Trust in the Merriam-Webster dictionary is defined as the “belief that someone or something is reliable, good, honest, effective.” Sadly, on numerous occasions, the City of Santa Monica and some their residents have proven that they cannot be trusted.
Most recently, the City and some of its resident’s violation of trust involved the Hines Bergamot Transit Village project. Even when Hines followed the city’s own general plan, Hines found they could not trust Santa Monica.
Even when Hines submitted a well-vetted master plan that would win a ULI Award of Excellence for good transit station planning, Hines found they could not trust Santa Monica. Even when the city council approved the Hines project, the City Council reversed their vote. Hines learned the hard way you cannot trust Santa Monica.
About seven years after negotiations began for a mixed commercial and residential project to replace the abandoned Papermate factory in Santa Monica’s former industrial corridor, it’s back to the drawing board for Hines Interests.
The Santa Monica City Council voted 4-1 to rescind its approval of the controversial Bergamot Transit Village, a 765,000 square-foot development project, with 300,000 square feet of office and 427 residential units, slated for a five-acre parcel across the street from the future Expo light rail station at 26th Street and Olympic Boulevard. This represents an FAR of 3.5, which is quite modest when one considers that this site is right next to a transit station. The Bergamot Transit Village is immediately across the street from the Water Garden development, which is comprised of 1.27 million square feet in five and six story buildings.
The recent vote comes after a coalition of anti-development activists circulated a referendum petition calling for the reversal of the Council’s 4-3 vote in February to approve the project. Because the opposition collected at least 6,500 valid signatures — roughly 10 percent of the registered voters in Santa Monica — the City Council was required to reverse its decision or place the matter before the voters, either in a special election or in November.
The decision also throws into question the future of the $32.2 million in community benefits for schools, parks and public streets the developer agreed to pay over the next 55 years as part of the now-defunct development agreement.
Trust is the basis of all human dealings. In all contracts, there is an implied tenet of good faith and fair dealing. When a landowner is attempting to secure governmental approvals, there has to be a belief that government will honor its own rules. If, as the landowner, you follow all the rules, there is an expectation that the process will yield a vote and, in most cases, a positive vote. If the city council takes a vote and it is positive, there is an expectation that that vote means something. Otherwise, as landowners, we need to give councilmembers lie detector tests. When the landowner is on the one yard line and ready to score, it is not okay for the council to change the rules and proclaim that they are playing by Canadian rules, with a football field 110 yards long.
This is what happened to Hines.
For a developer, the biggest factors affecting success are time and timing. If the approvals go on endlessly, the cost to carry the land and out of pocket costs can have a detrimental affect on project economics. If the project approval is out of sync with the financing and rental/sale market, then this can increase the holding period, the costs and negatively impact project economics.
I know that government and most community members are not concerned with whether a project is economically feasible for the developer. For the developer, a project needs to meet the demand in the market place and be financially feasible, so that it can be financed and provide a reasonable return for the developer’s investors. The objective for every project should be to create a win-win project for the developer, government and the community. The more that it is a win-win project the more that there can be community benefits. For those in government and the community that hold the view that the developer “has no choice,” they will be disappointed when the developer does not proceed with a project. At some point, projects are just not feasible.
I believe that Hines is at this point.
Developers are always trying to identify the various communities and satisfy their demands. Often, it is difficult for these community groups to articulate their concerns or objectives in a concrete way, so that the developer can properly respond. For most communities, all change is difficult. They want things to be the way they use to be, with less traffic, meet the community’s aesthetic and pay the fees of the new project without building the new project. For the developer, it feels like a greyhound race — the rabbit (the community) will always be ahead and winning.
Hines offered $32.5M or $42.48 per square foot in community benefits and on site park space and it was still not enough. How much of a smaller project does the community want?
In February, the Santa Monica City Council approved the huge Bergamot Transit Village multi-use development for a site in the Bergamot Arts District near a future stop on the Expo Line extension.
Then, following a massive NIMBY protest, there and a petition signed by over 6,000 people. With ten percent of the residents in the city signing the petition, they managed to get the project onto November ballot for a public referendum. This caused the city council to unapprove the project.
Now it’s back to the drawing board for developer Hines, which has been working on this project since 2007. In August 2007, Hines purchased a seven acre property, formerly a Paper Mate factory and (now unused). At that time, Texas-based developer Hines announced plans to put “two- to four-story office buildings totaling about 300,000 square feet,” on the site.
In December 2009: Hines held the first community meeting about the project. With Hines announcing plans for a 71-foot building (five stories and retail space), the project began to worry anti-development Santa Monicans, who cited fears about traffic. Although the “massive” development is right next to a stop on the planned Expo Line’s route, many were doubtful that would encourage car-free trips.
In January 2010: a short article in one of the local newspaper announced the planning commission meeting for the Bergamot Transit Village and stated that the development would have “far-reaching, irreversible impacts” on the community and encouraged residents to show up and complain about it. Opposite the print article was a letter to the editor “blasting” the project.
By December 2010: The project grew to 80 feet in height, and included 2,000 car spaces. This reinforced the fears of those who worried that this so-called transit-oriented development would flood the city with cars.
March 2011: The anti-Bergamot campaign started to get nasty, with residents accusing some city councilmembers of being biased in favor of the project because their campaigns got money from the developer of the 969,000-square-foot Transit Village.
March 2011: The Design Review Board sent Bergamot back to the design drawing board with instructions to jazz up the “insular campus with tall, unvaried buildings with blank walls…” and address residents’ concerns with the design.
In June 2011: Bergamot Transit Village received an unofficial federal blessing from US Housing and Urban Development Secretary Shaun Donovan, who toured the project site then gave a grant of $652,000 toward the building of the Transit Village. The award also put Santa Monica in the running for more federal money for public transit.
By August 2011: Hines presented a newly redesigned Bergamot Transit Village. It was smaller (767,000 square feet) and incorporated pocket parks throughout, and a new arrangement for the five buildings. The amount of retail space was reduced from 83,712 square feet to 47,123. The surrounding neighbors were not impressed and wanted it to be even smaller.
February 2012: Santa Monicans against the Transit Village received some support from the West LA Neighborhood Council, which voted to oppose the project. “I think everyone is sick and tired of Santa Monica dumping traffic in our district with no mitigations possible. The agenda is to build and grow, which is fine if it’s done in a responsible way,” says the West LA Council Chairman. (This action benefited a competing West Los Angeles development.)
March 2012: The Los Angeles City Council jumped on the anti-Bergamot bandwagon, fearing that the mitigation efforts in the project’s draft environmental impact report were “inadequate.” They moved to ask Santa Monica to extend the public comment period on the DEIR. Meanwhile, Santa Monica’s director of City Planning expressed a desire to increase the number of residences in the project, reasoning that maybe if more people worked at Bergamot they could live in Santa Monica. Thus, it was thought that they would not clog up the roads trying to get in.
May 2012: The planning commission’s review of the Bergamot Transit Village was pushed from June 2012 all the way to 2013. City planners wanted changes, and they hinted that the project might reappear in 2013 with more housing and less office space, which would alter the number of affordable housing units available.
May 2012: When the EIR for Bergamot was finally finished, it was 8,711 pages long — 75 percent of which was dedicated to traffic analyses — and had a cost of more than $1 million to compile.
September 2013: There was a new plan, however, there was the same opposition. Developer Hines presented a plan for 471 apartments (including 27 live/work units for artists), as much as 374,423 square feet of creative office space, 15,500 square feet of restaurant space, and nearly 14,000 square feet of retail space. Again, Gensler’s plan was criticized for “blandness,” and called “a mini-LA Live.” (I do not believe that the design is like LA Live. But, if it is, why is that a bad thing?) The buildings were still five to seven stories tall and there are still about 2,000 parking spaces. The project was submitted to the city for design review and then a return to the planning commission. It is the role of the planning commission to vote on whether to recommend that the city council move forward with a development agreement.
October 2013: The planning commission prepared to make their recommendation to the city council for the Transit Village, but grassroots group Santa Monicans for Renters’ Rights was demanding even more housing. They wanted to see the development have 60 percent housing and 40 percent office space.
January 2014: The city council finally had an opportunity to make a decision on the plans. At the public hearing, 150 Santa Monica residents come out to air their grievances. The council spent so much time listening to the opposition that they had to push a decision to February. It was agreed by the council that at the meeting there would be no public comments allowed.
February 2014: After so many years, so much work, the city council approved the plan and made only small changes to the Transit Village, which then included 427 apartments, about 30,000 square feet of restaurant and retail space, 1,926 parking spaces, 1,284 bike spaces, and around 375,000 square feet of office space.
March 2014: A NIMBY group called Santa Monica Coalition for a Livable City filed a lawsuit against the city, hiring one of the lawyers who (successfully) fought to repeal the Hollywood Community Plan. They also collect over 6,000 signatures that would have put the matter on the ballot for the November election. (The petition wording was like asking someone: “Do you want to pay taxes?”)
May 2014: Based upon the NIMBY actions, the City Council voted to reverse their vote in February in favor of the project.
At this point, Hines must move quickly in order to have their DEIR data remain valid. But, what are their real choices:
1.They could reduce the project from an FAR of 3.5:1 to 3:1. But, would this still be enough?
2.They could increase the housing to sixty percent of the project and reduce the commercial portion to forty percent. But would this still be enough?
3.They could provide 10 percent of the residences as affordable housing. But would this still be enough?
4.They could reduce the heights of the buildings from 5 to 7 stories to 4 to 6 stories. But, would this still be enough?
5.They could increase the amount of park space in the project. But, would this still be enough?
6.They could reduce the parking ratio from 2.61 spaces per 1,000 square feet to 2.5 spaces per 1,000 square feet. This would reduce the number parking spaces from 1,926 to 1,634. But, would it still be enough?
7.They could reduce the return on their investment. But would it still be enough?
Over the next couple of years, Hines could do all these things. But, can Hines really trust the City of Santa Monica and some of its residents? If it were your money, would you?
Photo of site by author
Rendering from smgov.net