Receive a report and provide direction to staff on generating a request for proposals (RFP) for a public/private partnership to build a parking structure and mixed-use development at the north lot of the Sunset Center

Receive a report and provide direction to staff on generating a request for proposals (RFP) for a public/private partnership to build a parking structure and mixed-use development at the north lot of the Sunset Center.

Executive Summary:

Recently, the City has again begun to explore ways to improve parking throughout town.  This effort has included conversations about the construction of a two-level parking structure at the north lot of the Sunset Center, with mixed-use development on top.  If the City is interested in pursuing this construction project right now, the first step in the process would be to craft a request for proposals (RFP) to find a private developer to partner with.  This report is intended to provide a brief overview of what a project could look like, potential benefits and challenges, and most importantly facilitate a “yes” or “no” direction from Council as to whether staff should further pursue developing an RFP for a parking structure at the north lot of the Sunset Center at this time.   

Discussion:

The number of visitors to Carmel-by-the-Sea increases each year, and will likely continue to do so as the world emerges from the global pandemic.  Although these guests are vital to the prosperity of the village, there are also impacts which come during peak times like weekends and holidays.  One of the most notable impacts is parking availability in the commercial districts of the City, which in turn impacts parking in the adjacent residential neighborhoods.  Recently, the City Council directed staff to once again begin exploring a paid parking program as a means to help manage transportation and parking in and around town, and also as a way to generate additional revenue for the City.  As part of early conversations regarding this program, the idea of a parking structure at the north lot of the Sunset Center was re-introduced as part of the overall solution.  The concept discussed briefly by Council included two levels of parking, with a portion of the construction sunk into the ground.  The top level of the structure would provide an opportunity for a mixed-use building(s) that would include commercial spaces at the street level and residences on the second story.  Given the scope of a project like this, a public/private partnership could provide an efficient and effective way to maximize the potential of the site.  If the City Council is inclined to pursue the concept of a parking structure at this time, the next step in the process would be to prepare and release an RFP to find a private partner.   

At this point in time, staff is only seeking a “yes” or “no” direction from the City Council as to whether to draft and launch a request for proposals.  Although very early in the process, there are still several things for the Council to consider when deciding whether to begin the RFP process for a parking structure.  These considerations include, but are not limited to:         

• Scope of project – Early conversations with City Council yielded the scope that was outlined earlier in the report (2-level, mixed use).  If the Council chooses to pursue an RFP, and also wishes to modify the parameters of the project, specific direction should be given to staff at this point so that the RFP can be appropriately crafted.
• Increased parking capacity – Currently, the north lot at the Sunset Center contains approximately 135 parking spaces.  Therefore, a two-story structure could double that to 270, or possibly even more.  This increased capacity would not only help relieve parking stress on the surrounding residential neighborhoods during large events at the Sunset Center, but could also play a role in the City’s paid parking program.  The additional spaces could be utilized for things like daytime employee-only parking to free up prime commercial spaces for downtown patrons.  This additional parking resource could play a key role in a successful paid parking program, where other attempts have failed in the past due to no solution for downtown employees.
• Increased housing – A mixed use development at the north lot could provide badly needed apartment-style housing on the second floor of the development.  Although these units may not be able to be required to be “affordable” depending on the size/density of the project, they could still help to increase the overall housing stock in the village.  Apartments by nature are typically more affordable than single family residences just given their size and configuration, or what is known as “affordable by design.”
• Public/private partnership – Development of a multi-level parking structure with a mixed-use element on top would be a major project in the City of Carmel-by-the-Sea.  If the council wishes to move forward with an RFP, it could be crafted to seek out a public/private partnership for construction of the project.  These types of partnerships include advantages like: reduced financial and legal risk to the City, direct contractual control over project delivery, and expanded access to private capital and resources/technology.  It is worth noting though, that partnering with a private entity does require diligent oversight of contract obligations, managing cost-overruns, and careful consideration during the award process since the pool of qualified candidates can sometimes be very small.
• Staff time/Council priorities – Although still a somewhat involved process, the writing and release of an RFP for this project would be a relatively simple endeavor.  However, once responses were received, and the process for selecting a developer and finalizing contracts began, the staff workload associated with this project would increase significantly.  In addition, processing permits through public outreach meetings/hearings and coordinating the actual construction project itself would also be a large undertaking.  At the May 12, 2021 strategic planning retreat, the City Council discussed the five (5) major priority areas (financial stability, community engagement, etc.) as well as a number of “added priorities” (outdoor dining, forest management plan, affordable housing plan, paid parking program, etc.).  As part of considering whether to proceed with an RFP at this point, the Council should weigh this project along with these other previously discussed priorities, which are currently slated to be reported on at the September 7 City Council Agenda. 
• CEQA/environmental review - At this stage, since a project scope has not been defined, it is not possible to know the level of environmental review and the type of CEQA documentation that will need to be prepared (Exemption, Initial Study, EIR, etc.).  However, given the potential for new residential and commercial development where there previously was none, it is likely that there will need to be a higher level of environmental analysis. 

• Construction impacts to surrounding area - Although entirely controllable through a construction management plan, the Council should be aware that a project of this scope would have construction impacts to the surrounding area including displacement of cars deeper into residential neighborhoods from events at the Sunset Center, noise, dust, and traffic flow.  These impacts are inherent with any project, but they are worth noting given the scale of this project and with other major development projects planned around town in the near future.

Direction:

Staff is seeking the following direction:

1. Is the City Council interested (Yes/No) in producing an RFP for a public/private partnership to construct a parking structure and mixed use development at the north lot of the Sunset Center?
2. If “yes”, does the Council have any guidance related to the content of the RFP based on the information presented in this staff report?

Environmental Review:

Not Applicable.  As a report and request for direction only, this action will not result in a direct or indirect physical change in the environment.  Nothing is being approved by the City Council at this point.  Therefore, the action does not qualify as a “project” as defined in section 15378 of the CEQA Guidelines, and is not subject to environmental review.

Direction from Council on whether to produce an RFP for a public/private partnership to construct a parking structure and mixed use development at the north lot of the Sunset Center at this time has no fiscal impacts on the City.  Any staff time associated with this work would be part of the adopted City Budget.  Once a recommended private partner was identified through the RFP process, a draft contract would be presented to the City Council for approval.  Any fiscal impacts associated with this agreement would be discussed in future reports when a contract was being considered for approval.