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HomeMy WebLinkAbout04.11.2016 Joint SP & PCH Minutes @1:00 MINUTES JOINT SPECIAL MEETING y°°.�x '; OF THE T!_ca CITY COUNCIL AND ° PLANNING COMMISSION HOUSING q TO��� SUBCOMMITTEE OF THE CITY OF SOUTH SAN FRANCISCO P.O. Box 711 (City Hall, 400 Grand Avenue) South San Francisco, California 94083 Meeting will be held at: CITY MANAGER CONFERENCE ROOM 400 GRAND AVENUE SOUTH SAN FRANCISCO, CA MONDAY, APRIL 11, 2016 1:00 p.m. 1. Call to Order. TIME: 1:00 p.m. 2. Roll Call. PRESENT: Councilmembers Addiego and Matsumoto, and Planning Commissioners Faria, Ruiz and Wong. ABSENT: None. 3. Public Comments. None. 4. Motion to approve the minutes of meetings of March 1, 2016 and March 7, 2016. A motion was made by Councilmember Matsumoto to approve the meeting minutes of March 1, 2016 and March 7, 2016; seconded by Commissioner Faria. Motion passed unanimously. Councilmember Matsumoto referred to an interoffice memo dated April 11, 2016 on the subject of policy related to acquisition and renovation of existing buildings as a strategy to provide affordable housing. She didn't know if it was germane to their discussions, but she requested that a copy be sent to the rest of the Council. Alex Greenwood, Economic and Community Development Director, stated that it was to be circulated to all of the Council. Councilmember Matsumoto stated that it needs to be noted so she doesn't waste their time making that request. 5. Review of responses to Request for Qualifications (RFQ)related to the acquisition and development of the 200 Linden and 212 & 216 Baden Avenue; policy discussion providing Affordable Housing through rehabilitation of existing buildings. (Ron Gerber, Housing and Redevelopment Manager). Ron Gerber, Housing and Redevelopment Manager, stated this was the item that was originally requested for discussion at the last meeting and it was determined to send it out to the whole Council. Mayor Addiego asked if he said No. five (5) was going to the entire Council. Mr. Gerber stated that this is the open session portion that we're going through the RFQ. Mayor Addiego asked how they provide affordable housing through existing buildings. Councilmember Matsumoto thought they were going to discuss this. Julie Barnard, Downtown Coordinator thought the problem was that there are two agenda items lumped into one. Mayor Addiego stated that Item No. five (5) was 200 Linden, 212 and 216 Baden Avenue,but this item was not going to include discussion about rehabbing existing buildings as it was not part of this project. He asked if Alex Greenwood was going to lead the charge. Alex Greenwood, Economic and Community Development Director stated he would update the introduction and then turn it over to the Economic Development staff. He stated that this was an exciting movement, as they are moving forward with the next round of properties for disposition through the long range property management plan. He stated that the three (3)parcels are a combined area of about 31,400 square feet in a strategic location. He explained that they were trying a different market oriented approach. He stated that the good part was that it threw the development opportunity to a much wider net, activated more interest in the development community and brought them a wide variety of projects to consider,but was complicated because of having a lot of apples, oranges, etc. to choose from and makes the decisions more difficult and more nuanced. He then turned it over to Mr. Gerber. Councilmember Matsumoto asked if they could stop. She stated that, in looking at her meeting request to which she was to respond, she stated that it listed policy discussion providing affordable housing through rehabilitation of existing buildings and another item discussing a proposed development at 150 Airport. She asked if she can conclude that was not on it. Mr. Greenwood stated that 150 Airport will be discussed at the April 20th Housing Subcommittee meeting. He apologized, stating there were changes to the agenda to give the subcommittee more time to talk about 200 Linden today. JOINT HOUSING SUBCOMMITTEE MEETING APRIL 11,2016 MINUTES PAGE 2 Mr. Gerber thanked the subcommittee members for their time because he knew it takes a lot of thought, analysis and deliberation. He stated that this was an open market system so there's no exclusivity towards one party. They try and work through the seven submittals and put together a summary. He stated that one difference between this process compared to Maple was that this was an open discussion and then would convene to closed session where they can discuss price and terms. He stated that Council and Successor Agency often meet in closed session to discuss price and terms, although it may be new to the Planning Commission. He mentioned various things to keep in mind, adding that a second memo for confidentiality relates to price and terms. He stated that there could be other items, such as design, which could affect the real estate price and there could be some design aspects that will affect the price and terms and that will be talked about in closed session. He referred to the open market providing a diversity with seven different proposals. He thought it was helpful to know the process seems to be working, adding that all of these projects will benefit downtown and there was a range of experience among them. He referred to the second page of the open session memo which he thought had something helpful to keep in mind on whether the specific teams will be able to successfully complete the project. He then mentioned that staff looked at other projects, and made some internal projections for their consideration to see what the property tax or TOT would look like which he thought the oversight board will care about. He stated that, if they decide to select a group of short listed firms, they can then ask them to spend time being more thoughtful on the total development cost of their specific proposal. He stated that hotel land use does not emphasize long range property management plan related to disposition of properties, specifically stating they were not emphasized over residential but were not prohibited. Referring to Councilmember Matsumoto's comments, he stated that this was their attempt to do the paper screen first. In closed session, they will have another spread sheet from which to work. He reminded them that they were heading towards the May 11th meeting with the Successor Agency. He asked if they have questions that they can't answer or they are not prepared to make a decision today that was fine. Councilmember Matsumoto referred to discussion of price and terms, and stated that the Successor Agency doesn't care about TOT because that goes into the City's General Fund. Mayor Addiego assumed that she meant the Oversight Board. Councilmember Matsumoto responded affirmatively. She stated that they will review the projects and rate them,but when they talk about price and terms, she concluded that is part of Redevelopment and the City does not own it. Mr. Gerber responded affirmatively. Councilmember Matsumoto thought that would play a major role when it goes to the Successor Agency. She stated that they could go through the exercise of making choices but they don't know what the prices submitted by these seven developers were and that could have a significant impact. She stated that one they like might offer one (1) million dollars and one they don't like might offer two (2) million dollars, and she assumed that might influence where the Successor Agency comes from. JOINT HOUSING SUBCOMMITTEE MEETING APRIL 11,2016 MINUTES PAGE 3 Mr. Gerber agreed, stating that it was a great point, and one of the reasons that term sheets were helpful as they can see the diversity and can try to be mindful of what the Oversight Board says. He mentioned that, if they decide they want a hotel, these are not binding offers but their best estimates, and typically the term sheet mentions what they can offer and it will lead to further negotiations. So, while not binding offers, it will give them a perspective on going forward from what the Council wants to see and what the Successor Agency/Oversight Board is going to see, and that can lead to negotiate higher and talk more about nuances to the hotel offers compared to condo offers, etc. Councilmember Matsumoto concluded that everything is negotiable with all the parties involved, such as land price, and it was acceptable. Mr. Gerber stated that price and terms are wide open for discussion from any of the seven proposers. Mayor Addiego concluded that they were going to go from this process into an ENRA with any of the seven. Mr. Gerber stated that the ideal would be that they would like, for the May 111h meeting, for them to develop a short list. Mayor Addiego stated that he understood that,but from that short list, they select and go into an ENRA at some point. Mr. Gerber stated that it would be after. Mayor Addiego asked to be reassured that what happened the last time was not going to happen this time. Mr. Gerber stated that it was one of the reasons they were glad they were doing this, because there is no exclusivity here. He stated that, when they choose a list of three or four on a short list, they get to provide a lot of input to the negotiations. He stated that they can bring each one, one at a time, to negotiate. Mayor Addiego stated that he will share with his Planning Commission colleagues the reference. He stated that, in the case of Sares Regis, they sat in this room and bid $11.5 million. When all the ENRA was through,they received four (4) million dollars. He acknowledged that there were a lot of reasons, some making sense, and some still seem to be in the ether a bit for that individual, and he felt they cannot have a replay of that as it will not work at the Oversight Board level. They can't float a number and watch it disappear. Mr. Gerber stated that it was an important point, and an excellent point. He thought that was one of the reasons they were going through this about price and terms for a legal process. He mentioned if someone comes back to reprice, if they have a short list, with No. one (1) as their preferred, with No. two (2) or three (3)behind it, and they get confirmed by the Oversight Board, JOINT HOUSING SUBCOMMITTEE MEETING APRIL 11,2016 MINUTES PAGE 4 then they can ultimately recommend developer No. one (1) and keep Nos. two (2), three(3) and four(4), on the queue and if No. one(1) doesn't come through with the same price and terms in 60 days, they can leave and they have Nos. two (2), three(3) and four(4) waiting. Councilmember Matsumoto stated that was leverage. Mayor Addiego thought that someone in the on deck circle should work. Mr. Gerber stated that was the intent of this process. Mayor Addiego thought it was a big difference from the last time. Mr. Gerber stated that, as part of the open session, they thought it would be helpful for any comments they have among the seven. He stated that one final note before they turn it over for their discussion, deliberation and discussion,they didn't make any strong recommendations of one over the others,but they showed what they thought was a break point between four(4) that have stronger experience as a team, as a developer, and the other three (3) that are newly formed entities with various levels of experience. He clarified that they were just pointing out that four have the experience, and, with the other three(3), they aren't saying they can't or shouldn't but merely noting that they are recently formed entities and they couldn't take a site visit of their completed projects as a team. He then referred to the process used to get to the seven. He stated that they put it on the website as normally done; they also had contracts with a real estate service called CoStar. Between their listing and CoStar and a list of developers they previously put together, they had a robust marketing effort and it did yield seven very diverse developers and some with a great deal of experience. Councilmember Matsumoto asked how important it was that they don't have experience as a team. She asked, if each component brings a proficiency with great recommendations and can provide work from other projects and he was recommending no because they don't have a track record as a team,how important is that. Mr. Gerber stated that they were not saying no,but letting them know the difference between the first four and the second three and they were not saying they should not choose them. They just felt it would be a helpful paper stream. He stated that, if they think they want to keep all three or some of them, it was entirely at their discretion. Councilmember Matsumoto stated that she read everything, but a lot didn't help. She thought it would be nice if, in addition to what he had, it had what they have projected. She stated that she would have liked more specifics of their vision. She stated that, for one of them, it spelled out what they anticipated, but she couldn't tell. Planning Commission Faria stated that they bid at least $30 to $60 million and you have an idea. Councilmember Matsumoto stated that one of her major concerns, overall, is the parking issue. She wants to know what the square feet they were given translates into in terms of parking JOINT HOUSING SUBCOMMITTEE MEETING APRIL 11,2016 MINUTES PAGE 5 spaces. She sees it as a nightmare and she would like to show how they are going to compensate for the parking, specifically what they were losing and how the City plans to make up for the parking. Mr. Gerber thought that was an excellent question. He stated from what they have seen in the proposals from each of the seven, they believe that they are all parking up to code. They have not seen anyone say they will offer more money if they can waive parking. He stated that, if all the material they received is lacking to her because of what they are getting from them directly regarding their vision, he stated that they can have a follow-up meeting in open session for them to spell out their vision. Councilmember Matsumoto stated that she also wants to know from them how many spaces they are talking about, specifically how many they give us. She stated that the square footage means nothing to her. She wants to know how many parking spaces they are going to lose. She stated that all of them said they would accommodate parking,but some had public parking and she needs to better understand as she thought that will be critical. Mr. Greenwood stated that he can answer the question. Planning Commissioner Faria commented that, with the Brookwood group, it stated parking not addressed, and that may be one of the concerns. Mr. Greenwood stated that the existing public surface lot has 16 spaces, and all of the projects would necessitate the deletion of a 16-space public service lot, and he thought the issue is a well raised one. Mayor Addiego asked if none of them provide public parking space, even with the commercial aspect. Ms. Barnard stated that the Signature Development group offered 42 public spaces. Mayor Addiego concluded they were the only ones. Councilmember Matsumoto stated that 200 Linden has 7,000 square feet, and she asked how many parking spaces is that; 216 has 3,500 of public parking and 212 Linden has 7,000. She was asking what that translates into for parking spaces. Mr. Greenwood stated that 200 Linden is the building and there is no parking on that. The others, 212 and 216 have about 30 spaces apiece. Councilmember Matsumoto stated that it was 30 spaces apiece for each of those. Mayor Addiego asked confirmation that some are metered and some are permit. Mr. Greenwood responded affirmatively. JOINT HOUSING SUBCOMMITTEE MEETING APRIL 11,2016 MINUTES PAGE 6 Mayor Addiego asked if it was 50-50. He thought he remembered one (1)row being for permit. Mr. Greenwood agreed, stating that he didn't have that information, but they can get it for him. Mayor Addiego stated that it does matter because, if it was permit, it was most likely employees. Councilmember Matsumoto stated that it was the employees and the businesses. Mayor Addiego stated that there are other options for employees. He stated that moving employees to the parking garage will mean they have a place to park. Planning Commissioner Wong felt like they were using the parking garage for an excuse for too many things and too many projects, adding that any projects that come through, they just add overflow into the main parking garage. Mayor Addiego stated that, when they created it, it was an additional 200 parking spaces, and it can address a lot of this. Councilmember Matsumoto stated that she was hearing a lot of complaints from retail and employees because they are over subscribing permit parking. Mayor Addiego stated that it doesn't mean there aren't spaces available. Councilmember Matsumoto stated that it did mean there was not space available. Mayor Addiego stated that he didn't think it meant there were not spaces that can be converted to permit parking. He stated that there is an allocation for metered spaces and there was permit parking. If permit was over subscribed, you balance that by finding some meter space that was not being fully utilized. Councilmember Matsumoto stated that what she was hearing was that those who are paying permit fee for parking and go to lunch can return to find no spaces left and they are paying a monthly fee and then their concern is legitimate. Mayor Addiego stated that the solution was to provide more permit parking. Councilmember Matsumoto stated that if 212 and 216 have 30 parking spaces-what was 200 Linden? Mayor Addiego stated the old bank building. Councilmember Matsumoto stated that there was parking but that was considered 216 and 212. Mr. Gerber thought they were saying that the site combined currently has 60 spaces. JOINT HOUSING SUBCOMMITTEE MEETING APRIL 11,2016 MINUTES PAGE 7 Councilmember Matsumoto concluded that the two parking lots including the parking that the IT people use because there was reserved building on the side building. Mayor Addiego stated it was right against the building, and he asked if that was additional parking they will lose. Mr. Greenwood stated that it was included in the 60. Mayor Addiego asked if that was Ms. Julie Barnard recollection as she walks the downtown. He stated that Councilmember Matsumoto might be correct. Ms. Barnard stated that she has never checked the number of parking spaces. Mr. Gerber stated that they will make sure. Mayor Addiego pointed out the row of parking where there was a building. He pointed out another row of parking that lines up with that, and there were some next to the bank, and she was correct. He stated that there were more than 60 spaces. Mr. Gerber stated that they will get the exact count of public spaces on the three assembled sites. Councilmember Matsumoto stated that her other question was that they have the 65 feet of 200 Linden and the 60 feet at 211 Airport. She asked how high is Giorgi Brothers. She asked if they can tell her from a height standpoint when she is trying to compare. Mr. Greenwood stated that they can provide that to her. Mayor Addiego stated that building and the Metropolitan, they didn't know the height. He stated maybe even the tower of the station, theater, as it all relates to what they are doing. Planning Commissioner Ruiz stated that he had a question related to the RFP. He stated that it was mentioned that the project was being proposed for affordable housing. Mr. Gerber stated that one of the developers was proposing 100% affordable housing and one of the developers was proposing market rate as a community benefit. It doesn't require his offering for affordable units. He stated they are asking what the market was telling them for the site and one was an affordable housing developer proposing affordable housing. Planning Commissioner Ruiz stated that there were two developers, and maybe the third one would be quid pro quo,proposing to have hotel facilities in the site. He stated that the Planning Commission has been bombarded with a lot of complaints about not having enough affordable housing. He questioned how they get it through the Planning Commission with a hotel project. Mr. Gerber stated that was the land use question and why it was good to have this in open JOINT HOUSING SUBCOMMITTEE MEETING APRIL 11,2016 MINUTES PAGE 8 session. They have to keep in mind what the maximum value of the site is which is the goal of the Oversight Board. He stated that, often, the affordable housing developers are going to offer a price that may or may not be close to what they determine is market value. He stated that, once the project is built, they will typically ask for what has been confirmed. Except for the ground floor ancillary commercial use, the affordable housing developer is proposing to offer property tax exemptions so there would be no property tax except for several thousand from the commercial space. He reiterated that it was a good land use question, stating how that compares with the other goal of getting the maximum value for the property. He stated that the affordable might or might not propose a market value acquisition and will likely have very nominal property taxes going forward. Mayor Addiego stated that the projects they have approved in recent times downtown are going to supply roughly 550 units of housing. Mr. Greenwood stated that was roughly the amount. Mayor Addiego stated that, outside of the rotary project which has 81, the total amount of other units might bring it up to 100. Mr. Greenwood responded affirmatively. Mayor Addiego concluded that they were at 20%which no one in the county was even attempting to do. He concluded that the answer as a Commissioner is that, in the aggregate, the city is providing 20% of the new housing for affordable. He stated that it can't all happen downtown. He thought, ultimately the decision with the Sares Regis was a good decision. He thought, if they get that particular development soon, that corner changes the whole complexion of the downtown. Councilmember Matsumoto stated that it supports the retail. She stated that, if they make it grow, they need to have those who have disposable income. If they go back to ordinary low-low, they don't have the discretionary income to support the downtown retail. She stated that they need to grow it, and they need tenants who have discretionary income to eat downtown. She stated that, like Sare's house, the kitchens aren't humongous because they get takeout. Mayor Addiego stated that was today. Maybe once a week they stay home and cook. Planning Commissioner Wong stated he didn't know if they want to do this now but he asked if staff projected what was based on property values. Mr. Gerber stated that they did in recent projects. They looked at what the development costs were for Brookwood, Sares Regis and that led to property tax projections. Planning Commissioner Wong asked if that makes a bigger difference if it was going to be condos or rental properties. JOINT HOUSING SUBCOMMITTEE MEETING APRIL 11,2016 MINUTES PAGE 9 Mr. Gerber stated that they didn't differentiate the product types between the luxury rentals and the condos. Planning Commissioner Wong stated that it was either going to be condos/residential which will be just property tax, park commercial which will also get sales tax and more hotel which will get TOT rates. He stated that was big, deciding what property type they were looking at. It will be a big part of the muscle. He concluded that the 94 was based on property tax, 269 just on what they estimate the number of rooms based on the TOT. Councilmember Matsumoto suggested they start at the top, Bayrock-eighty plus active luxury units and four units to be affordable. She assumed that was for sale because that was the 20%. Mr. Gerber stated that this was a rental project. Councilmember Matsumoto concluded that Bayrock was rental. She asked about Signature. Ms. Barnard stated that it was rental. Councilmember Matsumoto thought MidPen was probably rental. Mr. Gerber responded affirmatively. Omni's for sale. Councilmember Matsumoto stated that Brookwood was condos, and she says sale or not sale. Mr. Gerber stated that it was until Friday, at the deadline it was a condo project and they came with the financial deadline on Friday and added an office component and then added a hotel component. Councilmember Matsumoto asked confirmation about Brookwood. Mayor Addiego asked if they were morphing into everything. Councilmember Matsumoto stated that she was good with TBD. Planning Commissioner Wong stated that, for clarification, he didn't believe they were proposing a mixed use so much as three different scenarios. Councilmember Matsumoto liked TBD. Ms. Barnard stated that was one of the scenarios. Councilmember Matsumoto stated that she was ready to eliminate. Mayor Addiego stated that she can go ahead and do that. JOINT HOUSING SUBCOMMITTEE MEETING APRIL 11,2016 MINUTES PAGE 10 Councilmember Matsumoto stated that she will give her reasons. MidPen because they have enough of their developments there and she was all for them. She stated that, with due respect to Brookwood, given the trials and tribulations they have gone through whether their reputable, she would eliminate them. She would eliminate the Proferian because it was just too big and it scares her. She would love to have a boutique hotel, but 65 feet hotel in that tiny area scares her. Mayor Addiego stated that in the supplemental information they received it indicated that there were two prices. He asked if this was the one based on whether it had seven floors or less. Mr. Gerber stated that they were willing to go down and they can talk about it. The price they proposed relates to the max height which was 85, and they are proposing that they could do it at a lower height but will adjust their price down, concluding that the taller the building, the higher the numbers. Councilmember Matsumoto asked what the lower height was. Mr. Gerber stated that the envelope was 65. Mayor Addiego stated that they would be losing floors, not air conditioning. Councilmember Matsumoto stated that those were her three. She asked if there was consensus on any of those. Mayor Addiego stated that he was totally with her. He was not prepared to do an all affordable housing project on that site. He also didn't find Brookwood to be a completely viable alternative at this time. He asked if they could talk about Bayrock as the thing that was most glaring for him was that he didn't see California modern in the downtown area. He stated that, when he dreams about what the downtown may look like, this was a fine structure in Palm Dessert or Palm Springs, but he didn't see it working on any level downtown. Planning Commissioner Ruiz stated that he feels the same way when he looks at the picture. Mayor Addiego stated that, if you were up a little way this might work because you have a certain look up there that might let it in or compliment it. Councilmember Matsumoto stated that, while she could accept the other thing as it looks industrial, but what she likes about some of their other projects, for her, when they decide on a project, whatever developer it will be, she likes to see more glass and light because that will camouflage the density. She thought they could integrate some of their old things that make them unique, but for her, she thought they need to look at glass and airiness because it won't help. Mayor Addiego stated that it won't help with the mass. JOINT HOUSING SUBCOMMITTEE MEETING APRIL 11,2016 MINUTES PAGE 11 Mr. Gerber stated that one of the things they have done is that they didn't ask for any colored elevations or site plans,but asked them to show them what they can offer and can they build it. He stated that a lot of these developers have done things in Santa Barbara, San Francisco or Oakland,but they have the total flexibility and their discretion to have them come in and talk about what they would like to see there. Right now, they didn't ask for an RFP with any guidelines to show glass and light in an urban form in the area. He stated that could be the next stage or they could disqualify them now. He stated that he wanted to confirm that this was an RFQ. Mayor Addiego stated that, when you look at what they have done and who they are, he didn't think Bayrock would be in an elimination column. Councilmember Matsumoto agreed that they shouldn't be eliminated, adding that she would like to see what they have to offer. Planning Commissioner Wong pointed out an example of a downtown San Diego project that looked nice. Mayor Addiego asked if they are aware of what Signature Development has done in the Bay Area. He recalled that, at one point, they were in discussion with the City on the UC properties. His concern has to do with the closed session aspect of Signature. He stated that they were a big player. Mr. Gerber agreed, stating that their experience is as a second generation and has been doing it for about 20 years. Councilmember Matsumoto stated that, regardless of whether they choose them, she liked the past projects, and she would like to have a Walgreen's because they would be well served or a Walgreen's like. She mentioned the Hive example, and she sees where, like in Emeryville, it would be an open court and she was going to push if it was feasible. Planning Commissioner Faria agreed that MidPen doesn't fit, and stated that he was not predisposed to a hotel,but he thought in developing retail, they have to have the capability that, no matter what format they pick, they have the retail to support, not just this building but all those around and he felt it was critical. He stated, if they say they will give 1,000 square feet of retail, that was nothing. He thought they have to have something where they can walk out of other buildings and have support. Mayor Addiego stated that he was with him on that. Planning Commissioner Faria wanted to say that before they go down the list. Mr. Gerber stated that was the interesting aspect of the exercise they are going through, especially the term sheet, as they get to negotiate with them and make recommendations as they are developing the short list that will get confirmed by the Successor Agency and others, and they JOINT HOUSING SUBCOMMITTEE MEETING APRIL 11,2016 MINUTES PAGE 12 will be in a position to say they don't want financial and personal services, but want more than that. He thought, if they work through that, it will be part of the negotiations. Planning Commissioner Faria stated that he had one last comment before they proceed down the list. He stated that, when it comes to hotels, when he sees the larger ones, from an economic standpoint, he questions whether they can keep them filled. He asked what their rental rate was in their existing ones. He mentioned that they put in 152 units. Mayor Addiego stated that it was 88 now. Mr. Gerber stated that it was in the mid to upper 80s. Planning Commissioner Faria stated that it sounds like they do not have a lot of inventory to rent. Mr. Gerber agreed that it was an excellent point. He stated that one thing that was interesting, Marriott called them directly. He stated that one thing about working with hotels,most of these, such as Marriott and Sheridan, don't build hotels, but license and franchise. He stated that one interesting aspect was that people in the real estate division for these major flags preach qualified developers and he called directly they had not only pre-qualified them for projects but it was not often you hear the remarks they made. Mayor Addiego asked if Rahm was in another city in the East Bay. Mr. Gerber stated that they were working on El Vida now. Mayor Addiego stated that what they showed them was Texas and Texas style and he lost interest. Councilmember Matsumoto stated that she didn't care for Fairfield. If they do a Marriott to see Fairfield, she was not interested. Mr. Gerber stated that it was part of the negotiation process. They can go through in the early stages and, if they do decide to short list a hotel, the advantage they have in negotiations is that they can say, you are one of three or four, and if you want to stay in this, I want to see a letter of interest of this quality or higher, and if they want to see Hampton in Fairfield, no, and they have the discretion of requiring that. If they can't perform, you don't have to accept them. Mayor Addiego stated that it could be one of the stipulations that, if they were first on the list, they would have that short form. Mr. Gerber stated that it could be in an end run. Mayor Addiego stated that it could also happen in 30 or 60 days and, if they don't procure that kind of letter, on to the next person on the list. JOINT HOUSING SUBCOMMITTEE MEETING APRIL 11,2016 MINUTES PAGE 13 Councilmember Matsumoto asked what five stories high was. Mayor Addiego stated that five is 60 feet generally. He stated that the Rahm group had glowing letters from a lot of people with whom they do business. Mr. Gerber stated that they were the one who made an unsolicited offer last fall. He stated that was a matter of public record, at $2.1 million. They stated that it wasn't on the market yet, but when it gets on, they said to keep us in mind. Mayor Addiego asked if more than one of the seven do an unsolicited. Mr. Gerber stated that it was just Rahm. He thought they were the only one who made a full blown offer with the first sale agreement in the fall. Mayor Addiego stated that he remembered Proferian. He stated that they brought it to them in closed session. Mr. Greenwood stated that he thought Proferian did send a letter, but it wasn't a specific dollar amount or offer but they expressed an interest. Councilmember Matsumoto stated that she would like a breakdown of where they are relative to their RENA numbers, not from the past but they were under a new cycle. She would like to know where they are on that. Mayor Addiego asked if she remembered what they were charged with, 16 or 18 hundred. Councilmember Matsumoto thought it was 16 to 18,broken down. Mayor Addiego asked if it was just the downtown stuff that was 550. Councilmember Matsumoto stated that she had a conversation with the City Manager and, even though they are building now, part of it falls under the old numbers. She asked that they be careful. Assistant City Attorney Steve Mattas stated that they can restart for each cycle, and you can be given your set, meet them all, and then when that time period ends, they give you new RENA numbers and then they reset what you have done back to zero, as if all the stuff you built in the past doesn't count. He thought it is a bit frustrating how they credit you that way. He stated that, since they just recently adopted a new housing plan,they can reset to zero in RENA's eyes. Mayor Addiego stated that they didn't come close to the numbers during the depression. He thought that worked to their advantage. Mr. Mattas stated that you have to be zoned to accommodate that amount of housing, and you don't have to build it to technically meet your RENA numbers. He thought they did meet their JOINT HOUSING SUBCOMMITTEE MEETING APRIL 11,2016 MINUTES PAGE 14 RENA numbers for the last cycle. Mayor Addiego stated that they just didn't build anything. He asked if the reset was before the seven years. Mr. Greenwood stated that they can give them a proper accounting of where they were in the current RENA cycle. Councilmember Matsumoto stated that it impacts on how, if they are moving forward to compete with bids, and they go out for funding, that will play a role and they will look at those numbers. Mayor Addiego asked if anyone else had an observation on ROM. Planning Commissioner Wong stated that, not necessarily on them, but his comment was reiterating what they were saying before. He stated that the biggest need for downtown is commercial or retail. He thought a grocery store, such as Trader Joe's, would be nice in that area as it would be good for all the people living in the area to walk to a supermarket as opposed to having to drive to El Camino. Mr. Gerber stated that Proferian did, in their subsequent submittal, talk about assembling an adjacent site for a Walgreen's. Mayor Addiego stated that was in another session. Planning Commissioner Ruiz stated that Proferian proposed a hotel of 152 rooms, 30 units per floor, 90 parking units,but they were talking about basement parking. He asked if they realize that basement parking would be horrendous in that area price wise. Mr. Gerber stated that those questions "do they realize" are the things they can follow up on if they want to keep them on the short list. Planning Commissioner Ruiz stated that he was speaking about whether they have experienced the local area that would affect construction. He stated that they are only 10%retail and is that what they are looking for. Mr. Greenwood stated that the discussion was good, and he asked if he can make a response on the retail comments. He agreed, and it was borne out by some of the sales tax analysis they have done. He stated that there are a lot of retail store fronts with very small spaces,but what was missing in downtown are the larger spaces that can accommodate the convenience of grocery retail. He stated that as downtown matures as a true mixed use area, that will be a major constraint as they will need a Walgreen's but they will need a category of a gym, and as they have more downtown population they could consider. Mayor Addiego stated that Planning Commissioner Wong's observation is more pertinent to what the downtown will need as it grows into a more viable urban neighborhood. He stated that JOINT HOUSING SUBCOMMITTEE MEETING APRIL 11,2016 MINUTES PAGE 15 the little stores that are taking care of the population now aren't going to offer what is needed by a lot of the new residents. He stated that there are social inequities with the type of stores in the downtown areas. He stated that you can look at the price of milk and then drive across town, but if you can't drive across town, you are paying much more of your disposable income for the basics. Councilmember Matsumoto thought they could make it a condition. She stated that, on Grand Avenue, a lot of the ethnic stores that take care of their population are going to get priced out because of the rental. She thought she would like to have those stores on Linden so it accommodates the needs of their residents in that area. Mayor Addiego stated that he thought the opposite will happen. He stated that, if you go to decades,he thought Linden will be the premier commercial strip and they will have the boutique stores on Grand Avenue because the store frontages are about 35,but what she was talking about, to be able to put in the type of use like a grocery store, those lots exist now on Linden Avenue. Once you get to that tipping point, he thought you will see the plus and, long term, that was how you grow the downtown commercial in Linden Avenue. Planning Commissioner Wong stated that it will be easier to do now than it will be ten years from now. Mayor Addiego stated that drug stores vary in size, depending on what they offer, and he wondered about grocery stores, as Trader Joe's on McClellan was really tiny. He stated that he had an old broken down store that was 14,000 square feet and larger than Trader Joe's and that might be close to the 10,000 number. Mr. Gerber stated that most Trader Joe's are between 12,000 and 14,000 square feet and Walgreen's standard is about 14,000 square feet. They may flex a bit depending upon the market and what can be available. He thought the aspect of doing grocery is that they need a good hundred foot depths. He thought that was where it was important to understand, that getting a critical mass of land and parking, because a grocery store tends to pay low rent because they can dictated low rents. Mayor Addiego concluded that it was because of the draw. Mr. Gerber agreed, adding that it doesn't mean you can't get one, but the art of where you find the sublet and then what happens is residential subsidizes the retail. Mayor Addiego stated that, for the residential, that was quite an amenity to be able to go downstairs and shop. Planning Commissioner Wong stated that he knows that there aren't apartments above some, but in the apartment complex area. JOINT HOUSING SUBCOMMITTEE MEETING APRIL 11,2016 MINUTES PAGE 16 Mayor Addiego stated that was one of the big benefits of Golden Gate apartments in San Francisco. Planning Commissioner Ruiz liked Bayrock's proposal to have a functional rooftop for a gym or even looking at a restaurant. Mayor Addiego asked where that was referenced in the Bayrock proposal, asking staff for help. He stated that Commissioner Ruiz referenced Bayrock having an idea for the roof. Planning Commissioner Ruiz stated that they called it a functional roof. Mr. Gerber stated that it was on the third page of the proposal under development concept. Mayor Addiego read from the proposal, and he mentioned that it could also be a community garden, outdoor spa, hot tub, etc. Planning Commissioner Ruiz stated that the building would be high enough to enjoy the view of the Bay. Mayor Addiego stated that, if you are in the hot tub, no one will recognize you. Mayor Addiego stated that the dollar will drive a lot of this. He asked at what point do they jump into the closed session. He asked if they need a lot more from them. Mr. Gerber stated that what he has heard consensus on is No. five (5) so far for short listing, and that does not include Brookwood. Mayor Addiego stated that was about all you can accurately glean from all this discussion. He asked that they read the next item to go into closed session. Councilmember Matsumoto stated that she was assuming that he will be getting back to them people. She stated that she was not going to support Mega. She doesn't care if it is housing or hotel, and was not going to support the 65 people, as she thinks it is disproportionate. She was only one (1)person. Mayor Addiego asked her if she was not going to support 65. He stated that, if she can't support 65, she can't fathom the idea of 85. He stated that was what they put out. Mr. Gerber stated that was currently allowed by rights. Councilmember Matsumoto stated that she understood, adding that Planning Commissioner Faria stated that this was approximately 30 feet. Planning Commissioner Faria stated that a boutique was going above that and, if it was seven stories, then Proferian will be higher than that. JOINT HOUSING SUBCOMMITTEE MEETING APRIL 11,2016 MINUTES PAGE 17 Councilmember Matsumoto thought it was overwhelming, and she thought they will get pushed back, whether it was a hotel or a condo. Mayor Addiego asked what Sares Regis had. Mr. Gerber stated that Sares Regis is seven stories. Councilmember Matsumoto reiterated that she would struggle with it, whether it was a hotel or something else. Planning Commissioner Faria stated that he would have to see the project as he was not predisposed either way. Mayor Addiego stated on this lot, you have some ability to step it back a little bit, but doesn't have to be 85, a sheer wall from the sidewalk up to the 85 point. He stated that he remembered when they had the Fire Department come, throw a ladder with a flag on the end to show how high the parking garage was and the Planning Director at the time was beside herself because that was beyond what was allowed and how can you consider it, adding that she was no longer with them. He stated that it works, and it was not a skyscraper and changing the whole complexion of Miller Avenue. Planning Commissioner Faria stated that assuming high with a cutout, there were all kinds of perceptions as you get looking into something like a foyer but if it was just a block he would agree. Planning Commissioner Ruiz stated that you can step back and lower the height. Councilmember Matsumoto stated that you hear everyone talk about their city as it is today, and it is quaint. When she is in Redwood City, she looks around and admires what they are doing, but adds that it was not her vision of South San Francisco downtown. She was for growth but when you look down Grand Avenue, she didn't want to lose that uniqueness. Mayor Addiego stated that Grand Avenue is almost going to be like a themescape at some point. It will look like Main Street, USA for the next 50 years if they don't change it in a big way. He didn't know if Baden Avenue is going to impact the little shops on Grand Avenue. He acknowledged that there was sensitivity because they will and are hearing it. He asked if everyone was okay going to closed session. Councilmember Matsumoto concluded that they have eliminated two and they are going back with the other five. She was asking to be sure she was on the same page. JOINT HOUSING SUBCOMMITTEE MEETING APRIL 11,2016 MINUTES PAGE 18 CLOSED SESSION Time entered Closed Session: 2:09 p.m. Time exited Closed Session: 3:03 p.m. 6. Conference with Real Property Negotiators: (Pursuant to Government Code Section 54956.8) Properties: 200 Linden Avenue (APNs 012334130 and 012334160), 212 Baden Avenue (APN 012334040) and 216 Baden Ave (APN 012334030). Negotiators: Alex Greenwood, Ron Gerber and Julie Barnard Negotiating Parties: the City of South San Francisco, the Successor Agency to the Redevelopment Agency of South San Francisco and Brookwood Evolve Venture, MidPen Housing, Proferian, Qingdao Hisense Real Estate Co, Rahm Investments, Bayrock Multifamily or Signature Development Group. Under Negotiation:Price and terms for the disposition of the property.(Ron Gerber,Housing and Redevelopment Manager). Report out of Closed Session: No reportable action taken. 7. Adjournment. Being no further business the meeting was adjourned at 3:04 p.m. Submitted by: Approved by: `Ul G jN abriel Rodriguez, Deputy City Clerk f CC �i / ouncilmember City of South San Francisco ity of South SI Francisco JOINT HOUSING SUBCOMMITTEE MEETING APRIL 11,2016 MINUTES PAGE 19