HomeMy WebLinkAbout2001-07-09 City Council (4)City of Palo Alto
City Manager’s Report
TO:HONORABLE CITY COUNCIL
FROM:CITY MANAGER DEPARTMENT: CITY MANAGER
DATE:JULY 9, 2001 CMR: 306:01
SUBJECT:ORDINANCE OF THE COUNCIL OF THE CITY OF PALO ALTO
DECLARING THE NEED FOR A REDEVELOPMENT AGENCY TO
FUNCTION IN THE CITY OF PALO ALTO AND DECLARING THE
CITY COUNCIL TO BE THE REDEVELOPMENT AGENCY FOR THE
CITY OF PALO ALTO
RECOMMENDATION
Staff recommends that the City Council:
Introduce and give first reading to an ordinance declaring the need for a
redevelopment agency to function in the City of Palo Alto, declaring the City
Council to be the redevelopment agency for the City of Palo Alto, and making the
finding that the formation of a redevelopment agency "will serve the public interest
and promote the public safety and welfare in an effective manner in that this public
body is best able to serve the needs of the community to implement the purposes of
the Community Redevelopment Law" according to Health and Safety Code section
33200.
Direct staff to return to the Council and Agency, upon its formation, with documents
and actions necessary to organize and operate the Agency, and to designate the
Edgewood Center as a survey area and initiate the procedures for adoption of a
redevelopment plan, including formation of an informal Neighborhood Advisory
Committee.
BACKGROUND
On February 23, 2000, staff presented an updated long-range financial forecast to the
Finance Committee. The forecast identified resources available to fund ongoing and new
programs and projects. On June 6, 2000, the Finance Committee determined that
alternate means of financing would be necessary to fund new capital projects. One
CMR:306:01 Page 1 of 4
funding resource identified for further research was the establishment of a redevelopment
agency.
On May 8, 2001, a staff report with recommendations for formation of a redevelopment
agency was presented to the Finance Committee (Attachment 1). Staff shared
information about the City staff outreach to property owners, tenants residents and
neighbors in the area. All seemed enthusiastic about working with the City in the
establishment of a redevelopment agency and adopting a redevelopment plan for the
Edgewood Center. Formation of a redevelopment agency and adoption of a
redevelopment plan is being explored because a redevelopment agency has unique
powers and funding sources that can be used to alleviate blighting conditions and
revitalize blighted areas by means such as construction of infrastructure, public facilities,
and affordable housing.
Following public comment, staff clarified the procedures for designating a survey area,
conducting a study to determine whether conditions exist in the area to qualify the area
for inclusion as a redevelopment project area, and adopting a redevelopment plan.
Council members asked several questions regarding formation of a redevelopment
agency in Palo Alto including staffing impacts and the level of neighborhood
participation in guiding development at the Center. Since so many questions emerged,
the Finance Committee determined that it would be best to continue this item to another
date so that they could receive additional information on redevelopment, its purpose, and
implications for Palo Alto.
DISCUSSION
The item was rescheduled for the Finance Committee’s May 29, 2001 meeting. At that
time, several neighborhood speakers urged the City’s favorable consideration of the staff
recommendations. Following a brief introduction from staff, Finance Committee
members discussed implications of the establishment of a redevelopment agency in Palo
Alto. Issues including initial costs for the project area study and Environmental Impact
Report 0~IR) were discussed in detail. Staff also provided revenue estimates to quantify
potential tax increment benefits to the City in a variety of scenarios. Staff added that in
addition to the potential fmancial benefits associated with establishing a redevelopment
agency and developing a plan, revitalization of the Edgewood Center would provide a
community benefit to the citizens of Palo Alto by preserving the Edgewood Center as a
neighborhood-serving retail center.
Some concerns emerged from Committee members about the City’s ability to pay off
debt. Staff indicated that most of the time the losses incurred by agencies were in a
transaction where the redevelopment agency overestimated the capability of a project to
increase the property tax base of the project area, and therefore did not receive the
anticipated amount of tax increment. A member of the Finance Committee indicated that
CMR:306:01 Page 2 of 4
the Council might consider adopting certain criteria,
operation that would protect the City from such situations.
principles, and standards of
Staff further clarified that any redevelopment plan had to be consistent with the
Comprehensive Plan and Zoning Ordinance.
The Finance Committee determined that when the Redevelopment Agency was
established and the City Council considered the question of where to designate a survey
area, its recommendations to the full City Council would include all four parcels at
Edgewood Plaza.
The Finance Committee inquired about any potential impacts regarding the Palo Alto
Union High School District (PAUSD). The City Manager responded that the CRL
provides for means to reduce the fmancial burden of redevelopment on school districts,
and that he had already initiated discussions with the Superintendent and explored the use
of tax increment for assistance in funding projects of benefit to PAUSD or including
projects of benefit to the PAUSD in the project area.
On May 29, 2001, the Finance Committee recommended approval of staff.
recommendations to the City Council at which time staff agreed to bring the item to the
full City Council with an ordinance creating a redevelopment agency.
There are several additional actions that will need to be taken by the Council and Agency
following formation of the Agency. The staff recommendation seeks direction for staff to
go forward by preparing the documents and actions needed. These include the
organizational and operational documents associated with forming a redevelopment
agency, Such as bylaws, appointment of officers, CEQA, personnel and conflict of
interest procedures. The City and Agency will also ultimately enter into a cooperation
agreement for the provision of services and funding to the Agency. These further actions
and a tentative schedule are described in greater detail on Attachment 3, which is an
index of actions and documents prepared by the City Attorney’s office from drat~
materials provided by outside counsel.
PREPARED BY: ~(J..A~Ma~ ~~-
SUSAN ARPAN, Econori~c Resources Manager
CITY MANAGER APPROVAL:
BENEST, City Manager
CITY ATTORNEY APPROVAL: ~-~ %(~ ~ " "t%--,-z--<---, y Z" v’/
ARIEL P. CALONNE~ City Attorney
CMR:306:01 Page 3 of 4
ATTACHMENTS
Attachment 1:CMR: 195:01 Redevelopment Agency Feasibility Report
,Attachment 2:Frequently Asked Questions (FAQs) Regarding the Formation of a
Redevelopment Agency
Attachment 3:Index of Documents for the Activation and Organization of the
Redevelopment Agency of the City of Palo Alto
Attachment 4:Ordinance of the Council of the City Of Palo Alto Declaring the
Need for a Redevelopment Agency To Function in the City of Palo
Alto and Declaring The City Council To Be the Redevelopment
Agency for The City Of Palo Alto
CMR:306:01 Page 4 of 4
ATTACHMENT 1
City of Palo Alto
City Manager’s Report
TO:HONORABLE CITY COUNCIL
ATTN:FINANCE COMMITTEE
FROM:CITY MANAGER DEPARTMENT: CITY MANAGER
DATE:
SUBJECT:
MAY 8, 2001 CMR: 195:01
REDEVELOPMENT AGENCY FEASIBILITY REPORT
REPORT IN BRIEF
On February 23, 2000, staff presented an updated long-range financial forecast to the
Finance Committee. The forecast identified resources available to fund ongoing and new
programs and projects. On June 6, 2000, the Finance Committee determined that
alternate means of financing would be necessary to fund new capital projects. One
funding resource identified for further research was the establishment of a redevelopment
agency.
The establishment of an agency and adoption of a redevelopment plan can assist in the
revitalization of distressed business districts. A joint financing authority by the City and
redevelopment agency can also be created.
A number of procedural steps must be followed in adopting a redevelopment plan.
Several reports must be prepared and an EIR must be prepared. Following public
participation and comment, consultation with affected taxing agencies, and a formal
public hearing process, a redevelopment plan may be adopted by the City Council.
When the redevelopment plan is adopted, the base year for establishment of tax
increment financing is established. This date establishes the base or current assessed
value of the properties within the redevelopment project area. Edgewood Center meets
the requirements for establishment of a project area. A project area study will help
determine if the proposed project area is feasible.
In addition to the financial benefits associated with developing a redevelopment agency
and plan, revitalization of the Edgewood Center provides a community benefit to the
citizens of Palo Alto.
CMR:195:01 Page 1 of 7
RECOMMENDATION
Staff recommends that the City Council:
Make the finding that formation of a redevelopment agency "shall serve the public
interest and promote the public safety and welfare in an effective manner" according
to California Redevelopment Law section 33200 (a) and direct to staff to draft an
ordinance to form a redevelopment agency and other necessary organizational
documents.
Authorize the City to initiate a project area study for the Edgewood Center and initiate
the procedures for the adoption of a redevelopment plan for Edgewood Center.
Direct staff to form a Neighborhood Advisory Committee (NAC) to work with staff in
guiding the development of the proposed redevelopment plan for the Edgewood
Project Area and assist the City in developing goals and outcomes that are consistent
with the surrounding neighborhood, the City’s Comprehensive Plan, and
Redevelopment Law.
BACKGROUND
On February 23, 2000, staff presented an updated long-range financial forecast to the
Finance Committee. This forecast detailed, under different economic scenarios, available
resources to fund ongoing and new programs and projects. Within this context, staff
presented the beginning of a series of reports outlining options to finance remaining
existing infrastructure work and major new capital projects. On June 6, 2000, the
Finance Committee determined that alternate means of financing would be necessary to
fund new capital projects. On September 19, 2000, the Committee discussed the
possibility of establishing a redevelopment agency as one of these alternate sources of
financing. Redevelopment agency dollars can be invested in affordable housing,
infrastructure, economic revitalization efforts and public facilities. Other than affordable
housing, agency revenues must generally be used within the project area of an adopted
redevelopment plan. An agency’s affordable housing money can be used anywhere in the
City.
There are two primary reasons for considering the adoption of a redevelopment plan.
The primary reason is to facilitate the revitalization of distressed business districts or
neighborhoods based on approved project area plans. Second, with a formal Agency, the
City and the Agency could create a joint financing authority. Such a financing authority
is able to aggregate different sources of revenue in order to support the issuance and
repayment of bonds.
CMR:195:01 Page 2 of 7
This report will detail what steps are necessary to adopt a redevelopment plan and why
staff believes that a redevelopment plan could be a valuable resource for implementing
stated City goals.
DISCUSSION
Redevelopment Agencies
The first step in the process is to formally create the redevelopment agency for the City.
The Community Redevelopment Law authorizes every city and county in California to
establish a redevelopment agency. The agency is established by an ordinance of the
legislative body, which can determine that the members of the body shall also serve as
the governing board of.the redevelopment agency. However, the redevelopment agency
is a separate legal entity from the city. In addition to the ordinance that creates the
agency, there are a number of other procedural steps that are required in the formation of
an agency, such as the adoption of agency bylaws, designation of officers, adoption of a
conflict of interest code, etc.
Once the agency has been established, the community can initiate steps for adopting a
redevelopment plan for a particular area. The adopted redevelopment plan essentially
serves as a charter for the agency’s activities, by describing both the scope and the limits
of its authority. It also is a long-term planning and fmancing document. It can authorize
an agency to conduct its activities for up to 30 years, and collect tax increment to repay
its indebtedness for up to 45 years after plan adoption.
Redevelopment has been and remains one of the fundamental tools used by most cities in
California to revitalize deteriorating and blighted business districts and neighborhoods.
The most current figures from the State Controller’s Office indicate that there are 406
redevelopment agencies statewide. In order to accomplish stated objectives of an
adopted redevelopment plan, redevelopment agencies have powers that are typical for
local governmental agencies. These general powers include the authority to:
¯Organize its affairs and staffing to carry out the redevelopment plan;
¯Adopt a budget ,and system to pay and account for its expenditures;
¯Buy property;
¯Sell property;
¯Make certain types of loans or grants to carry out the redevelopment plan;
¯Construct infrastructure, such as streets, sidewalks, water and sewer systems,
street lighting, landscaping, signs, signals, parking facilities and other public
improvements;
¯Assist development by property owners, developers or manufacturing
companies to carry out the redevelopment plan;
CMR:195:01 Page 3 of 7
¯Rehabilitate, modemize, consolidate or remove structures where needed to
implement the plan;
¯AsSist in the development or rehabilitation of housing for use by moderate-
income and/or low-income families.
In addition to these general powers, a redevelopment agency has three special powers that
are used for the revitalization of areas identified in the redevelopment plan. These
powers are:
¯The ability to buy private property for resale to another private person or
organization. This allows an agency to acquire one or more properties for
consolidation or reconfiguration to enable private, market-based
redevelopment to occur.
¯The ability to use the power of eminent domain to acquire private property.
Although every property in the state is already subject to governmental use of
eminent domain by the state, county, cities, school districts and utilities for the
purpose of public use, redevelopment authority allows the agency to condemn
private property, upon paying a fair price for the property and relocating the
tenants. The agency may then resell the property so long as the subsequent use
of the property carries out the redevelopment plan and eliminates blight.
¯The power to collect property tax "increment" in order to finance the
redevelopment activities authorized in the plan.
The underlying reason for giving redevelopment agencies the special powers described
above is the existence of "blight" within the project area defined by an adopted
redevelopment plan. "Blight" is defined in the Community Redevelopment Law and
includes both physical and economic factors.
There are a number of procedural steps that must be followed in adopting a
redevelopment plan. These include the preparation of various reports that: describe the
specific physical and economic blighting conditions within the proposed redevelopment
¯ project area; analyze the financial feasibility of the proposed project; and discuss the
types of redevelopment activities that will eliminate the blighting conditions. An
Environmental Impact Report (EIR) must be prepared on the proposed redevelopment
plan. There are also various opportunities for public participation and consultation with
affected taxing agencies. The plan adoption process culminates in a formal public
hearing, often a joint meeting of the redevelopment agency and city council. The council
adopts the redevelopment plan by ordinance. Thereafter, the redevelopment agency is
vested with the responsibility for implementing the plan, although certain agency
activities still require the approval of the city council.
When a city council adopts a redevelopment plan, the base year for establishment of tax
increment financing is established. This date establishes the base or current assessed
CMR:195:01 Page 4 of 7
value of the properties within the redevelopment project area. Generally speaking, the
increases in property tax over the base year assessed valuation accrue to the
redevelopment agency for use in mitigating the conditions identified in the
redevelopment plan. Generation of these tax increment dollars allows an agency to
leverage funds through financing mechanisms such as bond issuance by the
redevelopment agency. The typical redevelopment plan adoption process is identified in
detail in Attachment 1 of this staff report.
Edgewood Center
To explore the feasibility of establishing a redevelopment agency, an interdepartmental
staff team has been working with representatives of Keyser Marston Associates, Inc.,
who are experienced in the establishment of redevelopment agencies and plan adoptions
throughout the state. As part of this effort, the team reviewed several areas in Palo Alto
that might meet the threshold criteria for the formation of a project area. One site,
Edgewood Center, appeared to meet the requirements for establishment of a project area
as well as being a center that would benefit from City assistance to meet Comprehensive
Plan goals. A project area study will help determine if the proposed project area is
feasible and desirable as a means of fulfilling these City objectives.
Edgewood Center is located on Embarcadero Road just West of Highway 101. The
Center includes an Albertson’s grocery store, Shell service station, several marginal small
shops and the Maharishi School of Science. In the recently completed Retail Strategy for
the Ci_ty of Palo Alto (Attachment 2)completed by The Sedway Group, the physical
condition of the Center is described as "showing severe signs of physical deterioration."
Several barriers to redevelop this center are cited in the Retail Strategy. Crime figures
available from the City Police Department indicate that Edgewood Plaza had the highest
number of serious crimes (assault, battery, burglary, robbery, sexual assault, stolen
vehicle) of any retail area in the City from January 1998 to April 2000. This is a serious
deterrent to increasing customer usage of the center. The lack of visibility at the center
will also make it difficult to attract credit tenants to the center. Another barrier to the
attraction of new retailers and customers is the fact that the Center is old, in poor physical
condition, and functionally obsolete by current supermarket and shopping center
standards. Finally, multiple ownership of the land and buildings is a deterrent to pursuing
coordinated revitalization of the buildings, parking and landscaping. Currently, there are
four parcels on the site, all with different owners. This parcelization is an obstacle
commonly identified in the redevelopment law as a significant obstacle to revitalization
and redevelopment.
In addition to tax increment fimds accruing to the City from the Edgewood Center, the
City could also benefit from increased sales tax at the Center, if it was redeveloped as a
mixed-use or retail center. Sales at Edgewood Plaza were down 59 percent from $6
million in 1989 to $2.4 million in 1999. From 1989 to 1992, sales hovered at $5.5 to $6
CMR:195:01 Page 5 of 7
million dollars, before dropping drastically in 1993 during the last economic recession.
Edgewood Plaza has failed to recover and sales have continued to fall. The loss in sales
tax revenue to the City from 1989 to 1999 from sales at the Edgewood Center is
approximately $35,000 yearly.
In addition to the fmancial benefits accruing to the City, community benefits for
redeveloping Edgewood Plaza include a revitalized shopping area to serve the local
residents.
RESOURCE IMPACT
Four primary departments will be impacted by the approval of this staff recommendation:
the City Manager’s Office, Administrative Services Department, Planning and the City
Attorney’s Office.
The City Manager’s Office will be responsible for administration of the Redevelopment
Agency and oversight of the consultant working on redevelopment plan adoption
services. This work will initially be absorbed into the current workload of the Office. A
consultant contract for $76,000 is part of a separate staff report and recommendation.
Administrative Services will be responsible for the following annual actions: budget
development and fmancial reporting, project management, monitoring and verifying tax
increment revenues, calculation of housing set-aside and monitoring and reporting on
agency financial limits and doing the annual Statement of Indebtedness. This workload
will initially be absorbed into the current workload of the Department.
The City Attorney’s office will address this matter with the assistance of outside counsel.
The estimated cost for these services through the 2001-02 fiscal year is less than $25,000.
These funds have not been budgeted.
The Planning and Community Environment Department will be responsible for
overseeing the preparation of an EIR to be prepared by a consultant for a cost ranging
from $50,000 to $75,000. Planning estimates that it will require one-fourth of an existing
Full Time Equivalent (FTE) to oversee the EIR preparation and participate in the
formation of the Agency. This workload will initially be absorbed into the current
workload of the Department.
POLICY IMPLICATIONS
The following policies and programs from the City’s Comprehensive Plan identify goals
for revitalization of the Edgewood Center that support a City decision to designate this
area a Redevelopment Project Area:
CMR:195:01 Page 6 of 7
Policy B-27
Support the upgrading and revitalization of Palo Alto’s four Neighborhood
Commercial Centers
Policy L- 18
Encourage the upgrading and revitalization of selected Centers in a manner that is
compatible with the character of surrounding neighborhoods.
Policy L-37
Maintain the scale and local-serving focus of Palo Alto’s four Neighborhood Centers.
Support their continued improvement and vitality.
¯ProgramL-37
Encourage property owners within Neighborhood Centers to prepare master
plans, with the participation of local businesses, property owners and nearby
residents
TIMELINE
Attached to this memo is a letter from Keyser Marston dated April 24, 2001 (Attachment
3) that includes both an expedited and a standard schedule for proceeding with the
adoption of a redevelopment plan. It appears that the standard schedule, because of the
timing of the establishment of a base year for tax increment fmancing and other
considerations, would be the schedule most in keeping with a reasonable schedule for
City staff. This schedule would target a March 2002 redevelopment plan adoption.
ENVIRONMENTAL REVIEW
This report, detailing the process for adopting a redevelopment plan, presents a
preliminary policy assessment to Council for discussion and direction to staff as part of
the City’s long term financial planning. If the Council determines that it would like to
adopt a redevelopment plan for the proposed area, the Community Redevelopment Law
requires that the proposed redevelopment plan be analyzed for environmental impacts.
PREPARED BY:S S~l~~~c Resources Manager
CITY MANAGER I{
EMILY HARRISON
Assistant City Manager
ATTACHMENTS
Attachment 1: Redevelopment Plan Adoption Process
Attachment 2: Retail Strategy for the City of Palo Alto, Edgewood Plaza
Attachment 3: Letter from Keyser Marston dated April 24, 2001
CMR: 195:01 Page 7 of 7
Attachment 1
Redevelopment Plan Adoption Process
The normal redevelopment plan adoption process includes:
*City Council adoption of a Survey Area (the area to study for inclusion in a
redevelopment project)
¯Planning Commission adoption of a Preliminary Plan (the primary purpose of the
Preliminary Plan is to establish the Project Area boundaries)
¯Agency receipt of Preliminary Plan and establishment of base year
¯Agency mailings to affected taxing agencies, the County Fiscal Officer and the State
Board of Equalization notice of the Agency’s intent to adopt a redevelopment project
and the proposed base year. (The County Fiscal Officer has 60 days to prepare a
report identifying the property values, and taxing entities serving the area including
their percentage of the property taxes)
¯Agency receives draft Redevelopment Plan and Owner Participation and Preference
Rules (O.P. Rules) and authorizes their availability for public review
¯Agency staff holds community meeting to discuss the proposed project
¯Agency adopts Preliminary Report (includes the blight and financial feasibility
findings) and authorizes public review of the draft EIR (45 day period)
¯Agency sends Preliminary Report and draft EIR to affected taxing agencies for their
consideration and offers to consult.
¯Planning Commission makes a report to the City Council on conformance of the
Redevelopment Plan with the General Plan and a recommendation on the adoption of
the Plan
¯Agency adopts Owner Participation and Preference Rules and Report to Council
(contains the components of the Preliminary Report plus a summary of the actions
taken during the adoption process) and Final Report to Council.
¯Agency and City Council consent to joint public hearing on the Plan
¯Agency and City Council hold a hearing on the Redevelopment Plan and EIR. Notice
of the hearing is published in the newspaper for four consecutive weeks, and affected
taxing agencies are notified by certified mail
¯Project Area owners and occupants are mailed notice 30 days in advance.
¯Council adopts ordinance approving the Redevelopment Plan.
¯Notice of Determination filed with County Clerk.
¯ATTACHMENT 2
SEDWAY.GROUP I .
I Real Estate and Urban Economics
Vacant~nderutilized Parcels. Overall, the center is underutilized. Land at the back of the site on
Ramona Street is occupied by a Goodwill Donation station. This portion ofth. e property could be an
appropriate site for housing development, which would enhance demand for on-site retail space. Parcel
number 132-28-074, a 10,165-square-foot site with street frontage on Alma Street, is vacant. The
development of this site with an appropriate tenant would provide a street presence for the center as
well as helping the center achieve a critical mass of commercial space to attract shoppers.
Vacant Commercial Space. Long-term vacancies have been a problem at the center. There are
currently four vacant commercial spaces at Alma Plaza. Three of the four are located in buildings
fronting on a semi-hidden walkway to the north of Albertson’s. Anecdotal evidence from site visits to
other commercial areas where previous Alma Plaza tenants are now located indicates that some spaces
have been vacant for upw.ards of five years. No "For Lease" signs were posted.
Past/Future Changes in the CommercialArea. Albertson’s is working on plans for a major expansion
of its store and renovation of the center. There has been some community opposition to the plans as
a result of the proposed size of the new supermarket, which exceeds 20,000 square feet. Though the
area is zoned PC, and therefore is not constrained by the 20,000-square-foot limit imposed by the
Neighborhood Commercial zoning category, the supermarket must show evidence of public benefit to
amend the original PC regulations of the Alma Plaza site. Albertson’s has shown a commitment to
negotiating the community and planning process in order to follow through on expansion of the
supermarket and renovation of the center.
Barriers to Development/Revitalization. The most significant barrier to the revitalization of Alma
Plaza is obtaining community support for amending the current Planned Community zoning regulations
for the site, which would enable the expansion of the supermarket. A public benefit must be shown to
justify amending the current zoning at the center. Albertson’s is working with the community to
identify an appropriate public benefit. Albertson’s owns all three parcels on which the site is located
and appears committed to the renovation of the center. However, Albertson’s will only undertake
renovation of the center if it is able to expand the size of its supermarket.
Priorities for the Center. Based on the preceding analysis, Sedway Group suggests the following
priorities for revitalization of the center:
¯Facilitate negotiations between Albertson’s and neighborhood residents to support receipt of
Albertson’s approval to expand its supermarket and renovate the shopping center.
¯Provide incentives or identify means of improving the deteriorating physical conditions of the
buildings, public spaces, and landscaping.
¯Fill the long-term vacancies with successful tenants that will add to the commercial mix and serve
the community.
¯Utilize the site more intensely and/or effectively, and encourage the development of the vacant
parcel fronting on Alma Street.
Edgewood Plaza Shopping Center
Physical Condition~ The Edgewood Plaza Shopping Center, located near the intersection of Highway
101 and Embarcadero Road, was built in’the late-1950s (see Exhibit 4 area map on Page 11). Like
PALO ALTO RETAIL STRATEGY JUNE 2000
SE DWA~’ GROUP
[-Real Estate and Urban Economics
Alma Plaza, the center is showing severe signs of physical deterioration. The buildings require paint
and new stucco in places. The parking lot drains inadequately and suffers from numerous potholes.
Landscaping is minimal and public spaces and ftmaimre are nonexistent. The facade facing the
neighborhood to the north is an uninviting blank wall.
Despite being near a major highway and arterial, the center remains relatively hidden from view behind
a wall, trees, and a Shell service station. The minimal signage is located at the entrance to the center,
well off the major thoroughfare of Embarcader9 Road.
Tenant Composition, A 20,000-square-foot Albertson’s supermarket anchors the Edgewood Plaza.
The supermarket is clean inside and offers an ATM, but is smaller than the standard supermarket
companies desire currently. The additional businesses are roughly evenly split between low-performing
service and retail establishments such as a cleaners, liquor store, hair and nail salons, shoe repair, 99
cent store, and dell. The addition of higher-profile tenants would be integral to the revitalization of the
center.
Sales Trends. Sales at Edgewood Plaza are down 59 percent from $6.0 million in 1989 to $2.4 million
in 1999~. From 1989 to 1992 sales hovered around $5.5 to $6 million dollars, before dropping
drastically in 1993 during the last economic recession. The center has failed to recover since and sales
have slowly fallen since 1993. The loss in sales tax revenue to the city from the 1989 to 1999 figure
is approximately $35,000 per year.
VacantZUnderutilized Parcels. The two parcels on which the shopping center is situated are
undemfilized overall and would benefit from more intense use of the land area. Specifically the parking
area directly north of the Albertson’s is wasted space and could be used to expand the supermarket or
for other types of uses, such as housing.
Vacant Commercial Space. At the time of the site visit and analysis there were two commercial
vacancies in the center. Both were located in the building directly across from the Albertson’s.
Following three to four months of vacancy the north-facing space (facing Channing Avenue) was rented
to a hair and wig supply store in early March of this year. The second space has been vacant for three
to four months and remains vacant.
Past/Future Changes at the Center. Albertson’s has plans for a major remodel of its supermarket.
Commercial Lessors, Inc., the owner and manager of the two commercial buildings on the western half
of the site (parcel number 003-18-023), indicated that they have submitted an application with the
planning department tO perform faqade improvements. They a~e awaiting approval to move forward.
Barriers to Development/Revitalization‘ There are several barriers to revitalization of this
neighborhood shopping center. First, crime figures available ~om the city police department indicate
that Edgewood Plaza had the highest number of serious crimes (assault, battery, burglary, robbery,
sexual assault, stolen vehicle) of any retail area in the city from January 1998 to April 2000. This is a
tremendous barrier to increasing customer visits to the center. Second, while the center is located near
2All sales tax revenue and total sales figures are inflation adjusted to 1999 dollars. 1999 figures are 12 months
ending 3~ Quarter 1999.
PALO ALTO ILETAIL STRATEGY 10 JUNE 2000
SEDWAY GROUP
I Real Estate and Urban Economics
EXHIBIT 4
EDGEWOOD PLAZA STUDY AREA MAP
Street Atlas-USA
PALO ALTO RETAIL STRATEGY 11 JUNE 2000
SE DWAY GROUP
I Real Estate and Urban Economics
the junction of a major highway and city medal, it is situated off Embarcadero Road, behind the Shell
service station. The lack of visibility will make it difficult to attract credit tenants to the center. In
addition, and largely as a result of the previous factors, the current tenant mix is neither complementary
nor attractive to potential catalyst tenants.
Another barrier to the attraction of new retailers and customers is the fact that the center is old, in poor
physical condition, and functionally obsolete by current supermarket and shopping center standards.
Finally, multiple ownership of the land and buildings will be a deterrent to pursuing coordinated
revitalization of the buildings, parking, and landscaping. Currently, the center’consists of two parcels,
each with separate owners. In addition, Albertson’s does not have site control of the parcel it occupies.
Priorities for the Center. Priorities for the Edgewood Plaza include:
¯Attract commercial teiaants that will add vitality to the center, serve the surrounding community,
attract a wider range of the market area’s demographic groups, and complement the supermarket.
¯Identify a means of utilizing the lots more intensely and/or effectively.
¯Encourage the renovation and revitalization of the existing building, parking lot, and landscaping.
¯Improve the signage and visibility of the center.
Town & Country Village Shopping Center
Physical Condition. Town & Country Village is strategically located at the major intersection of E1
Camino Real and Embarcadero Road, within one mile of the Stanford University campus (see Exhibit
6 on Page 14). The design of the center, which first opened in 1949, uses an attractive California
architectural details of terra cotta tiles, wood, shaded walkways surrounding the buildings, and
considerable greenery. At a minimum, physical improvements are needed for the paint, the concrete
walkways, and the asphalt parking lot.
While Town & Country lacks major street signage, it is extremely accessible and highly visible at the
corner of a prominent intersection.
Tenant Composition. Town & Country Village consists almost entirely of small retail shops in the
range of 1,000 to 2,000 square feet. The center includes a mix of specialty retail shops, neighborhood
service retail, and restaurants/cafes. Approximately 15 percent of the space, located primarily on the
second level, is occupied by office uses. The anchor tenant space, 15,000 square feet formerly occupied
by John’s Town & Country Market, is currently vacant.
Sales Trends. Inflation adjusted year 1999 sales of $26.8 million are down 7 percent from $28.8
million in I989~. After experiencing a decline in 1991 sales figures at Town & Country Village have
hovered between $22 and $25 million from 1991 to 1998, before showing a slight increase in the year
ending in the third quarter of 1999. Annual taxable sales revenue accruing to the city from Town &
Country Village is approximately $270,000.
~ All sales tax revenue and total sales figures are inflation adjusted to 1999 dollars. 1999 figures are 12 months
ending 3~ Quarter 1999.
PALO ALTO RETAIL STRATEGY 13 JUNE 2000
KEYSER MARSTON
500 SOUTH GRAND AVENUE, SUITE 1480
LOS ANGELES,’CALIFORNIA 90071
PHONE: 213/622-8095
FAX : 213/622-5204
ASSOCIATES INC.
ATTACHMENT 3
~DVISORS IN:
REAL ESTATE
REDEVELOPMENT
AFFORDABLE HOUSING
ECONOMIC DEVELOPMENT
FISCAL IMPACT
INFRASTRUCTURE FINANCE
VALUATION AND
LITIGATION SUPPORT
To:Susan Arpan
City of Palo Alto
MEMORANDUM
From:Paul Anderson
Los Angeles
Calvin E. Hollis, II
Kathleen H. Head
James A. Rabe
Paul C. Anderson
Gregory D. Soo-Hoo
San Diego
Gerald M. Trimble
Paul C. Marra
SAN FRANCISCO
A. Jerry Keyser
Timothy C. Kelly
Kate Earle Funk
Robert J. Wetmore
Debbie M. Kern
Date:
Subject:
April 24, 2001
Summary Plan Adoption Schedule
Enclosed please find a summary Redevelopment Plan adoption schedule for the proposed
Edgewood Redevelopment Project. The Schedule assumes the City Council will take their
first actions related to the adoption process on June 18, 2001 when they adopt an ordinance
forming the Redevelopment Agency and adopt a resolution designating the Survey Area (the
area for evaluation). The schedule anticipates that the Project will be adopted on March 25,
2002. The schedule is organized by major tasks/actions (i.e. document preparation, EIR
process, Planning Commission report and recommendations etc.) The schedule provides for
Finance Committee review of all documents prior to Agency/Council action and the formation
of a community advisory committee.
As an overview, the project base year will be 2001-2002. Any future tax increment that would
be generated from the new project would be the result of new development or change in
ownership with a higher sales price that might occur after August 20, 2001 when the 2001-
2002 base year is equalized. The base year value is the assessed value of the Project Area
as determined by the County Auditor Controller on January 1, 2001 (lien date) as reported for
the following August 20, 2001 (equalization date). So the base year 2001-2002 assessed
value for the Edgewood Project would be the value on the roll as of January 1, 2001.
The Project is not likely to generate any notable tax increment in the first year. More
specifically, the first years tax increment would be limited to only the growth in assessed value
Schedule memo2.doc;
To:Susan Arpan April 24, 2001
Subject:Project Adoption Schedule Page 2
from January 1, 2001 to January 1, 2002. The current (2000-2001) assessed value of the
Project Area is $4,888,915. Assuming a two percent growth as provided by Proposition 13
inflationary value growth, the first year tax increment from the Project Area would be $978 of
which the Agency would receive approximately 80% or $782 with balance being distributed to
the affected taxing agencies. As a side note, 20% of the $978 or $196 would have to be
allocated to affordable housing. Therefore, the first year discretionary funds would be limited
to $625.
Please call if you have any questions or if we can be of further assistance.
Schedule memo2.doc; pa
EDGEWOOD PLAZA REDEVELOPMENT PROJECT
Palo Alto
March 2002 Adoption
Document Draft Staff Final Planning Finance Agency City
Review Commission Committee Council
Agency Formation 5/11/01 5/25/01 6/1/01 6/12/01 6/18/01
Survey Area 5/11/01 5/25/01 6/1/01 6/12/01 6/18/01
Preliminary Plan 5/25/01 6/8/01 6/15/01 6/27/01 7/10/01 7/23/01
Redevelopment Plan 9/25/01 10/9/01 10/16/01 (see below)10/23/01 11/5/01
O.P. Rules 9/25/01 10/9/01 10/16/01 10/23/01 11/5/01
Preliminary Report 9/25/01 10/9/01 10/16/01 10/23/01 11/5/01
Draft El R 9/25/01 10/9/01 10/16/01 10/23/01 11/5/01
Report to Council 1/4/02 1/18/02 1/25/02 2/12/02 2/18/02 2/18/02
Final El R 1/4/02 1/18/02 1/25/02 2/12/02 2/18/02 2/18/02
EIR
NOP/Initial Study trans.7/23/01
NOP comments due 8/22/01
(30 days)
Draft EIR Received 11/5/01
Review Period (45 days)11/7-12/21
Optional Public Hearing 12/10/01
Final EIR 1/4/02
Agency Approval 3/25 or 4/1/02
Planning Commission
PC Receipt of Plan & EIR 11/14/01
Report and Recommendations 12112/01
(30 days)
Taxing Agencies
33327 Notices Sent 7/24/01
1st Fiscal officers report (60 days)9/4/01
EIR transmitted 11/6/01
Preliminary Report transmitted
Consultations 11/7-
3/25/02
Community Advisory Committee
Council Appoints Advisory Committee 6/25/01
Advisory Committee holds monthly meetings 7/3, 8/7, 9/4,
(1st Tuesday)10/2, 11/6, 12/4
Community Mtg Notice Sent (10 days prior )10/26/01
Community Mtg Notice Published (10 days prior)10/27/01
Community Information Meeting on Plan 11/6/01
Advisory Committee adopts recommendations 12/4/01
Hearing
Agency & Council Consent 2118/02
Notices Mailed (30 days before hearing)2/22/02
Notices published (4 weeks before hearing)2/25, 3/4,
3/11,3/18
Joint Public Hearing (1= reading no written 3/25/02
objections)
1= Reading with written objections 4/1/02
2na Reading no written objections 4/1/02
2na Reading with written objections 418102
Plan becomes effective (30 days) from 4/8 5/8/02
End of 60 day challenge period (33500) from 4/8 6/7/02
* two week lead time for Council actions
4/25/01
** Council is on vacation from August to mid- Sept
City Council/Agency meets every Monday except 5th Monday
Finance Committee meets 2nd and 4th Tuesdays
Planning Commission meets 2nd and 4th Wednesdays
ATTACHMENT 2
June 2001
Forming a Redevelopment Agency for Palo Alto
-Frequently Asked Questions-
Why is the formation of a Redevelopment Agency an effective tool
for Palo Alto?
Staff recommends forming a redevelopment agency because:
¯It will assist in preserving neighborhood serving retail in Palo Alto.
Edgewood Plaza,.the area identified as a potential project area, would
benefit greatly from revitalization by better providing neighborhood
serving retail to the surrounding neighborhoods (mainly St. Francis/
Duveneck and Crescent Park)
¯Financial benefits include tax increment dollars to fund infrastructure,
affordable housing, public facilities and economic revitalization.
Additional sales tax dollars would also be generated.
¯Formation of an agency allows the city to create a joint financing
authority to fund identified projects
2. What is staff proposing in the May 29, 2001 staff report to the
Finance Committee?
Staff recommends that City Council:
¯Direct staff to draft an ordinance to form a redevelopment agency and
make a finding that this formation "serves the public interest and
promotes the public safety and welfare in an effective manner"
¯Direct staff to initiate a project area study for Edgewood and initiate
procedures for the adoption of a redevelopment plan for Edgewood
¯Direct staff to form a Neighborhood Advisory Committee
3. What does the City gain from the establishment of an agency?
The establishment of an agency helps the City to pro-actively work with the
private sector to meet city goals. Redevelopment becomes another tool
beyond zoning regulations.
It also generates a source of funding for infrastructure, public buildings,
affordable housing and economic revitalization.
o Are there any negative consequences to the formation of an
agency and initiation of a project area study?
The City could be criticized for intervening in the private marketplace. In
this instance, Edgewood is a perfect example of how, without any
intervention, this center has deteriorated without the private sector solving
the problem.
The perception of blight has been a concern for residents and tenants of
centers like Edgewood that have been determined to be blighted. While a
redevelopment term, the definition of "blight" is consistent with concerns at
Edgewood Plaza.
An area that qualifies as a blighted area has serious adverse social, economic
and physical conditions, which constitute a danger to the health, safety and
general welfare of the community. These deficiencies include:
¯Physical deterioration
¯Economic deficiencies
¯Parcelization of properties
¯Poor access and visability
Another concern that has been voiced is that other local agencies (schools,
county) will be negatively impacted. With this issue in mind, state law
specifically prescribes how these groups can be protected. A
Redevelopment Agency can "pass through" (via a "pass through" agreement)
some or all of the tax increment to other affected taxing entities. The
Redevelopment Agency can also fund and complete projects of interest to
the Other taxing entities.
Although there will be initial costs for a consultant and EIR, the potential
for long term financial and neighborhood benefits outweigh this concern.
5. What is tax increment?
The increases in value due to the changes in ownership and new construction
will increase the tax revenues generated by the property. This increase in
tax revenue is known as "tax increment." For example, if a property were
assessed at $100,000 this year, the taxes paid by the property owner at the
standard tax rate of one percent would be $1,000. If, as a result of new
construction on the property, the property increases in assessed valuation to
$500,000, the taxes paid by the property owner at the same standard rate
would be $5,000. The $4,000 increase is called tax increment and it is
these funds which can become the revenue of the agency.
o Won’t Redevelopment take away from the school district some of
the growth in property tax C’tax increment") generated by the
Project Area?
Given the City’s commitment to the local education system in Palo Alto, there
are two ways to avoid significant financial harm to the school district. One
approach is negotiating a "pass through" agreement with the Palo Alto
Unified School District, passing through some of the tax increment from the
Redevelopment Agency to the district.
Another approach is identifying several school district projects benefiting
the Project Area that could be funded by the Redevelopment Agency.
How will the community be involved? What outreach has been
done so far?
A Neighborhood Advisory Committee (NAC) will be formed to advise the City
on the proposed redevelopment of the Edgewood Project Area and assist the
City in development of goals and outcomes that are consistent with the City’s
Comprehensive Plan and Redevelopment Law. The law does not require this
committee but because the City values neighborhood and public input into
City projects, staff recommends the creation of the NAC.
Thus far, property owners, tenants, and neighborhood representatives have
been contacted and asked for their input regarding the formation of an
Agency and designation of Edgewood Plaza as a project area.
8. What other local cities have redevelopment agencies?
A partial list of cities includes: Menlo Park, Mountain View, Sunnyvale, San
Mateo, Foster City, Daly City, Redwood City, San Francisco, South San
Francisco, Campbell, Santa Clara, Santa Cruz, and San Jose,
According to the most recent State of California Controller’s Office report
406 ~cities in California have Redevelopment Agencies. The State Controller’s
report is available on their website: http://www.sco.ca.gov/pubs/
9.Other questions, concerns?
ATTACHMENT 3
INDEX OF DOCUMENTS
FOR THE ACTIVATION AND ORGANIZATION OF THE
REDEVELOPMENT AGENCY OF THE CITY OF PALO ALTO
,DateJuly 9, 2001
July 23, 2001
July 24, 2001
August 22, 2001
September 22,
2001
Action
1. CITY COUNCIL gives first reading of and introduces Ordinance
declaring the need for a redevelopment agency in the City and declaring
that Council will act as the agency.
2. CITY COUNCIL gives second reading and adopts Ordinance
declaring the need for a redevelopment agency in the City and declaring
that Council will act as said agency.
3. AGENCY files a certified copy of the Ordinance declaring the
need for a redevelopment agency in the City with the County Clerk.
4. Ordinance declaring the need for and establishing a
redevelopment agency becomes effective 30 days after adoption.
5.AGENCY adopts necessary documents for its organization and
operation:
(a)Organizes and names Chairperson and Vice-
Chairperson.
(b)Adopts bylaws; appoints officers, including
Executive Director, Secretary and other personnel.
(c)
(d)
Adopts personnel rules, including conflict of interest
provisions.
Adopts EIR procedures.
Comment
Action or Document Required:
Ordinance of the City Council of the City of
Palo Alto Declaring the Need for a
Redevelopment Agency to Function in the
City of Palo Alto and Declaring the City
Council to be the Redevelopment Agency
for the City of Palo Alto
Action or document (s)required:
(1) Resolution of the Redevelopment
Agency of the City of Palo Alto Authorizing
the Secretary of the Agency to File a
Statement or Organization with the
Secretary of State and the County Clerk of
Santa Clara County
(2) Resolution of the Redevelopment
Agency of the City of Palo Alto Organizing
Said Agency and Naming Officers
(1) Resolution of the Redevelopment
Agency of the City of Palo Alto Adopting
Agency Bylaws and Appointing Officers
(2) Bylaws of the Redevelopment Agency
of the City of Palo Alto
Resolution of the Redevelopment Agency
of the City of Palo Alto Adopting Personnel
Rules and Regulations.
(1) Resolution of the Redevelopment
Agency of the City of Pa!o Alto Adopting
Procedures for the Preparation, Processing
and Review of Environmental Documents
1
010626sm 0052761
Date Action
After
August 27, 2001
(after Item 6(d)
above is adopted)
(e)
(f)
(g)
(h)
(i)
O)
Approves Cooperation Agreement to request the
use of City staff services for Agency purposes, if
applicable, and authorizes execution of contract with
City to repay City for staff services provided Agency
and to establish that Agency operations are covered
by City insurance.
Authorizes execution of other contracts with City, as
applicable.
Designates newspaper of general circulation for
official notices.
Informs all persons engaged in planning for
redevelopment project of interest disclosure
requirements and provides for such disclosure.
Adopts Conflict of Interest Code.
Authorizes filings with Secretary of State and County
Clerk for Roster of Public Agencies.
(k)Authorizes hiring of consultants, as necessary.
(I) Records Retention Schedule
CITY COUNCIL approves and authorizes execution of
Cooperation Agreement with Agency and establishes a redevelopment
fund.
Comment
(2) Procedures for the Preparation,
Processing and Review of Environmental
Documents
(1) Resolution of the Redevelopment
Agency of the City of Palo Alto Authorizing
the Execution of a Cooperation Agreement
with the City of Palo Alto
(2) Cooperation Agreement
[No document attached]
Resolution of the Redevelopment Agency
of the City of Palo Alto Designating a
Newspaper of General Circulation for
Publication of Official Notices.
(1) Memorandum - Conflict of Interest
Codes for Redevelopment Agencies
(2) Resolution of the Redevelopment
Agency of the City of Palo Alto Adopting a
Conflict of Interest Code Applicable to the
Members of the Agency Pursuant to the
Political Reform Act of 1974
Resolution of the City Council of the City of
Palo Alto Authorizing the Execution of a
Cooperation Agreement Between the City
and the Redevelopment Agency of the City
of Palo Alto.
010626 sm0052761
ATTACHMENT 4
ORDINANCE NO.
ORDINANCE OF THE COUNCIL OF THE CITY OF PALO
ALTO DECLARING THE NEED FOR A REDEVELOPMENT
AGENCY TO FUNCTION IN THE CITY OF PALO ALTO
AND DECLARING THE CITY COUNCIL TO BE THE
REDEVELOPMENT AGENCY FOR THE CITY OF
PALO ALTO
The Council of the City of Palo Alto does ORDAIN as
follows:
SECTION I. FINDINGS AND DECLARATIONS.
herein finds and declares as follows:
The City Council
A. Section 33100 of the California Community
Redevelopment Law (Health and Safety Code §§ 33000, et seq.)
creates in the Cit~ of Palo Alto a public body, corporate and
politic, known as the redevelopment agency, for the purposes of
exercising the powers granted by the Community Redevelopment
Law; and
B. Section 33200 of the Community Redevelopment
Law provides that as an alternative to the appointment of
five (5) members of the redevelopment agency, the City Counci!
may declare itself to be the agency, in which case all rights,
powers, duties, privileges and immunities of the redevelopment
agency shall be vested in the City Council;
C. There is a need for a redevelopment agency
to function in the City of Palo Alto in accordance with the
provisions of the Community Redevelopment Law.
D. Designation of the City Council as the
Redevelopment Agency of the City of Palo Alto will serve the
public interest and promote the public health, safety and
welfare in an effective manner in that this public body is.best
able to serve the needs of the community to implement the
purposes of the Community Redevelopment Law.
SECTION 2. A redevelopment agency is hereby established
pursuant to section 33101 of the Community Redevelopment Law, to
be known as the Redevelopment Agency of the City of Palo Alto.
The Redevelopment Agency is hereto authorized to transact
business and exercise its powers under the provisions of the
Community Redevelopment Law.
010703 cl 0052760 1
SECTION 3. The City Council hereby declares itself to
be the Redevelopment Agency of the City of Palo Alto.
SECTION 4. The City Clerk is hereby directed to cause a
certified copy of this ordinance to be filed in the office of
the County Clerk pursuant to Health & Safety Code section 33102.
SECTION 5. This ordinance shall be effective on the
thirty-first day after the date of its adoption.
PASSED AND ADOPTED this day of July, 2001, by the
following vote:
AYES:
NOES:
ABSENT:
ABSTENTIONS:
ATTEST:
City.Clerk
APPROVED AS TO FORM:
Mayor
APPROVED:
City Attorney City Manager
010703 cl 0052760 2