In the first annual Development Agreement Compliance Review, the Santa Monica City Council unanimously agreed to find six properties within the city limits to be in compliance with its respective development agreements. However, three developments have yet to fulfill their agreements with the City.
The compliance review session was in response to recent concerns of developers reneging on accords made with the City of Santa Monica and the lack of enforcement of such contract breaches in the past. Three other properties are still under compliance review, while four others have yet to commence construction, hence not immediately subject to compliance review.
At its second regular meeting of 2011 at City Hall on Jan. 25, the Council set out to review the progress of whether select real estate developments were acting in accordance with contractual terms laid out by the City in exchange for granting exceptions to zoning ordinances. These exemptions are usually traded for public benefits such as parking, affordable housing, or public space.
“For purposes of today, we are only being asked to determine those that are actually in full compliance. The other ones are going to remain with staff and they’re going to keep working on it,” Mayor Richard Bloom stated. “Then there are four that have not been built yet. When they are built out, we will determine compliance at that time.”
In all, 16 real estate developments were at issue in the compliance review, six of which were recommended to the council as being in full compliance with previously prescribed development agreements, entered into as early as 1981, in place. The six properties formally determined to be in full compliance included Bayview CA Limited Partnership’s Sheraton Delfina, mixed commercial use buildings by Maguire Thomas and Arboretum, reconstruction of Rand’s headquarters, and the construction of two entertainment studios at Lantana East and Lantana South.
A determination of compliance of three properties – Paseo Del Mar, Saint John’s Health Center, and Yahoo Center – is still under consideration, however it was acknowledged none were in compliance as of the Council’s Jan. 25 meeting. Among the compliance issues included in many of the development agreements in question included certain street improvements or payment of fees for arts or housing benefits.
Following revelations of developments in noncompliance last year, an annual Development Agreement Compliance Review was initiated for the council to determine whether projects that are granted exceptions to the City’s zoning ordinances in exchange for public benefit concessions are adhering to the pact.
According to Eileen Fogarty, the director of Planning and Community Development, ever since the City began actively looking into compliance of development agreements last year, many projects that have been subject to review by the council have made progress in coming into conformity with accords between the City and developers.
“When we came forward in May of 2010, we had four of 12 (development agreements) in full compliance. In September, we had eight of 12. Now in January, we have nine of 12 in full compliance,” Fogarty told the council. “A couple that are not in full compliance are all in the development review process … to come into compliance. We are really pleased with this process and these annual public reporting opportunities have really worked with bringing projects into compliance.”
The unanimously approved compliance review of the six developments came on the heels of a previously failed motion on the same issue. Council member Kevin McKeown’s original motion suggested one of the developments – the Marriott Delfina – be subject to pay an additional $24,000 to be compliant with a public art provision under the original development agreement signed in 1986.
Under that original development agreement, the City stipulated the new hotel should have built on its property, at the expense of $25,000, a public display of art. However, as the City never enforced the provision, the Marriott Delfina did not have a public art display built by the developer. Overlooked for more than two decades, the developer’s lack of action – combined with the City’s lack of enforcement – became an issue, spawning the need to have this Development Agreement Compliance Review. Under the compliance review, the City would now have to enforce the building of a public art display at the Marriott Delfina.
Under McKeown’s original motion, the council member stipulated the hotel’s developer would have to build the public art display at an expense adjusted for 2010 inflation. Being 24 years after the original development agreement was put into effect, the new expense adjusted for inflation was just under $50,000.
“It’s been a long time since 1986, and $25,000 in 1986 is (higher) today when this obligation is being fulfilled,” McKeown observed, citing an inflationary calculation he performed on the U.S. Bureau of Labor and Statistics website indicating that the $25,000 in 1986 is equal to slightly more than $49,700 in 2010. “Should the obligation here not be to fulfill this in current dollars? The staff report indicates they are in full compliance, but does sort of leave this issue hanging.”
In a 3-2 vote, the Council rejected McKeown’s original motion.
Despite her support for that original motion, council member Gleam Davis expressed concern of the City’s inaction in enforcing compliance of development agreements. She questioned who was more responsible: the developer for not building or the City for not enforcing.
“..it’s also very clear the reason we’re going through the process is because the City, quite honestly … dropped the ball,” Davis observed. “I suspect in 1986 had we got to the Delfina and said ‘Hey, you haven’t built your artwork yet,’ obviously the number would be a lot lower.”
After the rejected motion, McKeown quickly made a new motion, this time to find the above-referenced six properties to be in full compliance of the original development agreements, including the provision that Marriott Delfina’s developers would allocate $25,000, not adjusted for inflation, for the construction of a public art display as per the original 1986 accord.
The three properties working toward compliance include the Water Garden office park, the Santa Monica College Parking and Pool, and, finally, National Medical Enterprise, which will undergo an compliance determination later this year.