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Laguna Beach


Split council OKs church deal for possible future parking structure downtown

By SARA HALL

After more than two hours of discussion and more than two dozen public speakers, a split City Council decided to move forward with an agreement with a local church that could lead to a public parking structure being built downtown.

Council voted 3-2 on Tuesday (May 10) approving a Memorandum of Understanding (MOU) agreement with the Laguna Presbyterian Church regarding constructing a public parking structure on property owned by the church at 355, 359, 361 and 363 Third Street.

The item also included directing staff to proceed with soliciting proposals for preliminary design and entitlement for the proposed parking structure.

A majority of councilmembers agreed that this was something they wanted to explore further, which is what the MOU is allowing, several commented.

“Let’s move ahead and see if we can get there and if we can improve on this along the way,” said Mayor Pro Tem Bob Whalen. “This is a non-binding action tonight, but it keeps us in the game and gives opportunity to look at some good parking downtown.”

Whalen suggested modifying the staff recommendation for the lease agreement to return to city council for final approval, rather than authorizing the city manager to finalize and execute the agreement.

“I think there’s a lot of work and discussion and negotiation that has to go into the final terms of the lease,” he said.

He also asked staff to add some language to the MOU “just to drive home the point that we can terminate at any time.”

Whalen specified at the end of the last line of the first paragraph of the MOU, which currently reads that “neither city nor church have any obligations as a result of this MOU or as the result of the exchange of drafts of the proposed lease” to add “and either party may terminate negotiations on the lease in its discretion.”

His suggestions were ultimately worked into the motion for approval, which the 3-2 vote supported.

Councilmember Peter Blake also noted that the church and the city have been clear that if this doesn’t work out either party can stop the deal.

He feels a parking structure will provide a number of benefits for local residents, including easy access to the library and the farmers market, Blake noted.

“We can’t keep our heads in the sand about parking and just complaining about it, so we’ve got to do something about it,” Blake said. “We’re going to build this thing and we’re going to build a great parking structure there and it’s going to service the residents.”

Residents will likely access the structure more than the tourists, who don’t really know where that is (in relation to the beach or other visitor amenities), he added. 

Split council OKs church

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Laguna Presbyterian Church 

Although there were some potential issues raised during both the public hearing and on the dais.

Echoing some of the public comments of concern, Councilmember Toni Iseman noted that the church representatives were “clever” with the negotiations of the terms, which seem to benefit the church more than the city.

“None of us are going to be here in 53 years,” Iseman said, referencing the lease term length. “I think they’re going to look back on this night and go ‘Who was on the council then? How much money did they spend? And at the end of the term, they didn’t have anything to show for it?’”

They need more time to study the proposal and involve the community in the process, she said.

Iseman also noted that the parking subcommittee just started working on the issue and that there may be changes coming in the next year or so. They weren’t given any other options other than the parking structure for this property, she noted, but there are other ideas, like utilizing Act V.

While there are legitimate concerns that need to be addressed before any project is approved (like analysis of traffic, circulation and environmental impact, all of which will happen during the initial study) and while it is more expensive to do it on private property by leasing it (as opposed to building it on city-owned land), there are a number of other benefits to this deal, including that it’s in a good location where public parking is needed, Whalen said.

“Is it the lowest cost? No, but we’re in the business of providing services,” Whalen said. “This will be a service for the community and one we ought to continue to explore and see if we can get there. My bottom line is, I think it’s a great opportunity,” he said.

They need to provide more parking downtown, Whalen said. The community has made that need clear in recent resident surveys, and just neighborhood conversations, he noted.

They are responding to the resident poll, agreed Mayor Sue Kempf.

“Having some more parking in the downtown is a good thing,” she said. “The downtown is a revenue generator, it’s our economic engine in this city – besides our property taxes – and we get a lot of money there, which allows us to do other things.”

They’ve tried remote parking lots, like renting space at El Morro School or at the hospital during summer, and offered free parking, but it hasn’t helped the way they had hoped.

“People don’t want to stop and park,” Whalen said. “The reality is, for better or for worse, the human behavior now is to still come downtown with your car.”

This will be a great location to access all of downtown, Whalen said.

Council directed the city manager in 2019 to negotiate terms for a shared used agreement with the church for a future parking structure. City staff held several meetings with church representatives to discuss potential opportunities, parking needs and high-level deal points.

After a break in proceedings due to the pandemic and getting direction from council during recent closed session meetings, on Tuesday staff proposed an MOU with the church that describes the responsibilities of each party and outlines a cost sharing model designed to yield a similar return on investment for each party.

The proposed concept for the possible parking structure would provide an estimated 92 additional paid public parking spaces in downtown and would be available for free to residents with a Shoppers Permit.

A conceptual layout identifies a parking structure with two levels and a partial subterranean level. It could hold approximately 133 spaces and the church is requesting to reserve 41 spaces for their exclusive use.

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Church congregants would also be able to use public parking spaces on Sunday mornings until 12:30 p.m. at no cost. The church could also reserve public parking spaces for up to 25 special events per year (except between Memorial Day and Labor Day) for a maximum of four hours for each event. This exclusive use would require the church to pay the regular rates for each reserved space. The church would also have the ability to reserve the upper deck of the structure at no cost on Sunday mornings until 12:30 p.m.

The structure would be designed to be accessible from Third Street and the subterranean level would be accessible from the alley.

Currently, the site consists of a paved parking lot with 36 spaces and two buildings. 

Split council OKs parking

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Parking and traffic were identified as key concerns in recent resident and business surveys

The city is not committing to approve or undertake the construction of the parking structure by approving the MOU, said Project Director Tom Perez.

“Approval of the MOU does not constitute approval of the project, that is subject to CEQA and that is still a forthcoming action,” Perez emphasized.

Council directed the city manager and staff to negotiate the terms for a shared use agreement between the church and the city for use of the property, City Manager Shohreh Dupuis said.

“We don’t have a project,” she reiterated. The MOU are “terms of understanding between two agencies on how they are going to partner with each other. We followed the city council direction,” she confirmed.

Council did not direct staff to start an initial study, Dupuis noted, answering a question from Iseman on how the process would have been different if they had started with an initial study.

Once they have some preliminary concept designs, they start the initial study, which would look at the traffic analysis, circulation and the environmental impact.

Whalen agreed that those issues should be worked out on the “front end” of the overall process.

Answering a council question, Perez reiterated that the MOU allows the city to proceed with the preliminary design and that would be the phase of work where the full CEQA analysis would be conducted. If, for some reason, the city was unable to obtain the necessary entitlements it would be terminated, he added.

Answering a question from Iseman, Dupuis also confirmed that the city could walk away from the lease before any construction began.

Estimated capital costs of $10 to $12 million include construction and additional soft costs required for design, entitlement and construction administration. An appraisal of the property prepared on behalf of the church determined a fair market value to be $7.18 million. The city agreed the appraised value to be “fair and reasonable,” according to staff.

Annual revenue is estimated to be $440,000 and annual operating costs are estimated at $33,250, the staff report explains. The lease term is proposed for 53 years.

The city would also be required to make a one-time upfront rent payment of $1.98 million to the church within six months of executing the lease. It will be reimbursed to the city if the city is unable to obtain the required Coastal Development Permit and design review approval within three years of execution of the MOU.

The staff report also notes that the city would also pay the church annual rent as a percentage of gross receipts as follows:

–2% of the gross annual revenue beginning on the date the parking structure opens for use and then continuing for 10 years.

–After that, 10% of the gross annual revenue for a period of 20 years.

–And then, 28% of gross annual revenue until the end of the lease term.

Certain assumptions had to be made in the financial model, Dupuis said, and there are review points during the lease. When they receive construction bids and get a more in-depth financial analysis, they would review all of the assumptions again, she pointed out, because things could change (like bonding rates, construction costs, etc.)

“At that time, we can adjust the financial model,” Dupuis explained. “And at that time, if the city or the church decides that this is no longer a good financial deal, either party can walk away from the lease.”

Even then, if they decide to move forward with the project, the financial analysis would be reviewed every 10 years, she added.

“The parties would confer and address the financial bottom line,” Dupuis said, and would focus on “the commitment that both agencies are making to each other, that this is not a profit venture, this is a way to provide a public amenity and public services in the downtown. And overall, the 53 years, we are both interested to make sure we are receiving an equal rate of return on our investment.”

The goal is for the church and the city to get similar return on investment, Dupuis explained.

“Once we flush it out and (determine) what the true costs are we’ll have a better idea of what to do,” Kempf said. 

Split council OKs traffic

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Night traffic in Laguna Beach

More than 30 people spoke during public comment, including many supportive church members and many concerned residents.

Supporters noted that the MOU is, basically, an agreement to look at this property as an opportunity for a parking structure. The city can back out at any time, several pointed out.

It’s a convenient location for a parking structure and people already use the lot that aren’t visiting the church. It might not be a perfect solution, but it’s worth exploring, a few agreed.

Steve Sweet, senior pastor at Laguna Presbyterian Church and a 30-year resident of Laguna Beach, said he’s witnessed firsthand the need for additional parking for the church congregation, particularly on big events and holidays. The church also hosts a variety of community events, requests for which increased significantly this year, he noted. Many residents also use the current lot to visit nearby businesses, services and attend events.

“This proposed parking structure will help meet the increased need,” Sweet said. “This collaborative project with the City of Laguna Beach and Laguna Presbyterian Church will be a significant step forward for our residents and community by providing additional parking that is accessible, safe, and conveniently located in our downtown.”

This is a good example of a public-private partnership that can benefit the community, noted Cary Redfearn. The church is a great resource for the community already, he noted, and parking is a concern in downtown. A parking structure will be more beneficial for residents than tourists, who don’t typically travel by that location, he noted.

Addressing a few key comments from speakers opposing the agreement, resident Tom McGill noted that some were concerned that any parking structure in downtown would result in more tourists crowding into the city.

“The ‘build it and they will come’ crowd,” McGill said. “I got news, they’re (already) here. And all it means is that they’re parking in the neighborhoods.”

The second key objection McGill noted is that residents are concerned that this is a fiscally irresponsible proposal, waste of taxpayer money, or a “gift to the church,” he said.

“It’s simply not true, this is a mutually beneficial exchange of value between two willing participants,” McGill said.

It’s just like any other business deal, he added, it was a vigorous and fair negotiation and each side achieves important goals. The church gets more parking, but they’re turning over control of valuable land for 53 years, he noted. The additional parking will also be a benefit to the greater community, he added.

“It’s a win-win,” McGill said.

Residents concerned about the MOU and possible parking structure, noted that building on city-owned land would make far more financial sense than paying for leased land. Particularly since the city will own nothing at the end of the lease term.

Greg O’Loughlin of the South Laguna Civic Association strongly opposed the item. He questioned how the city can justify spending millions downtown when there are so many needs elsewhere in Laguna Beach.

It’s a great deal for the church, he noted, but not so much for residents or the city, with nothing to show for it at the end of the lease.

Others commented that they have no idea what the city’s needs might be like in 53 years.

Resident Michael Morris opposed moving forward with the current MOU and lease agreement as presented.

The entire process of pursuing this joint venture has lacked transparency and circumvented the efforts of the council’s own parking subcommittee, Morris said.

He questioned why this “temporary” parking solution would be up for action now, particularly if the subcommittee is tasked with devising a comprehensive parking strategy.

“Temporary in terms of 53 years and then we have nothing,” he explained.

It’s a huge investment with no tangible asset at the end of the deal, Morris noted. It makes no financial sense for the city.

“Why would taxpayers pay for the design, entitlement, construction, maintenance of a parking structure only to give it back to the leaseholders at the end of the lease?” Morris asked.

The same project on city-owned land would be a fraction of the cost, he estimated.

The exit clause also needs to be clarified, he emphasized, it needs to be clear that the city can walk away after further analysis is completed. There are also concerns about traffic and circulation issues, similar to the problems the nearby Susi Q Community Center faced.

Ruben Flores suggested a smaller lot for golf carts, which would ensure usage by residents only. As taxpayers, that’s what they want, he said. The city should also focus on making the community more walkable and pedestrian oriented, he added.

There also needs to be more public input and community engagement, several others agreed. Doing this behind closed doors is concerning, they commented.

Responding to the comments of concern that this was done out of the public view and without any community discussion, Kempf noted that it’s a confidential process.

“This isn’t a ‘cover of darkness’ thing, this is a typical council action where we talked about something in closed session and if we agree, then it eventually comes to open session,” she explained. And similar to other business deals, “You don’t negotiate in public.”

Kempf and other councilmembers pointed out that there will be plenty of opportunities for public input as the process plays out.

The subcommittee is also looking at other parking options and revenue opportunities, she noted. 

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Sara Hall covers City Hall and is a regular contributor to Stu News Laguna.

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