Site and Arch - Mixed Use - 2001TITLE:
Authorize the Executive Director of the Redevelopment Agency to Execute a
Disposition and Development Agreement with Campbell Avenue Associates, LLC
(dba: Sand Hill Property Company) for the sale and development of 175-201 E.
Campbell Avenue For a Mixed Use Development
RECOMMENDATION:
1. That the City Council adopt a resolution:
a. Finding that the attached Negative Declaration is adequate to serve as the environmental
documentation for the Disposition and Development Agreement in compliance with the
California Environmental Quality Act (CEQA); and
b. Authorizing the execution ofa Disposition and Development Agreement between the
Redevelopment Agency and Campbell Avenue Associates, LLC (dba: Sand Hill Property
Company) making specified findings in consideration of the sale and development of 175-201
E. Campbell Avenue and related actions.
2. That the Agency Board adopt a resolution:
a. Finding that the attached Negative Declaration is adequate to serve as the environmental
documentation for the Disposition and Development Agreement in compliance with the
California Environmental Quality Act (CEQA); and
b. Authorizing the execution of a Disposition and Development Agreement between the
Redevelopment Agency and Campbell Avenue Associates, LLC. (dba: Sand Hill Property
Company) making specified findings in consideration of the sale and development of 175-201
E. Campbell Avenue and related actions.
BACKGROUND
In February, 2001 the Agency Board executed a Disposition and Development Agreement (DDA) with
Barry Swenson Builder to acquire the vacant site owned by the Agency downtown located at 175-201 E.
Campbell Avenue between Second and Third Streets (the "Downtown Site"). The approved project was
a commercial development proposing office over retail. In August, 2002 the Agency Board authorized
staff to terminate the DDA in that Mr. Swenson could not satisfy pre-disposition conditions required
under the DDA. In August, 2003 the Agency was approached by Sand Hill Property Company (Sand
Hill) with a proposal that would have Sand Hill sell their hotel site on Creekside Way (the "Hotel Site")
to Matrix, LLC ( the "Hotel Developer") 200 room business class hotel, contingent upon the Agency
I
Item: 16.
Category: Public Hearing
Date: November 18, 2003
TITLE:
Authorlze the Executive Director of the Redevelopmeot Ageoey to Execute a
DispositlOU aud Developmeut Agreemeut with CampbeR Aveoue Associates. LLC
(dha: Saud Hill Property Compauy) for the sale aud developmeut of 175-201 E.
Campbell Avenue For a Mixed Use Development
RECOMMENDATION:
a. Finding that the atlllChed Negative Declaration is adequate to serve as the environmelrtal
documentation for the Disposition and Development Agreement in compliance with the
~ California Environmental Quality Act (CEQA); and
b. Authorizing the execution of a Disposition and Development Agreement between the
Redevelopment Agency and Campbell Avenue Associates. LLC (dba: Sand Hill Property
Company) making specified findings in consideration of the sale and developmeut of 175-201
E. Campbell Avenue and related actions.
1. That the City Council adopt a resolution:
2. That the Agency Board adopt a resolution:
a. Finding that the attaCbed Negative Declaration is adequate to serve as the environmental
documentation for the Disposition and Developmeut Agteement in compliance with the
California Environmental Quality Act (CEQA); and
b. Authorizing the execution of a Disposition and Development Agreement between the
Redevelopment Agency and campbell Avenue Associates, LLC. (dba: Sand Hill Property
Company) making specified findings in consideration of the sale and development of 17 5-201
E. Campbell Avenue and related actions.
BACKGROUND
In Febroary. 2001 the Agency Board executed a Disposition and Development Agreement (DDA) with
Barry Swenson Builder to acquire the vacant site owned by the Agency downtown located at 175-201 E.
Campbell Avenue between Second and Third Str- (the "Downtown Site"). The approved project was
a commercial development proposing office over retail. In August, 2002 the Agency Board authorized
staff to terminate the DDA in that Mr. Swenson could not satisfy pre-disposition conditions required
under the DDA. In August, 2003 the Agency was approacbed by Sand Hill Property Company (Sand
Hill) with a proposal that would have Sand Hill sell their botel site on Creekside Way (the "Hotel Site")
to Matrix. LLC ( the ''Hotel Developer") 200 room business class hotel, contingent upon the Agency
Redevelopment Agency Report
November 18, 2003
agreeing to sell the Downtown Site to Sand Hill. In closed session on August 5, 2003 the Agency Board
provided direction to staff regarding the basic business terms for a DDA with Sand Hill. Staff has had
prepared a DDA within the guidelines and parameters established by the Agency Board for
consideration.
DISCUSSION
Staff has reached terms with Sand Hill as expressed in the attached DDA that contemplates the Agency
selling the Downtown Site to Sand Hill for a three story, mixed use residential over retail development
and Sand Hill selling the Hotel Site to Matrix., LLC for a high end 200 room business class hotel. As do
most developers, Sand Hill is creates a separate entity for each of its developments. In this case, Sand
Hill is creating a Limited Liability Company called Campbell Avenue Associates, LLC as the entity that
will develop the Downtown Site. The principals will remain Peter Pao and Jeff Warmoth as required
under the DDA. For purposes of this report and for familiarity, staff will refer to the Developer of the
Downtown Site as Sand Hill. Sand Hill and the Agency have agreed to the terms and conditions on the
basis set forth in the Letter of Intent considered by the Agency Board at its closed session on August 5,
2003. The terms described in this report are in substantial compliance with the attached DDA and the
DDA on record with the City Clerk's Office. A summary ofthe major business terms of the DDA are as
follows:
Business Points
)> The Agency agrees to sell the Downtown Site to Sand Hill for $1.8 million. Sand Hill will
pay the Agency $700,000 cash upon conveyance of title and the Agency will hold a $1.1
million Promissory Note from the Developer for the balance of the purchase price secured
with a deed of trust on the Downtown Site.
)> When the Hotel Developer closes escrow on the Hotel Site, and upon the Hotel Developer
beginning construction of the Hotel, the Agency agrees to consider the Promissory Note paid
in full and will re-convey the deed of trust to Sand Hill.
)> If the Hotel Developer closes escrow on the Hotel Site, but does not begin construction
within 24 months ofthe date of execution ofthe DDA, Sand Hill will begin making quarterly
interest payments to the Agency based on the terms of the Promissory Note. The interest
rate will equal the prime rate plus one percent. Payments will be made until hotel
construction begins. Once interest payments have begun, no less than 12 months interest is
due to the Agency.
)> If the Hotel Developer does not close escrow on the Hotel Site within three years of Sand
Hill closing on the Downtown Site, Sand Hill will pay the Agency the $1.1 million balance
on the purchase price.
)> As additional consideration, Sand Hill will pay the Agency $6,000 per parking space
required for the retail component of the project as an in-lieu fee for using the parking
structure. It is contemplated the total amount will be approximately $200,000. Additionally,
Sand Hill will pay the Agency $6,000 per residential unit parking space required in excess of
17, the number of parking spaces being provided on-site.
J :\sandhilldda.DOC
Redevelopment Agency Report
November 18, 2003
~ Upon execution ofthe DDA, Sand Hill will have 12 months to develop conceptual plans for
approval by the Agency, secure land use entitlements, complete construction drawings,
secure a building permit and begin construction on the Downtown Site. The development
will be a three story, mixed use development with two story residential over one story retail.
Retail and restaurant will consist of approximately 10,000 to12,000 square feet on the
ground floor with a depth of no less than 50 feet. There will be 20 t022 residential loft units
above. The units will be rental units but the Developer will map them as condominiums to
give him the option to sell them individually in the future.
~ The Developer will provide one very low income unit at his cost. Two moderate income
units will be provided with the Agency assisting with the construction cost equal to $50 per
square foot not to exceed $50,000 per unit. Sand Hill or its successor is contractually
obligated to retain the three below market rate units in fee to ensure lease rates remain
affordable. The affordable units must be maintained for 55 years.
~ The ground floor must be leased to retail or restaurant uses.
Proiect Benefits
The implementation of the proposed DDA provides several benefits to the Project Area and the
Downtown area and helps meet Agency goals and objectives as stated in the Agency's Redevelopment
Plan and 1999-2004 Implementation Plan:
. A primary goal of the Redevelopment Plan for the downtown area is "To restore downtown
Campbell to its historic role as the symbolic, cultural, functional and economic focal point of the
City". Development of a major mixed use project that includes ground floor retail lends itself to
an active street life with opportunities for outdoor dining and specialty retail on the west end of
the downtown.
. The Site is vacant. A goal of the Implementation Plan is to "Identify key vacant, underdeveloped
an~ blighted properties in the downtown and facilitate redevelopment of those properties
consistent with the Downtown Development Plan."
. The addition of residential units to the downtown furthers the Agency's goal noted in Section
B(3)( c) of the Redevelopment Plan which states that the Agency shall provide opportunities for
residential development at medium and high densities to take advantage of downtown services
and amenities, including future light rail transit services.
HEALTH AND SAFETY CODE SECTION 33433 REPORT
When a property acquired with tax increment is sold by a redevelopment agency, a summary of the DDA
must be prepared and made available for review by the public under Section 33433 of the Health and
Safety Code. The report is intended to summarize the business terms of the DDA and provide full public
disclosure of the financial terms. This Summary Report was completed and is Attachment 3 to the staff
report officially noticed on November 5, 2003 and again on November 12,2003 for public review.
The City Council must adopt a resolution containing findings that the sale of the Site will assist in
eliminating blight and that the consideration paid by the Developer for the property is not less than the
fair market value of the property or the fair reuse value with the conditions, covenants and restrictions as
prescribed under the DDA. Fair market value is the value a willing buyer would pay a willing seller
without the covenants and restrictions of the DDA. The fair market value as determined by Hulberg &
J :\sandhilldda.DOC
Redevelopment Agency Report
November 18, 2003
Associates is $815,000. The fair reuse value as determined by Keyser Marston & Associates is a range
of $570,000 to $600,000. The fair reuse value is defined as the value of the property with the conditions,
. covenants and restrictions required under the DDA as detailed below. The cash consideration paid by the
Developer to the Agency for the Downtown Site will be no less than $700,000 and as much as$l ,800,000
if the Hotel Site is not sold to Matrix within three years. The following conditions and covenants in the
DDA account for the difference between fair market value and the purchase price for the Downtown Site.
a. The requirement of the Developer to begin construction within 12 months and
not be given the opportunity to time the market. Speculation is not permitted.
b. The Developer must lease the ground floor space to retail or restaurant uses '
unless otherwise approved by the Agency. The DDA restricts the Developer
from leasing to other uses that might otherwise be allowed in the C-3 zone to
ensure furthering the Agency's goal of creating a "main street" environment in
the downtown.
c. The Developer requirement to pay a parking in-lieu fee for use of the public
parking structure becomes a development cost factoring into the residual land
cost.
d. As required under California Redevelopment Law as of January 1,2003, the
Developer will be required to pay prevailing wage to construction workers.
Pay cheaper labor to lower development costs is not an option.
e. The Developer is required to provide one very low income dwelling unit at his
cost to remain affordable for 55 years without Agency assistance.
FISCAL IMPACT
The Agency purchased the Downtown Site with improvements in 2000 for $1.8 million. Additionally, it
paid $125,000 to relocate two businesses and a resident from the property. Under the terms of the DDA,
the Agency will contribute not more than $100,000 from its Housing Set-Aside Fund to help off-set
construction costs for two moderate income units.
As consideration under the DDA, the Agency will sell the Downtown Site for $1.8 million. The Agency
will hold a $1.1 million Promissory Note on the Downtown Site until the Hotel Site is conveyed by Sand
Hill to Matrix, LLC. Once the Hotel is under construction, the Promissory Note will be considered paid
and the deed oftrust will be re-conveyed. If the Hotel Site is not conveyed to Matrix within three years,
Sand Hill will pay the Agency the $1.1 million on the balance of the purchase price within three years.
Additionally, the Agency will receive approximately $200,000 parking in-lieu fees for use of the parking
structure.
The development of the Hotel Site that is contemplated under this DDA will result in a 200 room
business class hotel that will generate an estimated $525,000 annually in hotel tax and sales tax to the
general fund and approximately $250,000 annually to the redevelopment agency in property tax.. The
Downtown Site is expected to generate approximately $85,000 in tax increment and $25,000 in sales tax
annually.
J :\sandhilldda.DOC
Redevelopment Agency Report
November 18, 2003
Prepared by:
APProvedbY~
City a ager
Attachments: 1.
2.
3.
4.
5.
6.
City Council- Resolution Approving DDA
Agency Board - Resolution Approving DDA
DDA Summary Report
Environmental Assessment
Reuse Report
DDA
J :\sandhilldda.DOC
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Subject:
Kirk Heinrichs
Friday, September 06, 2002 11 :50 AM
Tim Haley
RE: 175-201 E. Campbell Avenue
Thanks Tim. If we move ahead with the approved plans with a developer other than Barry Swesnon, the Agency would
have to compensate the Developer for thhose costs under the terms of the DDA.
-----Original Message-----
From: Tim Haley
Sent: Friday, September 06,20029:52 AM
To: Kirk Heinrichs
Cc: Geoff Bradley; Sharon Fierro
Subject: 175-201 E. Campbell Avenue
Kirk:
Geoff mentioned that you would like to reinstate/extend the approval of the site and architectural approval granted by the
Planning Commission on August 28, 2001. This approval was effective on September 7, 2001 and expires on September 7,
2002.
I'll send an application form down your direction. I'd imagine RDA will be both the applicant and the property owner.
Are there any proprietary issues in using the previous plans in that Barry Swenson is no longer involved with the project?
Thx
Tim J. Haley
Associate Planner
408.866.2144
timh@ci.campbell.ca.us
1
r---
~- "'
PUBLIC HEARINGS
2. Authorization to Terminate the Disposition and Development Agreement (DDA)
with Green Valley Corporation for the Purpose of Negotiating a New DDA that
contemplates a Mixed Use Retail and Residential Development at 175-201 E.
Campbell Avenue (Resolution/Roll Call Vote)
City Attorney Seligmann stated he would not be able to provide legal counsel regarding
this item due to a conflict of interest.
Redevelopment Manager Heinrichs - Staff Report dated August 6, 2002.
There was no one in the audience who wished to speak on this item.
M/S: Burr/Kennedy - that the Redevelopment Agency Board adopt Resolution
2002-9 authorizing the termination of the Disposition and Development Agreement
(DDA) with Green Valley Corporation for the purpose of negotiating a new DDA
that contemplates a mixed use retail and residential development at 175-201 E.
Campbell Avenue. Motion adopted by the following roll call vote:
AYES: Agency Members: Dean, Burr, Kennedy, Furtado, Watson
NOES: Agency Members: None
UNFINISHED BUSINESS
There were no agendized items.
NEW BUSINESS
There were no agendized items.
ADJOURN
Chairperson Watson adjourned the meeting at 9:30 p.m.
APPROVED:
Jeanette Watson, Chairperson
ATTEST:
Anne Bybee, City Clerk
Minutes of 8/6/2002 Redevelopment Agency Meeting
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CITY OF CAAiPBELL
Community Development Departmt:nt
January 17, 2002
Ms. Deborah Calloway
Green valley Corporation
dba Barry Swenson Builder
777 N. First Street, 5th Floor
San Jose, CA 95112
Re: Plan Check Building 2002-031
201 East Campbell Avenue
Dear Ms. Calloway:
The Planning Division has reviewed your plan submittal for the above referenced
property in light of the Planning Commission approval per Resolution No. 3372. The
submitted plans are consistent with this approval, subject to the provision of additional
details and clarifications as follows:
1. Condition 4: required the submittal of a landscaping plan for review and
approval by the Community Development Director. This condition required the
following:
a. Minimum 24 inch boxed sized trees (15 gallon size shown)
b. Details of pavement treatments. The street improvement plans (Civil
Engineer) and the landscaping plans(Landscape Architect) are not
consistent. Additionally details of pavement treats need to be provided on
the landscape plan. .
c. No lighting has been shown.
d. Details of containerized plantings, bollards, bike rack, and walkway
furniture need to be shown.
e. How will containerized planting be irrigated?
f. Details of the metal trellis need to be shown.
g. Planting materials need to be coordinated with trellises.
h. Railings around outside seating areas need to be shown.
1. An additional transformer has been shown on the site plan that is not
reflected on the landscape plan and the civil plans.
J. Landscape planters are shown at the intersection of Second St. and
Campbell A venue, but are not shown on the street improvement plan.
;-,} :-';orth First Stn~t:t Campbell. Caiitornia 9500S-I~ib ITL 408 866'2I~O FIX ~08.866.8381 Ill!) ~OS.866.'2790
.1_
Plan Check 2002- 31 January 17, 2002
Page 2
2. Condition 6: Please clarify that the windows are "high quality commercial
windows' and that mullions are on the exterior. Additionally, it appears that
large fixed windows are called out adjacent to potential restaurant spaces.
Windows depict on the perspective are divided into two and three sections versus
large fixed windows on the elevations. It is recommended that the west elevation
and the rounded comer elevation utilize smaller window widths.
3. Condition 14: requires that the conditions of approval be included 10 the
Building Department submittal.
4. Additional information regarding lighting needs to be provided per Condition
4(t) and 9. Typical building exterior building fixtures should to be called out.
If you have any question regarding these items, please do not hesitate to contact me. I
may be reached at (408) 866-2144.
S~
\ ~hj-
Tim J. Haley
Associate Planner
cc: Frank Mills, Senior Building Inspector
Mike Arnone, Landscape Architect
Pete McMorrow, Civil Engineer
Bruno Marcelic, Architect
GeoffBradley, Senior Planner