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HomeMy WebLinkAboutCC Minutes 2003-12-01 SRCC Minutes (Regular) 12/01/2003 Page 1 IN THE COUNCIL CHAMBER OF THE CITY OF SAN RAFAEL, MONDAY, DECEMBER 1, 2003 AT 8:00 P.M. Regular Meeting: Present: Albert J. Boro, Mayor San Rafael City Council Gary O. Phillips, Vice-Mayor Paul M. Cohen, Councilmember Barbara Heller, Councilmember Cyr N. Miller, Councilmember Absent: None Also Present: Rod Gould, City Manager Gary T. Ragghianti, City Attorney Jeanne M. Leoncini, City Clerk OPEN SESSION – COUNCIL CHAMBER – 8:00 PM: None CLOSED SESSION – CONFERENCE ROOM 201 – 8:00 PM: 1) Conference with Legal Counsel – Existing Litigation Government Code Section 54956.9(a) Case Name: Chester Williams vs. City of San Rafael WCAB Case # OAK 273533 City Attorney Gary Ragghianti announced that no reportable action was taken. ORAL COMMUNICATIONS OF AN URGENCY NATURE: 8:07 PM a) Audited Financial Statements: - File 9-1 x 8-5 Gary Ford, San Rafael resident, stated the issue of timely receipt of the audited financial statements had been resolved to him in that he recognized he would not receive them until at least mid or late December. He indicated his current issue related to a potential Charter violation, explaining that Charter Article 8, section 11, specifically states that the City Council is required to publish audited financial statements within ninety days, and this had not been done. Mr. Ford requested the City investigate whether a Charter violation had occurred, and if so, resolve it in a public fashion. Having confirmed with Mr. Ford that this was reflected in his letter dated November 26, 2003, Mayor Boro stated City Attorney Gary Ragghianti would respond to the letter. b) Graffiti Abatement: - File 13-9 Indicating that rapid removal of graffiti was the best deterrent to its return, Dick Sadler reported that approximately seven years ago, San Rafael passed a Graffiti Abatement Ordinance, which basically states that upon notice, a business has approximately ten days to remove the graffiti, or perhaps an additional ten days if they joined San Rafael’s Graffiti Abatement Program. Mr. Sadler stated that in June of this year, three businesses had their plate glass windows acid etched. The two businesses on Fourth Street took care of their graffiti in short order; however, the business at 835 Fifth Avenue appeared to be receiving preferential treatment. Mr. Sadler stated that City Manager Gould indicated the plate glass would be removed and replaced on October 17, 2003, albeit the notice having been issued to the business on June 14, 2003. City Manager Gould stated that Mr. Sadler had brought the issue to staff’s attention at various times since June, and it was his understanding that this property owner suffered vandalism to the front and rear of his property, incurring substantial costs. One set of windows had been repaired and verbal assurances had been received that the second would be. Mr. Gould indicated that the City tries to work with property owners who have been vandalized, as indeed they were victims. On occasion the damage is costly, and in a tough economy, the City did not wish to penalize them twice. He stated he would request Code Enforcement to investigate the delay and determine whether further enforcement was required. Councilmember Phillips moved and Councilmember Miller seconded, to approve the Consent Calendar as follows: ITEM RECOMMENDED ACTION Minutes approved as submitted. 2. Approval of Minutes of Regular Meeting of Monday, November 17, 2003 and Special Closed Session Meeting of November 22, 2003 (CC) SRCC Minutes (Regular) 12/01/2003 Page 1 SRCC Minutes (Regular) 12/01/2003 Page 2 RESOLUTION NO. 11457 – 4. Resolution of Appreciation to Vera Hartunian for RESOLUTION OF APPRECIATION TO Ten Years of Volunteer Service with the San VERA HARTUNIAN FOR TEN YEARS Rafael Police Department (PD) – OF VOLUNTEER SERVICE WITH THE File 102 x 9-3-30 SAN RAFAEL POLICE DEPARTMENT RESOLUTION NO. 11458 – 6. Report and Resolution Authorizing the Director of RESOLUTION AUTHORIZING THE Public Works to Sign a Dredging Lease Between DIRECTOR OF PUBLIC WORKS TO the California State Lands Commission and the SIGN A DREDGING LEASE City of San Rafael for Dredging of the San Rafael BETWEEN THE CALIFORNIA STATE Canal and All Other Dredging Related LANDS COMMISSION AND THE CITY Documents (PW) – File 2-8-31 x 12-10 OF SAN RAFAEL FOR DREDGING OF THE SAN RAFAEL CANAL AND ALL OTHER DREDGING RELATED DOCUMENTS (5 year lease commencing October 1, 2003 and ending October 20, 2008) RESOLUTION NO. 11459 – 7. Resolution Authorizing the Use of Twelve (12) RESOLUTION AUTHORIZING THE Low and Moderate Income Housing Units by the USE OF TWELVE (12) LOW AND Redevelopment Agency in Conjunction with the MODERATE INCOME HOUSING Grant to Buckelew Community Development UNITS BY THE REDEVELOPMENT Organization (1103 Lincoln Avenue) (RA) – AGENCY IN CONJUNCTION WITH File 13-16 x 140 x 202 x (SRRA) R-455 x (SRRA) THE GRANT TO BUCKELEW R-173 COMMUNITY DEVELOPMENT ORGANIZATION (1103 Lincoln Avenue) AYES: COUNCILMEMBERS: Cohen, Heller, Miller, Phillips and Mayor Boro NOES: COUNCILMEMBERS: None ABSENT: COUNCILMEMBERS: None The following item was removed from the Consent Calendar for discussion, at the request of Councilmember Heller: MONTHLY INVESTMENT REPORT FOR MONTH ENDING OCTOBER 2003 (MS) – 3. FILE 8-18 x 8-9 Councilmember Heller complimented Assistant City Manager Ken Nordhoff on his preparation of the report. She stated the record should note the City was having problems with the VLF (Vehicle License Fee) payment; October 2003 down $171,170 from October 2002, and down $673,410 through the first quarter of the current fiscal year. Councilmember Heller believed the fact that the State was taking local government money, causing closure of libraries, etc., should be kept in the forefront. Councilmember Heller moved and Councilmember Phillips seconded, to accept the report. ACCEPTED MONTHLY INVESTMENT REPORT FOR MONTH ENDING OCTOBER, 2003, AS PRESENTED. AYES: COUNCILMEMBERS: Cohen, Heller, Miller, Phillips and Mayor Boro NOES: COUNCILMEMBERS: None ABSENT: COUNCILMEMBERS: None The following item was removed from the Consent Calendar for discussion, at the request of Councilmember Heller: RESOLUTION AUTHORIZING STAFF TO MAKE APPLICATION AND EXECUTE 5. CONTRACT WITH STATE OF CALIFORNIA DEPARTMENT OF GENERAL SERVICES FUNDS FOR THE E911 UPGRADE AND PURCHASE MAPPING SOFTWARE FROM SUN RIDGE SYSTEMS, INC. (PD/FD) – FILE 4-2-330 x 9-3-30 x 9-3-31 Councilmember Heller stated it was time for all the cities to have their own 911 service, which was a very good use of State money. She inquired as to when it would be in operation for San Rafael. Systems Manager Mark Rinkel explained that San Rafael’s E911 upgrade was in conjunction with the remainder of the Bay Area. Marin County would all go together, probably in February, and San Rafael anticipated having its system ready in January to be in a position to move with SRCC Minutes (Regular) 12/01/2003 Page 2 SRCC Minutes (Regular) 12/01/2003 Page 3 the County as a group. He confirmed for Councilmember Heller that after that, the entire County should be getting calls individually. Mr. Rinkel stated it was worth noting that it could take some time to pick up more and more calls as cellphone companies continually improve their systems. He explained the newer cellphones are much more accurate in identifying locations and in time the system would improve. Councilmember Heller stated she hoped there would be some press coverage on this item. Councilmember Heller moved and Councilmember Miller seconded, to adopt the Resolution. RESOLUTION NO. 11460 – RESOLUTION AUTHORIZING STAFF TO APPLY FOR FUNDING FROM AND EXECUTE CONTRACT WITH STATE OF CALIFORNIA DEPARTMENT OF GENERAL SERVICES FUNDS FOR THE E911 UPGRADE, AND TO PURCHASE MAPPING SOFTWARE FOR THE E911 UPGRADE FROM SUN RIDGE SYSTEMS, INC. AYES: COUNCILMEMBERS: Cohen, Heller, Miller, Phillips and Mayor Boro NOES: COUNCILMEMBERS: None ABSENT: COUNCILMEMBERS: None PUBLIC HEARING: 8. Public Hearing – 2350 Kerner Blvd. (Fasken Office Complex); CONSIDERATION OF A REQUEST FOR A DEVELOPMENT AGREEMENT TO ALLOW FOR A THIRTY-MONTH DELAY IN THE CONSTRUCTION OF A PREVIOUSLY APPROVED 116,427 SQUARE-FOOT OFFICE COMPLEX AT 2350 KERNER BOULEVARD; APN 009- 291-31 AND 34; PLANNED DEVELOPMENT (PD 1750) DISTRICT; SAN RAFAEL LAND COMPANY, LLC, OWNERS AND APPLICANTS (CD) – FILE 5-1-346 x 2-9-23 x 12-4 x 4-1-535 x 4-3-363 x 12-14 x 10-2 Mayor Boro declared the public hearing opened. Associate Planner Damon DiDonato explained this was a request for a Development Agreement to allow a delay in construction of a previously approved office project at 2350 Kerner Boulevard. Summarizing, Mr. DiDonato stated the key terms of the agreement would vest the previously approved project provided construction began within thirty-months and was completed within fifty-four months. The City would be prohibited from imposing any new regulations on the project; however, would be allowed to impose new fees, including a commercial linkage fee. Mr. DiDonato stated the owner would be obligated to provide site improvements, detailed both in the Development Agreement and the Staff Report. Mr. DiDonato reported that the Planning Commission reviewed the Development Agreement on October 28, 2003 and recommended approval to the City Council, finding the terms reasonable, length reasonable, the obligations to the City minimal and the public benefits, in large measure, had already been provided or would be provided within the first year of the agreement. Mr. DiDonato noted some errors within the Development Agreement, i.e., page 29, the dates of final adoption of the Ordinance and execution were incorrect and had been rectified. Jay Paxton, attorney representing the Fasken Trust, stated it was worth noting how this Development Agreement came to be before the City Council this evening. He noted that Mr. Dickman, Trustee, Mr. Hedges, General Counsel of the Trust, Bruce Jones, local representative of the Trust and Richard Hannam, Project Architect, were present should there be questions. Requesting approval of the Development Agreement, which they believed to be in the interest of fairness in the circumstances, as well as being consistent with good public policy and in the public interest, Mr. Paxton stated they were pleased to note it came with the recommendation of staff and the unanimous recommendation of the Planning Commission. Mr. Paxton explained that the project was approved by the City in March, 2000, and PPP (Priority Project Procedure) trip allocations were granted. A condition of that approval was that the Trust donate a ground lease for 50 years for the Corporation Yard, to preserve the entitlements. He indicated, however, that the City needed the Corporation Yard before the applicant was in a position to commence construction of the building and donate the ground lease. Mr. Paxton stated that staff urged the applicant in strong and persuasive terms to proceed with the donation of the ground lease. He indicated it was not an easy decision for the Trust to make, nevertheless, a decision was made to proceed and sign the ground lease. The Trust also paid its traffic mitigation fees of almost $900,000. SRCC Minutes (Regular) 12/01/2003 Page 3 SRCC Minutes (Regular) 12/01/2003 Page 4 Mr. Paxton reported that at that time discussion took place regarding what would happen should they go ahead with the ground lease. He indicated there was an understanding that because the City’s Corporation Yard was a part of the overall project approved, commencement of construction of the Corporation Yard would mean commencement of construction of the project as a whole. Mr. Paxton stated that as the construction of the Corporation Yard was nearing completion, the Trust looked at the market and engaged staff in discussion concerning whether or not it was desirable to add yet another office building to the present market in San Rafael. He noted vacancies presently in Central San Rafael are approximately 30% in Class A office space and have been for some period of time. As a result of those discussions, Mr. Paxton stated it was agreed that it made sense to consider deferring the development of this office project and instead proceed along the lines of the Development Agreement before Council this evening. He explained it would permit the City to avoid throwing yet another office building into this market, thereby avoiding slowing down the leasing of the San Rafael Corporate Center, which is important to the vitality and health of downtown San Rafael. Reporting that it took some considerable time to negotiate this Development Agreement, Mr. Paxton indicated there were disagreements at some points. The issues were worked out, however, and included recognition that should the City choose to impose a linkage fee, the Trust would be subject to it. He noted the agreement was quite favorable to the City on a number of other points also, e.g., requiring the installation of park improvements, etc., prior to the actual construction of the building. Noting a letter of objection to the Development Agreement was received by the City, arguing that the City was not entitled to grant it, Mr. Paxton stated that while they strongly disagreed, he would not address the argument directly. He noted, however, that the City Attorney had looked quite carefully at this matter and concluded the City had the power and right to enter into this Development Agreement. He indicated that the Fasken Trust stepped in for the City when it needed the cooperation of the Trust, doing so in good faith, and in the belief that this Development Agreement was a fulfillment of the risk taken. Mr. Paxton reiterated that it was also in the interests of the City of San Rafael as another office building was not needed presently. Indicating that it was not their intention to delay any longer than necessary the construction of this building, Mr. Paxton explained that throughout the period since first filing the application, the Trust had been in an economic position to be able to construct the building without financing, which also meant constructing the building without a lease. While not the best course from the Trust’s perspective, Mr. Paxton stated that between giving up its entitlements and this course, the Trust would clearly choose to construct the building and would undercut the rental rates prevalent in the City to procure tenants. Mr. Paxton indicated it was their belief this Development Agreement was in the interest of the City, yet they continued to hold discussions with tenants. He stated they intended to build as soon as they could and are presently in active discussions with tenants who could not go into downtown San Rafael. For their own reasons and uses, he indicated the existing space in downtown San Rafael does not work for them; however, this one does. Mr. Paxton stated they hoped to construct a building in the relatively near future that would not displace tenants from downtown San Rafael. While there was no assurance in the current market they could do this, Mr. Paxton stated they would try their best. Noting Mr. Paxton made reference to 30% vacancy, Councilmember Phillips stated this appeared significant with regard to the reluctance to construct at this point; therefore, he concluded there was some lesser percent that would make it more desirable to commence construction, even though the uses could be somewhat different. He inquired whether there was a trigger point. Mr. Paxton stated they did not have a set trigger point, explaining that the 30% figure he used was from the Orion Commercial Brokerage office survey and was effective as of the end of the third quarter. He believed the precise vacancy rate was 29.3% for Class A office in downtown San Rafael. Mr. Paxton stated they intended to proceed as soon as a tenant was procured; however, should the City Council instruct them to proceed now, they would do so. It was dependant on whether or not they could procure a tenant and negotiate a lease, and he confirmed they would prefer to find a tenant who would not draw business away from downtown San Rafael. Should the agreement be adopted, Councilmember Cohen stated it anticipates potentially two and a half years before the commencement of construction. He appreciated that it called for some of the work around the property to take place in the immediate future and inquired whether there was provision for maintenance of the property over the next two and a half years. SRCC Minutes (Regular) 12/01/2003 Page 4 SRCC Minutes (Regular) 12/01/2003 Page 5 Mr. Paxton deferred to staff; however, stated it was the intention of the property owner to maintain it. He stated they were completely willing to comply with any requirement by the City to continue to maintain the property, as it was in their best interests to do so. Community Development Director Bob Brown stated he did not believe the Development Agreement discussed continued maintenance of the site itself; however, he noted the City does have its full complement of nuisance ordinances, which have been imposed on the property and some construction soil being stored there has now been removed. Initiated by Code Enforcement, Mr. Brown noted there were watchful eyes very close to the site. Mr. Paxton stated they would be amenable to the insertion of such a provision should that be the pleasure of the Council. He stated it was consistent with their intentions with respect to the property. Referring to page 20 of the Development Agreement, Mayor Boro stated it discusses release upon transfer and the transferee expressly and unconditionally assuming all the obligations of the owner. He inquired whether this meant that should the property be sold within the thirty months, under this agreement, the purchaser would be obligated to commence construction within thirty months of the approved plan. Mr. Paxton confirmed they would be obligated in exactly the same way as the Fasken Trust. Mayor Boro stated he appreciated Mr. Paxton’s sentiments regarding the downtown; however, his issue related to the agreement the City had with the owners initially with respect to the transfer of the property. Assuming the market was the same in thirty months, Mayor Boro inquired whether construction would commence. Mr. Paxton responded affirmatively, explaining their decision would be to build rather than lose the entitlements. Lee Jordan, Attorney representing Cal-Pox, Inc., owner of the largest undeveloped acreage in East San Rafael, and the area impacted by the provisions of the Development Agreement under consideration this evening, stated he was not present to object to all of the provisions of the Development Agreement. He explained they were in accord with most of the provisions, and had no argument with those provisions which would vest in San Rafael Land Company a right to proceed with the project under the approved zoning, or the other entitlements referred to in the Development Agreement. Their issue was with the element that would purport to vest in the San Rafael Land Company, the right to retain the traffic allocation (PPP) granted in 1999. Mr. Jordan stated they did not believe the Development Agreement could legally or properly give to them a vested right in that PPP allocation, previously approved. Mr. Jordan reported that their objections were based on two issues. Indicating he would leave the legal objection to the end, he explained the other was because that provision of the Development Agreement would be contrary to the very policy decision contained in the City’s General Plan and the statements made by members of this Council during prior PPP hearings to other applicants in traffic impacted areas. He explained the General Plan makes it very clear that the purpose of the PPP allocation is to allow a short-term period during which traffic trips may be used for development of a given piece of property. Specifically, the General Plan contains the statement “the traffic allocation process is intended to give short-term priority for approval.” Mr. Jordan stated this policy contained in the General Plan had been repeated by members of this Council on a number of occasions. He recalled having attended numerous hearings where PPP applications were pending before the City Council and in almost every instance, the question had arisen as to whether or not the PPP process could properly be used to bank traffic allocations. Mr. Jordan stated Councilmembers’ statements had made it clear throughout that this was against the policy of the City, yet it was exactly what they purported to do this evening should that provision of the Development Agreement be approved. Mr. Jordan reminded Council that this traffic allocation was granted on December 7, 1999, four years ago. The provision purporting to grant to San Rafael Land Company a vested right to that traffic allocation, to which he objected, would extend that right for a further two and a half years, thus allowing them to retain that traffic allocation for six and a half years. Referring to City Council meeting minutes of PPP application hearings, Mr. Jordan (using pronouns) quoted:  “He stated that one of the things to be avoided was trip banking. He explained the City was not seeking to allow anyone to grab trips to be allocated in a particular area and hold them for a long period of time and this was the reason that limitations were in place.” SRCC Minutes (Regular) 12/01/2003 Page 5 SRCC Minutes (Regular) 12/01/2003 Page 6  “He did not wish to see foundations poured and the lands sit for five years until the economy got better.”  “He indicated that the purpose of the PPP process was not to allow PPP banking.”  “On the question of construction commencing within a year, he stated this could mean pouring foundations and then waiting and he was concerned about completion, as basically, it was taking an allocation of traffic. Taking the allocation for a third year was a pretty extreme exception.” Mr. Jordan stated taking an allocation for six and a half years was now being considered and he submitted that this was a clear breach of faith with the other property owners in the area who have repeatedly been assured that the City would not allow this, and it was not the purpose of the PPP process. Mr. Jordan stated that Mr. Paxton had indicated, and others might suggest, that they already had conferred upon the City the public benefit, the very basis upon which they were given a priority approval, and had executed the lease. He noted it was also mentioned that they paid a substantial amount of traffic mitigation fees. Mr. Jordan stated that should they not proceed with the project due to not having the traffic allocation, etc., he did not believe the City could retain the traffic mitigation fee. On the point of having already conferred the public benefit on the City, Mr. Jordan stated he did not believe there was a property owner in any of the traffic impacted areas of the City who would not willingly confer on the City the public benefit being offered for a traffic allocation, if in return they could be assured they could retain the traffic allocation and bank it for six and a half years. He commented that his client would be quite willing to do so, as would any other property owner. Noting it had also been suggested that the execution of this agreement was predicated upon negotiations that took place between the property owner and the City to the effect that this benefit would be conferred on the City in advance, in return for which they would somehow get a vested right to that traffic allocation, Mr. Jordan stated those negotiations were never discussed in public meetings when this issue was before the City Council, all of which he had attended. He stated it never had been a matter of public discussion, nor was there anything he could find in any of the City’s resolutions, ordinances or the General Plan that allows the City to confer upon a property owner a vested right to a PPP allocation in return for the conferring of the benefit in advance. Mr. Jordan noted it had also been suggested that the property owner conferred a benefit on the City by deferring construction of their project because of the vacancy problem existing in office structures in downtown San Rafael. He indicated that while the City might appreciate this, it was not the reason the owner was deferring construction, rather that they may be able to privately finance the construction. He indicated they have that ability; however, were not doing it now because of prevailing economic conditions. Mr. Jordan stated other property owners had been informed that this is not a proper basis for extending and continuing or banking a traffic allocation. The second basis for their opposition, Mr. Jordan stated, was that in their judgment, the City was not simply in a legal position at this point to include in that Development Agreement a provision that purports to vest in the San Rafael Land Company the permanent right to the traffic allocation granted on December 7, 1999, indicating that this PPP approval became null and void in December, 2000. Mr. Jordan referred to a letter in the file and contained in this evening’s staff report from another representative of Cal-Pox which states that the City does not have the legal authority to vest that allocation in San Rafael Land Company at this juncture. He stated the staff report indicates the City Attorney had considered this matter and came to the conclusion that the traffic allocation actually vested in San Rafael Land Company when construction of the Corporation Yard commenced; however, he found this to be an impossibility. Explaining, he stated the Corporation Yard construction commenced in the fall of 2001; however, the traffic allocation in question expired in December, 2000. Quoting from City procedures, Mr. Jordan stated “a priority project determination shall be valid for a period of one calendar year following the day of City Council approval.” (One calendar year from December 7, 1999) Mr. Jordan further quoted “within said one-year period, all required planning approvals, building permit and/or foundation permit approvals must be secured, a building permit and/or foundation permit issued and construction begun or a priority project determination time extension granted. If construction has not begun, a priority project determination shall terminate and become null and void.” Mr. Jordan stated that therefore, by December 7, 2000, construction must have commenced on this project in order for it to vest and the only exception would be if they obtained an extension. He noted, however, that the provision just quoted also states that the extension must be granted within that one-year period. SRCC Minutes (Regular) 12/01/2003 Page 6 SRCC Minutes (Regular) 12/01/2003 Page 7 Confirming that on January 16, 2002, the City Council granted an extension of the prior PPP allocation approval, Mr. Jordan stated that approval had already expired and it was not possible to extend something that had become null and void. Indicating that he had all the respect in the world for City Attorney Gary Ragghianti and Assistant City Attorney Gus Guinan, who were excellent lawyers, Mr. Jordan stated he believed they overlooked something by failing to note that under the rules of the City that apply to PPP traffic allocations, that approval expired and now was null and void. He indicated that the purpose of Development Agreements is not to cause a non-existing entitlement to vest, rather its only purpose is to cause the vesting of legally existing, valid and subsisting permits and entitlements, and this simply was not the case. Mr. Jordan stated they were concerned that the City Council was establishing a precedent which was in total violation of the representations made to other applicants for PPP approvals in the past. While he recognized it was not their intention to do so, he realized that would be the result of the action if the Development Agreement that purports to vest in this applicant the PPP allocation approved previously were approved, and he suggested it would be a mistake to do so. While his client had substantial development on his property, Mr. Jordan stated there was a substantial area which remained undeveloped. He reported that a number of prospective tenants had approached them with prospective developments for that property, one of whom had made repeated inquiries about the possibility of developing a project on that property which would produce for the City sales tax revenue of between $700,000 and $800,000 per year. Mr. Jordan stated that interest had existed since 1999 and even before, and was active, with inquiries being made through the City directly; however, the answer has always been that because of the commitment of this traffic to this project, i.e., to the San Rafael Land Company project, it would be impossible for the City to consider the other proposal. He stated that to do what is purported this evening would be at tremendous cost to the City. Mr. Jordan believed that his client and all other property owners in East San Rafael who have development proposals they would want to place before the City, had the right to appear before the City Council together with this applicant and have the question of PPP allocation reconsidered. Having concluded his formal remarks, Mr. Jordan stated he was unsure how many times he would make presentations to this City Council or any other public body again, as he was giving very serious consideration to ending this type of work. He recalled having appeared before the City Council on many occasions in the past, always as an advocate; however, he had also sat through hundreds of City Council meetings for the municipalities he represented in the County of Marin for over thirty-five years. With regard to this City, Mr. Jordan stated he was happy to state that none of the public agencies he had represented conducted their meetings in quite the same business-like fashion as San Rafael. Indicating this to be an honest compliment, Mr. Jordan stated he appreciated working with the City Council in the past and while not always winning, it had always been a pleasure to work with the City of San Rafael. Noting there were two issues, Councilmember Cohen stated he would comment later on the policy issue about PPP. On the issue of expiration of the allocation, he stated it was his understanding of Mr. Jordan’s legal argument that the San Rafael Land Company had no right to build, even today, as their traffic allocation had expired. It was not a question therefore, of what action may or may not be taken this evening, as Mr. Jordan contended they had no right at the present time to any traffic allocation. Mr. Jordan concurred and explained that the City did not have the right to confer that on them. Attorney Jay Paxton concurred regarding the conduct of City Council meetings and the honor of the City so carefully upheld. He noted Mr. Jordan had made the technical argument that because this Council’s meeting was on January 16, 2001, they could not extend a previously granted PPP. While he was unsure whether this was the time to argue about those sixteen days, he believed it was Council’s intention on January 16, 2001, when they adopted an allocation to the Corporation Yard, that they were in fact, making an allocation to the Corporation Yard. Whether it was an extension of something new did not appear to matter and did not attack in any way the validity of what was done in 2001. Mr. Paxton stated that a valid PPP was in place when construction of the Corporation Yard commenced, and had there not been, construction of the Corporation Yard would have been invalid. Mr. Paxton stated he appreciated Mr. Jordan’s quotes regarding PPP and reserving traffic, etc. While he understood City policy, he indicated this was an extraordinary circumstance; therefore, he did not believe the City was violating a yearly held policy, rather it was a recognition that this was an exception to that policy and he believed every policy had an exception for fairness built into it. Noting Mr. Jordan argued that the City would be setting a bad precedent, Mr. Paxton stated he SRCC Minutes (Regular) 12/01/2003 Page 7 SRCC Minutes (Regular) 12/01/2003 Page 8 believed it would set a worse precedent if having requested the extraordinary cooperation of an applicant, the City informed the applicant they could not build their project. He indicated that clearly, had there been that understanding at the time, there would probably have been a different conclusion regarding cooperation, and he believed a future applicant would reach a different conclusion should the City infer they did not wish to allow this project to go forward. City Attorney Gary Ragghianti recalled that after an examination of both the PPP policy and the facts involved in granting PPP to this project, the Planning Commission had acted to recommend the extension of the PPP that had been granted to this project prior to its expiration at the end of the year 2000. He believed it accurate that the City Council did not meet until January, 2001, and at that meeting, validated the recommendation from the Planning Commission. Mr. Ragghianti stated that at least two arguments could be made, and he recalled discussions at length with both Mr. Gould and Mr. Brown, at the conclusion of which he opined, rightly or wrongly, it was his judgment that prior to the expiration of the PPP for this project, the Planning Commission had acted in a timely fashion, such that if the Council granted the extension in January when it met, they (the approvals) would have been extended in a timely fashion. Mr. Ragghianti stated that was his opinion then and now. He indicated that the policy issues which attend this are separate and apart, and having a long history of staying out of policy decisions, he did not intend to enter into one now. Mr. Ragghianti stated that individuals who had articulated comments in the past could change their minds or modify their opinions, which was their prerogative. Of all of the public lawyers he had the privilege of meeting over the years, Mr. Ragghianti stated that Lee Jordan was the one for whom he had the most respect. He indicated that Mr. Jordan taught him a great deal when a young lawyer, some of which was extraordinarily painful. He noted that Mr. Jordan was one of the best public lawyers he had met, and sharing similar feelings for Mr. Paxton, Mr. Ragghianti stated they were both extraordinarily accomplished lawyers. Mayor Boro stated he assumed the second extension was for a year, with which Mr. Ragghianti concurred. Mayor Boro noted that that extension expired on January 16, 2002 and Mr. Brown, Community Development Director, agreed it was roughly in that time frame. As it was now December, 2003, Mayor Boro stated there had been approximately twenty-three months of running in neutral. A further 30-month extension was now being requested, and he indicated he had expressed to Mr. Gould that he had some problems with that. While respecting Mr. Paxton’s sentiments concerning the agreement with the City and their concern about the issues regarding the rest of the City, Mayor Boro stated this second issue was not one that should “play out on us.” He stated the obligation the City may have to the applicant with respect to what happened initially was an issue of concern to him; however, his perception was that a further twenty-two months beyond the second agreement had elapsed. Mr. Brown explained that it had taken a while to negotiate the Development Agreement back and forth between the two parties. He emphasized the fact that it had been made clear to the City Council that in staff’s opinion the Corporation Yard and Fasken Office Buildings were approved for better or worse as one project, and the PPP granting was for both projects; therefore, in staff’s opinion the fact that the Corporation Yard preceded the office, which was unexpected, nonetheless, it became the first phase of this phased project and in that sense staff believed it did vest the PPP allocation. Mr. Brown stated that under discussion were the other entitlements for the office complex it also needed in addition to the traffic allocation, and in staff’s opinion the traffic allocation did vest with the first of the buildings, the City’s project. Mayor Boro inquired whether it was Mr. Brown’s opinion the City did not need any extension whatsoever on the traffic allocation in that it had gone with the title. Mr. Brown stated this was staff’s belief and it was only the other entitlements for the office complex that were in play. City Attorney Gary Ragghianti concurred, explaining this also was the subject of a great deal of thought and argument with regard to the facts made known to him and studied during that time frame, and he did render the opinion that the construction of the Corporation Yard vested the PPP for this project. Councilmember Cohen inquired whether the traffic allocation for the Corporation Yard was part of the traffic allocated under PPP. Mr. Brown confirmed there were joint trips between the two. Councilmember Cohen stated, therefore, that the argument presented by Mr. Jordan that the allocation expired at the end of the first year would leave the Corporation Yard without any traffic allocation. Mr. Brown concurred, indicating it could not have been built. There being no further comment from the audience, Mayor Boro closed the public hearing. SRCC Minutes (Regular) 12/01/2003 Page 8 SRCC Minutes (Regular) 12/01/2003 Page 9 Councilmember Cohen stated that while he had tremendous respect for all three attorneys present this evening, unfortunately, Council was confronted with some mutually exclusive opinions. He believed that in matters such as these, it was best to favor one’s own attorney, and in this instance, he agreed with City Attorney Ragghianti. Councilmember Cohen stated that should Mr. Ragghianti concur with Mr. Brown that this is not an extension of PPP, then the issues become clearer. Should there be a dispute relating to that interpretation, he did not believe he was competent to sit in judgment of the legal issues and believed Council needed to take the advice of the City Attorney. Should the issue of whether or not vesting of PPP rights was being granted was off the table, Councilmember Cohen stated the matter became quite a bit simpler. Regarding the policy issues, Councilmember Cohen stated he was concerned about the length of time it had taken. He understood that no one quite anticipated this market, which looked tremendously different presently than in 1999, looking forward. Councilmember Cohen stated he was certain he was included in Mr. Jordan’s quotes, and if it was not a specific quote from him about banking of trips, he had articulated that point in similar words. He stated he had been concerned all along that PPP allocations should not be used to bank trips, thus creating almost a secondary market in traffic allocation. Councilmember Cohen believed, however, that something different was taking place in this case. Having looked through the Planning Commission material attached to the staff report to confirm the categories in PPP and the unique nature of this particular project, he stated that the incentives the City created in PPP in order to decide who got traffic allocation are almost all inherent to the project - high sales tax generator, affordable housing, neighborhood serving use – in almost every case those only come when the building is constructed. Therefore, policy concern had been that someone should offer a benefit and not deliver it because they were not building the project they pledged to build, resulting in no community benefit being conferred for the allocation of traffic. In this case, Councilmember Cohen stated the neighborhood serving purpose was allowing the City the property upon which to build its Corporation Yard. This was given as part of this project and had been realized. Indicating this was almost a unique circumstance, Councilmember Cohen stated there had been one other case in his memory which ended as a series of unfortunate discoveries that the benefit offered by another project in another part of town was physically separated from the project itself. He believed there was no desire to repeat that type of outcome; his assumption was that in the new General Plan, PPP would be expanded to all of the City, thus realizing community benefits that remained in almost every case, inherent to the project itself. Councilmember Cohen stated he did not believe a precedent would be created here where property owners would offer the public benefit to buy a traffic allocation for the next six years, and wait to see what happened, which would not be a desirable outcome. Indicating it appeared to him that the City had received the benefit, Councilmember Cohen stated he believed there was a fairness issue in this case and the argument he had just articulated distinguished this project successfully from the scenario of banking and holding on to traffic allocation while doing nothing. He stated he understood the owners’ of Cal-Pox desire to be able to further develop their property and recognized the potential benefit to the City. However, he also understood a decision was made in 1999, extended in 2001, and going on the advice of the City Attorney, it was legal, appropriate and proper for the City to do so. Councilmember Cohen stated it was reasonable to contemplate approving this Development Agreement. Councilmember Heller stated that Mr. Jordan’s ability to persuade and articulate on this issue of land use was excellent. She indicated she was swayed by Mr. Ragghianti’s argument, believing that through the years the City had done its utmost to keep all of the PPPs going through as rapidly as possible. Councilmember Heller stated the City did get the benefit of this one and she believed the clock started with the building of the Corporation Yard. Accepting the City Attorney’s interpretation of the vesting of the PPP at the time of the Corporation Yard construction, Mayor Boro stated that this process had been going on for four years, or 48 months, and it concerned him that it would continue for a further 30 months, i.e., six years in total. Indicating it appeared somewhat extraordinary to go that long, he stated he would like to see the project completed. Mayor Boro stated there was no crystal ball to forecast whether the market would improve in eighteen, twenty-four or thirty-months from now. It was not good presently; therefore, the argument made sense. He noted the office market in Marin County was flooded with vacancies; however, he was concerned that the additional thirty- months was too long, and suggested somewhere in the region of eighteen months. Mayor Boro stated he was going on the basis that the challenge on the PPP was valid. The development right was being dealt with and it appeared to him that eighteen or twenty-four months at the outside, would be more than sufficient. Councilmember Phillips stated there appeared to be strong legal arguments on both sides. He SRCC Minutes (Regular) 12/01/2003 Page 9 SRCC Minutes (Regular) 12/01/2003 Page 10 was persuaded in the first instance by Mr. Jordan and subsequently, by Mr. Paxton and he thanked City Attorney Ragghianti for his assistance in straightening the issue out; however, perhaps it was headed in a direction that would call upon others to make the legal judgment. Stepping back and looking at it from his perspective, Councilmember Phillips stated it appeared the City had received considerable benefit in this process and he was giving some beneficial interest to that prior commitment. He indicated he was also somewhat persuaded, albeit self- serving, that it was not in the City’s best interest at this point in time to further flood the rental market. Councilmember Phillips stated he was not quite as anxious as Mayor Boro to “get it done” because getting it done too soon would be “shooting ourselves in the foot.” He believed the applicant would get it done as soon and quickly as economically feasible, which would benefit not only them, but also to some degree, the City, the Corporate Center being one example. On the argument of the betterment of the City and vacancy rate, Mayor Boro stated a similar discussion took place, with which Mr. Paxton was involved, regarding the building of Home Depot. Some said that another hardware store could not be located there because it would drive others out of business. Mayor Boro stated the City indicated it was not its concern as should the use be entitled, it would be proceeded with and the market would sort itself out. He indicated he believed the market would sort this out and while respecting the desire to extend it to a point, Mayor Boro stated he believed thirty months was too much. Councilmember Miller stated the solidly probable opinions given by both sides provided a good deal of pause, also affording an excellent choice, indicating he would defer to the City Attorney in this case. As Councilmember Phillips had indicated, Councilmember Miller stated the City had already received the major public benefit. He believed a certain amount of fairness was necessary and in some ways, the market would sort the issue out because it was to the economic advantage of the Fasken Trust to complete the construction and get it operational. He noted they implied they were doing their best to do this in the most adverse of times, simultaneously indicating they did not want to fill it with someone who would take away from the downtown, which was a very poignant argument to him because the City could not afford a flooding of space that would take away from the downtown. Councilmember Miller shared Councilmember Phillips’ opinion that the timing was not as essential as Mayor Boro believed, and his sense was to support the Development Agreement. The title of the ordinance was read: “AN ORDINANCE OF THE CITY OF SAN RAFAEL APPROVING A DEVELOPMENT AGREEMENT TO ALLOW FOR A THIRTY-MONTH DELAY IN THE CONSTRUCTION OF A PREVIOUSLY APPROVED 116,427-SQUARE-FOOT OFFICE COMPLEX AT 2350 KERNER BOULEVARD (APN: 009-291-10, 32 AND 34 (PTN)) (RE: DA02-001, 2350 KERNER BOULEVARD AND 111 MORPHEW STREET: AP NOS. 009-291-10, 31, 32 AND 34 \[PTN\]” Councilmember Cohen reiterated his point concerning maintaining the property in a reasonable fashion for that thirty-months and Mr. Paxton agreed on behalf of his client. Councilmember Cohen stated he would like the motion to include the acceptance of an offer to maintain the property in a reasonable manner until commencement of and during construction. Mr. Paxton agreed and indicated they would be prepared to accept language in the Development Agreement satisfactory to the City Manager and City Attorney prior to its signing. Councilmember Miller moved and Councilmember Phillips seconded, to dispense with the reading of the ordinance in its entirety, and refer to it by title only, and pass Charter Ordinance No. 1816 to print by the following vote, to wit: Mayor Boro recalled meeting Mrs. Fasken, whom he admired greatly, in 1995. He indicated his concern was that for whatever reason, between the applicant and staff, the issue had been skated on for two years. He did not believe a further thirty-months was right and could not support such an extension. As the title of the ordinance contained the typographical error “two-year delay, this was clarified to read “thirty-month delay.” AYES: COUNCILMEMBERS: Cohen, Heller, Miller and Phillips NOES: COUNCILMEMBERS: Mayor Boro ABSENT: COUNCILMEMBERS: None COUNCILMEMBER REPORTS: 9. None SRCC Minutes (Regular) 12/01/2003 Page 10 SRCC Minutes (Regular) 12/01/2003 Page 11 There being no further business, the City Council meeting was adjourned at 9:20 p.m. ____________________________ JEANNE M. LEONCINI, City Clerk APPROVED THIS ______ DAY OF __________, 2003 ___________________________________ MAYOR OF THE CITY OF SAN RAFAEL SRCC Minutes (Regular) 12/01/2003 Page 11