HomeMy WebLinkAbout19 - City Hall Reuse_PA2012-031�EW�oR> CITY OF
NEWPORT BEACH
City Council Staff Report
Agenda Item No. 19
September 25, 2012
TO: HONORABLE MAYOR AND MEMBERS OF THE CITY COUNCIL
FROM: Community Development Department
Kimberly Brandt, AICP, Director
949 - 644 -3226, kbrandt @newportbeachca.gov
PREPARED BY: James Campbell, Principal Planner
APPROVED: O.
TITLE: City Hall Complex Reuse (PA2012 -031)
3300 Newport Boulevard
47532 Id Street
Future use of the City Hall Complex presents the community with a unique opportunity
to shape the future of the Lido Village area and Balboa Peninsula. The City Council
initiated amendments of the General Plan, Coastal Land Use Plan, and Zoning
Ordinance from Public Facilities to Mixed -Use to facilitate a future development
consistent with community goals. Discussion to date has focused on residential use with
a limited amount of commercial use or a hotel. At the September 11, 2012, Council
Study Session, staff presented the preliminary results of a market and fiscal analysis for
hotel use, as well as a fiscal analysis for residential use. The final reports are complete,
and staff seeks Council direction regarding the pending land use amendments and
development process.
RECOMMENDATIONS:
1) Review information provided,
2) Receive public comments,
3) Direct staff to include the following limits within the proposed General Plan
Amendment:
a) Up to 99 residential units and 15,000 square feet of retail use, or
b) Up to 99,675 square feet of hotel use, or
City Hall Complex Reuse (PA2012 -031)
September 25, 2012
Page 2
c) Any combination of residential units and hotel provided it does not exceed 99
units or 99,675 square feet of hotel use'.
4) Direct staff to prepare and publish a Request for Qualifications ( "RFQ ") seeking
development partners to assist the City in developing the City Hall Complex with
either an apartment community that may include an ancillary retail component or a
hotel project that may include a complementary residential component. A "dual tract'
RFQ process is recommended.
FUNDING REQUIREMENTS:
There is no fiscal impact related to this item.
DISCUSSION:
The existing City Hall Complex is located at the north -east corner of Newport Boulevard
and 32nd Street, and it is currently developed with Newport Beach City Hall and Fire
Station #2 within approximately 54,000 square feet of building area. The site is 4.26
gross acres with approximately 3.96 acres usable, as a portion of the site is devoted to
Newport Boulevard. As noted, the General Plan, Coastal Land Use Plan, and the
Zoning Map designate the site as Public Facilities.
' Accessory commercial uses within a hotel would be allowed and included within the floor area limit.
City Hall Complex Reuse (PA2012 -031)
September 25, 2012
Page 3
The City engaged PKF Consulting USA ( "PKF ") to prepare a market feasibility study
and an economic impact, fiscal impact, and residual land value analysis for developing
the City Hall Complex with either a 78 -room or 120 -room hotel. Keyser Marston
Associates ( "KMA ") has analyzed two residential development alternatives and has also
estimated the expected economic impact, fiscal impact, and residual land value. The
final reports can be found in their entirety on the City's website.
http: / /www. newr)ortbeachca.gov /index.aspx ?page =2172
1. PKF Hotel Market Analysis
The report concludes that the site is well situated for hotel development due to a variety
of factors including excellent visibility on Newport Boulevard, convenient access, and
proximity to the beach, Hoag Hospital, and other commercial uses. Given the Newport
Beach hotel market, the site would be best suited for an upscale boutique hotel and the
property is adequate in size to support up to 150 rooms and accessory uses
(restaurants, retail, and meeting spaces). The site's existing lot configuration is
acceptable and adjusting the lot line with the abutting Lido Plaza property is not
necessary. The presence of Fire Station #2 is also not a negative consideration.
The hotel would need to be positioned as an upscale, four -star boutique hotel with an
attractive design that complements the area. The main source of demand is expected to
be the leisure market, but given this demand is seasonal, the hotel should include
facilities and amenities that enable it to capture corporate and group demand to
maximize its potential. The analysis concludes that there is strong market support for a
hotel that meets the criteria identified in the study.
2. PKF Economic Impact, Fiscal Impact, and Residual Land Value Analyses
The report evaluates a 78 -room and 120 -room hotel scenario. It estimates the direct
and indirect fiscal impact that each development scenario will have on Newport Beach
businesses through the purchases of goods and services by hotel guests. The report
also estimates the fiscal impact of hotel operations on City tax revenues, including
transient occupancy and sales taxes. The report estimates the residual land value of the
two development scenarios for the purpose of estimating the annual long -term lease
revenue. This analysis takes into account extraordinary costs of improving a portion of
the site with a public plaza and promenade, pedestrian improvements on 32nd Street,
Via Oporto and Via Malaga, and 50% of the replacement cost of Fire Station #2. The
estimated cost of these public improvements may range from approximately $5.57
million to $8.95 million. Table 1 on the next page summarizes the analysis.
City Hall Complex Reuse (PA2012 -031)
September 25, 2012
Page 4
3. KMA Land Residual, Economic Benefits, and Public Revenues Analyses
The report analyzed two development alternatives. The first is a 92 -unit apartment
complex with 6,000 square feet of commercial space and 260 ground -level parking
spaces. The second development alternative is a 99 -unit apartment complex with 248
ground -level parking spaces. The report estimates the direct and indirect fiscal impact of
both development scenarios on Newport Beach businesses through the purchases of
goods and services by residents. The report also estimates the fiscal impact of each
project on City tax revenues, and lastly, the report estimates the residual land value for
the purpose of estimating the annual long -term lease revenue. The residual land value
analysis also takes into account the same extraordinary costs for area public
improvements ranging from $5.57 million to $8.95 million that were included in the PKF
hotel analysis. Table 1 below summarizes the analysis.
Table 1
Economic Impact, Fiscal Impact, and Residual Land Value Anal ses
78 -room
120 -room
92-Unit
Apartment
99 -Unit
Hotel
Hotel
& 6K retail
Apartment
Economic Impact
Annual direct and indirect
$ 20,566,715
$ 29,408,056
$ 2,690,000
$ 2,895,000
Total 10-year direct and indirect
$254,249,861
$362,006,807
$30,840,000
$33,190,000
Fiscal (Public Revenue) Impact
Total annual revenue
$ 638,253
$ 911,649
$ 132,000
$ 140,000
Total 10- ear revenue
$ 7,888,118
$ 11,219,804
$ 1,453,000
$ 1,541,000
Residual Land Value - no offset
$ 9,000,000
$ 11,000,000
$18,174,000
$19,156,000
RLV with offset costs of Option A(')
$ 3,430,481
$ 5,530,481
$12,604,000
$13,586,000
RLV with offset costs of Option B(Z)
$ 49,895
$ 2,149,895
$ 9,223,000
$10,205,000
Annual Ground Lease at 8%
Option A
N/A
N/A
$ 1,008,300
$ 1,086,900
Option B
$ 737,800
$ 816,400
Annual Ground Lease at 10%
Option A
$ 343,000
$ 553,000
$ 1,260,400
$ 1,358,600
Option B
$ 5,000
$ 215,000
$ 922,300
$ 1,020,500
Total Revenue (Option A & 10 %)
Total annual revenue
$ 981,253
$ 1,464,649
$ 1,392,400
$ 1,498,600
Total 10 -year revenue
$ 11,348,118
$ 16,749,804
$14,057,000
$15,127,000
Total Revenue (Option B & 10 %)
Total annual revenue
$ 643,253
$ 1,126,649
$ 1,054,300
$ 1,160,500
Total 10 -year revenue
$ 7,938,418
$ 13,369,804
$10,676,000
$11,746,000
Source: PKF Consulting USA and Keyser Marston Associates
(1) Option A public improvement costs are estimated to be $5,569,519
(2) Option A public improvement costs are estimated to be $8,950,105
City Hall Complex Reuse (PA2012 -031)
September 25, 2012
Page 5
The analysis shows that a hotel project will have a larger economic impact to the
community. The total annual revenue to the City from the 120 -room hotel is comparable
to the annual revenue of the two apartment development scenarios. The 10 -year
revenue estimate of a 120 -room hotel is higher than both residential projects.
4. Measure S (Charter Section 423)
Charter Section 423 requires an analysis of the density, intensity, and peak hour traffic
associated with a proposed General Plan Amendment ( "GPA "). When increases in
density, intensity, and peak hour traffic of a proposed GPA2 along with 80% of the
increases of prior amendments exceed specified thresholds, the proposed GPA is
considered to be a "major amendment' that requires voter approval. The specified
thresholds are 100 dwelling units (density), 40,000 square feet of floor area (intensity),
and 100 peak hour trips (traffic). City Council Policy A -18 establishes the Guidelines for
implementation of City Charter Section 423 and provides specific guidance as to the
density, intensity and traffic thresholds for the analysis.
The City Hall Complex is located within Statistical Area B -5 and the City has approved
two prior amendments. Table 2 identifies the increases in density, intensity, and peak
hour traffic associated with the two prior amendments.
Table 2
Statistical Area B -5: Prior Amendment Increases
Amendment
Increase in
density'
Increase
in intensity (2)
Peak Hour Trip Increase
AM
PM
GP 2010 -005
0
15,103
45.4
60.5
GP 2011 -003
1
4,053
12.7
16.8
Total Increases
1
19,156
58.1
77.3
80% Total Increases
11 1
15,235(3)
46.5
61.9
(1) Measured in dwelling units
(2) Measured in gross floor area
(3) Rounded to nearest whole number
The existing General Plan land use category of Public Facilities does not list residential
uses, and as a result, the existing allowed residential density for the site is zero (0)
dwelling units. Given that prior amendments have authorized one (1) additional unit, an
amendment authorizing residential development of up to 99 units would not exceed the
threshold identified by Charter Section 423, and would not require voter approval.
2 Increases above the maximum density and intensity, and associated peak hour trips, allowed by the
General Plan prior to the amendment.
City Hall Complex Reuse (PA2012 -031)
September 25, 2012
Page 6
As to the intensity thresholds identified by Charter Section 423, the existing General
Plan does not establish a limit on floor area for the intensity for the Public Facilities land
use category. Rather, Land Use Policy 6.1.1indicates that the needs of Newport
Beach's residents and businesses will determine the type and size of necessary
facilities. Absent a specified maximum intensity, the "plan to plan" analysis would
indicate that changes to the site's intensity would not require voter approval.
However, when the General Plan Update was approved in 2006, the City had
commissioned a traffic study that assumed that the existing City Hall site would be
expanded to 75,000 square feet. Therefore, staff has conservatively used the General
Plan 2006 Update traffic assumption for the purpose of analyzing the Charter Section
423 thresholds. Tables 3 and 4 reflect Staff's analysis as to development density and
intensity, and the resulting peak hour trips, which would not require voter approval
pursuant to Charter Section 423.
Table 3
Measure S Anal is for Proposed Mixed -Use Project
Density
Units
Intensity
Square Feet
Peak Hour Traffic
AM
PM
Existing General Plan land
use maximum (credit)
0
75,000(')
166
214
Proposed Mixed -use project
maximum
99
15,000
95
121
Amendment difference
99
60,000
-71
-93
Vote Required
No
No
No
No
80% of prior amendments
1
15,325
46
62
Total
100
15,325
46
62
Vote Required
No
No
No
No
(1) General Plan Transportation Study, 3122/2006, Urban Crossroads
Table 4
Measure S Analysis for Proposed Hotel Project
Intensity
Square Feet
Peak Hour Traffic
AM
PM
Existing General Plan building
area maximum credit
75,000(')
166
214
Proposed hotel building area
maximum
99,675
74
78
Amendment difference
24,675
-92
-136
Vote Required
No
No
No
80% of prior amendments
15,325
46
62
Total
40,000
46
62
Vote Required
No
No
No
(1) General Plan Transportation Study, 3/22/2006, Urban Crossroads
City Hall Complex Reuse (PA2012 -031)
September 25, 2012
Page 7
For the purposes of this analysis, Staff does not believe that the building area for the fire
station would be counted in the intensity analysis. The basis for this assumption is that
the majority of the fire station is a vehicle garage, and parking garages and parking
garages are not included in the calculation of floor area under the General Plan.
Additionally, the Institute of Traffic Engineers ( "ITE ") does not identify peak hour trip
generation rates for fire stations.
Therefore, in consideration of both the floor area and traffic limitations established by
Charter Section 423, Staff has concluded that a GPA proposing the following
development would not require voter approval:
a) Up to 99 residential units and 15,000 square feet of retail use, or
b) Up to 99,675 square feet of hotel use, or
c) Any combination of residential units and hotel provided it does not exceed 99
units or up to 99,675 square feet of hotel use 3.
Based on the PKF report, 99,675 square feet is adequate to construct a boutique hotel.
Should City Council wish to establish a maximum hotel floor area (intensity) in excess of
99,675 square foot, voter approval would be required. Staff estimates that the cost of a
stand -alone election in either Spring or Fall 2013 would range from approximately
$225,000 to $250,000.
5. Revitalization, Planning and the Coastal Commission
In 2010, the City embarked upon a neighborhood revitalization effort for Lido Village,
and the reuse of the site with a mixed -use project, apartment community, or boutique
hotel will serve the City's revitalization goals; however, each project has different
economic and fiscal impacts. The increase in revenues attributable to a 120 -room hotel
is forecast to exceed the expected revenues from a mixed -use project or 99 -unit
apartment community. The overall economic impact of the hotel to the community is
over 10 times that of residential use. In summary, a 120 -room or larger hotel may be the
basis to finance other community needs, and it would serve as a catalyst for area
revitalization. Lastly, a hotel is generally open to the public, where a residential project
may not be.
Development of the site at the proposed residential density or building intensity will
likely require a four -story building height above grade to maintain open space for the
public. Structured parking has not been considered and would not likely be necessary
with the four development scenarios analyzed. Approximately 1.3 acres of the site
s Accessory commercial uses within a hotel would be allowed and included within the floor area limit.
City Hall Complex Reuse (PA2012 -031)
September 25, 2012
Page 8
would be devoted to public plazas and promenades and 0.5 acres would remain in use
by the fire station. Overall building heights would need to be between 50 and 55 feet.
The balance of the site would be developed with the mixed -use project, apartment
community, or hotel.
The Coastal Act prioritizes visitor - serving uses and hotel development would likely be
supported by the Coastal Commission; however, a mixed -use project or an apartment
community may also be considered since the site is not well suited for a coastal
dependent use. The Coastal Commission has previously taken the position that the
development of high -cost visitor accommodations impacts lower -cost accommodations,
and they have required mitigation of similar projects in the state. Typically, the Coastal
Commission has required a mitigation payment of $30,000 as an in -lieu fee for 25% of
what the Commission views as high -cost accommodations. The $30,000 in -lieu fee was
identified in 2007 based on figures provided by Hostelling International on the cost to
construct an affordable overnight room. Although there is no standard definition of low -
or high -cost visitor accommodations, the Coastal Commission has viewed average
room rates that are 25% below the statewide average as low -cost. Those rates that
exceed the statewide average by more than 25% are considered high -cost.
When the Ritz - Carlton in Laguna Niguel requested approval to expand earlier this year,
the Coastal Commission used a 2008 statewide summer average room rate of $133 per
night for comparison. If the Coastal Commission applies this average room rate and
methodology to a potential hotel at the City Hall Complex, the hotel would be
considered high -cost and the City should expect an in -lieu fee requirement. The fee
would be $900,000 based upon a 120 -room hotel (120 x 25% x $30,000 = $900,000).
Should the City pursue a hotel, staff recommends the preparation of a specific impact
study given the Coastal Commission's dated assumptions on past approvals.
6. Request for Qualifications
Staff is preparing a Request for Qualifications for a development team that would
include all the necessary elements to make a successful project. The team would
include design professionals. Anyone interested in participating in the RFQ process and
who wishes a copy of the RFQ when it is publically available may register on -line at the
following webpage: https:// www5 .newportbeachca.gov /osupplier /. Candidates must
include the key words "City Hall Complex Reuse" in the area that identifies the types of
products or services offered.
As discussed at the City Council study session, the City can prepare an RFQ packet
that includes both the Residential and Hotel project scenarios. Staff anticipates that
responses to the Residential scenario may include an ancillary retail component, and
responses to the Hotel scenario may include a complementary residential component.
As an alternative the Council may indicate that the RFQ focus on either the Residential
City Hall Complex Reuse (PA2012 -031)
September 25, 2012
Page 9
scenario or the Hotel scenario. But given that there are only two primary land uses
being considered for the site, having the RFQ include both should not create an
unmanageable process.
7. Next Steps
Staff will prepare the RFQ package based upon Council's direction. It is anticipated that
it would be published on the City's website within a month. Staff will complete the
environmental review process and schedule a public hearing with the Planning
Commission in December or January 2013.
ENVIRONMENTAL REVIEW:
The City Council's review of the conceptual plan is exempt from the California
Environmental Quality Act ( "CEQX) pursuant to Section 15262 (Feasibility and
Planning Studies) of the CEQA Guidelines, California Code of Regulations, Title 14,
Chapter 3, because it has no potential to have a significant effect on the environment.
The City Council is considering the feasibility of and planning for possible future actions.
No final action will be taken and direction given does not have any legally binding effect
upon later activities. Environmental review will be conducted prior to approval of the
planed land use plan and zoning amendments.
NOTICING:
The agenda item has been noticed according to the Brown Act (72 hours in advance of
the meeting at which the City Council considers the item).
Submitted by:
Kimberly Brand , AICP
Director
Reports referenced in this staff report are available at the City Website:
http://www.newportbeachca.gov/index.aspx?paqe=2172
1. PKF Consulting USA, Inc., Marketing analysis dated August 8, 2012.
2. PKF Consulting USA, Inc., Economic Impact, Fiscal Impact, and Residual Land
Value Analyses dated September 14, 2012.
3. Keyser Marston Associates, Inc., Land Residual, Economic Benefits, and Public
Revenues Analyses dated September 17, 2012.
Rieff, Kim
=rom: Brown, Leilani "RECEIVED AFTER AGENDA
Lent: Tuesday, September 25, 2012 3:49 PM
To: Rieff, Kim
�tttCnb�u'9
Subject: FW: CITY HALL SITE- Upscale Hotel Option/ Public Record
From: Wetherholt, Drew [mailto: Drew. Wetherholt (a)marcusmillichao.com]
Sent: Tuesday, September 25, 2012 3:09 PM
To: Dept - City Council; Brown, Leilani
Cc: Kiff, Dave
Subject: CITY HALL SITE- Upscale Hotel Option/ Public Record
Council Members
I support the hotel option and I would like to encourage the City to move in the direction of placing an upscale boutique
hotel on the former City Hall site for the following reasons:
1. The Peninsula clearly needs a world -class anchor in order to help the revitalization of the immediate area.
Unfortunately, the area has been dilapidated and in continued decline for well over a decade. This area NEEDS an
anchor that will attract the tourism dollar that will, in turn, support the surrounding retail, restaurants and businesses.
Presently, we have high vacancy and continued decline of both the Lido and Cannery areas.
2. Revenues from both the hotel and a better sales tax base from the surrounding commercial properties will benefit
both the City and the community. An apartment building clearly will not generate this kind of revenue and will it NOT
dequately support the struggling retail in the immediate area. The reports indicate that the City can derive approx 10
IMES greater economic return when compared to an apartment building.
Another way to look at it- an apartment building of 99 -units with 2 people per unit at 100% occupancy will ONLY create
the SAME 198 "consumers" annually who certainly will not be shopping or enjoying restaurants everyday. A 100 -unit
hotel with a 2- person occupancy at 75% occupancy will create nearly 200 NEW "consumers" DAILY or 54,750 new,
"consumers" on an annual basis who WILL be shopping and enjoying restaurants etc. on a daily basis.
3. An upscale hotel will also encourage better developments for the rest of Lido Village creating an even better tax
basis for the City and a better destination point.
4. The Peninsula is already saturated with rental units. Do we really need any more? Many of these units already
cause issues for policing and party problems. Also the City certainly isn't maximizing tax revenue from many of these
weekly rentals as the landlords and management companies are not fully reporting the incomes from these properties.
5. Traffic impacts will be lower with a hotel. Guests of the hotel will not be coming and going all at the same time. As
the apartment tenants go to and from work there will be more impacts to the "rush- hour" traffic patterns. Parking will also
be more impacted by guests and visitors for the apartment building.
6. The market reports clearly reflects that there is significant demand for hotel uses. The City of Newport Beach
attracts visitors for all over the world and yet we do not have a high -end resort/hotel on the Peninsula! Hotel projects in
both Huntington Beach and Laguna have done very well. Newport has not developed a hotel in over a decade.
7. What if the apartment building fails to lease at $3,500- 4,000 /month? As an apartment building owner I feel these
lease rates are certainly high within the marketplace. Also the expenses used in the apartment report are LOW at only
$4,000 /unit. My working -class apartments have operating expenses greater than $4,000 /unit and certainly a LUXURY
apartment building will operate with expenses greater than $5,000 /unit. Given both of these facts the overall value of the
partment development WILL BE LOWER than what is reflected in the report. Should the operator fail to achieve the
$3,500- 4,000 /unit will they resort to placing drug rehab into the building in order to make the project economically viable?
The State and the City already have enough problems trying to regulate the drug rehab businesses and this certainly will
not have a positive impact both economically and for the surrounding neighborhoods.
I have been a resident and property owner on the Peninsula for nearly 20 years. It is unfortunate that the Peninsula still
looks like something out of the "1970's "- we have seen very little progress or improvements over the last several decades
ind yet the Peninsula continues to attract people from all over the U.S. and the world.
This City Council has the opportunity to create either another bland Mediterranean -style apartment building or
create a world -class destination and legacy for both the City and the Peninsula! I believe the aspects of
marketability, positive economic returns for both the City and supporting businesses and the overall positives impacts to
the community makes the hotel option clearly the best option.
Thank you for your consideration!
Sincerely,
Drew Wetherholt
Newport Beach
Harris, Lillian
From: STACY NIELSEN [stacynaz13 @hotmail.coml
;ent: Thursday, September 20, 2012 12:53 PM "RECEIVED AFTER AGEMM
To: gardenerncy @aol.com; Kiff, Dave; Brown, Leilani PRlPeTLf ," / q
Subject: City Hall Location
25--
To l�
To Whom it May Concern:
I am writing this letter in response to the proposal for either the Landmark Resort or an apartment complex in the
location in which City Hall currently sits. I prefer a park in this location, however, it seems that this is off of the table.
Nevertheless, I am vehemently against an apartment complex. This will either bring in lower income families or young
adults who will, in general, add to the late night activity and disrespect for our home. We need to increase the value of
our homes in Newport Beach and take pride in this beautiful city becoming more of a place that FAMILIES want to
vacation. We do not need a reputation of a "party" city as we will end up seeing more and more owners move off of the
peninsula only to be replaced by renters.
A boutique hotel, such as the Landmark will increase value, as well as its attractiveness as a family destination.
Thank you for your understanding in this matter. Should you have any questions, feel free to contact me at 949.231.2500
or by email at stacynazl3Ca>hotmail.com.
Thank you,
Stacy
Brown, Leilani
From: Lidomo @aol.com
Sent: Wednesday, September 19, 2012 4:02 PM "RECEIVED R AGENN
j Brown, Leilani P iIEI)„
b. oject: re use of cityhallsite. --
j
This letter is in support of an upscale boutique hotel on the soon to be old city hall site.
Please consider the use of the space for this.
The area is in great need of a hotel like this.
My family comes to visit and must stay in Fashion Island and drive to visit me.
It would be great for them to stay closer, and walk to my residence.
We would walk to restaurants also.
I am a Lido Isle resident.
There are few nice places to walk and eat.
This would provide revenue as well as a nice place to stay.
I do not support work force residences at this site.
We have enough apartments.
Please add a hotel to this site, as we are in great n eed of this on the West side. not more housing.
Guests would frequent the hotel and support businesses if this hotel was built.
Thank You
Maureen McCarthey
citizen and multiple homeowner in Newport Beach.
Brown, Leilani
From: doctorgja [doctorgja @aol.com]
Sent: Wednesday, September 19, 2012 2:00 PM " RECOVED AFTER AGENOA
j Brown, Leilani;@ sy ,> `p
b. oject: Re -use of City Hall Site ''` "- --
q- ,zs -r�-
This letter is in support of an upscale boutique hotel on the soon to be old city hall site. The West side is already
packed with housing that is largely rental in nature. This site can and should be used to support the eventual
upgrading of the Lido Village by the building of a hotel that will enjoy shopping and dining on the bay as it begins to
be revitalized. Perhaps this will be the catalyst which promotes businesses to consider moving to this area in the
development plan.
This area has been in great need of an anchor such as this to support, enhance, and rebuild the Peninsula area. It will
bring visitor revenue to the area and city. This hotel needs to be an upscale one as there is not one on this side to send
family or business int crests to when needed or desired. The study that has been done also supports a hotel that is
within walking distance to the beach. For years this has been an underutilized area for our residents and city. We
have plenty of housing on the West Newport Side, perhaps this will also entice new residents to choose to live in this
area because it is upgraded, walkable, enjoyable, and is close to the many things that draw people to the beach and
bay areas.
We need to make this decision not only about an income stream of dollars for the city, but also the overall quality of
life for residents, visitors, business owners and property values all through out the area. In the long term a hotel
which draws in business will be far more valuable than apartments. We need this approved and put into action to
support growth that is sustainable and future oriented as well. This type of development reaches a much broader
group of people who can enjoy the weather, bay and beach long -term and also short vacations.
Please consider this once in a lifetime opportunity to rebuild this community and support the continued growth and re-
development of the entire city.
Dr. Gloria J. Alkire, homeowner and citizen
I
Rieff, Kim
prom: Brown, Leilani °`Rfuf ti
Brown, Leilani "RECEIVED AFTER AGENDA
Ur ti,eiev`:,�
From: Denys Oberman [dho @o berm anassociates.com] a S_ j y
S ^nt: Monday, September 24, 2012 6:19 AM
gardnerncy @aol.com, Curry, Keith; parandigm @aol.com; mhenn527 @hotmail.com; Daigle, Leslie;
Hill, Rush; Selich, Edward; Kiff, Dave; Brandt, Kim; Campbell, James; Brown, Leilani
Cc: gracenb1 @yahoo.com; mnbrant @gmaii.com; lorirmorris @gmail.com;
Drew. Wetherholt @marcusmillichap.com; lee @ldiarc.com; bettina22 @roadrunner.com;
jbrosene @uci.edu; wdlongyear @gmail.com; nlsheffner @aol.com; 4nlehman @gmail.com
Subject: City Hall Reuse - resident statement
Attachments: CITY HALL SITE REUSE- Statement to City Council 9- 21- 12.docx
Importance: High
Sensitivity: Confidential
PLEASE DISTRIBUTE THE ATTACHED STATEMTN TO COUNCIL AND ENTER INTO PUBLIC RECORD, IN ADVANCE OF
CITY COUNCIL SESSION OF SEPT 25, 2012.
THANK YOU.
Regards,
Denys H. Oberman
BERMAN
9!mmgy or,- F(Mm_WI p,<iM:on
OBERMAN Strategic Consulting & Transactions
2Fn0 Michelson Drive, Suite 1700
i a, CA 92612
Tei (949) 476 -0790
Cell (949) 230 -5868
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CITY HALL SITE REUSE - - -- STATEMENT OF DENYS OBERMAN, RESIDENT
PLEASE ENTER INTO PUBLIC RECORD
September 21, 2012
Mayor Gardner and Members of the City Council:
We have had the opportunity to review the various consultant and staff reports prepared in connection
with the feasibility and attractiveness of Hotel and Residential apartment reuse options for the current
City Hall Site. Our comments are summarized below.
UPSCALE HOTEL OPTION
The Consultant retained by the City, Mr. Bruce Batlin of PKF Consulting USA, has
done a good job of evaluating the site options ,market conditions and economic
considerations associated with an upscale boutique hotel. Mr. Batlin's conclusions
support the position of the Community in connection with the market desirability
and economic benefit of an upscale hotel of four star plus quality.There is no doubt
that this is the highest and best use of the City Hall site.
-The report concludes that the City Hall site provides the most attractive Site option, due to ownership
and access
- The market analysis Phase 1 report evaluates 3 options of hotel size.The economic analysis report
evaluates 2 options. With consideration to both, it appears that an option in the 120 -150 bed range is
the most economically attractive, as this scale can best support a full appropriate complement of
amenities and meeting rooms, and provide a Revenue stream for the City far superior to that of
Residential uses.
-The evaluation when compared with evaluation of high -end residential apartment uses, provides a
clear conclusion that the City can derive approximately 10 times greater economic return with an
upscale Hotel than with that associated with the proposed alternative residential use. This is even with a
proposed average daily rate of $210 -220; which, per consultant's own statement at the September 11"'
Council study session, is probably low. Our research of comparable properties and locations indicates an
average daily rate in the $300 -325 range is probably more appropriate. With the rate adjustment,
This would increase the available revenue derived from the Hotel TOT, sales, and other tax alone by 35%
or more.
-An upscale Hotel is the only Use which can provide the Anchor Use required to drive successful
revitalization of the Lido Village /Balboa Penninsula area.
- Additionally, the report does not flush out the additional revenue which can be derived from both
increased activities in the hotel, and also additional revenue - generating complimentary uses, such as
restaurants, recreational, and shopping commercial business growth in Lido Village and Marina which
will successfully establish and sustain once a meaningful Anchor Use is established. This will secure the
area as an attractive Destination, fueled by both the surrounding residential community, and pleasure
or business visitors.
This area will become a valuable, complementary enhancement to the Newport Beach portfolio of
destinations, and enhance the overall marketability of the City on a global basis — correspondingly,its
ability to gain share of same.
-The market demand for an upscale Hotel in both this immediate area and broader regiion is well -
established, and the assumptions in the Consultant's report concerning occupancy are reasonable.
-As the City is aware , there is strong public and community support for the Hotel use on this site.Given
the commercial deterioration which has occurred in the Lido Villagearea, the City will likely need to
prepare to offer some facilitation and incentives to assure that a world class Hotel is successfully
recruited. Some of the physical enhancements of surrounding area are identified in the report. There
may be additional incentives that should be considered such as : subsidization /share on surrounding
landscape maintenance or parking, other infrastructure.Such incentives are more than worthwhile if one
considers the substantial addition of Revenue this will bring to the City, along with an increase in the
stated land value and net returns associated with higher revenue generation both for the operator, and
the City.
-It is also suggested that in the Requests for Proposal, the City invite developers to provide concepts for
not only the hotel, but also surrounding complementary uses for the Lido village and marina area that
they believe would be synergistic and enhance the economic beneifts to the City.
II. RESIDENTIAL USE OPTION
Residential uses are a demonstrably less attractive proposal from both marketability and economic
perspectives,
-The Lido/ Balboa Penninsula area already has more than adequate , heavy concentration of residential
uses,including high end and moderate single family, as well as apartments and triplexes providing
student and "work force" price points.
-There are already significant traffic,parking impacts which appear challenging for the City to
regulate.The proposed residential use would add undesirably high impact of 2 -3 times that of a hotel.
- Residential use as is reflected in the consultants' reports, will provide a fraction(approximately 10 %) of
the economic benefit to the City, on an annual and life cycle basis.
-The proposed return on land value ,based on our research, are inflated,and mistakenly represented as
providing a return on land value superior to that of a Hotel by as much as two times. It is unlikely that
the residential use proposed can be marketed and absorbed at the price points proposed of $3,500-
4,000 per month. This will open the door to an unstable ,undesirable tenancy base that will disrupt the
integrity of the surrounding neighborhoods, and potentially exacerbate the already existing condition of
Lido Village.
In Summary:
1. From perspectives of marketability, economic return to the City, and benefit to the residential
and commercial Lido /Balboa Penninsula community and the public, an upscale Hotel represents
the most attractive and sustainable Use as option for reuse of the City Hall site
It also is the Use most likely to help drive a complement of surrounding uses and revenue
stream into the area which can be maintained on a long term basis.
2. We respectfully request that the Council approve the proposal for an upscale Hotel use, and
proceed immediately to construct and solicit RFPs from a list of developers;with input from the
community.
Thank you .
Denys Oberman
Resident and member of Lido /Balboa Penninsula community in support of Lido Village revitalization
Rieff, Kim
°rom: City Clerk's Office "RECEIVED
,ent: Monday, September 24, 2012 1:24 PM � j1�F� AG.N�r1
To: Rieff, Kim PNj%jT
Subject: FW: apartments! NO
From: Kiff, Dave
Sent: Monday, September 24, 2012 1:23:46 PM
To: 'Linda Klein'
Cc: City Clerk's Office
Subject: RE: apartments! NO
Auto forwarded by a Rule
Hi Linda—
Thanks for sending that along — I will make sure the City Clerk has a copy for their records.
Dave
From: Linda Klein (mailto:lklein14(d)me.com]
Sent: Monday, September 24, 2012 12:38 PM
To: Kiff, Dave
,ubject: Fwd: apartments! NO
Sent from my Wad
Begin forwarded message:
From: Linda Klein <lklemI4 e me.com>
Date: September 24, 2012 3:36:51 PM EDT
Subject: apartments! NO
I am completely against any apartments or additional residences for the old city hall site. They
will do nothing for Lido Village. This is the best location for a high end boutique hotel that will
economically support the city and the village and the neighborhood. I will not go into all the
reasons as I know you are very familiar with the issues being faced with this decision which will
make or break this Peninsula area.
Linda Klein
Sent from my Wad
Brown, Leilani
From: Rike Hellermann [rhellermann @yahoo.co.uk]
Sent: Wednesday, September 26, 2012 6:47 AM
To: gardenerncy @aol.com; Kiff, Dave; Brown, Leilani
Subject: Re -use f City Hall Site
Dear Ladies and Gentlemen,
we heard through friends and neighbours in Newport Beach about a new development opportunity and re -use for the Old City
Hall Site. We strongly agree that the Peninsula should have a Boutique Hotel. It will not only help to create jobs, pushes the local
economy for surrounding business and the cmmunity but will re- energize tourism to the Peninsula.
We visited Newport Beach many times in the last years and we fell in love with so much that we bought a property there. The
beach, the restaurants and shops are nice. We never stayed in a hotel on the Peninsula but rather opted for an holiday
appartment. With a modern, updated Boutique Hotel you would not only help the community, but also the better traffic, and
creating a landmark for the Peninsula. The area needs protection and improvement. The area needs more hotels
Rike Hellermann
mobile 0798 1641840