Title
Receive a report on the status, funding, and schedule of the Historic/Arts District and Town Center portions of Phase 3 of the East Garrison development, and provide direction to staff.
Report
RECOMMENDATION:
It is recommended that the Fort Ord Committee receive a report on the status, funding, and schedule of the Historic/Arts District and Town Center portions of Phase 3 of the East Garrison development, and provide direction to staff.
SUMMARY:
This report is to provide an overview of the required scope, funding, and timing for the Arts/Historic District and Town Center portions of the East Garrison project as outlined in the Specific Plan, Conditions of Approval, and the Disposition & Development Agreement.
Phase 3 of the East Garrison development includes a number of discrete compontents:
• Single-family residential units - 194 market rate
• Condominium units - 151 market rate
• Live-work units - 49 market rate and Workforce 2
• Affordable townhome units - 33 moderate income
• Rental apartments (ArtSpace) - 66 low and very low income
• Town Center commercial district
o 34,000 s.f. neighborhood commercial development
o 40 loft-type residential units
o Library/sheriff field office
• Arts/Historic District
o 25 preserved buildings from the Second World War
o Reused and converted to a maximum of 100,000 s.f. of affordable studio space, and two public neighborhood parks
Work on this phase has not yet begun. Based on the developer’s current construction schedule, the Phase 3 tract improvements are on pace to be completed in 2018, at which time construction of the Historic/Arts District and Town Center can get underway. A number of planning, financing, and property actions are needed to be ready to construct in 2018. These steps are described below with estimated timelines.
DISCUSSION:
Arts/Historic District
Approximately 9 acres in Phase 3 is designated for development as a region-serving multi-cultural arts destination. Twenty three [“approximately 25” is stated in Specific Plan] preserved buildings from the Second World War will be reused and converted into a maximum of 100,000 s.f. of affordable studio space for visual, performing, and literary artists, as well as administrative, work, daycare, and classroom space for organizations (Specific Plan §3.2.4). Residential uses will be adjacent to the mixed-use Town Center and the multi-cultural arts destination. The neighborhood will include a 66-unit low and very-low income rental apartment complex, and 49 live/work units dedicated to artists sited along the central green space or adjacent to the Town Center (Specific Plan §3.4.5).
The DDA requires the Redevelopment Agency (now the Successor Agency), upon completion of the infrastructure improvements for the Phase 3 Historic District, to make available up to $5.0 million in tax increment funds (fourth priority in the “TI waterfall”), and the Developer will provide up to $1.0 million, for major capital improvements to the buildings in the Historic District (DDA Attachment 4 §G.1, §H.d).
On June 13, 2006 the Developer, Agency, County, ArtSpace Projects, Inc., and Arts Habitat, Inc. executed an MOA to negotiate a Disposition & Development Agreement (DDA-Historic/Arts District) for ArtSpace to take title to and rehabilitate the historic buildings. In 2008 a draft DDA for the Historic/Arts District was negotiated among the parties, but was not approved or adopted prior to the nation-wide financial collapse and the then-developer’s bankruptcy.
The DDA requires the Developer to identify a qualified non-profit corporation (which may be Artspace or an affiliate), and together with the Successor Agency, to enter into a contract for the maintenance and rehabilitation of those buildings to be conveyed to the non-profit. Upon completion and occupancy of 50% of the buildings in the Historic District, the Developer must contribute $250,000 to the establishment of an endowment for the non-profit to cover the operating costs of the Historic District.
At the time of conveyance of the East Garrison property to the developer in 2007, the Redevelopment Agency retained ownership of the 23 “historic contributing” buildings and surrounding property, as well as the old theater, that comprised the Historic District. The DDA states that the Agency will convey by lease or in fee to the non-profit corporation the 20 buildings to be maintained and rehabilitated by the non-profit. The Agency will retain the three buildings planned for public use and public ownership, and will enter into an agreement with the non-profit for their maintenance and rehabilitation to Agency specifications (in accordance with historical rehabilitation guidelines) at the Agency’s sole cost. When complete, the Agency is to convey title of the three buildings to the County (DDA Attachment 9 §3).
Next Steps:
It is anticipated that construction of the Phase 3 tract infrastructure improvements will be completed in 2018, at which time the planned Historic District development will be ready for implementation by ArtSpace/Arts Habitat and the Successor Agency. The activities and tentative timelines for completion for development of the Historic District include:
1. Summer 2016 - Schedule meeting with Artspace and Arts Habitat to re-acquaint the parties with their respective roles, financial and performance obligations, and timeline for implementation.
2. Fall 2016 through 2017 - Review/update development cost estimates, TI funding scenarios, anticipated revenue timeline, and potential short-term loan financing for Arts/Historic District program.
3. Summer 2017 to Spring 2018 - Negotiate and execute agreements and sell lots for Historic/Arts District
4. Summer 2018 - Implementation begin
Town Center
The Town Center includes approximately 16 acres in the center of the East Garrison Specific Plan area, and will include primarily commercial use. There will also be a public Town Square park that will be a primary gathering place for residents and visitors to East Garrison, and will serve as a venue for hosting community events, festivals, and concerts (Specific Plan §3.4.3).
The developer will construct a total of 34,000 s.f. of neighborhood serving retail, civic, and other non-residential uses, plus 40 loft-type residential units above the commercial spaces. The Library/Sheriff’s Field Office is to be funded by both the developer and Agency, and 4,000 s.f. of the proposed Library count toward satisfying the 34,000 s.f. Town Center Construction Obligation (DDA Attachment 4 §G.2; DDA Attachment 9 §6).
The anticipated timing of the Town Center development based on development triggers is:
a. Summer/Fall 2018 - UCP to post a completion bond for the Town Center prior to sale of the first lot in Phase 3;
b. Late 2019 or 2020 - UCP shall complete construction of at least 20,000 s.f. of the Town Center prior to sale of the 200th lot in Phase 3 or if not shall release bonds to and provide Agency with Right of Entry to complete the Town Center (First Implementation Agreement §5).
OTHER AGENCY INVOLVEMENT:
In 1994, as implementation of the closure of Fort Ord was nearing completion, the US Army, the Advisory Council on Historic Preservation, and the California State Historic Preservation Officer (SHPO) executed a Programmatic Agreement regarding Base Closure and Realignment Actions at Fort Ord (Attachment 5).
Subsequently, in 2004 the SHPO and the Fort Ord Reuse Authority (FORA) executed and recorded an Agreement and Covenant for the Transfer of the East Garrison Historic District (Attachment 6). This Covenant committed FORA to ensure the East Garrison Historic District is rehabilitated, adaptively used, preserved, and maintained in accordance with the Standards for the Treatment of Historic Properties (US Dept of Interior, National Park Service, 1995). This commitment was carried through in the deeds of transfer from FORA to the Redevelopment Agency and from the Agency to the East Garrison developer.
Since that time, however, in a letter dated December 4, 2012 (Attachment 7), the SHPO notified the developer and the County that, based on advice of their legal counsel, the Office of Historical Preservation (OHP) has no authority to enter into, hold, or enforce such covenants, and notified the County Assessor to remove the Historic Covenant from the title of the East Garrison Historic District properties.
Notwithstanding this action, the requirements of the Specific Plan, the DDA, the Final EIR, and the Conditions of Approval for the East Garrison development continue to require both the Developer and the Successor Agency to fund and implement the Arts/Historic District provisions of the development.
FINANCING:
The DDA requires the Successor Agency to provide up to $5.0 million in tax increment funds, and the developer to provide $1,000,000 (both amounts to be escalated to the ENR Construction Cost Index from October 2005) to rehabilitate and maintain the historic buildings in the Historic District. The funding is to be provided upon completion of the infrastructure improvements for Phase 3 of the development, which is presently anticipated in 2018.
The non-profit corporation will operate and maintain the 20 buildings in the Historic District using a combination of the funds from the initial developer endowment, rental or lease income from the property, and charitable grants and contributions, and no other funds are required from the developer, Successor Agency, or County.
All costs related to the commercial development of the Town Center will be borne by the Developer. The Library costs will be shared by the Agency and developer.
The Board of Supervisor’s stated intent in 2005 was that the East Garrison development would be “revenue neutral” to, i.e. have no impact on, the County General Fund. However, the Successor Agency is currently in dispute with the State Department of Finance regarding the continued viability of the DDA and the associated tax increment funding upon which the Successor Agency’s financial contribution to the project is based. The Agency’s ability to provide the required funding will be based on the outcome of that dispute.
Prepared by: G.H. Nichols, PE, Special Projects Engineer
Reviewed by: Melanie Beretti, Special Programs Manager
Approved by: Carl P. Holm, AICP, Resource Management Agency Director
Attachments:
Historic District:
1. Excerpt of Specific Plan re Historic-Arts District
2. Excerpt of DDA Attachment 4 re Financing of Historic-Arts District
3. Memorandum of Agreement to Negotiate DDA for Rehabilitation of Historic Buildings and Operation of East Garrison Historic Arts District
4. Excerpt of DDA Attachment 9 re Scope of Historic/Arts District
5. Conditions of Approval re Historic District #52-68, 170
6. 1994 Historic Covenant US Army-SHPO
7. 2004 Historic Covenant SHPO-FORA
8. 2012 SHPO Letter Rescinding Historic Covenant
Town Center:
9. Excerpt of Specific Plan re Town Center
10. Excerpt of DDA Attachment 4 re Town Center
11. Excerpt of DDA Attachment 9 re Scope of Town Center