Staff recommends that the City Council hold a public hearing and introduce an Ordinance (Attachment 1) approving Development Agreement (DA-22-001) for the Windflower – Block 2 project, for the purpose of extending project approvals that were previously approved by the City Council on November 14, 2017. See Attachment 1 – Exhibit A for the text of the Development Agreement.  The project includes the development of 443 multi-family rental units.

The Planning Commission recommended approval of this application to the City Council at its February 17, 2022 meeting on a 5-0 vote.  Attached to this staff report is the Planning Commission Staff Report (Attachment 2), Draft Planning Commission Meeting Minutes (Attachment 3), and Planning Commission Resolution Recommending Approval of the Development Agreement (DA-22-001) (Attachment 4).  

The Strategic Plan identified the build out of the Station District as a priority:

• Goal C. Economic, Community Development and Public Safety – Institute forward-thinking business, land use development, housing, social services, and public safety strategies that promote community growth and innovation.

• Strategy 3 – Facilitate the build out of the greater Station District Area through the construction of the Quarry Lakes Parkway, upgrades to the BART station, and completion of the pedestrian rail crossing and the sale and development of City-owned land.

The applicant, Windflower Properties, LLC, has submitted a request to enter into a Development Agreement with the City to extend the project approvals for the Windflower 2 project to be coterminous with the deadline for commencement of construction provided in the Disposition and Development.  The project consists of development on Block 2 of the Station District area for a high-density, multi-family development. Exhibit A to Attachment 1 includes the draft Development Agreement language. 

The Windflower 2 project was approved by Planning Commission on October 19, 2017, and subsequently by City Council on November 14, 2017.  The 3.5-acre project site referred to as “Block 2” is located along 11th Street. The City Council Resolution approving the project is attached (Attachment 5). See below for an overview of the project approvals. The City previously approved disposition of B lock 2 to the applicant pursuant to a Disposition and Development Agreement approved in 2017 (the “DDA”).  In addition, the following were approved:

1. SD-14-003 (Site Development Review) to allow the development of 443 new, market-rate, multi-family dwelling units (studios, one bedroom and two bedrooms, including 11 residential lofts and 13 live/work units) within two buildings, a six-level parking structure with 460 parking spaces, 5,088 square feet of ground floor retail space, public and private courtyards, and related site improvements and amenities. 

2. UP-14-006 (Conditional Use Permit) to allow: (a) a mixed-use development within the CSMU zoning district; (b) building height greater than 65 feet; (c) high-density residential uses and live/work units within the CSMU zoning district; and(d) reduction to storage requirements.

The original projects approvals were granted for one-year and were set to expire on November 14, 2018. The applicant obtained two, one-year extension extending the approvals to November 14, 2020. Per AB1561, which extended the life of housing entitlements in effect before March 4, 2020, the project approvals were extended an additional 18 months and are now set to expire on May 14, 2022 unless building permits have been issued, all fees paid, and construction commences. 

Since the approvals were granted, the applicant has been diligently working on moving the project forward onto the construction phase. The applicant has provided feedback that due to decreasing rents and rising construction and labor costs, attributed in part, to the COVID pandemic, there have been challenges securing financing.

Development Agreements (DA) are voluntary agreements commonly used for major projects that will be phased over multiple years to provide some degree of certainty to the applicant regarding the policies, regulations, and fees that will be applied to the project in return for the provision of public benefits to the City. Most significantly, a DA vests land use approval for a specific period. Per Union City Municipal Code (UCMC) Chapter 18.104, the DA is subject to review and recommendation by the Planning Commission and a final decision by the City Council. DAs are adopted by ordinance and require a second reading.

Development Agreement Contents

Extension of Approvals

The City and project developer previously entered into a Disposition and Development Agreement (DDA) dated, June 13, 2017, that provides for disposition of the Block 2 property to the applicant for the development of the project, subject to the terms and conditions contained in the DDA.   The City and developer desire to ensure that the project approvals do not expire before the December 31, 2024 deadline for the commencement of construction included in the DDA to ensure that the Project can proceed as approved by the City Council. 

DA Term

The term of the DA is five years.  This is separate from the date of December 31, 2024 which is when construction must commence. The reason for this is that there are certain provisions of the DA, such as those related to the Community Art Space, which could extend beyond the commencement of construction.  This language is not meant to extend the project approvals beyond that of the DDA. 

Public Art 

This project is required to comply with the Art in Public Places Program (UCMC Chapter 12.40), which requires a contribution of one percent of the project cost toward public art, with one-third of the one percent required as a contribution to the Union City Public Art Fund. The current approvals from 2017 reference the applicant providing an art installation that would also serve as screening for the Cheeves Way garage. 

The DA includes wording that allows the City and the developer to approve an arrangement similar to the City’s use of Studio 11 located in Union Flats, which is an apartment building located adjacent to the project site constructed by the applicant.  The arrangement allows for the applicant to satisfy the project’s public art requirements by providing the City with the right to use an approximate 2,000 sq. ft. portion of the building’s ground floor space located on 11th Street as a Community Art Space for display of artworks, classes and workshops, and public events. If this alternative is agreed upon by the City and the Developer, the DA requires the City and applicant to enter into a Community Art Agreement to address the obligations of each party with respect to the installation of interior improvements, utility charges, maintenance, repairs, and other expenses relating to the space.  The value of any below-market rate rent for the Community Art Space, as mutually agreed, and the cost of any Developer obligations regarding installation of improvements, maintenance, utilities, and other expenses for the space shall be equivalent in value to the Art Fee that Developer would otherwise be obligated to pay pursuant to Union City Municipal Code Chapter 12.40. Prior to issuance of the first building permit for the project, if the City and Developer are unable to mutually agree upon the terms of the Community Art Agreement, consistent with the provisions listed in Chapter 12.40 of the Union City Municipal Code, Developer will be required to either (i) pay the applicable Art Fee to City, or (ii) submit a proposal for public art to the City,  receive approval by the City’s Art and Culture Commission. If the City and Developer are unable to mutually agree upon the terms of the Community Art Agreement, the building area that was to be used as Community Art Space shall revert to use identified in the project approvals.

Project Amendments /Subsequent Approvals. 

Section 1.5.4 of the DA clarifies that the DA provisions would extend to any subsequent project approvals, which is typical language. Section 1.5.5 was added at the request of the applicant and provides some background on a future request for modifications to the project that the applicant is currently exploring.

The applicant has indicated that they intend to apply for modifications to the existing Site Development Review and the existing Use Permit approvals to ensure project feasibility. These include the relocation of certain amenities within the site, the reconfiguration of parking facilities, a reduction in height of certain buildings, a modification to the scope of on-site parking and storage, and changes to unit types and the total number of residential units, provided that the total number of residential units will not exceed 504 units (which is the maximum unit count allowed by the DDA). The applicant has presented staff with some concept drawings but, has not yet submitted a project application. When the applicant is ready to move forward on the proposed amendments, the proposed modification to the existing approvals will be brought back to the Planning Commission and City Council for consideration. The DA is being presented for approval prior to presentation of a request for consideration of project approval modifications so that the existing approvals will not expire in advance of such modification request.

The applicant requested information regarding anticipated requests for modifications to be included in the DA in order to alert the Planning Commission and City Council of the applicant’s intent to apply for modifications to the existing approvals as they will be the decision makers reviewing the modifications. The DA wording clarifies that nothing in the document is interpreted as a promise or representation regarding the City’s review of the anticipated modifications or as otherwise limiting the City’s discretion to approve, deny, or modify an application to modify the existing Site Development Review and the existing Use Permit for the Project.

Section 4.4 also addresses future amendments to project approvals and outlines the process. The DA categorizes future amendments as “major” (i.e., requires review by the City Council and Planning Commission), and “minor (i.e., can be approved by Economic and Community Development Director).  This is also typical language but the specifics of what constitutes a major versus a minor amendment was informed by applicable Zoning Ordinance provisions as well as discussions between staff and the applicant. Major amendments are defined as modifications that affects (a) the Term of the DA, (b) permitted uses of the property, (c) provisions for reservation or dedication of land, (d) the density or intensity of use of the property, (e) the maximum height or size of proposed buildings, (f) the location and maintenance of on-site or off-site public improvements, (g) any exceptions to applicable development standards as allowed by Section 18.38.250 of the Union City Municipal Code, or (h) such other modification Economic & Community Development Director reasonably determines to constitute a significant change in the Project. 

Minor amendments address a variety of items including minor alterations in vehicle circulation patterns or vehicle access points, variations in the location of structures that do not substantially alter the design concepts of the project approvals, minor changes to architectural features required to comply with applicable Building Code provisions or to address supply issues, substitution of comparable landscaping for any landscaping shown on any development plan or landscape plan, variations in the location or installation of utilities and other infrastructure connections and facilities that do not substantially alter design concepts of the project approvals, and minor adjustments to approved building façade colors and/or exterior materials, courtyard dimensions, and location and square footage of common area.

The Planning Commission recommended approval of this application to the City Council at its February 17, 2022 meeting on a 5-0 vote.  Attached to this staff report is the Planning Commission Staff Report (Attachment 2), Draft Planning Commission Meeting Minutes (Attachment 3), and Planning Commission Resolution Recommending Approval of the Development Agreement (DA-22-001) (Attachment 4).  

There is no impact to the General Fund. Per Sec. 2.6 of the DA, the applicant/developer is responsible for payment of fees related to the project approvals or subsequent approvals. These fees are established as either Processing Fees to cover the cost of City review of applications, or Impact Fees assessed to the project defraying the cost of providing City services in relation to the development impacts of the project. The applicant/developer shall pay the Impact Fees at a rate established at the time the fee is assessed and payable, per requirements established in the UCMC.

Staff recommends that the City Council hold a public hearing and introduce an Ordinance (Attachment 1) approving Development Agreement (DA-22-001) for the Windflower – Block 2 project, for the purpose of extending project approvals that were previously approved by the City Council on November 14, 2017.