By Jorge Casuso

June 22, 2020 -- (UPDATED) The City Council postponed until July 14 a decision on whether to continue negotiations on The Plaza mixed-use project Downtown after opponents submitted legal arguments to stop the proposed development on City owned land.

The proposed 357,000-square-foot mixed-use hotel development proposed by Clarett West has been on hold for four months after the Council voted to halt negotiations in February ("City Halts Negotiations on 'The Plaza' Project," February 26, 2020).

Rendering of proposed "The Plaza at Santa Monica" project (Courtesy of Clarett West)

The Council was concerned the proposed 99-year ground lease for the property at Fourth Street and Arizona Avenue could trigger California's expanded Surplus Land Act.

The Council has three choices on Tuesday, according planning staff.

It can direct the City manager to resume negotiations on the current proposal, which includes a 240-room luxury hotel, 106,800 square feet of creative workspace, approximately 40,000 square feet of open public space and 48 units of affordable housing.

The Council also can direct staff to "continue negotiating with the developer but on an alternative development proposal." Or it can cease negotiations and make the property available under the Surplus Land Act.

The latter alternative would require the City to make the 2.7-acre property available to "specified public agencies and housing sponsors" for low- and moderate income housing or open space.

Since negotiations were halted, the coronavirus shutdown has dealt a blow to Santa Monica's economy, resulting in a $150 million budget deficit, which could impact the Council's decision.

"While the potential applicability of the Surplus Land Act recently stalled negotiations, COVID-19 has also affected market trends and local conditions," staff wrote in its report to the Council.

"The pandemic has also had severe impacts on the City’s revenue streams, forcing reduction or elimination of various programs and services that community members value and rely upon," staff wrote.

On Monday, the Santa Monica Coalition for a Livable City (SMCLC) announced it had "served the City with legal objections to proceeding with plans to privatize public land at 4th and Arizona." (Coalition's Letter to the City Council)

Instead of following the Surplus Land Act, the slow-growth group wrote, "the City allowed the developer to pitch its own facts and arguments to the state agency that reviews compliance in a one-sided attempt to sidestep the law.

"The arguments made fundamentally misrepresent the law regarding contracts between cities and developers," the group wrote. "There is no valid agreement that exempts the City from complying with the Act."

The Coalition noted that the Council's goal to add nearly 9,000 housing units over the next eight years will require more recreational space ("Santa Monica Scrambles to Meet Housing Targets Other Cities Are Opposing," March 9, 2020).

"Public land should have a public use that the public wants," the Coalition said. "Santa Monicans are entitled to the same level of open space as is commonly found in all great cities."

The City's Recreation and Parks Commission agrees, recently "voting for the third time in four years to recommend the City Council scrap the Plaza Hotel Project and build a park on all or most of the site, which is public property," said Commissioner John C. Smith..

Frank Stephan, who heads Clarett West, has noted the company has been working with the City since it was chosen from among a dozen developers that responded to a Request for Proposal (RFP) for the site seven years ago.

"From our standpoint, this project has been a ten-year vision process by the City of Santa Monica," Stephan said. "It's been a real collaboration with the City."

Stephan noted that the project had been scaled back in 2017 at the request of the City Council by removing two floors, eliminating half of the creative work space and adding more public space ("Plaza at Santa Monica' Project Scaled Back," February 8, 2017).

On Sunday, former Mayor Dennis Zane expressed his support for the proposed project, arguing that the site is not adequate for a public park.

"This site has a very limited user base on three sides while the Promenade itself and Palisades Park are far more likely to attract potential users to the west," Zane wrote in a letter to the Council.

"It is not comparable to other beautiful urban parks in America which generally succeed because they have high-activity urban development on all sides, gaining their users and their energy from those populations."

Instead, the proposed project -- which should include more affordable housing -- "can be crucial to the success of a city, both economically and socially and in its quest to address the many needs of its residents," Zane wrote.