ACTION MINUTES

DALY CITY PLANNING COMMISSION

Regular Meeting

Tuesday, April 3, 2007

Council Chambers, Daly City

Chair Kelly called the meeting to order at 7:00 p.m.

ROLL CALL: Present: Smith, Kelly, and Tallerico

Absent: Satorre and Salamy

Staff Present: Sedik, Schott, Mothershead and DeFries

APPROVAL OF MINUTES: Moved by Commissioner Smith, seconded by Commissioner Tallerico, to approve the minutes of March 6, 2007. Motion carried 3-0.

PUBLIC HEARINGS:

10. Major Subdivision SUB06-2 and Use Permit UP06-6 for the construction of a 150-room hotel with 60 residential condominium units – 1835 Junipero Serra Boulevard

Staff report presented by: Tatum Mothershead, Senior Planner

Ms. Mothershead presented the application for a use permit and subdivision that would allow for the inclusion of residential condominiums within a hotel that was approved as part of the planned development for Pacific Plaza. The site is located on the east side of Junipero Serra Boulevard. It is the northernmost lot of the Pacific Plaza development. It is directly south of the BART kiss-n-ride lot.

The current planned development zoning for the property was approved in February 1999. The zoning allows for a variety of uses on the site that includes offices, a movie theater, retail, restaurants, parking structures, and a hotel. The planned development zoning established maximum building heights and building sizes The offices were allowed a maximum height of 125 feet, the parking structures were allowed a maximum height of 65 feet, the theater a height of 95 feet, and the hotel was allowed a maximum height of 110 feet.

The application that the Planning Commission is reviewing is a use permit to allow residential units in the hotel, the application is not to consider the development standards for the site as they are already established. The developer is requesting a residential component be included within the permitted building envelope. Chapter 17.28 of the Zoning Ordinance states that, “A use proposed which is not similar in character to an identified use by general category may be permitted in a planned development upon first securing a use permit.”

The City retained the Peninsula Conflict Resolution Center (PCRC) to facilitate a series of Community workshops. Three workshops were held – September 20, 2006, October 25, 2006 and February 28, 2007. The cumulative attendance estimated for all three workshops is approximately 150 people. Summaries of those workshops were included as attachment to the Commissioners’ staff reports.

The proposal being considered is for a Crowne Plaza Hotel & Conference Center, which would include a full service hotel with 150 guest rooms, 20 corporate suites, 40 residential condominium units, 11,500 square feet for two restaurants, 2,000 square feet for retail, 12,500 square feet for banquet and meeting space with seating for a dinner of 600, and below ground parking with 92 spaces. The traffic study indicated that four of these parking stalls may be too tight, so staff is recommending these stalls be removed or redesigned for alternative vehicles such as motorcycles.

There are two points of access to the site, one in the middle on Junipero Serra and one on the far south end of the site for emergency access and small delivery vehicles. Also on the street level or lobby level would be shops, one of the restaurants and the grand ballroom. Truck loading would be accessed through the BART Kiss-n-Ride lot.

The second floor would include meeting rooms, the fitness area and the other restaurant. A pool is also located on this floor, but it encroaches into the rear set back, so it will need to be relocated or removed. The third, fourth, and fifth floors would have the hotel rooms, 50 on each floor. The sixth, seventh, and eighth floors would have the residential condos and corporate suites. There will be 29 2-bedroom units, ranging in size from 1,070 to 1,819 square feet and 31 1-bedroom units, ranging in size from 613 to 897 square feet.

When the City Council approved the planned development zoning for this site and a hotel was allowed a maximum height of 110 feet, the City Council acknowledged that the visual impact of these buildings were significant even with mitigations, such as the installation of landscaping. The Council adopted a Statement of Overriding Considerations for this impact. The Planning Commission is not being asked to determine the level of significance of the visual impact of this building. The building is in conformance with the height allowance that was established within the planned development standards.

Ms. Mothershead discussed the renderings and elevations showing the height differential between the hotel and the houses on Niantic. There is a 51 foot separation between the rear of the houses and the rear of the hotel. The rear building wall of the hotel is 83 feet in height, which is well within the allowable development standards. The base of the hotel is 14 feet below the grade of the houses, so the apparent height differential is 69 feet.

The City entered into contract with Visual Impact Analysis LLC, a firm that specializes in shadow studies, which show the effects on neighboring properties. Slides were presented showing the worst and best case scenarios.

A preliminary traffic analysis was prepared by Kimley-Horn. Eight intersections were considered for the study. Some of the findings of that study were that the project causes less traffic than the 350 room project originally proposed in the Pacific Plaza EIR; the hotel and residential project will generate 88 AM and 96 PM peak-hour trips with at total of 1,578 daily trips; there would be no Level of Service (LOS) change at any area intersection; most intersections at LOS C or better (City’s General Plan requires LOS D or better); the John Daly/Junipero Serra/I-280 on-ramp will continue to operate at LOS D; and the average delay at that intersection added by the proposed project is less than one second.

The subterranean parking garage is dedicated to the condos and corporate suites, with 1 space required for each corporate suite, 1.5 spaces for each one-bedroom, and 2 spaces for each 2-bedroom unit. The total required parking for the suites and condominiums would be 88 spaces. The Planned Development standards for PD-54 require that one space be provided for each hotel room. In this case 150 parking spaces would be required. Per the “Hotel Parcel Parking Easement Agreement,” there will be 100 reserved spaces plus another 250 non-reserved spaces within the Pacific Plaza parking garages.

A hotel at Pacific Plaza is an entitled use and therefore only a building permit is required for its construction. The use permit and subdivision approval are required because of the inclusion of residential condominiums in the project. These units are meant to overcome a shortfall between the costs of construction the hotel and the value of the hotel based on the project revenue stream.

Redevelopment law requires that 15% of the total units developed within a redevelopment project area be affordable. The Daly City Redevelopment Agency’s policy has been to require 15% of the units proposed in each residential project in the Redevelopment Area be affordable. The applicant may appeal this requirement to the Agency Board. Previous 100% affordable projects, such as Schoolhouse Station and ABHOW’s Hillcrest Avenue senior project, have created a surplus of affordable units within the project area and units in the hotel project are not necessary to meet the Redevelopment Law requirements.

The hotel will bring revenue to the City from a combination of sources. Room tax or Transient Occupancy Tax is applied to each hotel guest’s bill and it is estimated that this will amount to $640,000 per year. There will also be sales tax from the restaurants and retail space, which is estimated at $60,000. Upon sale of the residential units, future homeowners will pay property tax to the County, a portion of which is distributed to the City and Redevelopment Agency. The building owner would pay additional property tax.

Staff reviewed the proposal under the requirement of the California Environmental Quality Act (CEQA) and determined that the project is exempt from environmental review per Section 15332: In-Fill Development. The City Council certified the Peninsula Gateway Plaza Redevelopment Project Supplemental Environmental Impact Report (EIR) and the associated Mitigation Monitoring Program on February 22, 1999 in association with the rezoning of the property to Planned Development PD-54. The hotel component that was considered as part of that EIR was larger than what is being proposed.

Commissioner Tallerico asked if the Commission was recommending that the 15% affordable housing not be enforced. Ms. Mothershead replied that it was a decision to be made by the Daly City Redevelopment Agency. Commissioner Smith asked if staff was recommending that City policy be appealed and no affordable units be included. Mr. Sedik said no, it would be on the DCRA agenda and they would make the decision of any reduction. He also said that the 15% affordable units would be a loss of revenue and compromise the project’s economic feasibility.

Commissioner Smith asked if staff had considered the economic feasibility of making one more floor of hotel rooms, rather than condos and if it had been considered to redesign the project to be economically feasible as a hotel and conference center.

Mr. Sedik responded that staff had done an economic analysis on the project and the condos are a source of revenue to create profit to underwrite the loss that the hotel represents. The hotel will cost more to build than the revenue expected to generate from it and eliminating a floor of condominiums will slide it off the scale of economic feasibility.

Commissioner Smith then asked if the traffic study took into consideration other proposed projects in the area, such as the Landmark project, the Mission/Westlake project, or the Senior project on Sullivan. Ms. Mothershead replied that the traffic study considered existing traffic and the proposed hotel and the EIRs for the Westlake Shopping Center improvements and the Landmark development considered the hotel development and confirmed there would be no LOS changes at the John Daly/Junipero Serra intersection.

Commissioner Tallerico had concerns about the traffic impacts at the John Daly/Junipero Serra intersection. He feels that traffic along Junipero Serra is already a problem and the hotel will make it worse.

Speakers: Michael Mowery, Kimley Horn Associates

B.B. Patel, developer

Dave Figueroa, International Union of Painters and Allied Trades

John Morch, Local 12, Floorlayer

Charles Wong, 245 Westlake Avenue

Vaughn Jones, COHRA

Doug Yamamoto, San Mateo Building & Trades Construction Council

Orlando Matias, Local 2

Alek Felstiner, UNITE HERE Local 2

Aurolyn Rush, UNITE HERE Local 2

Sylvia Alvarez-Lynch, resident

Genella Lintao, resident

Annette Hipona, Original Daly City Protective Association

Mr. Mowery addressed Commissioner Tallerico’s concerns explaining that Crowne Plaza will not create a one-second delay, but rather add an approximate one-second delay on the average to what is happening now. Not all trips out of the hotel were projected to make a left turn on Junipero Serra. They were distributed throughout the city to different destinations based on information from other traffic studies. Mr. Sedik pointed out that the one-second delay was an average. Some people may not have any delay and some may have a longer delay.

Commissioner Tallerico asked if staff had considered converting the two-bedroom condos to one-bedroom and adding more hotel rooms. He also wanted to know what the price of the condos would be. Mr. Sedik answered that staff had not considered all one-bedroom condos and didn’t know the price of the condos. Commissioner Smith stated that the question about the price had been asked at one of the workshops and the developer’s representative indicated that they would start around $800,000. She then asked if staff had obtained documentation of the attempts by the owner to apply for financing from different agencies. Mr. Sedik replied that staff had not requested documentation, but we do know that he has met with lenders. At this point, it was premature for the developer to go to the bank and ask for a loan as the project is not yet approved and he is not certain of the size of the project.

Commissioner Smith asked Mr. Patel if he could get full financing without the condos. He explained that the difference between what it costs and what it’s worth from the bank’s perspective would not be financially feasible. Commissioner Smith questioned the figures because she understood that the hotel business is rebounding and heard that Mr. Patel’s hotel in Palo Alto and other real estate ventures were very successful. Mr. Patel explained that the demand for hotel rooms in Palo Alto, where there are several Fortune 500 companies, is very different from Daly City. Daly City does not have primary demand generators or company employers looking for rooms.

Commissioner Kelly asked how corporate condos would generate income if there are no companies here. Mr. Patel replied that the hope was that the software and biotech companies in the surrounding areas might be interested due to the location and proximity to BART. The idea of corporate suites was to generate corporate business.

Mr. Figueroa and Mr. Morch, both union workers, felt that the project should be built and maintained by union workers. They said that Daly City was a blue collar town and union jobs would be good for the community. Commissioner Smith asked if they had discussed these issues with the developer. Mr. Figueroa replied that the developer wanted certain craft work done by nonunion workers because it would be cost efficient. Mr. Sedik pointed out that the City does require prevailing wages, which are set by the State of California. In some cases that might be slightly less or more than union wages. It will be monitored and contractors must submit certified payrolls. Mr. Figueroa stated that prevailing wages are based on union wages, but unions have certified apprenticeship schools. It is state law that 20% of all work should be done by a certified apprentice, which means that wages paid to them are cheaper than nonunion workers. Mr. Figueroa stated that other projects in Daly City, such as the War Memorial had prevailing wages and there was no monitoring. Some workers worked nights and didn’t get paid their overtime.

Charles Wong stated that he lives on Westlake Avenue and works at a union hotel in San Francisco, where he receives fair pay and good benefits. Nonunion workers have no security and poor wages. This should be a union hotel because we need good jobs for the people in Daly City.

Commissioner Tallerico asked if the City could require the developer to use union labor. Mr. Sedik replied that it was not within the scope of the law. Assistant City Attorney, Kelly Schott, confirmed that the City cannot require union labor. Commissioner Smith then asked if they could consider it as part of evaluating the community benefits that the City gets from the project. Mr. Sedik responded that they could consider and weigh a union contract, but they cannot require it. He didn’t think a union contract was a good basis for denying a project, but that it could be considered.

Vaughn Jones, representing the Council of Homeowners & Residents Association (COHRA), stated that at their April meeting, they adopted a resolution regarding maximum height limits for new construction in Daly City. COHRA recommends this policy be applied to this project and throughout Daly City.

Doug Yamamoto spoke on behalf of the San Mateo Building & Trades Construction Council, which represents 24 construction unions that build buildings in San Mateo County and have over 60,000 members. The Building and Trades Council cannot support this project because Mr. Patel will not commit to hire union workers. They have hundreds of members in Daly City that would like to work in their home town. The original idea was for a larger hotel, but Daly City allowed Mr. Patel to downsize the hotel to include 60 condominium units to offset the construction costs. The Council does not have a problem with that, but they don’t think that it is unreasonable to ask that he build and operate the hotel with union workers.

Orlando Matias, a Daly City resident and member of Local 2, felt it should just be a hotel and should have union workers and then it would be a good for the community.

Alek Felstiner, a researcher with UNITE HERE Local 2, which represents 13,000 hotel and restaurant workers in San Francisco and San Mateo County, outlined the reasons why they believe the project will be a bad fit for the site. First, the condo units are not necessary for financing the hotel. Second, the condos are a bad fit and are different from traditional residential developments. They are not used as primary residences, and as a result, they are likely to generate fewer jobs, will produce little sales tax revenue for the city, and will do nothing to address Daly City’s urgent need for affordable housing. Finally, Daly City has an affordable housing shortage. There is an imbalance between jobs and housing and these condos are going to sell at the high end of the market. They will not be affordable to Daly City residents. The condos are not essential or desirable to the project.

Aurolyn Rush, a Daly City resident and member of UNITE HERE Local 2, spoke against the condos, stating that they would not be affordable and not benefit the city. She said we need more jobs, affordable health care, job security and the right to organize.

Sylvia Alvarez-Lynch stated that she had attended all the workshops and the opinion was that the building was too high and there was no public benefit to building the luxury condominiums that add three additional stories to the project. She said that the need for affordable housing is great and growing every day and that the City’s proposal to exempt Mr. Patel from the required 15% affordable housing would give all future developers the opportunity to avoid the obligation for affordable housing. We need to provide affordable housing for the working class. She stated that this was terrible public policy and wondered who would benefit from this monetary give away. She also said that people have made it clear that they want a union hotel and Mr. Patel has refused to negotiate with the unions. She urged the Planning Commission and City Council to vote no and show solidarity with union labor.

Genella Lintao, currently a community worker with Daly City Peninsula Partnership and a resident on Niantic Street, had some concerns about the project. First, she feels that the quality of life for those on Niantic Street will be drastically decreased due to the height of the development. This will cause a lack of sunlight, which will cause mold to grow. There will be more noise and a lack of privacy. Another concern is that the condos will be unaffordable for Daly City residents. She stated that Daly City is currently experiencing a housing crisis and residents need union jobs and living wages.

Annette Hipona, representing Original Daly City Protective Association and speaking from the perspective of a school board member, asked why hold three community workshops and then ignore the input. She stated that there were consistent themes throughout the workshops that were not sufficiently addressed or are missing from the staff report. The first item was that the project is too tall and will have negative impacts on homes and neighborhood behind the project. The second item was that the community supported a hotel and conference center, but wanted less or no luxury condos. Her third statement was that we should find a developer who understands Daly City and its commitment to living wages for working families. She then referred to Page 4 of the staff report saying that staff proposes excluding the project from the state required 15% affordable housing requirement in redevelopment areas. She believes that this will set a precedent and is a means of granting a special exemption to a private developer to build luxury housing. She feels that Mr. Patel is increasing his profits at the expense of public money and non-profit charity intended to promote affordable housing. She feels that Mr. Patel should find creative ways to finance his project and should know how to operate and finance a successful hotel with his own resources.

COMMISSION ACTION

Moved by Commissioner Tallerico, seconded by Commissioner Smith, to close the public hearing. Motion carried 3-0.

Commissioner Tallerico made a motion to postpone action until other commissioners are present. No second motion.

Moved by Commissioner Kelly, seconded by Commissioner Tallerico, to adopt the findings as outlined in the staff report of April 3, 2007. Commissioner Smith then asked if the Findings that they are being asked to vote on are the Findings established in 1999. Ms. Mothershead explained that the Findings are a series of facts that the Council made in 1999 related to that EIR. Commissioner Smith then referred to the first paragraph of Findings on page 8 and, due to the impact of such a large building, took exception to the inclusion of the word “comfort” in the statement that they project “would not be detrimental to the health, safety, morals, comfort and general welfare of persons residing in…”

Commissioner Smith then made a motion to amend the Findings and strike the word “comfort” from the fourth line and to adopt the Amended Findings. Motion seconded by Commissioner Tallerico. Motion carried 3-0.

Moved by Commissioner Smith to affirm the Environmental Assessment. Commissioner Tallerico then asked what Environmental Assessment they were affirming. Ms Mothershead explained that they were affirming a Categorical Exemption for in-fill development. Commissioner Tallerico then seconded the motion. Motion carried 3-0.

Moved by Commissioner Smith, seconded by Commissioner Tallerico, to deny on the basis of the major subdivision and use permit for the addition of residential condominiums in this project. Motion carried by 2-1 roll call vote.

ADJOURNMENT:

Moved by Commissioner Tallerico, seconded by Commissioner Smith, to adjourn at 8:32 p.m.

Respectfully submitted,

Terry Sedik

Director of Economic and Community Development

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