Loading...
HomeMy WebLinkAbout071123-03.3 STUDY STUDY SESSION MEMORANDUM 3.3 TO: Mayor and Town Council July 11, 2023 SUBJECT: Discussion of Future Uses of 510 La Gonda Way BACKGROUND With the relocation of the Town offices to 500 La Gonda Way, the future use of 510 La Gonda Way is an issue the Town Council will need to decide in the coming years. During the recent budget study sessions, the Council requested staff to bring this topic to a future study session with background information on options and required procedures for disposition. The 2.27 acre property was acquired by the Town in 1985 at an initial cost of $3.5 million. The Town offices were located on the site from 1985 through the end of 2022. Current Use of 510 La Gonda While the Town offices have been relocated, 510 La Gonda is still tied to the ongoing use of the Town offices. While the building is vacant, the property is still home to the solar panels in the rear parking lot, which are currently the only means to charge the Town’s fleet of electric vehicles. In addition, the site is being utilized for Town employee parking, which is necessary to comply with the Town’s parking standards and to ensure sufficient parking for the non-Town tenants at 500 La Gonda. In order to meet parking requirements associated with the use of 500 La Gonda Way and comply with approvals granted by the Planning Commission, the Town will retain approximately 27,000 square feet of the property to site additional parking. The remainder parcel will be approximately 1.65 acres in size. Current General Plan and zoning for 510 La Gonda As part of the Town’s process to adopt a new Housing Element and provide sites sufficient to accommodate the Town’s assigned RHNA numbers, the Town Council changed the General Plan designation for the property to Residential-Multi-Family Special, with a density range of 30-35 units per acre and the zoning to M35 (30-35 units per acre). 510 La Gonda 2 July 11, 2023 DISCUSSION The Surplus Land Act As highlighted by the decision to change the General Plan and zoning for the property, the assumption has been that the Town will dispose of 510 La Gonda for a housing development once it is no longer needed for Town use. Any such disposition would need to comply with the Surplus Land Act (the “SLA”). This portion of the memo provides an overview of the SLA. The SLA has been on the books for many years, but its scope was greatly increased in 2019 through the adoption of AB 1486. As summarized by HCD, the law now essentially acts as a right of first refusal for development of affordable housing units before the land can be sold for any other purpose. The law also now gives HCD a more central role in the SLA process, up to and including review and approval of any disposition of the property. Property owned by a local government becomes “surplus” when the local agency declares it is no longer necessary for the agency’s use. Once the property is declared surplus, the agency must notify affordable housing developers registered with HCD of the property’s availability by sending them a Notice of Availability (unless the property is declared exempt surplus as explained below). The local agency can also send the notice to other affordable builders who may not be on the HCD list. Once the Notice is sent out, any of the developers has 60 days to express interest, which assuming at least one developer responds, triggers a 90-day negotiation period during which the agency must engage in good faith negotiations over price and terms. If more than one developer responds, the SLA prioritizes which parties get to negotiate first based on the percentage of affordable units they are proposing. If no one responds, the agency is then free to dispose of the property as it sees fit. Assuming the negotiation process is triggered, any agreement reached must ensure that at least 25% of all units in the development will be priced for lower income (not moderate) households. If no agreement is reached with any of the developers, the agency can then sell the property, if HCD finds that the agency negotiated in good faith. If the property is subsequently sold for housing, at least 15% of the units must be affordable to households at lower income levels. The SLA also clearly states that no agency must agree to sell for less than fair market value. The SLA also provides for a surplus property to be deemed “exempt surplus.” There are a number of possible exemptions, but the only one that potentially applies to 510 La Gonda would be if the Town declares that the property must be developed with housing that is 100% affordable, with at least 75% available to lower income and at least 50% of 510 La Gonda 3 July 11, 2023 that being available to extremely low income households. In that situation, the agency can bypass the Notice of Availability process and immediately negotiate with one or more affordable housing providers. HCD must approve the finding that the property is exempt and the rationale for the exemption. Policy Options for Consideration Assuming that the intent is still to move forward with seeing the site developed for housing, there are two primary alternatives, with the difference being the number of affordable units in the project. The first option would be to attempt to ensure the deepest level of affordability in the units to be built. This was the approach taken by the Town for the Laurel Drive project built by BRIDGE Housing. Under this approach, the Town could offer the property at no cost and include in the deal the full amount of the Town’s Low and Moderate Income Housing Fund (currently approximately $1,900,000). At the other end of the spectrum, the Town could sell the property to a developer at fair market value (undetermined as of this time). Under this approach, the ultimate project would include either 25% or 15% of the units being restricted to lower income households, depending on whether a deal was agreed to during the 90 -day negotiation period. In between these two ends of the spectrum, there are obviously variations on price, use of the Housing Fund and deal terms that would allow for different levels of affordability. RECOMMENDATION Receive the report and provide direction, if any, to Town staff on overall policy goals for future use of the property. Prepared by: Joseph A. Calabrigo Town Manager Robert B. Ewing City Attorney