Negotiations concerning a proposed project at 4th and Arizona, known as The Plaza at Santa Monica, are set to resume after a vote by City Council Tuesday night.

The future of the controversial downtown development project was up in the air in recent months after Interim City Manager Lane Dilg recommended temporarily halting negotiations between staff and Clarett West Development, LLC and DLJ Real Estate Capital Partners, LLC, back in February while the city attempted to discover if the development would be in violation of any state laws.

At its meeting on Tuesday, Council directed staff to adjust priorities in the negotiations of the 2.57-acre property to better reflect the input that’s been received from the public throughout the process, as well as impacts of COVID-19 on the economy, city revenues, and community needs.

“Council’s action last night does not constitute final approval of the proposed project, but it allows staff to continue negotiations,” city spokesperson Constance Farrell said in a news release Wednesday, which mentioned the Plaza at Santa Monica is currently proposed to include 48 on-site affordable residences or a monetary contribution of $24 million that will be used for the construction of up to 130 off-site affordable residences; 12,000 square feet of cultural space; a Mobility Hub with 476 bike parking spots and 1,970 square feet of programmable space for bike retail and repairs; and 192 public and 513 private parking spaces.

To help quell fears of a developer releasing interest in the property to another entity, councilmembers have also instructed staff to negotiate terms that would allow profit participation for the City should the developer ever choose to do release its rights to the property.

Not long after listening to dozens of public comments from residents living in and beyond the Westside, councilmember Sue Himmelrich moved to close negotiations with the developer entirely.

“I think it’s illegal. I think that it poses great risk to the city. And I think competition can only make this project better if we go to an RFP,” which would ensure more affordable units in the space as well as a hotel and open space, Himmelrich said, shortly before the motion was unable to garner a second from other members of the council.

With no second, Mayor Pro Tempore Terry O’Day moved to restart negations with the developers.

“My view is that we’re going to get a substantially better project by moving ahead now. And realizing tonight we’re not approving a DA, we are just restarting negotiations — it’s clear from the public testimony, from the staff report and from the questions from the council members that we need to have better numbers on the housing contribution, on the partner shares,” and other community benefits that have been proposed, O’Day said, adding, “It’s not okay, frankly, that we haven’t had financials done in 5 years. This coincides with the term of our former city manager turned activist on this project, and these negotiations have clearly been suppressed. So we deserve the opportunity to get a great project in place with real guarantees…”

O’Day added during the meeting he thinks its worth it to continue working with the developers even though times and priorities have changed since the project was first proposed, and the council agreed as it directed Dilg to find more information on the financials and other matters related to the proposed plaza.

The next step is for city staff to negotiate to align the project scope with the revised Council direction, according to Farrell. The final project is expected to be heard by the Planning Commission and approved by the City Council sometime in 2022. If the project were to be approved in the future, staff expects the development to open in approximately 2025 under current timelines.

brennon@smdp.com