title
DEVELOPMENT AGREEMENT REVIEW FOR THE OPEN WINDOW PROJECT FOR THE TIME PERIOD OF MARCH 25, 2016 - JUNE 30, 2020
recommended action
RECOMMENDATION
It is recommended that the Planning Commission:
1. Review the applicant’s submittal regarding good faith compliance with the terms or conditions of the Development Agreement for the Open Window Project; and
2. Make a determination as to whether the Applicant is/is not in compliance with the terms or conditions of the agreement so that the Director may either:
a. Notify the applicant via certified mail that it is compliant with the terms and conditions of the agreement; or
b. Notify the applicant via certified mail that it is not compliant with the terms or conditions of the agreement and provide recommendations to comply within a specified period of time, but in no event less than 30 days, or face legal action to enforce compliance, termination, or modification of the development agreement.
body
Summary
On February 23, 2016, the City Council approved a Mitigated Negative Declaration, Open Window Project Master Development Plan and Development Agreement between the City and Open Window Project, LLC (also known as Ten Space). The Open Window project proposes revitalization and redevelopment of 11.88 acres and is comprised of 51 properties within an approximately 15 square block area of Downtown Stockton. The project is a mixed-use development concept that includes high density residential, commercial, and industrial/art studio land uses.
The initial term of the Development Agreement is 10 years and is scheduled to expire on March 25, 2026. The Agreement provides the Ten Space certain protections and rights to develop the Open Window Project and in exchange the City benefits from the redevelopment and creation of new residential housing units and commercial space within the Project in the Downtown.
Pursuant to Government Code Section 65865.1 and Article 7 in the terms of the Development Agreement, Ten Space is supposed to be submitting an annual progress report to the City to demonstrate that they are in good faith compliance with all obligations and conditions required to be performed in the Agreement. The Agreement identifies the Planning Commission as the review authority for determining developer’s compliance with the Agreement.
The review for this Agreement is long overdue and is for the time period between March 25, 2016 - June 30, 2020. Ten Space to submit a report on the progress and status of the project for the time period specified to demonstrate their compliance. Staff’s analysis of the status report concludes that Ten Space is generally not in compliance with the Development Agreement as detailed in this staff report. This is being provided to the Planning Commission to make a determination as to whether Ten Space is in good faith compliance with the terms of the Agreement for the Open Window project.
DISCUSSION
Background
A “Development Agreement” is a voluntary legal contract between a local jurisdiction and a person or entity who owns or controls property within the jurisdiction, detailing the obligations of both parties and specifying the standards and conditions that will govern development of that property. Development agreements are usually employed for large, complex development projects that are constructed in phases over a period of years. The agreement may set the specific zoning, design, and other construction requirements for the project and give certainty to the developer that the rules will not be significantly changed other time. In return for this regulatory certainty, public agencies often negotiate additional benefits (or mitigation programs) that the developer will provide with the project.
Pursuant to Stockton Municipal Code Section 16.128.070.G.2.b, the City Council is the final approving authority, based on the recommendation of the Planning Commission, to conduct a public hearing and adopt a development agreement (by ordinance) and any subsequent amendments to the agreement.
On February 23, 2016, City Council approved the Development Agreement for the Open Window project (Attachment A) for the development of mixed-use development concept. The project proposes up to 1,034 residential units primarily built at higher densities as part of apartments or other multi-family unit developments, up to 200,000 square feet of retail space, 90,000 square feet of commercial space, and 110,000 square feet of industrial/art studio space. These spaces may be built as stand-alone development or combined in a missed-use format with residential uses. The project provides for a single-concept, comprehensive development approach to the 51 participating properties over an approximately 15 square block area in Downtown Stockton (Attachment B); 43 properties are under the control of the Developer and eight (8) parcels are City-controlled.
The Development Agreement was approved on February 23, 2016 and became effective on March 25, 2016. The term of the agreement is 10 years and therefore is scheduled to expire on March 25, 2026, unless extended.
Present Situation
Consistent with the Municipal Code, Development Agreements include a provision requiring periodic review where at least once every 12 months, within 30 days of receipt of a letter, the owner must submit proof of good faith compliance with the terms or conditions of the agreement. The Planning Commission is then to review the submission and determine compliance.
On May 29, 2020, Staff sent a letter to the applicant, Ten Space, requesting a the submittal of proof of good faith evidence of compliance with the terms or conditions of the Open Window Project’s Development Agreement. The Developer provided a letter, dated June 25, 2020 (Attachment C) that provides an update on the progress of the project.
Staff reviewed the update, along with the Development Agreement (DA), and other project components, such as the Master Development Plan (MDP), and the Mitigation Monitoring and Reporting Plan (MMRP) and performed an analysis of substantial compliance. Staff’s analysis and findings are being presented to the Planning Commission for review and determination of good faith compliance with the terms of the Open Window Development Agreement in accordance with terms of the DA and as required by the SMC.
Staff Analysis
Development Agreement Requirements:
1. 300 units to be completed by the expiration date.
2. If an additional 5-year extension is requested, 600 units must be completed by the end of the extension term.
3. Compliance with the Environmental Mitigation Monitoring Reporting Plan.
City records indicate that the Developer submitted numerous Building Permit applications for various parcels subsequent to the DA becoming effective in 2016. However, many of those applications ultimately expired due to lack of activity by the applicant. Three applications were re-activated in 2019 and have undergone plan check but have had no further activity by the applicant to complete the permit since March 2020.
To meet DA requirements, 300 residential units will need to be developed in the next 5 years, 8 months. The Developer indicates the delay in development is due to lack of project funding. The Developer expects to have building permits pulled for two buildings within the next 90 - 120 days (late September/October 2020).
According to the Developer’s report, of the 43 parcels under their control:
• 22 have not had any permit activity
• 29 permit applications have been submitted for 21 parcels (see Attachment D)
o 4 are in application review status (not yet issued) - 13.8% of submittals
o 14 have expired - 48.3% of submittals
o 4 re-issued (due to past expiration or redesign) - 13.8% of submittals
o 7 were finaled (completed) - 24.1% of submittals
Section 11.1 (Sales of Property) of the Development Agreement indicates the developer must have written consent from the City to sell, assign, or transfer parcels included in the project. Table 1 indicates the parcels that have been sold by the developer without the consent of the City.
Table 1 - Open Window Project - Properties Sold Without Consent
|
Address |
APN |
Date Sold |
|
225 North American |
139-250-12 |
9/20/2016 |
|
800 East Main Street |
149-210-01 |
8/28/2018 |
|
545 East Channel Street |
139-250-21 |
5/31/2019 |
|
630 E Weber Ave |
149-180-03 |
12/20/2019 |
|
646 E Weber Ave |
149-180-04 |
12/20/2019 |
|
29 N Aurora |
149-190-06 |
5/2020 |
|
206 N Sutter St |
139-250-03 |
8/7/2020 |
|
201 N California |
139-250-04 |
8/7/2020 |
|
216 N California St |
139-250-26 |
8/7/2020 |
|
843 E Weber Ave |
139-280-07 |
9/24/2020 |
Staff recommends that the Planning Commission make a determination that the applicant is/is not in compliance with the terms or conditions of the agreement so that the Director may notify the applicant of the Commission’s determination as required by the Development Code.
If the Commission determines the applicant is non-compliant, staff requests that the Planning Commission provide guidance so that the Director may send notice to the developer requesting compliance including a detailed plan with milestones to implement building permit issuance requirement within 60 days of approval. If Developer remains non-compliant at the end of the given time frame, Planning Commission will be asked to forward a recommendation to City Council to amend the Development Agreement for the project as it relates to the number of completed units with the goal of compliance.
Environmental Determination
The current action required of the Planning Commission is an annual compliance review of the Development Agreement, not a project as defined by CEQA Guidelines, Section 15162. Therefore, no additional environmental documents are required.
Public Notice
The City provided a 10-day notice to the Developer prior to the scheduled meeting date.
Attachment A - Development Agreement for Open Window Project
Attachment B - Vicinity Map
Attachment C - Annual Report from Developer
Attachment D - List of Permits
This report was prepared by Planning Manager Ariana Adame, (209) 937-8270; Ariana.Adame@stocktonca.gov.