HomeMy WebLinkAbout2014-02-19 e-packetSPECIAL MEETING
w CITY COUNCIL
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OF THE
°QZIFDR�� 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.
NOTICE IS HEREBY GIVEN, pursuant to Section 54956 of the Government Code of the
State of California, the City Council of the City of South San Francisco will hold a Special Meeting
on Wednesday, the 19`h day of February, 2014, at 6:00 p.m., in the Municipal Services Building,
Council Chambers, 33 Arroyo Avenue, South San Francisco, California.
Purpose of the meeting:
1. Call to Order.
2. Roll Call.
3. Public Comments — comments are limited to items on the Special Meeting
Agenda.
4. Agenda Review.
5. Study Session: Implementation Programs for the Economic Development
Strategy:
a. Downtown Property Development and Disposition.
b. Downtown Improvement Programs.
C. General Economic Development Programs.
6. Study Session: Review of drafts for Superstore Ordinance.
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
9. Adjournment.
Anna M. Brown, Deputy City Clerk
SPECIAL CITY COUNCIL MEETING FEBRUARY 19, 2014
AGENDA PAGE 2
DATE: February 19, 2014
TO: Mayor and City Council
FROM: Patrick O'Keeffe, Economic and Community Development Consultant
SUBJECT: PROPOSED GENERAL ECONOMIC DEVELOPMENT PROGRAMS AND TASKS
RECOMMENDATION
It is recommended that the City Council adopt or amend the following economic development tools
and direct staff to proceed to undertake the following tasks and programs:
Initiate the South San Francisco Business Cooperation Program.
o Business Outreach and Visitations.
o Promote Commercial Private Assessment Clean Energy (PACE) program
o Sales and Use Tax Recovery.
• Augment Business Attraction and Retention Programs and Marketing.
o Update bio marketing for Bio Conference, including marketing plan, contacts to local
developers and businesses for participation, set convention meetings and post
conference follow -up.
o Update the Economic Development Webpage for site selection purposes including the
Commercial Real Estate Directory.
o Create Downtown Branding/Marketing Plan and Business Outreach Program.
• Develop New and Enhance Existing Partnerships with Other Organizations.
• Develop partnership with the new Bay Area Center for International Trade
Development (BACITD) Incubator in San Bruno.
• Support the new Small Business Development Center in the BACITD incubator to
outreach to SSF businesses.
• Work with ChinaSF and China Silicon Valley.
• Maintain memberships with Team California, BayBio, SAMCEDA, and Joint Venture
Silicon Valley.
• Cooperate with Skyline College to develop a new biotech certificate program that can
benefit SSF students and community members.
• Join Silicon Valley EDA (SVEDA).
BACKGROUND
Prior to the elimination of redevelopment agencies, South San Francisco's business attraction and retention
plans relied mainly on land use planning and infrastructure, such as the South San Francisco General Plan
land use designations, the Economic Development Element, the One Stop Permit Center, and
Redevelopment Agency programs, to attract, support and retain the industries that have given us quality
Staff Report
Subject: Economic Development Programs and Tasks
Page 2 of 8
job growth. In addition, the City used Redevelopment Agency programs and funds to focus on
infrastructure improvements in the East of 101 area, purchase of properties for housing development in
Downtown, and purchase the former San Francisco Public Utilities Commission (PUC) properties for
transit oriented development. Specifically, the South San Francisco Redevelopment Agency spent over
$250 million dollars to improve our roads, build a new water treatment facility, improve our parks, provide
affordable housing, and augment the local and regional transportation systems.
In recent years, the City expanded beyond traditional redevelopment and began to use economic
development programs, such as the Career Fairs and education /training programs with Skyline College, to
help retain our high -tech industrial base by helping to train our local community members. We have also
used economic development tools to initiate partnerships with industry leaders (BayBio and Bio), State
economic development agencies (Team California and Go -Biz), educators, and universities (San Francisco
State University and Skyline College).
In 2011, the State of California eliminated redevelopment agencies, leaving cities with fewer tools to
promote business attraction and community improvements. In September 2013, the City Council approved
the budget for the City's Economic Development Program and Work Plan, which included a number of
economic development activities designed to retain and attract new businesses and companies, and replace
the business stimulus tools lost to the demise of redevelopment. The following discussion builds on the
foundation created by Council in the September 2013 budget commitment, and focuses on key activities
for the balance of the current fiscal year and through the next (FY 2014 -15) fiscal year.
DISCUSSION
Recommendation: Initiate the South San Francisco Business Cooperation Program
This program consists of three elements: 1) Contacting the major businesses and developers to assess how
the City's economic development efforts can be tuned to meet their needs, and let them know we are
supportive of their business efforts; 2) Providing information on the City's commercial PACE program to
assist in financing improvements that will save energy for the businesses and achieve our Climate Action
Goals, and providing information on other business support programs such as Employment Training Panel
(ETP) assistance, and the Governor's Office of Business and Economic Development (Go -Biz) financial
programs; and 3) ask for participation in the City's proposed Sales and Use Tax Program that will retain
these taxes locally instead of them being allocated to the County sales tax pool.
The sales tax reporting aspect of the program is designed to assist developers and businesses with the
coding of their expenditures on new equipment and construction materials as South San Francisco
purchases thereby establishing our city as the origin of the expenditure. Numerous cities in the Bay Area
are implementing this program with the assistance of their sales tax consultants (in our case Muni
Financial). The program elements consist of-
t . Analyze the companies and construction projects in the City to develop a target list for inclusion in
the Program.
2. Contact targeted companies and general contractors to explain the BCP service, explore the
possibility of their participation in the program and determine the level of interest and potential for
recovery of sales and use tax revenue to the City.
Staff Report
Subject: Economic Development Programs and Tasks
Page 3 of 8
3. Develop systems for cooperating business and contractors to utilize a direct payment permit to
capture use tax for direct allocation to the City.
4. Review the City's own purchasing, accounting, and tax reporting procedures for additional BCP
opportunities.
5. Monitor the newly implemented procedures and maintain records of all sales and use tax directly
allocated as a result of the BCP.
This program will staffed by a combination of existing staff for the business outreach (Mike Lappen,
Economic Development Coordinator), contract staff for the explanation and follow through on the PACE
program, and the Muni Financial consultants for the sales tax recovery element (this will require Council
to approve a contract at a subsequent regular meeting). Funding for the staff will come from the existing
budget for the Economic Development Department, and the Muni Financial consultant contract will be
funded on a contingent basis from new sales tax proceeds realized by the new reporting procedures.
Recommendation: Augment Business Attraction and Retention Programs and Marketing
Biotech Industry Outreach
The BIO International Convention is the annual conference of the Biotechnology Industry Organization
(BIO), which represents companies and institutions that research, develop and produce innovative
healthcare, agricultural, industrial and environmental technologies. In 2013, more than 15,000 attendees
from 65 countries and 49 states represented start -ups and Fortune 500 companies, regional and national
bioscience centers, state and international biotech associations and academic institutions. This year, the
Convention will be held in San Diego, which will allow the City to showcase our strengths, locally, as the
home to the world's largest biotechnology companies, Amgen and Genentech, and the "hub" of the
northern California biotech industry.
The City Council has directed staff to augment the marketing program for BIO, which includes employing
a marketing consultant, identify goals and measurable results, assist in updating the City's website, and
prepare marketing materials for a specific targeted group of convention attendees. Staff has hired a
marketing consultant to assist in preparing the marketing program including creating the appropriate
marketing materials and identifying the target segment of attendees. Based on our initial discussions with
BayBio, the California Pavilion will continue to showcase the best California has to offer and represents
the best venue for our participation in the Convention. The Pavilion will offer several forums that will
target the following:
• Funding — Companies, especially those from abroad, are constantly seeking funding. Foreign
delegations that come through Northern California are interested in connecting with Bay Area
venture capitalists (VCs).
• Technology - Companies are constantly searching for new technology (licensing from universities
and research institutions). We are discussing with the Pavilion organizers a one day "how to"
session involving licensing specialists from various institutions that can talk about hot new areas of
research and how to partner with them.
Staff Report
Subject: Economic Development Programs and Tasks
Page 4 of 8
Sites- For companies that are looking to move into California, a session, or forum, along the lines
of "we built this city on biotech" might be interesting — focusing on successes of South San
Francisco and San Diego: how they expedite zoning and infrastructure issues, processes they have
in place in order to remain biotech - friendly, and what sets them apart from the rest of the U.S. and
worldwide biotech clusters. Staff will also work with local developers to have marketing materials
available for distribution that show the several million square feet of entitled property that is
available for bio tech uses and development. For this forum and marketing effort, staff suggests
that Assembly member Mullin and City Councilmembers participate as speakers and facilitators for
the forum. Council Members may also want to participate in the SSF booth in the California
Pavillion to distribute site and marketing materials.
• BayBio and BIOCOM are working with the Governor's office to have him stop -by the Pavilion (on
the day when he addresses Convention) and say a few words about state's recent initiatives to
encourage biotech industry growth (tax incentives, etc.). They anticipate that the Governor will
visit the Pavilion on Tuesday.
Economic Development Webpage Update
Over the past few years, ECD staff has participated in several site selection and "Meet the Consultants"
conferences. Many site selection consultants have noted that they will look at a city or county webpage
for information (demographics, available properties, development fees, and incentives) before contacting
staff. In many cases, if the website does not contain site selection data, they will move on to another place
for information. In San Mateo County, Redwood City, Menlo Park and San Mateo have already updated
the economic development pages to include specific site selection material. Currently, City staff is meeting
to update the City's website. ECD staff will work with the Information Technologies Department to create
a specific business information page including the following:
• Expand the City's Webpage for Economic Development and use city data (economic, demographic
and site data) to identify new development projects, site selection and Real Estate opportunities.
• Expand the ECD Webpage to show opportunity sites and vacancies (Commercial Real Estate
Directory).
• Expand the ECD webpage to show incentives, such as PACE and contacts with Go -Biz.
• Work with the Social Media consultant to improve public outreach on economic development by
utilizing new communication channels including Facebook, Twitter and other social media to push
out new information periodically on opportunities and accomplishments.
Downtown Marketing and Business Outreach
Staff recommends basing Downtown oriented marketing and business solicitation on a market assessment
to determine the commercial area's competitive position in the local and regional markets. The assessment
of the competitive position is based on comparing Downtown to El Camino Real, other downtowns in San
Mateo County, and the specific performance of the north county area, which represents the primary
competition for the city and Downtown. The methodology for preparing this market assessment includes
conducting surveys of major development projects, analyzing construction and absorption data,
assembling information provided by the South San Francisco Economic and Community Development
Department, interviewing key brokers and developers, and evaluating secondary source economic data
(such as tax revenues provided by MUNI Financial). The assessment of the Downtown market, in addition
Staff Report
Subject: Economic Development Programs and Tasks
Page 5 of 8
to the general economic conditions in the city, provides a basis from which to calculate the commercial
area's capacity for retail expansion. The market assessment would include the following tasks and
strategies:
• Conduct market research on downtown residents and businesses. Begin to prepare video clips
showing downtown sites for web.
• Develop quantifiable goals and objectives for downtown revitalization.
• Use market research and goals to develop a marketing strategy and action plans to attract new
residents, new businesses and downtown visitors.
• Implement a retail business attraction program, including broker breakfasts and tours.
• Establish ongoing collaborative relationship with local business alliances and brokers to attract
retail businesses.
• Develop a branding strategy per the attached outline
Develop and implement strategies to support and develop local arts, culture, and entertainment.
Downtown Shuttle or Trolley System
Staff recommends that the City investigate funding options and potential partnerships that would provide
daily shuttle service for hotel visitors, South San Francisco Conference Center attendees, and employees in
the East of 101 Area with Downtown South San Francisco. Currently, The Peninsula Traffic Congestion
Relief Alliance manages the employee shuttle system between the East of 101 area and the BART and
Caltrain stations. This shuttle system also links the South San Francisco Conference Center with the two
transit centers but these services bypass our Downtown. For visitors, the hotels manage shuttles to San
Francisco International Airport and shopping areas in San Francisco, but not to Downtown South San
Francisco. The "Downtown Dasher" service is the closest transportation system that offers rides between
the East of 101 area and Downtown. The Dasher service picks up employees in the East of 101 area daily,
between 11 am and 2 pm, and drops them off in Downtown. The service requires that the employee have a
taxi voucher from the sponsoring employer and a reservation, which is cumbersome.
The City could investigate the feasibility of adopting a free shuttle system or trolley similar to Burlingame
to run between East of 101 businesses and hotels to the South San Francisco Downtown. The `Burlingame
Trolley," managed by participating hotels, provides free shuttle service from the hotels the commercial
neighborhoods at Broadway and Burlingame Avenues. The shuttles are funded by the City of Burlingame,
Peninsula Joint Powers Board, San Mateo Transit District, Bay Area Air Quality Management District,
City /County Association of Governments of San Mateo County, Downtown Burlingame Business
Association, and the Broadway Improvement District. A similar multi- source financing structure can be
explored for a South San Francisco shuttle/trolley.
Recommendation: New and Continuing Partnerships
Bay Area Center far International Trade Development (BACITD) Incubator
Staff recommends the City of South San Francisco support the Bay Area Center for International Trade
Development (BACITD) "Business and Entrepreneurship Center and Center for International Trade
Development" at Skyline College. The Center is designed to help small - and medium -sized enterprises
find opportunities in international trade. Using BACITD, the City of South San Francisco would be able
Staff Report
Subject: Economic Development Programs and Tasks
Page 6of8
to offer our businesses assistance in several forms, such as business improvement grants and loans to
qualified merchants, and business planning and consulting assistance.
The Business Incubator is being designed to support entrepreneurship through the mentoring, instruction
and connection of Skyline College's students to information, resources, expertise and innovation. The
incubator will provide the necessary tools to achieve business success and have a positive impact on
student learning objectives. The integration of business, education and training with an emphasis on
entrepreneurship and competencies required by the new economy, provides new opportunities for workers,
small companies and local business districts.
The incubator (also known in some areas as startup hubs) will allow Skyline College to institutionalize
entrepreneurship programs on campus and will result in connecting the Youth Entrepreneurship Program
(YEP), Skyline College certification programs and the Center for International Trade and Development
(CITD) to other entrepreneurship opportunities that will leverage both training and resources. By
connecting additional programs such as the Community Education Program, San Mateo County
Workforce Investment Board and Small Business Development Center, the incubator will facilitate the
interconnection between the college and the community. The incubator program provides the opportunity
to demonstrate the importance of a positive and sustainable town/gown relationship and its ability to
enhance and invigorate the economic vitality of the area. The following business sectors will be targeted:
• Bio tech firms
• Green businesses
• Entertainment, social media
• Women -owned businesses
• Veteran -owned businesses
• Youth Employment Program participants
• Tourism/hospitality businesses
• Other entrepreneurs that are identified by the college and advisory board that would benefit from
start-up /incubator services.
SBA Assistance far Local Businesses
There continues to be a need to help existing business remain in business or help entrepreneurs start a
business. Many individuals lack the skills to prepare a realistic business plan or test the market properly.
Many will use the wrong financial tools (such as a credit card) to start a business. In conjunction with a
new SBA office at the Business and Entrepreneurship Center and Center for International Trade
Development, the City could support the development of a Small Business Development Center that can
provide the following services to our businesses:
• Assisting viable small businesses with developing as well as making necessary adjustments to a
business plan.
• One-to -one counseling to meet individual business needs.
• Referrals to other business programs, resources, and websites.
Staff Report
Subject: Economic Development Programs and Tasks
Page 7of8
• Assist in helping small businesses develop a strong marketing plan.
• Provide information on the SBA Loan Programs and other resources.
ChinaSF and China Silicon Valley Programs
ChinaSF, a program initiated by the San Francisco Chamber of Commerce, has identified the City of South
San Francisco as a regional partner to create better linkages with East Asia. ChinaSF has two offices in
China, Shanghai and Beijing. If ChinaSF has potential inbound deals, they would reach out to us to see if
we can help the company located in our city. Likewise, if we receive inquiries from companies that are
looking for assistance to expand into China's market, ChinaSF will provide them assistance to meet with
the appropriate people in China. A similar organization focused on Silicon Valley was established last year
and reached out to our City to participate in their activities which are the same as China SF. Staff
recommends continued participation in both of these organizations as resources for our businesses and
developers.
Team California
Since 2008, The City of South San Francisco has partnered with Team California to undertake several
economic development outreach activities. In recent years, we have sponsored the California Pavilion at
the Bio International Conventions. This year, Team California has helped us identify emerging Green
Technology companies at the two largest Solar Industry conventions. We have also shared site selection
material. Team California makes it possible for economic development organizations to combine their
business retention, development and attraction dollars to participate in tradeshows, advertise in targeted
publications and provide an internet presence that they would not otherwise be able to achieve. Team
California provides cooperative branding advertising copy that is available for members to customize for
their own campaign Team California organizes its members to coordinate with marketing activities
undertaken by the State of California. Team California provides all organizational and administrative
support for such activates.
Skyline College
Skyline College is currently creating curricula to establish a biotech certification program. Skyline would
like to work with the City to reach out to our companies to help place students in jobs. The City would like
Skyline's help promote career pathways from high school to the workplace with SSFUSD students and
teachers to encourage our life sciences companies to offer more internship opportunities to high school and
Skyline students.
Joint Venture Silicon Valley
Staff regularly meets with the Silicon Valley EDA (SVEDA) to improve regional cooperation and
information exchange. The organization provides support services that can help improve information
exchange, collaboration with real estate brokers, marketing at retail conferences, and access to the
regional -wide Real Estate Information online.
The above programs will be implemented by existing staff as time permits or in response to outside party
events. The bio conference preparation and website updates are recommended as top priorities for the
balance of this fiscal year. The Downtown assessment and marketing program will be undertaken in the
Staff Report
Subject: Economic Development Programs and Tasks
Page 8 of 8
next fiscal year (FY 2014-15). Activities in support of other organizations including the incubator, SBA
center, and Skyline College will be on going and intermittent.
4eiffe By: By:
Pa ck Steven T. Matt s
Economic and CIpHimunity Development Interim City Manager
Consultant
Attachment:
Branding and Marketing Strategy
Branding and Marketing
Define Branding Branding is the process of endowing a product with the power of a
brand. The objective is to teach consumers "who" the products is, what it does, and why
consumers should care. For branding to be successful, consumers must be convinced
there are meaningful and advantageous differences between the product and its
competitors.
Brand components — name, sign, symbol, design.
Branding Management Process
• Identifying and establish brand positioning ( "positioning" is placing and
differentiating the product's meaningful and advantageous differences in the
consumers mind)
• Planning and implementing brand marketing
• Measuring and interpreting brand performance
• Growing and sustaining brand value
Branding's role in Marketing — one of many potential marketing tools available after
identifying the products position
Preparing Marketing Plan necessary first step
A marketing plan for the Downtown will help the City understand what the area has to
offer, how the surrounding environment affects the area, and what the City can do to
satisfy the needs and desires of those it is trying to attract. A comprehensive marketing
plan strives to understand the market environment and to plan out physical and non-
physical changes to capitalize on opportunities. The marketing plan describes a strategy
to position the city as a desirable place to live and run a business.
A marketing plan achieves its results by preparing comprehensive market studies, action
strategies, marketing strategies and evaluation tools. Specifically, it will assess:
• The city's strengths that can serve as a base from which to build on
• Potential growth opportunities
• The City's weaknesses and strategies to improve those weaknesses
• A market niche for the city
• The preferences and amenity needs of target populations and business
• Internal and external organizational improvements needed to achieve goals.
A marketing plan will help identify the Downtown's and City's advantages compared to
other cities and whether these advantages can be converted into brand equity. In the
absence of brandable advantages, the plan creates a road map to achieving these
advantages and communicating them to the public.
Recommendation: Direct staff to continue preparing the Marketing Plan it is currently
working on.
S
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c'�LIFOIR Staff ReD01-t
DATE: February 19, 2014
TO: Mayor and City Council
FROM: Patrick O'Keeffe, Interim Community Development Director
SUBJECT: PROPOSED DEVELOPMENT OF FORD PROPERTIES
RECOMMENDATION
It is recommended that the City Council 1) provide direction to staff on the City Council's desire for
hotel vs. residential development in the downtown, and 2) direct staff to further negotiate with the
developers interested in the Ford properties or issue a Request for Proposals (RFP) to further
explore development options.
BACKGROUND/DISCUSSION
In an effort to take advantage of favorable development conditions, staff has met with two housing developers
and one hotel operator that have expressed an interest in the former Ford properties (see Exhibit A). Staff
undertook these efforts to identify a potential developer for the Ford properties and to take steps to encourage
the State Department of Finance (DOF) to complete its review of the Successor Agency's Long -Range Property
Management Plan ( LRPMP) in a timely manner. On November 19, 2013, the Oversight Board approved the
LRPMP outlining how the Successor Agency would manage the disposition of the former RDA's 32 properties.
Staff submitted the LRPMP to the California State Department of Finance (DOF) but as of yet, has not heard
any comments from DOF.
In this report, staff is summarizing the results of the meetings with the developers and is asking for direction
from the City Council. In providing direction to staff, the Council should keep several factors in mind:
• First, the proposed densities and heights are contingent on the adoption of the Downtown Station Area
Plan (DSAP). Staff estimates to bring the DSAP before the City Council for approval in July 2014.
• Second, depending on how DOF rules on the LRPMP, the City will have to take different approaches to
how it negotiates with developers. For example, if DOF approves the LRPMP as submitted, the City will
be able to negotiate the inclusion of public benefits into the projects that developers will discount from
the price they can afford to pay for the land. If DOF requires that the sale of the properties maximize
revenue for the taxing agencies, then the City will have much less discretion in requiring public benefits.
Third, the uncertainty DOF is causing has a considerable adverse effect on the proposed developments.
The City cannot sell properties or give developers an option to purchase the properties until DOF
approves the LRPMP. It is possible the Oversight Board can approve an Exclusive Negotiating
Agreement (ENA) with a developer, and it is possible DOF will allow the ENA to stand since it is not
conveying property. However, it is unknown whether the City or the Successor Agency will be able to
convey the properties under terms negotiated or how long it will take to actually convey the properties if
the LRPMP must be approved first. Both of these factors may severely slow the progress a developer
Staff Report
Subject: Development of Ford Properties
Page No 2
will make in pursuing the projects. Nevertheless, taking steps to encourage DOF to speed up its review
process by having a developer ready to go will help the City take advantage of current development
interest.
Ford Property Description
The former Ford properties (as described in Table 1 below and Exhibit A) consist of four development sites
totaling approximately 2.18 acres.
Table 1
Site ID I Address Acres
2.1
401 -421 Airport Blvd.
1.06
22
315 Airport Blvd.
0.51
2.4
405 Cypress Ave.
0.20
3.5
Miller Ave. Site
0.41
Summary of Development Proposals
Staff met with the three interested developers to discuss their qualifications, experience, access to capital and
their development plans for the sites. The interested residential developers are Dorfman - Thompson and a
partnership consisting of Roger Stuhlmuller and Sares - Regis. The hotel operator /developer is BPR Properties
Attached as Exhibit B are the plans that were discussed with staff. Please note these are very preliminary
concept and massing plans. Staff has not asked for more specific plans at this stage, but will do so Council
provides direction. Table 2 below summarizes their preliminary proposals:
Table 2
Based on the discussion with the developers, staff believes both residential developers have:
• Strong teams capable of successfully developing the sites
• Extensive experience developing the proposed projects
• Strong financial capacity and access to equity capital
• Proposed feasible preliminary development concepts
In addition, the developers provided initial project proformas and estimate of what they believe they would be
willing to pay for the properties.
Staff also believes the hotel developer has an experienced team and access to capital. However, BPR Properties
did not submit any conceptual development plans that staff could evaluate. Staff is also concerned that site 2.1 is
Dorfman - Thompson
Stuhlmuller/
BPR Properties
Sares -Re is
Sites
2.1 & 2.2 but open to
All
2.1
developing all
Development Type
Market -rate rental
Market -rate rental
Hotel 3.5 -4 Star
housing (mapped as
housing (mapped as
condos)
condos)
Height
6 stories (5 residential
6 stories (5 residential
3 -4 stories
over odium)
over podium)
Units/Rooms
155
266
120 -150
Parking
194 Ground level
400 podium and
60+ surface lot
odium
underground
Based on the discussion with the developers, staff believes both residential developers have:
• Strong teams capable of successfully developing the sites
• Extensive experience developing the proposed projects
• Strong financial capacity and access to equity capital
• Proposed feasible preliminary development concepts
In addition, the developers provided initial project proformas and estimate of what they believe they would be
willing to pay for the properties.
Staff also believes the hotel developer has an experienced team and access to capital. However, BPR Properties
did not submit any conceptual development plans that staff could evaluate. Staff is also concerned that site 2.1 is
Staff Report
Subject: Development of Ford Properties
Page No 3
not large enough to adequately serve a 3 -4 star hotel, the proposed surface parking for the facility and the lack of
specific plans for the remaining parcels.
Residential Development
The City has preliminary proposals from two strong residential developers that have the capacity to bring new
market -rate housing to the Downtown. If the City Council agrees that the qualifications of these developers are
adequate, then the City Council should direct staff to have additional discussions with them to further negotiate
and vet their proposals. To facilitate this process, the Council can give staff direction on the selection criteria
such as:
• Desire to maximize density (number of units)
• Desire to maximize or minimize project massing
• Inclusion of affordable units (potential public benefit)
• Prevailing wage requirements (potential public benefit)
• Offsite improvements (potential public benefit)
Once staff has negotiated and thoroughly vetted the proposals, it will return to Council for a decision on which
developer the Council wishes to undertake the project. Staff will then prepare an ENA with one of the
developers for the City Council to recommend to the Oversight Board for approval and submittal to DOF.
Hotel Development
Based on the attached information received from the hotel developer and the limitations of the site for hosting a
desirable hotel, staff is concerned that the site area will not support the type of hotel Council desires.
Nevertheless, if the City Council believes a hotel is in the best interest of the City and the taxing agencies, staff
can continue discussion with BPR Properties or seek out proposals from other hotel developers. One aspect of
the hotel concept that cannot be matched by a residential project is hotel tax revenues that could approximate
$500,000 or more annually.
Request for Proposals
If the City Council believes the proposed developments or the qualifications of the developers are not suitable,
or that the City does not have sufficient options, then the City Council should direct staff to draft an RFP to
identify additional developers and options.
CONCLUSION
It is recommended that the City Council 1) provide direction to staff on the City Council's desire for hotel
vs. residential development in the downtown, and 2) direct staff to further negotiate with the developers
interested in the Ford properties or issue a Request for Proposals (RFP) to further explore development
options.
By:
Pa rick O'Kee
Economic velopment Consultant
Attachment: Exhibit A — Ford Properties Map
Exhibit B — Concept Plans
Approved:
Steven T. Niattas
Interim City Manager
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Staff ReDort
DATE: February 19, 2014
TO: Mayor and City Council
FROM: Patrick O'Keeffe, Interim Community Development Director
SUBJECT: PROPOSED DEVELOPMENT OF 310 -320 MILLER AVENUE
RECOMMENDATION
It is recommended that the City Council review and provide direction to staff on one of the
following development options.
1. Brookwood Equities Mixed - Income Development — Review the design concepts and
proposed financial assistance for a 55 -unit mixed- income housing development and
direct staff to negotiate a collaborative development agreement with Brookwood
Equities (Brookwood) for the City Council's approval for the proposed development
attached here as Exhibit A; or
2. Rotary Club Senior Affordable Housing Development— Review design concepts for a
69 -92 unit senior affordable development and direct staff to Negotiate an Exclusive
Negotiating Rights Agreement that will lead to a Development Agreement with the
Rotary Club for the proposed development attached here as Exhibit C; or
3. Market -Rate or Mixed - Income Development — Direct staff to draft a request for
proposals (RFP) to solicit additional concepts for the site for either a 100% market -rate
development or a mixed- income project
BACKGROUND /DISCUS SION
The dissolution of Redevelopment Agencies ( "RDA ") by the California Legislature has eliminated
the City's main tool for economic development and affordable housing. With Redevelopment, the
City had a robust and sustainable funding source for both types of initiatives. Without RDA, the City
faces an era of limited resources. The former RDA acquired the residential properties at 310 -314
Miller Avenue. However, since these were housing assets, the California State Department of
Finance (DOF) allowed the Successor Agency to transfer these properties to the City and are
therefore not subject to disposition. These residential properties, combined with the parking lot at
318 -320 Miller Avenue, create an ideal site for a new housing development.
All of the proposed options would require the adoption of the Downtown Specific Area Plan (DSAP)
in order to achieve the densities being requested. All options would also require a density bonus
since the proposed projects exceed the standard densities being contemplated in the DSAP. Staff
currently estimates the City Council will review the DSAP in June or July 2014.
Staff Report
Subject: Development of 310 -320 Miller Avenue
Page No 2
OPTION t- Brookwood Mined- Income Development
The assemblage consists of three affordable residential properties and a parking lot on the 300 block
of Miller Avenue. The site is well- suited for a 55 -unit mixed- income housing development. Pursuing
a mixed - income development will bring in higher income residents to support the area's retail and
restaurants, and produce housing opportunities for east of Highway 101 employees. Staff believes the
best way to spark development of market -rate housing in the downtown is to participate in the
development of a model project on City -owned land.
There are many reasons why market -rate residential development has not occurred in the downtown,
chief among them are:
• Based on general demographics, developers consider the downtown area a low - income
neighborhood
• The downtown area is an unproven area for market -rate apartment and condominium
development
• Development sites in the downtown are quite small ( <I acre) making projects more
challenging. Smaller sites eliminate the economies of scale achieved with 100+ unit projects
that developers seek and reduces the number of capital sources interested in funding these
projects.
Notwithstanding these challenges, staff believes a mixed- income rental project with the majority of
the units at market -rate is feasible if the City provides financial assistance for the affordable units
using housing funds.
Mixed - Income
A mixed - income project on Miller Avenue would include a minimum of eight affordable units, thus
preserving the number of affordable units that currently exists on the site. Per current affordability,
five (5) units would be affordable to very -low income tenants at 50% Area Median Income (AMI)
and three (3) units would be affordable to low - income tenants at 80% AMI. The new development
would replace older, run down units with modern units that would greatly improve tenants' living
situation. Increasing the number of affordable units to 11 with three (3) additional units affordable at
80% AMI would meet the City's Inclusionary Housing Ordinance requirement and justify the use of
additional housing funds to facilitate the development of the project. With the affordable units, the
income mix would be 20% affordable to meet the Inclusionary Ordinance's obligation and 80%
market -rate to meet the goal of creating housing opportunities for higher income east of Highway
101 employees.
Financial Assistance
Given the challenges of developing smaller sites, the City can ensure the development of market rate
housing within a mixed - income project by providing a portion of the project funding. The City's
participation makes the project feasible and attractive by reducing entitlement and financial risk. By
reducing these risks, the developer and the equity investors will be more willing to develop a smaller
project ( <100 units) in an unproven geographic market. Furthermore, under a collaborative
agreement, City staff will work with the developer who will manage the design, entitlement and
construction activities of the project. Such collaboration will ensure the development meets the
Staff Report
Subject: Development of 310 -320 Miller Avenue
Page No 3
City's design and quality standards. To participate in such a project, the City would contribute the
land (via sale or through an unsubordinated ground lease) and a limited amount of affordable
housing funds into the project. The private sector would contribute the bulk of project management
and investment including arranging the balance of the equity and debt financing.
Because the new development will need to include a minimum of eight affordable replacement units,
City staff is working to identify and bring additional public and quasi - public funds to the project.
Bringing in outside funds will allow the City to stretch its financial resources and potentially pursue
additional development projects at Grand - Cypress (201 -219 Grand Avenue) and at 418 Linden
Avenue. Combined, these three projects would create 111 new units in the downtown, 89 units
(80 %) of which will be market -rate and 22 units (20 %) of which will be affordable. City staff has
had several conversations with the Housing Endowment and Regional Trust (HEART) of San Mateo
County to encourage them to contribute $1.35 million to the Miller Avenue project (and
approximately $750,000 to a project at Grand /Cypress) which will support the cost of the affordable
units. HEART has not confirmed it is willing to make a financial commitment, but conversations
with them have gone very well. City staff has also met with several union pension funds to raise
equity funding for the project and conversations are progressing well.
Brookwood Development Proposal
The City has received a proposal for the redevelopment of this site from Brookwood. The Principals
of Brookwood includes Shepherd Heery, Brookwood's CEO and co- founder whose experience
includes major high -rise projects in South San Francisco, Atlanta, Oakland, San Francisco and
Tokyo; Alan Katz, Brookwood's president whose experience includes being Senior Vice President of
Development at Stockbridge Real Estate Funds and developed Park Place at Bay Meadows, a mixed -
use transit oriented development in San Mateo; Jelani Dotson whose experience includes 12 years of
professional design and development experience on Bay Area Properties both as sponsor and
consultant. The proposal from Brookwood is illustrated in the attached concept plans and would
consist of approximately 55 rental units in four stories over a ground level parking podium of 55
spaces (1.1 ratio). Brookwood proposes the following construction financial structure for the $25.4
million project:
• 60% Debt (loan) from lender ($15 million)
• 25% Cash Equity from private sources ($6.3 million)
• 9% Cash Equity from public sources (City and potentially HEART) ($2.4 million)
0 5% Land contribution equity by City ($1.2 million)
• 2% Deferred Brookwood Developer Fees and potential cash contribution ($0.45 million)
It is typical in today's development climate for a project to secure only 60% debt financing and the
balance from more expensive equity financing that bears higher interest rates. A portion of the equity
is projected to be contributed from public sources to offset the reduction of rental income from the
eleven below market rate units and the inclusion of higher construction costs (15 % -20% premium)
for prevailing wage labor. Paying prevailing wage will be a requirement of the public financing. This
is a typical financing arrangement for a development that includes affordable units, and when
structured with a private developer is often referred to as a public- private partnership (CP3).
Because of the way equity investors and lenders traditionally finance projects the property owner (the
City) and the developer generally bear the bulk of the initial pre - development cost burdens. Equity
Staff Report
Subject: Development of 310 -320 Miller Avenue
Page No 4
investors and lenders generally do not commit funds until after the project is entitled, and in many
cases not until after the construction drawings are approved, the contractor has established a
contractual price and the building permit is ready for submittal (i.e. the project is shovel ready).
Therefore, the City would have to contribute its portion of the funding for the affordable housing
component to the project early on. Brookwood is also proposing to contribute $450,000 to the project
primarily through deferred developer fees but also through possible cash contributions yet to be
negotiated. The City's early stage funding would serve to pay for the pre- development costs of
getting the project entitled. Entitlement costs include $150,000 for architectural services, $160,000
for engineering, geotechnical, waterproofing, acoustical and various other required consultant
services, and $216,000 to Brookwood for project management. Once the project is entitled, it is
expected other private equity sources will begin contributing for the remaining predevelopment costs
of preparing Bridging and construction documents. Upon completion of construction documents,
lenders and private equity investors will finance the remaining costs of the $25.4 million project
Risk
The benefit of a collaborative agreement with a market -rate developer instead of a nonprofit
developer is that this type of collaboration will enable the City to recover its capital contribution and
reinvest this money into future projects. This model differs substantially from other affordable
housing developments the City has assisted in the past. In past projects with Mid - Peninsula Housing
and Bridge Housing, the City's funds were permanently invested in the project. Under the proposed
collaborative agreement, the project would return the City's initial capital and a fair return on
investment. Despite returning the City's capital, the units are slated to remain affordable in
perpetuity as they would if the proj ect were developed by a nonprofit developer. The other benefit of
a market -rate developer is the ability to include a higher percentage of market -rate units consistent
with the City Council's goal for the Downtown.
As with all development, this project would entail certain risks. Key risks that are inherent to real
estate development include entitlement risk, construction, quality and cost risk, financial risk and
market risk. City staff will work with the developer to mitigate these risks to acceptable levels as
described below:
• Entitlement Risk -- With the City being the entitlement regulatory body, the City can mitigate
some of this risk by influencing design decisions, facilitating public outreach and directly
communicating with the developer on an ongoing basis. From the start the design team will
receive continuous and collaborative feedback from the City thus reducing the possibility that
the project submittal would not meet the City's standards and objectives.
• Construction, Quality and Cost Risk - To mitigate construction cost risk and to reduce the
risk of disappointment over design and quality control issues, staff recommends using the
Bridging Method of project delivery, a construction method whereby a portion of the design
work is completed before a design -build contractor is hired. By using Bridging the City and
developer will be able to dramatically reduce unforeseen construction risk and excessive
change orders that tend to plague many construction projects. Although Bridging may
marginally increase soft costs (as much as 5 %), it reduces the overall development costs. The
benefit of substantially reducing change orders is extremely important and will reduce the
Staff Report
Subject: Development of 310 -320 Miller Avenue
Page No 5
chance that the City and investors will have to contribute additional capital once construction
is underway.
Financial Risk — By virtue of being the land owner and paying for the entitlement costs, the
City will be carrying some of the financial risk. The City's risk will come early since it will
be a primary funder ofpredevelopment costs. Conceivably, the City could invest a substantial
amount of money to get the project entitled and then not have it go forward. If this occurred,
however, the Citywould still own an entitled project that could be sold with entitlements for
an enhanced price allowing the City to recover its investment. The City can stipulate in the
collaborative agreement that the land will not be conveyed until the construction loan closes.
• Market Risk — The only risk the City cannot mitigate is market risk. Barring another great
recession, staff believes the rental housing market will remain strong in the Bay Area over
the next few years. At a minimum, the City will meet its goal of enhancing the downtown
should the project come on line during a significant downturn.
Additional information about this project is provided in Exhibit B, Frequently Asked Questions
(FAQ) attached to this report.
OPTION 2 — Rotary Club Senior Housing Development
Development Concept
The City has received a proposal for the redevelopment of this site from the South San Francisco
Rotary Club (Rotary) and American Baptist Homes of the West ( ABHOW). The development
proposed by Rotary consists of 69 residential units in three stories on a podium above ground floor
parking and 6,000 square feet commercial space that would be leased to a nonprofit service agency.
An alternative design plan would add one story and increase the number of units to 93. HKIT
Architects has prepared preliminary conceptual design plans attached as Exhibit C. The residential
project consists of 66 one - bedroom units, and three two - bedroom units, one of which will serve as a
resident manager's unit. The residential portion of the development includes a 1,250 square foot
community room and 2,713 square feet of lobby and office space, in additional to the ground floor
commercial space for a social service agency. Thirty -four (34) will be provided yielding a parking
ratio of 1:05. The alternative 93 unit design adds 23 one - bedroom units and one two - bedroom unit.
Except for the one resident manager unit, all units will be rented to households whose income does
not exceed 50% of the area median income.
Rotary Development Team and Financing
Rotary's Board of Directors includes President Ed Bortoli (South San Francisco Scavenger), Vice
President Houston Lawrence (Prospect Mortgage) and Board Members Henry Kamilowicz, Bruce
Wright and Pete Carcione as set forth in their proposal letter in Exhibit D. Rotary has assembled a
team that includes ABHOW as a development partner, Arnie Fischman (a housing consultant), HKIT
Architects, Goldfarb & Lipman and others. Rotary has the following financial structure for the 69-
unit, $24.7 million project (Rotary has not provided a financing plan for the larger development
option):
17% Debt (loan) from lender ($4.2 million)
35% Equity from Low - Income Housing Tax Credits ($$.6 million)
Staff Report
Subject: Development of 310 -320 Miller Avenue
Page No 6
• 4% Equity from a public sources (City and/or County) ($1 million)
• 5% Land contribution by City ($1.2 million)
• 39% Rotary Plaza Capital Contribution ($9.7 million)
As noted above, Rotary will seek funding from the County of San Mateo through a competitive
process. If the County funds the project, the project will have to meet the County's residential
referrals for special needs. If the County does not fund the project, the City may need to make the
project's $1 million public cash contribution.
Rotary's senior affordable project does not meet the City Council's goal of creating new market -Tate
housing but does provide a substantial number of affordable housing units for seniors in close
proximity to shopping and transit. The development and entitlement risk of this alternative is lower
since Rotary has the financial resources to pay for the predevelopment costs.
OPTION 3 — Market -Rate or Mixed - Income Development RFQ
If the City Council does not believe either of the alternatives listed above address the City Council's
goals, an alternative to collaborating with Brookwood on a mixed - income development or an
affordable project by Rotary is to shop the site to other market -rate housing developers who would
use traditional financing means to develop the property.
As stated earlier, an unproven market for market -rate projects and the size of the site will make it
challenging to find a developer willing to develop this site without public investment. In addition, the
City would face challenges replacing the existing eight affordable units if the project only consists of
market -rate units.
Another variation of this option is to issue an RFP for a mixed - income project with City financial
participation to market rate developers who may have the financing capacity to increase the
developer equity contribution to pay for the entitlement costs thereby reducing the City's risk and
increasing developer commitment. Brookwood could resubmit a proposal as part of the RFP process.
FUNDING
The City has approximately $4,233,739 in cash and cash equivalents that can be utilized for
affordable housing purposes. This amount includes $2.38 million in housing bonds. The City also
has $4,878,537 in affordable housing land assets that can be converted into cash assets through land
sales or, in the case of the properties on Miller Avenue, contributed towards a major housing
development. These assets facilitate the City's ability to participate in the development of an
affordable or mixed- income project.
Staff recommends that the City utilize the former Redevelopment Agency's $2,381,532 housing
bond funds for the cash contribution to either the mixed - income or senior housing projects.
Committing the bond fiends to the project would eliminate the possibility of losing these funds to the
State of California in the future.
Option 1 Funding (Brookwood)
Staff Report
Subject: Development of 310 -320 Miller Avenue
Page No 7
As currently proposed by Brookwood, the City would contribute the land, valued at $1,225,000 and
an estimated $1,044,800 in cash to the project (total $2,269,000). Upon project disposition in 10
years after construction completion, the project would return to the City its equity plus interest based
on the performance of the project (total estimated return of $5,379,245 if the project performs as
planned). This scenario also envisions HEART contributing $1,350,000 to the project.
In the event HEART decides not to participate in the proj ect, or at a reduced amount, the City would
need to make up the difference. In this case, the City's maximum cash contribution would be up to
an estimated $2,394,800 (total $3,619,800 including land). Once again, based on theperformance of
the project, the developer would return the City's total increased equity plus interest (total estimated
return of $9,048,220 if the project performs as planned).
Option 2 Funding (Rotary)
Funding for the Rotary option would consist of a donation of land valued at $1,225,000. Because of
new tax credit investor requirements, the City would have to sell the land to Rotary for $1 instead of
placing a silent loan against the property as has been the practice in past affordable housing
developments. If the County of San Mateo does not fund this project, the City would also need to
make a cash contribution of $1 million ($2,225,000 total potential contribution). The $1 would be
permanently invested and not refunded to the City as long as the project remains affordable.
CONCLUSION
It is recommended that the City Council review the design concept for the 55 -unit, mixed - income
housing development and the senior housing project at 310 -320 Miller Avenue and provide direction
to staff. The City Council should determine is staff should:
1. Negotiate a collaborative development agreement with Brookwood for the City Council's
approval for the proposed 55 -unit, mixed - income development attached here as Exhibit A; or
2. Negotiate an Exclusive Negotiating Rights Agreement that will lead to a Development
Agreement with the Rotary Club for the proposed 69 -92 unit senior affordable development
attached here as Exhibit C; or
3. Draft a request for proposals (RFP) for Council approval to solicit additional concepts for the
site for either a 100% market -rate development or a mixed - income project.
Pafrick O'
Economic
Attachment:
�7
�S Approved:
;ee Steven T. Mattas
velopment Consultant Interim City Manager
Exhibit A — Brookwood 310 -320 Miller Ave. Concept Plan
Exhibit B — Brookwood FAQs
Exhibit C — Rotary 310 -320 Concept Plan
Exhibit D — Rotary Proposal Letter of January 28, 2014
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EXHIBIT A
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EXHIBIT B
Frequently Asked Questions (FAQ)
310 -320 Miller Avenue Mixed- Income Development
1. How did Brookwood become involved in this project?
Prior to the dissolution of redevelopment, the Redevelopment Agency selected Brookwood to
develop a market rate housing project on City owned property at 418 Linden Avenue. The
Redevelopment Agency selected Brookwood because of its experience in local development and its
expertise and track record for change order control using the Bridging Method of project delivery.
Following the dissolution of redevelopment agencies, Brookwood proposed to South San Francisco
our Collaborative Public Private Partnership model (CP3) for the development of several downtown
sites.
2. Is the risk /reward for the public funds fully vetted? Are rents and eventual sale prices too
aggressive?
Rent Pricing
Brookwood assumes the following:
• Current market -rate rent ($2.80 /nsf) reflects the average rent rate for relatively new
developments along El Camino Real including Archstone South San Francisco and Archstone
San Bruno. Brookwood assumes similar rents are achievable in the downtown based on the
following:
o Location (proximity to transit and highways, major job centers, and downtown SF)
o Amenities (restaurants, retail, government and parks etc.)
o Quality and character of the downtown
o Quality and character of the proposed new development
Brookwood assumes a 5% rent growth rate through 2017. Over the past two years, rents at
Archstone SSF and San Bruno have increased 19% and 14 9/6, respectively. According to
numerous third -party research reports, rents are expected to normalize to 3 -5% over the next
five years due to increased supply. Strong Bay Area economy and overall housing shortage
expected to keep rent growth rates elevated.
• Brookwood assumes a 3,5% rent growth rate after 2017, in -line with historical growth rates
for the Bay Area.
Page I 1
-4-
Sales Pricing
Brookwood assumes the following:
• Current market rate sales pricing ($475 /nsf; $475,000 for a 1,000sf unit) reflects an estimate
based on comparable sales information for existing units at Peninsula Mandalay (equal to), as
well as single family homes within a 1 -mile radius of the sites.
Brookwood assumes a 3.5% sales price growth rate. According to the Case - Shiller Home Price
Index, San Francisco MSA home prices increased 4.4% annually, on average since the year
2000.
Note on Pricing: New development has not occurred recently in the downtown. This limits the
comparable sales data for the sites. However, Brookwood has established price targets that are
consistent with the data and trends on the Peninsula.
3. Are the project costs and fees being charged by Brookwood customary and competitive?
Brookwood's fees are customary and competitive for a development project of this nature in today's
market place . The currently proposed fees are equivalent to fees charged for similar work in 2010.
Brookwood's fees include the additional management time to initiate and manage this initiative and
work collaboratively with the many stakeholders in the proposed process.
Brookwood proposes to contribute all or a portion of the milestone /profit payments in order to
achieve a 5% equity stake in the project (skin -in- the - game).
Attached as Appendix 1 is a detailed description of Brookwood's management fees and project costs
as they compare to the fees and costs an affordable housing developer is proposing to a neighboring
community for a 52 -unit affordable housing project. Brookwood's fees are $205,000 less than the
affordable housing developer's despite the market risk associated with the Miller Avenue project.
4. Interest rates are (already) changing, should the City be concerned about the accuracy of the
predictions?
Brookwood concurs that we are in a rising interest rate environment. Given that the City is interested
in developing this site and will participate in their design, Brookwood believes the projects will move
quickly through the approvals and permitting process. Brookwood is confident that our interest rate
assumptions are reasonable given:
• Market interest rates remain near all -time lows
• Current and expected Federal Reserve interest rate policy and intervention (i.e. Quantitative
Easing and low short-term rates)
Page [ 2
-5-
• According to Bill Conerly — Forbes Contributor:
I think the chance of short -term rates rising over the forecast time horizon are very, very low.
Long -term rates could remain at today's low levels if the economy re- slumps. However, a
surprise rebound in economic growth worldwide could add another percentage point to my
forecast (5.5% for a 30 -year mortgage).
• Pro -forma model sensitivity analysis (chart below) suggests the project's returns have
relatively low /modest sensitivity to interest rate shifts (i.e. 2 -3% impact on IRR for a 200bps
increase in perm loan rates)
• Opportunities to lock in fixed -rate construction /permanent debt within 12 months on a fast -
track schedule, if needed.
Interest Rate Forecast
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Perm Loan Rate
5. If the financial goals are not met, what recourse does the City have for its investment? Does
Brookwood have no money in the deal?
Given the equity -like nature of Brookwood's proposal for the City's funding, Brookwood
acknowledges it is asking the City to take on financial risk. Brookwood is confident, however, that the
proposed structure mitigates the financial risk the City assumes. Brookwood's financial model
assumes the following:
• Upon disposition and based upon the City's early /seed stage investment, each equity funding
source will the share cash flows proportionally. This means that if the project underperforms,
no single equity source would disproportionally bear the brunt of the reduction in disposition
revenue.
• As with all equity /revenue - sharing participants, the City receives a portion of rent annual rent
cash flows:
Page 13
-6-
o Timing of exit (disposition) will also impact the City's returns. A longer holding period
(10 years min.), increases the likelihood the City and Brookwood will all achieve their
return targets.
Brookwood will contribute its milestone payments (and possibly make a cash contribution) to have a
total of $450,000 invested in the project. Together, we believe the above terms align the interests of
the equity /sponsor team — Brookwood, the City, and HEART if it participates.
6. Can you give us any comfort on the interest level of the private investors /lenders in this deal?
Brookwood has discussions underway with a variety of debt and equity sources. Brookwood have
received preliminary verbal interest from TDA Investment group (union -based equity /mezzanine
debt). They have also met with several debt sources that are ready to process our
construction /permanent loan application and make offers.
Commitment from equity sources will require a feasible and approved agreement between
Brookwood and the City as well as any other members of the equity /sponsor team. With a "deal ",
Brookwood is confident it can obtain favorable commitments from debt and equity capital sources.
7. Why does the City's money produces relatively few affordable units at shallow affordability?
This model is fundamentally different from the traditional method of delivering affordable housing. If
the City was not interested in the return of capital and a return on investment (as is the practice with
nonprofit developers), then affordability could be deeper and the number of units could be
increased. Given the goal of financial returns to the public /nonprofit participants, Brookwood believe
the number of units and the level of permanent affordability is a sound public /nonprofit investment.
increased affordability and number of units negatively impacts the returns to the equity /sponsor
team and could impact the marketability for this pilot - project in this relatively low- income
neighborhood.
Brookwood believe the proposed program adheres to the spirit of providing affordable units within
market rate projects, and will result in additional affordable units for the area as well as achieving he
City's goal of creating market -rate housing in the area.
Page 14
-7-
EXHIBIT D
January 28, 2014�4�
Mr. Steven T. Mattas,
Interim City Manager
City of South San Francisco
City Hall
400 Grand Avenue
South San Francisco, CA 94080
Dear Mr. Mattas:
My name is Bruce Wright and I am writing on behalf of the South San
Francisco Rotary Club. The purpose of this letter is to express our serious
interest in the property on the 300 block of Miller Avenue as a potential
site for development of a new low- income senior housing project.
Background
The South San Francisco Rotary Club was chartered in 1951 as part of
Rotary Intemational. The size of the club has varied throughout the years,
and is presently 33 members representing various business throughout
South San Francisco.
In 1972, the dub members had the foresight to build Rotary Plaza, located
at 433 Alida Way. There are 181 units, of which 140 are Section 8 rents
supported by HUD and 41 are fair market rents as determined by HUD.
Our focus for residents is low - income seniors who are ambulatory and do
not require assisted living. The entry age is generally 62, though there is
provision for some entry at age 55. Income certifications are done
annually to qualify residents.
Rotary Plaza was built with a 40 year mortgage that was paid off in April
2012. There are currently no encumbrances on the property and it has
been appraised at about $21 million in its current condition. We are in the
process of obtaining financing to rehabilitate the property, addressing a
remodel of each unit, seismic retrofit, plumbing repairs and landscaping
issues. The estimated cost of the rehabilitation is $15 million, and when
completed will bring the property value in excess of $27 million.
A-
I-f•igyr.11
After the rehabilitation is complete, the property will be recirculated as a SAN Frt,ra CISCO
tax credit property. Rotary Plaza, Inc. will remain a general partner in the Komar CLUB
new entity. We are expecting that after the tax credit partners have DISTRICT 515 0
invested their funds, an estimated $10 million will be available to us for
investment in a new property.
-8-
Pd. BOX 563
SOUTH
SAN FRANCISCO
CA 94090
Mr. Steven T, Mattas January 28, 2014
City of South San Francisco Page 2
New Site Process
Over the past six years, we worked with city staff to identify a parcel of
land where we could build a new project. Initially, we focused on the old
PUC property but a combination of the master plan and needed
infrastructure improvements made that not happen. Other sites within the
city were identified and eliminated, with the exception of the 300 block of
Miller property. We also explored school district surplus property. We met
individually with City Council members to lay out our plans.
None of the examined properties scored as high as the Miller property as
a potential property for obtaining outside tax credit funding. Certainly, the
state decision with regards to redevelopment agencies and property has
delayed the process and lent uncertainty to the ability of the City to work
with us.
We have participated in the Downtown Plan project meetings since its
inception in April 2012. We have been patient to wait for the plan which at
that time R started was expected to be final by September 2013. The final
plan has not yet been released, but our understanding is that nothing we
are proposing is contrary to the plan and is in fact desirable within the
plan.
Relative to the desired site, we put together a team to prepare to make a
proposal. Within the team, we have already spent close to $100,000 in
preparation for the new site. The team is:
• South San Francisco Rotary Club
• Rotary Plaza, Inc. — board of directors
o President, Ed Bortoli, South San Francisco Scavenger
Company
o Vice President, Houston Lawrence, Prospect Mortgage
o Secretary, Henry Kamilowicz, general contractor
o Treasurer, Bruce Wright, Good & Fowler, LLP (CPA firm)
o Director, Pete Carcione, Carcione's Fresh Produce
: ABHOW (American Baptist Homes of the West) — development
partner
•
Arnie Fischman — housing consultant
• HKIT — architects
• Roberts- Obayashi — contractor
• Community Economics — financial consultant
• Goldfarb & Lipman, LLP — attorneys
+� Citibank — potential lendor
• Merritt Capital — potential tax credit investor
-9-
Mr. Steven T. Mattas
City of South San Francisco
January 28, 2014
Page 3
Work done by HKIT shows that the site allows for a potential of 69 or 92
units, with ground floor parking and commercial and 3 to 4 stories of
apartments above. This fits on the site that is a current street level parking
lot, plus 3 adjacent houses owned by the City. Rough drawings exist that
show how this is possible.
What We Need
To move ahead, we are looking to execute a site control agreement with
the City for the site.
We believe that we have formed a well - qualified team to make the project
happen. We believe that we will have the funding to accomplish our goals.
We believe that 69 or 92 units of low-income senior housing will be
needed in the future. We believe that our project fits well within the
downtown area and that it would be a boost to that area's economy.
Thank you for your consideration. We look forward to moving ahead and
working together. Please contact Bruce Wright at (650) 876 -7600 or
bwrightQ-cffllp.com for further information and details.
Sincerely,
eP-Wr!Qht
Treasurer, Rotary Plaza, Inc.
Cc: Mayor Karyl Matsumoto
Vice Mayor Richard Garbarino
Councilmember Pradeep Gupta
Councilmember Liza Normandy
Councilmember Mark Addiego
-10-
EXHIBIT C
TAMARACK LANE
_TRASH PROJECT DATA
- . - - -_
I fi' SITE AREA:.5E ACRES
MECH OPTION # I: 3 STORIES TYPE V
14 OVER CONCRETE PODIUM
DENSITY: 123 UNITS ! ACRE
PARKING F.A.R. 33
37 STALLS UNITS: a9
BUILDING AREA:81,87D S.F
FLEX I RETAIL AREA: 6,000 S.F
MECH-1 10 i PARKING STALLS: 37
OPTION #2: 4 STORIES TYPE V
j OVER CONCRETE PODIUM
9 DENSITY: 155 UNITS/ ACRE
F.A.R.: 4.1
UN1T5:93
r7l �> BUILDING AREA: 101,570 S.F.
% FLEX 1 RETAIL AREA: 2,175 S.F.
HOUSING 600 S,F FLM RETAIL PARKING STALLS: 45
A LOBBY OR
8 ADDITIONAL PARKING
STALLS + 2,175 S.F FLEX
--4 r.!
ELEC. OFFICES COURT]
—6� .. �e 7EN""ANCE — p is PARKING SENIOR ENTRANCE ENTRANCE MILLER AVENUE
SITE "A" - 300 BLOCK MILLER AVENUE SENIOR HOUSING - DOWNTOWN SITES
ARCHITECTS March 8, 2012 South San Francisco Rotary
-11-
TAMARACK LANE
PARKING SENIOR RETAIL
ENTRANCE ENTRANCE MILLER AVENUE ENTRANCE
ARCHITECTS
SITE "A" - 300 BLOCK MILLER AVENUE
March 8, 2U I2
-12-
PROJECT DATA
SITE AREA; S6 ACRES
OPTION #1: 3 STORIES TYPE V
OVER CONCRETE PODIUM
DENSITY: 123 UNITS I ACRE
F.A.R.: 3.3
UNITS769
BUILDING AREA: 81,870 ST.
FLEX 1 RETAIL AREA, 6,000 S.F.
PARKING STALLS: 37
OPTION #2: 4 STORIES TYPE V
OVER CONCRETE PODIUM
DENSITY: 165 UNITS I ACRE
EA.R.: 4.1
UNITS: 93
BUILDING AREA: 101,570 S.F.
FLEX 1 RETAIL AREA: 2,175 S.F.
PARKING STALLS: 45
iJ
1— 20'
01 tot
SENIOR HOUSING - DOWNTOWN SITES
South San Francisco Rotary
DATE: February 19, 2014
TO: Mayor and City Council
FROM: Patrick O'Keeffe, ECD Consultant
SUBJECT: DOWNTOWN IMPROVEMENT PROGRAMS
RECOMMENDATION
It is recommended that the City Council
• Direct staff to return to City Council with amended Downtown Improvement Program
Guidelines to include increased facade grants, loans for tenant improvements, architectural
assistance, and program promotion measures;
o Consider allocating $200,000 in one -time General Fund dollars for FY 2014 -15 to
support these activities and direct staff to prepare and return to Council with a
budget to support the amended Downtown Improvement Program;
o Direct staff to prepare a list of key businesses and key business locations to focus the
program on, given limited resources;
• Direct staff to review the feasibility of establishing a Downtown Business Improvement
District (BID)
o Consider allocating $200,000 in one -time General Fund dollars as seed money to
establish a Downtown Business Improvement District
• Direct staff to prepare a list of Downtown improvements to the public right of way that will
directly support new business activity;
o Consider including in the FY 2014 -15 Community Development Block Grant
(CDBG) budget an allocation of $200,000 for public right of way improvements;
• Direct staff to continue to support the homeless outreach programs to decrease crime in the
Downtown and increase the feeling of security for businesses, customers, and residents.
BACKGROUNDIDISCUSSION
The City Council is appropriately looking for new market rate housing in the Downtown to bring
residents (including new residents that are east of 101 employees) with spending power to support the
existing retail and restaurants and to attract new retail /restaurants. The Proposed Development of 310 -320
Staff Report
Subject: DOWNTOWN IMPROVEMENT PROGRAMS
Date: February 19, 2014
Page 2
Miller Avenue Staff Report, addresses how the City is going to create new housing in the Downtown.
However, in order to attract higher income residents, the City needs to make the Downtown a more
desirable place to reside and visit. Staff proposes supplementing the new housing with improvements to
existing businesses and incentives that attract new businesses through downtown improvement programs
and projects. This can be achieved by expanding the City's existing Downtown Improvement Programs,
establishing a Downtown Business Improvement District, funding public right of way (ROW) /streetscape
beautification projects, and continuing to support efforts to decrease crime and homelessness in the
Downtown.
DOWNTOWN IMPROVEMENT PROGRAMS
Existing Facade Improvement Program
The City currently has a Facade Improvement Program (also known as the Commercial Rehabilitation
Program), which is supported by Community Development Block Grant (CDBG) funding. This program
provides small grants and loans to help improve the facades of eligible Downtown businesses. The
current program offers grants for signage and awnings and loans for exterior painting and structural
facade improvements (see table below). The program only covers exterior improvements for Downtown
businesses since only exterior commercial rehabilitation is an eligible CDBG activity. This is a small
scale program, with the City typically helping 1 -3 businesses each year, due to limited funding and staff
Improvement Type Limit
Signs Grant Up to $2,500
Awnings Grant Up to $4,000
Exterior Painting Loan Up to $25,000
Structural Facade Improvements Loan Up to $50,000
RDA- Funded Business Improvement Program
Prior to the dissolution of the Redevelopment Agency (RDA), the City also used RDA funding to provide
more substantial loans (typically $100,000 to $350,000) to Downtown businesses undertaking large scale
renovations (interior and exterior). Unlike CDBG funding, RDA funding allowed the City to provide
loans for interior improvements and remodeling. However, this program is no longer available due to the
loss of RDA funds.
Proposed Actions
In order to make a larger impact on the Downtown, some incentives are necessary to attract stronger
anchor retail tenants and_ restaurants.Terefore, the City needs to resume making larger -scale tenant
improvement loans and expand its existing facade program. The following are potential program changes
the City could make:
• Increase the facade improvement grant maximum to $50,000 for new signage, storefront
improvements, awnings, exterior decorative lighting, etc.
Staff Report
Subject: DOWNTOWN IMPROVEMENT PROGRAMS
Date: February 19, 2014
Page 3
• Supplement grants by providing low interest loans again, up to $100,000, for interior tenant
improvement costs (e.g. restaurant tenant improvements and equipment).
• Pay for an architect on contract to prepare conceptual plans for storefront improvements for key
businesses, either to respond to initiatives by business owners or to stimulate a key business to
think about improvements.
• Increase program promotion efforts by the City and Chamber of Commerce (e.g. information at
the Planning/Building counters, mail program brochures, and personal contact with business
owners).
• Identify key businesses and key business locations to focus the program on, given limited
resources;
Funding
For the current fiscal year, the City only allocated $50,000 in CDBG funds or 5% of the CDBG budget to
the Facade Improvement Program as more funding was needed for housing rehabilitation projects (e.g.
Sundial Apartments) and public facility improvement projects (e.g. Boys and Girls Club). The City has
five areas in which it allocates CDBG funding: public services, housing rehabilitation, commercial
rehabilitation, public facility improvement programs, and program administration. The City allocates
15% of its annual grant to public services and 20% to administration in accordance with federal spending
limits. The remaining 65% gets allocated amongst housing, commercial and public facility improvement
projects.
Although additional CDBG funds maybe allocated to the Fagade Improvement Program, there is a timely
expenditure requirement for CDBG funding which means the City cannot over commit CDBG funds if
the demand or project feasibility is not there. In addition, fagade improvement projects have historically
been more susceptible to delays or cancellation due to more parties being involved (i.e. business owners,
landlords, and contractors) and require more intensive staffing/project management since business
owners often lack knowledge of construction and local/federal regulations. Finally, CDBG funding is
limited to exterior improvements. Due to these issues, staff proposes that CDBG fiends be reallocated to
public Right of Way (ROW) /streetscape improvements (see section below for more information) and that
the Facade Improvement Program be funded with $200,000 in one -time General Fund dollars for FY
2014 -15. Using General Fund dollars gives the City greater project flexibility and these funds are not
subject to any timely expenditure requirements.
Potential Facade bUrovement Program Budget
Grants/Loans $175,000
Architectural Services $25,000
Total $200,000
If the City Council approves of these program changes, in concept, staff will bring this back to the City
Council for final approval and at that time additional costs for staffing would be included.
Staff Report
Subject: DOWNTOWN IMPROVEMENT PROGRAMS
Date: February 19, 2014
Page 4
DOWNTOWN BUSINESS IMPROVEMENTS DISTRICT (BID)
In addition to expanding the City's Facade Improvement Program, the City can look into establishing a
Downtown Business Improvement District (BID) to revitalize the Downtown. A BID is a special benefit
assessment district that allows for an assessment on a property within a defined geographic area, such as a
downtown (no assessment is levied on residential properties or on land zoned for agricultural use).
Revenues from this assessment are then used for a variety of improvements in the area such as
maintenance, security, marketing/promotions, special events, parking, transportation, economic
development, tourism, and capital improvements. The assessment is viewed as a means of supplementing
City funding.
The formation of a BID typically takes 9 -12 months to create. The formation process includes creating a
database of sites, establishing a steering committee, executing a baseline services agreement between the
City and BID, conducting owner outreach, developing a plan, reviewing the plan, allowing time for
protest procedures, creating a resolution of intent and finally adopting the BID. Once the BID is
established an advisory board, consisting of the property owners/businesses, is appointed. A BID would
require a strong private /public partnership, including strong private sector leaders and City support.
In the San Francisco Bay Area there are numerous jurisdictions with BIDs including but not limited to
Burlingame, Palo Alto, Los Altos, San Rafael, Walnut Creek, Oakland, and Emeryville. Millbrae is
considering starting a BID.
Proposed Actions
A BID could be a good mechanism for the City to improve the vitality of Downtown. Therefore staff
recommends that the City Council direct staff to review the feasibility of establishing a BID.
Funding
Although the funding for a BID would be generated through the property assessments, in order to jump
start the creation of one the City Council could consider allocating $200,000 General Fund dollars as seed
money to establish the District.
PUBLIC RIGHT OF WAY (ROW) IMPROVEMENTS
A more immediate action for improving the Downtown that would complement the Facade Improvement
Program and a BID, is to invest in public Right of Way (ROW) projects in the Downtown. ROW projects
would provide a low cost option to make a visual difference in the Downtown. The City is currently
developing the Downtown Station Area Plan (DSAP) which is estimated to be reviewed by the City
Council in summer 2014. The DSAP calls for improving streets and open spaces, supporting local
business along Grand Avenue with new streetscape improvements, and providing flexible open space for
events. Specifically, the DSAP identifies the improvements listed on the following page, which can be
used as guidance for which ROW projects to undertake. Some of these streetscape improvements were
implemented under the Downtown Strategy that was developed in 2009, however many never came to
fruition as the intention was to use RDA funding for these improvements.
Staff Report
Subject: DOWNTOWN IMPROVEMENT PROGRAMS
Date: February 19, 2014
Page 5
Proposed Actions
Staff recommends the following action in order to help jump start the revitalization of Grand Avenue:
• Prioritize and implement the ROW improvements identified in the DSAP (see table below)
• Allocate in the FY 2014 -15 Community Development Block Grant (CDBG) budget $200,000 for
ROW improvements, this includes the reallocation of Facade Improvement Program funds (see
Funding Section below)
Downtown Strategy
Downtown Station Area Plan
Completed improvements
Proposed Improvements
• Flower planters
Pedestrian Environment. Improvements
• Lamppost banners (partial)
• Outdoor restaurant dining
• Newspaper racks
• Wayfinding signage
• Historic clock replica
Intersection Improvements
• Benches (partial)
• Decorative bollards
• Trash cans (partial)
• Special paving
• Permeable landscaping
• Special lighting
• Historical markers at selected
Public Open Space
locations (partial)
• City Hall Plaza
• Gateway Street Plaza
• Linden Neighborhood Center
Streetscape
• Street trees and planting
• Ground plane planting
• Paving
• Tree gates
• Trash cans (partial)
• Bicycle racks
• Light standards
• Public art
• Historical markers
Street Lighting
• Gateway lighting
• Grand Ave & Linden Ave lighting
• Pedestrian street lighting
• Special plaza lighting
• Seasonal/special event lighting
Funding
As mentioned above, it is important for the City to fund projects with CDBG funds that can be
implemented in a timely manner in order to meet the timely expenditure requirements. Therefore, staff
proposes reallocating Facade Improvement CDBG funding to ROW improvements in FY 14 -15 because
these types of projects have a more controllable schedule, involve fewer parties (i.e. only city staff and
Staff Report
Subject: DOWNTOWN IMPROVEMENT PROGRAMS
Date: February 19, 2014
Page 6
contractors), and meet the CDBG activity eligibility requirements. Currently, the City estimates it will
have approximately $200,000 in CDBG funding available for Fagade improvements and/or public facility
improvement projects that can be reallocated to ROW projects in FY 14 -15.
Potential ROW Improvement BudaetI
Trash Cans
$10,000
Flower Planters
$47,000
Benches
$5,000
Banners
$25,000
Tree Lighting (60 trees)
$100,000
Total
$187,000
EFFORTS TO DECREASE CRIME AND HOMELESSNESS
Recently a Homeless Outreach Team or Field Crisis Team (FCT), as it is known in South San Francisco,
was implemented in the City to move the most difficult, long term homeless /transient individuals out of
the Downtown area by placing them in emergency shelters and connecting them with County medical and
rehabilitation services. The City's Downtown Bicycle Patrol officers are working closely with the FCT
and larger scale political and programmatic changes are being made through the City's participation on
the FCT's Case Managers Group and Homeless Steering Committee. The City is also working with staff
at the Industrial Hotel/Tele Care, to mitigate the impact of the County mental health patients loitering in
the Downtown. These efforts are helping to decrease crime and the homeless /transients presence in the
Downtown which in turn will help bring in new residents and business customers. Staff recommends that
the City continue to actively participate in these efforts as they will support the public and private
investment in new housing, business fagade improvements, and public right of way improvements.
CONCLUSION
It is recommended that the City Council direct staff to return to City Council with amended
Downtown Improvement Program Guidelines to include increased facade grants, loans for tenant
improvements, architectural assistance, and program promotion measures; consider allocating
$200,000 in one -time General Fund dollars for FY 2014 -15 to support these activities and direct
staff to prepare and return to Council with a budget to support the amended Downtown
Improvement Program; direct staff to prepare a list of key businesses and key business locations
to focus the program on, given limited resources; direct staff to review the feasibility of
establishing a Downtown Business Improvement District (BID); consider allocating $200,000 in
one -time General Fund dollars as seed money to establish a Downtown Business Improvement
District; direct staff to prepare a list of Downtown improvements to the public right of way that
will directly support new business activity; consider including in the FY 2014 -15 Community
Development Block Grant (CDBG) budget an allocation of $200,000 for public right of way
1 Potential budget currently based off 2008 estimates and does not include staff, shipping, or installation costs.
These estimates will be updated at a later date.
Staff Report
Subject: DOWNTOWN IMPROVEMENT PROGRAMS
Date: February 19, 2014
Page 7
improvements; and direct staff to continue to support the homeless outreach programs to decrease
crime in the Downtown and increase the feeling of security for businesses, customers, and
residents.
By: r Approved: ,_Tj�A at�—
Pa yck O'Kee Steven T. 14attas
ECD Consult kit Interim City Manager
STM: PO: al
a
n
Hy
Staff R
DATE: February 19, 2014
TO: Mayor and City Council
FROM: Patrick O'Keeffe, Economic Development Consultant
SUBJECT: IMPLEMENTATION PROGRAMS FOR THE ECONOMIC DEVELOPMENT
STRATEGY
BACKGROUND
The demise of South San Francisco's robust redevelopment program has left a number of policy
choices for the City Council. Principal among them is the disposition of the property and cash assets
that have accumulated over several years. Equally important are potential economic development
programs and initiatives that will replace the economic stimulus previously provided by
redevelopment.
The Council has already set in motion a key policy change to support new economic development
through the pending Downtown Station Area Plan, which will be considered for adoption in the
summer of this year. Proposed policies in the plan will support new business, commercial
development and residential activity through revised standards for uses, densities and parking. If
adopted, the Council will be supporting new Downtown development with General Plan and zoning
incentives to replace the financial participation that was once provided by the redevelopment agency.
A second key policy decision by Council was the consideration of a very comprehensive list of
economic development activities in fall of 2013 (see attached Economic Development Strategy) and
an amendment of the Operating Budget to fund a focused list of initiatives and staffing to implement
them.
DISCUSSION
February le Study Session Agenda
The purpose of this Study Session is to build on these policy decisions by presenting a number of
implementation programs for Council consideration and direction, including the following:
A. Downtown Property Development and Disposition
1. Ford Properties
2. Miller Avenue Properties
B. Downtown Improvement Programs
1. Fagade Grant and Loan Programs
2. Public Right of Way Enhancement Projects
Staff Report
Subject: Implementation Programs for the Economic Development Strategy
Date: February 19, 2014
Page 2
3. Business Improvement District
4. Security and Homeless Programs
C. General Economic Development Programs
1. Business Outreach Program
2. Business Attraction and Retention Including the Bio Conference
3. Partnership Programs with Other Organizations
Staff Reports and Study Session Presentation
Each of these discussion areas have a corresponding staff report attached, which contains background
information, describes the recommended program and sets forth policy alternatives for the City
Council. The staff report options and programs will be summarized in a power point presentation by
staff at the February 190' meeting. Each program area is discreet and staff will ask for Council
discussion and direction at the end of each major section presentation. Since there is a considerable
amount of material to discuss, staff recommends that the Cit Council accomplish what it can in the
time allotted, and hold over to a Study Session on March 19 any items that cannot be completed on
February 19'x'.
March I9rh Study Session #2
In addition to any items above not completed in February, staff will schedule Council consideration
of the following additional programs and initiatives at a second Study Session in March:
1. Disposition of the PUC Properties.
2. Disposition of Affordable Housing Cash and Other Property Assets.
3. Disposition of the Grand 1 Cypress Properties.
FISCAL CONSIDERATIONS
These proposed programs will require financial support of varying degrees and funding sources. The
disposition of the parcels for residential development will be supported by remaining affordable
housing cash and bond proceeds. Commercial economic development initiatives will require funds
from General Fund sources. Proposed improvements to the public right of way are recommended to
be funded from Community Development Block Grant funds.
CONCLUSION
Although the various Economic Development programs and initiatives to be discussed at the
February and March Study Sessions are broken into segments to facilitate discussion and direction by
the Council, it should be kept in mind that taken as a whole they are synergistic activities that
interrelate and support one another. All vibrant commercial and Downtown areas share the elements
that are being recommended for Council consideration. To sum all of the following information up,
Staff Report
Subject: Implementation Programs for the Economic Development Strategy
Date: February 19, 2014
Page 3
the Downtown and East of 101 tech areas can be supported and made even more successful with the
following areas addressed:
• General Plan and Zoning policies that encourage high density commercial and residential
growth.
• Higher density housing in Downtown that supports retail and restaurant activity, night and
weekend life.
• Retail and restaurants that are amenities for Downtown residents, City residents and East of
101 employees and hotel guests.
• Improvements to the public streetscape that supports the Downtown commercial and
residential uses and makes the area a special place to visit.
• Transportation links that merge the Downtown with East of 101 employees and hotel guests.
• Marketing and branding programs that create a special identity and attraction for South San
Francisco and its commercial areas.
By: Approved:
Patrick O'Kee Steven T. ttas
Economic & mmunity Interim City Manager
Development Consultant
Attachment: September 25, 2013 Economic Development Strategy
SEPTEMBER 25, 2013
Exhibit A
City of South San Francisco
Draft
Economic Development Strategy
Contents
I. Jobs and Workforce Development
A. Create Jobs for City Residents
B. Develop Local Work Force
I1. Support for Existing Local Businesses I Business Attraction
C_ Promote Local Businesses and Other Actions that will Increase Commercial Activity
D. Support Local Businesses
E. Businesses Retention and Attraction
Ill. Capital Improvements, Traffic and Access to Businesses and Shopping Centers
F. Improve Access to local businesses and business centers
G. Capital Improvements
IV. Neighborhood Business deeds Development
H. Ensure Businesses to Meet Neighborhood Needs
I, Improve the Physical Condition of Neighborhood Commercial Districts
V. Other Economic Development Activities
J. Develop the Manufacturing and Industrial Economic Base
K. Promote Arts and Develop Arts as an Economic Development Tool
VI. Public Participation, Land Use Policies and Other Public Policy
L. Public Communication
M. Public Policy
N. Housing
O. Generate Sales Tax Revenue for City
VII. General Program Activities
O. General Program Management
1. Jobs and Workforce Development
a Inhe- fnr City Residents
Policies and Activities
Current
Activity
New or
Expanded
Hours per
Month
Hours to
Set Up
Non -Staff
Program Qt
Increase number of job opportunities for city
Activity
Expanded
Month
Set Up
TBA
residents/widen base of iob opportunities
TBA
1 links between employers and
✓
3
JEncourage
training programs
2
Gather and analyze general and local
employment market data, including all major
✓
1
$
employment sectors
3
Encourage High School District to provide
Sub -Total
4
8
I -
1=TE Equivalent 0.03 0.00
n na.,el.,n I neM Work Force
FTE Equivalent 0.16 0.03
-2-
Current
New or
Hours Per
Hours to
Non -Staff
policies and Activities
Activity
Expanded
Month
Set Up
Program
Improve Workforce Preparation and education
TBA
1 Work with job training agencies and programs
✓
3
to im rove workforce skills
2
Coordinate city employment and job training
with local educational institutions and job
✓
TBA
TBA
training programs
3
Encourage High School District to provide
education and training to meet local work force
✓
✓
20
60
needs
4
Support community wide efforts to provide
English as a Second Language education
✓
1
5
Improve access to information technology as a
V
TBA
TBA
tool to improve workforce preparation
6
Establish agreements with major employers to
provide job training for local youth and monitor
✓
TBA
TBA
progress
7
Continue City practice of providing internships
and mentoring
✓
✓
1
TBA
Ci h_Tn4ai
75
Fn
I -
FTE Equivalent 0.16 0.03
-2-
Il. Support for Existing Local Businesses 1 Business Attraction
C. Promote Local Businesses and Otter Actions that will Increase Commercial
Activity
Sub -Total 12 244 $
FTE Equivalent 0.08 0.13
-3-
Current
New or
Hours Per
Hours to
Hon -Staff
Policies and Activities
Activity
Expanded
Month
Set Up
Program
Promote local businesses (including increase visits
and tourism)
TBA
1
Work with local business alliances and groups
to promote businesses (SAMCEDA, Bay Bio,
4
Silicon Valley EDA, SF Chamber of Commerce)
2
Increase cooperation and coordinate with
Chamber of Commerce, Hispanic Chamber of
✓
3
Commerce and other business groups
3
Create a downtown marketing program
✓
8
240
4
Develop and implement a public "Shop local"
/
TBA
TBA
program
5
Improve image of City
8
Support cultural festivals to complement retail
✓
1
4
7
Add shopper attractions to commercial districts
✓
8
Encourage city businesses to purchase from
./
TBA
TBA
other local businesses
9
Increase hotellconvention center visitors and
✓
3
support. upgrading hotels
10
Promote recreational activities available in city
to stimulate economic activity
Sub -Total 12 244 $
FTE Equivalent 0.08 0.13
-3-
D. Support Local Businesses
, - i otai zo 98 $
FTE Equivalent 0.13 0,05
-4-
Curren t
New or
Hours Per
Hours to
Non -Staff
Policies and Activities
Activity
Expanded
Month
Set Up
Program
Program
Support existing local businesses (and business
LC&L_
retention )
TBA
1
Provide low - interest loans to encourage and
/
TBA
TBA
support local small businesses
2
Providelexpand small business assistance
programs especially those related to capital
TBA
30
acquisition, management training and technical
assistance
3
Strengthen business education programs
(working with Chamber of Commerce or other
✓
4
12
organizations)
4
Communicate economic development trends
and news to business community
✓
2
30
5
Develop a City purchasing policies to support
TBA
local businesses
6
Identify declining businesses and businesses
✓
2
likely to close or relocate
6
7
Identify business niche gaps in city and
✓
10
encourage existing businesses to bride gaps_
8
Use active mechanisms to stay informed of
business needs through such tools as business
$
surveys, customer surveys, personal contact
and business functions
9
Continue to support long -term viability of
✓
2
Iresearch park or other niche cluster
10
Continue business recognition programs such
as business visits and appreciation dinner
✓
2
10
, - i otai zo 98 $
FTE Equivalent 0.13 0,05
-4-
E. Businesses Retention and Attraction
Policies and Activities
Current
Activity
New or
Expanded
Hours Per
Month
Hours to
Set Up
Non -Staff
Program
�
Attract new businesses
TBA
1
Work with Chamber of Commerce to retain
✓
local businesses
2
30
2
Identify and recruit targeted industries
4
20
3
Promote City as "business friendly"
✓
,/
3
20
4
Develop a retail business attraction program
✓
4
40
b
Work with local business alliances, groups and
brokers to attract retail businesses and general
✓
3
businesses
6
Encourage local businesses to help recruit new
✓
retail businesses
7
Attract commercial retail anchors to business
✓
districts
8
Providing site location information to
4
prospective businesses
9
Use city data (economic, demographic and site
data) to identify economic development
2
opportunities
10
Attract and retain industrial businesses by
providing business assistance to industrial and
4
manufacturing businesses
19
Develop new business development and
✓
3
business retention ro rams
Sub -Total 30 110 $
FTE Equivalent 0.20 0,06
Ill. Capital Improvements, Traffic and Access to Businesses and Shopping Centers
F. Improve Access to local businesses and business centers
Policies and Activities
Current
Activity
New or
Expanded
Hours Per
Month
Hours to
Set Up
Non -Sta
Non-Staff
program
Improve customer access to city businesses and
work centers
TBA
I
Support streetscape and fagade design to
improve business identification and shopping
✓
customer shopping ex erience
2
Ensure sufficient parking exists in downtown
3
Monitor parking standards in commercial
districts to ensure they serve the parking needs
✓
of visitors and shoppers
4
Enforce parking standard in commercial
districts to ensure sufficient parking for visitors
✓
✓
and shoppers
5
improve signage directing shoppers to parking
lots
6
Create a shuttle system that circulates
througiftit city's commercial district
7
Encourage business delivery systems to reduce
customer parking demand at peak hours
+/
8
Identify improvements to local- serving
transportation networks
9
Participate in regional transportation efforts
./
Sub -Total 2 0 $
FTE Equivalent 0.09 0.00
-6-
G. Capital Improvements
Policies and Activities
Current
Activity
New or
Expanded
p
HOUR Per
Hours to
Set Up
Non-Staff
Program
Activity
Month
Program
Implement capital and transit improvements to
�
support the local economy
meet needs of adjacent neighborhoods
TBA
1
Recommend parking improvements (including
identify basic goods and services missing in
Increasing parking) to support local businesses
✓
✓
TBA
TBA
2
Recommend lighting and other improvements
Maintain diverse mix of commercial goods and
services in local nei hborhoods
to support local businesses
2
TBA
3
a
Monitor the need for capital improvements to
encourage new neighborhood serving
foster economic development on an ongoing
✓
✓
2
TBA
businesses
basis
4
4
Assist with capital improvements that support
✓
businesses serving neighborhood needs
downtown
2
TBA
5
5
Ensure new development pays full cost of
✓
✓
pro ram
public im rovements
6
Sub -Total
FTF Equivalent
IV. Neighborhood Business Needs Development
H. Ensure Businesses to Meet Neighborhood Needs
6 0 $ -
0.04 0.00
Policies and Activities
current
New or
Expanded
�
Hours Per
Hours to
Set Up
TBA
Activity
IUlonth
Program
Worst with merchant and business organizations to
�
meet needs of adjacent neighborhoods
1
identify basic goods and services missing in
neighborhoods
TBA
2
Maintain diverse mix of commercial goods and
services in local nei hborhoods
3
Implement planning and zoning mechanisms to
encourage new neighborhood serving
✓
businesses
4
Assist in developing and retaining existing
✓
businesses serving neighborhood needs
5
Develop a neighborhood retail recruitment
✓
pro ram
6
Assist in attracting new businesses to serve
✓
local neighborhood needs
Sub -Total 0 0 $
FTE Equivalent 0.00 0.00
-7-
1. Improve the Physical Condition of Neighborhood Commercial Districts
Policies and Activities
Curren t
New or
Expanded
Hours Per
Hours to
Set Up
Non -Staff
Program
Activity
Month
ErnnraM
Provide programs and services to assist
✓
neighborhood commercial districts maintain an
✓
TBA
r
Publicize the economic, social and
TBA
1
Support streetscape and facade design to
environmental benefits of manufacturing and
✓
2
20
improve business identification and shopping
industry
✓
customer shopping experience
Maintain an attractive industrial and
2
Implement capital improvements in
manufacturing area
✓
TBA
TBA
neighborhood commercial districts
Create and /or work with industrial business
3
Create and enhance pedestrian orientation and
associations in industrial areas
✓
✓
TBA
TBA
gathering laces
Attract and retain industrial businesses by
4
Award facade improvement grants and loans to
providing business assistance to industrial and
✓
✓
TBA
TBA
restore and improve buildings
manufacturing businesses
5
Work with property owners to identify and
Preserve land and buildings for industrial using
encourage upgrading of private properties and
land trusts, investment loans and business
✓
✓
reinvestment in redevelopment opportunities
incubators
Sub -Total 0 0 $
FTF Equivalent 0.00 0.00
V. Other Economic Development Activities
J. Develop the Manufacturing and Industrial Economic Base
Policies and Activities
Current
New or
Expanded
p
Hours per
Hours to
Set Up
Non -Staff
Program
Activity
Month
ErnnraM
Protect and strengthen the City's industrial and
✓
manufacturinig base
TBA
1
Publicize the economic, social and
environmental benefits of manufacturing and
✓
2
20
industry
2
Maintain an attractive industrial and
manufacturing area
✓
TBA
TBA
3
Create and /or work with industrial business
associations in industrial areas
✓
TBA
TBA
4
Attract and retain industrial businesses by
providing business assistance to industrial and
✓
TBA
TBA
manufacturing businesses
5
Preserve land and buildings for industrial using
land trusts, investment loans and business
✓
incubators
6
Strengthen the unique economic role of each
business area through zoning and other
/
TBA
regulations
7
Appropriately accommodate needs of
✓
automotive service businesses
TBA
TBA
Sub -Total 2 20 $
FTE Equivalent 0.01 0.01
-8-
K. Promote Arts and Develop Arts as an Economic Development Tool
Policies and Activities
Current
New or
Expanded
Hours Per
Flours to
Non -Staff
Activity
Month
Set Up
Program
Promote locally the entertainment and art culture of
about economic development efforts and policies
✓
TBA
the itv
Issue annual report on city's progress meeting
TBA
1
Develop strategies to support and develop local
economic development goals
✓
4
50
arts, culture, and entertainment
Maintain a accessible public database of
6
60
2
Implement policies and programs to expand
economic development projects, goals and city
✓
and performance, visual and public art
20
✓
demographics
3
Provide grants and assistance to artists and
3
arts or anizations
V11
Sub -Total 6 60 $
FTE Equivalent 0.04 0,03
VI. Public Participation, Land Use Policies and Other Public Policy
L. Public Communication
Policies and Activities
Current
Activity
New or
Expanded
Hours per
yours to
Set Up
Non -Staff
Program
Month
Improve and Increase communication with residents
about economic development efforts and policies
✓
TBA
1
Issue annual report on city's progress meeting
economic development goals
✓
4
50
2
Maintain a accessible public database of
economic development projects, goals and city
✓
4
20
demographics
3
Increase and improve communication with the
public about new business developments
✓
4
10
Sub -Total 12 80
FTE Equivalent 0.08 0,04
-9-
M. Public Policy
Policies and Activities
Current
Activity
New or
Expanded
Hours Per
Month
Hours to
set Up
Nan -Staff
Program
Establish and monitor public policies to encourage
Activity
Expanded
Month
Set Up
Program
economic development
TBA
1
Conduct periodic reviews of economic
TBA
1
improve public awareness about linkage
conditions and reviews of economic
✓
5
between housing and economic development
development strategy
✓
2
20
2
2
Revise Economic Element in the General Plan
✓
TBA
3
3
Encourage local efforts to fund services and
downtown and near transit centers
improvements for business districts such as
✓
4
60
4
optimize housing development including
business improvement districts and
consideration of higher densities
redevelopment areas
5
1housing
4
Create district master plans to help guide
✓
0
solutions
development
5
Support improvements to and transit and
✓
0
transportation network
6
Promote green business policies
✓
1
6
7
Use interdepartmental approach to improving
the physical and environmental condition of
✓
✓
2
commercial areas
8
Encourage housing and job growth
development in an near downtown or other
✓
4
.shopping
districts
9
Encourage job growth and housing near transit
✓
centers
4
101
Manage impacts of economic growth on traffic
and congestion
✓
4
Sub -Total 12 78 $
FTE Equivalent 0.08 0.04
N. Housing
Sub -Total 2 20 $
FTE Equivalent 0.01 0.01
-10-
Curren t
New or
Hours Per
Hours to
Non -Staff
Policies and Activities
Activity
Expanded
Month
Set Up
Program
Use housing as an economic development tool and
romote it
TBA
1
improve public awareness about linkage
between housing and economic development
✓
2
20
2
Encourage mixed use development
✓
3
Focus new housing development in the
downtown and near transit centers
4
optimize housing development including
✓
consideration of higher densities
5
1housing
Encourage development and use of alternative
/
TBA
TBA
solutions
Sub -Total 2 20 $
FTE Equivalent 0.01 0.01
-10-
O. Generate Sales Tax Revenue for City
Policies and Activities
Current
New or
Expanded
P
HOUR per
Hours to
Set Up
Non-Staff
Program
0.15
Activity
Program Staffing Needs
Month
Program
Total FTE
Maintain businesses that provide strong sales tax
Month
YR 1 Equiv.
Total Staff Hours
TBA
recei is to ci
Prioritize economic development strategy goals,
FTE Equivalent
1.02
0.58
TBA
1
Maintain a strong hotel Transit Occupancy Tax
programs and activities
2
40
base
General Program and oversight
2
20
240
2
Modify business tax monitoring system to
permit analysis
v'
TBA
3
Modify sales tax monitoring system to permit
analysis
TBA
Sub - total 2 0 $ -
FTE Equivalent 0.01 0.00
VII. General Program Activities
P. General Program Management
Policies and Activities
Current
New or
Expanded
P
Hours per
Hours to
Set Up
Non -Staff
Program
0.15
Activity
Program Staffing Needs
Month
Hours to
Set U P
Total FTE
General Economic Development Oversight
Month
YR 1 Equiv.
Total Staff Hours
TBA
1
Prioritize economic development strategy goals,
FTE Equivalent
1.02
0.58
1.60
programs and activities
2
40
2
General Program and oversight
20
240
Sub -Total
22
280
$ _
FTE Equivalent
0.14
0.15
Program Staffing Needs
Hours Per
Hours to
Set U P
Total FTE
Month
YR 1 Equiv.
Total Staff Hours
157.00
1058.00
1215
FTE Equivalent
1.02
0.58
1.60
Proposed Program Staffing
Existing Economic Development Coordinator Position 0.82 0.18 1.00
New Community Development Coordinator Position* 0.20 _ 0.40 0.60
Total 1.02 0.58 1.60
*0.4 FTE of New Community Development Coordinator Position will be dedicated to providing on going
Core Services in the Housing and Economic Development Division and 0.6 to expanded economic
development programs
_tr-
Staff Report
Subject: Implementation Programs for the Economic Development Strategy
Date: February 19, 2014
Page 3 of 2
the Downtown and East of 101 tech areas can be supported and made even more successful with the
following areas addressed:
• General Plan and Zoning policies that encourage high density commercial and residential
growth.
• Higher density housing in Downtown that supports retail and restaurant activity, night and
weekend life.
• Retail and restaurants that are amenities for Downtown residents, City residents and East of
101 employees and hotel guests.
• Improvements to the public strectscape that supports the Downtown commercial and
residential uses and makes the area a special place to visit.
• Transportation links that merge the Downtown with East of 101 employees and hotel guests.
• Marketing and branding programs that create a special identity and attraction for South San
Francisco and its commercial areas.
By: ' Approved: , N—.
Patrick 4'Ke1-0m`unity Steven T-
Economic & Interim City Manager
Development Consultant
Attachment: September 25, 2013 Economic Development Strategy
S
0
n
J O
c�L�FOR�� Staff Re-Dort
DATE: February 19, 2014
TO: Mayor and City Council
FROM: Patrick O'Keeffe, Economic Development Consultant
SUBJECT: STUDY SESSION: LARGE FORMAT RETAIL ZONING ORDINANCE
TEXT AMENDMENT
RECOMMENDATION:
It is recommended that the City Council provide comment on the draft Large Format Retail/
Superstore/ Food & Beverage Retail use Zoning Ordinance Text Amendment.
BACKGROUND:
Moratorium Established — Concern Re: Superstore Impact on Grocery Use
In the fall of 2012, the City Council expressed concern about the potential impact(s) a Superstore (Large
Format Retail use) which includes a full- service grocery component, might have on the City's current and
future grocery market. In December 2012, Council adopted an Interim Ordinance that established:
1. A City -wide moratorium on the issuance of use permits, building permits, or any other applicable
entitlement for large format retail or superstore uses; and
2. A moratorium on the issuance of use permits, building permits, or any other applicable entitlement
for grocery uses in the East of 101 area.
The moratorium was extended on January 23, 2013 for 16 months; it will expire on May 26, 2014.
DISCUSSION:
Project Objectives
Based on input and direction from Council, staff established the following project objectives focused on
promoting and protecting various aspects of the community. The project objectives are included below.
Promote:
• The City's existing commercial vitality and economic well- being;
• Economically responsible and fiscally sound land use planning;
• Maintenance of existing commercial uses deemed desirable to the long -term identity of the City;
• Stable neighborhoods by protecting neighborhood -level retail uses;
Staff Report
Subject: Study Session — Draft Lg. Format Retail Zoning Amendment
Page 2 of 5
The intent of the "Grand Boulevard Initiative" for El Camino Real with "Smart Growth"
principles, which include but are not limited to: maintaining walkable neighborhoods; compact
urban form; opportunities for transportation/transit alternatives; and an effective use of available
infrastructure; and
• Mixed -use development along principle corridors, such as El Camino Real and South Spruce
Avenue.
Protect:
• The downtown as the City's physical and symbolic center and focus of commercial activity;
• The City's neighborhood shopping centers as primary market areas for grocery sales and diverse
retail uses; and
• Standalone food and beverage retail sales uses in the community.
General Plan Consistency
The aforementioned Project Objectives are consistent with the following General Plan Land Use Policies:
a) GP Policy 2 -G -1: Preserve the scale and character of established neighborhoods, and protect
residents from changes in non - residential areas.
b) GP Policy 2 -G -5: Maintain Downtown as the City's physical and symbolic center, and a focus of
residential, commercial, and entertainment activities.
c) GP Policy 2 -G -7: Encourage mixed -use residential, retail, and office development in centers
where they would support transit, in locations where they would provide increased access to
neighborhoods that currently lack such facilities, and in corridors where such developments can
help foster identity and vitality.
As well as the following General Plan Economic Development Policies:
d) GP Policy 6 -G -1: In partnership with business and community groups, proactively participate in
the City's economic development.
e) GP Policy 6 -G -2: Establish economic development priorities and undertake targeted investments
to facilitate expansion, retention, and attraction of businesses that meet the City's economic
development objectives.
f) GP Policy 6 -G -3: Maintain and enhance an attractive climate for conducting business in South
San Francisco.
g) GP Policy 6 -G -5: Establish land use priorities based on economic criteria and sound fiscal
planning; reserve sites for designated uses rather than accepting any development.
Staff Report
Subject: Study Session — Draft Lg. Forinat Retail Zoning Amendment
Page 3 of 5
And finally, the following El Camino Real Sub -Area General Plan Policies:
h) GP Policy 3.4 -G -5: Encourage the implementation of the Guiding Principles of the Grand
Boulevard Initiative as adopted by the Grand Boulevard Task Force in April of 2007.
i) GP Policy 3.4 -G -7: Develop the South El Camino area as a vibrant corridor with a variety of
residential and non - residential uses to foster a walkable and pedestrian- scaled environment.
Draft Zoning Ordinance Amendment -- Overview
Since the moratorium was established, staff has been analyzing the potential impact(s) a Superstore could
have on the City's grocery market while also reviewing land use regulations that pertain to this
discussion. After completing a comprehensive economic and land use analysis, and considering the
Purpose Statements and General Plan policies, staff drafted Zoning Ordinance amendments to:
• Prohibit Superstore use in all zoning districts within which a Superstore use may currently be
allowed;
• Prohibit Grocery use within the East of 101 Area; and
• Revise, update and /or add new definitions (Convenience Market, Large Format Retail, Grocery
Store, Supermarket, and Superstore) to clarify the City's intent.
A complete "marred -up" version of the Zoning Ordinance amendments is attached to this staff
report.
Rationale — Prohibit Superstores City -wide
The Large Format Retail /Superstore/Food & Beverage Zoning Ordinance Text Amendments will protect
the economic vitality of the City's commercial businesses (existing and future), including Food &
Beverage uses. Staff contracted with Seifel Consulting to complete one report and one memorandum
evaluating the impacts of Superstores and the proposed amendments on the City's economy. The
Economic Impact Report concludes that:
The addition of a grocery component within a new superstore in the community would translate
into the loss of 5 to 20 percent in grocery sales for existing stores in South San. Francisco;
The addition of a grocery component within a new superstore in the community would
particularly concentrate negative economic impacts on a two -mile radius (Primary Market Area)
that will likely include the downtown commercial area and neighborhood shopping centers, both
of which include conventional and upscale grocery stores, ethnic grocery stores and discount
stores; and
Allowing a Superstore (which includes a grocery component) could also limit the community's
ability to attract certain types of grocers in the future.
Staff Report
Subject: Study Session Draft Lg. Format Retail Zoning Amendment
Page 4of5
The land use memorandum states that the Ordinance amendments (specifically the prohibition on
Superstores City -wide) would have no effect on what could be constructed on individual sites that would
otherwise accommodate a Superstore use.
Rationale — Prohibit Grocery Use in East of 101 Area
Locating grocery stores proximate to residential neighborhoods and with easy access by all modes of
travel (walking, biking, car, and transit) is an important land use strategy to encourage healthy
communities and strong neighborhood commercial activity. By prohibiting any new grocery uses in the
East of 101 area, the City is ensuring that residents have the choice in the mode used to acquire their
groceries, and that the downtown and neighborhood commercial centers remain a focal point in the City's
commercial fabric.
Rationale — Update and /or Add New Definitions
In order to better articulate the City's expectations for various retail and food & beverage related uses,
several definitions had to be updated, and new definitions were added.
DEIR — Public Notice and Comment
A notice of preparation (NOP) was issued by the City on November 6, 2013 to inform agencies and the
general public that an Environment Impact Report (EIR) was being prepared and to invite comments on
the scope and content of the document. A scoping meeting was held on December 5, 2013,
A Draft Environmental Impact Report (DEIR) was prepared for the Zoning Ordinance Amendment and
circulated for the mandatory 45 -day public review period on January S, 2014. The Planning Commission
held a Public Hearing to take comment on the DEIR on February 6, 2014. No substantive comments were
received regarding the DEIR at the hearing. The public comment period will close on February 24, 2014.
Next Steps
Pending the outcome of the City Council Study Session and the comments received on the DEIR, staff
anticipates presenting the Environmental Impact Report and draft Zoning Ordinance text amendments in
the coming months for the required Planning Commission and City Council public hearings.
CONCLUSION:
Staff has completed all of the necessary steps to bring the Large Format Retail/Superstore/Food &
Beverage Retail Zoning Ordinance Text Amendment to public hearings in the coming months. This is an
opportunity for Council to review the Zoning Amendment and provide staff with any comments and/or
direction on the amendments and next steps.
Staff Report
Subject: Study Session — Draft Lg. Format Retail Zoning Amendment
Page 5 of 5
By: a6x,��
Patrick O'Keeffe
Economic Development onsultant
SM /PO /JR/MA/SK/gb
Approved: ".1ti
Steven Mattas
Interim City Manager
Attachments:
• Draft Zoning Ordinance Text Amendment: Large Format Retail /Superstore/Food & Beverage Retail
Large Format /Superstore /Food & Beverage Zoning Ordinance Text
Amendments
The proposed text amendments to the Zoning Ordinance are provided below. Note that only the sections
of affected text are provided. The full Zoning Ordinance with proposed text amendments is available on
the City's website at the following URL: http:Hca-
southsanfrancisco.civicRius.com/index.asp%?NIA --367 (Additions are identified in underline and
deletions in Btr-iketh,-�h.)
1. Revise "Food and Beverage Sales" definitions (SSFMC Chapter 20.620.004 — Commercial Use
Classifications) to differentiate between "Convenience Market ", "Grocery Store ", and
"Supermarket ". The main differentiator is the size of the establishment.
Food and Beverage Sales. Retail sales of food and beverages for off -site preparation and
consumption. Typical uses include food markets, convenience markets, groceries, liquor stores, and retail
bakeries.
Convenience Market. Retail establishments that sell a limited line of groceries, prepackaged food
items, tobacco, magazines, and other household goods, primarily for off - premises consumption and
typically with long or late hours of operation and in a relatively smn" building
that is less than 5,000 gross square feet. This classification includes small retail stores located on the same
parcel as or operated in conjunction with a service station but does not include deliea }esserg pecialty
food shops.
fiesh eut meat.
Grocery Store. Retail establishments that primarily sell food, but also may sell other convenience
and household goods, and could include a delicatessen or specialty food shop, baked goods, frozen foods
fruits, vegetables, meats, cheeses, dairy, and prepared food, and which occupy at least 5.000 square feet
dedicated to sales, but not more than 25,000 square feet of gross floor area.
Supermarket Retail establishments that primarily sell food, but also may sell other convenience
and household goods, and could include a delicatessen or specialty food shop, baked goods, frozen foods,
fruits, vegetables, meats, cheeses, dairy, and prepared food, and which occupy more than 25,000 square
feet of gross floor area, but not more than 80,000 square feet of gross floor area.
2. Add a definition for "Specialty Food Store" (SSFMC Chapter 20.630 — Terms and Definitions) to
further clarify one of the terms used in the revised Food and Beverage Sales definitions.
Add the term "Specialty Food Store" to the summary list of terms (SSFMC 20.630.001 — List of Terms).
Specialty Food Store. A food store of less than 10,000 square feet primarily engaged in selling food stuffs
associated with a particular nationality, religious observance, dig!= practices, or cuisine.
3. Revise "Retail Sales" definitions (SSFMC Chapter 20.620.004 — Commercial Use Classifications)
to differentiate between "General Sales ", "Firearm Sales ", "Large Format Retail ", and
"Superstore ". Create a new definition for "Superstore ".
Retail Sales.
-1-
General Sales The retail sale or rental of merchandise not specifically listed under another use
classification. This classification includes retail establishments with 80,000 square feet or less of sales
area; including department stores, clothing stores, furniture stores, pet supply stores, small hardware
stores (with 10,000 square feet or less of floor area), and businesses retailing the following goods: toys,
hobby materials, handcrafted items, jewelry, cameras, photographic supplies and services (including
portraiture and retail photo processing), medical supplies and equipment, pharmacies, electronic
equipment, records, sporting goods, kitchen utensils, hardware, appliances, antiques, art galleries, art
supplies and services, paint and wallpaper, carpeting and floor covering, office supplies, bicycles, video
rental, and new automotive parts and accessories (excluding vehicle service and installation). Retail sales
may be combined with other services such as office machine, computer, electronics, and similar small -
item repairs.
Firearm Sales An establishment engaged in the selling, dealing in, trading, or transferring
firearms.
Large Format Retail. Retail establishments over 80,000 square feet in size ef� that sell
merchandise and/or bulk goods primari ly for individual consumption, includin but not limited to
department stores, home improvement stores, membership warehouses olubs and supemteres which
emphasize bulk sales to the general public as well as tg -other businesses, and other big box format stores.
Large Format Retail uses may include a limited (5,000 square feet or less ) grocery store sales
com onent. This use type specifically excludes Su erstores as defined by this section.
Superstore. Retail establishments (over 80,000 square feet of sales area) that serve as a one -stop
shopping destination by offering a wide variety of goods and merchandise, often at a discounted
price. They are distinguished by their size, and by the inclusion of grocery sales. Superstores typically
feature a full- service food and beverage retail safes area that exceeds five thousand square feet of the
gross floor area, and could include a delicatessen, baked goods frozen foods, fruits, vegetables, meats,
cheeses dairy, and pLeVarod food. A superstore may also feature various business centers such as a bank
pharmacy, vision center, et center, photo center, and pLepared food outlet(s).
4. Prohibit new "Superstore" uses in the City by adding a new chapter prohibiting the opening,
establishment, and/or operation of new superstore uses in the City (SSFMC 20.430 — Prohibition on
New Superstores). This amendment will also require the addition of this chapter title in the Zoning
Ordinance Chapter Index.
Chanter 20.430
PROHIBITION ON NEW SUPERSTORES
Sections:
20.430.001 Purpose and Intent
20.430.002 Definitions
20.430.003 Superstores Prohibited
20.430.004 Violation and Enforcement
20.430.001 Purpose and Intent
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It is the p=ose and intent of this cha nter to preclude the opening, establishment and/or
operation of new superstore uses_ in the City. (Ord_ & _. 2013)
20.430.002 Definitions
The words and phrases included in this section shall have the following meanings, unless it is
clearly apparent from the context that another meaning is intended:
"Superstore" means retail establishments (over $0000 square feet of sales area) that serve as one-
sto p shopping destination by offering a wide variety of goods and merchandise often offered at a
discount. They are distinguished by their size, and by the inclusion of grocery sales. Superstores typically
feature a full- service food and beverage retail sales area that exceeds five thousand square feet of the
gross floor area, and could include a delicatessen, baked goods, frozen foods, fruits vegetables. meats.
cheeses, . dairy, and prepared food. A superstore mad+ also feature various business centers such as a bank,,
pharmacy, vision center, et center, photo center, and pLepared food outlet(s). Some superstores may also
include gas _stations as part of their center. (Ord. _ & _. 2013)
20.430.003 Superstores Prohibited
A. _ _ Superstores are not _a permitted use and are prombited in all zones throughout the City.
No permit or My other a licable license or entitlement for use nor an business license shall be
approved or issued for the establishment, maintenance or operation of a superstore within the City,
B. The establishment, maintenance or operation of a superstore within the City is declared to
be _a public nuisance and may be abated by the City either pursuant to the South San Francisco Municipal
Code or aLiy other available legal remedies including. but not limited to declaratga relief and civil
iniunctions. (Ord. .2013)
20.430.004 Violation and Enforcement
The establishment maintenance or aeration of a su erstore in violation of or in noncom liance
with, any of the requirements of this chapter or applicable provisions of the Zoning Code or South San
Francisco Municip 1 Code, shall be subject to any enforcement remedies available under the law and/or
the Ci 's Municipal Code. In addition the CiM mgX enforce the violation of this cha ter by means of
civil enforcement throua a_ restraining; order, a preliminary or permanent injunction or by anther
means authorized by the law. Ord. 2013
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5. Update the applicable use tables throughout the Zoning Ordinance as identified below:
a. Table 20.090.002 Land Use Regulations- Commercial, Office, and Mixed Use Districts: Add
subclassifications below "Food and Beverage Retail Sales" to further clarify where in the City each of
these uses are permitted, conditionally permitted or not permitted,
Use Classification CC
BPO
CMX
ECRMX
Additional Regulations
Commercial Uses ( cont'd)
Food and Beverage Retail
Sales
See sub - classifications below
n -Prm P .� P
Convenience Market
P
P 9
P
P
See Section 20.350.014
Convenience Market
Grocery Store
P
PL9)
P
P
See Section 20.350.02024
Large Format Retail
Supermarket
P
P(9)
P
P
Limitations:
9. Hours of operation 7 am to 7 pin weekdays only except within 400 feet of a BART station
b. Table 20.090.002 — Land Use Regulations - Commercial, Office, and Mixed Use Districts: Update the
section reference for the additional regulations that pertain to "Large Format Retail"
Use Classification JCc
BPO
CMX
ECRMX
Additional Regulations
Commercial Uses (cont'd)
Retail Sales
See sub- classifications below
General Sales
P
-
P
P
Large Format Retail
C
-
-
C
See Section 20.350.02024
Large Format Retail
Off -Price Merchandise
C
-
C
Second Hand Store
C
-
C
C
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c. Table 20.100.002 – Land Use Regulations- Downtown Districts: Add subclassifications below "Food
and Beverage Retail Sales" to further clarify where in the City each of these uses are permitted,
conditionally permitted or not permitted.
Use Classification
C
7-
DMX
DRL
D
D
I Additional Regulations
Commercial Uses (cont'd)
Food and Beverage Retail
See sub - classifications below
Sales
D
-
P
See Section 20.350.044014
Convenience Market
Grocery Store
Pit)
See Section
Convenience Market
C
C
-
-
-
20.350.9014
Convenience Market
Grocery Store
P
P
-
-
Supermarket
d. Table 20.110.002 -- Land Use Regulations - Employment Districts: Add subclassifications below "Food
and Beverage Retail Sales" to further clarify where in the City each of these uses are permitted,
conditionally permitted or not permitted.
Use Classification
BC
B
F
MI
I Additional Regulations
Commercial Uses (cont'd)
Food and Beverage Retail Sales
See Sub - classifications below
P —Mup G E
Convenience Market
P
P
-
P
See Section 20.350.044014
Convenience Market
Grocery Store
Pit)
�i
C 1
Supermarket
P(I)
-
Cl
-
Limitations:
1. Prohibited east of 101
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e. Table 20,110.002 — Land Use Regulations - Employment Districts: Update the section reference for the
additional regulations that pertain to "Large Format Retail"
Use Classification
BC
BTP I FC IMI
Additional Regulations
Commercial Uses (cont'd)
Retail Sales
See sub-classifications below
General Sales
P
P
P
P
-
Firearm Sales
Convenience Market
-
-
C
Large Format Retail
P
-
P
-
See Section. 20.350.8024
Large Format Retail
Second Hand Store
C
-
P
-
Swap Meet
C
-
-
C
f Table 20.250.003 — Land Use Regulations- Transit Village Sub - Districts: Add subclassifications below
"Food and Beverage Retail Sales" to further clarify where in the City each of these uses are permitted,
conditionally permitted or not pennitted. Clarifying the areas where "Grocery Store" and "Supermarket"
uses are permitted, conditionally permitted, or not permitted,
Uses Permitted
T
T
ITV-RM
ITV-RH
Commercial Use Classifications
Food and Beverage Retail Sales
See sub-classifications below
42
P
-
Convenience Market
P
C
-
See Section 20.35 0.044N 14
Convenience Market
Grocery Store
P
P
-
Supermarket
P
P
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g. Table 20.270.003 — Land Use Regulations -El Camino Real/Chestnut Sub - Districts: Add
subclassifications below "Food and Beverage Retail Sales" to further clarify where in the City each of
these uses are permitted, conditionally permitted or not permitted. Clarifying the areas where "Grocery
Store" and "Supermarket" uses are permitted, conditionally permitted, or not permitted.
Uses Permitted
M�
ECR/C -MXM
ECR/C -RH
Commercial Use Classifications
See sub - classifications
Food and Beverage Retail Sales
P
P
-
See Section 20.350.044014
Convenience Market
P
P
-
Convenience Market
Grocery Store
P
P
Supermarket
P
P
=
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