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HomeMy WebLinkAboutMinutes 2014-02-19 @6:00SPECIAL MEETING MINUTES CITY COUNCIL v o OF THE c9LIF0R�1� CITY OF SOUTH SAN FRANCISCO P.O. Box 711 (City Hall, 400 Grand Avenue) South San Francisco, California 94083 Meeting to be held at: MUNICIPAL SERVICES BUILDING 33 ARROYO DRIVE SOUTH SAN FRANCISCO, CA WEDNESDAY, FEBRUARY 19, 2014 6:00 P.M. Purpose of the meeting: Call to Order. Time: 6:03 p.m. 2. Roll Call. Present: Councilmembers Addiego, Gupta and Normandy, Vice Mayor Garbarino and Mayor Matsumoto. Absent: None. Public Comments — comments are limited to items on the Special Meeting Agenda. Gary Chow, Rob Wood, Bruce Wright, Arnie Fischman and Henry Karnilowicz all spoke on behalf of the South San Francisco Rotary Club, highlighting the club's involvement with the City on many different levels, their desires to have a new Rotary building included as part of the downtown development strategy and their reasoning on why their development would be a good fit for downtown. Overall comments reflected the positive contributions that a new Rotary site would make to the downtown, the ability of its residents to help revitalize and support downtown business, the level of civic engagement Rotary has been a part of, and their successful history in building, maintaining and managing senior housing developments. 4. Agenda Review. No changes. However suggestions on how to order the items were made. In anticipation of lengthy discussion, Interim City Manager Mattas recommended bringing item 5 back at the following work session. Items 6 and 7 were time sensitive and should be heard this evening. Council consensus was to go to 9:00 on items 5 and 6, enter closed session from 9:00 to 9:30 to handle the other time sensitive items. 5. Study Session: Implementation Programs for the Economic Development Strategy: Economic and Community Development Consultant Patrick O'Keeffe gave an overview of the information to come. A new General Plan document completed this summer will raise densities and encourage high density development to support further development and economic activity like retail and restaurants. Other improvements would include welcoming streetscapes, improved transportation, and increased marketing programs. Combined, the intent of these improvements is to make the area a citywide and regional draw. a. Downtown Property Development and Disposition. Consultant O'Keeffe began by reviewing the development proposals for the Ford Properties located at 401 -421 Airport ("2.1"), 315 Airport ( "2.2 "), 405 Cypress ( "2.4 ") and a Miller Avenue site ( "3.5 "). Downtown Station Plan would need to be in place to move forward with the proposed densities and the State Department of Finance would need to approve our Long Term Property Management Plan. Developers would also have to enter in to an Exclusive Negotiating Rights Agreement ( "ENRA ") to move forward. Three interested developers were met with to discuss the various aspects of their plans including experience and access to capital. The three firms were Sares- Regis, and Thompson - Dorfinan housing, and BPR for a hotel development. Further detail was provided about each firm and their development plans. Staff determined both housing development firms and proposals to be strong and each was proposing a high- density market rate development. Staff felt the hotel developer had a strong team and access to capital, but noted their failure to submit conceptual designs for staff review. Council's fourth option was to issue a request for proposals if they did not like the current proposals. After clarifying the how the remainder of the meeting would flow, Council gave input related to the Ford Properties. Councilmember Addiego spoke on the merits of having the hotel and housing developments and how he saw them both as potential game changers for the downtown. The additional $500,000 in Transient Occupancy Tax ( "TOT ") had his attention and had him leaning towards a hotel development. Councilmember Gupta questioned if the commitment levels among the developers was the same. He understood the only parcel that is common to all the pre- options is 2. 1, which leaves a couple of other parcels to be decided upon. He asked the following questions: was there a possibility to mix housing and hotel developments; if a hotel was chosen, what would be the plan for other parcels; and what the City's financial exposure in all of the options would be. Consultant O'Keeffe believed all of the developers shared the same interest and commitment levels. He continued that the options of housing or hotel were exclusive because the size of the remaining sites left concerned about whether the number of units that could be developed would be enough to attract the quality of residential that was desired. There was a 100 -unit threshold that attracts this level of developer and attracts what's called institutional financing to provide major source of capital SPECIAL CITY COUNCIL MEETING FEBRUARY 19, 2014 MINUTES PAGE 2 for that size of a project. While they could try to do both, they may have a more difficult time doing the residential part. If a hotel were selected for 2.1, 2.2 would have to be compatible, something like a major restaurant. Given the location of the where 2.4 and 3.5 are located, he thought they would be residential developments at a smaller scale and with a different type of developer. Financially, Consultant O'Keeffe there had been no details negotiated at this point, but it was being approached with the understanding that any of the three development teams would pay the City for the property and there would be no cash assistance like what is proposed with the Miller parcel. He mentioned that how much is paid depends on the type of use and density involved. Councilmember Gupta opined that good housing was sorely needed in terms of downtown foot traffic and upgrading retail markets. Without further details, he was leaning toward housing rather than hotels. Vice Mayor Garbarino sought clarification as to whether or not the housing would be market rate. Consultant O'Keeffe responded affirmatively. Vice Mayor Garbarnino understood the attraction of the additional TOT revenues, but part of the plan was to develop housing to attract upwardly mobile people who will be crossing the freeway to the downtown center. He felt both plans had positives. While the report was solid, he asked if it was possible to get further information, as he was not ready to make a decision just yet. Mayor Matsumoto stated he preference for housing, noting it's relation to the vibrancy of a downtown and the ability to capitalize on the current housing shortage and market in San Francisco. She also referred the number of developments in Redwood City and how they were similar to the submitted proposals. The density and ridership was also necessary to move forward with the relocation of the Caltrain station. She wanted to attract the type of workforce that would help revitalize downtown. The Mayor wanted to further understand the "market rate" and why there were 3 bedroom units being considered, as those were more in line with family residence. Consultant O'Keeffe stated there were very few 3 bedroom units proposed for the developments, and they were primarily 1 and 2- bedroom units. As for market rate, he gave the range of $2,000 - $3,000 a month, depending on the size of the unit with an income roughly three times the rent or $60,000- $70,000. Councilmember Addiego stated that no matter if it were a hotel or housing, the face of downtown would be changed. He understood that 2.1 was the most attractive to both and noted the second largest parcel was 2.2. He still questioned whether or not the best of both worlds was possible; a hotel and adjacent housing. He added that good things happen in surrounding parcels when money is invested. Consultant O'Keeffe suggested asking the residential developers to see if they would be interested in developing the other three if they don't have the 2.1. He added that even if the answer was no, there might be different tier of developers who might be interested in those parcels. They may be harder to SPECIAL CITY COUNCIL MEETING FEBRUARY 19, 2014 MINUTES PAGE 3 develop, but not impossible. Councilmember Addiego mentioned prior considerations of eliminating lanes to facilitate more land, and asked if they owned the parking lots on the corner of Miller and Cypress Avenue. Interim City Manager confirmed the lots were owned by the City. Something that would need to be considered is traffic impact associated with giving up those lots. He stated that if the Council desired, staff could look into it. He added that one of the proposals, possibly the Sares -Regis proposal, for site 2. 1, there were parking considerations that were of concern for the developer. It was important to adequately park the overall site because of the density they were creating and there was shared parking. If he was remembering it correctly, they were proposing two stories of parking, potentially one subterranean. Those were factors they would want to look at when considering trying to accommodate a hybrid approach. He also advised that clarity was needed in the level of hotel Council desired if that was the direction they wanted to take. Consultant O'Keeffe had indicated the development rate of $150,000 per room was towards the moderate scale, adding that the area already had a lot of those in existence. Did Council want a hotel that was of a higher quality? Consultant O'Keeffe stated the higher they go in quality level in hotels, the more amenities are associated with them, such restaurant, health facilities, etc. and that larger sites were needed to do that. There was a need for at least a couple of acres to get the 3.5 to 4 star quality. He added that, if they were talking about doing both 2.1 and 2.2, and putting some of the facilities on 2.2, you might have a large enough project to do it, but that was not the proposal so far. It would be hard to set the expectation of a high quality hotel on the site because they don't have a large enough site that was contiguous. Was Council willing to consider a mid -range business hotel? Mayor Matsumoto spoke of her previous discussions with hotel developers, where the cost of building full service with prevailing wage was $400,000 per room on a 2 acre site. Councilmember Addiego asked if the brands mentioned - Hampton Inn, Hyatt Place etc., could be built for $150,000 /room. Consultant O'Keeffe responded affirmatively. Councilmember Addiego felt that these were fine establishments and that there were many good restaurants downtown that would encourage guests to hit the streets. He made it clear that, while he was not trying to offend anyone, he did not want a Super 8 or something similar to what was on the north end on Airport Boulevard. He asked the rest of Council for their opinion with the examples of hotels given. Mayor Matsumoto stated that she was not for the hotel at all and reiterated her previous statements in regards to Caltrain and the revitalization of the downtown. In her opinion, a hotel would not get them there. At this time she was supporting the housing, so there wouldn't be the need to go out into existing neighborhoods. Mayor Matsumoto wanted to move forward as she did not want to miss the opportunity. Vice Mayor Garbarino was still undecided and wanted to wait for staff's follow up information. SPECIAL CITY COUNCIL MEETING FEBRUARY 19, 2014 MINUTES PAGE 4 Councilmember Addiego recalled Councilmember Gupta's comments regarding the level of viability, and whether the proposals were all equal. If an ENRA was entered into with Sare- Regis, would it be negotiated as two parcels instead of four? Interim City Manager Mattas stated that both of the residential proposals have indicated that they would actually be interested in all of the four properties. He stated that Dorfman didn't propose on all four, but indicated that they would be interested, and Sares -Regis was ready to move on all four. The City was in a unique position of having a number of properties in our control and all the parties indicated interest, not only in the discussed parcels, but in other parcels as well. He stated that, if the Council was interested in seeing how to achieve even more, they would look further into that, which has always been the plan. If developers are interested in their properties and want to move quickly, that should be encouraged. Conversations on whether the developers could make it work without parcel 2.1 wouldn't take long and it could be brought back in March. The market analysis was strong for both residential and hotel but he reminded Council that they just approved a hotel at Oyster Point and there was great interest the success of that development, especially given its location and quality level. Staff recommended that they try to move quickly on these opportunities because the market may change again, adding that they had interested people and quality residential similar to the proposed was popping up along the Peninsula. Councilmember Gupta was asking if Council was creating a fourth option which included hotel and residential units, with 2.1 dedicated to the hotel and remaining parcels for residential. Staff would be exploring if it was a feasible option with the developers and do comparisons with the other three options. Interim City Manager Mattas stated that was the direction he was hearing from some members. Councilmember Addiego understood the time sensitivity of the matter but noted staff s assessment in that wouldn't take long to have discussion on whether developers could work without 2.1. He asked what time frame they were talking about. Interim City Manager Mattas asked Council if they would like to hear from the developers on the importance of 2.1 as representatives were present from both firms. Ben Brunnel, with Sares Regis, stated that they were interested in all four sites but 2.1 was the anchor, providing them with the critical mass. He also noted the cross parking and how 2.1 would have parking available for 2.2 located there. Without that 2.1 site, it reduces the institutional /residential development threshold. He stated that they might still be interested or they might not. Bruce Fairty of Thompson Dorfman had a similar position. He stated that when planning for density, most people think you start with the units, but really you start with the cars because they control your density. The parking ratio was 1:1 and because of that, they would have to restudy. He could not answer the question conclusively, but their interest was much higher with site 2.1 than without it. Councilmember Normandy stated that as a member of this body as well as the Housing Endowment and Regional Trust ( "HEART ") she understood the need for not just housing, but affordable housing. For her, the opportunity to consider market rate housing, or work force development and potentially SPECIAL CITY COUNCIL MEETING FEBRUARY 19, 2014 MINUTES PAGE 5 the option to buy a condo was something that intrigued her. At this point, she was inclined to move forward with the residential. While she thought there was an opportunity for a hotel, she was not sure if there was a need for an additional one on Airport Boulevard. Consultant O'Keeffe heard a majority of Council say that they were interested in residential. He stated that, if they would like staff to explore both options and come back, that could be done as well. After hearing from the developers how critical 2.1 was to the feasibility of their projects, Council was inclined to move forward with the development of housing. Mayor Matsumoto asked if that provided direction. Interim City Manager Mattas asked if there was a preference to continue with one developer in particular or with both to see what they can do to further refine their proposals. Staff's recommendation was to consider an ENRA. He noted that whichever developer was selected would start incurring more expenses in order to move forward. Consultant O'Keeffe stated they would like to spend a little time with both the residential development firms and flesh out what the proposal would be, how much they will be willing to offer for the land price. Recommendations on which firm to enter into an ENRA with would be forthcoming. Before closing the topic, Councilmember Gupta noted his interest in Councilmember Addiego's concept of redesigning some of the roadways in the area and would like to continue discussion on this at some point. Mayor Matsumoto sought clarification on the remainder of the process in regards to the Ford Properties. Consultant O'Keeffe stated that the hotel proposal drops out and staff would have further discussions with the residential developers, come back with a recommendation for the strongest one and then enter into an ENRA. This would happen as soon as possible. The Mayor made one last call for speaker cards related to the Ford properties. Being none, discussion on the development of 310 -320 Miller Avenue began. Noting the absence of two Councilmembers, Mayor Matsumoto called a five minute recess. Meeting recessed: 7:17 p.m. Return to session: 7:22 p.m. Consultant O'Keeffe reviewed the staff report and detailed the development options for the property. There was also the possibility of soliciting RFP for additional concepts. The following details were provided for the Brookwood proposal: 55 -unit mixed income project, 20 percent affordable, 80 percent market rate. Regarding the affordable units, he stated that, if they don't do it on this site, they will have to find it somewhere else. He felt the 80/20 combination was a SPECIAL CITY COUNCIL MEETING FEBRUARY 19, 2014 MINUTES PAGE 6 good one because, while you have affordability, you salvage bringing income into the area with the 80 percent market rate. Financial structuring was also reviewed with City contributions being nine percent ($2.4 million) in cash equity and a five percent ($1.2 million) for land contribution. Risks highlighted were in the areas of entitlement, development quality, financial and market. The only risk that could not be mitigated was the market rate, though staff believed the market would remain strong in the Bay Area for the next couple of years. The following details were provided for the Rotary Proposal: Between 69 -92 units, though 92 might be pushing it a little. There would also be 6000 square feet of commercial space leased to a non- profit service agency. This project was 100 % affordable and financial contributions from the City in the potential amounts of 4 percent ($1 million) equity and 5 percent ($1.2 million) land contribution. A third option of RFP was available if Council decided against either proposal. This option allowed Council to decide on whether or not it should be entirely market rate or mixed income. Mayor Matsumoto called for public comments. Tracy Choi, of the Housing Leadership Council of San Mateo County ( "HLC ") stated that HLC supported housing developments at all income levels and often endorsed developments that are 100 percent deed restricted or had at least a portion of affordable units because trends show this will be the greatest need in the future. Rotary Club's proposal would help that need and also help with the significant growth in our senior population, who tend to be have fixed and limited incomes and more likely to use public transportation. She hoped that Council would move forward with the Rotary development proposal. Belen Seara of the San Mateo County Union Community Alliance spoke as an advocate for low income families across the county. While they were excited to see some of the projects tonight, they thought it was premature because they were still in the process of creating the vision for downtown, and felt the process was being undermined. She hoped the processes would be inclusive and transparent. She mentioned the staff report was not posted for review and that they had received it through the Rotary Club. Since it wasn't posted on the various websites, they didn't have a chance to read the report and they couldn't make any specific recommendations. She encouraged them to make the process as transparent as possible, and stressed that they should be getting the report as they have invested time in this process. Mayor Matsumoto stated she had difficulty finding items previously but had worked with staff to work through it. She assured Ms. Seara that the report was indeed posted and directed staff to assist Ms. Seara in locating it. She had made several attempts at contacting staff but to no avail. Mayor Matsumoto asked Management Analyst, Bertha Aguilar to help Ms. Seara and in the future to make sure the items are properly posted. Interim City Manager Mattas assured Council all items were properly noticed and posted for public review. Ancel Romero spoke in support of the Rotary Club development. Being the current property manager, he could attest to their investment and noted some of the services they provide for the SPECIAL CITY COUNCIL MEETING FEBRUARY 19, 2014 MINUTES PAGE 7 residents such as pharmaceutical consulting from Walgreens, visiting nurses and participating in Meals on Wheels. They also work closely with the county and plan to provide a transit bus for their residents. Mayor Matsumoto asked if they would accept Section 8 and if so, at what percentage. Mr. Romero stated this would be a Section 8 development with people paying 30% of their income towards rent. Mr. Shephard Heery, Chief Executive of the Brookwood Group, stated they were honored and excited to work with City on a collaborative basis. He commended the Rotary project but understood only one development could go on the site. Brookwood had been working with the City for more than two years in an effort to meet the City's objectives; revitalize downtown, attract incomes that will enhance retail and commercial opportunities, replace at least 8 to 11 units of affordable housing with market rate. He felt the project would truly benefit the City, attracting employees from the east side of 101, pulling them into the downtown and showing major employers that the City was quite concerned and interested in meeting their needs. Given the current capital and construction markets, they wanted to move forward. Timing and availability of some of the other sites discussed were not as certain as the timing and availability of the Miller site, making it an important project site from a market perspective. Brookwood's approach was innovative but conservative, and guarded against the risk of the city losing its principal, it returns capital and brings returns on capital as the City would be able to get money out and reinvest in future projects. Brookwood was fully committed to the process and transparency in the process. Mayor Matsumoto asked for confirmation as to whether or not this was a condo project and for Brookwood's definition of "affordable ". The response was that the project had been mapped as condos but they were but they were expecting to operate it as rental property. They expect it to be affordable for employees in the biotech industry and they expect to market them in a truly market rate condition. It was clarified that the units would be larger than those available in the San Francisco market. Mayor Matsumoto asked, if HEART does not come through with the $1.35 as it was laid out, would it be left to the City to come up with that financing. Mr. Heery stated assistance from Brookwood in finding the money and they were committed to making it happen. Jelani Dotson, of the Brookwood Group Market, stated the current market rate tends to range between $2,000 for one bedroom unit and up to $3,000 for a two bedroom. They feel they can attract those same levels of rents in the downtown, especially with a higher quality project and critical mass, as well as the existing retail amenities and the potential relocation of the Caltrain station. He stated that Brookwood had been involved with South San Francisco since 2010, first with the Linden project, then started to examine Miller Avenue for the past three years. Through their discussions, they saw the vision for higher density around transit and jobs, which is what they were trying to provide with their proposal. Critical mass was going to be important, so if the development of the Ford sites occurs, a symbiotic condition would be created. They were committed to being SPECIAL CITY COUNCIL MEETING FEBRUARY 19, 2014 MINUTES PAGE 8 transparent and responsible managers of the public funds and they were ready to provide significant long term returns to the City that could be used to further downtown redevelopment. Councilmember Gupta noted that he had met with Brookwood to discuss his concerns with the financial risks he saw in the arrangement and wanted to share the clarifications that were made. His concerns, which Mr. Heery clarified for him, were with the debt involved in the project. He was assured that debt structure was more equity holder friendly. His second issue was that he was leery about putting up soft money. He felt everyone involved should own part of the commitment and Mr. Heery agreed. Mr. Heery thought it was an accurate explanation. He reiterated that the debt structure was very equity light in terms of foreclosure, and they were prepared to put money in. Councilmember Normandy stated that she had not spoken to anyone, but what she heard was an interest from Rotary since 2009. She asked how long Brookwood had expressed. Mayor Matsumoto stated that it was since 2008. Councilmember Normandy asked for clarification regarding city versus county contributions to such a project. She asked if the city loans, they could keep it in South San Francisco, where they have the residents in the city. Consultant O'Keeffe stated the two proposals included a City contribution of land and cash. Under Brookwood, if the project performs well, they would get the money back with interest and would be able to reinvest in another project. In the case of the Rotary project, while it was called a loan, they would be leaving their money in the project for the duration, but would be entitled to a share of any extra income. With his experience with low income projects, there were usually no residuals. Councilmember Normandy sought clarification on if the City loaned the $1 million to Rotary, would service be able to be restricted to South San Francisco residents. Consultant O'Keeffe stated if the City loaned the money, they would be under no obligation to house county recommended residents whereas, if the county loans money, the county gets to refer residents. Beyond that, talk of preferences went into legal territory. Interim City Manager Mattas stated felt staff needed to explore that further and report back. Councilmember Addiego recalled meeting the residents at 636 El Camino and noted how many of them were from Daly City. He was fine with and welcomed transplants from other cities. Councilmember Addiego did take the opportunity to express his frustrations about a lack of transparency where he was concerned personally, as he had not been made aware by previous staff that there were players other than Rotary Plaza in this discussion. He had not been given complete information and yet other councilmembers were knowledgeable. Mayor Matsumoto was in disagreement with Councilmember Addiego related to residential preference. For example, at 636, she had been asked numerous times by longtime senior residents of the community why they hadn't been given preference for a unit, having to explain the City was SPECIAL CITY COUNCIL MEETING FEBRUARY 19, 2014 MINUTES PAGE 9 without option. Personally, she thought the Rotary development would be wonderful on Spruce and El Camino given the various amenities. She then asked if the other developers were interested in this site or was she getting mixed up. Interim City Manager Mattas stated that all of the developers had expressed knowing more about all of the City's available properties, as they were all aware of the City's Long Term Property Management Plan and the PUC properties that would be coming on to the market. However, none had made proposals on this particular site. He reminded Council there was the third option if they wished to look at other potential development opportunities for the site. Mayor Matsumoto stated that she just wanted clarification. Interim City Manager Mattas noted the amount of consideration given by staff on how to achieve a lot of the City's goals. The difficulty was in the limited size of the sites. That was the challenge because there was only one sizeable site that hadn't been accumulated. Direction was needed as to whether Council was interested in one of the two options or, if they wanted to study it in a broader context of all the available properties. Vice Mayor Garbarino disclosed that he had a phone conversation with Shep on this matter. He also wanted to speak on Councilmember Addiego's comment about being unaware of another player, and shared his frustration as he too had been unaware, or at least that he hadn't sensed any enthusiasm for it. He wasn't trying to be critical, but opportunity was missed for 3 -4 years. He recalled his issue with the parking lots for some time now, particularly when the Miller Avenue parking structure was built. To him, it made no sense to have additional parking structures adjacent to a brand new parking structure, especially given the complaints of it being underutilized. Referring to the third option, if there were no public dollars involved, then does that mean everything else was off the board, such as prevailing wage. Interim City Manager Mattas stated it depended on the replacement housing obligations on this site, and there is some need to net out some affordable units in the downtown. If they want affordable and it had to be subsidized it in any way, there would be a prevailing wage requirement. The more specificity in an RFP, the more complete the responses would be. If the Council was interested in an RFP, it would help them to know if it was 100% market rate development, fully privately financed or an RFP for some kind of mixed development. Vice Mayor Garbarino stated his lack of interest in the third option to go out for RFP. Councilmember Gupta spoke on the merits of each proposal, noting how they each met certain needs of the City and thanking both parties for bringing them forward. Given this, he questioned the possibility of having both projects move forward, using the Mayor's suggestion of relocating the Rotary project to Spruce and El Camino. Miller Avenue may not be the best site for senior housing given some of its characteristics, like it being a bit hilly. He also felt senior housing should be close to transportation centers so that family and friends can visit them frequently without any inconvenience. He would like to see that project be close to established transportation such as BART or some other development they might be thinking about. He reiterated that he liked both projects, and would like the Brookwood project at the Miller. However, he did not want to lose the work and designing motivation of the Rotary Club, so he wanted to try to find an alternate site where SPECIAL CITY COUNCIL MEETING FEBRUARY 19, 2014 MINUTES PAGE 10 they could look into in more detail and more seriously. Mayor Matsumoto asked if both projects could be brought back for the following reasons: (1) She still questioned the financing mechanisms for Brookwood and (2) she would like a response to Councilmember Normandy's question relative to preferences at Rotary. Councilmember Addiego thought more discussion would probably be helpful. He was very grateful for the existing Rotary Plaza which the Rotarians brought them 40 years ago. He was also excited and ready to support Rotary Plaza 2.0 as he thought bringing mature people back into the downtown was one of the prescriptions to a successful downtown. He asked if Rotary could give them the age you have to be to qualify for that type of housing. The response given was that residents had to be at least 62. Councilmember Addiego stated that he was 59 and he looked forward to the building. Mayor Matsumoto asked if there was enough direction. Consultant O'Keeffe concluded that they were to bring back both of the proposals at a subsequent session for further discussion after additional research was conducted. Mayor Matsumoto stated that they would move on to 5b. b. Downtown Improvement Programs. Consultant O'Keeffe reviewed the staff report and staff's recommendations which included: a Downtown Improvement Program with increased grants and loans for fagades improvements, architectural assistance, and program promotion materials; the feasibility of establishing a Downtown Business Improvement District ( "BID "); improvements to the right of way; and continued support of the downtown homeless outreach programs. Details were provided about each of these aspects. Staff was requesting direction on amendments to the loan and grant program and Council's commitment to allocating $200,000 one -time money to the effort. Staff would come back with a feasibility report on establishing a BID for Council to determine if they were willing to invest general fund monies into that effort. Additional study sessions would be necessary to fully inform the Council on that issue, and for Council direction on coming up with a list of potential right of way projects on which to spend Community Development Block Grant ( "CDBG ") funds on and present that in the CDBG budget to show the reallocation of the funds. Direction was also needed on the continuation with the homeless efforts in which they were already engaged. Mayor Matsumoto asked if the $200,000 was coming from CDBG. Housing and Redevelopment Manager, Norma Fragoso responded affirmatively. Interim City Manager Mattas stated Council's preference on seeing the bigger picture of the budget. Items will be brought before the budget subcommittee and then to full Council. If there was interest SPECIAL CITY COUNCIL MEETING FEBRUARY 19, 2014 MINUTES PAGE 11 in exploring these plans, staff wanted to show them where in the general fund this money comes from. To have a more robust economic development approach, it may require some seeding, particularly with the idea of a BID. A one -time investment to give businesses the motivation to be interested would be a good thing. If they want them to look at it further, then it will come back through the budget process. Overall, Council expressed approval and excitement of all of the plan's aspects. Specific comments included: concerns about a new City Management team having the opportunity to review and understand all of the aspects; addressing particular awnings first; the need for clarification on whether the BID was targeting business or property owner; concerns about the slanted parking on Grand Avenue and the lack of parking improvements being addressed in the plan; and concerns on the amount of the investment meeting the objectives. Consultant O'Keeffe stated for the BID, the owner would be responsible to pay the assessment, and it depends on how the lease is written if the owner and the business are not the same. In a commercial retail lease, the property tax obligations are passed through to the tenant. Both groups would need to be worked with and a part of discussions when going out to talk about establishing a district. Interim City Manager Mattas added that, when you create bids, you can focus on one or the other but ultimately it gets included in the rent. Outreach should be conducted for both to determine which worked best. In other cities it was actually the tenants who are the members of the bid as opposed to the property owners. There were different ways of structuring it. Regarding the parking, Mayor Matsumoto stated that, in the downtown specific plan, it was going to be two lanes and they were going to widen the streets and do parallel parking. Consultant O'Keeffe stated transformation of one key property could encourage the businesses around them and get them to respond. The amounts stated could achieve one or two properties done really well, then you can always allocate more money later or find out the private sector was picking up the slack by making the investment on their own. There was energy in the downtown area with good quality restaurants and he thought this would help build on that and strengthen it. Councilmember Gupta stated, from that understanding, he fully supports staff s direction in terms of his own desires at this time. Mayor Matsumoto thought this was enhancing what was going to happen with the downtown specific plan, not working to contradict or just Band -Aid it. Councilmember Normandy asked about the painting of buildings on Grand Avenue. In addition to a loan of up to $25,000, was there an opportunity to look at providing grants for extra painting on key properties. Consultant O'Keeffe stated the short answer was that limits of the grants funded through CDBG could be raised. Mayor Matsumoto stated the direction from Council was to proceed as staff had recommended. SPECIAL CITY COUNCIL MEETING FEBRUARY 19, 2014 MINUTES PAGE 12 food /good component distinguished them. Interim City Manager Mattas stated the zoning regulations were tightly drafted and that Council should be aware that they were specifically intended to address some of the economic impacts that were identified in the Siefel report in which data showed a likely draw from other retail establishments and impact the ability to draw in a Safeway due to the market availability. This is a very specifically drafted ordinance to draw distinctions that didn't exist in the prior ordinances. They have three separate categories of large format retail, grocery, and superstores. This was really intended to address just the superstores and grocery east of 101. Council consensus was to proceed with the process. However, regular updates on the Levitz and Lowe properties were requested. Interim City Manager Mattas advised Council that there was an entity that has the Levitz property under contract now. They had initial discussions with South San Francisco and they indicated they will have an application in pretty soon and have indicated they would like to meet with Councilmembers once they get their application in. The site would be retail but not involving groceries. 7. Closed Session: CONFERENCE WITH LEGAL COUNSEL— ANTICIPATED LITIGATION Significant exposure to litigation pursuant to paragraph (2) of subdivision (d) of Section 54956.9: (1 case) 8. Closed Session: Conference with Labor Negotiators. (Pursuant to Government Code § 54957.6) Agency Negotiators: Jason Rosenberg and Paul Kimura Position: City Manager Enter closed session: 9:08 p.m. Return to open session: 10:30 p.m. Report out of Closed Session: No reportable action. 9. Adjournment. Being no further business, Mayor Matsumoto adjourned the meeting at10:30 p.m. Submitted by: Anna M. Brown, Deputy City Clerk City of South San Francisco Ap oved PA U 4M sumoto, Mayor City of South San Francisco SPECIAL CITY COUNCIL MEETING FEBRUARY 19, 2014 MINUTES PAGE 15