July 21, 2005 To

THE COMMUNITY REDEVELOPMENT AGENCY OF THE CITY OF LOS ANGELES, CA

12 M E M O R A N D U M

CT6990

DATE: JULY 21, 2005

TO: AGENCY COMMISSIONERS

FROM: RICHARD L. BENBOW, ACTING CHIEF EXECUTIVE OFFICER

RESPONSIBLE PARTIES: DAVID RICCITIELLO, REGIONAL ADMINISTRATOR LILLIAN BURKENHEIM, PROJECT MANAGER KAREN YAMAMOTO, CITY PLANNER

SUBJECT: ENVIRONMENTAL ACTION AND APPROVAL OF DENSITY VARIATION FOR A MIXED-USE DEVELOPMENT LOCATED AT 1155 S. GRAND AVENUE (CD 9) CITY CENTER REDEVELOPMENT PROJECT DOWNTOWN REGION

RECOMMENDATION

That the Agency:

1. Adopt the attached Resolution (Attachment A) certifying that it has reviewed and considered the environmental effects of the Project as shown in the City of Los Angeles Mitigated Negative Declaration (hereinafter “MND”), ENV-2005-1812- MND, pursuant to State CEQA Guidelines Section 15096(f), for the proposed mixed-use project located at 1155 S. Grand Avenue (“Project Site”) (Attachment B, Location Map);

2. Approve, pursuant to Sections 512.4, 512.6 and 520 of the City Center Redevelopment Plan (“Redevelopment Plan”), a density variation of 49,999 square feet, and a transfer of floor area by variation of 34,496 square feet from 1130 S. Hope Street (“Gladstone-Hollar parcel”), subject to the acquisition of said parcel by the City of Los Angeles Department of Recreation and Parks through eminent domain as well as the execution of a covenant agreement, to the Proposed Project (see Attachment C, Site Map), and by making the necessary determinations which will permit the development of a mixed-use development located at 1155 S. Grand Avenue (“Proposed Project”) (Attachment D, Project Rendering), subject to the following condition:

• The Developer shall secure a building permit within five (5) years of the date of approval of the Proposed Project. Should the Developer not secure a building permit within the specified time, subject approval shall expire.

• The Developer will provide Community Benefits (see page 7) to compensate for the additional Floor Area in an amount equal to its value. ENVIRONMENTAL AND VARIATION APPROVAL – 1155 S. GRAND AVENUE 2 CITY CENTER REDEVELOPMENT PROJECT

SUMMARY

Project Site

The Project Site encompasses 63,355 square feet, consisting of the parcel referred to as “Lot 114” (54,966 square feet) which is owned by the Developer, Lot 114 Investors LLC, as well as the parcel referred to as Parcel A-2 (7,789 square feet), which is currently owned by Flower Holdings but is being acquired by the Developer, and 600 square feet of alley vacation which was approved by the City Deputy Advisory Agency on July 13, 2005. Lot 114 and Parcel A-2 are currently surface parking lots – Lot 114 with 128 parking stalls, and Parcel A-2 with 32 parking stalls.

Abutting the Project Site to the west is the parcel referred to as the “Gladstone-Hollar” parcel. This 7,820 square-foot parcel is currently being acquired by the City of Los Angeles Department of Recreation and Parks through eminent domain.

Located in the heart of the South Park area, the Project Site is ideally posed to further the development of South Park as a vibrant urban residential community in Downtown Los Angeles. Just east of the Staples Center and future L.A. Live project, the Project Site is situated amongst residential projects currently under construction or in the pipeline in South Park, including the 264-unit Met Lofts Apartments, the 176-unit Elleven Condos, the 236-unit Luma Condos, the 66-unit Grand Avenue Lofts, the 128-unit Glass Tower Condos, and the 105-unit Olive Lofts Condos.

The Proposed Project

The Proposed Project would further the current renaissance of the South Park area of Downtown Los Angeles by helping to create a vibrant residential community. Such developments promote the goals and objectives of the Redevelopment Plan, including the following:

• To create a modern, efficient and balanced urban environment for people, including a full range of around-the-clock activities and uses, such as recreation and housing.

• To achieve excellence in design.

• To provide high and medium density housing close to employment and available to all ethnic and social groups.

The Proposed Project would further the urban residential development of the block created by 11th and 12th Streets, Hope Street and Grand Avenue, realizing the vision set forth in the Downtown Strategic Plan and the South Park Development Strategies and Design Guidelines. The South Group is currently developing the 176-unit Elleven project in the northeast quadrant of the block; and will soon begin construction of the adjacent 236-unit Luma project in the northwest quadrant of the block. The Elleven project represents the first new-construction homeownership opportunity in recent times. The Proposed Project, referred to as Evo would take up the southeast quadrant, as well as incorporate a mid-block paseo linking east (Grand Avenue) to west (Hope Street).

ENVIRONMENTAL AND VARIATION APPROVAL – 1155 S. GRAND AVENUE 3 CITY CENTER REDEVELOPMENT PROJECT

The Proposed Project, designed by GBD Architects and TVA Architects, is envisioned as an urban-scaled residential neighborhood with pedestrian-scale community amenities. Proposed is a mixed-use high-rise condominium building with a landscaped mid-block paseo in a park-like setting that will enable pedestrian passage between Hope Street and Grand Avenue. The Proposed Project consists of approximately 464,626 square feet in a 24-story structure with 311 (229 two-bedroom and 82 one-bedroom) joint live/work condominium units, approximately 7,294 square feet of ground-floor neighborhood retail/commercial space, and roof-top residential amenities including a terrace with lap pool. Parking (427 stalls) is provided on-site. The height of the tower is 263 feet.

The Proposed Project also provides for ground-level green space – a landscaped mid- block paseo through the Project Site that would allow for pedestrian passage between Hope Street and Grand Avenue. In addition, the Developer proposes to create a park on the adjacent Gladstone-Hollar parcel, which is currently being acquired by the City of Los Angeles Department of Recreation and Parks through eminent domain. The design of the proposed park would be integrated with the mid-block paseo to create a green open space in the area. The inclusion of mid-block paseos is an important objective of the South Park Development Strategies and Design Guidelines, which recommends that in new developments, the opportunities to allow mid-block easements for pathways in the east-west direction be studied and implemented. Mid-block paseos may convey the experience of a stroll through a semi-private garden, and could be designed to allow for small seating or gathering areas when integrated with housing.

The Proposed Project is contemplated to be a contemporary urban condominium development, with selling prices ranging from $300,000 to $1,000,000. Total development costs are estimated at $110 million. The developer of the Proposed Project is Lot 114 Investors LLC (“Developer”), represented by Mr. Jim Atkins.

The City of Los Angeles Planning Department (“City Planning Department”), Deputy Advisory Agency held a public hearing on the Proposed Project on July 13, 2005, for subdivision and zone variance approvals, under Vesting Tentative Tract Map No. 062799 and ZA-2005-1867-ZV-CU-YV-ZAA-SPR (Attachment E, List of Requested Entitlements from City Planning). The Deputy Advisory Agency approved Tract Map No. 062799 and adopted the MND on July 14, 2005.

Council District 9, represented by Councilwoman Jan Perry, endorses the Proposed Project as presented.

Need for Density Variation

Section 512.1 of the Redevelopment Plan sets forth the maximum floor area ratios (FARs) for the three Development Areas within the Redevelopment Project Area. The Project Site is located within the South Park Development Area, north of Pico Boulevard, which is limited to a floor area no more than six (6) times the Parcel Area.

The Project Site encompasses approximately 63,355 square feet in area, including Lot 114, Parcel A-2, and the alley vacation (54,966 + 7,789 + 600 square feet). With an allowable FAR of 6:1, the resulting allowable floor area is 380,130 square feet, approximately 84,496 square feet short of the 464,626 square feet needed for the ENVIRONMENTAL AND VARIATION APPROVAL – 1155 S. GRAND AVENUE 4 CITY CENTER REDEVELOPMENT PROJECT

project as proposed. In order to complete the Proposed Project, the Developer requests a density variation of 49,999 square feet, plus the transfer of floor area of 34,496 square feet by variation from the Gladstone-Hollar parcel, subject to the final acquisition of the site by the City of Los Angeles Department of Recreation and Parks through eminent domain, as well as the execution of a covenant agreement. The resulting FAR of the Proposed Project would be 7.3:1.

Discretionary Action

Pursuant to Section 512.4 of the Redevelopment Plan, floor area ratios may exceed the maximum FAR set forth in Section 512.1 of the Redevelopment Plan, through the transfer of FAR. Staff recommends that the Agency make the following determinations pursuant to Section 512.4 of the Redevelopment Plan:

1. The resulting higher density development must be appropriate in terms of location and access to the circulation system; compatible with other existing and proposed development; and consistent with the purposes and objectives of this Plan.

The Proposed Project would further the current renaissance of the South Park area of Downtown Los Angeles, by helping to create a vibrant residential community. The Redevelopment Plan envisions the South Park area as a high-density residential neighborhood. The Proposed Project is consistent with the purposes and objectives of the Redevelopment Plan, as discussed in The Proposed Project section above.

2. Unless otherwise permitted by the applicable Community Plan as it now reads or as it may be amended from time to time in the future, Floor Area Ratios may only be transferred from parcels or portions thereof and to parcels or portions thereof which are within, respectively, the Historic Downtown, City Markets or South Park Development Areas.

The Project Site, and the parcels or portions thereof from which floor area ratio is being transferred, are all located within the South Park Development Area.

3. The Floor Area Ratio on any parcel shall not exceed the maximum Floor Area Ratio set forth in the applicable City zoning ordinance in effect at the time the transfer is made.

ENVIRONMENTAL AND VARIATION APPROVAL – 1155 S. GRAND AVENUE 5 CITY CENTER REDEVELOPMENT PROJECT

The FAR of all the parcels involved in the transfer of FAR do not exceed the maximum FAR of 6:1.

4. Transfers of Floor Area Ratio to parcels with reasonable proximity or direct access to a public or private rapid transit station shall be particularly encouraged.

The Project Site is located approximately two blocks east of the MTA Blue- Line Station, and is situated In close proximity to the MTA and LADOT bus lines which run throughout the South Park area streets. The Project Site is also a short walking distance to the Staples Center and L.A. Live project, thus promoting pedestrian activity which will create a safe and vibrant mixed-use community in South Park as envisioned in the Redevelopment Plan.

5. Transfers of Floor Area Ratio from parcels on which buildings of historic, architectural or cultural merit are located shall be particularly encouraged where the transfer can reasonably be expected to further the goal of preservation of such buildings.

The Proposed Project consists of new construction.

Pursuant to Section 512.6, the Agency may, at its discretion, grant a transfer of FAR of less than 50,000 square feet by a variation as allowed in Section 520 of the Redevelopment Plan, which states that “the Agency is authorized to permit a variation from the limits, restrictions and controls established by this Plan.”

Staff recommends that the Agency make the following determinations pursuant to Section 520 of the Redevelopment Plan:

a. The application of certain provisions of this Plan would result in practical difficulties or unnecessary hardships which would make development inconsistent with the general purpose and intent of this Plan.

Without the requested density variation, the Proposed Project would be limited in the number of units and unit sizes proposed, as well as its ability to provide ground floor commercial uses, thereby negatively affecting the economic feasibility and quality of the Proposed Project.

The Project Site is designated High-Multiple Family Residential in the City’s General Plan and Residential in the Redevelopment Plan, both of which encourage high-density mixed-use development. The proposed show-case mixed-use complex would implement the Redevelopment Plan by providing quality high-density housing close to employment and a full- range of around-the-clock activities and uses, such as recreation, sports, entertainment and housing.

b. There are exceptional circumstances or conditions applicable to the property or to the intended development of the property which do not apply generally to other properties having the same standards, restrictions and controls. ENVIRONMENTAL AND VARIATION APPROVAL – 1155 S. GRAND AVENUE 6 CITY CENTER REDEVELOPMENT PROJECT

The size and location of the Project Site present a special circumstance for the proposed development. While the Redevelopment Plan designates the Project Site and surrounding area for high-density housing, the 63,355 square-foot lot permits a maximum of only 380,130 square feet of floor area. Even with the inclusion of transferred floor area of 34,397 square feet from the Elleven project, there is a shortage of 49,999 square feet, thereby limiting the potential for such development. The requested variation would enable the Developer to develop a project consistent with the Redevelopment Plan and surrounding properties.

c. Permitting a variation will not be materially detrimental to the public welfare or injurious to property or improvements in the area or contrary to the objectives of this Plan or the applicable Community Plan.

Granting the variation is not injurious to the public welfare, injurious to property in the area, or contrary to the objectives of this Plan or the applicable Community Plan.

The South Park area as a whole is a mixed-use community with residential, medical, commercial and retail uses. The Proposed Project, which would provide 311 joint live/work for-sale condominium units, would be desirable and appropriate in this part of Downtown Los Angeles as this area is designated and zoned for (high-density) residential development. The Project Site is in close proximity to public transit and to jobs, which would meet the Plan’s objective to provide housing close to employment.

The addition of for-sale residential units, particularly at this scale, will increase the number of vested stakeholders who will pick up trash on the sidewalk and report crime in order to protect their property. For-sale housing will also increase the stability of the neighborhood as property owners tend to have a longer tenure than renters, and a stronger interest in maintenance and improvement of the area.

A stated objective of the Redevelopment Plan (Section 105, no. 6) is to “create a modern, efficient and balanced urban environment for people, including a full range of around-the-clock activities and uses, such as recreation, sports, entertainment and housing”. South Park is a desirable location for residents who want to live in the City Center in close proximity to cultural, entertainment and employment opportunities within the various downtown neighborhoods. The Project Site is located approximately two blocks from the MTA Blue Line Stations, and is a short walking distance to the Staples Center and L.A. Live project, thus promoting pedestrian activity which will create a safe and vibrant mixed-use community in South Park as envisioned in the Redevelopment Plan.

To accommodate the requested density variation, the Agency is utilizing the excess density that has accumulated from Agency-assisted projects in the South Park area. To date, 568,684 square feet of excess density has been accumulated from six residential projects, a community/recreation center and a park. Thus far, density variations have been granted to the following projects: ENVIRONMENTAL AND VARIATION APPROVAL – 1155 S. GRAND AVENUE 7 CITY CENTER REDEVELOPMENT PROJECT

Elleven project 38,430 square feet Luma project 49,999 square feet Hanover project 49,800 square feet

Total 138,229 square feet

There are currently 4 proposed projects requesting density variations, including the Proposed Project (the others are the South Group project, the Glass Tower Condos and the Olive Lofts) which total 233,507 square feet. The current balance of 430,455 square feet excess density would accommodate the four requested variations.

Community Benefits

The developer will provide the following community benefits in exchange for the granting of the additional floor area density:

• Agency staff will review and approve all development plans prior to issuance of a building permit. • Significant architectural design that welcomes pedestrians into the site and around the site. • The construction of the projects will be undertaken following the Agency’s prevailing wage policies. • Developer will continue their active outreach program to recruit businesses and individuals from the project area to work on the project. • The Developer will not discriminate against any qualified employee or applicant for employment because of race, color, religion, creed, national origin, ancestry, physical handicap, medical condition, age, marital status, sex or sexual orientation. • The Streetscape Design Guidelines, adopted for South Park, will be followed and the sidewalks surrounding the site are improved as part of the project. These streetscape improvements will be designed and constructed to include the proposed park parcel, to create a uniform streetscape. • Dedication and Improvement of mid-block paseo and that will be landscaped and maintained by the project for use by the general public during daylight hours. • Commitment to provide funding and assistance to the Department of Recreation and Parks to acquire, build and maintain a pocket park adjacent to the development site. • Special designed parking that separates commercial and residential parking and maximizes the pedestrian frontages, while providing easy parking access around the site. • Design and construct a building that takes advantage of sustainable technology including energy efficient lighting, glazing, building materials, landscaping, HVAC, and waste reduction and recycling programs.

ENVIRONMENTAL AND VARIATION APPROVAL – 1155 S. GRAND AVENUE 8 CITY CENTER REDEVELOPMENT PROJECT

Discretionary Approval Does Not Trigger Affordable Housing Requirement

The Agency could not require affordable housing as a condition of issuance of the discretionary approval for the Proposed Project for the reasons summarized below:

1. Neither the Agency (nor the City) has an inclusionary housing requirement that mandates across the board that a certain percentage of all new housing construction have affordable units.

2. The State redevelopment law’s 15% inclusionary housing requirement on residential development within a redevelopment project area applies “in the aggregate and not to each individual case [of residential development]” (Health & Safety Code Sec. 33413b.) Fifteen percent (15%) of this aggregate must be affordable housing, pursuant to state law.

3. The State law’s replacement housing requirement is only triggered by a demolition of low and moderate income housing units done as part of a written agreement with a redevelopment agency, or with financial assistance from the agency. (Health & Safety Code Sec. 33413a.) The Project Site is currently a 128-stall parking lot.

4. The Agency’s 1994 Housing Policy limits its requirements for on-site affordable housing to projects in which the Agency is a financial participant. The Proposed Project is being privately funded, with no financial assistance from the Agency.

No Agency, Federal or other City of Los Angeles funds have been provided this Project and there will not be an agreement with the Agency, therefore the Agency's prevailing wage policy will not apply. No representation is being made with respect to the Agency’s requested action and the effect S.B. 975 and its interpretation by the California Department of Industrial Relations may have on the proposed project.

RE:

Initial Action.

SOURCE OF FUNDS

No funding is required for this action.

PROGRAM AND BUDGET IMPACT

The proposed actions will not require Agency funds.

ENVIRONMENTAL REVIEW

The City of Los Angeles is the lead agency for the Proposed Project for purposes of the California Environmental Quality Act (CEQA). The City, acting through its Planning Department, circulated the Draft Mitigated Negative Declaration (“MND”), ENV-2005- 1812-MND, on June 23, 2005 (the public review period ended on July 13, 2005). The Deputy Advisory Agency held a public hearing on the Proposed Project on July 13, 2005 ENVIRONMENTAL AND VARIATION APPROVAL – 1155 S. GRAND AVENUE 9 CITY CENTER REDEVELOPMENT PROJECT

and adopted the MND on July 14, 2005. The Agency’s environmental responsibility, as a Responsible Agency under CEQA, is to consider the environmental effects of the Project as shown in the MND prepared by the lead agency prior to acting on the Project.

BACKGROUND

An important goal of the Redevelopment Plan is “to provide high and medium density housing close to employment and available to all ethnic, social and economic groups, and to make an appropriate share of the City’s low- and moderate-income housing available to residents of the area”. To effectuate this goal, the Agency has promoted the provision of housing, both affordable and market-rate, in the last few decades. Up to year-end 1998, the vast majority of the housing units produced in the City Center Redevelopment Project Area (“Project Area”) was affordable housing. As of December 31, 1998, of the total 7,920 existing housing units, 7,705 units (or 97%) were affordable units, while 215 units (or 3%) were market-rate units. Only 120 of the existing units offered home ownership opportunities.

In the last few years, especially following the adoption of the Adaptive Reuse Ordinance, the private sector has been constructing market-rate housing units, in part to bring about the modern, efficient and balanced 24-hour live/work urban environment that is also an important goal of the Redevelopment Plan. During the years 1999 to present, approximately 2,000 residential units were constructed in the Project Area, with 636 (or 32%) affordable units and 1,364 (or 68%) market-rate units. Only 231 of these 1998-to- present housing units are owned by individuals.

Today, there is a total of 9,920 existing housing units in the Project Area, of which 8,341 (or 84%) are affordable and 1,579 (or 16%) are market-rate.

Currently, there are approximately 4,454 residential units in 29 projects under construction, permitted, or plan check in the City Center Redevelopment Area. Of these projects, eight provide for affordable housing, resulting in 335 (or 26%) affordable units and 968 (or 74%) market-rate units. The balance of the ongoing production is being done privately with no public assistance.

Upon completion of these 4,454 units, there would be a total of 14,374 residential units in the Project Area, of which 8,676 units (or 60%) would be affordable and 5,698 (or 40%) would be market-rate units. These units that are currently under construction or in the pipeline would increase homeownership opportunities in the Project Area to 2,258 units, only 16% of the total 14,374 units.

A key Agency objective for the Redevelopment Project Area has been to promote ownership housing opportunities. Allowing the density variations would increase the opportunities for homeownership, which is an aim of the Redevelopment Plan, adopted in May 2002.

The Redevelopment Plan allows for an increase in density on a property pursuant to Section 520, which states that “the Agency is authorized to permit a variation from the limits, restrictions and controls established by this Plan,” if certain determinations are made. The provision permits the Agency to assure that the development accomplishes ENVIRONMENTAL AND VARIATION APPROVAL – 1155 S. GRAND AVENUE 10 CITY CENTER REDEVELOPMENT PROJECT

the goals and objectives of the Redevelopment Plan, and to provide for-sale workforce housing.

The Community Context Summary is attached as Attachment F.

______Richard L. Benbow Acting Chief Executive Officer

There is no conflict of interest known to me, which exists with regard to any Agency officer or employee concerning this action.

Attachments: A – Resolution B – Location Map C – Site Map D – Project Rendering E – List of Requested Entitlements from City Planning Department F – Community Context Summary