers: City Council approval was required to extend the agreement. That approval was never requested. Therefore, there is no valid agreement that exempts the City from complying with the Surplus Land Act,” said Beverly Palmer, Esq., with Strumwasser and Woocher

Council was scheduled to discuss the project this month but the item was postponed to a July meeting.

Cole said the project has taken too long to come to fruition and in the meantime, economic and cultural forces have made it obsolete.

He said changes brought on by the pandemic make it unlikely the Plaza will be profitable, or even buildable, in the future.

“The reality is that the project components that are supposed to drive profits that can be shared by the City (retail, office and hotel) are all highly speculative not just in this moment, but going forward,” he wrote. “People will continue to shop, work and travel. But there is strong evidence that changes accelerated by the pandemic will mean an oversupply of retail, office and hotel space for the foreseeable future. The cost of constructing the building’s unique design means that these new entrants will have to command a premium in a soft market. There is serious question about whether this project will get financed, let alone generate consistent long-term profits to subsidize programmed public space, cultural uses and substantial City revenue.”

He said the actual project had also devolved over the years and criticized the lack of affordable housing on site, over abundance of parking, quality of the design and the current developer group.

Instead, he advocated for a more housing dense project.

“A project at this important site should consist of a well-designed public space that can be programmed and administered to avoid the problems at nearby Reed Park; a mix of housing types that prioritizes affordable housing and includes moderate income units to provide workforce housing in a jobs rich location; and potentially a hotel to assist in the project’s financial viability and contribute to City revenue to support vital community service (sited on City-owned land, such a hotel could incorporate the Council’s desires for workforce protections for low-income workers),” he wrote. “Such a project should incorporate these uses in compliance with the Downtown Community Plan and reflect the plan’s common sense urban design principles which are more consequential than fleeting perceptions of ‘iconic’ architecture.”

Council’s next meeting is scheduled for July 14.