The DDA includes the uses allowed and the quality of the buildings required. It also contractually obligates the Developer to meet a specified time schedule and details the obligations of both the Agency and the Developer during this Agreement and the consequences of not meeting the terms of the Agreement. Staff and the Developer have been negotiating the terms of the DDA for the last few months based on the direction given by the Agency at its meeting on June 16^th, 1998. The terms in this Agreement are consistent with the Agency approvals in June. Staff is recommending that the Board of the Redevelopment Agency authorize the Executive Director to execute the DDA.

The Downtown Specific Plan requires that the first redevelopment project in Block 1 triggers the requirement for a Master Plan for the Block. The Master Plan has three main elements; land use, development standards and design guidelines, and circulation and parking. The draft Master Plan will describe the requirements for Block I in particular to insure that the mix of uses, design of the buildings and the streetscapes are all compatible. The draft Master Plan is scheduled for Planning Commission and City Council review in September.

A summary of the resource team meetings is also included. The resource team decided at its August 5, 1998, meeting, to focus on the following activities:

• get more people interested in downtown revitalization;

• assist in community education and outreach on downtown issues;

• help get more input and feedback; and

• identify important issues and solutions to community concerns.

There were additional suggestions for the group's activities including reviewing the Mozart development's impact on traffic in the downtown area and discussing the architectural design of both the buildings and the public plaza. The group’s next meeting will be on September 2, 1998, and will include updates on downtown issues and developments, a review of the Downtown Specific Plan, and finalizing a work plan.

On April 7^th, 1998, the Redevelopment Agency Board (Agency) approved the concept of developing 450,000 square feet of class A office space in three uniquely identifiable buildings, two of which will be 5 stories in height and the third building being no more than six stories. Also approved in concept was a 120,000 square foot, 150 room, first class hotel, an underground parking structure, and a public plaza for the Evelyn/Mathilda corridor.

On June 16^th, 1998, the Agency approved the financial transaction of the Agency purchasing and selling land in the Evelyn Mathilda corridor. The financial terms of the agreement with the Mozart Development Company are based on the development program that was approved by the Agency Board. The terms are as follows:

• Mozart will design and construct a turnkey underground parking structure with a minimum of 320 parking spaces.

• Mozart will contribute $1 million towards the development of the public plaza and downtown identity elements.

• Mozart will reimburse the Agency for the costs of assembling the land up to an agreed upon cap.

The total financial package for the sale of the Agency-owned and assembled land is above the fair market value established by an independent appraiser based on the development program approved by the Agency in April. The proposal will provide sufficient funds to assemble the land, complete the replacement parking and contribute to the public plaza and downtown identity elements.

The Agency directed the Executive Director to prepare a Disposition and Development Agreement based on these terms to be reviewed by the Board in August.

In 1997 the Land Use and Transportation Element was adopted. Policy and Action statements relating to the downtown include:

C1.2.1 Promote downtown as a unique place that is interesting and accessible to the whole City and region.

In 1993, Council adopted the Downtown Specific Plan. The Downtown Specific Plan provides a vision for the future growth and development of the downtown and provides guidelines and standards for development.

There are a number of elements that are included in the DDA. These include:

The Agency agrees to sell assembled parcels of land to the developer for a specified price. The developer agrees to purchase the property at a specified price. The DDA includes a map of the development parcel as well as the conceptual plan.

The DDA clearly states the purchase price for the land, which is the same as was approved by the Agency in June. The total price for the sale of the land is in excess of $10 million, and consistent with fair market appraisal.

Phase I Office Site :

• $1,000,000 for public improvements such as the public plaza
• cost of purchase of the Acquisition Parcel owned by Dubrovnick Associates
• $138,000 in escrow for the parking garage

Hotel Site:

• $1,300,000 in escrow for the parking garage.

Phase II Office Site:

• Construction of City-owned underground parking garage with a minimum of 320 spaces

The sale of the land will happen in phases and each closing will occur just before the start of construction. Prior to each closing the following must have been completed to the satisfaction of the Agency: all Land Use Entitlements have been granted; building and construction permits for each phase have been obtained; evidence of financing and construction contracts are obtained; and for the hotel, evidence of a hotel operator satisfactory to the Agency has been committed.

The Mozart Development Company agrees to purchase the land for development, according to a specific scope of development, including the use of the property, design characteristics, and a time schedule for completion. Exhibit G in the DDA is the timeline for the completing the development.

The project described in the DDA is the same is as in the Background to this report and consistent with the description approved by the Agency on June 16^th, 1998. Since the approval in June, at the request of the Agency, a height limit has been clarified in the DDA. The height limit for the five story buildings is 69 feet to the top of the useable space. The six story building has a height limit of 83 feet to the top of the useable space. Consistent with the existing Municipal Code provisions which permits an additional 25 feet of height for the roof pitch and mechanical equipment including the elevator penthouse, the DDA has limited the height to an additional 20 feet above the useable space to allow for design flexibility. This establishes a not to exceed height limit of 89 feet for the 5 story buildings and 103 feet for the 6 story building. The general requirements further specify that each building will have a Class A quality and a unique identity and create a lively streetscape.

The DDA establishes a procedure for submission of plans and elevations of the buildings by the developer and it establishes the review process by the Agency and City to maintain tight control over quality of design and construction.

The next element in the DDA is the architectural review process that insures that the project described in the DDA is built to the quality standards expected. The application includes site plans, elevations, and a traffic study for all phases of the development. The review process will include four informal public review and comment sessions. The DDA states that within 120 days of signing the DDA the Developer shall apply to the City for Land Use Entitlements which will be reviewed by the Planning Commission and City Council. Concurrently the Agency must approve the submission as being consistent with the description of the project in the DDA. Within 6 months of receiving Land Use Entitlements, the Developer must submit construction drawings for the Phase I office and within 9 months all additional phases must be submitted for building and construction permits.

Provisions required by lenders are included to assure that the transactions can be financed. At each phase the Developer must provide evidence of sufficient funds through equity and/or loans committed for the purchase of the land and construction of the development. For the hotel, the developer must provide sufficient evidence that there is a committed hotel operator capable of operating the hotel in a manner that meets the project description. There will also be an operating covenant on the hotel for twenty years following completion to ensure that the hotel is maintained as a four star quality hotel. The Developer must also provide evidence of construction contracts with a reputable builder.

Covenants running with the land are imposed on the continued use of the property so that the property is used and maintained in accordance with the redevelopment plan. The use covenants in the DDA concentrate on the long term operation of the hotel to insure its continued operation as a 4 star hotel.

The rights and remedies of both parties in the event of a breach of the agreement are described, and the conditions to the performance of both parties are specifically described.

The Remedies section is the City’s best insurance that the development will be completed on time and as described. During the first 120 days after this Agreement has been executed the Developer can decide that the project is infeasible either financially or architecturally and the $100,000 deposit plus interest will be returned to the Developer.

Following this initial period, the deposit is at risk if the Developer fails to:

1. apply for Land use Entitlements plans within the time specified;
2. apply for building and construction permits plans within the time specified;
3. submit evidence of financing, hotel operator and construction contracts plans within the time specified;
4. accept conveyance of any portion of the site plans within the time specified or;
5. commence construction within the time specified;
6. decide not to build under the Land Use Entitlement Requirements.

If the Developer fails to remedy any of the above constraints and the Agreement is terminated prior to the closing of the Phase I office and/or hotel site, the Agency may retain the $100,000 deposit as liquidated damages. If the Developer completes the Phase I office site and closes on the hotel site but does not complete the hotel, the City may take possession of the hotel site and reimburse the Developer for the purchase cost less $400,000. If at any point the Developer suspends construction, or fails to complete construction, the Agency has the right to reenter and take possession of the site and improvements and use its best efforts to resell the property consistent with Agency’s obligations and the Redevelopment Plan. The Developer is reimbursed for reasonable costs expended and if the Agency cannot sell the property for costs, the Agency may sue the Developer for damages.

Exhibit G of the DDA includes a timetable for the development. It is anticipated that the whole schedule could take up to four years to complete. Construction time for each building could be 24 months with the second phase starting six months after the first phase. The approval process through public meetings, Land Use Entitlements and construction permits is expected to take almost a year from the execution of the DDA.

In summary, the DDA is an agreement that includes the terms of a land sale between the Agency and Mozart and sets out the envelope of the development. It includes the uses allowed and the quality of the buildings required. It also contractually obligates the Developer to meet a specified time schedule and details the obligations of both the Agency and the Developer during this Agreement and the consequences of not meeting the terms of the Agreement. Staff and the Developer have been negotiating the terms of the DDA for the last two months based on the direction given by the Agency at its meeting on June 16^th, 1998. The terms in this Agreement are consistent with the Agency approvals in June. Staff is recommending that the Board of the Redevelopment Agency authorize the Executive Director to execute the DDA as presented in Attachment A.

The Downtown Specific Plan requires that the first redevelopment project in Block 1 triggers the requirement for a Master Plan for the Block. The Master Plan has three main elements. These are land use, development standards and design guidelines, and circulation and parking. The land use section of the Master Plan will detail the future development potential in the Block including the types and the mix of uses that will be compatible with the new development as well as existing uses. The development standards and design guidelines will address lot size, building coverage and setbacks, architecture and landscaping and open space. The parking and circulation will address pedestrian and bicycle circulation, public transportation links and future parking requirements. The draft master plan is scheduled to be reviewed by the Planning Commission on September 14th, and by the City Council on September 22^, 1998.

At the Council meeting on June 16^th the idea of a resource team was endorsed as a way to have more public involvement in downtown issues. Invitations were sent to all the people who signed up at the downtown forum meetings held in May. A description of the resource team and an invitation to join was also included in the two editions of the Downtown News newsletter as well as in the last Quarterly Report.

There have been two resource team meetings in the last month. There are approximately twenty- five people who either have attended a meeting or have expressed interest in being part of the resource team. The first meeting was a discussion of the role of the resource team and an update of what had been happening with the Mathilda/Evelyn corridor development. At its August 5, 1998, meeting, the Sunnyvale Downtown Planning Resource Team decided to focus on the following activities:

• get more people interested in downtown revitalization;
• assist in community education and outreach on downtown issues;
• help get more input and feedback; and
• identify important issues and solutions to community concerns.

There was additional input regarding specific aspects of the role of the Resource Team. In particular, suggestions for the group's activities included reviewing the development's impact on traffic in the downtown area and discussing the architectural design of the buildings and the public spaces.

These suggestions, and all others from the Resource Team, will be considered at the next Resource Team meeting. The group decided to meet monthly and due to the availability of meeting rooms, currently the first Wednesday of the month has been chosen as the meeting date. The next meeting will be on Wednesday, September 2^nd at the Sunnyvale School Board Offices. The agenda for that meeting will include updates on downtown issues and developments, a review of the Downtown Specific Plan, and to finalize a detailed work plan.

There is both an immediate and longer-term fiscal impact from this proposal. In the short term, the Mozart proposal will provide sufficient funds to assemble the land, complete the replacement parking, and contribute $1 million to the public plaza and downtown identity elements. In the longer term the development will contribute over $1,000,000 annually in property taxes, approximately $0.5 million a year in Transient Occupancy Tax from the hotel, and an estimated $12 million in increased retail sales in the downtown, which would add $120,000 in sales tax to the City annually.

A notice of the review of the DDA by the Agency was published twice in the SUN. The members of the resource team were notified of the meeting and copies of the RTC were sent to all the resource team members.

Prepared by:

Dyane Matas
Housing & Neighborhood Preservation Officer

Reviewed by:

David S. Boesch, Jr.
Director, Community Development

Approved by:

Robert S. LaSala
Executive Director-Secretary

• Conceptual site plan (Mozart)
• One of each of the urban design elements
• Map of pedestrian linkages to other districts

• Allowed uses in the North of Washington District

• The use of the Special Development Permit to address lot size, building coverage, and setbacks for the North of Washington District (Block 1)
• Development Standards for Block 1 including:

• Visual continuity through the use of common architectural elements, open space, landscaping, and art

• Roof forms

• No more than half of the length of a façade as a blank wall or garage doors
• Architectural treatment along long spans of wall
• Front porches and stoops
• Residential vertical treatment
• Horizontal treatment incorporated at the street level using elements such as: bay windows, balconies, chimneys, awnings, loggias, cornices and eaves, sills and belt courses, and dormers
• Changes in the rhythm pattern of window openings, balconies, combinations of building material or other façade treatments from one module to the next.

• Street Furniture / Identity Elements – The City of Sunnyvale will establish specifications for urban design elements which will be installed per the Downtown Specific Plan
• Landscaping / Open Space / Plazas

• Sample of architectural details for Block 1 (perspective showing roof and wall articulation, windows, massing, building materials, etc.)
• Plaza details (perspective of plaza with seating, lighting, art, fountain, etc.)

• Pedestrian Circulation

• Majority of parking shall be in structures, underground, or at podiums, permitting buildings to be built above structured parking (Mozart proposal to have 1400 parking spaces under new office buildings and an additional underground structure for 320 spaces and 125 street-level spaces)