Title
Public Hearing to Consider Introduction of Ordinance Amending Ordinance No. 3086 Amending the Zoning Map to Permit Hotels at 2350 Harbor Bay Parkway (“Parcel 1”); and
Recommendation to Authorizing the Interim City Manager to Proceed with Acquisition of 2370 Harbor Bay Parkway (“Parcel 4”) for Open Space and Park Purposes. (Community Development 481001)
Body
To: Honorable Mayor and Members of the City Council
From: David L. Rudat, Interim City Manager
EXECUTIVE SUMMARY
This report recommends a course of action for the future improvement of two adjacent, vacant parcels located between the San Francisco Bay and Harbor Bay Parkway at 2350 and 2370 Harbor Bay Parkway in the Harbor Bay Business Park. Exhibit 1 includes a map showing the location and configuration of the two parcels.
The larger of the two parcels, referred to as “Parcel 1” is located at 2350 Harbor Bay Parkway (Assessor’s Parcel Number (APN) 74-1362-5). Parcel 1 is a 1.2-acre parcel owned by Ms. Mina Patel. The property is zoned to allow office buildings and mixed use buildings, but not hotels. Ms. Patel would like to build a hotel on the property. A hotel is only possible if the City Council changes the zoning to allow hotels. If a majority of the City Council cannot make all three findings required to change the zoning, then any future development of Parcel 1 will be limited to office buildings or mixed use office buildings consistent with the existing zoning. Staff is recommending that the City Council approve the zoning change to allow a hotel on Parcel 1.
The adjacent, smaller parcel, referred to as “Parcel 4” is located at 2370 Harbor Bay Parkway (APN 74-1362-6), directly adjacent to the Bay. Parcel 4 is a 14,837 square foot parcel owned by Harbor Bay Isle Associates (HBIA). It is zoned for park and open space use, and is currently being used by the public as part of the Bay Trail and Harbor Bay Shoreline Park. Staff is recommending that the City Council authorize the City Manager to acquire the parcel at no cost from HBIA.
BACKGROUND
On March 15, 2013, HBIA (the current owner of Parcel 4 and prior owner of Parcel 1) executed an amendment to a Settlement Agreement between HBIA and the San Francisco Bay Conservation and Development Commission (BCDC). The Settlement Agreement establishes certain obligations and limitations on the use of waterfront lands owned by HBIA at Harbor Bay, including Parcel 1 and Parcel 4. (The City is not a party to the Settlement Agreement and did not participate in the discussion between HBIA and BCDC that precipitated the 2013 amendment.)
The 2013 Settlement Agreement amendment allows HBIA to develop Parcel 1 as “a single use building containing either a restaurant or private offices or a mixed use building containing on the upper floor or floors private offices and on the ground floor one or more visitor serving commercial uses such as either a sit down or take out restaurant snack bar or coffee shop”. Prior to the 2013 amendment, the Agreement limited the use of Parcel 1 to restaurant use. The Settlement Agreement requires open space and park use on Parcel 4.
Since the use of Parcels 1 and 4 are also governed by the City of Alameda zoning ordinance, shortly after executing the 2013 amendment with BCDC, HBIA approached the City of Alameda in the spring of 2014 and requested a zoning amendment for Parcel 1 that would allow office and mixed use development consistent with the recently executed Settlement Agreement amendment with BCDC. (The zoning already allowed restaurants.)
On July 7, 2014, a Grant Deed was recorded in the Alameda County official records transferring title in Parcel 1 to Mina Patel’s Tax Exchange Holding Company, Greenley LLC. By September 2014, title in Parcel 1 was transferred to Mina Patel’s company, Ram Hotels.
On October 21, 2014, the City Council considered the zoning amendment for Parcel 1 and adopted Ordinance No. 3086 to rezone Parcel 1 to Commercial Manufacturing, consistent with the zoning in the rest of the Harbor Bay Business Park. The Ordinance required that any use and development of Parcel 1 be consistent with the BCDC Settlement Agreement as amended. HBIA represented the applicant at the public hearings. Ordinance No. 3086 is attached as Exhibit 2.
After the City Council’s action to approve the zoning change, Ram Hotels simultaneously submitted applications to build a hotel on Parcel 1 to both the City of Alameda and BCDC. The Ram Hotels proposal included a hotel on Parcel 1 and landscaping and Bay Trail improvements on Parcel 4. Ram Hotels proposed to improve Parcel 4 and then dedicate it to the City of Alameda to complete the Shoreline Park as an offsite improvement project, with the cooperation of HBIA.
Over the course of the next year, the City of Alameda worked with Ram Hotels to process the hotel application. During the entire public planning process, City staff was working under the faulty assumption that BCDC considered the hotel to be consistent with the BCDC Settlement Agreement and that BCDC was generally in support of a hotel on the site.
On September 1, 2015, after three public hearings before the Planning Board, the City Council held a public hearing and approved the hotel. The Council action was conditioned on BCDC approval of the same proposal, and the Council resolution required that all necessary permits be acquired and work be commenced within two years.
Sixteen months later, on February 10, 2017, BCDC staff recommended approval of the hotel to its Board of Commissioners. Although BCDC staff was recommending approval, the staff report also stated that the hotel use was not consistent with the Settlement Agreement, and an amendment to the Settlement Agreement would be necessary if the Commission approved the hotel project. Eleven commissioners voted to approve, one abstained, and six BCDC commissioners voted against the proposal. Since BCDC requires 13 affirmative votes to pass a motion, the motion to approve the project failed. Two weeks later, the six commissioners who voted against the project voted to approve findings for denial. Therefore, based on the action of the six commissioners, the application was denied.
In April 2017, the City Council approved a referral requesting that staff prepare a report to the City Council addressing the “feasibility of completing the Park and whether title to the uncompleted strip should be taken in order to facilitate completion.”
On September 1, 2017, the City Council’s September 1, 2015 approval of the hotel project expired.
In November 2017, Ms. Patel approached the City with a new design for a hotel on Parcel 1.
On January 22, 2018, the Planning Board held a public hearing to consider whether the Board would recommend an amendment to the zoning for Parcel 1 to allow hotel use by removing the reference to the Settlement Agreement restrictions. A majority of the Planning Board recommended against the zoning amendment. (4 opposed, 2 in support, and one absent.)
In March 2018, the City Manager’s office began discussions with HBIA for the acquisition of Parcel 4 by the City to complete the Shoreline Park. The most relevant correspondence is attached as Exhibit 3.
DISCUSSION
The following discussion is organized into two parts: 1) Recommendation on Parcel 1 Zoning Amendment, and 2) Recommendation on Parcel 4 Acquisition.
Recommendation on Parcel 1 Zoning Amendment
The proposed zoning amendment requires that the City Council consider the following question: should the zoning for Parcel 1 be changed to allow a hotel, or should the zoning for Parcel 1 remain the same, which allows office, mixed use and/or restaurant use?
Under the current zoning adopted by the City Council in October 2014, Parcel 1 can be developed by the property owner with a restaurant, an office building or mixed use building. The size, height, setbacks, and parking for the future office building is all governed by the existing CM zoning standards for the site.
Staff is recommending that the zoning be changed to allow hotels for the following reasons:
• A hotel with publicly accessible ground floor spaces and waterfront patios and seating areas is a good use of a waterfront site and preferable to the use of the site for private offices with private waterfront patios and spaces immediately adjacent to the San Francisco Bay Trail, which is permitted under the current zoning for the site.
• The San Francisco Bay Conservation and Development Commission Bay Plan encourages visitor serving uses, such as hotels on waterfront locations. The BCDC staff also recommended the use of the site for a hotel.
• A hotel would need to meet the same height, setback, parking, and floor area limitations that would be imposed on an office building.
• Hotels are permitted on all other sites in the Harbor Business Park with Commercial Manufacturing zoning designations.
Planning Board Recommendation: At the Planning Board meeting, the Board disagreed with the staff recommendation and recommended that the zoning for Parcel 1 remain unchanged. A majority of the Board (four members) argued that the site is too small for a hotel. The minority (two members) argued the existing zoning requirements (height limits, floor area ratios, setbacks and lot coverage limits) limit the size of any new building on the site, whether it is a hotel or an office building, and that the Board can always deny a hotel proposal that is not consistent with the zoning or not attractively designed to meet City expectations and standards.
City Council Discretion: A zoning amendment is a legislative action that can only be made if a majority of the Council can make all three of the following findings:
1. Allowing hotels on the property would be consistent with General Plan policies and objectives;
2. Allowing hotels on the property would be equitable, and
3. Allowing hotels on the property would benefit the general welfare of the community.
When considering the necessary findings for a zoning change, the City Council should consider the following:
• There are no General Plan policies that would indicate that hotels should not be on waterfront sites, such as Parcel 1 or in the Harbor Bay Business Park. In fact, the General Plan specifically recommends a hotel on the Ballena Isle waterfront site, and the General Plan states that hotels in the Harbor Bay Business Park are appropriate.
• General Plan policies support an island-wide jobs housing balance. To achieve this balance, Alameda needs more jobs. An office building will typically generate more jobs than a hotel of comparable size. Furthermore, the City is currently considering four other hotel proposals: one on Park Street, two other proposals in the Harbor Bay Business Park, and a preliminary proposal for Ballena Isle.
• Hotels are permitted on all the other development sites within the Harbor Bay Business Park. Therefore, granting the right to Parcel 1 for hotel use would not be granting the property owner a right that is not available to other property owners in the Business Park.
• The hotel occupancy taxes that hotels generate benefit the General Fund, which funds the construction and maintenance of public parks, streets, and police and fire services.
Conclusions on Zoning Amendment: In conclusion, staff recommends that the zoning be amended to remove the reference to the Settlement Agreement, which would allow a hotel on Parcel 1. This amendment would allow the Planning Board to consider a proposal for a hotel on this site, which, if approved, would allow the applicant to resubmit an application to BCDC to approve a hotel on the property.
Recommendation on Parcel 4 Acquisition
In April 2017, the Council approved a referral directing staff to investigate the feasibility of acquiring Parcel 4 and completing the Shoreline Park. This report provides the requested analysis:
As shown in Exhibit 1, Parcel 4 is a small parcel between Parcel 1 and the San Francisco Bay. The property is zoned for open space use and is currently improved with a temporary bicycle and pedestrian path, which is part of the Harbor Bay Shoreline Park. The parcel is approximately 43 feet wide and 350 feet long. In 1991, a 17.5 foot wide public access easement was recorded along the length of the property to allow use of the property for the Bay Trail bicycle and pedestrian path.
The Development Agreement between HBIA entities and the City of Alameda anticipates and requires conveyance of Parcel 4 to the City for the Shoreline Park. The Development Agreement assumes that Parcel 4 will be improved concurrent with Parcel 1 consistent with BCDC approval. Upon completion of the improvements, the Development Agreement requires dedication of Parcel 4 to complete the Shoreline Park.
As documented in the attached correspondence with HBIA regarding the conveyance of the property to the City, City staff believes that the City should acquire the property at this time at no cost to the City. Exhibit 3 includes the most relevant written communications between the City and HBIA.
Staff believes that with the upcoming expiration of the Development Agreement in April 2019 and based on the fact that the City has waited over 20 years for HBIA or a subsequent owner of Parcel 1 to improve Parcel 4 and dedicate it to the City, the City should immediately pursue acquisition of Parcel 4 in its current condition.
Once the City has acquired Parcel 4, the City Council, as part of the bi-annual Budget Capital Improvement Program, may decide to: 1) improve the parcel at City cost, or 2) retain the parcel in its current condition with its temporary asphalt path and require that any future developer of Parcel 1 fund landscape and Bay Trail improvements. The City of Alameda does not currently have any funds dedicated for improvement of this particular parcel.
The Harbor Bay Business Park Assessment District 92-1 provides funds for improvement and maintenance of the Harbor Bay public facilities, including the Harbor Bay Parkway and Shoreline Park, but the funds currently available within the District are already committed to other Harbor Bay Business Park improvement needs. During the annual budget process, the City Council has the authority to reallocate funds and adjust funding priorities.
In conclusion and in response to the City Council’s April 2017 request, staff believes it is feasible and appropriate for the City to acquire Parcel 4 at this time. Staff is recommending that the City Council authorize the Interim City Manager to pursue all necessary required processes to acquire the property at no cost for permanent open space use.
FINANCIAL IMPACT
Parcel 1 Zoning Amendment: Hotels generate Hotel Occupancy Taxes and property taxes that generally exceed the property taxes and any other taxes that might be generated by a private office building of a similar size to the hotel building. From a General Fund perspective, allowing hotel use on the property would have a positive financial impact.
Parcel 4 Acquisition: Acquisition of the parcel at no cost will require an expenditure of time and resources to prepare and review documents and complete the transaction. The transaction will also require an action by the Planning Board determining that the acquisition of the land for open space is consistent with the General Plan. In the event that the transaction becomes more complicated than anticipated or legal issues arise, the City Manager and City Attorney will inform the City Council at which time the Council will have the option of pursuing an alternative course of action.
MUNICIPAL CODE/POLICY DOCUMENT CROSS REFERENCE
Hotels and office uses are consistent with the General Plan policies for the Harbor Bay Business Park.
The General Plan and Zoning Map designate Parcel 4 for public open space uses consistent with the rest of the Harbor Bay Shoreline Park.
ENVIRONMENTAL REVIEW
An Environmental Impact Report was prepared for the development of the Harbor Bay Business Park Planned Development. The Environmental Impact Report considered the environmental impacts of full development of the Business Park at a density and intensity that far exceeds the actual density and intensity that has been implemented with the development of the Business Park over the last 20 years.
Pursuant to Sections 15162 and 15163 of the California Environmental Quality Act (CEQA) Guidelines, no additional environmental review is required for this zoning amendment. The amendment would not change any of the physical development limitations (e.g. height limits, setbacks, lot coverage, Floor Area Ratio) that apply to the property. The proposed amendment would simply allow the development of the site for a commercial hotel; whereas the current zoning already allows development of the site for a comparable sized commercial office building.
Further, there have been no significant changes in circumstances that require revisions to the previously certified Environmental Impact Report. The subject property is currently vacant and it has no habitat value for any endangered, rare, or threatened wildlife species. A habitat assessment and survey of burrowing owls conducted by WRA Environmental Consultants concluded that no burrowing owls are present on the site and that the site provides poor quality habitat for burrowing owls. In addition, allowing use of the site for a hotel would result in fewer peak hour automobile trips than a commercial office building. Lastly, the Alameda Airport Land Use Commission and Federal Aviation Administration (FAA) deemed that the prior, taller hotel was consistent with airport land use regulations upon the FAA issuing a Determination of No Hazard to Air Navigation for the proposed location and 5 story height of the prior hotel.
RECOMMENDATION
Conduct a public hearing and introduce a first reading of an Amendment to Ordinance No. 3086 to permit hotels at 2350 Harbor Bay Parkway (“Parcel 1”), and authorize the Interim City Manager to proceed with acquisition of 2370 Harbor Bay Parkway (“Parcel 4”) for open space and park purposes.
Respectfully submitted,
Andrew Thomas, Interim Planning Building and Transportation Director
Financial Impact section reviewed,
Elena Adair, Finance Director
Exhibits:
1. Map of Parcels
2. Ordinance 3086
3. Harbor Bay Isle Associates Correspondence