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Item 18 Staff Report Accept Report on Los Gatos Estates, INC'S Request to Use Required Below Market Price In-Lieu Fees to Construct Below Market Price Residential UnitsCOUNCIL AGENDA REPORT DATE: November 17, 1995 TO: MAYOR AND TOWN .! CIL FROM: TOWN MANAGER MEETING DATE: 11/20/95 ITEM NO. I� SUBJECT: ACCEPT REPORT 0 LOS ' ATOS ESTATES, INC'S REQUEST TO USE REQUIRED BELOW MARKET P i -LIEU FEES TO CONSTRUCT BELOW MARKET PRICE RESIDENTIAL UNITS. RECOMMENDATION: Direct Town staff to negotiate with Los Gatos Estates, Inc., about a possible award of approximately $400,000 in Town Below Market Price (BMP) funds to Los Gatos Estates, Inc. to build BMP rental. units as part of a mixed use development at Los Gatos Boulevard and Shannon Road (the former West Valley Dodge site). BACKGROUND: Town Code Section 29.10.3025 contains requirements for below market price residential units (BMP). Depending on the size, type, and location of the development as determined by the Town, developers either construct BMP units as part of a development project or pay an in -lieu fee. The Town deposits in -lieu fees in the Town's BMP Fund for use in land banking, writing down the cost of owner - occupied units, purchasing rental units, and other housing activities. DISCUSSION: Los Gatos Estates is currently developing 15 single family houses in the HR zone on Kennedy Road. A condition of approval was that the developer pay an in -lieu fee of approximately $400,000 to the Town, and a portion of the fee must be paid as each occupancy permit is issued. No in -lieu fee has been paid yet. Los Gatos Estates would like to use the in -lieu fees to fund BMP apartments as part of a project at the northeast corner of Los Gatos Boulevard and Shannon Road formerly occupied by West Valley Dodge. It hopes to remove all existing improvements and to build a mixed use project with retail and office uses on the first floor and apartments on the second floor. The rents for the new BMP apartments would conform to the Town's BMP regulations. The developer has not determined how many BMP units would be created. Los Gatos Estates would like to shift the in -lieu funds directly to the mixed use project, instead of depositing them with the Town. This would be a significant change in past practice and is not recommended because the money could quickly be lost without any result. The Town collects the in -lieu fees to ensure that they are only disbursed in accordance with a specific construction schedule and to prevent their seizure by a bankruptcy court. The mixed -use concept was reviewed by the Conceptual Development Advisory Committee on September 27 and generally accepted with the direction to Los Gatos Estates that Council approval would be required. The Conceptual PREPARED BY: LEE E. BOWMA PLANNING DIRECTOR REGINA FALK COMMUNITY CES DIRECTOR Reviewed by: Attorney Finance Revised: 11/17/95 4:20 pm Reformatted: 10/23/95 ATTACHMENT 5 4 r i PAGE 2 MAYOR AND TOWN COUNCIL SUBJECT: ACCEPT REPORT ON LOS GATOS ESTATES, INC'S REQUEST November 17, 1995 Development Advisory Committee encouraged Los Gatos Estates because of the project would rid the site of the current eyesore and advance goals and policies of the Los Gatos Boulevard Charette. In addition, the preliminary designs shown the Committee would be a significant enhancement for this area of the Town. Los Gatos Estates' current option on the property expires in early December. It is eager to learn whether it can use the in -lieu fees to invest in its project so it can decide whether to exercise its option now. Development of the necessary agreement and construction concept and approval by the Council would not occur before Los Gatos Estates' current option expires. If the Council does not want to further consider "sole sourcing" with Los Gatos Estates, then Staff will move forward with developing a request for proposals to use the BMP Fund monies. Los Gatos Estates could, of course, present a proposal to use the monies at that time. This process has the advantage of actively designing project elements and perhaps getting a larger number of units and types of units. However, this process would also not conclude before Los Gatos Estates' December option deadline. Without the commitment of $400,000 to subsidize the Shannon project, the developer may decide to let its option lapse. However, the developer may choose to pursue the project in any event, but include only market rate units. CONCLUSION: Council should determine if Staff should negotiate with Los Gatos Estates to attempt to reach an agreement on using BMP in -lieu funds to construct low rent units within a mixed -use project at Los Gatos Boulevard and Shannon Road. Staff would contract with a housing construction specialist to negotiate the proposal specifics and return to Council for approval if agreement can be reached. There is no risk to the Town in this process; the Town will collect the in -lieu funds in either case. If Staff is not able to negotiate an acceptable return on its investment of BMP in -lieu funds, it can pursue other options. In any case, the developer must pay the BMP in -lieu funds to the Town for the Kennedy Road project in accordance with Town ordinance. Because negotiations are likely to extend into late December, the developer may want to extend its option at the Los Gatos Boulevard/Shannon Road site. ENVIRONMENTAL ASSESSMENTS: This not a project defined under CEQA, and no further action is required. Any action that may result from a Council recommendation such as an ordinance amendment may require further environmental assessment of that specific action. FISCAL IMPACT: The BMP Fund balance for year end 1995-96 is estimated to be $138,480 (account 216-36000). Use of $400,000 in the proposed project would consume approximately 60 to 75% of the BMP funds projected to be available to the Town. Payment of a consultant to assist in negotiations would come from the BMP Fund. LEB:DRR : N:1DEV\CNCLRPTS\LGESTATE.3 Attachments: Distribution: A. Letter From Los Gatos Estates, Inc. dated October 3, 1995. B. Article From Perspective Section of San Jose Mercury News dated October 22, 1995. Mr. William F. Hirschman, Maxim Investments, 1190 Saratoga Avenue, Suite 210, San Jose, CA 95129. OCT 1 2 1995 Los Gatos Estates, Inc. 1190 Saratoga Avenue, Suite 210 San Jose, CA 95129 Telephone 408/236-3236 Fax 408/236-3237 October 3, 1995 The Honorable Patrick O'Laughlin Mayor of the Town of Los Gatos P.O. Box 949 Los Gatos, CA 95031 Dear Mayor O'Laughlin: I am writing, pursuant to the direction of the Conceptual Development Advisory Committee, to request that the Town Council consider my proposal to permit Los Gatos Estates, Inc. to construct a number of BMP units on an alternate site in satisfaction of the current condition to pay in -lieu fees for my Kennedy Meadows Project (previously Lands of Weir). My proposal is to construct an equivalent dollar value of apartment units within the project I am proposing, on the corner of Los Gatos Boulevard and Shannon Road, to equal the dollar amount which would be required as BMP in -lieu fees. I feel that the community would be best served by actual housing units being constructed rather than fees and I would ask that the Council give my proposal some consideration and the appropriate direction so that I may move ahead accordingly. Thank you for you consideration. Sincerely yours, ,r2r4,,< William F. Hirschman President WFH:oms ArracHMENzA It's hand' ` when thefridge is empty Concept of condo p'yJe'w above stores^^�^ neefA work — notto mention a dash of style 4F HE BUILDING blocks of 21st-century Santa Clara County are falling Into lotts a place. attention. SoThe l system e do Jobs and housing in southern San Jose. But one crucial building block is being neglected: the apartment -shop- ping center. As land prices rise and popula- tions get more dense, we're going to have to make better use of land already within city limits. Com- bining two or more uses in one building complex Is a good way to do it. A handful of buildings combin- ing housing with shops have been built on major commercial strips. More are on the way. But for such an important piece of the city's future, the results often have been clumsy. The quality of de- sign of these multiuse projects ALAN HESS will affect the quality of most of what we see driving around the county. Upstairs from the new Nob Hill shopping center on Stevens Creek Boulevard at Lawrence Express- way sit 39 two-story townhouses. The Stevens Creek Villas were de- signed by Kwan-Henmi architects of San Francisco. The effect is slightly blurry. There's the stan- dard 70,000-square-foot shopping. center, a string of shops and cafes on the parking lot. Its long, flat, flat stucco walla are typical, adorned only by the jewelry of the stores' signs along the roof - line. But that's not all. Up above there's a row of crackerbox-style townhouses — also a common sight, but not floating in the air overhead. The result is something like Frankenstein's monster — a bit of this, a bit of that, clip them together with a bolt or two and, voila! The two different kinds of buildings — different in function, different in size, different in ap- pearance — have been grafted See HESS, Page 4F Write Aluu Ness at 750 Rieder Park Drive, San Jose, Calif 95190 or sera! Memrnj Center a -mail to Alhess or Internet e-mail to AlAtss(nxral.rnrn- San Jose Mercury News • P•rsp/Ctiv/ • Sunday, October 22, 1995 Living above the store lacks style ■ HESS from Page IF t'get her w:?'wit ra,P'h fi4N5x. devoted to resolving their differ- ence. Sure, they increase housing - unit density. But a lot has been left undone. For all the attention focused on mango Tech Museums and blue Rep Theaters in downtown San Jose. most people are going to be living in the suburbs in the next century. But these suburbs will be as dense and as varied as the traditional downtown. They'll be made of buildings like this archi- tectural medley. That's why we need to give them more attention. The Stevens Creek villas pro- ject is just the latest step in the evolution of this new type of building. This project is an Im- provement over an earlier ver- sion, a shapeless gray clapboard monstrosity at Cezanne Street and El Camino Real in Sunnyvale. - Two Ingredients are missing from these examples: a concept of how shopping and living mix as people go about their daily lives, and a concept of how shopping and housing together tat into the larger neighborhood of a public commercial strip. Mixing housing and shops is not brand new. Medieval cities had shops on the first floor, with living quarters for owners or workers in the back or on the second floor. Go to any city de- signed before 1900 and you'll see blocks of apartments with shops and offices lining the first fluor. But we lost track of those kinds of urban solutions in this century. especially in the sprawling car cities of the West. The whole ap- peal of the suburbs was W sepa- rate the place where people worked (often near a dirty, smelly factory) and where they lived (ideally in the healthy coun- tryside). Zoning restricted stores to certain areas, housing to oth- ers, and Jobs to yet another place. Now that suburbia is becoming more dense, tin! age-old idea of Goat/ wvEs - .EaCLA, r,E cos Separately, townbduses and shopping centers are not extraordinary sights, — but together, there's impact ALAN HESS store buildings with apartments above is being adapted to the new city. Instead of apartments over shops, though, it's condos over shopping centers. The advantages are obvious. Residents are only a quick Jaunt from the supermarket — a big plus when you come home late from work and don't have any- thing in the fridge. With restau- rants, copy stores, nail boutiques, pharmacies and bookstores, near- ly every shopping center Is ■ quick -stop version of neighbor- hoods like Willow Glen or Los Gatos. What is needed is a clear and graceful idea of how these two separate pieces fit together. It needs a con ept. v lion. And that only caa from a deep look into th• nature of life in these new suburban cities. Accessibility is an important design element in forging a com- munity. At Two Worlds, a 1980e apartment -shopping hybrid at 100 El Camino Real West in Mountain View, designed by San Francisco architect Donald Mac- Donald, several stairs connect the second -floor residential zone to the shops and grounds below. Ste- ven= Creek Villas, in contrast, has only one securltytrontrolled en- try. The perceived need for secu- rity defeats the creation of an open project integrated with the community and easily accessible to the shopping area A unified image of the shop- ping -housing hybrid is also need- ed. Stevens Creek Villas turns a dlajointed face to its side street: a terrace, an open stairwell, a gap- ing view of the parking structure, all piled up with nu real composi- tion — this doesn't look like a townhouse development, or an apartment house, or anything at all. At another shopping -apartment combo on El Camino Real and Flo- ra Vista In Sunnyvale, an elabo- rate entry to the apartments is completely hidden even from the side street at the rear of the building. These designs fall short of defining the buildings' pres- ence in theirneighborhoods. Two Worlds links itself to its surroundings more successfully by moving its parking lots to the side and to the rear. That gives it the advantage of presenting a well -landscaped face to the street. The stores and offices are set in a shady arcade around the first floor, bordering the lawn. The housing units above are shaped so that balconies provide a view outward, another link to the neighborhood. This hybrid architecture needs architects, city officials and de- velopers to care for It in its for- mative stages. It's legitimate. It has a role to play in the city. It can provide a model for the multi- use, high -density housing project- ed for light -rail stations. It offers a workable alternative to the nee traditional town centers that aca- demic theoreticians are pushing these days. 1t has a lot to offer us in solving problems of congestion, cutting down on use of cars, and in creating a sense of place on the commercial strips that dominate the Santa Clara Valley. But if these projects remain awkward, slapdash grafting of two build- ings, the type is going to get a bad reputation teal fast. That's why it's worth paying attention to. ■ November 20, 1995 Los Gatos, California LOS GATOS BOULEVARD 15166/OFFICE DEPOT/RESOLUTION 1995-160 (17.09) Motion by Mrs. Lubeck, seconded by Mrs. Benjamin, that Council adopt Resolution 1995-160 entitled, RESOLUTION OF THE TOWN OF LOS GATOS DENYING APPEAL OF PLANNING COMMISSION DECISION APPROVING PLANS TO DEMOLISH AN EXISTING COMMERCIAL STRUCTURE AND TO CONSTRUCT A`N APPROXIMATELY 28,000 SQUARE FOOT RETAILSTORE IN TIC CH ZONE. Carried unanimously. VERBAL COMMUNICATIONS Thank You to Outgoing Mayor: Mardi Bennett, 38 Alpine, thanked Pat O'Laughlin for his work as the Mayor this past year. BELOW MARKET PRICE/IN-LIEU FEES/RESIDENTIAL UNITS (18.47) Mayor Attaway stated that this was the time and place duly noted to consider report on Los Gatos Estates, Incorporated's request to use required below market price in -lieu fees to construct below market price residential units, which was received and filed. William Hirschman, 230 Old Blossom Hill Road, spoke of a mixed use project on Los Gatos Boulevard at the corner of Shannon in which a greater number of BMP units might be made available. Motion by Mrs. Benjamin, seconded by Mrs. Lubeck, that Council direct staff to place the subject of Below Market Price Units Program on the agenda for discussion at the Council Workshop January 6, 1996. Carried unanimously. BUILDING REGULATIONS/TOWN CODE AMENDMENT/ORDINANCE INTRODUCTION (19.28) Mayor Attaway stated that this was the time and place duly noted to consider introducing ordinance rescinding, amending and adding to the Code of the Town of Los Gatos, Chapter 6 -Building Regulations. Motion by Mrs. Benjamin, seconded by Mrs. Lubeck, that Council waive the reading of the Draft Ordinance. Carried unanimously. The Town Clerk read the Title of the Draft Ordinance. Motion by Mrs. Benjamin, seconded by Mrs. Lubeck, that Council introduce Draft Ordinance entitled, ORDINANCE OF THE TOWN OF LOS GATOS AMENDING ARTICLES III THROUGH X OF CHAPTER 6 OF THE TOWN OF LO&GATOS TOWN CODE RELATED TO BUILDING REGULATIONS AND TO ADOPT THE 1994 CAJ11 RNTA STATF, BUILDING STANDARDS REGULATIONS WITH THE 1995 CALIFORNIA STATE BUILDING STANDARDS REGULATIONS WITH THE 1995 STATE OF CALIFORNIA TC:D7:MM112095 7