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HomeMy WebLinkAbout05/02/2000, 1B - CONCEPTUAL PROPOSAL FOR AUTO PARK WAY EXPANSION AND OPEN SPACE DEDICATION council Ak.�mDse j 5oL ev ac En oa REpoRt 1=N.�1.B C I T Y O F SAN LU IS O B 1 S P 0 FROM: Ken Hampian, Assistant City Administrative Officerr Prepared By: Shelly Stanwyck, Economic Development Manager SUBJECT: CONCEPTUAL PROPOSAL FOR AUTO PARK WAY EXPANSION AND OPEN SPACE DEDICATION CAO RECOMMENDATION 1. Receive a report on a conceptual proposal for the expansion of the Auto Park Way off Los Osos Valley Road for purposes of new auto sales, relocation of downtown auto dealers, and open space protection. 2. Following parameters outlined in this report, direct staff to negotiate a Memorandum of Understanding (MOU) with the developer when his conceptual proposal is submitted as a formal project application. REPORT-IN-BRIEF This report presents Council with a conceptual proposal to expand the Auto Park Way area and dedicate a portion of the McBride property for open space. The expansion would support the General Plan goals relating to relocating and attracting auto dealers to the Auto Park Way area. The positive impact that auto dealers have on the economic health of the City is described in this report. The outstanding issues Council must grapple with are: (1) What form of incentives are consistent with the General Plan's direction.to encourage auto dealers to relocate to the Auto Park Way area? (2) How important is it to encourage an expansion of the Auto Park Way area at this time? (3) What.would be the best way to deal with the General Plan open space requirements for this particular property? This report recommends two incentives. The first is a sales tax reimbursement agreement. The sales tax reimbursement agreement would serve as an incentive to the relocating auto dealers because a portion of the costs of the development would be financed over a longer term and paid back, in part, from the new net sales tax revenues generated by the auto dealers. The second incentive recommended is flexibility in the on-site open space dedication required for the McBride Property. Both incentives require some policy direction from Council. Staff feels that it is in the City's overall best interests to overcome this long delay in the expansion of the Auto Park Way area and recommends supporting both incentives. In addition, staff requests direction to begin negotiating an MOU once a project application for the conceptual proposal has been filed. The Council is not being asked at this time to approve a project. If however, Council is not supportive of the concept, it is in the best interests of both the City and the developer to clearly indicate that now, and not proceed further. 1B-1 Council Agenda Report—Conceptual Proposal For McBride Property Page 2 DISCUSSION Background Introduction. Sales tax revenue from the sales of new and used automobiles is critical to the health of the City's general fund. The general fund not only supports our critical services, such as police and fire protection, street maintenance, and homeless services, but it also allows us to enjoy "extra amenities" that add to our quality of life and make San Luis Obispo a special place to live. In recent years, for example, the general fund has been used to provide open space acquisitions, art-in-public places, the Creek Walk project, youth athletic fields, the Performing Arts Center, enhanced neighborhood services, and grant funding to dozens of social service, arts and cultural non-profit organizations(Attachment 1, depicts General Fund revenue information). In order to keep the general fund healthy, our local automobile sales industry must be strong. City General Plan policy recognizes this relationship, and supports goals related to relocating and attracting auto dealers to an expanded Auto Park Way area off Los Osos Valley Road. However, for a variety of reasons, for many years, the City has been stalled in achieving our goals for the Auto Park Way area and we are currently at risk of losing additional dealers to other communities (one left for Paso Robles in 1999). Recently, an opportunity has arisen to achieve an expanded Auto Park Way area and, at the same time, free up downtown properties for uses more compatible with our Downtown goals. However, this opportunity is not without its own challenges and issues. Impact of Auto Dealers on the City's Economy. Our economy is in an unprecedented era of expansion. Many traditional economic models no longer apply to the new "hi-tech" economy. At a local level, this economic success can be seen in continued increases to our sales tax revenues. In SLO, typical economic segments, such as general consumer goods, are not driving increased sales tax revenues. Instead, significant and constant increases to new auto sales are driving the positive trend here, as evidenced by these impressive statistics: ■ Of our top 11 sales tax generators, seven are auto dealers. ■ Over fifteen percent (15%) of the total sales tax revenues in the City come from new car sales (and sales tax composes about 30% of the general fund revenue). ■ During the past four quarters,new car sales have increased over each prior year's quarter. ■ This past year, new car sales and auto leasing accounted for more than fifty percent (50%) of the increase in our point-of-sale revenues. ■ During the third quarter 1999, new car dealers increased their sales tax revenues by 9.9% to $334,940. 1B-2 Council Agenda Report--Conceptual Proposal For McBride Property Page 3 Interestingly, the success of our auto dealers is seemingly due to the synergistic benefit of the Auto Park Way area. When analyzed by area, the L aguna/Los Osos Valley Road area (where Auto Park Way is located)has seen significant revenue increases over the past two quarters while our secondary dealer area, Santa Rosa/Monterey Street, saw minor increases during one quarter and decreases during the most recent quarter. • Osos Vallev Road 12 Quarter 1999 1 17.1% increased sales tax revenues 1 8.8% increased sales tax revenues 3'd Quarter 1999 1 11.3% increased sales tax revenues 1 -9.5% decreased sales tax revenues Problems with Existing Locations. Many significant buildings in our downtown core were at one time home to auto dealerships. As the uses in the downtown area have changed, auto sale activities in the area have become more difficult. Because of the size of their lots and their layouts, downtown dealers face sidewalk encroachment issues and problems loading and unloading vehicles. These dealers also suffer significant property damage because of tree "droppings" and vandalism related to nighttime activities in downtown. Other "non Auto Park Way dealers", such as the Saturn dealership on Broad Street, experience neighborhood compatibility problems. In addition, the dealerships not located in the Auto Park Way area are unable to benefit from the synergy created by an auto park. Despite the many economic and land use advantages of an expanded Auto Park Way area, for a variety of reasons,no progress has been made toward any such expansion for many years. November 16 1999 Council Action — and a New Proposal for the McBride Property. Due to the long delay on the two remaining parcels designated for possible auto sales expansion in the General Plan, on November 16, 1999, at'the suggestion of Council Subcommittee of Mayor Allen Settle and Council Member John Ewan, Council directed staff to conduct an analysis of other alternatives. This work has been underway, and shall be separately presented by the Community Development Department to Council on May 2, 2000. However, the circumstances that resulted in Council's direction in November 1999 have changed. While the analysis of alternative locations was underway,.Paul Quong was formulating a new development proposal for the McBride Property (the "Quong Conceptual Proposal" or "Quong concept"). The McBride Property is shown in Attachment 2. This new proposal is challenging but feasible. Since, in staffs' opinion, the McBride Property is still the best near- term alternative for the expansion and/or relocation of auto dealers, staff believes the Quong concept deserves serious consideration. Therefore, the remainder of this report addresses the challenges that the Quong concept raises, and possible ways to meet those challenges. The McBride Property and the Quong Conceptual Proposal for New Auto Sales General Plan Guidelines for Auto Dealers/McBride Property. The General Plan contains many policies that encourage the development of an auto center in the Auto Park Way area. The development of a portion of the McBride Property for new auto sales is consistent with the General Plan. 1B-3 Council Agenda Report—Conceptual Proposal For McBride Property Page 4 ■ First, the General Plan established an area where this use would be encouraged, the Auto Park Way area: "The City intends to create around Auto Park Way an easily accessible and attractive auto sales and services center(L UE 3.5.7.A). " ■ Second, it sets forth the amount of land that was anticipated to be needed for this use, about 50 acres: "Until the 2004 update of the LUE, it has been estimated that about 50 acres will be a sufficient amount of land for auto dealer sales in the auto Park Way area. (LUE 3.5.7.A). " ■ Third, it stated that the City would provide incentives to encourage dealers to relocate to the Auto Park Way area: "The City will provide incentives to encourage relocation of auto sales to the Auto Park Way area. (LUE 3.7.8). ■ Fourth, it suggested that auto sales not be encouraged in other locations in the City: "In an effort to reinforce the Auto Park Way area, and to maximize space for other uses in other locations, auto sales should be minimized in other areas of the City (LUE 3.5.7.B). " Although a significant amount of the Auto Park Way area has been developed, it is presently insufficient for our local dealers' needs. Because of present demand, there is a significant need for Auto Park Way to be expanded to encompass the approximately 50 acres that were originally planned for this use. The development of the McBride property will accommodate the immediate demand, leaving another 11 acres to be identified elsewhere for the long-term (e.g. a portion of the LOVR Gap). The Historical Cost Constraints on the McBride Property. The McBride Property is located in the County of San Luis Obispo, adjacent to City uses, at the end of Calle Joaquin Road. The rear portion abuts the Auto Park Way area and Rancho Grande Motors. For years, there has been no activity on the McBride Property because prohibitive economic constraints have precluded any proposals for the property. The owner has treated the entire parcel as if all of it could be developed for service commercial use in the City. There has been no discount in the valuation of any portion of the parcel by McBride for that part of the property, which, under the City's General Plan, would be required to be dedicated for open space use upon annexation into the City. Thus, the cost per acre for the McBride Property is very high. In fact, it is so high that that it makes the development of the property very risky. For our local auto dealers, the cost has been too high for any single dealer to develop the site. The Quong Concept for McBride Property. The developer of the Marigold Center, Paul Quong, is presenting the City with a more promising conceptual proposal for the development of the McBride Property (Attachment 3). The concept is to create six parcels, of varying size, five for new auto sales and one for open space. The development would occur adjacent to both Kimball Motors and Rancho Grande Motors. In addition to facilitating the City's General Plan goals for the property, a new road would be created, linking Calle,Joaquin with Auto Park Way. 1B-4 Council Agenda Report—Conceptual Proposal For McBride Property Page 5 The immigration building on the McBride Property would also be removed. Significant amounts of landscaping would be used to enhance the area. Because of the purchase of a portion of Rancho Grande Motors, in the back of Auto Park Way, the Quong concept creates a significant circulation link. The new circulation link would be beneficial to the auto dealers, improving upon the synergistic relationship between them. It would also dramatically increase safety in the area, as customers would be able to traverse the area in a circular fashion, rather than having to go down two separate dead-end streets via a very busy arterial street. The cost of the acquisition of the property necessary to create the circulation link is in excess of one million dollars. The costs for the infrastructure improvements necessary to construct the circulation link are estimated to total, at a minimum $800,000. Some of the more expensive improvements include a bridge ($225,000), street grading and paving ($100,000), curb, gutters and sidewalks ($100,000) and a traffic signal ($100,000). The Quong concept has significant costs for property acquisitions and infrastructure improvements. In order for the development to occur, and to be financially workable, slightly more than half of the 25.24-acre site must be developed. The concept includes an open space dedication of about nine-acres; the development of 14.3 acres for new auto sales; and the remaining acreage is to be used for sidewalks and streets. What the Council Is Being Asked to Do Now (and the major policy issues to be faced) While promising, the Quong proposal contains its own unique set of challenges and requirements. Meeting these challenges requires Council policy direction and conceptual support, and such direction and support is being sought at this time. However, Council is not being asked to approve a project Separately, the project will need to proceed through the usual development review process to achieve all of its approvals and permits, including review by the Planning Commission and the Architectural Review Commission. Through this process, there will be numerous public hearings. It is anticipated that a General Plan Amendment and pre-zoning application would be required before proceeding to the annexation of the property. After annexation and environmental determinations, a tentative map would have to be approved. Then subdivision improvements would have to be approved by the appropriate advisory bodies. Before proceeding through this time-consuming and costly formal process, Council direction on the key policy issues is important to determine the feasibility of the endeavor. Such direction is being sought relative to the following two main questions: 1. Is the City willing to utilize sales tax reimbursement as a strategy for meeting the General Plan goal of creating an incentive program "...to encourage relocation of auto sales to the Auto Park Way area."(LUE 3.7.8). 2. Is the City willing to conceptually support some flexibility in the on-site open space dedication requirement? 1B-5 Council Agenda Report—Conceptual Proposal For McBride Property Page 6 Sales Tax Reimbursement as an Incentive. The first incentive, which requires policy direction, comes in the form of a sales tax reimbursement agreement. This would be an agreement with the developer that would assist auto dealers in locating in an expanded auto center. As mentioned in the Quong concept, because of the high land costs, the significant circulation linkage costs, and the open space requirement, the development costs for this project are much higher than usual on a square foot basis (especially, on a building square foot basis). Cost is one of the primary factors for auto dealers in determining whether or not they can locate in an area. Because of the various factors described, the costs associated with this development are potentially too high for our local auto dealers. By entering into a sales tax reimbursement agreement with the developer, the City would assist relocating auto dealerships by financing a portion of their development costs for their new locations. The agreement would serve as an incentive to the relocating auto dealers because a portion of the costs of the development would be paid back over time,in part, from increased sales tax revenues generated by the auto dealers. The sales tax reimbursement agreement could finance roughly one million dollars of development costs over an X year term (e.g. 15 to 20 years) at X percent (e.g. eight to 10 percent). The term of repayment and the interest rate would both be negotiated. The City.and the auto dealers would share 50% of the net new sales tax revenues generated in their new locations. The shared sales tax revenues would be used to pay a portion of the debt on the developed property. An average annual sales tax revenue amount generated by each relocating dealership would have to be calculated and used to set the minimum. There would be a maximum on the amount shared of up to double the dealer's annual debt burden on the new location. Put in numerical terms, if the dealer's debt obligation is $10,000 per year, and the dealer previously generated $100,000 in sales tax revenues per annum, the City and the dealer would share in the sales tax revenues from $100,000 to $120,000. The City would apply up to $10,000 per annum to the dealer's debt obligation. If the dealer fails to generate increased sales tax revenues, it would have to pay its debt obligation out of pocket because there would-be no increased sales tax revenues to share. Also if the dealer experiences a shortfall, say the dealer only generates $10,000 in new sales tax revenues, again, the dealer has to make up .the $5,000 debt service shortfall out of pocket. Any sales tax revenues generated in excess of $120,000 would belong entirely to the City and would not be shared. Flexibility in the Location of the Open Space Dedication. Another form of incentive could be flexibility in the on-site open space dedication. However, this flexibility also requires some policy direction. The General Plan states that "Dalidio Area properties (generally bounded by Highway 101, Madonna Road and Los Osos Valley Road) shall dedicate land or easements for the approximately one-half of each ownership that is to be preserved for open space" (LUE 1.13.5E). A strict interpretation of this language would mean that approximately 12 '/i acres of the 25.24-acre McBride property would be dedicated in open space, while the other 12 '/z could 1B-6 Council Agenda Report—Conceptual Proposal For McBride Property Page 7 be developed. The permissive, rather than mandatory language in the General Plan regarding this potential open space dedication appears to leave room for some flexibility. The developer is proposing slightly over nine acres in on-site open space, leaving a shortfall of over three acres. The developer has indicated a willingness to negotiate for a payment to the City of an amount that is appropriate for the less than 50% dedication of open space at this location. Staff believes that such flexibility will be necessary to make the concept work. However, staff also believes that this approach will require a General Plan Amendment, and that the proposed payment should be "significant" and apply toward a similar type of land. For example, the Natural Resources Manager has been working to complete the acquisition of the Morganti Property, property which contains the same type of"prime" agricultural soil as the McBride Property. The Morganti acquisition still needs over$200,000 from the General Fund. If such funding were acquired through the Quong project, in recognition of the added development of three acres, the City would obviously be able to use its General Fund money for open space acquisition elsewhere (for example, the Foster acquisition is still a very long way from being funded, even though we have less than one year to do so). Why We Should Proceed to Negotiate an MOU Staff believes that the Quong concept represents the best opportunity we have had in many years to achieve our General Plan goals for Auto.Park Way expansion and enhanced new car sales. While not binding, the MOU will give the developer some assurance that the City supports the project concept, and is willing to work with the developer to overcome certain project challenges (in this case, they are both financial and policy related). In the absence of an agreed upon MOU, staff also believes that this project will proceed no further. We have already described how important auto sales are to our economic health and ability to fund important public services and projects. Therefore, the historic increase in sales tax cities achieved through the clustering of auto dealers is a very important reason to proceed further with this proposal. Other factors to keep in mind include: ■ Retaining Existing Businesses. If they cannot find alternative locations, several auto dealers have stated they will leave the City. Presently, neighboring cities to both the north and south have made very lucrative offers to local auto dealerships in the hopes of luring them away. In the past two years, the City of Paso Robles has entered into sales tax agreements with two car dealers, one expanding, and the other relocating from San Luis Obispo. The loss of auto dealerships would be a devastating blow to our sales tax revenue stream, a revenue stream which funds many of the extra amenities which add to our quality of life. ■ Relocation Creates New Opportunities. Many significant buildings in our downtown core were at one time home to auto dealerships. As the uses in the downtown area have changed, new auto sales in or near downtown have become less compatible. Relocation of dealers from the uptown,Monterey Street area, to the Auto Park Way area would create the opportunity for new, more compatible uses in the 1B-7 Council Agenda Report—Conceptual Proposal For McBride Property Page 8 downtown. We've recently seen businesses which traditionally need to be located close to governmental offices and the courts (e.g. larger. law firms, insurance companies and title companies) move outside of downtown. In addition to reuse by professionals for office space, the uptown area could see increased retail, tourist, or service related businesses occupy the spaces presently occupied by auto dealerships. ■ Possible Enhancement of Water Supply. During the most recent drought, the City's most productive well was located in the center of the roundabout on Auto Park Way. The McBride Property is in this productive water region. Because the City would own some of this property through the open space dedication, the property is also a possible location for processing and treating water. A study to determine how the City can increase groundwater production and treat the water produced in this area is in its initial stages. ■ Circulation Improvement. The circulation improvement created by the Rancho Grande link in the Quong proposal is hard to measure. However, with the new bridge, and a traffic signal at Auto Park Way, we can expect improved traffic circulation and safety in the area and increased consumer satisfaction because of improved access to all of the auto dealers in the Auto Park Way area. For all of the above reasons, staff is recommending that we proceed to MOU negotiations with Mr. Quong. Recommended MOU Conditions and Parameters If Council agrees to proceed to the MOU stage, it is necessary to provide staff with guidance in negotiating the MOU. Staff recommends the following parameters: 1. MOU negotiations may commence once a formal project application has been filed and judged"complete for processing"by the City's Community Development Department. 2. Although on a much smaller scale, staff can negotiate the terms of a sales tax sharing agreement modeled after the principles set forth in the San Luis Marketplace MOU. These principles are generally as follows: ■ Sharing of only net new sales tax revenues. The MOU will specify that about 50% of the net new sales tax revenues generated, not exceeding the debt service costs, will be shared. The MOU will outline how the average sales tax valuation for dealers will be established. The MOU will limit the sharing to only the annual debt service amount for each parcel; any excess sales tax revenues generated above the debt obligation will not be shared. ■ Maximum contribution. The MOU will establish the maximum contribution toward debt financing that the City is willing to provide. 1B-8 Council Agenda Report—Conceptual Proposal For McBride Property Page 9 ■ Ground rules for assessment district. The MOU must address the ground rules for forming an assessment district, e.g. what will the rules be and is one necessary? ■ Debt. The MOU will define the security for the debt obligation as well as the term and interest rate for the obligation. ■ Development Terms. The MOU will also outline concepts that the developer will be encouraged to address in the design of the project. These could include signage for the project, lighting, landscape buffers and a landscape maintenance program for the area. 3. The project proposal must include a dedication of at least 9 acres of the.McBride Property for open space and a substantial contribution toward the acquisition of offsite open space elsewhere, of a similar nature. 4. The negotiated MOU must return to Council for final approval. 5. The MOU will guide the eventual negotiation of a binding development agreement. However, a development agreement will not be negotiated until the project has obtained its discretionary approvals. FISCAL IMPACT Because of the nature of the negotiations which would be involved in the MOU, Staff recommends using the services of PCR Kotin to assist in negotiating both the MOU and the Sales Tax Sharing Agreement portion of the MOU. Depending upon how long the negotiations take, our price for PCR Kotin's services will vary. At present, we estimate this cost to be between $5,000 and $8,000. Because the scale of these negotiations are of a much smaller scale than those of the San Luis Marketplace, there are sufficient funds in the Economic Development Program's budget for this type of contract service. Should the costs of negotiations exceed the Economic Development Program's budget, we will ask the developer to pay the shortfall. The costs of negotiating a Development Agreement are not estimated at this time, but will be addressed when we reach that point. ALTERNATIVES 1. Reject conceptual proposal. Council could reject the Quong concept. Rejection would continue the stalemate between the City and the auto dealers who would very much like to relocate out of the downtown area but within the City limits. Staff does not recommend this alternative because of the potential loss of local businesses and the negative economic impact it would have to the General Fund. 2. Allow some of the incentives but not all. Council could accept some, but not all, of staffs' recommended incentives. For instance, Council could reject the proposal to allow the acquisition of off-site open space, but accept the concept for the sales tax 1B-9 Council Agenda Report—Conceptual Proposal For McBride Property Page 10 reimbursement agreement. Under this alternative, since less of the property would be developable (because more would be going toward an on-site open space dedication) the cost of development would increase significantly. It is likely under this alternative that the sales tax reimbursement agreement would have to be much richer (both in the debt obligation and sales taxes generated by the dealers) to enable the developer to complete the project. Staff does not recommend this alternative because it is probable that some auto dealers would be unable to relocate because the performance obligation for relocation, even with the City's"assistance",would be too great. 3. Encourage development in an alternate location. The only other comparable alternative location for the expansion of the auto center is the "Los Osos Valley Road Gap Property" (Alex Madonna's property). For many reasons staff does not recommend pursuing this alterative. First, although the property could be used for new auto sales it is presently not within the boundaries of the City and there is no proposal for its annexation. Second, new auto sales is just one of the many suggested uses for the LOVR Gap Property. Unlike McBride, the LOVR Gap Property is eligible for a variety of possible uses including: vehicle sales, multifamily housing and/or an open space corridor, trail or both to connect Laguna Lake Park and Prefiuno Creek with the Irish Hills (LUE 8.7). Finally, the owner of this property has not indicated an interest in either its annexation or development. Therefore, staff recommends that we view this property as the probable location of the remaining 11-acre need,but for the longer term. 4. Provide completely different incentives. Council could elect to provide alternative incentives to those described herein. The alternative incentives could be in addition to, or instead of, the original incentives proposed herein. One alternative incentive could be for the City to pay for all of the various infrastructure costs associated with the Quong concept. Estimates run from $800,000 to $2 million. This alterative is not recommended because it is a more expensive alternative than Council probably wants to undertake. Another alternative incentive could be fee waivers. However, staff would point out that for several years a$15,000 per dealer fee waiver existed for any dealer willing to relocate to the Auto Park Way area. This waiver "offer" was completely unsuccessful. Even at a high level it is unlikely that this alternative.incentive would be sufficient to encourage the relocation of auto dealers to the Auto Park Way area, and this alternative is not recommended on its own. ATTACHMENTS 1. General Fund Revenue Information 2. McBride Property Vicinity Map 3. Quong's Conceptual Proposal 1B-10 16.7% Percent New Auto Sales were of Sales Tax Revenues ' for the City 3rd Quarter, 1999 ❑New Auto Sales ■Sales Tax Revenues 83.3% 15% 2000-01 General Fund Revenues ..r • ❑Property Tax Sates Tax; 11% ■Utility Users Tax 316/0 ❑Transient Occupancy Tax ❑Other Taxes ■From Other Governments 3% 12% ©Service Charges ■All Other Revenues 11% 8% 9% O Sales Tax 8% 15% 1999-00 General Fund ,. Operating Program Expenditures 14% O Leisure, Cultural& Social Services' ■Community Development ❑General Govemement 47% O Public Safety 16% ■Transportation ATTACHMENT GENERAL FUND REVENUE INFORMATION 1B-11 / t � �� ♦ s-�,tIIIt � i i� �tf� tr. �► Attachment 3 n O O Pau!Quong Managing Member Tom Phillips Member Enterprises, LLC April 21, 2000 Mayor Settle and City Council Members CITY OF SAN LUIS OBISPO City Hall, 990 Palm Street San Luis Obispo, CA 93401 RE: Auto Park Plaza Expansion Project McBride Property Annexation/Quong Development Dear Mayor Settle and City Council Members. For several months we have been meeting with City officials regarding a cooperative, City-Private project to expand the Auto Park near Los Osos Valley Road northwest of Freeway 101 interchange. The 26-acre regionally central, easily accessible and visually prominent McBride property on Calle Joaquin is the ideal site. Annexation could provide a combination of agricultural preservation and planned development subdivision to accommodate 5 additional auto sales and service dealerships. Such commercial space is critically needed now to retain and expand this major source of retail sales tax, vitally important to the City's economic health. The City's General Plan and the Chamber of Commerce Vision Paper for Economic Development both support the concept of expansion and enhancement of the existing Auto Center to strengthen auto sales citywide and to improve land use downtown and elsewhere within the community.The former Economic Strategy Task Force was one of the original sources for the concept, beneficial to both the City for planning and sales tax enhancement, and to the auto dealers who need to relocate from obsolete downtown facilities, and expand to keep pace with regional growth. The adopted General Plan (LU policy 3.5.7) specifically encourages vehicle sales expansion adjoining the existing Auto Park Way and minimizing auto sales in other areas. Problems and challenges are evident with any development proposal, but solutions and successful implementation appear possible by public-private cooperation.Three key factors will determine if this project concept is feasible: Schedule, Economics and Development Policy— Schedule-The need is now, but the planning and annexation process is complex. It is expected that project decisions made in 2000 would enable subdivision in 2001 and completion of new dealerships in 2002, particularly dependent on the environmental determination. If an EIR is required, it would require time extensions on our options to purchase, which may be available, but at extra expense. It would also risk some dealers deciding to go elsewhere in the interim. o Z Economics- Land acquisition and development costs, particularly correction of existing LU o circulation deficiencies, threaten to make the preferred project infeasible. One basic problem, for > C) example, is that McBride is willing to sell the total property at what he considers fair market value W N } for commercial use, despite the City requirement that only half the property would be allowed W H urban development,the other half preserved as open space. Effectively, the development area Q a U must support twice the land cost per square foot than other undeveloped commercial areas Q S within the City. Another is the extraordinary cost of connecting Auto Park Way to Calle Joaquin to nn consolidate the auto sales complex and solve existing circulation problems.This involves expensive purchase of a portion of an existing dealership sales lot, off-site road, bridge over Prefumo Creek, and signal installation expenses. If these increased costs were passed on to the auto dealerships, it would price the project out of local and regional markets for alternative sites. 1111 E. Kafella Avenue /Suite 235/Orange, CA 928671(714) 538-9532/FAX(44%A354.5 For the project concept to be feasible, the City will need to assist with most of the project's off- site costs, perhaps using part of the project's increased sale tax revenues to fund off-site area circulation improvements.The City may also need to offer further incentives to the dealers to make relocation and redevelopment feasible, such as waiving some other development fees. Development Policy-The project requires amendment to General Plan text and maps regarding on-site open space and development configuration, and proposing in-lieu fees for agricultural preservation outside the urban reserve to off-set the loss of 3 to 4 acres of such land on-site.The planned development pre-zoning can provide for design, landscaping, lighting and sign guidelines appropriate to this highly visible location, but the developer must still attract the dealers to this site based on reasonable development expectations and expenses.The developer needs direction and reassurance from the City before he commits to further environmental, economic and technical studies regarding the project. A letter of intent and memorandum of understanding are essential for the project to continue. In summary,the project must be a cooperative effort to succeed.Among the reasons the project is beneficial are the following: • Enables relocation and expansion of local auto sales facilities currently operating from obsolete, inadequate locations along Monterey Street downtown, encouraging private redevelopment of these central business district and tourist-commercial properties for more compatible uses; • Discourages unplanned, scattered auto dealerships along Broad Street, South Higuera or other strip commercial development inside the City or loss of new auto sales facilities relocating to other nearby communities; • Proposes to preserve the open space vistas from both northbound and southbound Freeway traffic by maintaining agricultural use north of on-site development and removal of the existing Border Patrol buildings, creating less obstructed views of Cerro San Luis Obispo, Bishop's Peak and the Irish Hills, across open agricultural fields adjoining Freeway 101; • Preserves a combination of on-site and off-site prime agricultural land as open space; • Provides a street connection between Calle Joaquin and Auto Park way, consolidating the existing auto sales complex currently bisected by Prefumo creek and creating safer circulation, including signalization of Auto Park Way at Los Osos Valley Road. Attached is a general plan vicinity map to illustrate the project concept. Our development team looks forward to presenting this proposal to the Planning Commission and City Council during the next few months as our formal applications progress through environmental determination, general plan amendment, pre-zoning, annexation and tentative subdivision map review. What is needed now is Council direction on the concept and issues outlined above. Paul Quong, President Quong Enterprises, LLC John Rossetti Rob Strong,A.I.C.P. Commercial Broker Planning Consultant 1B-14 J Use Element �J o VIM 1 / J / ,r oE'�°•�^R�"'Sr•"Y�t��'6'K'`�t� •:a''< tlit'Th'S.. / r� � /� 'yy��� kW<1.i:�`:..:: .::. ,.,.:C'���S j.. nth •'n �qt C.�' ^;:<. ^ :. ter.-�•.,.;'?''' r� � ���r / r c FIGURE 3 VEHICLE SALES AREA AT AUTO PARK WAY : t"' , city Of to Mn ' a VEHICLE SALES AREA san Luis os>Ispo o=t..a.:.:.;�'::��ska°='e., t= u MZME 1B-15