TO: Mayor and City Council

FROM: City Staff

SUBJECT: Recommendation to Approve the Preferred Site Use Alternative for 415 Pacific Coast Highway and Direct Staff to Initiate Next Steps Including Preparation of Environmental Impact Report, Documentation Drawings and Demolition Plan, Analysis of Operating Options, Negotiation of Beach Operating Agreement Extension with State, and Authorization of Mayor to Submit Letters of Support for Potential Funding Opportunities

INTRODUCTION

The project site is a five acre beach parcel located north of the Santa Monica Pier at 415 Pacific Coast Highway. Designed by the noted architect Julia Morgan, the original structures were constructed c. 1928 as the beachside estate of actress Marion Davies. The site consisted of a large main house, several guest houses, pool and court areas and seaside cabanas and dressing rooms.

The property was sold in the 1940's to a private party and converted to a hotel and beach club. The State purchased the property in 1960. Under the Beach Operating Agreement with the State, the City of Santa Monica operated the property and leased it to a beach club, the Sand and Sea Club. A proposal in the late 1980's for a hotel with some community facilities was defeated in a citywide referendum, and Proposition S was passed, limiting hotel and restaurant development in a new beach overlay district, which includes this site.

When the City assumed responsibility for the site in 1991, the facility was suffering from deferred maintenance and did not meet a number of building and safety codes. The City made capital improvements and repairs to the facility to ensure access for the disabled and code compliance in public use areas. The cabanas and the North House were closed due to code violations and disrepair. For two years the City operated the site as a public use summer beach facility and rented the banquet and reception areas to private parties and groups on a year-round basis. A long term planning process for the site was set to begin in January of 1994.

In July 1997, the City Council establishing a Working Group to develop a viable use for the use. The Working Group includes City Councilmembers Ken Genser and Michael Feinstein, who serve as co-chairs, and representatives of Landmarks Commission (Margot Alofsin), Planning Commission (Ken Breisch), Architectural Review Board (Sergio Zeballos), and Recreation and Parks Commission (Susan Wilson). The City Council also approved a contract with the urban design firm of Moule & Polyzoides for planning services.

The Working Group met on a biweekly basis from September 1997 through May 1998. Working Group meetings were well attended by the public and provided opportunity for public comment during each step of the process. The following summary briefly describes the steps taken to develop the recommended use for the site.

The recommended alternative restores the significant historic elements of the site: the North House will be restored as a meeting facility with a focus on community and non-profit activities. The Main Building (not part of the original estate but one of the earliest additions after conversion to hotel use - c. 1948) will be rehabilitated as a two-story banquet and meeting facility. Gardens and an outdoor terrace will enhance and functionally enclose this portion of the site. The pool, one of the few remaining pools designed by Julia Morgan, will be restored for recreational swim and a changing and shower facility will be added. The pool deck and adjacent park will serve as a gathering place for families. The beach square, adjacent to the existing restaurant, will establish an informal meeting place that draws from the beach path and volleyball courts, and the beach greens. Approximately 300 parking spaces will be provided in the north and south lots which will be connected by an access road. Since peak use of the site will occur during the day on summer weekends, the banquet and meeting facility will not be programmed at that time; banquets will be permitted during summer weekdays and at night on the weekends. Concession stands will offer beach equipment rentals and refreshments.

As indicated above, a parking demand and supply analysis was prepared for each alternative and the recommended plan, determining the number of spaces required for each use component. The analysis for the recommended plan use is included as Attachment D. The existing 168 spaces which currently serve beach goers and the restaurant are assumed to remain available for these public uses as well as the additional recreation amenities such as the pool and park space. The maximum number of spaces available on the site is about 300. With the exception of peak summer weekend days, the variation in use patterns provides for shared parking during most of the year since the beach/recreational parking spaces would be available for banquet and meeting users during non-peak periods. Since there is a projected shortfall of about 118 spaces if all uses were programmed simultaneously, it is recommended that no banquets be scheduled during summer weekend days. All other uses can be accommodated during the peak period.

Parking is provided in two lots connected by the existing frontage road. Parking management will allow for efficient use of spaces by directing Banquet and North House users and employees to the north lot and beach goers, recreation, and Visitor Center visitors to the south lot. A key point raised by the Working Group, boards and commissions, and the public is the importance of bringing visitors to the site by means other than personal vehicles. Several connections to the beach bike path are provided and the development of shuttle service from other parking lots and between visitor destinations such as the Santa Monica Pier and Third Street Promenade are viable strategies.

The recommended site use plan calls for the installation of a traffic signal or half signal on Pacific Coast Highway. The City has initiated discussions with CALTRANS about the need for traffic signal control along PCH at several locations, including 415 PCH. Over the past year, the PCH Task Force, convened by Assembly Member Sheila Kuehl and comprised of representatives from CALTRANS and other state and local agencies and governments from Los Angeles, Malibu, Santa Monica, and Topanga, has been working to solve many of the problems along PCH, including improving safety conditions. At a public meeting of the PCH Task Force held on June 10, 1999, the City presented information about the planning for a future public recreational facility at 415 PCH and subsequent preparation of an Environmental Impact Report that will include traffic signal warrants analysis.

To implement the recommended site use plan, there are a number of activities that would be undertaken over the next year to move the project forward. Staff would initiate the preparation of an Environmental Impact Report, documentation drawings and a demolition plan. In light of the continuing deterioration of the Main Building, staff will undertake temporary repairs to the roof of the Main Building, similar to what was done to the North House roof after the 1994 Northridge Earthquake. This work, which consists of removing the existing roof and installing a roof membrane, would be done in compliance with CEQA and would protect this element from further deterioration.

A comprehensive economic analysis has been conducted as part of the planning study. The analysis considered the total project capital cost and the operating costs and revenues of each program component to determine the total net operating revenue available to finance the project. This was done for each of the considered alternatives and is summarized for the recommended site use alternative in Attachment A.

As the Working Group studied various alternatives, a key consideration was finding a balance of maximum public access and financial self-sufficiency. While several alternatives maximized pubic access, i.e. Beach Park and Beach Recreation, the absence of a strong revenue generating component required a high level of City subsidy. The Meeting and Banquet Center alternative provided strong revenue generation but at a much lower level of public access. The Public Beach Club alternative presented revenue generating uncertainties since there are few public beach club models and the high construction costs for the parking structure needed to accommodate the peak summer parking demand increased the overall project cost. The hybrid developed by the Working Group includes a strong revenue generator (banquet and meeting center) to partially subsidize park and recreation uses which are usually fully subsidized by the City.

There are several factors that might affect the range of subsidy required. The use of the North House is focused on non-profit and community uses, assuming that 40% of meetings will be at a lower non-profit rate. By shifting the rate structure to reflect more for-profit meetings, the subsidy could be reduced by about $30,000, to $167,748. If the rate structure for the North House is oriented to more non-profit rates or if parking revenues are lower than expected, the subsidy might increase to as much $278,801 per year.

Another means to reduce or eliminate the annual subsidy is to seek grants and State or federal funding. The project could break-even on an annual basis with a total capital contribution of between $5.2 and $5.7 million. In order to act quickly if outside funding opportunities arise over the next year, staff seeks authorization for the Mayor to submit letters to funding agencies on behalf of the project.

There are several possible revenue sources that might cover the operating subsidy and/or construction costs. There are currently two State Park Bond Acts under consideration by the State Legislature. While the proposed bills do not specify projects, the 415 PCH plan appears to meet funding eligibility requirements. Staff will monitor progress on the legislation. Looking to internal funding sources, it may be possible to cover a portion of the subsidy by the Beach Fund if revenues continue at current levels, however availability of the Beach Fund will depend on other capital project needs. If consideration is given to raising the Transient Occupancy Tax (TOT), a portion of the increase might be dedicated to covering the annual operating subsidy.

No budget action is required at this time. There are sufficient funds currently appropriated in Accounts 11-740-511-20094-8900-99520 and 11-740-522-20099-8900-99520 to cover the costs for preparation of the Environmental Impact Report ($100,000), documentation drawings and demolition plan ($75,000), and temporary repairs to the Main Building ($50,000). According to a projected time line for the project, funds for the design and construction documents and demolition would be required in FY 2000-01, with construction funding anticipated in FY 2001-02.

Staff recommends that the City Council:

1. Approve the recommended site use alternative for 415 Pacific Coast Highway;

2. Direct staff to initiate the next steps in the planning and implementation process including the preparation of an Environmental Impact Report, documentation drawing and demolition plan, temporary repairs to the Main Building, and analysis of operating and management options;

3. Authorize the City Manager to negotiate the extension of the Beach Operating Agreement with the State Department of Parks and Recreation and;

4. Authorize the Mayor to submit letters on behalf of the City Council in support of funding opportunities for the 415 PCH project.

Attachments:
A: Recommended Site Use for 415 Pacific Coast Highway
B: Matrix of Potential Uses
C: Summary of Board and Commission Comments
D: Parking Demand and Supply Analysis

Prepared by:
Barbara Stinchfield, Director
Judith Meister, Beach Manager
Community and Cultural Services Department