CITY COUNCIL AGENDA ITEM NO. 5

CITY COUNCIL AGENDA ITEM NO. 5

Meeting Date: June 28, 2011 Subject/Title: Memorandum Regarding Sunset Industrial Complex Prepared by: Casey McCann, Community Development Director Submitted by: Donna Landeros, City Manager RECOMMENDATION Accept the attached memorandum for informational purposes. PREVIOUS ACTION Previous actions regarding this matter are detailed in the attached memorandum. PROJECT DESCRIPTION The purpose of this item is to provide the City Council with information about the Sunset Industrial Complex. BACKGROUND The background and history of this matter are described in the attached memorandum. ANALYSIS The analysis of this matter is included in the attached memorandum. FISCAL IMPACT This report provides an informational overview of the Sunset Industrial Complex and does not involve specific fiscal impacts to the City. Attachment

1. Memorandum Regarding Sunset Industrial Complex

MEMORANDUM

Date: June 28, 2011

To: Mayor Taylor and City Council Members

From: Casey McCann, Community Development Director

Subject: Sunset Industrial Complex – An Overview Executive Summary The purpose of this memorandum is to provide the City Council with an overview regarding the development of Sunset Industrial Complex (SIC) and the subsequent amendments to its zoning regulations. A recent article in the Contra Costa Times concluded that required conditional use permit (CUP) application fees were not paid by property owners or business tenants during the prolonged period while the issue of land use violations at SIC was being resolved. Staff proposes the following considerations:

• From the City’s perspective, the primary issue affecting SIC was land use and not fee collection.

• With regard to zoning, the City collects fees based on the type of permit that is required. At the time, the City could not have known which businesses would be required to obtain a CUP until the final amendments had been made to the Planned Development (PD) zoning. Therefore, CUP fees were not required to be collected at that time.

• When possible violations were identified in 2004, staff immediately ascertained that there were no egregious land use conflicts affecting either neighboring properties or other businesses within the complex. It was also determined that none of the alleged violations created any significant threat to life safety.

• This issue affected numerous businesses at the complex, not one or two. By July of 2008, almost 20 percent of the nearly 50 businesses at the complex were of questionable compliance with the PD zoning.

• Staff reported on this matter to the Land Use and Development Committee (Becnel/Taylor). The Committee directed staff to consider amendments to the SIC zoning and to not take expeditious action to have any of the violating businesses removed or relocated until after the PD zoning had been thoroughly analyzed and potential amendments to the zoning regulations considered.

• The City Council ultimately amended the PD zoning for SIC, clarifying which uses would require a CUP and those uses which are prohibited. One business was determined to need a CUP. It subsequently obtained the required CUP and paid the required fee. Nine other businesses were determined to be prohibited by the PD zoning – not consistent with the industrial land use theme of this complex. These businesses were allowed three years

– until May 2013- to move from SIC, preferably to another location in the city of Brentwood.

• While these events were occurring, Council Member Brockman was a property owner at SIC with tenants in purported violation of the PD zoning. At no time did Mr. Brockman in his role as a Council Member participate in these deliberations or influence staff regarding resolution of the PD amendments.

Background – Creation of the Sunset Industrial Complex The City purchased a 40-acre parcel at the northeast corner of Tresch and Sunset Roads in 1999 to: expand the adjacent Sunset Park sports complex, and to implement an economic development strategy by zoning the remaining acres and developing the site as an industrial complex. The City and the Redevelopment Agency developed SIC on 27 acres with the intention to accommodate small and mid-sized industrial businesses. SIC was an offshoot of an economic development strategy, envisioned by the City and the Agency to accomplish four goals.

• Attract new and retain existing industrial businesses by providing a well-planned and established industrial area

• Provide an area where new industrial uses could be surrounded by other industrial uses, avoiding land use conflicts

• Generate investor and developer market confidence in Brentwood, where there was no long-term market history for the types of industrial uses envisioned for SIC

• Provide relocation opportunities for industrial-type businesses adjoining Brentwood Boulevard, a key component to the long term revitalization of this important thoroughfare

In partnership with the City, the Agency funded nearly $4 million for the installation of infrastructure, including sewer, water, streets, sidewalks and landscaped edges, as well as the development of ready-to-build pads. From 2002 to 2004, 17 parcels were mapped, infrastructure was constructed, and sales of parcels commenced. Planned Development 56 Zoning SIC is zoned under Planned Development PD-56. The PD zoning standards established the intent and purpose of the SIC: “the primary character of the area is intended to be a mix of light, medium and heavy industrial uses to serve the needs of the Brentwood community.” The complex was intended for employees and customers of warehouse, manufacturing, distribution, wholesale, industrial, and construction-type businesses. The complex was not intended for use by the general public, such as a neighborhood or regional shopping center or as an office complex. Public disclosure of the zoning standards made through various methods: request for purchase proposals, purchase agreements, letters and continuing discussions with the buyers. The buyers were made aware of the zoning at the time of their purchase by staff. PD-56 is delineated with three subareas. Subarea A consists of 5.6 acres along the north side of Sunset Road at the entrance to the complex. The permitted and conditional uses for this subarea allow light industrial and limited retail. Subarea B has 8.6 acres and is intended for light to medium industrial. It fronts the west side of Elkins Way and includes the parcels fronting Carrol Court. Subarea C is intended for medium and heavier industrial uses. Its 14.6 acres are located

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along the east edge and northern portions of the complex, adjoining Sunset Park and the City corporation yard, including the parcels fronting Beatrice Court. The PD-56 parking requirements provided for industrial uses, taking into account large floor areas and small occupancy counts. The parking requirements for SIC are therefore significantly lower than requirements for shopping centers, services, executive offices, salons, and recreational uses. Non-Conforming Businesses Ten parcels closed escrow at SIC during 2004. The buyers’ qualifications and type of business were primary considerations in the selection decisions made by the Council. Early businesses that moved to the complex included fire sprinkler system design, customized granite and stone manufacturing, customized cabinetry making, construction material supply, concrete batch plant, concrete finishing, and contracting for plumbing, fencing, masonry, and engineering. These are the types of uses originally intended for the complex, especially for Subareas B and C. City and Agency staff worked closely with local businesses to help establish their operations at SIC. Despite reminders regarding the allowed uses, numerous businesses were established in the complex which appeared to be in violation of the PD zoning. One of the first major violations staff dealt with was EcoWater Systems, located at 380 Carrol Court. EcoWater owns a two-story building and occupies the ground floor, where it operates its water processing plant. In 2004, EcoWater leased the second floor to several prohibited businesses, including a personal fitness trainer, insurance adjuster, appraiser, employment placement firm, computer-aided design service, and mortgage broker. After staff notified EcoWater of these violations and possible abatement actions, a hands-off approach was agreed to be taken until the overall zoning issues of the complex could be resolved. On November 8, 2004, staff sent a letter to the property owners, reminding them of the permitted and conditionally permitted uses. The PD-56 ordinance was attached. Several of businesses at SIC were identified as being in questionable conformance with the zoning, including three at the property owned by Mr. Brockman. It should be noted that Mr. Brockman was not a Council Member at this time. His tenure on the Council started in June of 2005. Prior to then, he was a Planning Commissioners from January 9, 2001 to December 31, 2002. On November 12, 2004 staff received a letter from Mr. Brockman indicating that he believed dance studios, karate studios or recreational uses were allowed, because of the intent paragraph on the first page of the PD ordinance. After an in-house staff meeting to assess options, the Community Development Director agreed that PD-56 should be amended to conditionally permit these types of uses as a means to clarify the intent section. Zoning Issues On December 13, 2005, the City Council unanimously adopted a resolution (Brockman recused) amending the PD-56 zoning regulations, specifically allowing the following uses in Subarea A with a CUP: “indoor recreational facilities including, but not limited to, a dance studio, gymnastics facility, or fitness facility.” The second reading of this ordinance amendment was

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adopted on January 10, 2006. At this time, the full extent of future nonconforming uses at the entire complex was not known. After adoption of the zoning amendment, two businesses at Mr. Brockman’s building obtained CUPs: Curves fitness facility (approved on December 20, 2005) and Shutters restaurant (approved on April 18, 2006). Another letter was sent by staff to the property owners and brokers on July 17, 2006 reminding them of the uses provided by the newly revised PD-56 regulations. The letter stated that a “limited amount of retail use, café and recreational uses, such as dance and karate studios, are allowed in Sub Area A.” This was the last letter sent to buyers, due to the City Attorney’s recommendation that staff should not selectively enforce uses specifically at SIC without also enforcing similar uses at all of the other industrial parks in the city, including Harvest Business Park. Later, in its report to the Land Use & Development Committee in December of 2007, staff noted that Harvest Business Park (HBP) is also zoned Planned Development with three subareas, each having its own selection of permitted and conditional uses. HBP is distinct from SIC. SIC is designated Industrial by the general plan. It was created to accommodate primarily industrial uses in Subareas B and C, with the allowance of specified non-industrial uses in Subarea A. HBP is not an industrial complex. It is designated Mixed Use Business Park by the general plan and the PD zoning for HBP provides for thoroughfare commercial, commercial office, and limited light industrial office uses on its nearly 70 total acres. The survey of HBP revealed a total of eleven businesses that either required a CUP or were not allowed under the PD-12 zoning. All of these businesses were located within Subarea C. Among the prohibited businesses were a dance studio, day spa, nail salon, barber shop, and martial arts academy. During this time frame, staff also spent considerable time and effort abating an illegal outdoor auto sales business (note: indoor auto sales are allowed). Regarding SIC, when the land use violations were first observed, staff expressed concerns that, since SIC was a City and Agency project, and SIC buyers and developers paid industrial fees - not office fees – the property owners should not be allowed to use SIC space for non-permitted uses. Director Sword stated that the PD zoning for Harvest Business Park could be amended to allow existing uses to remain, leaving SIC as the only industrial park in the city that needed revision and possible subsequent enforcement. In 2006, Code Enforcement staff surveyed all the businesses at SIC to identify whether or not businesses were using 50 percent or more space for office, and if appropriate permits were approved. The survey was completed in the fall of 2006. Mr. Brockman’s property was on the list of uses identified as not having the necessary conditional use permits for some of his leased businesses. Director Sword spoke to Mr. Brockman in early 2007 regarding compliance with the CUP requirements. For the next several months, staff surveyed the conditions at both SIC and at Harvest Industrial Park. Strategic options were prepared for consideration by the Land Use & Development Committee.

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Land Use & Development Committee Deliberations In late December of 2007, staff presented land use strategies for both the SIC and the Harvest Industrial Park to the Land Use & Development Committee. The committee directed staff to report back with additional information and analysis:

• Planned uses of undeveloped properties in the city • Pending or potential business and industrial projects in the city • Locations zoned appropriately for businesses that might need to be relocated • Square footages at SIC and at Harvest Business Park • Current vacancy and lease rates for business park and industrial uses in the city • CC&Rs for SIC and at Harvest Business Park • Owner-occupied versus rental uses • Weigh options for mitigating the serious land use violations while being sensitive to

property owners and tenants • Ascertain local context, review the proposed Equus project adjoining Harvest Business

Park and any other possible projects near each of the Sunset and Harvest sites In July of 2008, staff presented updated information and analysis to the committee. Major policy alternatives were discussed and, again, numerous nonconforming businesses in each of the three Subareas were identified. The committee re-affirmed the industrial intent and purpose of SIC and recommended that PD-56 be amended to include all existing uses that met the original intent of the complex, by:

• Allowing construction, industrial, manufacturing, fabricating, and auto-related uses (except vehicle sales) in all Subareas

• Allowing 100 percent office rather than the existing 50 percent office for intended uses, and require a CUP to monitor on-site parking availability

• Adding prohibited uses, including financial institutions, restaurants, personal services (e.g. beauty salons), educational institutions, day care centers, indoor playrooms, secular and non-secular assemblage

• Allowing a three year (36 month) amortization period for violating uses to relocate and for nonconforming uses to obtain a CUP

Staff completed the provisions and brought them back to the committee for a final review. The committee was satisfied with the changes to the draft ordinance and recommended that it be forwarded to the Planning Commission for recommendation and to the City Council for approval. Adoption of PD Amendment The Planning Commission recommended approval of the draft ordinance at its February 16, 2010 meeting. The Planning Commission amended the ordinance to allow day care facilities as an ancillary use to a conditionally permitted indoor recreational facility only in Subarea A.

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On April 27, 2010, the City Council held a public hearing and adopted the PD-56 amendments. The second reading was adopted on May 11th. On March 15, 2011, Black Diamond Gymnastics was granted a CUP to allow a combined use facility for gymnastics, cheerleading, dance studio, and day care at 2015 Elkins Way. Attachments

• Site Map • Original PD-56 Ordinance • November 8, 2004 Letter to SIC Owners and Buyers • November 12, 2004 Letter from Robert Brockman • December 13, 2005 City Council Staff Report • July 17, 2006 Letter to SIC Owners and Buyers • Survey of Businesses at SIC – 2007 • Presentation to the Land Use & Development Committee – December 20, 2007 • Land Use & Development Committee Meeting Summary of December 20, 2007 • Survey of Businesses at SIC – 2008 • Presentation to the Land Use & Development Committee – July 15, 2008 • Land Use & Development Committee Meeting Summary of July 15, 2008 • Survey of Businesses at SIC – 2010 • April 27, 2010 City Council Staff Report • PD-56 Ordinance (current version)