HomeMy WebLinkAbout15 DOWNTOWN COMMERCIAL CORE AND RED HILL AVENUE SPECIFIC PLAN REASESSMENT REPORTDocuSign Envelope ID: 63BOC69D-1BFD-4B3F-8FDF-D6C835E73DF6
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3,5
MEETING DATE: DECEMBER 5, 2023
Agenda Item 15
Reviewed; DS
City Manager
Finance Director
TO: HONORABLE MAYOR AND MEMBERS OF THE CITY COUNCIL
FROM: NICOLE BERNARD, ACTING CITY MANAGER
SUBJECT: DOWNTOWN COMMERCIAL CORE AND RED HILL AVENUE SPECIFIC
PLAN REASESSMENT REPORT
SUMMARY:
As directed by the City Council during the City's Midpoint Strategic Plan Update in 2021, an
analysis of the Downtown Commercial Core Specific Plan (DCCSP) and the Red Hill Avenue
Specific Plan (RHASP) was initiated in 2022 to identify potential plan revisions that align
development regulations with the real estate market. The City contracted with Economic
Planning Systems (EPS), Inc. to assess the DCCSP and RHASP ("Plan Areas") and provide
a summary of findings and policy options. EPS presented their initial report to the Mayor's
Economic Development Ad -Hoc Committee, comprised of Mayor Austin Lumbard and
Councilmember Ryan Gallagher,
The following recommendations are presented to the City Council on behalf of the Mayor's
Economic Development Ad -Hoc Committee.
RECOMMENDATION:
That the City Council:
1. Receive and file the Downtown Commercial Core and Red Hill Avenue Specific Plan
Reassessment report prepared by Economic Planning Systems, Inc.;
2. Direct staff to prepare resolutions for applicable policy options identified in the Ad -Hoc
Committee's recommendation list, and agendize those for the City Council
consideration on or before February 20, 2024;
3. Direct staff to prepare an agenda report further describing and outlining the scope of
amendments to the Specific Plans and/or Tustin City Code for applicable policy
options identified in the Ad -Hoc recommendation list, on or before March 19, 2024;
and,
4. Direct staff to prepare an agenda report further describing and outlining the strategy
initiatives identified in the Ad -Hoc recommendation list, on or before April 16, 2024,
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City Council Report
December 5, 2023
Page 2
FISCAL IMPACT:
The cost associated with the preparation of the attached report has been appropriated in the
budget. Future fiscal impact(s) arising from any actions taken will be dependent on the actions
taken by the City Council, and a formal assessment of fiscal impact will be completed at the
time those actions are considered.
CORRELATION TO THE STRATEGIC PLAN:
The proposed project furthers the objectives of the following Strategic Plan goal:
Goal A — Economic and Neighborhood Development: Enable business opportunities and job
development, and enhance the vibrancy and quality of life in all neighborhoods and areas of
the community.
DISCUSSION:
The report prepared by EPS (attached) summarizes the findings and policy options
developed as part of the Specific Plan Reassessment Study ("Study") conducted at the
direction of the City Council. The Study's objective is to identify barriers to real estate
investment and redevelopment in the Downtown Commercial Core Specific Plan (DCCSP)
and Red Hill Avenue Specific Plan (RHASP) areas, and propose planning and policy
solutions to overcome the barriers.
The Study Includes:
• Market Position and Evaluation
• Policy Context
• Feasibility Analysis
• Policy Options and Implementation Workplan
• Parking Policy Context and Strategies
As part of the Study process, EPS engaged with stakeholders including Tustin developers,
property owners, City Councilmembers, and Planning Commissioners to solicit input
regarding the opportunities and constraints to development in Tustin, and particularly within
the Study areas. The Study was presented to the Ad -Hoc Committee in two separate
meetings. The first meeting was held to provide the Ad -Hoc Committee with information on
Tustin's and the trade areas' market position and evaluation, along with Tustin's policy
context affecting the development community.
At the second meeting, upon completion of the feasibility analysis, EPS presented the
findings and high-level policy options to the Ad -Hoc Committee and received direction to
forward the final study to the City Council.
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City Council Report
December 5, 2023
Page 3
A Technical Memorandum (available upon request) has also been prepared, which provides
additional detail on the methodology and technical analysis that informed the findings and
options presented in the Study.
CONCLUSION:
The Specific Plan Reassessment Study builds upon existing City efforts, addresses the most
straightforward and attainable opportunities, and aligns with the visions embodied in each
Specific Plan. The Study's recommendations are designed to help catalyze development and
stimulate investment in the Plan Area, thereby realizing the City Council's goal for commercial
revitalization and increased housing opportunities in Downtown, and along the Red Hill
Avenue corridor.
It is recommended that the City Council receive and file the Downtown Commercial Core and
Red Hill Avenue Specific Plan Reassessment report prepared by Economic Planning
Systems, Inc. and adopt the Economic Development Ad -Hoc Committee's recommendation
as outlined in the recommendation above.
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Prepared by: i,A
Adrianne DiLeva
Management Analyst II
Approved by: A1jkAZ11'__ —
u ina Willkom 3-6' astman
Community Development Director Assistant Comm. Dev. Director— Planning
Attachment: Downtown Commercial Core and Red Hill Avenue Specific Plan Reassessment
Report
DocuSign Envelope ID: 63BOC69D-lBFD-4B3F-8FDF-D6C835E73DF6
The Economics of Land Use
Report
Downtown Commercial Core and
Red Hill Avenue Specific Plan
Reassessments
Prepared for:
City of Tustin
Prepared by:
Economic & Planning Systems, Inc.
Economic & Planning Systems, Inc.
800 Wilshire Boulevard
Suite410 November 16, 2023
Los Angeles, CA 90017
213 489 3838 tel
Oakland
Sacramento
Denver
Los Angeles
EPS #224029
www.epsys.com
DocuSign Envelope ID: 63BOC69D-1BFD-4B3F-8FDF-D6C835E73DF6
Table of Contents
Introduction.............................................................................................1
2. Study Process and Methodology.................................................................2
3. Analysis Findings...................................................................................... 3
4. Policy Options and Implementation Timeline................................................5
5. Policy Impact on Development Feasibility................................................... 10
APPENDIX A: Reassessment Project Overview .................................................... 12
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List of Figures
Figure 1: The Tustin Development Trade Area includes Orange, Santa Ana, and Irvine. 3
Figure 2: Summary of Policy Options and Recommended Implementation Timeline ...... 5
Figure 3: Feasibility Impacts of Proposed Near -Term Policy Options on Large and
SmallSites...................................................................................... 11
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Economic & Planning Systems, Inc.
1. Introduction
This report summarizes the findings and policy options developed as part of the
Specific Plan Reassessments study conducted by Economic & Planning Systems
(EPS) for the City of Tustin. The study's objective is to identify barriers and
challenges to real estate investment and redevelopment in the Downtown
Commercial Core Specific Plan (DCCSP) and Red Hill Avenue Specific Plan (RHASP)
areas and propose planning and policy solutions to overcome them.
The study and proposed policy options represent the next phase in refining the
policies of the two Specific Plans, originally adopted in 2018, to better achieve the
desired vision and goals. This work also implements one of the proposed housing
programs under the City of Tustin's Housing Element for 2021-2029.
EPS worked with City Staff to prepare an action plan and timeline for implementation
of various policy options, which are tailored to the city's unique needs and goals.
The proposed policy options build upon existing City efforts, address the most
straightforward and attainable opportunities, and align with the visions embodied
in each Specific Plan. They are designed to help catalyze development and
stimulate investment in the Plan Area, thereby realizing the City Council's goal for
commercial revitalization and increased housing opportunities in Downtown and
the Red Hill Avenue corridor.
This study and associated policy options focuses on the factors affecting
development economics within the DCCSP and RHASP area. It is important to
emphasize that economic outcomes are only one lens for evaluating land use
policy decisions. Other key considerations outside the purview of this analysis
include, without limitation:
• Urban design and architecture
• Affordable housing
• Traffic and parking availability
• Environmental impacts
• Impacts to City finances
Tustin Reassessments Report - 11-16-23.docx
DocuSign Envelope ID: 63BOC69D-1BFD-4B3F-8FDF-D6C835E73DF6
Downtown Commercial Core and Red Hill Avenue Specific Plan Reassessments
2. Study Process and Methodology
The findings and analysis presented herein represent the culmination of a detailed
reassessment of the two Specific Plans that has included market analysis, local
and state policy review, developer / property owner interviews, stakeholder
outreach (including a series of meetings with Planning Commissioners and the
City Council's Economic Development Ad Hoc Committee), and related tasks.
EPS also utilized Stakeholder input to identify a list of fourteen (14) potential
'opportunity sites" within both Specific Plan areas that might be well suited for
redevelopment. EPS then worked with City staff to identify five of these sites that
would be representative of likely development scenarios that might occur within
these areas, including both larger and smaller sites, as well as both occupied and
vacant sites.
To arrive at the proposed policy options, EPS tested the impact of various
regulatory changes on development feasibility at the key opportunity sites. EPS
created a generalized business case for a likely development project or building
prototype at each of the opportunity sites selected through the study process and
measured feasibility outcomes in terms of residual land value, or the amount that
developers could afford to pay for land after all accounting for all development
costs. The feasibility analyses reflect current market conditions, comparing values
to costs for specific development scenarios.
EPS also conducted sensitivity tests for various project parameters, which
revealed that certain policy changes can significantly improve development
feasibility. For example, relaxing requirements related to on -site parking, ground
floor retail, inclusionary housing, and residential density are all expected to
improve project economics. Reducing affordable housing and park fees are likely
to have a similar effect. Taken together, these measures can have a
transformative effect even on the opportunity sites with the most challenging
constraints from an economic perspective. The next step in implementing any of
these changes requires agreeing on what is appropriate and reasonable as well as
drafting detailed and specific policy proposals.
EPS prepared a separate Feasibility Analysis Technical Memorandum that
details the methodology and findings of the feasibility analysis. It includes
additional details on the scenarios, prototypes, and assumptions utilized to test
changes in development policies.
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Economic & Planning Systems, Inc.
3. Analysis Findings
EPS found that the fundamental economic characteristics within each Specific Plan
area are strong and favorable given Tustin's location in a broader "Trade Area"
that includes parts of northern and central Orange County. The Trade Area, shown
Figure 1, is important because it incorporates the nearby locations that local
developers and investors compare against Tustin and the Specific Plan Areas
when considering investment opportunities.
Key market findings included:
• Tustin is strategically located and well connected to the regional economy
• Tustin has favorable socio-economic indicators for housing and related real
estate investment (e.g., income, education, age)
• Tustin's retail market is sizable but has mixed market performance
• Tustin's office market is not currently a major economic driver
• Tustin's has a strong housing market but minimal new supply, which
suggests pent-up demand
• Redevelopment will be challenged by occupancy and revenue stream of
existing properties
Figure 1: The Tustin Development Trade Area includes Orange, Santa
Ana, and Irvine.
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Downtown Commercial Core and Red Hill Avenue Specific Plan Reassessments
Whether looking at socioeconomic indicators, rental data, or reputations for
schools and public safety, Tustin seems well -positioned relative to the trade area
for housing development, which has been the primary driver of trade area
redevelopment activity in recent years. Additionally, the area around Old Town
has several features that would be viewed favorably by real estate developers and
investors relative to nearby areas, especially its historic and walkable character
within a well -located suburban location. These attributes are well aligned with
current trends that are driving real estate demand, especially for housing.
Despite an overall favorable market context, EPS identified aspects of local policy
that are likely barriers to development feasibility in the Specific Plan areas,
including:
• Ground floor retail requirements
• Parking requirements
• Heigh limits
• Limitations of the Residential Allocation Reserve discretionary review process
• Park impact fees
• Inclusionary housing requirements
• Open space & storage requirements in residential buildings
These categories represent both standard drivers of development economics as
well as policy barriers unique to the DCCSP and RHSP. EPS utilized this list in
developing a set of Policy Options that were presented to City staff and the
Economic Development Ad Hoc Committee, and which are included in Appendix
A.
EPS also noted that rapidly evolving changes in state planning laws, including
rules around the State Density Bonus, reform of parking standards, and other
laws intended to help housing developers bypass lengthy or difficult approvals will
impact future development in Tustin. Even where these policies don't directly
affect the Specific Plan Areas, they have and will likely continue to alter the
competitive environment in surrounding parts of northern and central Orange
County and thus indirectly impact the development economics of the Trade Area.
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Economic & Planning Systems, Inc.
4. Policy Options and Implementation
Timeline
Based on findings from the feasibility analysis, EPS worked with City staff to
propose a set of policy options and implementation timeline, which are
summarized in Figure 2 and further described below. In addition, a detailed EPS
presentation outlining the Specific Plan Area Policy Options to Consider is attached
in Appendix A to this report.
Figure 2: Summary of Policy Options and Recommended Implementation Timeline
• Preliminary residential
parking standards update
• Set all residential Park Fees
equal to RHASP rate
• Temporarily suspend
affordable housing in -lieu fee
• Expand fee deferment
• Commence public realm
improvements:
6 > Parklets on El Camino Real
and Main Street
> Gateway signage and Main
Street streetscape Mi
• Expand developer services
and educational materials
• Revisit Voluntary Workforce
Housing Program
Pending ODS:
• Modify retail requirements
(incl. parking)
• Eliminate PAR Program
• Modify height restrictions
• Relax residential private
storage requirements
• Clarify residential density
bonus approach
� ng-Term
4+ months
Ami
• Increase residential capacity
• Refine parking strategies and
pursue supply investments
• Complete / expand public
realm improvements and
activation and branding
initiatives
• Explore economic
development, site marketing
efforts
• Implement policies to
accelerate redevelopment of
vacant sites
► Implement preliminary parking standards update. Reduce base
residential parking ratios (from 2.25 spaces required per unit to 1.5-1.75
spaces per unit) to help stimulate multi -story infill and vertical mixed -use
development. Detailed research on residential parking standards and local
policy context is contained in the Parking Policy Context & Proposed
Strategies section of Appendix A.
► Set all residential Park Fees in the Plan Areas at an equal level
based on the current RHASP rate. Most projects in the Plan Areas must
currently pay parkland impact fees based on market land value. Tustin could
create an administrative rule to set "market" land value equal to $2.5 million
per acre for the purposes of park fee calculation. This is already the value
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Downtown Commercial Core and Red Hill Avenue Specific Plan Reassessments
established for non -subdivision projects in RHASP. This straightforward
change would provide more certainty and likely cost reduction for
developers as well as create internal consistency within the City's policies,
reducing confusion for staff and potential project applicants.
► Temporarily suspend affordable housing in -lieu fee. As a near -term
strategy, waive the in -lieu fee for developers providing 5 percent Very -Low
Income units onsite. The City Council could introduce a motion to
temporarily suspend inclusionary housing in -lieu fees for all Specific Plan
area projects for 18-36 months. This would incentivize investment in the
Plan Areas by improving feasibility for all residential projects.
However, it is anticipated that some developers may still pursue on -site
affordable housing to utilize State density bonus and associated waivers,
especially before the City updates its policies related to parking and design
standards. If no development projects are initiated during the initial 18-36
months period, the City may utilize that information in updating its
affordable housing policies (in the mid- and long-term).
► Expand fee deferment. Adjust administrative rules to allow developers to
pay all impact fees at Certificate of Occupancy rather than at permit
issuance, which can have an outsized benefit on project financing for
developers with likely minimal impact on City finances. This could also be a
temporary, expiring benefit intended to create urgency for developers
before Mid -Term and Long -Term Policy Options can be implemented.
► Complete planned public realm improvements. This includes parklets
on El Camino Real and Main Street, as well as gateway signage and
streetscape improvements on Main Street.
► Expand developer services and educational materials. Continue efforts
to streamline permitting and implement a 'gone -stop shop" on the City
website for relevant information related to development (e.g., affordable
housing requirements, objective design standards, fee schedules, density
bonus). This can provide a resource for both developers and community
members to better understand City incentives and planning and entitlement
process for the Plan Areas.
► Revisit Voluntary Workforce Housing Program. Consider engaging a
consultant to review the City's inclusionary program and conduct feasibility
analysis to optimize rules and ensure consistency with the City's Housing
Element, evolving State law, and economic considerations. Temporary or
permanent waivers for small sites or vacant sites could be used as an
additional incentive for redevelopment in key locations.
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Economic & Planning Systems, Inc.
► Modify retail requirements and associated parking. The DCCSP
requires 100 percent retail frontage on many streets, providing minimal
flexibility. The City could require a lower percentage of retail and/or require
retail along fewer number of street frontages to increase development
feasibility and also avoid overbuilding of retail spaces that could lead to
empty storefronts in lower demand locations.
At the most important locations for retail, such as along the historic El
Camino Real in Old Town, the City could establish retail nodes and
incentivize retail building by making residential uses at these locations
allowable only as a bonus for providing retail frontage or square footage.
This strategy would discourage developers from trying to get around
building ground floor retail (e.g., through State Density Bonus waivers) at
these key locations. Determining the locations of these retail nodes could be
completed in tandem with establishing objective design standards. The City
may also want to conduct a retail market study to help determine the size of
these nodes.
Given that the feasibility analysis findings indicate additional challenges for
small sites, the City could incentivize vertical mixed -use infill projects on
small sites, especially in Old Town, by clarifying and promoting its parking
in -lieu fee policy and/or further relaxing (retail) parking requirements for
such sites or at retail nodes. More relevant information on parking is
contained in the Parking Policy Context & Proposed Strategies section of
Appendix A.
► Eliminate the RAR Program and allow residential in most Plan Area
locations. The RAR was initially conceived to allow for housing development
on previously commercially -zoned properties and to provide certainty and
streamlining around environmental review. However, the program has had
limited success in encouraging development, likely due to the extended,
discretionary approval process that results in uncertainty around whether
and how much housing will be allowed or "allocated" for a given project.
Eliminating the RAR process and allowing residential uses in most Plan Area
locations will provide more certainty to developers (up until EIR unit count
limits are exceeded) and resolve potential inconsistency in the City's
Housing Element by ensuring housing is permitted on all housing inventory
sites within the Plan Areas. Forthcoming objective design standards and
other Specific Plan requirements will still apply. Stakeholder interviews
confirmed broad consensus and support within the City of Tustin around
eliminating or replacing the RAR. Note that the City may choose to maintain
some limits on residential uses at key retail nodes (see prior bullet) to
incentivize desired development patterns.
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Downtown Commercial Core and Red Hill Avenue Specific Plan Reassessments
► Modify height restrictions. In some cases, providing additional height,
even if stepped back on the upper stories, will likely improve project
feasibility, especially for vertical mixed -use development on smaller sites in
the DCCSP. Implementing modest height increases outside of freeway -
adjacent parcels represents another policy option, especially where historic
resource protection is not a concern.
► Relax residential private storage requirements. Current storage
requirements were noted by a housing developer active in Tustin as unusual
and contributing to an increased cost of housing development. Developers
typically have approaches for determining an appropriate amount of storage
to meet the needs of tenants even when none is required. The City could
consider relaxing requirements for private on -site storage (e.g., remove
entirely, set as percentage of units, or look to match neighboring cities). If
deemed necessary, the City could conduct comparative research on
surrounding jurisdictions to help determine what code changes might be
appropriate. Revising these requirements could be done in conjunction with
expanding bike parking requirements, which also align with reduced vehicle
parking requirements.
► Clarify residential density bonus approach. Develop an official Schedule
or Brief (posted on website) to specify how City staff determines State
Density Bonus under the 'form -based" code for the Specific Plan areas. This
would provide greater clarity for developers given that "form -based" codes —
where density is governed by height and design standards only, rather than
units per acre or floor area ratio —are still less common within California.
► Increase residential (unit -count) capacity. If changes to the Specific
Plans are successful and result in multiple new development projects, there
may be a shortage of available residential units that can utilize the
Environmental Impact Report (EIR) conducted as part of the Specific Plans.
The City could consider updating the EIR with higher unit counts and/or
implementing an administrative waiver program for residential projects of
less than five acres within the Specific Plan areas that otherwise comply with
City policies and regulations (using CEQA Infill Exemption {Cal. Code Regs.
Tit. 14, § 15332}).
Refine parking strategies and pursue supply investments. Implement
strategies to manage parking demand and supply as well as refine or
eliminate certain parking standards, plan/finance new facility investments,
update fees, and refine parking management (e.g., time limits, metering).
More relevant information is contained in the Parking Policy Context &
Proposed Strategies section of Appendix A.
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Complete and expand public realm improvements and pursue
additional activation and branding initiatives. Complete any planned
capital projects to enhance the public realm and look to complement those
improvements by exploring activation and branding programs that engage
with businesses, property owners, public, etc. More relevant information and
examples of activation and branding initiatives are contained in the Long -
Term Action Options section of Appendix A.
Expand economic development and site marketing efforts. Evaluate
the potential for targeted economic development projects or partnerships
that catalyze private investments. This could include, among other
initiatives, the creation of marketing materials (e.g., maps, brochures,
websites) to highlight investment opportunities and future projects within
the Specific Plan areas.
Implement policies to accelerate redevelopment of vacant sites. If no
new development projects have been proposed on key vacant sites within
the Plan Areas over the next 24-36 months (after other policy options have
been implemented), consider implementing additional carrot/stick policy
options (e.g., waivers, concessions, taxes, code enforcement) and exploring
public -private partnerships at key vacant or under-utilized sites in the Plan
Areas. More relevant information and examples are contained in the Long
Term Action Options section of Appendix A.
City of Tustin public officials interviewed as part of this project have thus far
expressed a desire to openly contemplate a wide range of possible policy changes.
It is important to note that each of these changes comes with tradeoffs, including
potential impacts on neighborhood parking supply, city revenue, future continuity
of retail frontages, and inclusion of income -restricted housing units on -site at new
developments. In choosing the right set of policy changes, EPS recommends that
city officials carefully consider all potential tradeoffs, not just the economic
considerations analyzed as part of this analysis.
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Downtown Commercial Core and Red Hill Avenue Specific Plan Reassessments
5. Policy Impact on Development Feasibility
As noted at the outset, the goal of this study and suggested policy changes is to
decrease barriers to real estate investment and redevelopment and thereby spur
desired economic investment within the Specific Plan Areas. Visible impacts of
policy changes, such as construction of new buildings can take several years due
to the length of the development process. Investment and development activity is
also highly dependent on market conditions.
In 2023, overall macro market conditions for new development have worsened
significantly, primarily due to steadily escalating interest rates since mid 2022.
Higher interest rates make debt financing for construction and land purchases
much more expensive, and also reduce the amount that most individual home
purchasers and investors can afford to pay for newly built homes and apartments.
These decreases in price and valuation have happened at the same time as year -
over -year construction cost inflation has moved above 10 percent and Orange
Country apartment rents have cooled.
These market changes mean that few developers are likely to start construction
on new projects —both in Tustin and surrounding locations —until market
conditions improve, which may be more than a year. However, established and
sophisticated developers may begin the development process somewhat earlier, in
anticipation of those market improvements. This could involve entering into land
acquisition agreements and applying for project approvals in preparation for when
interest rates improve.
The proposed policy options are expected to increase feasibility and thereby
increase the likelihood that developers will choose to focus their new development
investments within the Specific Plan Areas instead of other nearby locations within
northern and central Orange County. Figure 3 below provides a summary of the
expected feasibility impacts from the set of proposed Near -Term Policy Options on
two example sites within the DCCSP: one large and one small.
As shown, the large site project becomes feasible under the Near -Term Policy
Options.' On the other hand, the smaller site faces more challenging economics,
and the set of Near -Term Policy Options are not sufficient to make a development
project feasible.
1 A project is deemed feasible when the project results in sufficient proceeds, after construction
costs and profit, to pay a "residual land value" that is greater than the market value of the site
(which was estimated between $4.8 and $5.65 million for analyzed sites within the DCCSP)
10
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Economic & Planning Systems, Inc.
However, EPS notes that proposed Mid -Term and Long -Term Policy Changes such
as further parking reductions, adjustments to on -site affordable housing
requirements, or impact fee waivers could create a feasible project at this site.
These additional changes may be necessary to make development feasible at
smaller (e.g., less than one acre), constrained sites in and around the Old Town
area.
The feasibility results are based on more extensive analysis detailed separately in
the Feasibility Analysis Technical Memorandum.
Figure 3: Feasibility Impacts of Proposed Near -Term Policy Options on Large and
Small Sites
Current Policies
Residential Parking
2.25 per unit
Park Fees
$32,256 per unit
Aff Units
5% Very -Low + Fee
($6,900 per unit)
Example Large Site
Description
4-Story Horizontal Mixed-
Use(Wrap & Retail Strip)
Size
8.9 acres, 449 units
Residual Land
$2,669,000
Value per acre
Feasibility
Unlikely
C Existing Use Value
Example Small Site
Description 4-Story Vertical Mixed -Use
Size 0.45 acres, 40 units
Residual Land
Value per acre ($5,092,000}
Feasibility
C Existing Use Value
Changes:
• Residential parking reduced to
1.59 spaces per units
• Park fee assumes land value
at $2.510 per acre
• Affordable Housing
In -Lieu Fee Set to $0
• Same as above +
in -lieu retail parking
Near Term Policy
Options Implemented
1.6 per unit (aug)
$16,800 per unit
51lo Very -Law +
$0 in Fees
4-Story Horizontal Mixed-
Use(Wrap & Retail Strip)
8.9 acres, 449 units
$6,850,000
Feasible
4-Story Vertical Mixed -Use
0.45 acres, 40 units
$2,897,000
Unlikely
11
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APPENDIX A:
Reassessment Project Overview
CITY OF TUSTIN SPECIFIC PLAN REASSESSMENTS:
DOWNTOWN COMMERCIAL CORE (DCCSP)
RED HILL A VENUE (RHSP)
Reassessment Project
Overview
C
r. 1AJ
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AGENDA TODAY
• Introduction and Background
• Overview of Market Context and Opportunity
• Stakeholder Input
• City Policy Context
• Development Feasibility Analysis
• Policy Options and Implementation Workplan
• Parking Policy Context and Strategies
Economic & Planning Systems EPS PPT Presentation I 1
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INTRODUCTION AND BACKGROUND
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WHO WE ARE
■ California -based firm
established in 1983
• Specialists in urban
economics and publics
finance REAL ESTATE PUBLIC LAND USE & ECONOMIC
ECONOMICS FINANCE TRANSPORTATION DEVELOPMENT &
• Balance of public and REVITALIZATION
private sector clients
■ Strong practice in /��I 'ff nT N---
economics of infill FISCAL& HOUSING PUBLIC —PRIVATE PARKS&
ECONOMIC POLICY PARTNERSHIP (P3) OPEN SPACE
redevelopment IMPACT ANALYSIS ECONOMICS
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STUDY OBJECTIVES AND CONTEXT
Objective
Identify ,barriers and challenges to real estate
in vestment in DCCSP / RHASP Plan Areas.
Provide planning and policy options to
address them.
C ontPxt
■ DCCSP / RHASP not leading to type, amount
of investment sought by Council
■ Housing Element commits to market
evaluation, recommended policy changes that
remove constraints on housing
• Study is focused on factors affecting real
estate development economics only
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OVERVIEW OF STUDY PROCESS AND DELIVERABLES
✓ Market Position & Evaluation
- General understanding of demographic and market factors affecting development prospects
✓ Policy Context
— Review of city and state programs, policies and requirements
✓ Stakeholder Outreach & Engagement
— Spoke with Developers, Property Owners, City Councilmembers, and Planning Commissioners
✓ High -Level Policy Options and Considerations
✓ Opportunity Site Feasibility Analysis
— Technical analysis of development economics at selected Opportunity Sites to test impact of
incentives and policy changes and leading to final options to consider
✓ Optional Analysis Tasks
— Analysis of parking strategies and policies
— Research on infrastructure financing sources
=� Final Policy Options to Consider for the Specific Plan Areas
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HIGH-LEVEL STUDY FINDINGS
1. Market Context and Opportunity
— For residential development, local market conditions do not appear to be a major barrier
based on Trade Area growth and activity
— For retail and office development, market conditions are less favorable, although limited
mixed -use or owner- / tenant -driven projects may be viable
2. City Policy Context
— City land -use policies and zoning appear to be at least a partial barrier to redevelopment
in Specific Plan Areas
— Range of possible solutions exist but will require political support and alignment with
city / community goals around development. Financial feasibility testing of certain policy
levers can provide clarity on potential impacts to project economics.
3. Property and Ownership Barriers/Considerations
— Some owners of strategically located sites appear reluctant to (re-) develop
— Revenue from existing uses represent a redevelopment hurdle
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MARKET CONTEXT AND OPPORTUNITY
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KEY TAKEAWAYS FROM THE DATA
Tustin has favorable socio-economic indicators
(e.g., income, education, age)
Strong residential demand throughout Trade
Area is positive indicator for Plan Areas:
■ Numerous higher -density residential
projects in Trade Area (mostly townhomes
and mid -rise; some vertical mixed -use)
■ Successful townhome project and recent
developer proposals in Plan Areas
New office and retail unlikely to drive
redevelopment due to poor/uncertain market
conditions
Housing is the most likely economic driver for
new development
TRADE AREA
Yorba Linda
Cerribcs Buena Park Fullerton
Anaheim
Garden Grove
Westminster
t
sunset eead, Four tam
Valley
Huntington
Beach
Costa Mesa
e
N ewport Forest
Beach
Laguna Hills
Corona
Rancho
Santa
Margarita
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QUALITATIVE FINDINGS PROMISING FOR DEVELOPMENT
• Tustin named on Fortune list of
25 Best Places to Live for Families
■ Both Plan Areas are centrally -located,
well-connected to transportation corridors
■ DCCSP has particular allure due to
historic, walkable character
■ Property owners report new townhomes have already
brought energy, younger demographic to Old Town
neighborhood
■ Informants indicate retail tenants priced out of
expensive OC markets (e.g., Newport Beach, Irvine)
interested in bringing trendy uses to second -
generation spaces in Tustin, Orange, etc.
■ Schools, safety rated better than some neighbors
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BROADER REAL ESTATE TRENDS ALSO PROMISING
Plan Areas (especially DCCSP) are poised to leverage broader market trends:
Development Real Estate Trend DCCSP Area
Type
Residential
Pandemic led to continued
interest in less -expensive,
more suburban markets
Younger cohort seeks active
lifestyles, access to bike/ped
and recreation amenities
Shift to place -based,
Retail experiential retail in post -
pandemic age of online
shopping
RHASP Area
+ Tustin and study areas are slightly cheaper than
Orange County on average
+ Minimal new rental and for -sale product represents
major unmet market opportunity
+ Combination of high Walk
Score (89 vs 51 city avg.)
and attractive walking
environment
More typical, suburban
commercial corridor
with limited walk appeal
(Walk Score N70)
+ Unique historic character of More limited sense of
Old Town lends an inherent place due to major
sense of place thoroughfare
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STAKEHOLDER INPUT
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DEVELOPMENT POLICY CONCERNS OF STAKEHOLDERS
Multiple rounds of review can create delays and
increase entitlement costs, project timeframe
Certainty
Some policies and requirements
are unclear and subjective
"'Approvable"
projects may not be
financially feasible
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...IN EACH OF THE SPECIFIC PLAN AREAS
'trra C.rl'�
= Tarno
0.
o y 'n
r N� P'4 lrry+.r
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c r' aF ¢P •�q �i�,
nrr
r
to
3 s
,i
4r o a a'•.
F
1. Red Hill Plaza (8.25 ac)
2. Frontier Park (5.8 ac)
3. Red Hill Shopping Village (5.89 ac)
Economic & Planning Systems
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CITY POLICY CONTEXT
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CITY POLICIES AND DEVELOPMENT FEASIBILITY
Both Plan Areas have unique policies and requirements that directly affect
development economics.
Standard policy drivers of project economics:
— Ground floor retail requirements
— Parking requirements
— Height limits
Development policy concerns noted by stakeholders:
— RAR / discretionary review process (for residential)
— Fees & inclusionary housing requirements
— Open space & storage requirements
Removing policy barriers / costs generally involves trade-offs.
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EVOLVING STATE LEGAL CONTEXT
Law / Statute
Description
DCCSP / RHSP
Application
State Density Bonus Law
More units and / or concessions for
inclusionary housing.
Partially overlaps with IHO
Housing Accountability Act
Timely processing and "objective" standards for
Area Plans may be exempt as
(HAA) + Amendments (SB 330,
housing approval. Restricts moratoriums or
housing is discretionary (if not in
8, 167; AB 1 51 5, 31 94)
caps.
conflict with Housing Element)
Requires ministerial approval of housing on
"commercial
5feet
Applies to sites with > 0 f
Housing on Commercial
corridors." Including Density
frontage on streets > 7wide
Corridors (AB 201 1)
Bonus, allows 38-72 units/ac. Projects must be
"prevailing
where multi -family is "permitted"
1 5% aff. and use wage" labor.
SB 6 Allows housing on commercial sites by right, Requires "skilled & trained" labor.
but not "ministerial."
Elimination of Parking Minimums Eliminate parking minimums for projects <
near Transit (AB 2097) mile from major transit (e.g., commuter rail, City evaluating applicability
bus lines with 1 5-minute headways)
CEQA Infill Exemption (Cal. Code "Infill" projects bypass public review periods City could prepare Class 2
Regs. Tit. 14, § 1 5332) and portions of CEQA if developers submit (and exemption report template for
City accepts) "Class 2 exemption findings" use by developers.
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POLICY OPTIONS CONSIDERED
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RECONSIDER RESIDENTIAL ALLOCATION RESERVE (RAR)
Barriers to Overcome:
■ RAR created uncertainty for housing developers and additional discretionary approval
step with "beauty contest" effect
■ Housing Element allocation of RAR bank to specific sites adds new uncertainty
Options
■ Modify / eliminate RAR approval process
Kev Considerations
■ Increasing unit counts could require
CEQA consideration or EIR update
■ Other State housing law applicability
unclear (HAA + AB201 1)
• Reduction in administrative burden may
be an additional benefit
y S E16
EL CAMINO PLAZA
- SWC OF SIXTH STREET & EL CAMINO REAL
7.81 Acres
SITE 15 �j' I• i;I� - 1 ■-=
2 NEWPORT AVE.&EL CAMINO REAL '
VACANT, Z.73 Acres �1L
• � SITE � .,
aowNT.N
COMMERCIAL
P,
CORE
SPECIFIC PLAN
AREA
AA
Sites 15 & 16—
tt jr
2Z housing
-lilt
units
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REVISIT AFFORDABLE HOUSING REQUIREMENT
Barriers to Overcome:
• Added cost / complexity of inclusionary housing
can be tipping point for some projects
■ Tustin developers have built few on -site affordable units
Options
• Copy State Density formulas
■ Create incentive program that goes beyond State
Key Considerations
■ City's affordable housing goals and obligation to achieve RHNA affordability targets
■ Developers will compare requirements with nearby jurisdictions (see next slide)
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MORE "SURGICAL" MIXED -USE (RETAIL) REQUIREMENTS
Barriers to Overcome:
• Ground floor retail does not always add value for developers on mixed -use projects
• Requiring too much ground floor retail can lead to vacant storefronts, reduce project
feasibility
Options
• Develop more focused retail requirement in at key
nodes and less than 100% coverage along frontage
• Create a retail "density bonus" or similar incentive
Considerations
• Balance with City goals to protect / ensure retail
preservation and vitality
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ADDRESS VACANT & UNDERUTILIZED SITES
Barrier to Overcome: Vacant & Underutilized Sites with Reluctant Owners
Carrots
■ Expand flexible fee payment (e.g., upon completion vs permit issuance) to all housing types
■ Temporary / expiring benefits (e.g., fee waivers, RAR or IHO exemptions, fast -track approval)
■ Density allowances, financial concessions (including 1033 exchange)
Ctirkc
■ New/increased code enforcement, "public nuisance" policies, or fa4ade/landscaping rules
■ Vacant land tax (requires voter approval)
■ Eminent domain for public facilities (e.g., park or parking) - a "high bar"
Other
■ Public -Private Partnerships (e.g., Development Agreements, shared parking)
• Expand/continue matchmaking efforts (link owners with experienced developers)
■ Public investment and land assembly assistance (e.g., street vacations)
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PURSUE PARKING STRATEGIES AND INVESTMENT
Barriers to Overcome
■ Sometimes limited parking availability in Old Town at
peak hours - new development will need more capacity
■ Neighbors near RHASP have concerns about parking
Options
■ Revise requirements, plan for future public parking sites
■ Invest in better management practices
■ Consider short-term parking leases on vacant sites
Key Considerations
■ Parking is a major cost of development: public provision of parking can
help redevelopment feasibility
■ Need to identify best practices and best locations for additional capacity
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EXPAND DEVELOPER SERVICES & MARKETING
Barriers to Overcome
• Developers and property owners may not understand or be aware of City plans, policies
and programs, especially if recently updated or changed
• Developers value responsive, timely interactions with city, want to know what to expect
with no surprises
Options
• Continue efforts towards a one -stop source of information on city website
• Create marketing collateral summarizing what City is already doing: call out programs,
incentives, plan details, available sites, etc.
■ Continue efforts at streamlining applications, reviews, inspections, etc.
Key Considerations
• Plain -language materials can be educational for both developers and residents
• Simpler, more straightforward approval requirements save time for developers and staff
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COMPLETE PUBLIC REALM INVESTMENTS
Barriers to Overcome
• Walking and biking environment within Plan Areas could be more
pleasant, easier, safer, with more bike parking options
Options
• Implement pedestrian & bicycle improvements identified in
Specific Plans
Key Considerations
• Need to identify funding sources
■ Provides multiple benefits: aesthetic improvement, driving/parking
alternatives, environmental benefit, supports active lifestyles
■ Location considerations:
— Largest impact may be to build on pedestrian -friendly Old Town with better connections
— Along major roads (Red Hill Ave, Newport Ave, and First Street), focus on nodes/intersections
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CREATIVE ECONOMIC DEVELOPMENT & PARTNERSHIPS
Barriers to Overcome
■ More vibrancy desired at all times of day, especially in Old Town
■ More attractions, marketing could establish Plan Areas as
destinations
Options
• Establish tenanting, branding themes and/or dedicated ED staff
■ Provide city sponsorship to grow Merchants Association and/or
additional programming (food truck nights, street fair, etc.)
■ Partner with a vacant site developer to create temporary use
such as park space or pop-up business installation
Key Considerations
■ Negotiating a temporary use of vacant site may require entitlement guarantee
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DocuSign Envelope ID: 63BOC69D-1BFD-4B3F-8FDF-D6C835E73DF6
POLICY TRADE-OFFS / POTENTIAL IMPACTS
Development feasibility isjust one lens for evaluating land use decisions. City
must weigh other policy trade-offs, which may require more analysis.
Urban design and architecture Produce taller, denser buildings that Objective Design Standards can address
may be unpopular most concerns
Affordable/inclusionary Produce few/no affordable housing Minimal development also means
housing units few/no affordable units
Traffic and other environmental Increase traffic and other Additional CEQA analysis may be
impacts infrastructure demands triggered after plans EIR caps; may
reduce VMT per capita
Long review periods for project Limit City's ability to pick and choose Objective Design Standards can address
approval among projects most concerns
KDevelopment does not include
desired retail uses
New Burden on City Services
Lead to residential -only buildings
where mixed -use desired M
Increase service expenditures but
also generates new tax revenue
Already a risk; can incentivize by
differentiating retail node policy
New infill development likely to provide
net positive revenue to City
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DEVELOPMENT FEASIBILITY ANALYSIS
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HOW DO WE DETERMINE FEASIBILITY?
Residual land value (RLV) approach with static pro forma
• Helps us answer the question:
— Is net value of a proposed project (before cost of land) equal or greater
than property / site value?
Two ways to
estimate site value:
comparable sales or
existing income stream
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GOAL IS TO INCREASE FEASIBILITY OF REDEVELOPMENT
INFEASIBLE
C:
Project Value Project Cost
FEASIBLE
Project Value Project Cost
Meeting return
thresholds are an
additional "cost."
This hidden "cost"
increases with:
■ Project Risk
■ Project Timeline
Preliminarily, per unit
residential val ues in
Tustin appear
sufficient to cover
typical project costs.
Feasibility analysis is
forthcoming.
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I N FI LL DEVELOPMENT ECONOMICS CAN BE TRICKY
Infill redevelopment projects often highercost than greenfield/vacant sites
Project Value
Project Cost
Often leads to higher costs
Demolition and/or environmental
"cleanup" related to prior use
Upgrading old infrastructure, access
Meeting parking requirements on
small / irregularly -shaped parcels
Preserving historic structures and
/or mitigating construction impacts
on neighboring properties
Buying a property with
existing tenants / revenue
stream
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CONTEXT FOR UNDERSTANDING RESULTS
• Static pro forma feasibility analysis can show:
— Generalized business case for development given market conditions
— How policy changes will affect property development economics
in general, including for similar sites within Specific Plan area
— Economics (values vs costs) for a specific development project/scenario
• Analysis does not show:
— Willingness or motivation of property owners to pursue development
or sell at a reasonable price
— Time and expense necessary to obtain entitlement
— Property specific factors that require due diligence (e.g., cost of
environmental clean-up, cost of buying out existing lease terms)
— Expertise or financial capacity of potential developers
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BASELINE SCENARIOS USED TO TEST POLICIES
■ Baseline scenarios conform to existing Specific Plan guidelines:
— Within Specific Plan height limits
— Meet affordable housing requirements (Voluntary Workforce Housing Program)
— Meet minimum retail frontage requirement
— Assume park impact fees set at market land value estimate
— Meet existing parking requirements
■ Test financial impact of certain policy options:
— Increasing height limits
— Waiving affordable housing in -lieu fee
— Reducing ground floor retail requirement
— Capping/reducing park impact fees
— Reducing required parking ratios
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CUSTOMIZED SCENARIOS FOR EACH
■ Analyzed capacity and
configuration of each
opportunity site to determine
appropriate/ efficient layouts
■ Utilizing development project
experience, focused on
constructing scenarios most
likely to be feasible (highest
and best use)
■ Applied prototypes that
reflect real world projects
from the Trade Area to create
two baseline (2) scenarios
each
OPPORTUNITY SITE
3�
2
a Mc[aOJen Are
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NEAR TERM POLICY OPTIONS IMPROVE FEASIBILITY
Current Policies
Residential Parking
2.25 per unit
Park Fees
$32,256 per unit
Aff Units
5% Very -Low + Fee
($6,900 per unit)
Example Large Site
Description
4-Story Horizontal Mixed-
Use(Wrap & Retail Strip)
Size
8.9 acres, 449 units
Residual Land
$2,669,000
Value per acre
Feasibility
Unlikely
@ Existing Use Value
Example Small Site
Description
4-Story Vertical Mixed -Use
Size
0.45 acres, 40 units
Residual Land
i$5,092,000)
Value per acre
Feasibility
nfeasible
@ Existing Use Value
Changes:
• Residential parking reduced to
1.59 spaces per units
• Park fee assumes land value
at $2.5M per acre
• Affordable Housing
In -Lieu Fee Set to $0
• Same as above +
in -lieu retail parking
Near Term Policy
Options Implemented
1.6 per unit (avg)
$16,800 per unit
5% Very -Low +
$0 in Fees
4-Story Horizontal Mixed-
Use(Wrap & Retail Strip)
8.9 acres, 449 units
$6,850,000
Feasible
4-Story Vertical Mixed -Use
0.45 acres, 40 units
$2,897,000
Unlikely
4 157% increase
4 Increased
from negative
to positive
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POLICY OPTIONS & IMPLEMENTATION WORKPLAN
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POLICY OPTIONS & LEVERS CONSIDERED
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IMPLEMENTATION TIME -FRAME OVERVIEW
Straight -forward,
easy -to -implement
administrative or
policy changes to
incentivize near -term
(re-) development
feasibility.
Policies that further
improve feasibility for
residential mixed -use and
implemented in
conjunction with approval
of objective design
standards (ODS)
Policies and programs
that may require longer
term planning and
implementation efforts,
including approval of
funding tools / resources
and CEQA analysis
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IMPLEMENTATION SCHEDULE FOR POLICY OPTIONS
• Preliminary residential
parking standards update
• Set all residential Park Fees
equal to RHASP rate
• Temporarily suspend
affordable housing in -lieu fee
• Expand fee deferment
• Commence public realm
improvements:
> Parklets on El Camino Real
and Main Street
> Gateway signage and Main
Street streetscape
• Expand developer services
and educational materials
• Revisit Voluntary Workforce
Housing Program
Pending ODS:
• Modify retail requirements
(incl. parking)
• Eliminate RAR Program
• Modify height restrictions
• Relax residential private
storage requirements
• Clarify residential density
bonus approach
ong-Term
24+ month
• Increase residential capacity
• Refine parking strategies and
pursue supply investments
• Complete / expand public
realm improvements and
activation and branding
initiatives
• Explore economic
development, site marketing
efforts
• Implement policies to
accelerate redevelopment of
vacant sites
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NEAR -TERM ACTIONS (6 - 12 MONTHS)
Policy Option to Consider Description
Implement preliminary residential Reduce Plan Area residential parking ratios (from 2.25 to 1.5-1.75 per unit) for
parking standards update Specific Plan areas.
Create administrative rule to use "market" land value equal to $2.5 million per
Set all residential Park Fees at acre for park fee calculation based on already established land value for non -
equal level based on RHASP rate subdivision projects in RHASP. Provides certainty and likely cost reduction for
developers.
Introduce City Council motion to temporarily suspend inclusionary housing in -lieu
Temporarily suspend affordable fee all Specific Plan area projects for 18-36 months. On -site requirements still to
housing in -lieu fee remain in effect. Would be effective after the Housing Element Rezone, expected
October, 2024.
Expand fee deferment Adjust administrative rules to allow developers to pay all impact fees at
Certificate of Occupancy rather than at permit issuance.
Commence planned public realm Commence construction of parklets on El Camino Real and Main Street, as well
improvements as gateway signage and streetscape improvements on Main Street.
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MID-TERM ACTIONS (12 - 24 MONTHS)
Expand developer services and Continue efforts to streamline permitting and implement a "one -stop shop" on
educational materials City website for relevant information (e.g., affordable housing requirements,
objective design standards, fee schedules, density bonus)
Revisit Voluntary Workforce Housing Conduct program review and feasibility analysis to optimize rules consistent with
Program Housing Element, evolving State law, economic considerations.
Modify retail requirements
and associated parking
Eliminate RAR Program and allow
residential in most Plan Area
locations
Modify height restrictions
Relax residential private storage
requirements
Clarify residential Density Bonus
Approach
Identify key retail nodes; allow residential only if sufficient ground floor retail is
provided. Consider relaxing retail parking rules for smaller, vertical mixed -use
projects (e.g., reduction for Old Town) and refine/promote in -lieu fee policy.
Eliminate long, discretionary review/allocation process for residential to provide
developers more certainty (until EIR unit count limits are exceeded) and ensure
housing is allowed in most Plan Area locations (including all RHNA sites). ODS
and other Plan Area requirements will still apply.
Increase allowable heights where historic resource protection is not a concern.
Relax requirement for private on -site storage for every unit (e.g., remove
entirely, set as percentage of units, or look to match neighboring cities).
Consider expanding bike / scooter parking requirements.
City should develop an official Schedule or Brief (posted on website) to specify
how State Density Bonus is determined under Plan Area "form -based" rules.
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LONG-TERM ACTIONS (24+ MONTHS)
Increase residential (unit -count)
capacity
Description
aA
Update the EIR for the Specific Plan areas with higher unit counts or implement
administrative waiver program for compliant residential projects (using CEQA
Infill Exemption {Cal. Code Regs. Tit. 14, § 153321)
Refine parking strategies and pursue Implement strategies to manage parking demand and supply. Refine or
supply investments eliminate certain parking standards, plan/finance facility investments, update
fees, refine parking management (e.g., time limits, metering).
Complete and expand public realm
improvements, explore activation
and branding initiatives
Explore economic development and
site marketing efforts
Implement policies to accelerate
redevelopment of vacant sites
Complete City capital projects to enhance public realm; explore complementary
activation and branding programs that engage with businesses, property
owners, public, etc.
Evaluate potential for targeted projects or partnerships that catalyze private
investments. Develop marketing materials to highlight investment opportunities
and future projects within the Specific Plan areas.
Implement carrot/stick options (e.g., waivers, concessions, taxes, code
enforcement) and explore public -private partnerships at key sites.
Economic & Planning Systems EPS PPT Presentation 1 42
DocuSign Envelope ID: 63BOC69D-1BFD-4B3F-8FDF-D6C835E73DF6
PARKING POLICY CONTEXT & PROPOSED STRATEGIES
DocuSign Envelope ID: 63BOC69D-1BFD-4B3F-8FDF-D6C835E73DF6
PARKING REQUIREMENTS SHOULD REFLECT GOALS
HIGH PARKING MINIMUMS AND WALKABILITY GOALS ARE AT ODDS
City Goals for DCCSP:
■ Create a synergistic, desirable, livable, walkable, and attractive area
■ Develop into a pedestrian -oriented, mixed -use district
■ Activate commercial area with residential uses
High parking minimums 4 Lower, flexible parking standards
Compatible with strip malls or low
density residential
More workable for large,
standalone sites
"Sea of parking" discourages walking
Self contained (no spillover effects)
Compatible with compact development,
diversity of uses, shared parking
Easier for small site / infill projects
Support good activity/energy: more
people out of cars, multipurpose trips,
"browsing" and window shopping
Requires management of spillover effects
(district approach)
Orange County (Source: CoStad
Downtown San Luis Obispo (Source: Wikimedia user "hakkun)
Economic & Planning Systems EPS PPT Presentation I 44
DocuSign Envelope ID: 63BOC69D-1BFD-4B3F-8FDF-D6C835E73DF6
TUSTI N ALREADY REQUIRES MORE RESIDENTIAL PARKING THAN NEEDED
Tustin requires 2.25 parking spaces per unit
for all apartments, but...
De velopers typically build less.-
■ Approx. 1.8 spaces per unit
— Number of spaces built in new multifamily rental
developments` over the last 20 years in Irvine, Orange,
and Santa Ana
And residents also typically use fewer.-
■ 1.46 parking spaces per unit (and 1.06 per bedroom)
— The maximum parking usage observed in Sunnyvale, CA
during a large survey** conducted in 201 3-201 5
I� 17 all S-Vp
Source: Costar
Source: Flickr user 'Art Prof'
*Based on information obtained from CoStar for eleven properties with available parking data, representing 6,988 total apartments.
**Survey conducted in the San Francisco and San Jose region and included twenty-five market -rate apartment buildings, representing 6,700 total apartments.
Highest parking usage was observed in the cities of San Jose and Sunnyvale, CA, which have similar car ownership rates to northern Orange County.
Economic & Planning Systems EPS PPT Presentation I 45
DocuSign Envelope ID: 63BOC69D-1BFD-4B3F-8FDF-D6C835E73DF6
NEARBY CITIES HAVE LOWER RESIDENTIAL REQUIREMENTS
Townhomes
3-4 BR
2 per unit
2 per unit
2 per unit
3 per unit
I_
1.5 per unit
Studios
2 per unit
1.2 per unit
1 per unit
1 per unit
1 per unit
113R
2 per unit
1.7 per unit
1.5 per unit
1 per unit
1 per unit
213R
2 per unit
2 per unit
2 per unit
2 per unit
1.5 per unit
313R
2 per unit
2.4 per unit
2 per unit
3 per unit
1.5 per unit
Wrap or
413R
2 per unit
2.7 per unit
2 per unit
4 per unit
2.5 per unit
Podium
Multifamily
Additional
Visitor
0.25 per unit
0.3 per unit
0.4 per unit
0.25 per unit
0 per unit
Parking
Typical
2.25 per
2.07 per
2.03 per
1.69 per
1.21 per
Building
unit
unit
unit
unit
unit
[2]
[1] Multifamily project requirements reflect a project size of 51 units or greater.
[2] Based on average mix of unit sizes in new developments; includes additional visitor parking requirements.
[3] Developers in Tustin have recently utilized the density bonus, in part to get lower parking requirements.
Economic & Planning Systems EPS PPT Presentation I 46
DocuSign Envelope ID: 63BOC69D-1BFD-4B3F-8FDF-D6C835E73DF6
SUCCESSFUL DOWNTOWNS REQUIRE EVEN LESS PARKING
Studios
2 per unit
1 per unit
0-1 per unit
0.5 per unit
113R
2 per unit
1.5 per unit
1.5 per unit
0.5 per unit
213R
2 per unit
1.8 per unit
1.5 per unit
0.75 per unit
Townhome [3]
3BR
2 per unit
2 per unit
1.5 per unit
1.125 per unit
and
ELIMINATED
Multifamily
4BR
2 per unit
2 per unit
1.5 per unit
1.5 per unit
STATEWIDE
(Wrap or
Additional
AS OF
Podium)
Visitor
0.25 per unit
0 per unit
0 per unit
0.1 per unit
]AN 1, 2023
Parking
Typical 2.25 per 1.56 per 1.31 per 0.61 per
Building unit unit unit unit
[4]
[1] Downtown Plaza District includes properties within the eight -block area bounded by Maple Avenue, Grand Street, Almond Avenue and Lemon Street.
[2] Central District of Pasadena has a parking maximum of 1 per unit for studios and 1.75 per unit for remaining types
[3] Tustin does not require visitor parking for "single-family housing." Orange, Pasadena, and San Luis Obispo do not distinguish between different types
of residential uses within their downtown areas.
[3] Based on average mix of unit sizes in new developments; includes additional visitor parking requirements
Economic & Planning Systems EPS PPT Presentation I 47
DocuSign Envelope ID: 63BOC69D-1BFD-4B3F-8FDF-D6C835E73DF6
REFORM IS WIDESPREAD IN STATE AND BEYOND
■ Recent policy trend has been to reduce and
eliminate parking requirements
— Driven by demand, housing crisis, climate change;
can also reduce cost of construction/housing
— Some jurisdictions have instituted maximums to
prioritize compact, walkable development
■ As of 2023, State eliminated all parking minimum
requirements near high -quality transit stops
— Includes %-mile area around Tustin Metrolink station
— Does not currently affect the Specific Plan areas
*Per Urban Land Institute (2015), over 52% of people in U.S. and 63% of millennials would like to live where they do not need to use a car very often.
Economic & Planning Systems EPS PPT Presentation I 48
DocuSign Envelope ID: 63BOC69D-1BFD-4B3F-8FDF-D6C835E73DF6
NEW EXEMPTIONS IN TRADE AREA IMPACT TUSTI N
■ Tustin is affected by reduced �� J
requirements in nearby An l,)im aIra
locations competing for real
p
estate development investment
,
Much of Santa Ana, parts of �J
Anaheim and Orange, can no G-de,Grcve
longer require parking Narth Tuswn
4 :7
• Developers active in the Trade
Area may choose to build in
these areas for favorable
project economics Fountain // �ouA,aania F
Valley I�/y
I 11CTA High Regimcy Raft- 2040
/ ; L 0 HeIF Mile Around Nl2TA Intersections
—- LL51.
Irvine
3 Miles
Not fo' plblic use. City ifTustin 8f3��a. to M•5 H
Economic & Planning Systems EPS PPT Presentation I 49
DocuSign Envelope ID: 63BOC69D-1BFD-4B3F-8FDF-D6C835E73DF6
PRELIMINARY PARKING STANDARDS UPDATE
SHORT-TERM ACTION (6-12 MONTHS)
• EPS feasibility analysis confirmed that
Example Updated Residential
Stan..
parking requirements strongly impact
project financials
Townhomes 3+ BR
2 per unit
— Not conducive to multi -story infill and
studios
1 per unit
vertical mixed -use
113R
1.25 per unit
— Especially difficult on smaller sites
213R
1.5 per unit
• EPS recommends reducing residential
Wrap or 3BR
2 per unit
parking ratios to 1.5 - 1.75 per unit
Podium 4BR
2.5per unit
(blended) across Specific Plans
MultifamilyAdditional
— Although a large change, expected to
Visitor
Parking
0.25 per unit
have minima/ spillover effects
Typical
Building
1.6 per unit
Economic & Planning Systems EPS PPT Presentation 1 50
DocuSign Envelope ID: 63BOC69D-1BFD-4B3F-8FDF-D6C835E73DF6
GROUND FLOOR RETAIL AND ASSOCIATED PARKING
MID-TERM ACTION (12 - 24 MONTHS)
• Identify key nodes (e.g., Old Town district and other important locations) for
requiring ground floor retail, but relax elsewhere
— Requirements currently too ubiquitous; more specifics about size, character, and
location of desired walkable/retail district will aid development, avoid empty storefronts
— At nodes, can make housing a conditional use only if desired retail is built
• Consider making it easier to include retail within mixed -use projects by further
reducing parking requirements
— e.g., 50% less parking required in Old Town district (like downtown San Luis Obispo)
• Clarify and market in -lieu fee policy; consider updating in -lieu fee amounts
— Could limit policy to specific locations (e.g., Old Town district, small sites only)
— Could use fee to help finance new parking supply (long-term)
Economic & Planning Systems EPS PPT Presentation 1 51
DocuSign Envelope ID: 63BOC69D-1BFD-4B3F-8FDF-D6C835E73DF6
REFINE PARKING STRATEGIES & PURSUE SUPPLY INVESTMENTS
LONG TERM ACTION (24+ MONTHS)
• Further refine or eliminate certain parking standards
— Consider additional reductions, especially for specific subarea (e.g., Old Town district)
• Monitor and manage spillover effects:
— Implement time limits, metering at high volume locations to better manage existing
supply, reduce perception of parking shortage - may require parking study
• Consider additional programs to reduce parking demand:
— Unbundled parking requirements (must charge rent for parking space)
— Bicycle / scooter parking requirements and associated parking standard reductions
— Invest in public parking for bicycles
■ Plan for additional
supply Old Town
supply as more
development occurs
— Identify sites and
consider potential
financing options
for public facilities
Economic & Planning Systems EPS PPT Presentation 1 52
DocuSign Envelope ID: 63BOC69D-1BFD-4B3F-8FDF-D6C835E73DF6
PARKING FACILITY FINANCING OPTIONS (OLD TOWN)
Parking structure or other capacity improvements should
be justified by a detailed study. Financing options include:
• Developer fees and/or user fees
— In -lieu fees
— Impact Fees
— User fees (e.g., parking metering, permits)
■ Certificates of Participation (COP) bond
■ General Fund earmark
■ District Formation
— Enhanced Infrastructure Financing District (EIFD)
— Mello -Roos CFD or Business Improvement District
— Parking District
■ Public -Private Partnerships (e.g., shared parking)
Source: Nickruser "Umberto Brayj"
Economic & Planning Systems EPS PPT Presentation I 53
DocuSign Envelope ID: 63BOC69D-1BFD-4B3F-8FDF-D6C835E73DF6
LONG TERM ACTION OPTIONS
DocuSign Envelope ID: 63BOC69D-1BFD-4B3F-8FDF-D6C835E73DF6
POLICIES TO ACCELERATE REDEVELOPMENT OF VACANT SITES
Incentives (Carrots)
■ Temporary / expiring benefits to create urgency
(e.g., fee waivers, affordable housing ordinance
exemptions, fast -track approval)
■ Additional density/zoning incentives,
financial concessions (including 1033 exchange)
Penalties (Sticks)
■ New or enhanced code enforcement, "public nuisance"
policies, or fa4ade/land scaping rules
■ Vacant land tax (requires voter approval)
■ Eminent domain for public facilities (onerous process)
Other
■ Public -Private Partnerships (e.g., development agreements, shared parking facility)
■ Public investment, land assembly assistance (e.g., street vacations)
Economic & Planning Systems EPS PPT Presentation 1 55
DocuSign Envelope ID: 63BOC69D-1BFD-4B3F-8FDF-D6C835E73DF6
ACTIVATION AND BRANDING INITIATIVES
OBJECTIVE
■ Establish Old Town as a "destination" and enhance vibrancy
at all times of day (target for Old Town) through a combination
of attractions/events and marketing
OPTIONS
■ Implement programming (food truck nights, street fair, outdoor
movies, etc.) or temporary use (park space, beer garden, pop-up
business installation) on a vacant site-
■ Continue to invest in signage, public art
■ Establish tenanting or branding goals and themes
■ Provide city sponsorship to grow Merchants Association
■ Dedicate staff resources
*Negotiating a temporary use of vacant site may require entitlement guarantee
Economic & Planning Systems EPS PPT Presentation 1 56
DocuSign Envelope ID: 63BOC69D-1BFD-4B3F-8FDF-D6C835E73DF6
REFERENCE
DocuSign Envelope ID: 63BOC69D-1BFD-4B3F-8FDF-D6C835E73DF6
DCCSP RETAIL REQUIREMENTS
Definition from DCCSP:
■ Mixed -use commercial space shall span the
building width of Principal Street frontages and be
a minimum of 45 feet deep.
• In horizontal mixed -use, residences are allowed
to be on the ground floor, provided they do not
front on a Principal Street.
Assumption:
■ Exemption for parking ingress/egress
■ Exemption for multifamily residential lobby
Principal Street- Where allowed within a DA and entitled as provided in chapter 5, Administration
and Implementation Plan, mixed use shall be designed as vertical format with first Floor commercial
use.
Non-P rincipa I Street- Whom allowed within a Mand entitledas provided in Chapter6,Administration
and Implementation Plan, mixed use maybe designed as vertical format with first Floor commercial or
horizontal format in conjunction with commercial use in a separate building. Livehvork units, where
allowed and entitled, shall be limited to Non -Principal Streets.
Economic & Planning Systems EPS PPT Presentation 1 58