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HomeMy WebLinkAboutRDA Min 1989-01-03 12-19-88 / 1-3-89 J(~ r~.~ C J.rman Seal Beach, California January 3, 1989 The Redevelopment Agency of the City of Seal Beach met in adjourned-joint session with the City Council at approximately 7:10 p.m. Present: Chairman GJ:gas Agencymembers Hunt, Laszlo, Risner, Wilson Absent: None I Also present: Mr. Nelson, Executive Director Mr. Stepanicich, City Attorney Mr. Knight, Director of Development Services I Chief Stearns, Police Department Mr. Jue, Director of Public Works/ City Engineer - Mrs. Yeo, Secretary CONTINUED JOINT REDEVELOPMENT AGENCY/CITY COUNCIL PUBLIC HEARING-- PROPOSED HELLMAN LAND DEVELOPMENT Mayor Hunt declared the continued joint/consolidated Redevelopment Agency and City Council public hearing open to consider Amendment No. 4 to the Redevelopment Plan for the Riverfront Redevelopment Project, amendment to the Hellman Specific Plan, General Plan Amendment la-88, Land Use Element, General Plan Amendment lb-88, Open Space/ Conservation/Recreation Element, Tentative Parcel Map No. 86-349, Vesting Tentative Tract Map No. 13198, and Precise Plan-1-88. Mayor Hunt recalled previous agreement as to procedures for this meeting where the-Council would have the opportunity to express their views with regard to the proposed plan based upon the information presented to date. Mayor Hunt also noted recent reference to alternate plans of Mola Development that -incorporate some of the comments made by-the public, therefore he would then ask that Mola present those plans to the Council and public. Councilmember Risner inquired if the-Council could consider new plans and the original plan currently under consideration, should alternatives-be presented at this meeting. The City Attorney responded that if the applicant has decided there may be alternatives that they would prefer to pursue or raise with the Council, that could be done, however no action could be taken on alternatives at this meeting. He added that one option would be for the developer to withdraw his application, also if there were substantial J:evisions in the alternative(s) then the proposal should be reviewed by staff as to additional environmental review that may be necessary, whether or not a new application would need to be filed, also if the developer did not withdraw the application a decision would have to be made as to what action would be taken on the current application, whether it " J I 1-3-89 I buyers a range of more affordably priced units. He suggested that as a condition of the issuance of any building permits, the Hellman Estate be required to agree to a binding contract to sell, at a reduced price from the fair market appraisal, the five acre park proposed for baseball and tennis court facilities, thus the City would gain something of benefit as the result of the reduced Gum Grove Park area. Prior to issuance of building permits he said he would also recommend that the parcel map be conditioned to require that a wetlands restoration plan be produced given the fact that no one clearly knows how much acreage will be required to be restored or where, until the Coastal Commission decides that issue, therefore no development should occu~ until the restoration plan is in place. He noted that there are some that believe as much as one hundred forty acres could be required for wetlands,-that letters from various sources argue the wetlands issue, yet that is a decision -that will be forthcoming from the Coastal Commission, and for those believing more than twenty-four acres will be required there should therefore be no fear of having the application and plan before the Commission. Councilman Grgas stated-he would support modification of the Specific Plan language to further clarify that if the wetlands fail,-no housing or commercial development would ever be permitted on those lands, that it would remain as active or passive -use by-the public. Pointing out that the Specific-Plan presently-provides for the height of the single family homes of-thirty-two feet, three sto~ies, which is more-restrictive than Old Town-and Surfside, he stated he would support-a two story restriction for this project. Mr. Grgas said that although the Impact Analysis indicates that a requirement to have the developer, at his expense, provide for a road to Westminster Boulevard near Studebaker is not justified, he believed that road would help to relieve traffic -congestion-at-various locations such as Seal Beach Boulevard, the intersection of Westminster and Seal Beach Boulevard, and the freeway on-ramps,-therefore the developer should be ~equired to dedicate and pay for his contributory share of impact, and the City, using its Redevelopment Agency-funds could provide the remaining revenues to construct the road and signalize the intersection at Westminster -which, based upon information provided by the City Engineer, appears to be feasible. -He stated he would suggest other conditions at a later time. Mr. Grgas noted that some argue against any development on the Hellman property-and urge that the -project be denied, and pointed out -by oath of office he is obligated to uphold-the Constitution of the United States and of the State of California which was conceived to provide basic protections to all people, providing rights -and remedies to those who oppose-the project and protection of p~operty rights of the land-owner, -the Fifth Amendment likewise providing that denial-of property rights requires just compensation to the property owner. - He-added that by the City's appraisal, the value of the property exceeds twenty-two million dollars, and cited the recent-failure -to bond for an amount of less than -one-tenth that amount -to acquire the remainder of the Zoete~ School site, and-given the lack of outside revenue sources, he would conclude that a no development alternative is unrealistic and unachievable.- In reference to the issue of just compensation, he noted many such cases have been determined in -the courts to the detriment of the pUblic agency and-their treasury. -Councilman Grgas questioned what would be the-right development plan for the community, does the City want a golf course or not, is there a willingness to give up anything for it, or more Gum Grove Park or more I I 1-3-89 wetlands, again citing the example that the property can only be divided in so many ways before the property owner ultimately determines it is not worthwhile or a court decides the City may-have to compensate them for their loss. He added that the City is then faced with approving the existing proposal with modifications or the only remaining alternative. Mr. Grgas noted the Scenario Three illustrated in the consultants report is being referred to as the preferred plan by some dispite the financial consultant's advice that it may be infeasible, some question the consultants findings, yet the physical and financial implications on the City must be understood. He expressed his feeling that the only remaining alternative is one that eliminates the golf couIse-completely, a single family development plan, the question then-being what benefits, whether it be recreation or open space, could the ,City expect-under that scenario. He reported the developer has prepared-such a plan for presentation at this meeting. Councilman Grgas pointed out that the developer has asked fo~ direction as to what is consideIed acceptable-for this property, therefore he would suggest that the alternatives be looked at, studied, and then a decision be made as to which plan best meets the need of as many people as possible. He-said he would question what -the impact would have been on the community with the approved original plan of-one thousand single family and condominium units, that plan not implemented only because-of a downturn in the economy and increased mo~tgage interest rates which thwarted the Ponderosa Company pIoposal to build there, and from a histo~ical perspective this fact alone should point out the inherent risk involved with a financial undertaking of this magnitude. Councilman Laszlo stated that when he first joined the Council he had-hoped-that this project would go forward without difficulty, and that he had-favored a golf course for Seal Beach. He pointed out that the amount of public testimony, telephone calls and letters regarding this project, the majority of which have been in opposition to the development proposed, and should not be considered a small minority. Mr. Laszlo -noted that the greatest concern appea~s to be focused on the condominiums, too small and too numerous, -and with the traffic problems this development could-cause. -He referIed to the minimum-condominium size p~esently required by the City of-nine hundred fifty square feet, wheIe this plan would make an exception to that requi~ement. Councilman Laszlo also stated he has not been assuIed that this project-will not worsen traffic on Pacific Coast Highway and-Seal-Beach Boulevard, and to infer that traffic p~obelms a~e caused by regional developments is wrong. Being the only remaining land-available for housing in-the City, -he said he felt a development should be one that everyone will appreciate, -and that he would support the golf course -if the City weIe to own it and if it would generate revenue to -the City. Councilman Laszlo stated he has been pursuing improved traffic and more park space for a number-of yeaIs, -that it appears all areas -of the City that are not private communities oppose this project, therefore he could not support the project as -it presently stands, however would-be -willing to listen to other proposals that may be brought forth. Councilmember Risner aCknowledged that she had-attended one meeting with-Mr. Mola, along with the City Manager, to discuss a potential p~oject that -might be proposed for the Hellman land by Mr. Mola, such as a golf course, I I I 1-3-89 I preservation of Gum Grove Park, condominium units and single family houses, that no specifics of a development were discussed, and that she had not seen the proposed map prior to other members of the City Council.. She added that she felt the meeting had been called because the subject development would be within the district she represents. Councilmember Risner expressed her belief in. private property rights, stating she has never been a developers obstructionist, supports reasonable, planned development, opposes poorly drafted initiatives relating to no growth issues, and cited examples of her previous support for parks and open-space in the community. She said she recognized the right of the developer to-make a profit and hoped he would respect her right to evaluate his land use proposal, as it is her obligation to secure development that meets the needs-of the community. Councilmember Risner acknowledged that the land p~oposed-for development is a problem property, thus requires a greate~ amount of time to evaluate any proposal to be placed thereon. She expressed her feeling-that the length of time devoted to this proposal is the result of poor homework by the developer on the issue of wetlands, failure to submit a.proforma as requested, drastic reduction of Gum Grove Park, and lack of attention to citizen comments, -the City also not having done the type of planning on land use and financial aspects that should have been, all of which.has added to the delay of this processing. She stated that although this issue has been under consideration at a number of.meetings, there has been inadequate opportunity for-public testimony, and that the Council has an obligation. to hear the comments of those who wish to speak. Councilmember Risner pOinted out that she had voted against certification of the Environmental Impact Report for the reasons that it did-not address the area of the-wetlands, did not provide for continued maintenance and restoration thereof, the-EIR indicating those issues would be .resolved at a later date, and noted that at that time the lakes within the- golf course were proposed as mitigation and fulfillment-of wetland requirements, the issue of the monarch butterfly simila~ly addressed in the EIR, and stated she believed it.is mandatory -to supplement the EIR to address all issues. Mrs. .Risner also stated she felt the City's General Plan was being violated, the Plan calling for five acres of park per one thousand residents, yet the 10.5 acre Gum Grove Park is proposed to be eliminated, the City to retain a non-exclusive easement over 4.7 acres with a narrow strip consisting of 2.l-acres proposed to extend to Seal Beach Boulevard to constitute a total of 6.8 acres, and noted the Department of Fish and Game recommended that the City retain Gum Grove park.- -She repo~ted that the EIR p~oposed.park-fees .as mitigation.for the park reduction, however to date.there are no plans for use of the fees that would be collected and it is known that those monies must be used.to benefit the area from which they are derived within a period of five years, and expressed her feeling that it is poor-planning to extract monies without knowing where and how they-will be spent. Councilmember Risner referred to the Hellman.offer -to sell an additional five acres to the City fo~ recreation use, .however the offer was never confirmed nor was a price mentioned, -also the cost to prepare the property for use, given the oil production activity on the land, nor has the cost of development of the site been considered, and questioned if it had been a bonafide offer. She again-stated. what is being considered by the Council-would violate the park standards of the General.Plan, and that reduction of parkland was never discussed nor were mitigation measures proposed in the EIR. I I 1-3-89 Mrs. -Risner -confirmed that she had voted in favor of the project originally however at that- time- it was erroneously reported that Gum Grove Park consisted of 8.5 acres and was proposed to be reduced to 6.8 acres, and although she did not favor the reduction, felt it-might be reasonable to secure other benefits, -however stated that the-present sixty percent reduction is -unacceptable. She added that at that I time it was also -reported the lake system would satisfy the wetlands requirement, which was-later learned is not the case. Councilmember -Risner stated that-since that time a number of issues have been brought to attention with major concerns focusing on: the -desire for all single family homesJ if approved, the condos-should be greater than the minimum six hundred-square -feet -proposedJ wetlands of at least-twenty-five acres,-restored, -and provision for proper maintenanceJ-Gum Grove Park retained at or near 10.5 acres, secured, restored,- and placed in City ownership, and parking providedJ and a golf course, noting-that comments-have indicated -the driving range is mandatory and/or the course may-be more desirable-as-a regulation nine-hole. Mrs. Risner said it has been stated that conversion of the stacked-condos to single family-units is not financially feasible-unless there are a-large number of units approved, which would-most likely eliminate the golf course, also that there is not sufficient-land to provide twenty-five acres of wetland, -ten acres of Gum Grove Park, a-golf course, and sufficient-single family dwellings to have a viable development. -She said a development should be considered that will provide all of these-uses. Mrs. Risner referred to-the supplemental report received from the financial consultant setting forth additional scenarios for-comparison to-the-current plan. She noted that the current plan I estimates wetlands at 21.4 acres,-and if the current plan were to be approved -she felt certain the Coastal Commission will require-at least-twenty-five acres as shown in the modified-scenarios, and there is nowhere to obtain that acreage unless-the applicant were willing to give up a development footprint or some of the golf course. She continued-with-an-acreage comparison of the current plan, a current modified plan, and Scenario 3.2 as set forth in the Kotin, Regan, -& Mouchley supplemental-report of December 28th. -She noted -that--Scenario 3.2 would require sacrificing .4 -acre of the golf course, and she felt certain a Gum Grove Park of ten acres would be acceptable to the community for a development -of two-hundred thirty-three -single family homes with-land available for golf course almost equal to the current -plan, and assuming twenty-five acres of wetland. Mrs. Risner stated the question -then becomes whether or not the-two hundred thirty-three home development is viable economically, a first assumption being that the-price of the land is constant, about 22 million dollars dependent upon the entitlements.- She pointed out -that the December 28th KRM analysis of two hundred thirty-three dwellings assumed a sales price of $513,500, premium of $40,000, for an average 1988-89 sales price of $553,500-for a 2,864 square foot home, or-$l93.26 per square foot, -a price she felt to be conservative, and cited the selling and square-footage price I of several thirty year old homes on the Hill ranging between $290,000 and $550,000, or $189.66 to $229.52 per square foot, without-the security and premium of a gated community, views, and-proximity to a golf course. Councilmember Risner concluded that there-is an attempt to create a land use-plan that the community can support, that-is-profitable for the developer, -and provide-the benefits to the City that have been expressed during the hearing process. She suggested 1-3-89 I that serious consideration be given to Scenario 3.2, a development of two hundred thirty-three single family homes, wetlands, Gum Grove, and golf course. Councilmember Wilson expressed the-difficulty of this issue in trying to strike a balance between emotion, reality, and shared interests while keeping in mind the oath to uphold and defend the constitutional rights of everyone and do what is best for this City. Mrs. Wilson stated she favors the present plan with reasonable changes that have been suggested through the-public hearing process to date, such as elimination of sixty condominiums by combining the six hundred square foot units into twelve hundred square foot units. She expressed her felling that eliminating the condos altogether and building more than four hundred single family, three car garage dwellings would not create an improvement in projected traffic, and would result-in up to 1,575 more persons while the present plan of six hundred condos and one hundred thirteen homes results in only 1,476, those figures based upon 3.5 persons per single family dwelling and-l.8 per condo. Mrs. Wilson noted it has been suggested that-a percentage of affordable housing should be incorporated in the plan, and pointed out the urgent need for such housing, particularly in Orange County. Councilmember Wilson expressed her feeling that there is a need to show concern for the housing needs of the average citizen by providing housing in this community, as much concern as is shown for the wildlife where, in Seal Beach there is over one thousand acres-of National Wildlife Refuge located on the Naval Weapons Station, a healthy salt marsh with strong tidal flow. Mrs. -Wilson questioned the attitude of those who have said the City does not need the type of resident the condos would bring. She stated that if the Hellman-property is retained as it currently exists it would be necessary for the City or someone to purchase it at the fair market value, p~ojected at approximately 22 million dollars, and if restored as wetlands it would be fenced and inaccessible to the public, and noted that the City has not even had the capability to maintain Gum Grove Park as it was to have been under the-terms of-it's lease. She stated her concern with allowing the one hundred forty-nine acres, much of which is developable land, to be-taken by the Ports of Los Angeles and Long Beach-as mitigation so they can develop landfill into twenty-four ac~es of docks. She acknowledged that that development is -important to them, however stated that -Seal Beach is in need of the revenue that will be generated by the Mola development to balance the City's budget instead of -adding taxes and fees to cover the annual expense of services that the citizens demand. She noted the estimated $890,000 annual revenue from the p~oject would enable the City to accomplish needed projects such as the groin repair, -sand replenishment on the beach, and improvements -to the Zoeter site. Councilmember Wilson expressed the desire to preseIve the area for the future of the child~en,-yet-questioned the message being sent to those children through the conduct demonstrated over this issue, outside of the appropriate-rules and procedures that are to be abided by for meetings and public testimony. She added it appeared the childIen have the impression that Gum Grove Park would be eliminated rather than restored and maintained, with additional acreage to be made available and devoted-to recreational use. She also referred to the destructive treatment of the-Hellman land and its' habitat as -inexcusable, which-continues despite the no trespassing signs placed by the land owner. Councilmember Wilson expressed her respect for the public testimony, letters and I I 1-3-89 phone calls in opposition to this issue, however also noted her respect for the opinions of those who own property and live adjacent to the-subject site and have expressed objection to conditions of the area as they exist. She said what is now a fire hazard and undesirable conditions could be a landscaped green area with waterways and seventy percent open space, as opposed to a single family development of only forty percent open space. Mrs. Wilson stated she did not feel-transfer of- ownership of Gum Grove Park would be -of benefit to the City, and cited the lack of funds and personnel to maintain that area over a number of years. She made reference to and read excerpts from a communication from a resident who objected to the manner in which signatures-were obtained for-the Support Gum Grove Park petition, stating there were assurances made to the signer-that the petition would not be used to halt the Mola development of the Hellman property, yet it now appears that is the intent, the letter further expressing support for the Mola development as well as Gum Grove Park with no opinion as to it's size, also in support of the golf course and various housing opportunities. She noted this was one of many similar communications received. Councilmember Wilson concluded that rejecting the proposed plan could result in another lengthy delay of much needed improvements to this property as well as the revenue that would be realized by the City. Mayor Hunt-commenced his remarks by stating that nothing in his previous life prepared him to make perfectly clear, logical and sound decisions on the issue being considered, yet he was inclined to believe that the other members of the Council and-the interested members of the public were in the same position, also that he felt there to be room for the differences -that have been-felt and expressed during this consideration. Mr. Hunt stated that to him no development is not a possibility, the Hellman Ranch, including the 10.5 acre eucalyptus grove is private property, the Hellman's wishing to sell the land, which they have a right to do, thus consideration should proceed on the basis that they are entitled to that right and they will sell their land. He acknowledged his interest in the comments of the public and the members of-the Council, however stated his greater interest lies-with the reasons and justifications-for the expressed wants and -desires. He added that although it is recognized that this-development will bear on the life of everyone-in the community, even more so on those in immediate-proximity to the development, some special consideration should therefore be afforded to them, however stated that his intent will be to look at-the entire community. Mayor Hunt said he felt it would be difficult to find valid reasons to-oppose the condos- with the understanding that sixty of the units would be combined for twelve hundred-square -feet, and-given the price that would be paid for the condominium units, the argument that the condos would turn into rented units is not supported by fact. - He added that a further concern to him is the moral aspect of eliminating the condos where all types of housing is needed and-should be made available to people of varied economic status, noting that-the era of purchasing a home with-nothing down has long past. Mayor Hunt made reference to Gum Grove Park, private land, owned by Hellman and under lease to the City for seventeen years. He noted that when it was leased there were grand ideas of what the area was going to be, but they did not work. He acknowledged that there-are-some people who use Gum Grove regularly for various reasons, yet a very small percentage of the I I I 1-3-89 I community, therefore one must consider whether the number of people who reap the advantages is sufficient to justify the payment that the entire population pays for parks. Mr. Hunt explained that he sees Gum G~ove-as two pieces, the approximate five hund~ed -t~ee-eucalyptus grove located on a steep hill, a small percentage of those trees healthy specimens, half dead or -diseased, therefore that portion is not very desirable to-Mola because of its lack of functional use for development, the~efore they a~e willing to give, or sell for a small price, this portion to the City. He added that the balance of the-Park, the open, unwooded area, is valuable to the developer and recommended that-in looking at City requirements for Gum Grove Park he felt it must be looked at in terms of usage, and if the intent is to insist that the entire 10.4 acres be-retained rathe~ than just the wooded area, the City will ultimately have to pay for that land and will lose the benefit in some other area. He noted that although Gum Grove has certain value to some Hill residents, he felt it important to take economics into conside~ation and to not demand space that would not have great -utilization. With regard-to the wetlands issue, Mayor Hunt stated he would-dismiss-without consideration comments made relating to eminent-domain,-prescriptive-rights, and other legal terms- and tactics that have been used by the wetlands enthusiasts, stating he has read the cor~espondence, -legal opinions, and -spoken to persons at the Port regarding this issue. He advised that the City does have hired, paid staff to provide expert, unbiased, professional advice to assure that the City is following reasoned and legal procedure-in dealing with the-wetlands. He added it would-be un~easonable-to-believe that the Ports of Los-Angeles/Long Beach would pay- the-price required to acquire the Hellman Ranch and restore it-to wetlands. He explained that in the next thirty-years the Ports must restore four square miles of wetland since they will be filling five square miles for docking area, and even though the Hellman Ranch as well as all other sites along the coast are included -on their list for potential restoration, he expressed his doubt that the Ports would pay $150,000 per acre to -acqui~e the land and an additional $60,000 per acre to restore the wetlands, or SOO-million dollars to satisfy their-obligation. Mayo~ Hunt noted it would possibly be more advantageous and less costly-for the Ports to restore offshore. He-said the fact that the Hellman property is on their restoration list is irrelevant, and looking to them for a ~esolution would not seem to be realistic. Mayor Hunt made reference to-the high rate of tennis facility usage in the City, -and noted the upcoming loss to the publiC of the three Zoeter-courts. He cited the usage as making the need for tennis facilities -very clea~ and said that need can be fulfilled as-part of the Hellman development, possibly four new courts, and if there is a development, he pledged to work towards insuring that recreation benefit. Mr. Hunt stated-whatever revenue -is derived from a development is a function of density, the higher the density the greater the revenue. --In terms of balance in the case of this development, he pointed out the developer will pay approximately 22-million dollars for the land, one must then add the money that the develope~ must have, plus the benefits the City may require, then offset that with density, having to build more-units if the City is going to make heavy demands of money and/or benefits. He expresed his feeling that the-City could be less demanding in their requirements, so long as the development is at least self- sufficient over a period of years. He stated he generally favored the inclusion of the golf course in the development, I I 1-3-89 which would p~ovide three hundred thousand hours or more of public recreation, the public desire-evidenced by their participation. He noted that golf is a growing activity, that there is a shortage of facilities in urban a~eas, that people in Seal Beach-are being increasingly restricted from this ~ecreation by the usage of such-facilities in other communities. He also pointed out that golf is a-user fee activity which could -be a ~evenue source and a golf course I is asthetically pleasing, the~efore he felt it is.a good investment and should be a requirement of the development. Making refe~ence .to..the Scenario 3.2 mentioned by. Councilmember Risner and the-alternative anticipated to be presented-by MOla, Councilman.Grgas requested that the consultant, -Kotin,-Regan & Mouchley, be invited to address the -3.2-Scenario at this time, explain their findings and recommendations, and what that.Scenario would mean to the City and-developer, which may have a bearing on the Council's impression of the alternate plan of the Mola Corporation. With unanimous consent of the .Council, Mayor Hunt declared at.recess at-8:20.p.m.- The Council ~econvened at 8:32 p.m. with Mayor Hunt calling the meeting to order. , Councilman Grgas -again stated-his rcequest that the consultant add~ess-the 3.2 scenario prior to presentation of the Mola alternative. Discussion followed with regard to the Council's.prefercred order of presentations, further public-testimony, consultant presentation, or the Mola alternative. Mr. .Thomas Jirovsky, Vice President, Kotin, Regan & Mouchley, advised he had prepared the financial analysis for the prcevious ~eport-presented by Mr. -Mouchley, and that he was recently notified by the City Manager that.the City would like an additional .analysis prepared of a reduced yield on the Scena~io Three-previously discussed, noting that it was indicated-to them that.the developer had advised only two hundrced-thirty-three detached.single family.homes could-be placed on the site with the retention of the eighteen hole golf course, wetlands and the enlarged Gum Grove.Pa~k. M~. Jirovsky stated he had .prepared the supplemental analysis using the same assumptions of the prior-analysis, average.price of $443,000 plus an average prcemium of-$40,000 pe~ home. Under-Scenario 3.1, which also assumed a-nine-percent annual inflation in housing prices, the internal rate of.return dropped from 25 to 14 percent, and the profit margin-dropped from 15 to 4 percent. He noted he was.also.asked -to indicate what additional number of-units or change of housing prices would be necessary to make Scenario Three economically .attractive, reflected in Scena~io 3.2. Mr. Jirovsky reported he calculated an average $70,000 p~ice.increase in current dollars-was-needed to generate the sufficient profit.margin and IRR to make the project viable-in-their-opinion, and that the analysis also car~ied fo~th an assumption that prices would increase at a continued -nine-percent per -year.. He advised they performed an additional-analysis, Scenario 3.3, which retained the $553,500-average price in current dollars and-assumed-that no fu~ther inflation occurred, under that Scenario the-IRR drcopped-to 11.5.pe~cent .and the-profit margin dropped to less .than 1 percent, therefore the project is clearly not economically viable. He explained it is not-anticipated that-housing prices-will-be flat for the-next.four yearcs, nor can they project that they will increase nine percent I I 1-3-89 I from the current level. Mr. Jirovsky stated their general conclusion-was that Scenarios 3.1, 3.2, and 3.3, all being the same basic scenario, are not economically viable given the risks that would be facing the developer due to the dependence on-future inflation, unless someone would be willing to guarantee -the -average -prices or make another type of subsidy. Councilmember Risner challenged the sameness of Scenarios 3.1, 3.2, and 3.3 based on the price of the homes, with 3.3 being the same as 3.2 but without the inflation rate, and stated it seemed to be unrealistic to evaluate all of the plans-with-a -nine-percent inflation rate, then the 3.2 plan that-appears that it may work with a pre-tax IRR of 32.2 percent and a profit margin of 16.2 percent, she questioned the reasoning for Scenario 3.3 without an inflation rate, adding that she believed that if that situation were applied to -the-other scenarios there would be the same amount of decrease in-viability. Councilman Laszlo asked how many-years the inflation rate is based upon. Mr. Jirovsky-responded until 1993-when-the project is sold out. Councilman G~gas ~eferred to the question regarding the numbe~s due to-the-deletion of -the inflation rate in Scenario 3.3, -and expressed his-understanding-that that was to-show-what-the o~der of ..magnitude change could be if any given assumption were deemed to be invalid, in-other words in assuming a $553,500 price is a reasonable-number but if inflation fell -short-of the -nine percent assumption, the developer's-profit-margin could go from 16.2 percent under Scenario 3 to potentially zero if the assumption is not realized. An-alternative to that would be assumption of a 5 percent inflation-rate and a-sales price of $553,500, and questioned if that is an economically viable-number given the risks involved in this development, is it a -number that the developer or the City could rely on as being an achievable numbe~. - Mr. Jirovsky again-pointed out that they did not do a market study, and-stated -that in terms of what a developer can rely on, a better question is what his lender-will rely-on,-and that he-felt-the $553,500 can be shown to be a reasonable price-based upon a few-recent sales, yet -qualified-his statement due to the rapid appreciation over -the past two yea~s, explaining that lende~s will not consider just-a recent few sales and apply that to-a large-project-and continue to inflate for the next five years given the recent economic expansion. He explained that Scenario-3.3-was only meant-to show a range of probabilities and how-sensitive the return to the developer is given reasonable changes in assumptions of sales -price or inflation-rate. -Councilmember Risner referred to-Scenario 1, the-proposed plan, showing an IRR of 24.6-percent and 14.8-percent pre-tax profit margin, and questioned what the percentages would-be if there were no inflation ~ate applied, suggesting that if the inflation rate was deleted for Scenario 3, -that effect should likewise be shown for each of the-scenarios. Mr. Jirovsky responded that if -no inflation were applied to Scenario I there would most likely be-a similar -percentage -drop in the profit margin, and that the th~eshold return that the lender would look for-would consequently be-reduced slightly as well, if the inflation is removed, the threshold return would be lowered, possibly between 15 to-20 percent for the IRR and 12 to 13 percent for the-pre-tax p~ofit margin, concluding that he would believe that-Scenario I with-no inflation applied -would probably-be at or -below those thresholds. Councilmember Risner read a recent Los Angeles Times article and-quotes of J. -M. Peters, O~ange County developer, relating to-~continued- interest of buyers-in acquiring a detached home...the norm being five to six units per acre... I I 1-3-89 the move-up market continuing to be viable...luxury homes $750,000 and up small part of market...a continued strong market and prices in-1989 with nine to ten percent appreciation rate next year and thereafter...the demand for 35,000 homes annually in Orange County...with annual production of about 25,000...29 percent per square foot increase in the prices of homes over the past three years". Mrs. Risner said she had been-told by the-Mola people that their single family development in Huntington Beach sold for I about $450,000 initially and are now selling for $750,000. The Mola representative clarified that those units are-on the water with boat slips. Councilman Grgas referred to a November 8th news article reporting "Orange County average home prices decline 3.4 percent in October from September's record high...analysts saying the decline signaling a cooling-off period of California's hottest housing market," and an article of December 1st reporting "signs of the demand for lavish housing may be cooling...local builders may turn to small, less expensive units to stay at work...a slowdown of-interest in houses placed for sale...the market remaining strong but too early to tell if it will resume the furious pace it -maintained for the most of this year," a quote of the president of the National Association of Homebuilders addressing a-Newport Beach meeting. Councilman Grgas -noted for every argument there-is a counter and stated he wished-to rely on the opinion of the City's experts. Councilmember Risner-countered that Mr. Peters-is-as expert a -developer -as can be found. Conversation continued with regard to selection of the financial analysis consultants, the cost of their services, and consideration of the facts provided by KRM. Councilman Grgas asked-Mr. Jirovsky for clarification of-his comments regarding the economic viability of Scenario-3.2. Mr. Jirovsky responded that his I statement-was that the two hundred thirty-three unit single family detached housing project was not a viable alternative, explaining that you can not pick a price and project an inflation rate and deem it is fact, stating that was his reasoning in using the Scenario 3 and merely applying-three different economic-assumptions. He clarified further that he was not implying that Scenario 3.2 was not valid, but that the- two hundred thirty-three units is not valid, since it is possible that 3.1, 3.2 or 3.3 might occur, but given the range of those possibilities it is not economically viable. Mr. Grgas asked if he would recommend a developer proceed with a two hundred thirty-three alternative. -Mr. Jirovsky responded in the negative. Mayor Hunt -noted that the-key factor appears to be the selling price, recalling that $443,000 had -been presented as an expert opinion of the average sales prices in the initial analysis. Mr. Jirovsky-clarified-that the $443,000 was an assumption used based upon the appraisal that was done in January 1988, and was not their firm's opinion of the selling price. With-regard to the $553,500 sales price reflected under Scenario 3.2,-he clarified that figure was a result-of analysis-on-their part to determine what price was necessary to-make that Scenario feasible. Mayor Hunt asked if KRM had -an-estimate of sales prices in 1988/89 dollars. Mr. Jirovsky-advised- they-could-not provide-that figure I since they had not conducted detailed market research of the specific product proposed. He added he believed the appraisal was -valid as -of the-date it was prepared, noting that there has most-likely been -appreciation of the numbers contained in the appraisal up to the time it was forwarded to-their firm. -Mr. Jirovsky confirmed that he was comfortable in using-the $443,000 as a baseline number, that he felt it was reasonable, also satisfied with the nine 1-3-89 I percent, explaining that .he did not feel it appropriate to take the peak of the ma~ket and inflate at nine percent from that point. He clarified that the nine percent represents their opinion of the long term ave~age appreciation for this kind of product, a reasonable starting point, specific to housing.and not cost of living. with regard to a reference to Scenario 3.2 and -reflected square footage price of $193.26, Mr. Jirovsky explained that different size houses will reflect different price.ranges, the smaller the house, the higher the cost, and that $193.26 would not be considered unreasonable. Councilman Laszlo asked if the calculations reflected the cost to build the golf cou~se and it~s potential sale. Mr. Jirovsky advised that a cost to develop the golf course was included of approximately 4.5 million dollar-s, with a sale assumed at a break even price. Councilman Grgas noted that it has been rumored that the golf course could sell for about 12.5 million dollars and asked if that .could.be.conside~ed a viable number. Mr. Jirovsky stated that based upon an economic consultants report that was.done for Mola, of which they received a copy, the income stream for various years fOllowing opening was projected at about $500,000 which would indicate a value range-of 4 to 5.million dollars without substantial future inflation. He verified that the sale of the golf course was assumed-as part of the cash flow revenues for the developer in Scena~io 1, and the rate of -return of 14.9 percent assumed the sale of the.golf course for 4.5 million. Mayor Hunt made reference to the sales price of several single family residences all below $400,000, and recalled a statement that the new units at Seal Beach Boulevard and Elect~ic were sold for $600,000, reported that was a false statement and pursuant to the agent those units have not sold. Councilmember Risner questioned the .financing methods considered under Scena~io 3.2. Mr. Jirovsky reported that the IRR-of-23.2.percent assumes all equity financing, and clarified that.they did an analysis.assuming a combination of debt and.equity, for .the calculation of the IRR they only measure that as if it were one hundred percent equity. With rega~d to leverage.financing, .he-stated that the IRR on the equity will go up to .the extent that the borrowing rate is less.than the IRR,-as an example, the interest rate for prime is substantially. less than-23-therefore the return on equity would go up~ however- stated that is not the issue because the threshold return they used.of 25 percent was the threshold.for- one hundred percent equity financing, and if 80 percent borrowing were assumed, the threshold would go up as well. I I Councilmember Risner again ~equested that the 3.2 Scenario be considered .as something .to explo~e further which would allow the community to-have the things they have expressed, the-golf course, the Park, and 25 acre wetlands. She stated that rather than tr-ying to find-ar-guments as to why it will not wo~k, asked the Council.if they felt it could be explored with some-modifications, a land use plan that may be workable, -if not-two-hundred thirty-three homes maybe add some townhomes-as an alternative to six hundred condos. Councilman Grgas -replied that he -felt that has .been looked at, stating.he too wanted. the best plan for the community, a plan where-there-will-be some assurance that it is going to be built, and again made reference to the independent experts that were hired to evaluate the proposal and have repo~ted their analysis to the City. -Councilmember Risner pointed-out that the figures used in the analysis were from an appraisal-of nearly a year -ago, she also made reference to the current housing price market. Mr. Grgas noted 1-3-89 several properties in Old Town for sale for more than a year at a price of.$500,OOO or more. He stated also that he felt most of the-members-of .the Council.understand that 3.2 is not a viable altercnative, therefore-the options are to consider the current-pIan-or look at the alternative to be presented. Discussion continued. -Mayor Hunt stated he had indicated that if there werce a possibility that two hundred thirty-three homes, one hundred thirteen on the presently proposed single family site and one hundred twenty within the footprint.of the condos, he would support it, however it appears that.the prcobability of that is not great, therefore he would -remain open .to .further analysis if that is .desired. Mr. Grgas referred.to-comments of Mr. Jirovsky where he stated that in -order to assure-that the developer receives reasonable rate of return he has to be guaranteed sales price, in other words if you want the project you could subsidize the developer for the amount of money-that he may not make if the-project doesn't succeed, a guarantee of the developer's return. -Mrs. Risner .responded that you would never guarcantee a return on investment, however on Redevelopment Agency projects such as this, if there are community desires and.tax incrcement produced, many Agencies do use the tax incrcement to assist in the project area, adding -that she-would be willing to use tax increment for Gum Grove and otherc arceas. Councilman Grgas asked if there would.be a willingness to subsidize.public improvements to insurce-the developers rate.of returcn and guarantee that the project will be built. Conversation continued. The majority-of the Council expressed-their preference that the Mola Corporation present their alternative proposal prior to public testimony. Mr. Kirk Evans, Mola Development Corporation, 4699 Jamboree Road, Newport Beach, stated that although he-would like to respond-to comments-of the Council directly, he did not feel this would be an appropriate time since the request-was to only discuss the alternatives, and they would hold their -responses until the rebuttal period. Mr. Evans asked that -the record reflect that they originally came to the City in.early 1986,. thereafter a letter was sent out on City letterhead-signed by Mrs. Risner with a brochure enclosed showing the development plan-proposed, that letter sent to-every registered voter in Councilmember Risner's district. Mr. Evans -read the referenced-letter that noticed an October 13, .1986 meeting to-considerc proposed plans for a public-golf course.and-residential community for the Hellman property. Mr. Evans stated-he wish to make-it-clear that this was-not a developer generated .plan, that the plan was put together after .meeting with the Council representative and a number of -orcganizations-in the community. Mr. Evans stated that throughout this latest- process they have been listening to the desires of the-community and have attempted to put forth a plan based upon public testimony,.recognizing the concern regarding-Gum Grove. Park and preservation of the full lO.4-acres7 the wetlands, pointing-out that the policy of the State and Federal government is to not destroy the wetlands and wherever possible build around them, State policy also calling-for acre for acre restoration of equal value7 rcecreation facilities and tennis courts, a 3.6 acrce community.park provided with three tennis courcts, tot lot,- grass area, and a.trail that would connect the-park with Gum Grove7 -also addressing comments to the effect-that condos- are not-in-keeping with.the .Seal Beach character. Mr. Evans described their alternate proposal .as:-a-development of four hundrced forty-nine homes with three car garages, forty-one percent open-space, direct-connection-frcom Regency to Pacific Coast Highway, a public street thoroughfare off of I I I 1-3-89 I Seal Beach Bouleva~d to Pacific Coast Highway, public streets, no security gates, Gum Grove Park would be accessible from Seal-Beach Bouleva~d where parking would be provided and from Avalon wher-e existing pa~king would continue, all of the-wetlands in place in the-area which they are presently-located, which- also-includes those areas that ce~tain people have- said- exists on-site. -He again stated they have tr-ied to accommodate -public desires, however they can not-accommodate-those who-desire no development. Mr. -Evans made-reference to the Scenario 3 from a-land use-standpoint only, and pointed out-that the consultant-did not prepa~e any plans for this -site at the time two hundred thi~ty-three-homes were proposed, -that they simply took a-one hundred fifty-acr-e parcel, deducted seventy-five-acres to accommodate the golf course,-twenty acres -for- wetlands, ten acres for Gum Grove park,-and the acreage that was left, -regar-dless-of earthquake faults, liquefaction, -and other--constraints, multiplied that by six to a~rive at-the-density,-what- they-did was to only put togethe~ what was felt-could be done. - Mr. Evans pointed out that the golf-course can- not be shrunk -any-further, -that they-located as many-single family-homes as possible -in the current condo area, -that under this scenario-Gum G~ove continues to be-a -reduced size, provides twenty-one-acres of wetland, with some-of the wetlands-restoration as part of the golf course lakes, -and provides for the driving range which is needed for-the-golf-cour-se-to be viable. Mr. Evans stated they felt the plan - approved a year- -ago was -viable, and if situations have-changed and the community-no-longer wishes the plan -that was- -p~oposed, -they have -tded -to develop-a-plan-to address the- input of the community, -thus the plan of-four hundr-ed forty-nine single-family-homes is being-submitted for-consideration. He stated this plan can work economically and if it is the-desi~e -of the Council, they would submit -the application and-Iook- at the environmental constraints-of that plan, and-they would be willing to-hold the-o~iginal p~oposal -in-abeyance-pending review of the alte~native. -With regard to the scenario of two hundred thirty-three-single-family-homes, Mr. Evans stated they-~an the-numbers in-the same-manner as -KRM, and determined that scenario-is -not financially or economically feasible, and to expect a develope~ to come up with 20 million dolla~s -equity-in a p~oject-is-not realistic, the only way the two hund~ed thirty-three unit development would be considered is if the City were-willing to subsidize that project. Mr. Evans-explained that a bank will-look at what the dollars are today, they-will not conside~ an--inflated dolla~ value, the banking industry the determining factor of what can and-can not -be done, and it is- their-firm belief that with-a two hundred thirty-three--home- scenado, there would be a residual land-value of somewhere -around 10 million -dollars which would require an infusion of approximately 12 million dollars over -the-term of the project. In response to Mr. Evans-comments,-Councilmember Risner again confirmed she -had written a letter early-in this process and had-requested-the City to send the letter to each Hill resident which noticed and-invited -those persons to the -hearing-on the proposed plan. -Mrs. Risner inqui~ed if another- plan could be processed while the current proposal is -before the Council.- - The City-Attorney responded that -although -he- -did- not -believe the -Council would want to-consider a number of competing applications, project alternatives-could be-considered, under CEQA a requirement is to look at-alternatives to-the project as-proposed. He explained that-if-during the course of the public hearings additional alternatives are proposed to be considered, those I I 1-3-89 could be reviewed as-an alte~native-to the project proposed by the-pending application-and-there could be further review and analysis of the pr-oject-alternatives. He added that for any of the alternatives to take place, particularly if there are fundamental changes to the pr-oject, -an amendment to the Specific Plan-would need to be done in the concept of a project alternative ~eview, also-it would be necessary for the environmental consultant, -retained by the City, to review the alternatives, as well as a staff analysis of the I changes. He added that a-condition-could be that all additional-consulting-costs would-be paid by the developer for the-Council to consider--alternatives, also if the developer provides an-approp~iate extension on the pending application to give-sufficient time to study the alternatives, the current proposal -could be held in abeyance. Councilman G~gas inquired if the present plan is placed-in abeyance -and- the alternatives are considered, would there be a requirement -to go before the Planning Commission before-being reviewed by the Council. Mr. Stepanicich-suggested that afte~-the initiat analysis it could be brought back-to-the Council for-initial review and if the-decision we~e to proceed with -fu~ther review of an alternative, it would then be referred- to the-Planning Commission for consider-at ion and recommendation, noting that before -amending the Specific Plan-the recommendation of the Commission would be r-equi~ed. Councilman Grgas ~eferred to Mr.-Evans-statement -that they believed the residual land value r-eduction over the life of the project would be somewhere near 12 million dollars for a project of two hundred thirty-thr-ee units, eighteen-hoLe-golf course and Gum Grove-par-k, -pointed-out-that that -is an accumulative number over- time -and inquired,-for negotiation purposes, what a reasonable discounted number would be in present day I dollars, -if -there were a determination by the City to- undertake certain-public- impr-ovements-that the developer would-othe~wise be required to provide. Mr-. Jirovsky said he would tentatively not recommend that the City commit any more than 6-to 8 million- dollars, however clarified that to be-a very inpr-ecise-figure and would-depend on the discount rate and-timing of the -money they-would otherwise spend. Councilmember Risner noted that to put 6 to 8 million dollars back into the project area-ove~ the life of the project and propose- a scenario that-would be acceptable to everyone in the City, -it may be worth consideration. With regard-to the-3.2 scenario, Mr. Evans again explained that the-consultant did not do any specific -site planning-in illustrating that scenario, -he merely-took an average one hundred fifty ac~e parcel and-subtr-acted-the acreage for the various fixed-uses. --Mrs. Risner stated that if the-Council wer-e to look at-Scena~io 3.2, placing the single family homes in the footprint-of-the condos, and if there were consideration of-allocating-tax increment to benefit the project area,-she would want-to see a 10.4 acre Gum Grove Park. Mr. -Evans recalled a number--of people have criticized the golf-cour-se, -and-pointed out that the proper-ty is -only so deep to-be advocating the full Gum Grove Park. Mrs. Risner stated possibly -there-could be some negotiation on the acreage to establish a reasonable amount acceptable to I the community. M~. Evans clarified that the restrictions on scenario 3.2 -are-the same as exist on the current plan with r-egar-d-to-Gum G~ove Park. - Mr. Evans again confirmed their offer--to place the curr-ent-application in abeyance and commence process of the four hundred forty-nine unit pr-oposal, -and-in-order- to expedite the process, they would go on-reco~d at this time that-if the Council chooses to look at that plan, they would agree to start a supplemental 1-3-89 I EIR as soon.as the City retains the consultant, at their expense. Mayor Hunt asked if they would be willing to look at the two hundred thirty-three unit scenario in the same manner. Mr. Evans replied that not knowing what the City's feelings are with regard to an economic subsidy, their answer would be no as it is felt it would be a waste of money, and the City's consultant has confirmed that it is not an economically viable project without a subsidy. He stated the scenario 3.2is not significantly different when it comes to the environmental constraints that many people have expressed their opposition to, merely replacing the environmental constraints by one benefit, deleting the condos, which.some people are supportive of, and if this plan were in the process, given the opposition regarding wetlands, Gum Grove Park, etc., they would be concerned with an expenditure for.this application unless it is known that the City is supportive of a subsidy for scenario 3.2. Mr. Evans pointed out that the entire development is not within the Redevelopment Agency pr,oject-Area, and in scenario 3.2 only one hundred twenty homes would be in the area from which tax increment is derived. Councilman Grgas suggested that.the Council be quer,ied if there would be a willingness to subsidize the two hundred thirty-three unit project. Councilmember Risner stated she felt there should be some consideration of modification to. the proposals that are being brought forth, and-to her would necessitate that Gum Grove Park .be lar,ger than 4.7-or 6.8 acres, and expressed her willingness to explor,e.the use of tax increment to make the Scenario 3.2 development viable, however she could not commit to an amount. Councilmember-Risner suggested that if the projected pr,ofit is not.as great from a reduced project, possibly the cost.of the land from Hellman would also be reduced. -Mr. Evans.confirmed that regardless of the pr,oject, .the land costs will.not change. Mr,. Evans made refer,ence to the-existing General Plan for the Hellman property which, since the.early 1980's allows.for a thousand units, and that-he did not feel it was realistic to think that.if the Mola plan is-disposed of, and the option allowed to lapse, then-the-Hellman's could sell the property for less money. He-stated-that would not happen. Mrs. Risner asked-if-Mr. Evans concurr,ed that.zoning determines the cost of the land. Mr. -Evans r,eplied he would agree that the cost of the land .is.based on the zoning that presently exists, which allows one -thousand units.on-one hundred ten acres. Mr. Evans referred to the current application and . acknowledged their .willingness .to.reduce the six hundred sixty condo units to six hundred and make them twelve hundred square feet if that is more acceptable, and stated further-that the third story could not be removed from the condominium structures, if it were it-would have to be placed elsewhere, .and clarified that the current condo pr,oposal is for one hundred twenty units of six hundred square. feet which would be combined for larger square footage. Councilman Grgas stated he was not opposed to Scenario 3.2 and-was prepared to look at it further, however it-should be-understood that it may cost money to implement that alternative. .He said he would like to see the City Council move in the-direction of sending back the four hundred forty-nine-and two hundred thirty-three proposals for processing -as alternatives, which.in turn would mean it would be necessary to authorize the staff to-engage consultants .to negotiate some number that would be acceptable to-Mola-Corporation as a-subsidy to make scenario 3.2 viable, assuming-all else were to fall into place, including a-larger Gum-Grove Park, also engage consultants to prepare a supplemental EIR, evaluate the impacts of the I I 1-3-89 proposals, then the Council could consider and evaluate all three options. Mr.-Evans stated if that is the-desire of the Council, to do a supplemental EIR there must be. alternatives, and they would have no-objection to-having a supplemental EIR prepa~ed-for the four hundred-forty-nine proposal, with the-alternative-of the other plan as well, so that any environmental -document will address all aspects, which he felt would take no more-than ninety days to - complete. With regard to the wetlands, he offered that.if anyone wished to hear-f~om their wetlands expert, who has been conferring with the Fish and Game and U. S. Wildlife, he was present in the audience-and available to make a presentation as to what presently-exists-on the site-and how he intends to prepare the- restoration plan. -Mayor Hunt stated that rather than considering-whether to send one or both of the plans back for processing during this meeting, it would-be his p~eference to schedule this matter for the next meeting and make a decision at that time. Councilman Laszlo suggested a fourth alternative in relation to the Scenario 3.2-of possibly one or-two condo-pads and othe~ similar alternative housing, stating that the plan he believed to be preferred-will require a subsidy, and in that regard he would anticipate there-may be questions as to whether a subsidy would be through bonds-or straight revenues, also to what-degree a subsidy would affect Redevelopment Agency-and-City revenues.- Mayor Hunt suggested that-at next meeting there-could be consideration of having a mix-and -single family within the same-footprint, which could be a desireable combination. Mr. Grgas stated that if-there is a desire to provide affordable housing opportunities on-the site, possibly there could be a mix somewhere-in Scenario 3.2 of single family-and air -space development, that his preference would be-town homes rather than stacked condos if it were possible, affordable from a standpoint of providing a range of opportunities, not necessarily a subsidized housing. - Mayor Hunt noted a mixed development as Mr. Laszlo suggested could possibly result in a lesse~ subsidy. Mr. Evans stated his-initial reaction would.be that there-is much mo~e value to a single family detached home than a condo given-the-five to six-units per acre of single family development, and to go-to a townhome style would most likely be -about ten units per- acre. Noting the element of time, -he asked that when this is-again considered in two weeks if staff could be-directed to- compile-a list of-environmental consultants for selection at that-time. Mr. Knight advised that-although the EIR. consultant,-Michael -B~andman & Associates, has the. base data, LSA has-done most of the significant wetlands analysis. Councilmember Risner indicated her- preference of MBA-since LSA-is performing work fo~ Mola. - Mr. -Evans noted that MBA has also-done work for them, and that a great deal of criticism-during -this process has-been directed towards the MBA prepared environmental report. With regard to considering plans at the next-meeting that may be alternatively processed, the City Manager stated it should be understood that if there are alternatives referred back to the Planning Commission, present staff-would not be able to accomplish this process-in a timely manner without supplemental personnel or-assistance of-consultants. The City Attorney-suggested -it may be helpful to provide a staff report setting forth the exact procedures that would take place over the next few months, and offered to assist the Development Services Director in that regard. -M~. Nelson noted also that he had not heard agreement by the developer I I I 1-3-89 I to assume the cost of the City's negotiator to determine a subsidy amount, which will require expert assistance. with unanimous consent of the Council, Mayor Hunt declared a recess at 10:04 p.m. The Council reconvened at 10:18 p.m. with Mayor Hunt calling the meeting to order. It was the consensus of the Council to conclude the public hearing by 11:30 p.m. with a goal of concluding the meeting by midnight. Mayor Hunt declared the public.testimony portion of the hearing on this item open. The City Clerk reported the Council had been provided with a packet of ten communications received during and since the December 5th meeting, -also copies .of the various petitions received at that meeting, a letter from Mola Development Corporation dated December 9th regarding the LSA wetlands draft map, a communication from the City of Huntington Beach authored by the Mayor P~oTem in support of Mola.developments in that community, the supplemental report and amendment thereto from KRM, and a letter.submitted by Councilman Grgas at this meeting from a resident expressing support of the project, specifically the condominium development as affordable housing. The City Manager advised there were no additions to the staff report at this time. Mayor Hunt invited members of the audience wishing to speak to this item to come to the microphone and state their name and address for the record. . Mr. Riley Forsythe, 523 Riviera Drive, quoted a section of the California Coastal Act and stated. that the Council, as opposed to other agencies, has the power and opportunity to designate as many acres as wetlands on the Hellman property as they choose. Mr. Forsythe made reference to provisions of a draft wetlands guide received from the National Wildlife Federation, and submitted same for the record. He said rezoning of this property would increase its value to the point where the possibility of acquisition by an entity such as the Port of Long Beach may be an.impossibility, and that the wetlands and park.acreage .issue must be established before a development is even considered. Mr. Forsythe added that the development proposed will further increase the City's financial problems by at least $21,000 per year. He questioned the construction of.condos on land that has an active fault.line and liquefaction problems, read an excerpt from the most recent Time Magazine regarding.the Armenian earthquake and alleged comparable land conditions existing at the.location of that earthquake with those.on the Hellman property. Mr. Forsythe stated his opinion that it does not make sense to app~ove a project-that has so many adverse impacts on the City, environmentally and financially, in addition to the public opposition. Ms. Sara Jones, 214 - 17th Street, said she was in attendance to express her opposition to the proposed project, however spoke favorably of the .possible alternatives that may be more acceptable, and commended Mola Development for seeking direction from the Council and for addressing some of the expressed public concerns. .Ms. Jones stated her opposition to the present plan was based upon traffic and the size of the condo units, and although affordable-housing is important, increasing the transient population would be a distinct.possibility. She stated. that although she felt the property will be developed,.the nature of the development and mix should be the important issue. Ms. Jones asked that serious consideration be given to access onto Westminster Boulevard as a condition of the development. Mr. Bill Morris, 1729 I I 1-3-89 Crestview Avenue, expressed support for the apparent direction of the Council to reduce the number and increase the size of the condominium units. He stated a thirty foot wide grove does not constitute a park and would be of no benefit to the Hill residents, that a passive park of greater acreage is needed. In reference to alternative plans that may be given further study, Mr. Morris suggested that they be used as a basis and that a planning firm be retained to refine them for the most efficient proposal, I noting that the Park acreage continues to be reduced-under the 3.2 scenario. Mr. Mario Voce, 730 Catalina Avenue, member-of the Save Gum Grove Park Group, stated they want the entire Gum Grove Park preserved so they can restore and maintain it.- -He advised their -group did retain an attorney, Mr. Ray-Gorman,-and proceeded to review Mr. Gorman's background and experiences with regard to the California Coastal Commission, Coastal Act, California Environmental Quality Act, federal coastal laws, State planning and zoning law, and matters of litigation and negotiation. Mr. Voce made reference-to a November 7th letter from Mr. Gorman addressed to Mayor Hunt and the City Council and read a number of excerpts -from the eighteen page communication relating to the Gum Grove Park and wetlands issues. Mr. Voce concluded that prior to the time any development on the Hellman site-can be considered the park and wetlands concerns must be resolved. Ms. Soretta Fielding, Seal Beach Boulevard, recalled sometime back the desire of everyone was to secure as much open space as possible in conjunction with this development, and stated that through the discussions it appears the open space is directed only to a certain segment of the population of the-community, and asked the Council to consider that whatever open space is determined that it be left as such for people of all ages to enjoy and never I subject to development. Ms.-Maria Dahlman, 1724 Crestview Avenue, stated her opposition to the Mola proposal with regard to- the size and number of condos, traffic, and loss of Gum Grove Park. She spoke favorably of-considering alternatives, and said the wetlands issue should be resolved before going forward. Ms. Dahlman questioned the logic of losing Gum Grove Park and in turn purchasing and -developing a five acre site for recreation with Quimby monies, a site she said was undesireable-due to location, surroundings, noise, and potential danger to children given the proximity to the oil wells. She-suggested that the homes, condos or portion of the golf-course be located in that area, reinstate the acreage of the wilderness park area with the five acres, and develop a tot lot near the Gum Grove. Mr. Keith Sneedon, 302 - 15th Street, questioned the democracy of the processing of this issue. He suggested that all plans be rejected, and then the desires of the people be sought to determine-what may be acceptable, starting with exact determinations for wetlands and Gum Grove Park. Mitzi Morton, 153 - 13th Street, stated there was no reason for the-City Council to approve six hundred square foot condo units for the project when it has previously been determined such size to be too small for a rental unit. She compared I the condo development with Marina Pacifica of five hundred seventy-two, three-story units, the proposed development having a density not desireable for Seal Beach. Ms. Morton distributed a map and portions of the Hellman-Specific Plan to the-Council. She expressed her opinion that before any development is considered the City should look to the future-, establish a plan for the thirty-eight developable acres of the remaining seventy-~ight on the Hellman site, 1-3-89 I and stated that she mentioned this because it appears attitudes regarding long standing goals are changing, Gum Grove Park and a future community park possibly only a dream. Ms. Morton stated that by using the maximum development standard density of 27.5 dwelling units per acre, there could.be one thousand forty-five additional units built on the thirty-eight remaining acres or a total of over eighteen hundred on the Hellman site, and although this would be a worst case scenario it is a potential. She also cited the planned hotel at First Street and Pacific Coast Highway as also causing more density and traffic, and questioned if the City is going to high density because of the golf course and wetlands. Ms. Morton also made reference to policy plan sixteen contained in the draft Local Coastal Plan calling for the adopted Specific Plan for the Hellman Estate to be modified as necessary to preserve wetlands on site. She suggested that the proposed plan be denied and that Mola return to Hellman for an adjustment of the price for the land that can not be built upon, as the City will not allow seven hundred seventy-three dwelling units on the one hundred forty-nine acres. Ms. Morton said that the profit of the developer should not be a City concern, where the lowest possible density and open space should. Discussion followed. The Development Services Director explained that one must look at the gross density of the project as the uses proposed for the site will continue with the property, gross density, including the golf course, condos, etc., being 5.2 dwelling units, and net density, applied to a specific product or type, the condominiums net 27.5 dwelling units per acre maximum. He stated it would not be appropriate to say the remaining thirty-eight acres will have a gross density of 27.5 dwelling units per acre, the proposal for that area is to remain oil extraction since the anticipated life of that use is a minimum of twenty-five years, and the basic accepted time line for an environmental impact report is around twenty years and at the end of that use the applicant would have to come to the City to amend the Specific Plan in accordance with a plan that may be prepared at that time. He explained that although a plan for the remaining acreage could be developed with an applied density or use requirement, but whether that would be viable in twenty-five years or more would be highly speculative. Ms. Jane McCloud, 700 Balboa.Drive, referred to her frequent use of the wilderness area during her eighteen year residency, stating that the Grove-is not only trees of more than ninety years old, but also marshes and meadows, used and enjoyed by people of all ages. She said that although the trash and debris left on the site by some is inappropriate, her attention focuses on the beauty of the area and contact with the animals and plantlife. Ms. McCloud expressed her feeling that the-reduction would result in a narrow buffer, an inadequate area for park, plants, animals, and people, with no privacy or contact with nature. .She recommended that the Council continue to strive to save and maintain the cur~ent size and configuration of Gum Grove Park, that the access roads should remain for emergency and handicapped use and there should be routine police patrolling. She questioned whether the park should be extended.to Seal Beach Boulevard, specifically with regard to safety-f~om access. Ms. McCloud added that she felt it important to maintain the-geographic continuity between the Park and wetlands as a total ecological system. She said she has not been in favor of the condos, too massive and an inappropriate design for the atmosphere of I I 1-3-89 Seal Beach, stated her preference for single family homes and that the development should have minimum impact on traffic. Ms. McCloud stated she could utilize the golf course facility, however questioned the number of Seal Beach residents that would, and exp~essed concern. regarding the proposed location for. the baseball, tennis and tot lot facilities, suggesting an area closer to the Park. She added her feeling that any golf course should be a quality I facility, that there should be no golf course at the expense of Gum Grove Park, and questioned.whether it will even be built.once the wetlands determination is concluded. Ms. McCloud said that the City should.not be responding to a developer's plan, the process should cease, and with citizen input.the General Plan and Redevelopment Plan should provide the guidelines for development. Ms. Alice Davis, 224 - 4th Street,-stated one of the reasons she-purchased her home in Seal Beach seven years ago was for the beach and Gum Grove Pa~k, citing the importance to her of being near the beach, nature, and open space. As a member of the Park Group she said they-want to preserve-the entire park in its present configuration, and the manner in which it is proposed constitutes no more than a buffer for the golf course. While acknowledging the desire of many to play golf, she also cited the need-for open space and pa~ks by others, a golf course benefitting the golfer, a park-benfitting anyone. She also made reference to Time Magazine, an article regarding the state of the earth. Ms. Davis asked that the Council save Gum Grove Pa~k for the future of the City. Ms. Wendy-Mor~is, -1729 Crestview Avenue, stated although alternatives a~e being proposed, the original plan remains under consideration, .a plan she did not like, having too many faults and-impacts on the quality of life in Seal Beach. Ms. Morris-asked if a previously proposed-comp~omise I plan for other-agencies or parties to buy and restore-the wetlands and Gum Grove Park had been looked into. The City Manager advised that -staff has researched all sources suggested, that there is a-potential for restoration monies, however no one is willing to pay the fair market rate for the land. Ms. Morris questioned how the market rate could be so high if the land can not be. built upon. Councilman Grgas explained that Mola Development would be. buying one hundred forty-nine acres, that Hellman would not consider selling-him only those-parcels that are.developable and then give the remainder to the City, -where-it is more likely Hellman would close off the Park and allow the area to further deteriorate. He added-that the question may be- whethe~ there are agencies that would assist the-development by acqui~ing the wetlands or through subsidy-of the infrastructure improvements, which is suggested by- the 3.2 scenario.- Ms. Morris presented her statement and elaborated on the reasons she believed the plan proposed was--not the best for the City, her specific objections being the elimination of Gum-Grove as a park, the size and number of condos, her p~efe~ence -being total deletion, and the extension-of a natu~e trail to Seal Beach Boulevard. Living in the area adjacent to the proposed extension, Ms. Morris referred to and submitted-a petition signed by nine of eleven neighbors also opposing the extension, which would I allow a public access trail from Seal Beach Boulevard however would not allow for regular access by.police patrol. Ms. Mo~ris asked if police and fire departments had been consulted regarding access and potential problems resulting from such access. The City Manager responded that discussions have been held with-regard to vehicular access for pat~ols and emergency situations with a number of solutions considered, that specific details and issues such 1-3-89 I as those referred to will be addressed as conditions of the map when it is consider,ed, and.noted the one hundred nine conditions already imposed by the Planning Commission. Ms. Morris stressed that she did not want an extended trail system without police access. Ms. Morris expressed her concern with noise levels that will affect residences adjacent to the oil production on the site as well as the proposed additional five acres for.recreation use. Ms. Morris questioned how the lake system pumps are to be powered, who would be responsible for liability in the case of an earthquake given the fault and liquefaction elements, and .the provision for restricting erratic golf balls from backyards, proposed in the EIR.through netting or the planting of trees.that will take-a number of years to be effective. She stated there is a need to reduce traffic noise from McGaugh School classrooms either by a sound wall or air conditioning as a condition. She also expressed concern with the Fir,st Street connector road and traffic impacts at Westminster and Pacific Coast Highway, and the proposal that the City.would be.responsible for one-half of the cost of that roadway construction. Mr. Knight responded that the pumps for the lake system would be electrically operated, and the City Attorney added that the geologic conditions of the property would be required to be disclosed at the time of the sale of the units and would be the responsibility of the-developer. Ms. Morris stated concern with drainage ,easements from the yards-of existing residences onto the Hellman property, and noted-the lack of response to her written comments to the EIR regarding same. The City Manager advised that in.reviewing the grading plans staff will need to consider existing law regarding natural course drainage of property, existing easements determined, and if no easement exists, there are laws that would apply to the downhill properties. With regard to the First Street connecting road and the initial understanding that no westbound turn would be allowed onto Westminster Boulevard, the City. Engineer explained that this roadway would connect approximately five hundred feet from the Island Village existing signal, and through discussions with the City of Long Beach it has been agreed that the additional signal could be located.within that distance and that the signals would be interconnected, and confirmed that the intersection at Pacific.Coast Highway would allow both right and left turns. With regard to costs, Councilman Grgas explained that the developer can not be required to pr,ovide more than his contributory share of.the t~affic impact, and that the City's.share of.the roadway costs could come from the-tax increment from.the project. Staff further clarified that the roadway would be one lane in each direction initally, an eighty foot right-of-way with a futu~e ability for four lane~. Ms. .Morris spoke fo~ retaining the full size Gum Grove'park to adjoin the wetlands, and questioned how any development could be considered until an actual acreage determination is made. I I Mr. Rob Schonholtz, LSA Associates, reported their firm has made a number of examinations of the wetlands.on the Hellman property, .their determination being approximately 24 acres on the actual project site with some additional acreage outside the project, the determination using the Coastal Commission wetland definition and following the methodOlogies used by DFG in 1980 and 1982. He reported Mr. Wright's mapping was reviewed and unfortunately his early comment that he had not perimetered the map has somehow been lost and the 35 acre figure has been accepted as fact, explaining that their firm perimetered the map and found 1-3-89 / 1-16-89 29.8 acres. - Be added that LSA has-continued to do further investigation of the-area, that although-the two mappings are basically in agreement there are a number of disagreements, and that LSA is continuing to work with the various agencies to determine a reasonable conclusion. Mr. Shull concluded he felt confident in stating that the actual acreage, using Coastal Commission definition, to be approximately 25 acres with a variable of about 2.5. Mayor Bunt-declared the jOint public hearing continued until January 16th. I With unanimous consent of the Council, Mayor Bunt declared a recess at 11:54 p.m. The Council -reconvened at midnight with Mayor Bunt calling the meeting to order. The City Attorney clarified that based upon Council discussion, the-procedure for the-continued hearing would be to-consider what alternatives should the further studied, that staff will provide a report-outlining the procedure for the manner in which those alternatives will be considered, and requested further direction with regard to consultants with specific expertise that the Council may-wish to consider. Councilman Grgas-suggested that staff present a report identifying the-consultants that are anticipated to be needed to evaluate the plan(s), including the fiscal impact consultant, KRM, and that the estimated costs and funding sources for each be identified. The City Manager advised that if the Council-wished to retain physical planning services, staff would most likely recommend POD, and KRM for fiscal analysis. with regard to-the EIR consultant, Mr. Knight stated he may recommend LSA to address the wetlands issue due to their expertise in that I field, however not necessarily for the remaining environmental issues. Councilmember-Risner objected to the use of LSA due to their working relationship with the developer. The joint session concluded at approximately 12:10 a.m. c~n~ I-~ Seal Beach, California January 16, 1989 The Redevelopment Agency of the City of Seal Beach met in regular session at 6:45 p.m. with Chairman Grgas calling the meeting to order with the Salute to the Flag. I