Discussion of Crestridge Properties. (Pfost)

FROM: DIRECTOR OF PLANNING, BUILDING AND CODE ENFORCEMENT

DATE: MAY 7, 2002

1) Consider proposals from parties that have submitted statements of interest and allow for public comment; 2) Provide direction to Staff whether for-sale condominiums are consistent with the Institutional Zone, and whether any of the concepts proposed for the use of the Crestridge property should receive further consideration; and 3) With the assistance of the Facilitator, define the next step for determining the appropriate use of the properties.

Prior to discussing potential uses for the Crestridge properties, it is important to first have an understanding of certain background issues that may affect any decisions regarding these properties and a basic understanding of the entitlement processing that has occurred in the past. To that end, following is a brief description of the zoning, uses and property along Crestridge Road, a brief history of the two currently un-entitled vacant properties along Crestridge Road that are the topic of this Workshop, and a brief discussion of issues pertaining to the City's obligations to provide affordable housing within the City of Rancho Palos Verdes.

Crestridge Road, from Highridge Road to Crenshaw Boulevard gradually slopes downhill. Properties on both sides of Crestridge Road have a General Plan land use designation and Zoning designation of Institutional. Some properties include both an Institutional and an Open Space Hazard land use designation. As shown on the attached aerial photograph of Crestridge Road, existing land uses on the northern side of the street, from west to east include: Hilltop Automotive, Church of Jesus Christ of Latter-Day Saints, The Canterbury, Congregation Ner Tamid, a 4.5 acre vacant parcel with current entitlements to permit the construction of the Brighton Gardens Assisted Living Facility, a privately owned un-entitled 9.77 acre vacant parcel, and the Redevelopment Agency's 19.63 acre vacant parcel located on the corner of Crestridge Road and Crenshaw Boulevard. Existing land uses on the southern side of the street, from west to east include: the Peninsula Community Church, the California Edison substation, and the Palos Verdes Art Center.

Attached are Development Code Sections 17.26 and 17.32, which describe the permitted and conditionally permitted land uses in the Institutional and Open Space Hazard Zones.

The focus of this Workshop is on the two un-entitled vacant parcels located near the corner of Crestridge Road and Crenshaw Boulevard. Attached is an Arial Photograph showing the general configuration of both of these lots in relationship to the neighboring 4.5 acre vacant lot that will house a new assisted living facility, and the Congregation Ner Tamid.

On October 12, 2001, a development company, Standard Pacific, submitted a request for a use determination for the 9.77 acre vacant parcel located immediately adjacent to and west of the Agency owned property. The request was for a determination that senior condominiums are similar to and no more intensive than other conditionally permitted uses in the Institutional zoning district. Standard Pacific was considering purchasing the property from its current owner, Crestridge Estates llc, and pursuing an application for a 104-unit senior condominium project on the site. Standard Pacific has also expressed interest in a larger, 120-unit residential project that could encompass the subject property as well as a portion of the adjacent, Agency-owned property. On October 26, 2001, the Director issued a determination that senior condominiums are not consistent with the Institutional zoning district. On November 12, 2001, the developer filed an appeal of the Director's determination. On December 11, 2001, during the hearing of the appeal, the Planning Commission expressed reservations about considering a condominium use consistent with the Institutional zoning district. Not wishing to have a negative vote, the applicant withdrew his application at the meeting. Although the applicant withdrew the application, the Planning Commission felt this was an important topic that needed further discussion. As such, the Planning Commission recommended that the City Council and Planning Commission conduct a joint workshop to hear public input on what the community believes to be appropriate uses for the subject property at the same time the City Council would be addressing the Agency owned property. Attached is a copy of the December 11, 2001 Staff Report to the Planning Commission discussing the reasons why the Director denied the use interpretation of condominiums in the Institutional Zone. As discussed in the "Discussion" section below, Standard Pacific is one of the six interested parties that have been allotted time to give a presentation at the Workshop.

On August 28, 1999, the City Council and Planning Commission held a joint workshop to review the concept of a proposed Senior Affordable Housing apartment project presented by the Corporation for Better Housing. At that time, the developer requested that the City contribute up to $1.9 million of its Affordable Housing Funds towards the development of the project. At the workshop, the City Council/Planning Commission gave general direction to the Developer, and indicated that the project had some merit.

Subsequent to August 28, 1999, a development application was submitted to the City by the developer. Over the next 2 years, the application was revised several times. The initial August 28, 1999 proposal was for an 84-unit apartment building for seniors plus a 5,000 square foot Community Center for the Peninsula Seniors. All units at that time were to be reserved for low and very low-income residents. The project was subsequently revised as the Peninsula Seniors withdrew their request to be included in this project and the number of units were reduced to address some of Staff's concerns. Ultimately, a revised project was submitted that reduced the size of the project to 52 units, of which 13 were to be reserved for low and very low-income residents. The proposed project included a partially subterranean parking structure with 76 parking spaces. An additional 9 parking spaces were proposed at grade. Above the partially subterranean parking structure were two floors of living area inclusive of 52 residential units, an approximate 2,000 square foot community room for residents, a library for residents, elevators, laundry facilities, a lounge and recreation court (swimming pool and spa).

The Traffic Committee reviewed the project at their March 26, 2001, April 23, 2001, and May 31, 2001 meetings. At their May 31^st meeting, the Traffic Committee recommended conditional approval of the proposed project from a traffic standpoint.

The Planning Commission reviewed the project at their March 27, 2001, May 8, 2001, May 22, 2001 and June 26, 2001 meetings. At their June 26, 2001 meeting, the Developer's request to change the project from 52 apartment units to 40 or 42 condominium units was presented to the Commission. The Commission felt that the issue of changing the project to condominiums needed to be addressed by the City Council before the Planning Commission could take any further action on the development proposal. Subsequently, the Planning Commission tabled the item until the City Council addressed the issue of whether or not the Developer could file a Tentative Tract Map for a Condominium development.

On August 21, 2001 the City Redevelopment Agency considered various issues pertaining to a proposal from Corporation for Better Housing and Indian Ridge Crest Gardens, LLP regarding development of the Crestridge property for Senior Housing including the approval of a new Exclusive Negotiating Agreement (ENA). The Board decided: (1) not to approve another ENA between the Rancho Palos Verdes Redevelopment Agency and Indian Ridge Crest Gardens, LLP; (2) not to sell the property back to the developer, Indian Ridgecrest Gardens; and (3) to direct staff to consider other options for the property, including the feasibility of a park.

As discussed in the "Discussion" section below, this project is also one of the six interested parties that have been allotted time to give a presentation at the Workshop.

Since the City's Redevelopment Plan was first adopted in 1984, the Redevelopment Agency has been required to set-aside twenty percent (20%) of the gross annual tax increment into the Agency's Low and Moderate Income Housing Fund. The purpose of this Fund is to increase, improve and preserve the City's supply of low and moderate-income housing. In carrying out the housing set-aside requirements, the Agency may expend these funds on a number of different programs, including acquiring real property. Once the unexpended and unencumbered funds in the Housing Fund exceed the greater of $1 million or the aggregate amount deposited in the fund over the last four years, the RDA has up to 1 year to either transfer the excess funds to the County or come up with a plan on how it intends on expending the excess funds. If the Agency does not transfer the funds to the County, but instead comes up with a plan, the excess funds must be spent on a program within the City within 2 years. In summary, the Agency would have a maximum of 3 years to expend excess surplus funds. If the excess surplus funds are not spent within 3 years, at 3 years, the Agency would face penalties that would affect the expenditure of other non-set-aside Agency funds.

For a number of years, Agency staff and Board members actively pursued alternatives for the use of RDA set-aside funds, including contacts with experienced developers of affordable housing projects, attempts to purchase developable land, new construction of affordable units in proposed developments and conversion of existing apartments into affordable units. In March 2000, the Agency purchased the Crestridge property for approximately $702,000 with RDA set-aside funds. At the time of purchase, the RDA set-aside fund balance was approximately $932,000. The current fund balance is approximately $588,000. Under state law, once purchased, the RDA has 5 years to initiate activities to provide affordable housing on the property. However, this could be extended for one additional 5 year period if the Agency adopts a resolution affirming its intention that the property be used for the development of affordable housing.

The 1999 Regional Housing Needs Assessment provided by the Southern California Association of Governments (SCAG), and subsequently the City's General Plan Housing Element adopted in August 2001, indicate that in the current planning period (2000-2005), 8 very low income housing units, 5 low income housing units, 8 moderate income housing units and 31 above-moderate income housing units for a total of 53 new housing units should be constructed in the City. The fulfillment of the Agency's obligation to utilize 20% of its tax increment income for the development of low to moderate income housing will support the General Plan Housing Element Goals and assist in meeting the Regional Housing Needs allocated to the City by SCAG.

In October 2001, the Governor signed two bills, AB 637 and SB 211, which make significant changes to the affordable housing requirements of the Community Redevelopment Law and affect the Agency's expenditure of funds on the Crestridge property. Both bills became effective on January 1, 2002. Basically, AB 637 adds a requirement that over the duration of the Agency's implementation plan (plus an additional 5 year period), affordable housing set-aside funds shall be expended on affordable housing that is available to families with children in at least the same proportion as the population under 65 bears to the total community population. According to the 2000 Census, the City's total population is 41,145. Of that, 33,445 or 81.29% are under the age of 65, while 7,700 or 18.71% are age 65 or over. In summary, it appears that, during the implementation plan period, only 18.71% of the set-aside funds may be spent on affordable housing available exclusively to senior citizens.

In summary, the affordable housing constraints and opportunities dictated by State Law that apply to the current RDA owned Crestridge property are listed below:

• The Agency has 5 years from the date of purchase (March 2000) to initiate activities for the development of affordable housing on the Crestridge parcel. The Agency can, by resolution, extend the 5 year period for one additional 5 year period. If physical development does not occur by the end of the extended period, then the property shall be sold and the proceeds shall be deposited back into the Agency's Set-aside Fund.

• Due to new State Legislation, only 18.71% of the Agency's set-aside funds, over the period from 2000-2010, may be spent on senior affordable housing on the Crestridge parcel. Additionally, it is not permitted under State Law for a housing development to have some, but not all, of its housing units restricted to senior housing. Therefore, RDA set-aside funds can only be used for a non-age-restricted low and moderate-income housing project.

• The Agency could use its set-aside fund to construct an Affordable Housing project on the Crestridge site, but it would need to be available for everyone (i.e. not age restricted). Additionally, a General Plan Amendment/Zone Change to multi-family would be needed for the site because we could no longer utilize the Institutional land use "Homes for the Aged", since the project would be for all ages.

• The City could purchase the site from the Agency with the City's In-lieu Fee Program Funds (current balance is approximately $974,000), and still build a senior affordable housing project on the site, but, due to recent Legislation and the limitations on the use of set-aside funds for senior housing, the City could not use Agency set-aside funds to help cover the full cost of development. The proceeds from the sale will be put back into the Agency's Set-aside Fund, resulting in a Fund balance in excess of $1 million. The Agency has up to a maximum of 3 years to determine what to do with and expend the funds in excess of $1 million or risk penalties.

• The Agency could opt to hold onto the Crestridge property and re-assess the City's affordable housing needs in 2004, which is one year before the current Housing Element planning period ends, and then decide whether to develop affordable housing on the Crestridge site or sell the property to a private party. The 2004 date is also one year before the City has to decide whether or not to develop the property. Addressing the excess surplus funds issue could also be delayed until that time if the City opts to sell the property.

Interest in the Crestridge property is high. We have received three statements of interest from potential users and have solicited a proposal for affordable housing for comparison purposes from a developer other than Corporation for Better Housing. In addition, the City Council directed staff to investigate the potential use of the land as a park site. Finally, staff believes that Corporation for Better Housing is still interested in developing the site. Each of the conceptual proposals is described below in normal text. Below each proposal description, in italicized text, Staff has identified some specific points that need to be considered while reviewing each of the proposals. A copy of each Statement of Interest is attached to this report. At the Workshop, a representative from each of the 3 interested parties, Corporation for Better Housing, and Affirmed Housing Group, will give a brief presentation. Additionally, the City Manager will provide a brief presentation on a proposed City park for the subject site.

City staff met with representatives from the Palos Verdes Art Center to discuss their interest in the property. The Art Center has outgrown their site on the southwest corner of Crenshaw Blvd and Crestridge (opposite the City property) and is interested in acquiring the City land and building a new facility. It is not clear whether they would be interested in purchasing the property outright, or whether they would pursue some type of partnership arrangement with the City.

• This project would likely raise some environmental and aesthetic issues including traffic, parking and building appearance.
• The proposed use would not require a General Plan or Zone Change, as Staff believes that an Art Center is consistent with the conditionally permitted uses in the Institutional zone.
• Approval of a Conditional Use Permit and Grading Permit would be required.
• Agency funds can only be used towards the development of affordable housing, and therefore could not be used for this type of use. As such, the property would need to be purchased from the Agency.
• Proceeds from the sale of the property would put the Agency's Set-aside Fund balance over $1 million.

The Exceptional Children's Network, a non-profit organization, is interested in developing an educational facility for learning disabled, and gifted and talented children on the Crestridge site. Their Statement of Interest described a "purchase" of the property. It is not clear what type of traffic this potential use would generate, nor is it clear how large a building would be required to accommodate the school.

• This project would likely raise some environmental and aesthetic issues including traffic, parking and building appearance.
• The proposed use would not require a General Plan or Zone Change, as Staff believes that an Educational Facility is consistent with the conditionally permitted uses in the Institutional zone.
• Approval of a Conditional Use Permit and Grading Permit would be required.
• Agency funds can only be used towards the development of affordable housing, and therefore could not be used for this type of use. As such, the property would need to be purchased from the Agency.
• Proceeds from the sale of the property would put the Agency's Fund balance over $1 million.

The nature of their proposed project is construction of 104 senior "for sale" (condominium) two and three bedroom attached units on the neighboring 9.77 acre vacant parcel. The developer would like to incorporate the City-owned parcel into his project. His letter points out that he would incorporate affordable units into the project and would include a linear park with public trails and a viewpoint, and/or a Senior Center on the subject corner site.

• The 104-unit project has not been reviewed by Staff and may have issues of its own, including aesthetics, traffic, and density.
• For the reasons described in the attached Planning Commission Staff Report, dated December 11, 2001, Staff had previously determined that "for sale" condominiums are not consistent with the General Plan and Zoning. Staff is seeking Council direction on this issue.
• If "for sale" condominiums are determined not to be consistent with the Institutional land use designation, then a General Plan Amendment and Zone Change application will be required in addition to a Conditional Use Permit and Grading Permit.
• Due to recent legislation, RDA set-aside funds can only be used for a non-age-restricted low and moderate-income housing project. Agency funds can no longer be used for a project of senior affordable units only, if this becomes a desired component of the project.
• The City's In-lieu Fund Program could be used to purchase the site from the Agency if some of the units are sold/rented at an affordable rate.
• Proceeds from the sale of the property would put the Agency's Fund balance over $1 million.

The Peninsula Seniors have expressed an interest in developing a Senior Center on the Crestridge Property. Staff is not clear as to the exact size of the proposed facility.

• This project would likely raise some environmental and aesthetic issues including traffic, parking and building appearance.
• The proposed use would not require a General Plan or Zone Change, as Staff believes that a Senior Center is consistent with the permitted uses in the Institutional zone.
• Approval of a Conditional Use Permit and Grading Permit would be required.
• Agency funds can only be used towards the development of affordable housing, and therefore could not be used for this type of use. As such, the property would need to be purchased from the Agency.
• Proceeds from the sale of the property would put the Agency's Set-aside Fund balance over $1 million.

City Staff invited Affirmed Housing Group to evaluate the possibility of an affordable senior housing project that would recognize the issues raised by the adjacent neighborhood including traffic, building mass and preservation of open space. The Affirmed Housing Group corroborated Corporation for Better Housing's assertion that for on-site management of senior affordable rental units the number of units could not be much below 50. However, they did indicate that if the City wanted only five affordable units, designed to complement the existing nearby neighborhood and to preserve some of the open space, it could be accomplished. The only limitation is how much money the City is willing to invest to build and manage five affordable units.

• A reduction in the size of a project would likely still raise some environmental and aesthetic issues including traffic, parking and building appearance, yet they would be significantly less than a 40-52 unit building.
• Approval of a Conditional Use Permit and Grading Permit would be required.
• Due to recent legislation, RDA set-aside funds can only be used for a non-age-restricted low and moderate-income housing project. Agency funds cannot be used exclusively for a senior only facility. As such, the property would need to be purchased from the Agency to provide senior affordable housing only. However, if non-age restricted units are to be sought, then approval of a General Plan Amendment and Zone Change for multi-family residential would be needed if the Agency were to still fund this project because we could no longer utilize the Institutional land use "Homes for the Aged", since the project would be for all ages.
• The City's In-lieu Fund Program could be used to purchase the site from the Agency and a senior affordable project could be constructed.
• Proceeds from the sale of the property would put the Agency's Fund balance over $1 million.

The Corporation for Better Housing/Indian Ridge Crest Gardens' proposal for approximately 40-42 condos or 52 apartments is still on the table. The most recent project submittal was described in some detail earlier in this report.

• This project has raised some environmental and aesthetic issues including traffic, parking and building appearance.
• For the reasons described in the attached Planning Commission Staff Report, dated December 11, 2001, Staff had previously determined that "for sale" condominiums are not consistent with the General Plan and Zoning. Staff is seeking Council direction on this issue.
• If "for sale" condominiums are determined not to be consistent with the Institutional land use designation, then a General Plan Amendment and Zone Change application will be required in addition to a Conditional Use Permit and Grading Permit.
• Due to recent legislation, RDA set-aside funds can only be used for a non-age-restricted low and moderate-income housing project. Agency funds cannot be used exclusively for a senior only facility. As such, the property would need to be purchased from the Agency to provide senior affordable housing only. However, if non-age restricted units are to be sought, then approval of a General Plan Amendment and Zone Change for multi-family residential would be needed if the Agency were to still fund this project because we could no longer utilize the Institutional land use "Homes for the Aged", since the project would be for all ages.
• The City's In-lieu Fund Program could be used to purchase the site from the Agency if some of the units are sold/rented at an affordable rate.
• Proceeds from the sale of the property would put the Agency's Fund balance over $1 million.

A passive park with trails, a viewpoint and possibly points of interest similar to those in the Lower Hesse Park Trails could be designed for this site. Assuming no parking or restroom facilities were added, such a park could be developed for less than $100,000 (plus $702,000 for the land plus interest). Minimum irrigation and planting is assumed.

• Agency funds can only be used towards the development of affordable housing, and therefore could not be used for this type of use. As such, the property would need to be purchased from the Agency.
• Proceeds from the sale of the property would put the Agency's Fund balance over $1 million.

A final alternative is to continue to hold the property in its present form and leave the decision for its best use to a time after all City property and needs have been studied and evaluated. This decision could occur during or at the end of the General Plan update process, or in 2004. The advantage to this approach is that the City will continue to be consistent with its adopted Housing Element and with the requirement to keep its Housing Set-aside fund balance below one million dollars. If, by pursuing this alternative, the City does not meet its housing need of 13 new affordable housing units by year 2005, then the next Housing Element revision, expected in year 2005, will need to address why the City did not meet its need and what programs the City will use for the next 5 year planning period. Additionally, as noted earlier in this report, the Agency should decide whether to develop an affordable housing project on the property prior to 2005 (5 years after purchase of the property).

Attached is an e-mail letter from Ms. Libby Aubrey, who has expressed an interest in developing some type of cultural facility on the site. Ms. Aubrey plans on addressing her interest during the Public Comment section of the Agenda.

Staff also received the attached letter, dated May 1, 2002, from Mr. Ray Mathys, providing comments on the Crestridge properties.

The initial fiscal impact of any of the proposals is whether or not the Crestridge property must be purchased from the City Redevelopment Agency. Any project that does not include an affordable housing element for families would necessitate reimbursement of at least $702,000, or possibly more if the fair market value of the property has increased, plus interest to the Agency Housing Fund. If the property is to be utilized as a park the cost of the land would likely be a charge to the General Fund Reserve.

If the property is purchased from the Agency, the problem of what to do with the housing set-aside funds that are in excess of $1 million must be addressed. As was pointed out earlier in this report if there is an excess of $1 million, the City must develop a plan and expend these funds within 3 years or risk sanctions.

There are many issues pertaining to the subject properties and the expenditure of City and RDA funds. Given the limited time at the Workshop and the number of issues pertaining to this topic, Staff does not anticipate that any final decisions will be made on the Crestridge properties. Staff envisions that upon hearing all of the testimony and direction provided, that at a future meeting, Staff will be able to provide more specific recommendations as to the development of the Agency owned parcel. In order to help provide direction at this Workshop, Staff has retained the services of a professional meeting facilitator to attend the workshop, absorb the discussion and input from all those in attendance, and then propose a next step in the process.

Although there are many issues to be discussed, below, Staff has identified certain items/issues to provide some focus and assist the Workshop Committee members in providing future direction to the neighborhoods, Staff, and the parties that have a development interest in the subject parcels. Staff recommends that:

1. The Workshop Committee allows each of the interested parties time to present their proposals, and provide adequate time for public input.
   
   
2. The Workshop Committee provides direction as to whether or not for-sale condominiums should be a permitted use in the Institutional Zone.
   
   
3. In order to properly evaluate the potential uses of the Crestridge property the Workshop Committee, and local neighborhoods, will probably want to review, at a minimum: a site plan, a rough grading plan, elevations of any structures proposed for the site, a draft traffic study, and the proposal for City/RDA cost sharing, if any. Since the cost of preparing these submittals is estimated at between $10,000 and $25,000 for each proposed project, the Workshop Committee may wish to eliminate one or more of the alternatives at this time if they feel it cannot be successful.
   
   
4. The Workshop Committee identify any additional information and analyses, if any, that is required in order to make a determination of the use of the RDA-owned property
   
   
5. The Workshop Committee allows the Facilitator to give a brief presentation at the end of the Workshop to help define future direction.

Respectfully submitted:
Joel Rojas, AICP, Director of Planning, Building, and Code Enforcement

Reviewed,
Les Evans, City Manager

Arial photograph of Crestridge Road
Palos Verdes Art Center letter of August 22, 2001
Exceptional Children's Network letter of September 5, 2001
Standard Pacific letter of October 10, 2001
Peninsula Seniors letter of April 29, 2002
Affirmed Housing Group letter of November 21, 2001
Crestridge Park Proposal and Site Photographs
Libby Aubrey letter dated April 29, 2002
Planning Commission Staff Report, dated December 11, 2001
Development Code Sections 17.26 and 17.32

Based on Government Code Section 54954.5
(All Statutory References are to California Government Code Sections)

Existing Litigation:
G.C. 54956.9(a)

Indian Ridge Crest Gardens, L.P. vs. City of Rancho Palos Verdes
Case No. BC 272155