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HomeMy WebLinkAboutItem 1a: Continued Public Hearing: Extended Stay America Hotel: Overturn Planning Commission Decision rprAll%$iyl gia s..w.s.uu 444aiiy aft STAFF REPORT Development Services Department DATE: June 19, 2012 TO: Honorable Mayor and City Council FROM: Jason Kruckeberg, Assistant City Manager/Development Services Director By: Jim Kasama, Community Development Administrator SUBJECT: A CONTINUED PUBLIC HEARING FOR A COUNCILMEMBER CALL UP FOR REVIEW OF ARCADIA PLANNING COMMISSION APPROVAL OF CONDITIONAL USE PERMIT APPLICATION NO. CUP 12-02 TO REVISE THE OPERATIONAL CONDITIONS OF APPROVAL OF CONDITIONAL USE PERMIT 97-002 THAT APPROVED THE EXISTING EXTENDED STAY AMERICA HOTEL AT 401 EAST SANTA CLARA STREET Recommended Action: Overturn the Planning Commission's decision and adopt the Amendment to CUP 97-002 with the original Conditions of Approval SUMMARY Conditional Use Permit Application No. CUP 12-02 was filed to revise the operational Conditions of Approval for the existing Extended Stay America hotel at 401 E. Santa Clara Street. The Planning Commission conditionally approved the application at their April 24, 2012, meeting. That decision was called up for full City Council consideration by Council Member John Wuo on April 30, 2012. At the June 5, 2012, City Council meeting, a public hearing was opened for the City Council to consider Conditional Use Permit Application No. CUP 12-02. Attached are the June 5, 2012, staff report and the letter that the Applicant distributed to the City Council. After discussion, the public hearing was continued to the City Council's next meeting for the City Attorney to prepare additional language for the condition of approval regarding indemnification. It is recommended that the City Council overturn the Planning Commission's decision and adopt the Amendment to CUP 97-002 with the original Conditions of Approval as recommended by the City Attorney. DISCUSSION Conditional Use Permit Application No. CUP 12-02 was filed to primarily clarify the applicability of the City's transient occupancy tax (TOT). In particular, to address a Appeal—CUP 12-02—Continuance Extended Stay America 401 E. Santa Clara Street June 19, 2012—page 2 provision that requires hotel guests to re-register every 30 days if their length of stay will exceed 30 consecutive days. Additionally, two (2) new conditions are being added to, replace provisions of the Redevelopment Agency Disposition and Development Agreement. These are Conditions No. 8 and 9 of the attached Planning Commission Resolution No. 1851. Furthermore, a new Condition No. 10, regarding indemnification is to be added. It is this condition that is under discussion, and for which additional language was requested of the City Attorney. Condition No. 10, as approved by the Planning Commission, reads as follows: 10. The applicant shall defend, indemnify, and hold harmless the City of Arcadia, its agents, officers or employees from any claim, action or proceeding against the City or its agents, officers or employees to attack, set aside, void or annul this approval and modification of the subject application whether such challenge is against the City, its legislative body, advisory agencies or administrative officers. The City will promptly notify the applicant of any such claim, action or proceeding against the City and the applicant will either undertake defense of the matter and pay the City's associated reasonable legal costs, or will advance funds to pay for defense of the matter by the City Attorney. A decision to undertake the defense of the matter shall be at the sole and absolute discretion of the City of Arcadia. While this indemnification provision does not apply to any claim or case filed prior to this application, INCLUDING THE SPENCER MATTER DESCRIBED BELOW, applicant further agrees that this provision shall not be construed as a limitation on the applicant and the City later entering into an indemnification, defense, or other mutual agreement relating to the matter of Alex Spencer, et al. v. HVM L.L.C. Management Co. d/b/a Extended Stay Hotels, et al., Los Angeles County Superior Court Case No. GC047629. The City Council, at the June 5, 2012, public hearing, directed the City Attorney to provide additional language that would preclude the Applicant from filing any claims against the City, regardless of the result of the litigation. The City Attorney has drafted the following to be added to Condition No. 10: Furthermore, and notwithstanding any provision herein to the contrary, neither the applicant nor any person or entity affiliated with the applicant shall file any claim, cross-claim, complaint, or cross-complaint (collectively, "Extended Stay Claims") against the City and/or its officials, officers, employees or agents (collectively, "City Parties") pertaining to any fact or issue involved in or which gave rise to said litigation, and the applicant shall indemnify and defend the City Parties for and against any such Extended Stay Claims. Appeal—CUP 12-02—Continuance Extended Stay America 401 E. Santa Clara Street June 19, 2012—page 3 RECOMMENDATION It is recommended that the City Council overturn the Planning Commission's decision and adopt the Amendment to CUP 97-002 with the original Conditions of Approval recommended by the City Attorney. Approved: Dominic Lazza City Manager Attachments: June 5, 2012 City Council Staff Report with the following attachments: Aerial Photo with Zoning Information Photos of Subject Property Plans of Subject Property Planning Commission Resolution No. 1545 March 27, 2012 Planning Commission Staff Report March 27, 2012 Planning Commission Minutes Excerpt April 24, 2012 Planning Commission Staff Report April 24, 2012 Planning Commission Minutes Excerpt March 27, 2012 Letter from Applicant Planning Commission Resolution No. 1851 Notice of Exemption June 5, 2012 Letter from Applicant of ARCO' LIPURn/ a A 1 . � 17.-.7,7,,g,sifts k-4, -���� �6 PORT °'444444ity° �°� S TAPP Development Services Department DATE: June 5, 2012 TO: Mayor and City Council FROM: Jason Kruckeberg, Assistant City Manager/Development Services Directory= By: Jim Kasama, Community Development Administrator Prepared By: Tim Schwehr, Assistant Planner F SUBJECT: A COUNCILMEMBER CALL UP FOR REVIEW OF ARCADIA PLANNING COMMISSION APPROVAL OF CONDITIONAL USE PERMIT APPLICATION NO. CUP 12-02 TO REVISE THE OPERATIONAL CONDITIONS OF APPROVAL OF CONDITIONAL USE PERMIT 97-002 THAT APPROVED THE EXISTING EXTENDED STAY AMERICA HOTEL AT 401 EAST SANTA CLARA STREET Recommended Action: Overturn the Planning Commission's decision and adopt the Amendment to CUP 97-002 with the original Conditions of Approval SUMMARY Conditional Use Permit (CUP) Application No. CUP 12-02 was filed by Mr. Timothy B. McOsker, an attorney with the firm, Mayer Brown, LLP. He is representing the hotel management company, HVM, LLC ("Applicant"), which operates the Extended Stay America Hotel at 401 E. Santa Clara Street. An aerial photo of the site with zoning information is attached. Extended Stay America is currently involved in litigation relating to its collection of the City's transient occupancy tax (TOT). In order to clarify the method of applying the TOT, the Applicant submitted Conditional Use Permit Application No. CUP 12- 02 to revise the operational Conditions of Approval by which the existing hotel was approved. Included in the new Conditions of Approval are provisions for indemnification by the Applicant, to which the Applicant disagrees. The Planning Commission, at their April 24, 2012, meeting approved Conditional Use Permit Application No. CUP 12-02 with indemnification provisions that do not provide as much protection for the City as was recommended by the City Attorney, and on April 30, 2012, Council Member. John Wuo called up for review the Planning Commission decision for purposes of full City Council consideration of the matter. Appeal — CUP 12-02 Extended Stay America 401 E. Santa Clara Street June 5, 2012 — page 2 It is recommended that the City Council overturn the Planning Commission's decision and adopt the Amendment to CUP 97-002 with the original Conditions of Approval recommended by the City Attorney. BACKGROUND, The subject property, 401 East Santa Clara Street, is developed with a three-story, 122 studio-room hotel constructed in 1998 (See the attached photos and plans). The hotel use was developed in cooperation with the Arcadia Redevelopment Agency and approved by Conditional Use Permit No. CUP 97-002 and the Conditions of Approval were imposed by the adoption of the attached Planning Commission Resolution No. 1545. The existing hotel is compatible with the other uses in the area, and is consistent with the CPD-1 Zoning and the General Plan's Commercial designation of the property. The new Conditions will not affect this compatibility or consistency. The revised Conditions add protections for the City from claims and actions, reinforce the original Conditions of Approval that this hotel will not provide permanent housing, and that the property will be maintained to high standards and in accordance with the City's property maintenance requirements. The issue when Conditional Use Permit Application No. CUP 12-02 was filed was primarily the clarification of the method by which the City's transient occupancy tax (TOT) was applied. This was in response to an action by former customers regarding their payment of the TOT, and the proposed revisions to the Conditions of Approval are part of Extended Stay America's efforts to resolve the legal dispute. Specifically, CUP 97-002 included a condition requiring lodgers to re-register every 30 days in the event their stays exceeded 30 consecutive days. The revised Conditions proposed by the Applicant will delete this language and simply provide that the hotel will comply with the City's current TOT regulations, even if later amended. On April 10, 2012, the voters approved an amendment to the City's TOT regulations that extended the period of occupancy subject to the TOT from 30 days to 90 days. Extended Stay America will comply with this amended regulation. The Planning Commission considered Conditional Use Permit Application No. CUP 12-02 at its March 27, 2012, meeting, and continued the hearing to its April 24, 2012, meeting to have staff revise a proposed Condition of Approval. The March 27, 2012, and April 24, 2012, Planning Commission staff reports and minutes are attached. The additional Condition at issue is for indemnity provisions. The City Attorney recommended an indemnity provision that would be applicable to all future and current claims and actions retroactive to the original Conditional Use Permit approval in 1997. The applicant questioned the fairness of the retroactive aspect of the indemnity requirement, and the Planning Commission Appeal — CUP 12-02 Extended Stay America 401 E. Santa Clara Street June 5, 2012 —page 3 requested that the condition be revised to be applicable to claims and actions based on the amended Conditional Use Permit. That revised condition was presented at the continuance of the public hearing on April 24, 2012, and the Planning Commission approved Conditional Use Permit Application No. CUP 12- 02, and adopted the attached Planning Commission Resolution No. 1851. On April 30, 2012, Council Member Wuo called up for review the Planning Commission decision for purposes of full City Council consideration of the matter. DISCUSSION Conditional Use Permit Application No. CUP 12-02 was filed to primarily clarify the applicability of the City's transient occupancy tax (TOT). In particular, to address the second sentence (underlined) of Condition No. 2 of CUP 97-002, which reads as follows: 2. CUP 97-002 is specifically for a transient hotel use. Guest occupants shall re-register every 30-days in the event that their length of stay will exceed 30 consecutive days. The applicant and property owner shall execute and record a legal instrument precluding conversion of the project into a residential use. This legal instrument shall be prepared by and approved by the City Attorney. Extended Stay America is currently involved in litigation relating to this condition (Alex Spencer et. al v. HVM LLC Management Co. dba Extended Stay Hotels, et al.) As a means of clarifying this condition and in an effort to resolve the legal dispute, the Applicant proposed that this condition be amended to read as follows: 2. CUP 97-002 is specifically for a transient hotel use only. The hotel shall not be used for permanent housing. The Operator shall collect and remit the Transient Occupancy Tax to the fullest extent authorized by law, as may be amended from time to time. The applicant shall execute and record a legal instrument precluding conversion of the project into a residential use. Reasonable expenses and costs in connection with preparation of the legal instrument shall be paid for by the Applicant, and the legal instrument shall be prepared by and approved by the City Attorney. Additionally, because this hotel was developed in cooperation with the Arcadia Redevelopment Agency (Agency), a Disposition and Development Agreement (DDA) was executed between the Agency and the hotel developer. The DDA reiterated the restriction on converting the hotel to permanent housing, and also • included provisions that clarified the applicability of the Conditional Use Permit to any subsequent hotels, and that the Agency be notified of any sale or transfer of any part of the ownership or improvements of the hotel. The DDA also included provisions regarding the quality of the hotel and the maintenance of the improvements. During the discussions for resolving the legal dispute, the prospect Appeal —CUP 12-02 Extended Stay America 401 E. Santa Clara Street June 5, 2012— page 4 of the elimination of redevelopment arose, and because of that possibility, the Applicant, in cooperation with the City Attorney, included two (2) new conditions to replace the provisions of the DDA. These are Conditions No. 8 and 9 of the attached Planning Commission Resolution No. 1851. Furthermore, the Applicant included an indemnification provision. This was included because indemnification is generally required for all Conditional Use Permits, but it was not a requirement of CUP 97-002 when the subject hotel was initially approved. The Applicant's indemnification proposal read as follows: 10. Except in the matter of Alex Spencer, et al. v HVM L.L.C. Management Co. d/b/a Extended Stay Hotels, et al., Los Angeles County Superior Court Case no. GC047629, the applicant shall defend, indemnify, and hold harmless the City of Arcadia, its agents, officers or employees from any claim, action or proceeding against the City or its agents, officers or employees to attack, set aside, void or annul an approval or modification of the subject application by the City, its legislative body, advisory agencies or administrative officers. The City will promptly notify the applicant of any such claim, action or proceeding against the City and the applicant will either undertake defense bf the matter and pay the City's associated reasonable legal costs, or will advance funds to pay for defense of the matter by the City Attorney. A decision to undertake the defense of the matter shall be at the sole and absolute discretion of the City of Arcadia. Notwithstanding anything to the contrary, in the matter of Alex Spencer, et al. v. HVM L.L.C. Management Co. d/b/a Extended Stay Hotels, et al., Los Angeles County Superior Court Case No. GC047629, there is no indemnification or defense condition upon the applicant; the parties shall bear their own costs and fees in defense in that matter; and each party shall be responsible for its own costs and fees resulting from settlement, adjudication, or other resolution of the case. The City Attorney, in order to better protect the City from present and any future claims and actions related to this hotel and Conditional Use Permit, recommended the following indemnification provisions in place of the applicant's proposal: 10. This approval shall not be effective unless and until; A. The Applicant, or their successor in interest, executes an agreement with the City of Arcadia agreeing to indemnify and hold harmless the City, its officials, officers, agents and employees ("City Parties") from, any and all actions, suits, claims, damages to persons or property, losses, costs, penalties, obligations, errors, omissions or liabilities, that have been asserted in the matter of Alex Spencer, et al. v. HVM L.L.C. Management Co. d/b/a Extended Stay Hotels, et al., Los Angeles Superior Court Case No. GC047629 or that may be asserted Appeal — CUP 12-02 Extended Stay America 401 E. Santa Clara Street June 5, 2012 —page 5 or claimed in the future by any person, firm or entity arising out of or in connection with an appeal of that matter or this CUP Amendment (hereinafter "Indemnified Claims and Liabilities"). At a minimum, such indemnity shall include the following: 1. Applicant shall defend and pay for any current and future action or actions filed in connection with any of said Indemnified Claims and Liabilities and will pay all costs and expenses, including legal costs and attorneys' fees incurred in connection therewith; 2. Applicant shall promptly pay any judgment rendered against the City and Applicant for any such Indemnified Claims and Liabilities; and Applicant shall save and hold the City and the City Parties harmless therefrom; and 3. To the extent the City is or is made a party to any action or proceeding filed or prosecuted against the Applicant for such Indemnified Claims and Liabilities, Applicant shall pay to the City any and all costs and expenses incurred by the City in such action or proceeding, including but not limited to, legal costs and attorneys' fees; or B. There is final disposition in the matter of Alex Spencer, et al. v. HVM L.L.C. Management Co. d/b/a Extended Stay Hotels, et al., Los Angeles Superior Court Case No. GC047629 in the form of an executed settlement agreement among all of the parties to the case or judgment issued in favor of the plaintiffs. At the regular meeting on March 27, 2012, the Planning Commission considered Conditional Use Permit Application No. CUP 12-02 at a public hearing, and the applicant presented the attached letter regarding the indemnification requirement. After receiving additional testimony and discussion, the Planning Commission continued the public hearing to its April 24, 2012, meeting and directed staff to revise Condition No. 10 to remove the retroactive aspects of the indemnification provisions. In response to the Planning Commission's direction, the City Attorney and the Applicant reviewed the language of the indemnification provisions, and the following was submitted for the Planning Commission to consider at their April 24, 2012, meeting: The applicant shall defend, indemnify, and hold harmless the City of Arcadia, its agents, officers or employees from any claim, action or proceeding against the City or its agents, officers or employees to attack, set aside, void or annul this approval and modification of the subject application whether such challenge is against the City, its Appeal — CUP 12-02 Extended Stay America 401 E. Santa Clara Street June 5, 2012—page 6 legislative body, advisory agencies or administrative officers. The City will promptly notify the applicant of any such claim, action or proceeding against the City and the applicant will either undertake defense of the matter and pay the City's associated reasonable legal costs, or will advance funds to pay for defense of the matter by the City Attorney. A decision to undertake the defense of the matter shall be at the sole and absolute discretion of the City of Arcadia. While this indemnification provision does not apply to any claim or case filed prior to this application, INCLUDING THE SPENCER MATTER DESCRIBED BELOW, applicant further agrees that this provision shall not be construed as a limitation on the applicant and the City later entering into an indemnification, defense, or other mutual agreement relating to the matter of Alex Spencer, et al. v. HVM L.L.C. Management Co. d/b/a Extended Stay Hotels, et al., Los Angeles County Superior Court Case No. GC047629. The City Attorney's recommendation, however, was that the indemnification provisions should be those originally drafted by his office; that is, retroactively applicable to the 1997 approval of the initial Conditional Use Permit. Prerequisite Conditions Section 9275.1.2 of the Arcadia Municipal Code requires that for a Conditional Use Permit to be granted, it must be found that all of the following prerequisite conditions can be satisfied: 1. That the granting of such Conditional Use Permit will not be detrimental to the public health or welfare or injurious to the property or improvements in such zone or vicinity. The proposed revisions to the operational Conditions of Approval are consistent with the intended and existing commercial use of the property and will not have any adverse impacts to the neighboring businesses or properties. 2. That the use applied for at the location indicated is properly one for which a Conditional Use Permit is authorized. Per Sections 9260.1.12.7 and 9275.1.50 of the Arcadia Municipal Code, hotels are allowed in the CPD-1 zone subject to the approval of a Conditional Use Permit. The existing hotel was approved by Conditional Use Permit No. CUP 97-002 (Resolution No. 1545). 3. That the site for the proposed use is adequate in size and shape to accommodate said use, and all yards, spaces, walls, fences, parking, loading, landscaping, and other features required to adjust said use with the land and uses in the neighborhood. The site is adequate for the existing hotel. Any Appeal —CUP 12-02 Extended Stay America 401 E. Santa Clara Street June 5, 2012 — page 7 necessary adjustments to the existing facility since its development have been readily accommodated. 4. That the site abuts streets and highways adequate in width and pavement type to carry the kind of traffic generated by the proposed use. The site is accessed via East Santa Clara Street, which is a collector street with two, undivided traffic lanes; one in each direction, and is adequate for the traffic demand of the existing use. 5. That the granting of such Conditional Use Permit will not adversely affect the comprehensive General Plan. The existing hotel is a commercial use that is consistent with the General Plan Land Use Designation of the site. Based on the foregoing, the existing hotel and the proposed operational revisions satisfy each of the prerequisite findings. PLANNING COMMISSION ACTION Despite the City Attorney's recommendation that the indemnification provisions should be those originally drafted by his office, the Planning Commission voted unanimously on April 24, 2012, to approve Conditional Use Permit Application No. CUP 12-02 and adopt the attached Planning Commission Resolution No. 1851 to revise the operational Conditions of Approval of the hotel at 401 E. Santa Clara Street as proposed by the Applicant, including the aforementioned, non-retroactive indemnification provisions. ENVIRONMENTAL ASSESSMENT Because no physical alterations to the property are proposed or necessary, this project is categorically exempt from the provisions of the California Environmental Quality Act (CEQA) pursuant to Section 15301 of the CEQA Guidelines for the operations of an existing facility. A Notice of Exemption is attached. FISCAL IMPACT The fiscal impacts of whether the indemnification provisions are retroactive to 1997, or are to be applied from the approval of Conditional Use Permit No. CUP 12-02 are indeterminable. If the indemnification provisions are not retroactive, the City will likely be liable for some part of the current litigation, but otherwise, it is not possible to foretell if there will be any other claims or actions involving the subject hotel and the City on issues arising from hotel operations prior to the approval of CUP 12-02. With the indemnifications proposed by the City Attorney, the City would be shielded from any and all claims, including the present case and any future claims based on either past, current, or future activity. Appeal —CUP 12-02 Extended Stay America 401 E. Santa Clara Street June 5, 2012 — page 8 RECOMMENDATION It is recommended that the City Council overturn the Planning Commission's decision and adopt the Amendment to CUP 97-002 with the original Conditions of Approval recommended by the City Attorney. Approved: Dominic Lazzar City Manager Attachments: Aerial Photo with Zoning Information Photos of Subject Property Plans of Subject Property Planning Commission Resolution No. 1545 March 27, 2012 Planning Commission Staff Report March 27, 2012 Planning Commission Minutes Excerpt April 24, 2012 Planning Commission Staff Report April 24, 2012 Planning Commission Minutes Excerpt March 27, 2012 Letter from Applicant Planning Commission Resolution No. 1851 Notice of Exemption • ." :" • dl, p , ry „§t„,;.„„, ., �— y�� .t 4' Nom,r'I 21.0 Freeway !�P[ 5 ° r. . 4 k ., L ” "•w :, ° k R—I subject '\t2 ''''V� ,'�F � Property t„ J�8 1 2'7�i f .> g U § 1 I' i 1µ" N.' 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J � i. :,1 � m Z QZ oJ Z o �o N ce ' ' 2 W U) RESOLUTION NO. 1545 A RESOLUTION OF THE PLANNING COMMISSION OF THE CITY OF ARCADIA, CALIFORNIA, GRANTING CONDITIONAL USE PERMIT NO. CUP 97-002 FOR A THREE-STORY, 122 STUDIO- ROOM HOTEL AT 401 EAST SANTA CLARA STREET. WHEREAS, on February 12, 1997, an application was filed by Mr. Sig Raulinaitis of Extended Stay America, Inc. for a three-story, 122 studio-room hotel, Development Services Department Case No. CUP 97-002, to be located on a site on the north side of East Santa Clara Street bounded on the west side by the Santa Anita Wash, on the north side by the Foothill Freeway, and on the east side by a one-acre vacant remainder parcel, which property is commonly known as 401 East Santa Clara Street, and more particularly described in Exhibit"A". WHEREAS, a. public hearing was held on March 25, 1997, at which time all interested persons were given full opportunity to be heard and to present evidence; NOW, THEREFORE, THE PLANNING COMMISSION OF THE CITY OF ARCADIA HEREBY RESOLVES AS FOLLOWS: SECTION 1. That the factual data submitted by the Development Services Department in the attached staff report'are true and correct. SECTION 2. This Commission finds: A. That the evaluation of the environmental impacts as set forth in the initial study are appropriate and that the project will have no significant effect upon the environment within the meaning of the California Environmental Quality Act of 1970, and, when considering the project as a whole, there was no evidence before the City that the proposed project would have any potentially adverse effect on wildlife resources or the habitat upon which wildlife depends, and therefore, the Negative Declaration was approved. B. That the granting of the Conditional Use Permit will not be detrimental to the public health or welfare, nor injurious to the property or improvements in such zone or vicinity in which the property is located. C. That the use applied for at the location indicated is properly one for which a Conditional Use Permit is authorized. D. That the site for the proposed use is adequate in size and shape to accommodate said use, and all yards, spaces, walls, fences, parking, loading, landscaping, and other features required to adjust said use with the land and uses hi the neighborhood. E. That the site abuts streets and highways adequate in width and pavement type to carry the kind of traffic generated by the proposed use. F. That the granting of the Conditional Use Permit will not adversely affect the comprehensive general plan. SECTION 3. That for the foregoing reasons this Commission grants a Conditional Use Permit for a three-story, 122 studio-room hotel upon the following conditions: I. The hotel, accessory improvements, and the site shall be maintained and operated in a manner that is consistent with the proposal and plans submitted and approved for CUP 97-002, and shall include, but not be limited to, the following provisions: a. 24-hour, on-site management shall be provided; b. Fencing and other enclosures on the property shall be wrought iron or masonry with a decorative finish,except for the fencing along the freeway right-of-way. c. A detailed landscaping and irrigation plan shall be prepared for both the project site and the remainder parcel by a licensed landscape architect and shall be subject to approval by the Development Services.Department. 2. CUP 97-002 is specifically for a transient hotel use. Guest occupants shall re- register every 30-days in the event that their length of stay will exceed 30 consecutive days. The applicant and property owner shall execute and record a legal instrument - 2- 1545 precluding conversion of the project into a residential use. This legal instrument shall be prepared by and approved by the City Attorney. 3. The items listed in the August 28, 1996 memorandum from the Acting City Engineer are to be complied with to the satisfaction of the Engineering Division including the revisions indicated on the response dated February 25, 1997. 4. All local code requirements regarding accessibility, fire protection, occupancy, and safety shall be complied with to the satisfaction of Building Services and the Fire Department. 5. Water services, as listed in the February 27, 1997 memorandum from the Maintenance Services Division shall be complied with to the satisfaction of the Arcadia Water Division. 6. Approval of CUP 97-002 shall not take effect until the property owner and applicant have executed and filed the Acceptance Form from the Development Services Department to indicate acceptance of the conditions of.approval. 7. All conditions of approval shall be complied with prior to completion and .occupancy of the hotel. Noncompliance with the plans and conditions of CUP 97-002 shall constitute grounds for suspension and/or revocation of any approvals in accordance with Section 9275.2.15 of the Arcadia Municipal Code, which could result in a temporary and/or permanent closing of the hotel. SECTION 4. The decision, findings.and conditions of approval contained in this Resolution reflect the Planning Commission's action of March 25, 1997 by the following vote: AYES: Commissioners Bell,Bruckner,Huang,Kalemkiarian, Murphy and Sleeter NOES: None ABSENT: None ABSTAIN: None _ 3- 1545 SECTION 5. The Secretary shall certify to the adoption of this Resolution and shall cause a copy to be forwarded to the City Council of the City of Arcadia. I HEREBY CERTIFY that the foregoing Resolution No. 1545 was adopted at a regular meeting of the Planning Commission held on the 8th day of April, 1997 by the following vote: AYES: Commissioners Huang,Kalemkiarian,.Murphy and Sleeter NOES: None ABSENT: Commissioners Bell and Bruckner ABSTAIN: None 41101A-_ ..4_4161... el . I an,Planning Commission ity of Arcadia ATTEST: 410r ....001"" Alt.„...4,2 - ..„..-.400111_, . -- Secretary,Planning Commission City of Arcadia APPROVED AS TO FORM: ??1.1 6;ziiff xg-e_____ Michael H. Miller,City Attorney City of Arcadia - 4- 1545 or ARC • O,yrrok,V1 , ed9�� a- • Au(uN 3,as N f �e� il;J STAFF REPORT ,.icy. Development Services Department March 27, 2012 TO: Arcadia Planning Commission FROM: Jim Kasama, Community Development Administrator By: Tim Schwehr, Assistant Planner SUBJECT: Conditional Use Permit Application No. CUP 12-02 to amend CUP 97-002 to revise the operational conditions of approval for the Extended Stay America hotel in the Commercial Planned Development (CPD-1) zone at 401 E. Santa Clara Street SUMMARY Conditional Use Permit Application No. CUP 12-02 was filed by Mr. Timothy B. McOsker, an attorney with the firm, Mayer Brown, LLP. He is representing the hotel management company, HVM, LLC ("Applicant"), which operates the Extended Stay America Hotel at 401 E. Santa Clara Street. An aerial photo of the site with zoning information is attached. In order to clarify the method of applying the City's transient occupancy tax, the Applicant is requesting to revise the operational conditions of approval of the original Conditional Use Permit (CUP 97-002 / Resolution No. 1545 — attached) by which the existing hotel was approved. Specifically, CUP 97-002 included a condition requiring lodgers to re-register every 30 days in the event their stays exceeded 30 consecutive days. The revised conditions proposed by the Applicant will delete this language and simply provide that the hotel will have to comply with the City's existing transient occupancy tax regulations (TOT), even if later amended. As you may be aware, a revised version of the City's TOT regulations has been placed on the April 10, 2012 ballot. That ballot initiative would allow the City to extend the period of occupancy subject to the TOT from 30 days to 90 days. Thus, if that ballot initiative is approved and CUP 12-02 is approved, the Applicant will have to comply with the new TOT regulations. The Development Services Department is recommending approval of this application. GENERAL INFORMATION APPLICANT: Mr. Timothy B. McOsker of Mayer Brown, LLP Representing the property manager, HVM LLC LOCATION: 401 E. Santa Clara Street— Extended Stay America Hotel REQUEST: To amend Conditional Use Permit No. CUP 97-002 (Arcadia Planning Commission Resolution No. 1545) to revise the operational conditions of approval SITE AREA: 2.38 acres (103,673 square feet) FRONTAGE: Approximately 90 feet along E. Santa Clara Street EXISTING LAND USE & ZONING: The site is currently developed with a three-story, 122 studio-room hotel constructed in 1998. The property is zoned CPD-1 , Commercial Planned Development. SURROUNDING LAND USES & ZONING: North: 210/Foothill Freeway — unzoned South: Hotel & Medical Offices — zoned CPD-1 East: Two-story, R&D facility— zoned CPD-1 West: Santa Anita Wash, Three-story Office Building, & City Reservoir — zoned S-2 (Public Purpose), CPD-1, & S-2, respectively GENERAL PLAN DESIGNATION: Commercial (0.5 FAR) — The Commercial designation is intended to permit a wide range of commercial uses which serve both neighborhood and citywide markets. The designation allows a broad array of commercial enterprises, including restaurants, durable goods sales, food stores, lodging, professional offices, specialty shops, indoor and outdoor recreational facilities, and entertainment uses. PUBLIC HEARING NOTIFICATION Public hearing notices for CUP 12-02 were mailed on March 16, 2012 to the owners and occupants of those properties that are located within 300 feet of the subject property — see the attached radius map. Because staff considers the proposed project exempt from the requirements of the California Environmental Quality Act (CEQA) the public hearing notice was not published in a local newspaper. BACKGROUND INFORMATION, The site is developed with a three-story, 122 studio-room hotel constructed in 1998 (See the attached photos and plans). The hotel use was developed in cooperation with the Arcadia Redevelopment Agency and approved by Conditional Use Permit No. CUP 97-002. The conditions of approval were formerly imposed by the adoption of Planning CUP 12-02 Extended Stay America 401 E. Santa Clara Street March 27, 2012 — page 2 Commission Resolution No. 1545 (attached). At issue is the second sentence (underlined) of condition no. 2, which reads as follows: 2. CUP 97-002 is specifically for a transient hotel use. Guest occupants shall re-register every 30-days in the event that their length of stay will exceed 30 consecutive days. The applicant and property owner shall execute and record a legal instrument precluding conversion of the project into a residential use. This legal instrument shall be prepared by and approved by the City Attorney. Extended Stay America is currently involved in litigation relating to this condition (Alex Spencer et. at v. HVM LLC Management Co. dba Extended Stay Hotels, et al.) As a means of clarifying this condition and resolving the legal dispute, the Applicant is proposing this amendment. PROPOSAL AND ANALYSIS The applicant is proposing to revise condition no. 2 of Resolution No. 1545 (CUP 97- 002) to maintain the City's restriction that this use remain a hotel and not become permanent housing, and stipulate that the transient occupancy tax be collected as provided for by law. The revision will also necessitate that the legal instrument that was executed and recorded as called for by the original condition no. 2 be revised as well; and wording is included to effectuate that. The proposed new condition would read as follows: 2. CUP 97-002 is specifically for a transient hotel use only. The hotel shall not be used for permanent housing. The Operator shall collect and remit the Transient Occupancy Tax to the fullest extent authorized by law, as may be amended from time to time. The applicant shall execute and record a legal instrument precluding conversion of the project into a residential use. Reasonable expenses and costs in connection with preparation of the legal instrument shall be paid for by the Applicant, and the legal instrument shall be prepared by and approved by the City Attorney. Additionally, because this hotel was developed in cooperation with the Arcadia Redevelopment Agency (Agency) a Disposition and Development Agreement (DDA) was executed between the Agency and the hotel developer. The DDA reiterated the restriction on converting the hotel to permanent housing, and also included provisions that clarified the applicability of the Conditional Use Permit to any subsequent hotels, and that the Agency be notified of any sale or transfer of any part of the ownership or improvements of the hotel. The DDA also included provisions regarding the quality of the hotel and the maintenance of the improvements. During the legal dispute and the discussions for its resolution, the prospect of the elimination of redevelopment arose, and in anticipation of any ramifications of that, the City Attorney is proposing the following two (2) new conditions to reiterate those provisions of the DDA: CUP 12-02 Extended Stay America 401 E. Santa Clara Street March 27, 2012— page 3 8. This Conditional Use permit applies to all subsequent hotel uses. The applicant may not assign or attempt to assign the authorized uses on the property, nor make any total or partial sale, transfer, conveyance or assignment of the whole or any part of the Extended Stay America Hotel use or the improvements thereon, without notification to the Redevelopment Agency, or its successor entity, and without informing subsequent purchasers or operators of the requirements of this CUP. 9. The applicant covenants and agrees for itself, its successors, its assigns and all voluntary and involuntary successors in interest to the subject parcel, project, or any part thereof, that (i) such use shall be for a quality reputable extended stay hotel, including ancillary uses located within the hotel (ii) the subject property and exterior (including all landscaped areas) and interior portions of the Project shall be maintained in a first-class condition and in accordance with the standards of the City's municipal code; (iii) the project shall be marketed and advertised to the business community and shall provide weekly maid service; and (iv) neither the project nor subject parcel shall be used for permanent housing. Lastly, and in order to protect the City's interests in this matter the City proposes the addition of an indemnification clause that protects the City from the current litigation between the plaintiffs and Extended Stay. That condition would provide that the CUP amendment becomes applicable only if two (2) conditions are satisfied. The condition would read as follows: 10. This approval shall not be effective unless and until; A. The Applicant, or their successor in interest, executes an agreement with the City of Arcadia agreeing to indemnify and hold harmless the City, its officials, officers, agents and employees ("City Parties") from, any and all actions, suits, claims, damages to persons or property, losses, costs, penalties, obligations, errors, omissions or liabilities, that have been asserted in the matter of Alex Spencer, et al. v. HVM L.L.C. Management Co. d/b/a Extended Stay Hotels, et al., Los Angeles Superior Court Case No. GC047629 or that may be asserted or claimed in the future by any person, firm or entity arising out of or in connection with an appeal of that matter or this CUP Amendment (hereinafter "Indemnified Claims and Liabilities"). At a minimum, such indemnity shall include the following: 1. Applicant shall defend and pay for any current and future action or actions filed in connection with any of said Indemnified Claims and Liabilities and will pay all costs and expenses, including legal costs and attorneys' fees incurred in connection therewith; 2. Applicant shall promptly pay any judgment rendered against the City and Applicant for any such Indemnified Claims and Liabilities; and Applicant shall save and hold the City and the City Parties harmless therefrom; and CUP 12-02 Extended Stay America 401 E. Santa Clara Street March 27, 2012— page 4 3. To the extent the City is or is made a party to any action or proceeding filed or prosecuted against the Applicant for such Indemnified Claims and Liabilities, Applicant shall pay to the City any and all costs and expenses incurred by the City in such action or proceeding, including but not limited to, legal costs and attorneys' fees; or B. There is final disposition in the matter of Alex Spencer, et al. v. HVM L.L.C. Management Co. d/b/a Extended Stay Hotels, et al., Los Angeles Superior Court Case No. GC047629 in the form of an executed settlement agreement among all of the parties to the case or judgment issued in favor of the plaintiffs. The existing hotel is compatible with the other uses in the area, and is consistent with the CPD-1 Zoning and the General Plan's Commercial designation of the property. The new conditions will not affect this compatibility or consistency. The proposed revised conditions have been reviewed by the City Attorney and have been found to be acceptable. Indeed the revised conditions will protect the City, reinforce the original conditions of approval that this hotel, while approved for extended stays, will not provide permanent housing, and that it will be maintained to the high standards called for by the DDA and the City's property maintenance requirements. CODE REQUIREMENTS All City requirements regarding disabled access and facilities, occupancy limits, building safety, emergency equipment, water supply, drainage, and waste and pollution control are being complied with to the satisfaction of the Building Official, City Engineer, Fire Marshal, and Public Works Services Director. CEQA Because no physical alterations to the property are proposed or necessary, this project is categorically exempt from the provisions of the California Environmental Quality Act (CEQA) pursuant to Section 15301 of the CEQA Guidelines for the operations of an existing facility. A Notice of Exemption is attached. FINDINGS Section 9275.1.2 of the Arcadia Municipal Code requires that for a Conditional Use Permit to be granted, it must be found that all of the following prerequisite conditions can be satisfied: 1. That the granting of such Conditional Use Permit will not be detrimental to the public health or welfare or injurious to the property or improvements in such zone or vicinity. The proposed revisions to the operational conditions of approval are consistent with the intended and existing commercial use of the property and will not have any adverse impacts to the neighboring businesses or properties. CUP 12-02 Extended Stay America 401 E. Santa Clara Street March 27, 2012— page 5 2. That the use applied for at the location indicated is properly one for which a Conditional Use Permit is authorized. Per Sections 9260.1.12.7 and 9275.1.50 of the Arcadia Municipal Code, hotels are allowed in the CPD-1 zone subject to the approval of a Conditional Use Permit. The existing hotel was approved by Conditional Use Permit No. CUP 97-002 (Resolution No. 1545). 3. That the site for the proposed use is adequate in size and shape to accommodate said use, and all yards, spaces, walls, fences, parking, loading, landscaping, and other features required to adjust said use with the land and uses in the neighborhood. The site is adequate for existing hotel. Any necessary adjustments to the existing facility since its development have been readily accommodated. 4. That the site abuts streets and highways adequate in width and pavement type to carry the kind of traffic generated by the proposed use. The site is accessed via East Santa Clara Street, which is a collector street with two, undivided traffic lanes; one in each direction, and is adequate for the traffic demand of the existing use. 5. That the granting of such Conditional Use Permit will not adversely affect the comprehensive General Plan. The existing hotel is a commercial use that is consistent with the General Plan Land Use Designation of the site. It is staffs opinion that the existing hotel and the proposed operational revisions satisfy each of the above prerequisite findings. RECOMMENDATION The Development Services Department recommends approval of Conditional Use Permit Application No. CUP 12-02 to revise the conditions of approval of CUP 97-002 and Resolution No. 1545. PLANNING COMMISSION ACTION Approval If the Planning Commission intends to approve this project, the Commission should move to approve Conditional Use Permit Application No. CUP 12-02 and adopt the attached Resolution No. 1851, which states that the project satisfies the requirements for a Conditional Use Permit, and incorporates the Commission's decision, specific findings, and revised conditions of approval. Denial If the Planning Commission intends to deny this project, the Commission should move to deny Conditional Use Permit Application No. CUP 12-02; state the finding(s) that the proposal does not satisfy with reasons based on the record, and direct staff to prepare a resolution incorporating the Commission's decision and specific findings for adoption at the next meeting. CUP 12-02 Extended Stay America 401 E. Santa Clara Street March 27, 2012 — page 6 If any Planning Commissioner, or other interested party has any questions or comments regarding this matter prior to the March 27, 2012 public hearing, please contact Assistant Planner, Tim Schwehr at (626) 574-5422, or at tschwehr(c�ci.arcadia.ca.us. Approved by: Ji asama ommunity Development Administrator Attachments: Aerial Photo and Vicinity Map with Zoning Information Resolution No. 1545 (CUP 97-002) 300-foot Radius Map Photos of Subject Property Plans of Existing Facility Notice of Exemption Resolution No. 1851 CUP 12-02 Extended Stay America 401 E. Santa Clara Street March 27, 2012— page 7 \, MINUTES ;',°'. - Excerpt - -titt-t• ,. ARCADIA PLANNING COMMISSION �yAly oR Tuesday, March 27, 2012, 7:00 P.M. Arcadia City Council Chambers PUBLIC HEARINGS 1. CONDITIONAL USE PERMIT NO. CUP 12-02 401 E. Santa Clara Street— Extended Stay America Timothy B. McOsker of Mayer Brown, LLP — Representing HVM, LLC The applicant is requesting an amendment to Conditional Use Permit No. CUP 97-002 (Arcadia Planning Commission Resolution No. 1545) to revise the operational conditions of approval. RESOLUTION NO. 1851 A Resolution of the Planning Commission of the City of Arcadia, California, approving Conditional Use Permit No. CUP 12-02 RECOMMENDATION: Conditionally approve Conditional Use Permit No. CUP 12-02 Mr. Kasama presented the staff report. Chairman Baerg asked how this Conditional Use Permit is related to the lawsuit. Mr. Kasama explained that the lawsuit has to do with the applicability of the City's transient occupancy tax and the condition requiring guests to re-register every thirty days. He said that this Amendment is proposed as a means of clarifying the requirement and resolving the lawsuit. Chairman Baerg asked if anyone would like to speak in favor of this project. Mr. Tim McOsker, of Mayer Brown, LLP, represented the applicant. He referred to his letter dated March 27, 2012, wherein he outlined his client's situation and stated agreement with most of the terms of the Amendment. He explained that the lawsuit filed against his client and the City alleges that the 30-day re-registration requirement conflicts with Civil Code Sec. 1940.1 which is designed to protect tenancy rights after 30 days, but not to prevent compliance with Transient Occupancy Tax regulations. At this point, Mr. McOsker explained, no one knows if there will be any liability resulting from the lawsuit. However, his client is opposed to the indemnification condition included in the draft Resolution. He noted that when the original CUP was approved, approximately 15 years ago, indemnification was not required and, therefore, not included in the original conditions. Mr. McOsker explained that his client is agreeable to the application of an indemnification condition for the future, but not on a retroactive basis. Commissioner Chiao asked about the status of the litigation. Mr. McOsker explained that the lawsuit is in a very early stage and little has been done to date. Commissioner Chiao asked if Mr. McOsker expects that there will be additional plaintiffs, and Mr. McOsker said yes, but he couldn't predict how many. Mr. McOsker explained that the purpose of the proposed amendment is to modify the controlling document, which is the original CUP and that by doing so; the CUP would more closely conform to the Arcadia Municipal Code. Commissioner Beranek asked what is at the root of this suit, and Mr. McOsker explained that there is a collection of people who object to the requirement to pay the Transient Occupancy Tax after thirty days. Chairman Baerg asked if anyone would like to speak in opposition to this project. There were none. MOTION It was moved by Commissioner Baderian, seconded by Commissioner Parrille to close the Public Hearing. Without objection the motion was approved. Mr. Martinez explained that the applicant accepted the conditions and benefits of the original Conditional Use Permit and that it is fair for the City to impose retroactive indemnification. He said there is also a clause stating that the City would be willing to consider another approach if a settlement is reached. However, at this point, the City Attorney's office recommends including the indemnification clause as drafted. Chairman Baerg asked if approval of the Amendment with all recommendations, particularly No. 10, would unilaterally impose the indemnification clause on the applicant. Mr. Martinez said that is correct, but that the applicant would have the option to appeal the decision to the City Council. Commissioner Chiao said that he also finds the retroactive indemnity clause to be a little strong, but that in looking forward, a standard indemnification clause would benefit the City. Chairman Baerg agreed, stating that he is not in favor of retroactive indemnification for the existing lawsuit but, would support a standard indemnification clause. Commissioner Beranek agreed. Commissioner Baderian suggested asking the City Attorney for a revision of Condition 10 of the Amendment regarding indemnification. He suggested reviewing the proposed revision at the April 24 Planning Commission meeting. MOTION It was moved by Commissioner Baderian, seconded by Commissioner Chiao to reopen the public meeting and continue Conditional Use Permit No. CUP 12-02 to April 24, 2012. ROLL CALL AYES: Commissioners Baderian, Beranek, Chiao, Parrille and Baerg NOES: None Arcadia Planning Commission— Minutes Excerpt—March 27, 2012 Page 2 of 2 of ARC nj �cr op. C.4 o>t9��3� IucurpuruluJ � Au„oe[5,IMl rn4nlrp of MEMORANDUM Development Services Department DATE: April 24, 2012 TO: Arcadia Planning Commission FROM: Jim Kasama, Community Development Administrator By: Tim Schwehr, Assistant Planner SUBJECT: Continued Public Hearing for Conditional Use Permit Application No. CUP 12-02 to amend CUP 97-002 to revise the operational conditions of approval for the Extended Stay America hotel in the Commercial Planned Development (CPD-1) zone at 401 E. Santa Clara Street BACKGROUND At the regular meeting on March 27, 2012, the Planning Commission considered Conditional Use Permit Application No. CUP 12-02 to amend the operational conditions of approval of Conditional Use Permit No. CUP 97-002 for the Extended Stay America hotel at 401 E. Santa Clara Street. The March 27, 2012 staff report is attached. At the public hearing, the applicant presented the attached letter regarding the recommended new condition of approval regarding indemnification. After receiving additional testimony and discussion, the Planning Commission unanimously voted to continue the public hearing and directed staff to revise the proposed condition no. 10 regarding indemnification. DISCUSSION In response to the direction from the Planning Commission, the City Attorney has revised the recommended indemnification condition (no. 10) to read as follows: The applicant shall defend, indemnify, and hold harmless the City of Arcadia, its agents, officers or employees from any claim, action or proceeding against the City or its agents, officers or employees to attack, set aside, void or annul this approval and modification of the subject application whether such challenge is against the City, its legislative body, advisory agencies or administrative officers. The City will promptly notify the applicant of any such claim, action or proceeding against the City and the applicant will either undertake defense of the matter and pay the City's associated reasonable legal costs, or will advance funds to pay for defense of the matter by the City Attorney. A decision to undertake the defense of the matter shall be at the sole and absolute discretion • of the City of Arcadia. While this indemnification provision does not apply to any claim or case filed prior to this application, INCLUDING THE SPENCER MATTER DESCRIBED BELOW, applicant further agrees that this provision shall not be construed as a limitation on the applicant and the City later entering into an indemnification, defense, or other mutual agreement relating to the matter of Alex Spencer, et al. v. HVM L.L.C. Management Co. d/b/a Extended Stay Hotels, et al., Los Angeles County Superior Court Case No. GC047629. The above revised Condition No. 10 has been incorporated into the attached Resolution No. 1851. RECOMMENDATION The Development Services Department recommends approval of Conditional Use Permit Application No. CUP 12-02 to revise the conditions of approval of CUP 97-002 and Resolution No. 1545. PLANNING COMMISSION ACTION Approval If the Planning Commission intends to approve this project, the Commission should move to approve Conditional Use Permit Application No. CUP 12-02 and adopt the attached Resolution No. 1851, which states that the project satisfies the requirements for a Conditional Use Permit, and incorporates the Commission's decision, specific findings, and revised conditions of approval. Denial If the Planning Commission intends to deny this project, the Commission should move to deny Conditional Use Permit Application No. CUP 12-02; state the finding(s) that the proposal does not satisfy with reasons based on the record, and direct staff to prepare a resolution incorporating the Commission's decision and specific findings for adoption at the next meeting. If any Planning Commissioner, or other interested party has any questions or comments regarding this matter prior to the April 24, 2012 public hearing, please contact Assistant Planner, Tim Schwehr by calling (626) 574-5422, or by email at tschwehr(a ci.arcadia.ca.us. Approved by: Jima, asama C,( munity Development Administrator Attachments: March.27, 2012 Staff Report Letter from Applicant Resolution No. 1851 CUP 12-02 (cont'd) 401 E. Santa Clara Street April 24, 2012 —page 2 MINUTES Excerpt ,- ¢Ija, ARCADIA PLANNING COMMISSION ma°°��, Tuesday, April 24, 2012, 7:00 P.M. Arcadia City Council Chambers PUBLIC HEARINGS 1. CONDITIONAL USE PERMIT NO. CUP 12-02 401 E. Santa Clara Street— Extended Stay America Timothy B. McOsker of Mayer Brown, LLP — Representing HVM, LLC Continued from March 27, 2012 The applicant is requesting an amendment to Conditional Use Permit No. CUP 97-002 (Arcadia Planning Commission Resolution No. 1545) to revise the operational conditions of approval. RESOLUTION NO. 1851 A Resolution of the Planning Commission of the City of Arcadia, California, approving Conditional Use Permit No. CUP 12-02 to revise the operational conditions of approval of the Conditional Use Permit (CUP 97-002 / Resolution No. 1545) that approved the existing hotel at 401 East Santa Clara Street. RECOMMENDATION: Conditionally approve Conditional Use Permit No. CUP 12-02 and adopt Resolution No. 1851 Mr. Kasama presented the staff report. Chairman Baerg asked if anyone would like to speak in favor of this project. Mr. Tim McOsker of Mayer Brown represented the applicant. Mr. McOsker said that the applicant is satisfied with the changes made to the conditions of approval providing indemnity to the City going forward except for the Spencer case which is ongoing. Chairman Baerg asked if anyone would like to speak in opposition to this project. There were none. MOTION It was moved by Commissioner Parrille, seconded by Commissioner Beranek to close the Public Hearing. Without objection the motion was approved. Commissioner Beranek asked Mr. Deitsch if he would like to add a comment. • Mr. Deitsch explained that he continues to recommend the original language of condition 10 as presented at the March 27 meeting but that the Commission has the option to amend it and approve the revised version. MOTION It was moved by Commissioner Baderian, seconded by Commissioner Parrille to approve Conditional Use Permit No. CUP 12-02 subject to the conditions in tonight's staff report and to adopt Resolution 1851. ROLL CALL AYES: Commissioners Baderian, Beranek, Chiao, Parrille and Baerg NOES: None • Arcadia Planning Commission — Minutes Excerpt—April 24, 2012 Page 2 of 2 • MAYER ' BROWN Mayer Brown LLP 350 South Grand Avenue 25th Floor �m`,. p ��� ."\ s ,X Los ngeles,California 90071-1503 _G._ €�.; Main Tel+1 213 229 9500 March 27, 2012 Main Fax+1 213 625 0248 www.mayerbrown corn BY HAND DELIVERY MAR 2 7 2012 Timothy B.NicOsker Direct Tel+1 213 229 5102 Members of the Et 1 ` Services Direct Fax+1 213 576 8130 . City of Arcadia Planning Commission tmcosker @mayerbrown.com 240 W. Huntington Drive 6 City r`ity of Arcadia Arcadia, CA 91066 Re: CUP 12-02 (Amendment to CUP 97-002 for Extended Stay America hotel at 401 E. Santa Clara Street) Honorable Members of the Planning Commission: This office represents HVM L.L.C. in connection with Conditional Use Permit Application No. CUP 12-02 for property located at 401 E. Santa Clara Street. We seek to amend and revise some of the operational conditions in existing CUP 97-002 for the Extended Stay America -hotel at that address ("Extended Stay''). Approving the amendments will facilitate Extended Stay's continued operations in Arcadia, while allowing both the hotel and the City to comply with applicable state and local law. Extended Stay has been in business in Arcadia for nearly fifteen years, and hopes to continue doing so for many years to come. We appreciate the work of your staff and the recommendation that CUP Application 12- 02 be approved. Indeed, for the past several months, Extended Stay, the City Attorney's office and City staff have collaborated over these proposed amendments. Extended Stay and the City are, therefore, already in agreement on virtually all of the revisions to the CUP conditions before you today. The most significant of these is Condition No. 2, addressing the hotel's compliance with the City's current transient occupancy tax regulations ("TOT").' This amendment permits Extended Stay to accommodate its longer-term guests without engaging in unnecessary re-registration of these guests every 30 days, while preserving the provisions which guarantee that the hotel may not be used for residential purposes. Under this revised condition, Extended Stay will still collect and pay the TOT to the City, in accordance with the law, as may be amended by the City. Extended Stay is also in agreement with the City as to the conditions defining the use of the hotel after sale or transfer of the property. However, Extended Stay recommends a different approach to the indemnification issue in proposed Condition No.10. While the more recent policy of the City is to always require an indemnification in a CUP, the current CUP 97-002 for this site includes no indemnification. We I As you are aware,the relevant TOT regulations are set for a public vote by ballot on April 10, 2012. Mayer Brown LLP operates in combination with other Mayer Brown entities with offices in Europe and Asia and is associated with Tauil&Chequer Advogados a Brazilian law partnership. 701415807.1 11177822 Mayer Brown LLP City of Arcadia Planning Commission March 27, 2012 Page 2 understand and agree with the new policy, but we think it is unfair to ask Extended Stay to indemnify the City for litigation which was already filed prior to our request for an amendment. Rather, Extended Stay would agree to indemnify the City for any and all claims arising after the date that CUP 12-02 is approved. However, as both Extended Stay and the City are (and have been) vigorously defending themselves in the pending lawsuit of Alex Spencer, et al. v. HVM L.L.C. Management Co. d/b/a Extended Stay Hotels, et al., Extended Stay does not believe it necessary or proper to indemnify the City in this ongoing litigation. Additionally, the agreed- upon amendment to Condition No. 2 addresses the central issue in the Spencer suit. This amendment is mutually beneficial to Extended Stay and the City, and limits both parties' potential exposure in the litigation, if there is any exposure. Accordingly, Extended Stay requests that proposed Condition No.10 be revised as follows: "Except in the matter of Alex Spencer, et al. v. HVM L.L.C. Management Co. d/b/a Extended Stay Hotels, et al., Los Angeles County Superior Court Case No. GC047629, the applicant shall defend, indemnify, and hold harmless the City of Arcadia, its agents, officers or employees from any claim, action or proceeding against the City or its agents, officers or employees to attack, set aside, void or annul an approval or modification of the subject application by the City, its legislative body, advisory agencies or administrative officers. The City will promptly notify the applicant of any such claim, action or proceeding against the City and the applicant will either undertake defense of the matter and pay the City's associated reasonable legal costs, or will advance funds to pay for defense of the matter by the City Attorney. A decision to undertake the defense of the matter shall be at the sole and absolute discretion of the City of Arcadia. Notwithstanding anything to the contrary, in the matter of Alex Spencer, et al. v. HVM L.L.C. Management Co. d/b/a Extended Stay Hotels, et al., Los Angeles County Superior Court Case No. GC047629, there is no indemnification or defense condition upon the applicant; the parties shall bear their own costs and fees in defense in that matter; and each party shall be responsible for its own costs and fees resulting from settlement, adjudication, or other resolution of the case." Again, we note that even with this revision to the indemnification condition, Extended Stay would provide indemnification and defense for future matters that the City now typically requires in its CUPs. 701383982.1 11177822 701415807 1 11177822 Mayer Brown LLP City of Arcadia Planning Commission March 27, 2012 Page 3 Thank you for your attention to this issue. , :je (rely, jA, Timothy B.1.•cOsker cc: Marco Martinez, Best, Best & Krieger LLP 701383982.1 11177822 701415807.1 11177822 RESOLUTION NO. 1851 A RESOLUTION OF THE PLANNING COMMISSION OF THE CITY OF ARCADIA, CALIFORNIA, APPROVING CONDITIONAL USE PERMIT NO. CUP 12-02 TO REVISE THE OPERATIONAL CONDITIONS OF APPROVAL OF THE CONDITIONAL USE PERMIT (CUP 97-002/ RESOLUTION NO. 1545) THAT APPROVED THE EXISTING HOTEL AT 401 EAST SANTA CLARA STREET. WHEREAS, on February 17, 2012, an application was filed by Timothy B. McOsker of Mayer Brown LLP as representative for the applicant, HVM L.L.C. to revise the operational conditions of approval of Conditional Use Permit No. 97- 002 (Planning Commission Resolution No. 1545) that approved the existing, three-story, 122 studio-room hotel that was constructed in 1998 at 401 East Santa Clara Street, Development Services Department Case No. CUP 12-02; and WHEREAS, a public hearing was held by the Planning Commission on March 27, 2012, and a continued public hearing was held by the Planning Commission on April 24, 2012, at which time all interested persons were given full opportunity to be heard and to present evidence. NOW, THEREFORE, THE PLANNING COMMISSION OF THE CITY OF ARCADIA RESOLVES AS FOLLOWS: SECTION 1. That the factual data submitted by the Development Services Department in the staff reports dated March 27, 2012 and April 24, 2012 are true and correct. SECTION 2. This Commission finds: 1. That the granting of such Conditional Use Permit will not be detrimental to the public health or welfare or injurious to the property or improvements in such zone or vicinity. The proposed revisions to the operational conditions of approval are consistent with the intended and existing commercial use of the property and will not have any adverse impacts to the neighboring businesses or properties. 2. That the use applied for at the location indicated is properly one for which a Conditional Use Permit is authorized. Per Sections 9260.1.12.7 and 9275.1.50 of the Arcadia Municipal Code, hotels are allowed in the CPD-1 zone subject to the approval of a Conditional Use Permit. The existing hotel was approved by Conditional Use Permit No. CUP 97-002 (Planning Commission Resolution No. 1545). 3. That the site for the proposed use is adequate in size and shape to accommodate said use, and all yards, spaces, walls, fences, parking, loading, landscaping, and other features required to adjust said use with the land and uses in the neighborhood. The site is adequate for the existing hotel. Any necessary adjustments to the existing facility since its development have been readily accommodated. 4. That the site abuts streets and highways adequate in width and pavement type to carry the kind of traffic generated by the proposed use. The site is accessed via East Santa Clara Street, which is a collector street with two, undivided traffic lanes; one in each direction, and is adequate for the traffic demand of the existing use. 5. That the granting of such Conditional Use Permit will not adversely affect the comprehensive General Plan. The existing hotel is a commercial use that is consistent with the General Plan Land Use Designation of the site. - 2 - 1851 SECTION 3. That for the foregoing reasons this Commission grants Conditional Use Permit No. CUP 12-02 to revise the operational conditions of approval of Conditional Use Permit No. 97-002 (Planning Commission Resolution No. 1545) for the existing, three-story, 122 studio-room hotel at 401 East Santa Clara Street; such that the conditions are now as follows: 1. The hotel, accessory improvements, and the site shall be maintained and operated in a manner that is consistent with the proposal and plans submitted and approved for CUP 97-002, and shall include, but not be limited to, the following provisions: a. 24-hour, on-site management shall be provided; b. Fencing and other enclosures on the property shall be wrought iron or masonry with a decorative finish, except for the fencing along the freeway right- of-way; c. A detailed landscaping and irrigation plan shall be prepared for both the project site and the remainder parcel by a licensed landscape architect and shall be subject to approval by the Development Services Department. (This condition has been satisfied.) 2. CUP 97-002 is specifically for a transient hotel use only. The hotel shall not be used for permanent housing. The operator shall collect and remit the Transient Occupancy Tax to the fullest extent authorized by law, as may be amended from time to time. The applicant shall execute and record a legal instrument precluding conversion of the project into a residential use. Reasonable expenses and costs in connection with the preparation of the legal - 3 - 1851 instrument shall be paid for by the Applicant, and the legal instrument shall be prepared by and approved by the City Attorney. 3. The items listed in the August 28, 1996 memorandum from the Acting City Engineer are to be complied with to the satisfaction of the Engineering Division, including the revisions indicated on the response dated February 25, 1997. (This condition has been satisfied.) 4. All local code requirements regarding accessibility, fire protection, occupancy, and safety shall be complied with to the satisfaction of Building Services and the Fire Department. 5. Water services, as listed in the February 27, 1997 memorandum from the Maintenance Services Division shall be complied with to the satisfaction of the Arcadia Water Division. (This condition has been satisfied.) 6. Approval of the amendments to CUP 97-002 shall not take effect until the property owner and applicant have executed and filed the Acceptance Form from the Development Services Department to indicate acceptance of the conditions of approval. 7. All conditions of approval shall be complied with and maintained at all times. Noncompliance with the plans and conditions of CUP 12-02 shall constitute grounds for suspension and/or revocation of any approvals in accordance with Section 9275.2.15 of the Arcadia Municipal Code, which could result in a temporary and/or permanent closing of the hotel. 8. This Conditional Use Permit applies to all subsequent hotel uses. The applicant may not assign or attempt to assign the authorized uses on the property, nor make any total or partial sale, transfer, conveyance or assignment - 4 _ 1851 of the whole or any part of the Extended Stay America Hotel use or the improvements thereon, without notification to the Arcadia Redevelopment Agency, or its successor entity, and without informing subsequent purchasers or operators of the requirements of this Conditional Use Permit. 9. The applicant covenants and agrees for itself, its successors, its assigns and all voluntary and involuntary successors in interest to the subject parcel, project, or any part thereof, that (i) such use shall be for a quality reputable extended stay hotel, including ancillary uses located within the hotel; (ii) the subject property and exterior (including all landscaped areas) and interior portions of the project shall be maintained in a first-class condition and in accordance with the standards of the City's municipal code; (iii) the project shall be marketed and advertised to the business community and shall provide weekly maid service; and (iv) neither the project nor subject parcel shall be used for permanent housing. 10. The applicant shall defend, indemnify, and hold harmless the City of Arcadia, its agents, officers or employees from any claim, action or proceeding against the City or its agents, officers or employees to attack, set aside, void or annul this approval and modification of the subject application whether such challenge is against the City, its legislative body, advisory agencies or administrative officers. The City will promptly notify the applicant of any such claim, action or proceeding against the City and the applicant will either undertake defense of the matter and pay the City's associated reasonable legal costs, or will advance funds to pay for `defense of the matter by the City - 5 - 1851 Attorney. A decision to undertake the defense of the matter shall be at the sole and absolute discretion of the City of Arcadia. While this indemnification provision does not apply to any claim arising or case filed prior to this application, INCLUDING THE SPENCER MATTER DESCRIBED BELOW, applicant further agrees that this provision shall not be construed as a limitation on the applicant and the City later entering into an indemnification, defense, or other mutual agreement relating to the matter of Alex Spencer, et al. v. HVM L.L.C. Management Co. d/b/a Extended Stay Hotels, et al., Los Angeles County Superior Court Case No. GC047629. SECTION 4. The Secretary shall certify to the adoption of this Resolution. Passed, approved and adopted this 24th day of April, 2012. Chairman, Planning Commission ATTEST: SecrP,t y, Planning Commission APPROVED AS TO FORM: CljTift&., �. Stephen P. Deitsch, City Attorney - 6 - 1851 STATE OF CALIFORNIA ) COUNTY OF LOS ANGELES ) SS: CITY OF ARCADIA ) I, Jim Kasama, Secretary of the Planning Commission of the City of Arcadia, hereby certify that the foregoing Resolution No. 1851 was passed and adopted by the Planning Commission of the City of Arcadia, signed by the Chairperson and attested to by the Secretary at a regular meeting of said Planning Commission held on the 24th day of April, 2012 and that said Resolution was adopted by the following vote, to wit: AYES: Commissioners Baderian, Beranek, Chiao, Parrille and Baerg NOES: None Se tary of the Planning Commission �t U 4 r CITY OF ARCADIA h. 240 W. HUNTINGTON DRIVE 0Ilitk. '40 ARCADIA, CA 91007 o��ij•• NOTICE OF EXEMPTION o��,otH TO: ❑ Clerk of the Board of Supervisors FROM: City of Arcadia or 240 W. Huntington Drive ® County Clerk Arcadia, CA 91007 County of: Los Angeles 1. Project Title: Conditional Use Permit No. CUP 12-02 2. Project Location—Identify street address and 401 E. Santa Clara Street- Extended Stay America cross streets or attach a map showing project site g P J ! between N. Second Avenue and N. Fifth Avenue (preferably a USGS 15' or 7 1/2' topographical map identified by quadrangle name): 3. (a) Project Location—City: Arcadia Los Angeles (b) Project Location—County: 4. Description of nature,purpose, and beneficiaries Amendment to an existing Conditional Use Permit(CUP of Project: ' 97-002)to revise the operational conditions of approval- benefits the hotel at this location and the City of Arcadia ' 5. Name of Public Agency approving project: Arcadia Planning Commission 6. Name of Person or Agency carrying out project: HVM,LLC-Property Owner 7. Exempt status: (check one) (a) ❑ Ministerial project. (b) ❑ Not a project. (c) ❑ Emergency Project. (d) ❑ Categorical Exemption. State type and class number: Operations of an existing facility -Class 1 (Section 15301) —I (e) ❑ Declared Emergency. (f) ❑ Statutory Exemption. I State Code section number: (g) ❑ Other. Explanation: 8. Reason why project was exempt: Involves the operations of an existing facility-Class 1 Categorical Exemption 9. Contact Person: i Jim Kasama,Community Development Administrator I Telephone: ! (626)574-5423 10. Attach Preliminary Exemption Assessment(Form "A")before filing. I Date Received for Filing: o _ Sig re(L d gency Representative) (Clerk Stamp Here) ( low uhiiy PfYrdo},0.4-AAlire/s Notice of Exemption\2011 FORM"B" • • MA_YERt BROWN Mayer Brown LLP 350 South Grand Avenue 25th Floor Los Angeles,California 90071-1503 Main Tel+1 213 229 9500 June 5, 2012 Main Fax+1 213 625 0248 www.mayerbrown.com BY HAND DELIVERY 1d if 4z• a7 "eel-7744 U Timothy B. McOsker Direct Tel+1 213 229 5102 Mayor and Members of the Direct Fax+1 213 576 8130 Arcadia City Council tmcosker @mayerbrown.com 240 W. Huntington Drive Arcadia, CA 91066 Re: CUP 12-02 (Amendment to CUP 97-002 for Extended Stay America hotel at 401 E. Santa Clara Street)/Item # 1(a) on June 5, 2012 Honorable Mayor and City Council: This office represents HVM L.L.C. in connection with Conditional Use Permit Application No. CUP 12-02 for property located at 401 E. Santa Clara Street. We filed the application to amend and revise key operational conditions in existing CUP 97-002 for the Extended Stay America hotel at that address ("Extended Stay"). The Planning Commission unanimously approved the amendments, which facilitate Extended Stay's continued operations in Arcadia, while allowing both the hotel and the City to comply with applicable state and local law. We appreciate both the work of your staff and the approval of this application by the Planning Commission. We ask that you leave the Planning Commission's decision in place, for the benefit of both the City of Arcadia and the Applicant. Extended Stay and the City family have been in agreement on virtually all of the revisions to the CUP conditions before you today. The most significant of these is Condition No. 2, addressing the hotel's compliance with the City's current transient occupancy tax regulations ("TOT"). This amendment permits Extended Stay to accommodate its longer-term guests without engaging in unnecessary re-registration of these guests every 30 days, while preserving the provisions which guarantee that the hotel may not be used for residential purposes. Under this revised condition, Extended Stay would collect and pay the TOT to the City, in accordance with the law, which was just amended by the municipal electorate. It is important to note, and to clarify the description set forth in the staff report, that both the City of Arcadia and the Applicant are co-defendants in pending litigation on this TOT issue. It is the City's condition, imposed by the current CUP, that is alleged to be illegal in the lawsuit of Alex Spencer, et al. v. HVM L.L.0 Management Co. d/b/a Extended Stay Hotels, et al. It appears the City agrees with the Applicant that the proper method to modify the language and therefore address any potential liability is through this amendment. In fact, the only difference between Extended Stay and the City, at least initially, was on the indemnity provision. While the City's more recent policy is to always require an indemnification in a CUP, the current CUP 97-002 never included an indemnification. We Mayer Brown LLP operates in combination with other Mayer Brown entities with offices in Europe and Asia and is associated with Tauil&Chequer Advogados,a Brazilian law partnership, 702236938.1 11177822 Mayer Brown LLP Honorable Mayor and Arcadia City Council June 5, 2012 Page 2 understand and agree with the new policy, but we think it is unfair to ask Extended Stay to indemnify the City for litigation which was already filed prior to our request for an amendment. Rather, Extended Stay has agreed to indemnify the City for any and all claims arising after the date that CUP 12-02 is approved. As both Extended Stay and the City are (and have been) vigorously defending themselves in the Spencer case, Extended Stay does not believe it necessary or proper to indemnify the City in this ongoing litigation. Additionally, the agreed- upon amendments to the CUP address the central issue in the Spencer suit. As Extended Stay has previously expressed to the Planning Commission, these amendments will be mutually beneficial to Extended Stay and the City, limiting both parties' potential exposure in the litigation, and decreasing risk and liability, if any. Accordingly, Extended Stay requested from the Planning Commission fair and equitable treatment on the indemnity issue, and the Commission agreed. On March 27, 2012, the Commission directed that the City Attorney draft language with a prospective indemnification, but where the parties to the Spencer suit bear their own costs, fees and liability, if any. On April 24, 2012 the City Attorney returned with that language, which the Planning Commission unanimously adopted. We urge the City Council to uphold the Planning Commission's decision to approve CUP 12-02, containing the provision indemnifying the City for any and all claims arising and cases filed after the date that CUP 12-02 is approved. Extended Stay cannot accept CUP 12-02 without removal of the retroactive portion of the indemnification provision. While Extended Stay remains ready and willing to indemnify the City for future claims, it is inequitable to require Extended Stay to indemnify the City for claims arising prior to our application for this amendment. It is important to note that Extended Stay is not required by law to accept the proposed CUP amendments with a punitive indemnification provision. If the City Council adopts the current version of the amendments and Extended Stay chooses not to accept them, the original CUP language will remain operative. This would not be beneficial to the City, as the original CUP imposed by the City requires Extended Stay — under the threat of revocation—to engage in actions alleged to be illegal by the Spencer plaintiffs. We therefore recommend that the City Council uphold the decision made by the Planning Commission, including the indemnity language prepared for Resolution No. 1851. Thank you for your attention to this matter. Sincerely, Timothy B. McOsker 4� cc: Stephen Deitsch, City Attorney 702236938.1 11177822