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HomeMy WebLinkAboutMinutes 1998-05-20Mayor Eugene R. Mullin Council: James L. Datzman Joseph A. Fernekes Karyl Matsumoto lohn R. Penna MINUTES City Council Municipal Services Building Community Room May 20, 1998 SPECIAL MEETING CITY COUNCIL OF THE CITY OF SOUTH SAN FRANCISCO MAY 20, 1998 NOTICE IS HEREBY GIVEN, pursuant to Section 54956 of the Government Code of the State of California, that the City Council of the City of South San Francisco will hold a Special Meeting on Wednesday, the 20th day of May 1998, at 6:00 p.m., in the Municipal Services Building, Community Room, 33 Arroyo Drive, South San Francisco, California. Purpose of the meeting: Call to order. Bay West Cove Specific Plan. Gateway Specific Plan. Good and Welfare Adjournment. City Clerk City of South San Francisco Dated: May 14, 1998 CALL TO ORDER: ROLL CALL: AGENDA (Cassette No. 1) 2. Bay West Cove Specific Plan. - ' Gateway Specific Plan. ACTION TAKEN 6:07 p.m. Mayor Mullin presiding. Council Present: Datzman, Matsumoto and Mullin. Council Absent: Fernekes and Penna. City Clerk Battaya stated Councilman Penna in- formed her Office he would not be attending tonight's meeting due to his conflict of interest on the two items on the Agenda. Coordinator of Economic & Community Develop- ment Beyer related: Council approved the Specific Plan which is the area being discussed; tonight staff will talk about Shearwater and then the Gate- way, or a portion of it; Council adopted the Specific 5/20/98 Page 1 AGENDA ACTION TAKEN 3. Bay West Cove and Gateway Specific Plans - Continued. Plan for the whole redevelopment area, and the precise plan for the Auto Nation 20 acre parcel; the Shearwater Project area, the Bay West Cove Specific Plan, has five planning areas; Area 1), with the 20 acres, was approved for Auto Nation; Area 2), is a large area of 19.2 acres with a proposal for an extended stay and studio plus hotel on 4.7 acres, if approved it would leave 13.5 acres for other development; Area 3), which was set aside for commercial/retail and a 175 room hotel that was approved for La Quinta Inn; Area 4), 8.5 acres was approved for Marriott Hotels Residence Inn and Court Yard; and Area 5.) is that portion of the development in the bay slot; since Auto Nation approval in December they have been back talking and showed us a site plan for a six plus acre that they would like to have for future development out of their 20 acres; they talked to Computer City and Staples about a retail use on the site; the reason staff is bringing this to the Council for discussion is that in the last several months there have been discus- sions on Bay West Cove, also with others interested in the 13.5 acres and have discussed the possibility of an R&D or biotechnology; the quality of current hotels in the area is 2 and 3; the question came up to add more hotels and staff has been interested in the potential for restaurant usage as well; staff has concerns in making any changes to the proposed land use as designated in the Specific Plan; if the hotels have been approved and are all constructed, you would have 800 rooms, extended stay hotels, just within this project and there have been three other hotels approved in the Gateway, but he does not think all of them were extended stays; he is concerned with a saturation of hotels in the area if the economy goes down; second concern is the potential impact of changing from retail and going to biotech or office use on traffic generation in peak hours; they have worked with the developers trying to balance out the difference economic benefits to the City and the land use; there are only two areas where there can be significant development - one in Shearwater and the other is Macy's/Costco site on El Camino that have sufficient square footage. Mayor Mullin asked that both items be presented without discussion in between. Coordinator of Economic & Community Develop- ment Beyer related: in December the Council and the Agency approved a six story office building for 5/20/98 Page 2 AGENDA ACTION TAKEN 2. & 3. Bay West Cove and Gateway Specific Plans - Continued. this site, and Hines said they looked at scenarios for the site; the Council would like two four story office buildings to be constructed in the future on that site; in recent weeks or months we received notice from the Hines interests indicating there is potential of a 300,000 square foot building for pharmaceuticals and they are in the process of discussing that with Core; staff's concern was discussed when the six story building was approved, because any time we deal with R&D there is the potential of three stories as opposed to the mid-rise buildings that were discussed for the site; the Hines people are very aware of our concerns and feel discussions are premature because they are in the process of com- pleting the preliminary design and will come in within a few weeks to discuss this; if they are not going to develop that site, the City should look to R&D or offices for that site, and those are the com- ments in relation to Gateway. City Manager Wilson related: what he wanted to reinforce in thinking, is some of the issues of reve- nue flow; the City will continue to support the de- velopment of R&D; we find it to be a very attractive use and an enhancement of the park; it generates more revenue than other use, but falls short from what we can get in sales tax; he remains very cau- tious about maintenance of service levels and tends to reinforce his caution or concerns of having this revenue base, whether developed in the near or far future and balance that for the need of a mixed development or base on the east of 101; so, we can weather all sorts of economics over the years, be- cause SSF has been stable in delivering services over the years, while other cities have been on roller skates. Director of Economic & Community Development Van Duyn related: on the aerial map it shows the area for retail and the rest is committed for Auto Nation and hotels and the six acres they spin back; he pointed out the area for office and R&D; other than the restaurant for the tenants, it is all office use and this is R&D; he spoke of the mixed use on the Hilton site; there is another site being developed for Athena Pharmaceuticals; staff had objectives, some local serving retail, not just for the community at large but a large concentration of people that need services as businesses and employees in the general area and there is no retail without getting in their auto and going across the freeway; the other thing 5/20/98 Page 3 AGENDA ACT!_ON TAKEN ~) 2. & 3. Bay West Cove and Gateway Specific Plans - Continued. mentioned is the lack of restaurants, and he knows the Council has queried applicants in the Hines and Shearwater areas for restaurant use, so if we begin to cut out all retail we obliterate the entire area to have retail except for the Auto sales. Discussion followed: Mayor Mullin stated he was going to assume the downsizing of Auto Nation is part of their spinning off the acres or something else; they over estimated the amount of auto service and sales, and with that decided that a smaller facili- ty would meet their needs; Councilmember Matsumoto stated, in her decision making, she wanted to see what will sustain our services; can we get a five, ten year plan for that will give her a better means of voting; City Manager can do that for Mr. Beyer developed a variety of scenarios, and that has been updated and Council can see how they came to this; Councilmember Matsumoto was con- cerned about what happened in Redwood Shores; even though a lot of traffic studies have been done, the most comprehensive traffic study was done on the Bay West Cove Project, and in that staff took all the cumulative trips and added it to the traffic gener- ated which was used for the Oyster Point Inter- change; Councilmember Matsumoto stated, coming across on Grand Avenue, east of 101 at 5:00 p.m. it took her fifteen minutes to get across; Director of Economic & Community Development Van Duyn stated, with the improvements made, which include widening and the fly over on the Oyster Point and the Interchange improvements at Gateway and the hook ramps on the west side intersection of 101; staff has been able to demonstrate we can do a reduction at Oyster Point, but there is a companion capacity at Grand Avenue because a lot of the trucks southbound on 101 will use the fly over into the east of 101 area, so of the traffic that would normally exit at Grand would find the fly over quicker; Direc- tor of Economic & Community Development Van Duyn stated the Director of Public Works at a meet- ing showed all of the improvements and those in application to CalTrans and these are contributing to pay for the costs, so there is a direct relationship to solve the traffic problem; Councilmember Matsumoto asked if it took into consideration that Council had approved the office complex; no, in the analysis it was generally the land use traffic numbers which were approved in December, that doesn't have the amount of office and research that may occur in the 19 acres; if there is an application, 5/20/98 Page 4 AGENDA ACTION TAKEN 2. & 3. Bay West Cove and Gateway Specific Plans - Continued. if they pursue office and R&D we will require an extensive analysis again; keep in mind the cumulative includes the Terrabay and traffic in relationship at Sister Cities Blvd. and 101, so all of that will be part of the cumulative analysis; staff has to be very careful because they have to be able to demonstrate to CalTrans that we are not over build- ing and the mitigation is going to meet with the demand for an affirmative for the Interchange and fly over; if the applicants use flex time would that help; the a.m. times will be extended; staff's concern in the staff report about the impacts of a down market in the hotel business and its affect on the City's T.O.T. revenue, plus concluding lines on additional concern that all hotels are similar and none are full service hotels, and generation of sales tax - Mayor Mullin does not know what that means, for it seems staff is saying it is good, and then saying it is bad; staff is saying that the type of hotel we have been getting is similar and we went a year trying to get a five star hotel, and were looking at Lot//9; staff thinks they have a good balance in the potential sales tax in the Shearwater Project and T.O.T; Mayor Mullin stated those things could have been spelled out better in the staff report; subsi- diary use of the park and restaurants are critical components; Mayor Mullin invited anyone that chose to speak to come to the microphone. Mr. Paul Paradis, Hines, stated they are the owners of 601 and 605 Gateway Blvd., the two mid-rise buildings. He stated they also are the owners of Lot //9 where as of today they are building up to six stories on a new building at 701 Gateway and the leasing is going quite well, and they have been able to get a restaurant on the ground floor. While the lease is not signed, we are satisfied that it will be signed. Mayor Mullin stated the City calls the two mid-rise buildings - sky scrappers. Mr. Paradis continued: his firm thought for the rest of Lot//9 is to build two four story office buildings of 220,000 sq. ft.; they have not designed them yet or had the Board approve them; they came across Core Pharmaceutical that needs 300,000 sq. ft.; he spoke of their new drug used with unstable angina and said they also have a number of other drugs in the R&D stage; Core has been located on East Grand for ten years; now that they have a new drug 5/20/98 Page 5 AGENDA ACTION TAKEN ~,, 9.. 2. & 3. Bay West Cove and Gateway Specific Plans - Continued. they are taking a new step in the biotech world for there is a big difference in being an R&D company with and without a drug; Hines was pleased that Core selected Lot g9 as their preferred location and we have been talking with them for months and seriously for the last couple of months; the 300,000 sq. ft. for Core represents 50% of office space and 50% R&D; he knows that one of the City's concerns is height; the building will be a mix of two and three stories at the corner of Oyster Point and Gateway on the Gateway frontage and will roughly be the same as the four story; the three story will be the same as our height for the four story; we have an architect coming up with a design in keeping with 701 and the two sky scrappers; they are looking to show the Council that it is an attractive site plan; they would like to attract a free standing restaurant or one on the ground floor of the building; some restaurateurs do not believe it is a wise investment in this location for they believe the nighttime will not support the restaurant; he thinks the hotels will help that, particularly because they are limited ser- vice; the other thing he believes Core will do is give us the ability to even expand the Gateway to a larger degree subject to the traffic problems; they would like to come back and discuss another mid-rise building at one of two locations with structured parking and that will continue to bring office space subject to the traffic issue that needs to be carefully addressed; his firm has other options and they are in the original plan entitlement; etc Mr. David Connor stated he was representing Bay West Cove as the owners, who are asking for flexi- bility in looking at the site. We appreciate the fact that staff is going to retail, and we are looking for a retail user. So fare we had Home Depot who passed due to the expense, we have Walmart looking right now, but they don't want to pay the price - it is expensive. He stated that in the plan for the hotels, they are not looking for more rooms, but to spread them out a lot. He stated, he has been in the hotel business longer than the development and when the hotels get over built, it is better to have smaller ones than bigger hotels. In the past when the hotels were in trouble it was in the food and beverage, even after running 50% off ads, and the decreased occupancy really hurts the large hotel not the smaller hotels. He was 5/2O/98 Page 6 AGENDA ACTION TAKEN ~,,~ ~..~ _ 2. & 3. Bay West Cove and Gateway Specific Plans - Continued. one of the smaller hotels that did not run into problems while most went bankrupt and he was in that market place and feels comfortable in that. They are also looking for free standing restaurants and he has one interest coming in Friday, because we also feel the area could use restaurants. Restau- rants do not make money, his lost $10,000 a month in operating a restaurant, for the customers go down town and the locals won't come across the street even after they ran specials. At lunch time most of the people want to spend $5.00, including drink, so you know where you are going and he probably sent out 500 surveys. If the demand is there for retail, then we want to do that, but we are asking to keep it open. He things it is better to have something on the site rather than it being vacant. Mr. Bob Brisbane, Britannia Development, stated his firm brought eight new biotech businesses to S.S.F. He listened to what Council said and there is a problem with a balance and his big concern is expansion and growth of his tenants and new ones coming in and have a great interest in Shearwater in your preferred uses. He thinks they could put a good development together, work with staff and come up with something we can be proud of and they will be four story, but three story. We are talking 300,000 sq. ft. of high end biotech which he thinks will be a credit to our City and if you agree to the use, we will get on with it quickly. Vice Mayor Datzman related: his comments were meant constructively, for when he was first appoint- ed to Council the Manager and key staff sat down and discussed all projects; he looks at the strip where people are going to judge us, for we sit at a meeting and approve three hotels, and he does not know the difference between a hotel and a proposed hotel; he is interested in what the stake holders have to say; he heard from an individual that the first hotels going in are the first to suffer when the econ- omy changes and now he does not know; so now they are saying big box retail and he needs more information to work with for these are important decisions to make on that corridor; revenue is very important; traffic is a valid issue, and he does not know whatever direction is consistent for the best use; hotels need restaurants and yet we cannot host 300 people in S.S.F. He stated that the bayfront property is a precious site, and he wants the best for that site. 5/20/98 Page 7 AGENDA ACTION TAKEN 2. & 3. Bay West Cove and Gateway Specific Plans - Continued. Mayor Mullin stated he shares the Vice Mayor's summary. He has expressed to the City Manager his concern about the number of hotels, because of the economy of Asia and the Pacific Rim. He once did a Barn Inn investment and he would have been better off to throw the money out the window. Director of Economic & Community Development Van Duyn stated he had spent a lot of time trying to get class 4 and 5 hotels, especially on that site, for the staff is concerned about the image in that corri- dor because the R&D profile is a one to two story site. City Manager Wilson related: the issue raised by the Vice Mayor on another point; the Convention & Visitors Bureau of their funding; there has been a question on our minds on how much we could sup- port the Bureau and we really have not come up with a firm strategy or long term idea on what our relationship should be, and he has been working with the hospitality group to develop a proposal so we can come back and have a discussion as to what role that may play; one of the suggestions you will hear is a study of the hospitality industry, it would be multi-phased and one will be hotel use; we heard a lot of the comments from people in the business, but maybe we could have someone looking out for us that talks about hotels and markets and maybe bring it together; the study will be geared on how it affects the Bureau; what we ask is that you not come up with a definitive dialogue for many are looking at what is occurring; the developers have been doing their thing, are moving fast and moving with the market; Paul indicated he has not come forward with a hard plan and now we are suggesting that the Council start the thinking process because there may be proposals coming forward and then you will be more comfortable; we found out there are materials to give you to make you better prepared; this is nothing more than to raise the issue and bring it to your attention; it is dynamic and there could be trade-offs and we are suggesting not to move too quickly, but think about it. Vice Chairman Datzman stated he would like a picture painted as to what is going to happen, for Mr. Connor talked about a free standing restaurant and he is not sure what that means. We have major considerations to make on whether we are players, and he would really appreciate an opportunity to get 5/20/98 Page 8 AGENDA ACTION TAKEN ,~ ,~ ..~"' 2. & 3. Bay West Cove and Gateway Specific Plans - Continued. ADJOURNMENT: ESPECTFULLY SUBMITTED, Barbara A. Battaya, City Clerk City of South San Francisco a fresh perspective of that picture. Councilmember Matsumoto asked if there is an ebb and flow in biotech companies, where if the market went down we would have empty offices. Director of Economic & Community Development Van Duyn sated most of these buildings are leased buildings, so the developers are lining up potential tenants. Mr. Brisbane would build up a product that would be a leased building. Now for other uses, other than R&D, they would be there. He discussed options when a tenant leaves, and there is a list available for R&D companies for there is venture capital available as they grow..He wants to see more R&D, but there may be]imitations and maybe get more land mix uses. M/S Matsumoto/Datzman - To adjourn the meeting. Carried by unanimous voice vote. Time of adjournment was 7:18 p.m. APPROVED. The entries of this Council meeting show the action taken by the City Council to dispose of an item. Oral communica- tions, arguments and comments are recorded on tape. The tape and documents related to the items are on file in the Office of the City Clerk and are available for inspection, review and copying. 5/20/98 Page 9