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RESOLUTION APPROVING A DISPOSITION AND DEVELOPMENT AGREEMENT WITH RBH STOCKTON OZ PROJECT, LLC FOR THE SOUTH POINTE PROJECT
recommended action
RECOMMENDATION
It is recommended that the City Council adopt a resolution:
1. Approving a Disposition and Development Agreement between the City of Stockton and RBH Stockton OZ Project, LLC for the South Pointe Project;
2. Authorizing the City Manager, or designee, to execute the Disposition and Development Agreement with RBH Stockton OZ Project, LLC;
3. Authorizing the filing of Notice of Exemption No. 01-24 under the California Environmental Quality Act (CEQA) for the disposition of real property for parcels which make up the South Pointe properties;
4. Authorizing the disposition of four City-owned parcels which make up the South Pointe properties, in accordance with the Disposition and Development Agreement;
5. Authorizing budgeting, and receiving of revenue associated with disposition of four City-owned parcels which make up the South Pointe properties; and
6. Authorizing the City Manager, or designee, to take whatever actions are necessary and appropriate to carry out the purpose and intent of this resolution.
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Summary
On December 15, 2020, City Council approved an Exclusive Negotiating Rights Agreement (ENRA) with RBH Group, LLC for a proposed mixed-used development project at South Pointe, located along West Weber Avenue (Attachment A - Vicinity Map, Attachment B - Aerial Map, and Attachment C - Conceptual Rendering). The ENRA was the culmination of a Request for Interest and Qualifications (RFI/Q) process, whereby RBH Group was selected to bring both market-rate and workforce housing, commercial retail, education, and community space to the downtown waterfront.
Over the course of the ENRA process, City staff negotiated a purchase agreement in the form of a Disposition and Development Agreement (DDA) to facilitate the development of the site. Concurrent to the negotiations, City staff successfully pursued a grant from the Department of Toxic Substances Control (DTSC) to remediate the site in preparation for development due to its long history of industrial uses. The planning efforts for the site remediation are underway and the site cleanup is anticipated to commence during Q2 2024.
As a result of reaching these milestones, it is recommended that the City enter into a DDA with RBH Group, LLC for the South Pointe Project, which will outline the terms and conditions for the property disposition.
DISCUSSION
Background
The property known as South Pointe is approximately 9.12 acres of four vacant contiguous parcels located on the west end of the downtown waterfront along the south shore of the Stockton Channel. Historical documents identify that the previous use of the site consisted of storage and warehouse facilities from at least 1895 to sometime after 1979. In the 1980’s, the former Redevelopment Agency of the City of Stockton purchased numerous properties on the south shore of the Channel, including South Pointe, for potential redevelopment but the projects did not come to fruition. By 1996, the subject property was vacant in its entirety and continues to remain vacant.
In 2015, as required by legislation enacted after the elimination of redevelopment agencies, the Successor Agency to the former Redevelopment Agency of the City of Stockton prepared a Long Range Property Management Plan (LRPMP) which governed the disposition and use of the properties owned by the former Redevelopment Agency. The LRPMP identified the South Pointe site as a feasible mixed-use waterfront development attributing to the City’s vested interest in ensuring the Marina remains a viable enterprise and major contributor to the overall success of the downtown waterfront and subsequent new development.
The redevelopment of the South Pointe site is consistent with both City planning documents and historical reports specific to downtown redevelopment. The Envision Stockton 2040 General Plan, adopted in 2018, concentrates higher-intensity mixed uses and high-density residential uses in the downtown with a live/work/play environment along the waterfront to further boost the downtown’s vitality. Policy LU-2.1 in the adopted General Plan encourages the City to “Promote the downtown and waterfront as a hub for regional commerce and entertainment, with high-quality housing to complement commercial activity and to infuse the area with daytime, evening, and weekend activity.”
To support the community’s vision and align prior studies for a more vibrant downtown and waterfront, the General Plan changed the existing land use from industrial to downtown commercial allowing multifamily, commercial, and retail land uses with the certification of the Environmental Impact Report for the Envision Stockton 2040 General Plan.
In 2022, the City Council adopted the City’s Economic Development Strategic Action Plan (EDSAP), which identified infrastructure as a key focus area to advance economic opportunities. Furthermore, Investment Area 4 of the EDSAP seeks to “transform downtown into a thriving connected City Center,” through infrastructure improvements and placemaking efforts that would result in a central identifying hub for the city to enable businesses to thrive, attracting external visitors, and bringing in residents through the development of full-spectrum housing.
The EDSAP’s suggested initiative of incentivizing full-spectrum housing development identifies the importance of obtaining brownfield redevelopment grants to support this effort to increase commercial activity, increase residential housing, and bolster the feasibility for a grocery store in downtown.
These objectives are consistent with a report produced by the Urban Land Institute in February 2012, which elevated the importance of downtown and waterfront redevelopment with a focus on infill development opportunities.
In June 2020, the City released a Request for Interest/Qualifications (RFI/Q) to solicit project concept statements for the South Pointe site that would address the City’s goals and objectives for the downtown waterfront area, including:
• Incorporate high-quality design elements to reflect the unique waterfront location and its proximity to the Delta;
• Stimulate the downtown waterfront south shore area with increased foot traffic and activities;
• Generate long-term revenue through sales and/or property taxes;
• Development that coincides with the 2040 General Plan and zoning guidelines that would promote a live/work/play environment; and
• Logical concepts that would enhance the quality of life for Stockton residents, visitors, businesses, and their employees.
Through the RFI/Q selection process, RBH Group was selected for Council recommendation.
On December 15, 2020, City Council approved an Exclusive Negotiating Rights Agreement (ENRA) with RBH Group, LLC for a proposed mixed-used development project at South Pointe. The proposed project included both market-rate and workforce housing, commercial retail, education, and community space to the downtown waterfront (Attachment D - Resolution 2020-12-15-1403).
In May 2021, the City Council deemed the four (4) parcels, contiguously known as South Pointe, as surplus and authorized the creation of a development agreement for the subject properties (Attachment E - Resolution 2021-05-11-1204). Pursuant to the State of California Surplus Land Act, a notice for the subject site was sent to the appropriate agencies with no responses received.
Concurrent to the ENRA negotiations, environmental investigations were being conducted on various brownfield sites under a 2018 grant from the Environmental Protection Agency (EPA), which included the South Pointe site. As a result of the investigations, City staff identified a key barrier to future development of the site - due to its historical industrial uses, the vacant site contains contaminated soil that requires remediation to facilitate redevelopment.
As a result of the findings, in March 2022, the City Council authorized the submittal of a grant application under the California Department of Toxic Substances Control’s (DTSC) Equitable Community Revitalization Grant (ECRG) Program (Attachment F - Resolution 2022-03-22-1210). Utilizing information from the EPA grant activities, the City received a $5.25 million grant under the ECRG Program for the cleanup of the South Pointe site. The City of Stockton will be performing the cleanup work and will turn over the site to RBH for development in accordance with DDA. The necessary remedial planning documents are currently being drafted and are anticipated to be completed in Q1 2024.
Present Situation
The proposed DDA with RBH demonstrates a critical step forward in achieving the City’s goals and vision for a thriving and vibrant downtown waterfront in Stockton after three years of negotiations. RBH’s proposed mixed-use development project on four (4) City-owned legal parcels totals approximately 9.12 acres located north of West Weber Avenue along the Stockton Channel in the downtown area (Project). The proposed Project on the vacant site will consist of market rate, workforce, and independent living senior residential units; retail space; community/civic space; parking; and ancillary site improvements such as landscaping, lighting, and drainage facilities.
The proposed DDA outlines each parties’ responsibilities and milestones in preparation of property disposition, including:
• Project description;
• Developer responsibilities;
• City’s responsibilities including site remediation;
• Phased development milestones and conveyances where:
o Phase 1 shall include no fewer than 300 housing units, including independent living senior housing, 4,000 square feet of educational space, infrastructure, and 16,000 square feet of retail and/or community facility space; and
o Phase 2 shall include no fewer than 220 housing units.
• Inclusionary housing restrictions that require no less than 15% of residential units in each phase be developed and reserved as affordable for lower income households;
• CEQA compliance;
• Schedule of performance;
• License and Maintenance Agreement for the existing shared public space;
The DDA outlines the minimum number of housing units that will be included in the project, but the developer may maximize density to include additional units in accordance with applicable code and zoning.
As part of the next steps, the proposed Project will go before the Planning Commission for approval for a Commissions Use Permit, which is required for any new construction in the Channel Overlay Zoning District where South Pointe is located. The Planning Commission will be asked to consider approval of a Use Permit enabling the Project to be developed and, in turn, permitting RBH to continue its planning efforts. The Planning Commission will also be asked to consider adoption of an Addendum to the 2040 General Plan EIR and its Mitigation and Monitoring Program to achieve compliance with CEQA. Entering into a DDA prior to these items is pertinent in ensuring agency responsibilities before allowing the developer to move forward with design and other approvals needed to move the project forward.
The proposed DDA with RBH Group demonstrates a number of community benefits, including:
• Fulfilling the City’s General Plan goal of supporting high-quality housing to complement commercial activity and infuse daytime, evening, and weekend activity in the downtown and waterfront;
• Provide mixed-income, multi-generational housing to further diversify the downtown population;
• Public improvements to enhance the walkability of the waterfront area;
• Hundreds of millions of dollars in private investment that would be realized through the development of new buildings, new commercial space for businesses, future place of employment, and help spur additional private investment in the downtown and waterfront area;
• The generation of annual tax revenue through sales tax from commercial businesses as well as property taxes, which would support the ongoing operations of the City, San Joaquin County, and school districts;
• Supporting and showcasing local artists with the installation of artwork, such as murals, sculptures, installations, and/or other forms of artwork in the Project area; and
• Activating an otherwise vacant property that would support surrounding existing businesses and increase foot traffic along the promenade along the west end of the southern waterfront.
The development of the DDA involved substantial coordination and due diligence that included legal drafting by the law firm Burke, Williams & Sorensen (BWS), as well as a pro forma review by Economic & Planning Systems (EPS). The work performed by BWS ensured that the DDA contained adequate definitions, milestones, exits for all parties involved, and to provide consistency with the Surplus Land Act. The pro forma review by EPS focused on the developer’s operational model and assumptions to provide certainty around project feasibility.
Staff recommends approval and execution of the DDA with RBH Stockton OZ Project, LLC for the development of the South Pointe project. As outlined in the DDA, the City will prepare an Initial Study to assess the environmental effects of implementing the pending Remediation Document and developing the Project. The City reserves full discretion to take all steps necessary to comply with CEQA prior to the City’s action on entitlements for the Project, DTSC’s action on the Remediation Document, or transfer of the properties.
NOTIFICATION
As required for the lease or sale of real property, and in accordance with provisions of Article V, Section 510, of the Charter of the City of Stockton, a notice was published in the official newspaper of the City at least ten (10) days before such action is taken. A public notice was published in the legal notice section of The Record on January 25, 2024.
ENVIRONMENTAL CLEARANCE
It has been determined by the Community Development Department that the disposition of the subject parcels is Categorically Exempt under California Environmental Quality Act Guidelines Section 15061(B)(3). The activity constitutes a discretionary project under the City’s jurisdiction and qualifies as a project which has been determined not to have a significant effect on the environment and therefore, is exempt from the provisions of CEQA under the above-noted statutory or categorical exemption(s).
In accordance with Section 65402 of the Government Code, it has been determined that the proposed property sale is neutral in regard to conformity with the Stockton General Plan.
FINANCIAL SUMMARY
The City has spent many staff hours and approximately $300,000 in grant funding on environmental cleanup and site preparation in anticipation of developing this property.
If approved by Council, and upon close of escrow of the property, the gross amount of $3,500,000 will be deposited into the redevelopment successor agency account, less closing costs, legal fees, filing fees, and miscellaneous fees, including reimbursement to City departments for costs incurred in the preparation and administration of the disposition and agreement, to be transferred after the sale. The disposition of the surplus property is consistent with the Amended Long Range Property Management Plan, which contemplated the site as a future mixed-use development.
The long-term fiscal impacts of the development include an anticipated increase in property tax revenue and sales tax revenue associated with the new housing and retail units.
Attachment A - Vicinity Map
Attachment B - Aerial Map
Attachment C - Conceptual Rendering
Attachment D - Resolution 2020-12-15-1403
Attachment E - Resolution 2021-05-11-1204
Attachment F - Resolution 2022-03-22-1210