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HomeMy WebLinkAboutMin - CC - 2020.11.04CITY BURLINGmE q $AaiEo JLkE � BURLINGAME CITY COUNCIL Approved Minutes Special Meeting — Study Session on November 4, 2020 1. CALL TO ORDER A duly noticed meeting of the Burlingame City Council was held on the above date online at 6:20 p.m. 2. STUDY SESSION a. DISCUSSION OF PROPOSED DEVELOPMENT AGREEMENT TERMS FOR THE 220 PARK ROAD (FORMER POST OFFICE) PROJECT City Manager Goldman stated that the study session was to discuss the proposed development agreement terms for 220 Park Road, the former Post Office. She explained that the Sares Regis Group submitted an application for the redevelopment and restoration of portions of the existing Post Office building and construction of a new six -story office project with ground floor retail and two levels of underground parking at 220 Park Road. She noted that the underground garage would extend under City Parking Lot E. She added that the project includes 11,915 square feet of retail uses on the ground floor, 140,000 square feet of office on the floors above, and 280 parking spaces. City Manager Goldman stated that staff has regularly met with Sares Regis and their development partner Dostart Development to negotiate the terms of the development agreement. She noted that the draft term sheet is attached to the staff report. CDD Gardiner explained that currently there are three things are underway in connection with the Post Office project and the Town Square. 1. The Council is reviewing the draft terms of the development agreement with Sares Regis 2. The Planning Commission is reviewing the Post Office development project 3. The City has contracted with Urban Field Studio for the Town Square project, and they are currently working on public outreach. Sares Regis President Dave Hopkins discussed his group's excitement for the project and described it as a once -in -a -lifetime project for a developer. Sares Regis representative Andrew Turco began by explaining the complexity of the project. He noted that the project encapsulates two adjacent properties with different property owners. He stated that so much of Burlingame City Council November 4, 2020 Approved Minutes the success of both projects (redeveloping the Post Office lot and creating a Town Square on Lot E) rely on working together. He stated that the project has the added complication of the need to preserve the historic front of the Post Office. Mr. Turco stated that in creating the development agreement, the group began to feel like there were several different agreements that needed to be organized and consolidated. He explained that the development agreement provides milestones for coordination between the Town Square and Post Office projects, creates certainty, and incentivizes progress. Mr. Turco reviewed the meetings that Sares Regis has had with the City including: • City Council Study Session 1 (February 2020) • City Council Study Session 2 (March 2020) • Special Joint City Council -Planning Commission Study Session (May 2020) • Planning Commission — CEQA Scoping (July 2020) • Community Open House (September 2020) • City Council Study Session 3 (November 2020) Mr. Turco noted that the future meetings are as follows: • CEQA Published (November 2020) • Planning Commission — Project Hearing (November 2020) • City Council — Development Agreement Hearing (December 2020) • City Council — 2nd Reading (January 2020) Mr. Turco stated that the draft term sheet covers six main items: 1. Form of Agreement 2. Milestone Schedule 3. Shared Parking 4. Town Square Contributions 5. Interim Use and Maintenance of Property 6. Temporary Staging for Historic Preservation and Construction Mr. Turco reviewed the terms regarding shared parking. He explained that the development agreement provides that there would be 275 parking spaces for public use on evenings and weekends. He displayed a drawing of the underground garage. He noted a highlighted area that represented the area under Lot E. He stated that in exchange for the City allowing the project to utilize the space under Lot E, Sares Regis would allow the public to utilize the underground garage on nights and weekends. Vice Mayor O'Brien Keighran asked what time the public would be able to use the garage on weeknights. Mr. Turco stated that Sares Regis provided the City with its agreement with Redwood City as a sample. In that agreement, the public was allowed to use the parking spaces from 5:00 p.m. to 10:00 p.m. weekdays and all -day on weekends. Vice Mayor O'Brien Keighran asked whether the public would be able to use the underground garage on holidays. Mr. Turco replied in the affirmative. 2 Burlingame City Council November 4, 2020 Approved Minutes Mr. Turco next reviewed the terms regarding the Town Square contribution. He stated that Sares Regis believes that the success of the Town Square is essential to activating the retail along the edge of the building. He explained that Sares Regis proposes providing a $2 million contribution to the City to be used for the Town Square project. He stated that this number was based off of their review of other town squares and initial figures. Mr. Turco explained that Sares Regis knows how important it is to the City that both projects move forward. Therefore, the term sheet includes a provision that after three years, the developer must provide an additional 5% in contribution for every year that construction doesn't start. Therefore, in year four, there would be an additional $100,000, and in year five, there would be an additional $105,000. Mr. Turco stated that in addition to the $2 million contribution, the City would be collecting over $1 million in fees towards street improvements. He noted that Sares Regis is open to utilizing those funds for the Town Square project. Mr. Turco stated that Sares Regis has talked with staff about whether Sares Regis should take on some of the elements of the Town Square project. He stated that construction of these elements would count against the $2 million contribution. He reviewed the elements that Sares Regis has offered to undertake: • Improvements to the Lorton Avenue and Park Road sidewalks fronting the Town Square • Widening of the Lorton Avenue sidewalk into the street right-of-way along the Town Square and Post Office site • Construction of a new culvert clean -out within Park Road, subject to further discussions about potential utility conflicts Councilmember Brownrigg asked if the $2 million contribution is in addition to other fees, such as impact fees, that the project will be required to pay. Mr. Turco replied in the affirmative. Mayor Beach asked if Sares Regis' cost estimate of the Town Square included the City's public bidding process and prevailing wage. Mr. Turco stated that they didn't necessarily account for the public bidding process, but the numbers were based on union figures. He added there is a 3% escalation built in per year for the first three years. He added that after the third year, the cost escalation went to 5%. Mayor Beach stated that prior to the pandemic, developers built into their pro forma a 1% cost escalator every month. She stated that it seems like the reality could be more like 10% to 12% per year. Mr. Turco stated that Sares Regis reviewed different data sources and the past ten years of real estate construction costs. Mayor Beach asked if Sares Regis had utilized a construction cost index. Mr. Turco replied in the affirmative. He noted that he didn't remember the specific cost index that they used but that he would get back to Mayor Beach with that information. Mr. Hopkins added that Sares Regis talked with contractors that undertake large projects to understand what the escalation would be. Burlingame City Council November 4, 2020 Approved Minutes Councilmember Colson stated that the City can value engineer the project. She explained that when the Town Square project gets closer, the City can start with its budget and work backwards to see what is possible. Mr. Turco next reviewed the interim use and maintenance of the property terms. He explained that Sares Regis heard from the City Council that they were concerned about the current condition and look of the property. He stated that Sares Regis wants to develop the property as quickly as possible. He added that he believed there were a couple of things that could be done to make the property look a little bit more inviting in the interim: • Place a graphic wrap around the fence for the property — he noted that this would be dependent on getting the current property owner's permission and buy in. • implement necessary historic resource preservation as the building has been sitting vacant since 2014 Councilmember Brownrigg thanked Sares Regis for trying to get the space activated. He noted that he remains frustrated that the lot has stood as is for so long. He added that he shares the sense of urgency in redeveloping the site. Mr. Turco reviewed the final portion of the draft term sheet concerning the temporary staging for historic preservation and construction. He noted that Sares Regis and the City entered into a temporary construction staging agreement for use of Lot E and a portion of the parking stalls on Park Road for temporary relocation of the historic Post Office building in order to preserve the building in accordance with the historic preservation covenant standards. He added that the temporary closure of Lot E will acclimate the public to the surface parking disappearing to make way for the permanent Town Square. Mr. Turco explained that Sares Regis will compensate the City for this temporary use of Lot E not explicitly related to storing the Post Office's historic elements at the current rate of the Burlingame Business Parking Permit of $60 per parking stall per month and increasing to $65 per stall and $70 per stall in years four and five. Councilmember Ortiz stated that he was very excited about the project and looked forward to a quick completion. He noted that he appreciated the Vice Mayor's questions about when the underground garage would be open to the public. He added that he hated the current fence around the lot and thought that the graphic wrap would be great. Councilmember Ortiz asked if the City had its own estimate about the cost of the Town Square. CDD Gardiner replied in the negative. Councilmember Brownrigg asked about the patio extension outside of the Post Office that was depicted in one of Sares Regis' slides. He asked if it was on the City's land and how it would be managed. Mr. Turco stated that Sares Regis heard from the public, Planning Commission, and City Council about the desire to link the two projects. He explained that the patio would be a great way to do this and would be a benefit to the community. He noted that this element would be part of the Town Square project, but that Sares Regis could build it and credit it against the $2 million contribution. 4 Burlingame City Council November 4, 2020 Approved Minutes Councilmember Brownrigg stated that he liked the patio but thought that Sares Regis should pay for it and not include it in the $2 million contribution. He added that he agreed it was important to make the two projects feel integrated. City Attorney Kane discussed questions that would need to be hammered out if the patio becomes shared space between the City and Sares Regis including: who controls the patio, maintains it, benefits from it, and where liability lies. She stated that these details would need to be worked out through a subsidiary agreement. Councilmember Brownrigg stated that all cities are learning more about this as they open up their sidewalks to restaurants. City Attorney Kane replied in the affirmative. Councilmember Brownrigg asked CDD Gardiner to speak briefly about the Town Square process. CDD Gardiner stated that staff was finalizing a website that would provide images and content regarding the Town Square and provide space for public feedback. He added that there would be a few community outreach meetings in the coming months, and that based on feedback, plans would be developed in January 2021. City Attorney Kane discussed the importance of timing of the two projects. She explained that both the Town Square and Post Office projects leaned on each other, and therefore the agreement would have to outline deadlines for each of them. Mayor Beach asked how long Sares Regis would need to utilize Lot E. Mr. Turco stated parking along Park Road would be used for three to five months, and Lot E would be used for approximately 24 months. Mayor Beach stated that it would be valuable to have targets in the agreement concerning usage of Lot E to ensure that the City's interests are protected. Mayor Beach stated that 4(c) of the term sheet needs to be refined. She explained that she didn't believe it was clear enough, and she wanted to ensure that milestones were met. Mayor Beach stated that she appreciated Councilmember Brownrigg's comments about the patio on the Post Office building. She thought it would add a lot of benefit to the community. However, she voiced concern that if the City took up Sares Regis' offer to undertake too many of the elements listed under 4(f), there wouldn't be that much left of the $2 million for the Town Square. She explained that she would like to see more information about the cost escalators and wanted to ensure that the City had a reasonable amount to move forward with the project. She stated that there was mutual value in having the Town Square project succeed. Councilmember Brownrigg stated that he has been part of the negotiations for years on the Post Office site. He explained that the $2 million came from an Urban Field presentation when the company was presenting their credentials to the City. He added that he thought the City should ask Sares Regis to cover the cost of the patio in addition to the $2 million contribution. However, he thought it was important to acknowledge that Sares Regis wasn't obliged to give the City $2 million towards the cost of the Town Square project. 5 Burlingame City Council November 4, 2020 Approved Minutes Therefore, he stated that he agreed with Councilmember Colson that a 5% escalator after three years seemed reasonable. He added that he didn't believe that Sares Regis owed the City whatever Urban Field designs. Councilmember Colson concurred with Councilmember Brownrigg. She explained that the City will be able to develop a project that will stay within the budget. She noted that it is an important distinction that the $2 million contribution is not a community fee that Sares Regis has to pay. Councilmember Colson thanked Sares Regis for their work on cleaning up and preserving the historic facade of the building. She noted that this wouldn't be cheap and would take a lot of skilled work to do. She stated that she believed the community was incredibly excited about this project. Vice Mayor O'Brien Keighran stated that she agreed with Councilmember Colson and Councilmember Brownrigg about the $2 million contribution. She noted that these are different negotiations from the previous project where public land was going to be used. She stated that the City needed to be reasonable. Vice Mayor O'Brien Keighran asked if Sares Regis thought the current owner of the site would approve the graphic wrap. Mr. Hopkins replied in the affirmative. Vice Mayor O'Brien Keighran stated that like Councilmember Colson, she appreciated the hard work of preserving the historic elements of the Post Office building. She asked if the City would be inspecting the work to ensure that everything is done correctly and asked how often it would be inspected. CDD Gardiner replied that an inspection was done about a year ago at the beginning of the rainy season. He added that the inspection is done annually to ensure that the building's historic features are preserved. Councilmember Ortiz stated that he believed this would be the most important project that the Council would work on. He thanked Councilmember Brownrigg and Councilmember Colson for their hard work and stated that he looked forward to the ribbon cutting! City Attorney Kane reviewed what was discussed. She explained that she heard that the Council was supportive of the key business terms as proposed but clarification was needed around the potential shared spaces in the plaza and eventual project. She stated that there is a strong interest in narrowing down the timing, incentives, and milestones. She noted that she previously shared with Sares Regis that the City has two sensitivities with projects of this sort: 1) not getting started, and 2) getting part way through and then lagging. Therefore, she stated that the development agreement would have to address expectations that everyone can agree on. City Attorney Kane stated that one of the aspects of the project that still has to be coordinated with Public Works is the feasibility of whether the culvert clean -out can be moved to within Park Road. She noted that this might eat up a lot of the $2 million contribution. Councilmember Brownrigg stated that he appreciated the efficiencies of moving the culvert and Sares Regis offering to enhance the sidewalks. However, he didn't know that this would come out of the $2 million. Therefore, he asked if the question of common public works was covered in the term sheet. City Attorney 6 Burlingame City Council November 4, 2020 Approved Minutes Kane stated that her understanding is extending the enhanced sidewalk would be credited against the $2 million contribution. Mayor Beach stated that this was laid out under 4(f). Councilmember Brownrigg asked how this works in terms of timing. City Attorney Kane stated that these details would have to be written out in the agreement. She asked if she was right that the sidewalk work would come last. Mr. Turco replied in the affirmative. He stated that Sares Regis is developing a timeline by which the City would need to let them know whether to move forward with items listed under 4(f). Mr. Hopkins stated that the sidewalk work is a substantial public improvement. He noted that it isn't immaterial in terms of cost but will create a better connection with the Burlingame Avenue streetscape. He added that it will have some impact on parking, etc. Mayor Beach opened the item up for public comment. No one spoke. Mayor Beach stated that the Council was excited to work with Sares Regis on the project. 3. ADJOURNMENT Mayor Beach adjourned the meeting at 7:30 p.m. Respectfully submitted, /s/ Meaghan Hassel -Shearer City Clerk 7 Burlingame City Council November 4, 2020 Approved Minutes