Item Number: AGENDA ITEM 7 TO: CITY COUNCIL Submitted By: Douglas D. Dumhart FROM: CITY MANAGER Community Development Director Meeting Date: Subject: Conceptual Review of a Proposal for the July 19, 2011 Development of a Chase Bank at 5962 La Palma Avenue RECOMMENDATION: It is recommended that the City Council conceptually approve a proposal for the development of a Chase Bank at 5962 La Palma Avenue and direct staff to draft a Zoning Code Text Amendment and Development Agreement for further consideration. SUMMARY: The City has received a letter from Studley, the real estate brokerage firm representing the property owner at 5962 La Palma Avenue, requesting that the City consider the development of a JP Morgan Chase Bank on their property. The letter is provided as Attachment 1 to this report. The site is located at the southwest corner of Valley View Street and La Palma Avenue and has been vacant for over 10 years. Late last year, the subject parcel was rezoned from Neighborhood Commercial (NC) to Planned Neighborhood Development (PND) land use designation, which prohibits financial institutions and banks. The Broker has stated that they have exhausted attempts to find end users for his client’s property that are consistent with the goals of the new PND Zone and that meet the needs of his client. They have a ground lease offer from Chase to develop a free-standing bank. The financial institution use alone does not meet the requirements in the PND Zoning District to develop the commercial corner with retail uses that are lacking in the community. The property owners have proposed a mitigation measure to satisfy the PND District’s revenue producing goals and allow the bank use. A development agreement could be prepared that would address how the project would satisfy the goals and objectives of the PND District. Prior to initiating further discussions, staff is seeking conceptual approval and authorization to proceed with the preparation of a development agreement for further consideration. Bank Proposal July 19, 2011 Page 2 of 9 BACKGROUND: The Economic Development Plan adopted by the City Council in early 2009 included an action item to change the zoning on six key corner sites considered candidates for redevelopment. Referred to as the “Six Study Sites,” the sites are generally small, one-half acre parcels located at arterial intersections. Two of the sites are vacant former fueling stations. While the other four sites are improved, their land uses do not necessarily represent the highest and best use. The new “Planned Neighborhood Development” (PND) Zoning for the Six Study Sites became effective in November 2010. The objective of the PND Zoning designation is to prohibit specific uses and relax development standards in exchange for high quality architecture that encourages land assembly in order to foster quality development that will ultimately optimize the City’s tax base with revenue producing uses. The allowed uses in the PND Zone places emphasis on encouraging retail and food service uses and discourages service based commercial activity. Prohibited uses specifically included banks and financial institutions, check cashing services, pawn shops and liquor stores. The property belongs to the out-of-state heirs of William and Leona DeJager, who used to operate a dairy on the property and adjacent land. Once the dairy ceased operations, the subject site was leased as an Exxon-Mobile service station. For the last decade, the site has been tied up in environmental remediation efforts. Remediation efforts have been completed. As such, Exxon- Mobile relinquished exclusive control and the family has been exploring development of the property. The property owners do not wish to sell the property; rather, they are seeking a long-term ground lease for development. The family requests they be allowed to develop the property with a respected national banking tenant. ANALYSIS: Table A on the following page describes the PND District locations. The site’s advantages are its exposure to the highest volume arterial street in the City (Valley View Street) and another major arterial (La Palma Avenue), good visibility, and proximity to the Walgreens store on the north side of La Palma Avenue and a large, active retail center on the east side of Valley View Street in Buena Park. Traditionally, these factors would enhance development potential. Some of the site’s limitations include its proximity to single family residences, its small parcel size – it is the smallest of the subject sites at 0.53 acres – the existence of raised medians at the intersection that limit ingress/egress, the lack of the potential for site assembly, and it is the only study site that was not in a Redevelopment Project Area (this may no longer be a factor in light of AB1x 26 that abolishes Redevelopment). Bank Proposal July 19, 2011 Page 3 of 9 Table A: PND Study Sites Parcel In CDC Multiple Study Sites Size Project Area Parcels 1. Southeast corner of Moody 4.59 acres Yes Yes Street and Orangethorpe Avenue 2. Northeast corner of Walker 0.75 acres Yes Yes Street and Orangethorpe Avenue 3. Northeast corner of Moody Street 0.69 acres Yes Yes and La Palma Avenue 4. Southeast corner of La Palma 0.60 acres Yes No Avenue and Walker Street 5. Southwest corner of La Palma Avenue and Valley View Street 0.53 acres No No (Subject Site) 6. Northwest corner of Crescent 0.65 acres Yes No Avenue and Walker Street There has been limited development interest on the site primarily due to its small size. Studley claims to have contacted numerous national retailers and restaurants regarding the availability of the subject site. A list of retailers targeted by Studley has been included as an attachment to their June 14, 2011, letter. They have indicated that development on the site would not be feasible or in harmony with their respective corporate models. Max Franco has shared replies from Chipotle Mexican Grill, Farmer Boys, Chick-fil-A, and McDonald’s all claiming the site is too small for their operations. On behalf of the City, David J. Gilmour, AICP at Architects Orange, prepared some site plan concepts using McDonald’s 2,400 square foot (SF) drive-thru prototype building from their “Small Town Retail” concept as shown below for the subject property. He prepared five versions of concept site plans that are provided as Attachment 2 to this report. The exercise revealed the site’s circulation and accessibility challenges due to the raised medians at the intersection and how critical a Valley View Street ingress and egress is to the site’s development success. While it might be possible to locate the Small Town Retail concept building on the site, there would be no access from the major street frontage and illuminated menu boards and speaker boxes would be located adjacent to the nearby homes. Bank Proposal July 19, 2011 Page 4 of 9 McDonald’s Regional Corporate in Long Beach has also been asked by the City to evaluate the site. McDonald’s likes the vicinity of the location because they believe they have a void in that trade area. Ron Underwood of Bickel Underwood Architecture, a site planner for McDonald’s, verified the limitations of the size for a quick service establishment. Mr. Underwood’s evaluation demonstrates that, without assembly of at least one adjacent residential property, the site is not large enough to host McDonald’s “Express” double drive- thru prototype. This is a facility so small that it does not really have indoor seating. A copy of his site plan analysis for 5962 La Palma Avenue is provided as Attachment 3 to this report. Even with the acquisition of the adjacent residential property, however, McDonald’s indicated that their interest was marginal in that modifications to their existing corporate model would have to occur in order to make development at the site possible. Parking Demand and Buildable Area Providing adequate off-street surface parking is a key component of land planning. On-site surface parking severely limits the building footprint. This condition is exacerbated in standalone sites like 5542 La Palma Avenue with no available on-street parking or off-site parking to share. During the design phase, alternative parking layouts are developed to identify the most efficient parking lot layout for customer patronage, serviceability of buildings, and to accommodate fire lanes. Retail parking uses a parking ratio of 4 spaces per 1,000 square feet of building area. The land area required per parking space and used for the concept-level planning of parking areas typically range from 300 to 350 square feet per parking stall. This includes the area required for the parking stall and drive aisles for surface parking lots. Oddly configured sites (unusual shapes, narrow sites, etc.) are more difficult to use efficiently for parking, and the land area required per stall will be higher. The Table B on the following page estimates parking demand based upon these assumptions for the 23,000 square foot lot. When the zoning setbacks are taken into consideration the buildable site area is smaller than the gross buildable square footage. This means the development would likely entail a second story to fully develop to their gross buildable area. Two story construction on a small lot is not feasible without sufficient leasable square footage to absorb the additional costs for the second story, such as elevators. Bank Proposal July 19, 2011 Page 5 of 9 Table B: Development ability of 5542 La Palma Avenue Gross Buildable Site Area 4/1,000 Parking F.A.R. 4 Buildable Less Parking Area3 SF Area SF Parking Area SF Traditional Retail 0.4 9,2402 37 Spaces 11,840 11,260 PND 0.6 13,860 55 Spaces 17,600 5,500 PND (Relaxed1) 0.6 13,860 42 Spaces 13,440 9,660 1 Assumes 3/1,000 parking ratio 2 Does not take into account zoning set-back requirements 3 Assumes 320 square feet per parking stall 4 “FAR” = Floor Area Ratio.