In 2012, the City Council approved General Plan Amendment No. GPA-2-12(B) and Planned Unit Development No. PUD-128-12, and adopted a Mitigated Negative Declaration and Mitigation Monitoring and Reporting Program to facilitate the future development of a resort hotel project on City-owned land located on the northeast corner of Harbor Boulevard and Twintree Lane, west of Choisser Road, commonly referred to as “Site C.”  Planned Unit Development No. PUD-128-12 authorizes development of Site C with up to 769 rooms and ancillary hotel uses such as pools, spas, and fitness centers within up to three (3) hotels, up to 104,000 aggregate square feet of conference/meeting banquet space, hotel restaurant space, restaurant/entertainment space, and multi-level parking structures with 1,297 parking spaces. 

In 2013, the City Council adopted Resolution No. 9172-13, approving the Grove District Resort Hotel Development Agreement (“DDA”).  The DDA generally requires the City to convey Site C to the developer in exchange for the developer constructing a resort hotel project meeting specified requirements on the property in accordance with the land use entitlements for the Project approved by the City.  The DDA contemplates that the City will enter into a mutually acceptable statutory development agreement with the developer pursuant to California Government Code section 65864 et. seq. (the “Development Agreement Statutes”), but does not require the City to do so.

The Development Agreement Statutes authorize a city to enter into a statutory development agreement with any person having a legal or equitable interest in real property for the development of that property.  The purpose of the Development Agreement Statutes is to provide assurance to the applicant for a development project that upon approval of the project, the applicant may proceed with the project in accordance with existing policies, rules and regulations, and subject to conditions of approval, in order to strengthen the public planning process, encourage private participation in comprehensive planning, and reduce the economic costs of development.

In order to implement the Project, pursuant to the DDA, the developer, Investel Garden Resorts, LLC, requested City approval of Site Plan No. SP-043-2017 and Tentative Tract Map No. TT-17455, and requested that the City enter into Development Agreement No. DA-008-2017.  The Site Plan and Tentative Tract Map are subject to Planning Commission review and approval.  The Development Agreement requires City Council approval and the adoption of an Ordinance.

Site Plan No. SP-043-2017 depicts the final Project layout and design.  The Project will be constructed on approximately 4.3 acres and consists of 769 hotel rooms and approximately 26,090 square feet of additional hotel ancillary uses within two (2) full-service and one (1) limited-service hotel; approximately 39,867 square feet of conference/meeting banquet space; approximately 36,885 square feet of restaurant/retail/entertainment space; approximately 24,014 square feet of hotel restaurant space; and a total of up to 1,297 parking spaces within a multi-level parking structure with one level of subterranean parking.  Tentative Tract Map No. TT-17455 allows for the adjustment of the rear property lines of four (4) existing City-owned parcels located at the northeast corner of the site on Choisser Road to incorporate a portion of these parcels into the Project site and to consolidate the existing parcels on the Project site into two (2) lots. Because the final Project design reflects minor modifications to the conceptual site plan studied in 2012, the City prepared a subsequent initial study in accordance with the California Environmental Quality Act (CEQA) to analyze the environmental effects of the Project modifications.  The subsequent initial study concluded that all of the modified Project’s environmental impacts could be reduced to a level of less than significance. 

On November 2, 2017, the Planning Commission conducted a public hearing and voted 6-0 with one Commissioner absent to adopt a Subsequent Mitigation Negative Declaration and Mitigated Monitoring and Reporting Program for the final modified Project and approved Site Plan No. SP-043-2017 and Tentative Tract Map No. TT-17455.  The Planning Commission also adopted Resolution No. 5900-17 recommending that the City Council approve the proposed Development Agreement.

The proposed Development Agreement would give the developer a vested right to construct and complete development of the Project consistent with Planned Unit Development No. PUD-128-12, Site Plan No. SP-043-2017 and Tentative Tract Map. No. 17455, within the time frame specified in the DDA.  In consideration for this vested right, the developer would pay a negotiated Development Agreement payment to the City in an amount calculated to equal the positive difference between (1) the final actual total of the development fees charged by the City; and (2) Four Million One Hundred Sixty Three Thousand One Hundred Twenty Nine Dollars ($4,163,129).  If the current estimates of the City Development Fees are accurate, the Development Agreement payment will be $852,571.  This Development Agreement payment will be used to partially reimburse the City for the cost of services, equipment, and public infrastructure required by the Project that are not otherwise being reimbursed to the City, including, but not limited to, additional costs for fire, police, and public works services and equipment and construction of public infrastructure.  The Development Agreement would have an initial term of five (5) years, with the option for up to five (5) additional one (1) year extensions upon developer’s payment of an additional fee. 

There is no financial impact to the City.

It is recommended that the City Council:

• Conduct a Public Hearing; 

• Introduce and conduct the first reading of the attached Ordinance approving Development Agreement No. DA-008-2014 for properties located at 12222, 12252, 12262, 12272, 12292, and 12302 Harbor Boulevard; 12511, 12531, 12551, and 12571 Twintree Lane; 12233, 12235, 12237, and 12239 Choisser Road; and

• Authorize the City Manager to sign the Development Agreement on behalf of the City.

By:     Maria Parra, Senior Planner