|Council Gives Village Developer a 149-Year Lease Option
October 13, 2011 -- The Santa Monica City Council narrowly approved an amendment that will allow the developers of the Civic Center Village condos the option of extending their leases from 99 years to 149 years.
The motion, which passed with a four-to-three vote, would allow the lease-holders an option to extend the lease in the last quarter – that is, after 75 years have passed on the original lease.
The proposed amendment was in response to investor concerns.
“As the developer was negotiating with lenders and investors, [the developer] came back and said the deal needs to look like this in order for us to go forward,” Housing Administrator Jim Kemper told the Lookout Tuesday.
But not everyone on the dais was convinced that the amendment was ideal.
“Any extension of the lease creates a significant value...to the development,” said Councilmember Bobby Shriver.
“My question is...what are we getting for it?” Shriver asked. “If we're going to ensure that value, we should get something for it.”
“This is not an attempt to increase value, though in some indeterminate way, it may very well do that. It is an attempt to get financing,” President of developer Related California Bill Witte countered.
Securing financing in this case has been a struggle, especially in this economic climate, said Witte, who explained that condo developments are usually done on land that has been purchased, rather than leased.
Shriver retorted that he found it difficult to believe that such a reputable developer as Related California would have trouble securing financing for an oceanside condo development in Santa Monica.
Shriver said that by givng the developer the option to extend the lease, the city is creating value – since the developer says that financing of the project hinges on this extension option – and so the city should get something from the developer.
“We're spending money and we don't get anything for it,” he told the Lookout Wednesday. The council didn't even know how much the extension would be worth, even though there is a pretty standard formula to translate the option into a money value, he said.
At Tuesday's meeting, Director of Housing and Economic Development Andy Agle told the council that asking staff to run the numbers might delay the project, which might cause the developers to miss an affordable housing financing deadline.
Other councilmembers supported the proposed amendment.
“There is also an intangible benefit,” said Mayor Pro Tem Gleam Davis. “We are getting both condominium and affordable housing in our downtown area,” she said.
In fact, according to Kemper, the development will be split more or less fifty-fifty, with approximately 160 affordable units in a highly desirable location of Santa Monica.
The project would also bring construction jobs into Santa Monica at a time when they are very needed, said Mayor Richard Bloom.
Davis said she was worried about losing the project.
“If we don't approve this tonight, the first thing that developer is going to do is going to make up a list of things they can do for relatively little cost to them that might be extremely valuable to the city that they would put on the table,” Shriver countered.
The amendment passed, with Bloom, Davis and councilmembers Pam O'Connor and Kevin McKeown voting for it, and Shriver and councilmembers Bob Holbrook and Terry O'Day voting against it.
|Copyright 1999-2011 surfsantamonica.com. All Rights Reserved.