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HomeMy WebLinkAbout1996-09-24 City Council (17)City of Palo Alto City Manager’s Repor TO:HONORABLE CITY COUNCIL FROM:CITY MANAGER DEPARTMENT: ADMINISTRATIVE SERVICES AGENDA DATE: SEPTEMBER 24, 1996 CMR:403:96 SUBJECT:UPDATE ON MIDTOWN REVITALIZATION PLAN IMPLEMENTATION AND REQUEST FOR COUNCIL DIRECTION ON CITY PARTICIPATION IN COSTS REQUEST This report provides an update on discussions with property owners in the Midtown Business District regarding the potential for public financing of improvements to assist in revitalization of the Midtown core area. Policy direction is also requested from the Council regarding reimbursement of costs incurred by the City to support the Midtown revitalization efforts. RECOMMENDATION Staff recommends that the Council: ° Provide direction to staff as to the Council’s intent regarding whether the $73,725 already spent to assist the property owners in developing a Conceptual Master Plan should be reimbursed through any future financing, or another method should tax exempt financing not be pursued. Provide direction to staff and the property owners as to the expectation for reimbursement of additional expenses incurred by the City to assist in the Midtown revitalization efforts. These expenses include: a) $35,000 already approved by Budget Amendment Ordinance (BAO) for traffic consulting and a planning consultant to prepare ordinance changes to initiate the Neighborhood Commercial Midtown Shopping Center District Zone (NC-MSC); and b) $35,000 to $60,000 for financial consulting services, approved conceptually on July 22. CMR:403:96 Page 1 of 7 Provide direction to staff and the property owners regarding expectation for City participation in the construction costs for improvements identified-in the Conceptual Master Plan. BACKGROUND On July 22, 1996, the Council approved a staff recommendation to proceed with Phase 2 of the Midtown revitalization’efforts. Specifically, the Council directed staff to: ao Return to the Planning Commission (PC) and Architectural Review Board (ARB) to initiate a Neighborhood Commercial Midtown Shopping Center District Zone (NC- MSC). This zone would be applicable only to the Midtown core area and would be based on review and refinement of the Midtown Conceptual Master Plan developed over the past year. bo Work with a subcommittee of the Midtown commercial property owners to identify financing mechanisms for implementation of on-site parking, sidewalk and circulation improvements within the Midtown core area. Return with a Budget Amendment Ordinance (BAO) to retain the services of a financial consultant to work with property owners, to ensure that the broad outlines of a financing plan are understood and continue to be supported by the property owners as the project progresses; and to structure a debt package to bring to the financial markets. do eo f. Return with a BAO and amended contract for the traffic consultant to provide an additional $15,000 for traffic analysis related to the installation of a new traffic signal on Middlefield Road at Bryson Avenue, and for traffic analysis for the environmental review of the Conceptual Master Plan and proposed new NC-MSC zone. Retum with a BAO for up to $20,000 of contract planner time to.expedite review of the Conceptual,Master Plan and the NC-MSC zone. Draft a policy permitting the City-owned parking lot to be used as a credit for parking required for reuse/redevelopment of structures within the Midtown core area. DISCUSSION Meetings with Midtown Property_ Owners Following Cotmcil action on July 22, staff initiated a meeting with the subcommittee of the Midtown property owners to discuss implementation of the Council’s direction. The CMR:403:96 Page 2 of 7 outcome of that meeting was a request from the subcommittee to delay any work on public improvements or tax-exempt financing of such improvements until the owners could have further discussions amongst themselves about other financing options. The subcommittee asked that the City proceed with initiating the NC-MSC zone and with relocating the traffic signal. They also requested consulting assistance from the City to explore fmancing options other than tax-exempt financing. The property owners scheduled another meeting with selected Council Members on September 10, which the City Manager also attended. At that meeting, the property owners expressed uncertainty about the Council’s financial commitment to Midtown revitalization efforts. Individual property owners vary in their ability to contribute financially to the revitalization envisioned by the Conceptual Master Plan, and there is a perception that the City has already committed to some level Of financial participation, even though no formal Council action has been taken in this regard. The property owners also introduced the possibility of phasing the project, and the retention of a landscape architect to work on what they characterized as "Phase 1" improvements. The property owners were advised that finalization of the Conceptual Master Plan was a necessary precondition to both the traffic signal relocation plan and completion of the NC-MSC zone Changes. Progress on Midtown Work Plan Staff has received Council approval of a BAO for up to $20,000 of contract planner time to expedite review of the Conceptual Master Plan and the NC-MSC zone. A consultant has been retained and a preliminary workplan prepared. That preliminary workplan envisioned a study session with the ARB and PC in early October, with review of the proposed zoning and final Master Plan by the ARB and PC in November; and with recommendations from the ARB and PC coming to the Council in January 1996. This timeline will need to be revised somewhat, as the property owners have not yet retained an architect to finalize the Conceptual Master Plan, which is a necessary precursor to proceeding with the zoning ordinance changes. A meeting of the property owners to discuss the next step in the revitalization effort is scheduled for September 18. Assuming that the property owners retain the architect to begin work on finalizing the Conceptual Master Plan in late September or early October, staff would estimate a study session with the ARB and PC in early November 1996. Should the property owners find it necessary to delay this part of the project, however, staff will have difficulty scheduling the initial study session with the ARB and PC, due to anticipated meetings with both bodies on the Draft Comprehensive Plan. This would result in a delay in the adoption of the new ordinance until sometime in early to mid-1997. A BAO and amended contract for the traffic consultant to provide an additional $15,000 for traffic analysis and evaluation related to the proposed new traffic signal on Middlefield Road at Bryson Avenue, and for traffic analysis for the environmental review of the Conceptual Master Plan and proposed new NC-MSC zone was also approved by the Council. The CMR:403:96 Page 3 of 7 workplan associated with this part of the project consists of 4 phases: planning (2 months), pre-design (2 months), design (3 months), and construction (7 months). The planning phase is already funded. The design and construction phase will require an additional $135,000. The detailed design for the new driveway, which is part of the finalization of the Conceptual Master Plan, will need to be completed before the start of design for the traffic signal, and construction of the new driveway will need to be completed prior to the start of construction for the traffic signal. Finally, Council approved staff’s recommendation that a BAO be prepared for financial consultant services which would be required to move forward with Phase 2 of the Midtown Revitalization Project. Staff prepared an amendment to the existing contract with Keyser Marston and Associates, to provide such assistance during a transition period, prior to retaining underwriting/financial advisor services in conjunction with debt i~suance. However, given the uncertainty about the financing of the project at this time, staff is not proposing to retain fmancial consulting assistance, but may return at a later date with a BAO, should such assistance be required. Reimbursement of City_ Expenditures for Midtown Revitalization At the meetings with the property owners, questions were raised about the appropriateness of having portrayed, at the July 22, 1996 Council meeting, the $73,725 already spent by the City to assist the property owners in developing a Conceptual Master Plan as reimbursable from the proceeds of tax-exempt financing, should this option be pursued. Previous staff reports (CMR:255:95 and CMR:415:95) have indicated that these expenses represented the City’s contribution to a "public/private partnership." It is the expectation of the property owners, therefore, that these costs would not be reimbursed to the City through a tax-exempt financing, or reimbursed by another method should tax-exempt financing not be pursued. Council’s approval of BAO’s totaling $35,000 for consultant assistance for the zoning ordinance changes and ’for traffic consulting assistance, as well as any needed financial consulting assistance (estimated to cost $35,000 to $60,000) were, however, proposed by staff in the context of an anticipated tax-exempt financing, and represented to the Council as being reimbursable. Given that such reimbursement through tax-exempt financing appears less likely, staff is requesting Council direction as to its expectation for reimbursement of these expenditures. CMR:403:96 Page 4 of 7 MIDTOWN REVITALIZATION PRO~CT COSTS INCURRED/COMMITTED TO-DATE Phase 1: Market Analysis Traffic Consultant Meeting Facilitation Economic Consultant Subtotal - Phase 1 $26,225 17,500 10,000 20,000 $73,725 Phase 2: Traffic Consultant Planning Consultant Financial Consultant Subtotal - Phase 2 $15,000 20,000 $35 to $60,000 $70 to $95,000 TOTAL $143,725 to $168,725 Staff is also requesting Council direction for City participation in the capital costs which are associated with implementation of the final Master Plan. These include: MIDTOWN SITE CONSTRUCTION COSTS General Construction Demolition Parking Lot Paving Storm Drainage Sidewalk Landscaping Lighting Design/Testing Traffic Signal TOTAL $57,000 82,000 415,000 57,000 264,000 88,000 37,000 150,000 135,000 $1,285,000 CMR:403:96 Page 5 of 7 POLICY IMPLICATIONS The City’s policy for costs incurred in private redevelopment is to require the developer to pay all such costs. Those costs include any improvements on private property, as well as any improvements to public property (sidewalks, tree planters, etc.) that are the result of development and are not initiated as part of the regular City maintenance or capital program. Participation. in such costs as part of the Midtown revitalization effort would represent a change from this policy. To the extent that future commercial redevelopment or revitalization efforts may require City assistance in initiating action, the City’s financial contribution to the Midtown efforts may be perceived as setting a precedent for public participation in private redevelopment. FISCAL IMPACT The General Fund Budget Stabilization Reserve (BSR) has been the source of the $143,725 to $168,725 either spent or committed to date to assist the Midtown revitalization efforts, and would also be the source for additional expenditures, with the exception of the traffic signal, which could be financed from the Electric Fund Rate Stabilization Reserve. ENVIRONMENTAL ASSESSMENT An environmental assessment will be done for the proposed zone change. No environmental assessment is required at this time. ALTERNATIVES The Council has a number of options with revitalization effort. Examples include: regard to participating in the Midtown O Continuation of the current City policy to require private development to pay the costs of such development. O o Extension of the public/private partnership philosophy used to date for consulting assistance to the capital rehabilitation efforts associated~with implementation of the Midtown Master Plan, with individual project components subject to negotiation with the property owners as to whether they will be paid by the owners or by the City. Provision of City funding on a "matching" basis for some or all components of Master Plan implementation. CMR:403:96 Page 6 of 7 PREPARED BY: Harrison Deputy City Manager, Administrative Services CITY MANAGER APPROVAL: Fleming Manager CC:rga Related CMR’s: CMR:331:96, CMR:415:95, CMR:255:95 CMR:403:96 Page 7 of 7