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HomeMy WebLinkAboutItem 10a - Informational Update regarding Proposed Facility with Residential Care at 401 E. Santa Clara Street STAFF REPORT DEVELOPMENT SERVICES DEPARTMENT DATE: March 3, 2026 TO: Honorable Mayor and City Council FROM: Lisa Flores, Interim Development Services Director Sara Somogyi, Director of Recreation and Community Services Justine Bruno, Deputy City Manager SUBJECT: RESOLUTION NO. 7677 REAFFIRMING THE AUTHORITY GRANTED UNDER SECTION 807 (GENERAL PLAN) OF THE ARCADIA CITY CHARTER; AND INFORMATIONAL UPDATE ON A POTENTIAL SUBSTANCE AND ALCOHOL USE TREATMENT FACILITY WITH RESIDENTIAL CARE AT 401 E. SANTA CLARA STREET CEQA: Not a Project Recommendation: Adopt SUMMARY Since 1998, the Extended Stay America, located at 401 E. Santa Clara Street, has operated as a licensed hotel use in Arcadia. In May 2025, Bricks Behavioral Health Foundation (“Bricks”) and CRI-Help, both providers in the substance use disorder treatment field, were awarded $54 million by the California Department of Health Care Services to convert the same Extended Stay America into a facility for substance and alcohol use treatment services with residential care. At the February 3, 2026, City Council Meeting, Council Member Cao received support from Council Members Fu and Kwan to place on a future agenda a discussion of the potential development of a substance and alcohol facility in Arcadia. While no application has yet been received, such a facility in the Downtown Mixed Use Zone could conflict with Arcadia’s zoning and land use regulations. Therefore, a resolution that would reaffirm Arcadia’s ability to make land use, zoning, and development determinations based on the authorities granted under the Arcadia City Charter has been prepared for consideration. Resolution No. 7677 and Informational Update March 3, 2026 Page 2 of 7 It is recommended that the City Council adopt Resolution No. 7677, reaffirming the authority granted under Section 807 of the Arcadia City Charter, and the City Council’s right to establish land use policies, and regulate zoning and development standards in the City of Arcadia. BACKGROUND In March 2024, California voters passed Proposition 1, aimed at expanding and supporting the state’s behavioral health system. With the approval of Proposition 1, $6.4 billion in bond funding was authorized to grow and support behavioral health treatment facilities, supportive housing, and behavioral health services for veterans. In May 2025, the California Department of Health Care Services announced the first round of funding of Proposition 1 bonds, which consisted of a $3.3 billion grant award to create or expand 214 behavioral health facilities across California. Included in the Round 1 funding was a $54 million award to Bricks and CRI-Help, who announced their intent to acquire the Extended Stay America hotel in Arcadia and convert the property into an alcohol and substance use rehabilitation facility. On the California Department of Health Care Services website, the recipient reporting dashboard shows an award for: • Adult Residential Substance Use Disorder (“SUD”) Treatment – 100 beds/slots • Chemical Dependency Recovery Hospital – 16 beds/slots • Outpatient Treatment for SUD – 185 slots Bricks Behavioral Health Foundation is expected to be the property owner and developer, and CRI-Help would be the operator and lessee. At the time of funding award, CRI-Help released some images on Facebook of the proposed facility, with an expected opening date in 2027 (refer to Figure 1 below). Resolution No. 7677 and Informational Update March 3, 2026 Page 3 of 7 Figure 1: Conceptual rendering of proposed conversion of Extended Stay America into a residential treatment facility for substance abuse disorders, posted on Facebook. Shortly after the public announcement, City staff met with Bricks and CRI-Help to gain a better understanding of the proposed facility. After that meeting, the City Manager informed the City Council of the proposal, including the additional details gathered by staff (see Attachment No. 2 – May 15, 2025, City Manager Weekly Report). Over the past several years, California legislators have passed laws that attempt override or provide exemptions to local land use policies. Examples of recent California laws that seek to usurp local authority include Senate Bill 79 (2025), Senate Bill 450 (2025) Senate Bill 9 (2021), and Senate Bill 330 (2019). While these bills address different areas of land use and development, a central theme is the state protections embedded into each, which serve to override the home rule authority over land use, zoning, and development policies of charter cities like Arcadia. At the February 3, 2026, City Council meeting, Council Member Cao requested that the City Council place an item on a future agenda to receive more information on this Resolution No. 7677 and Informational Update March 3, 2026 Page 4 of 7 potential development, and to consider a resolution opposing the removal of local control regarding land use, zoning, and development decisions. Council Members Kwan and Fu concurred. DISCUSSION Since the public announcement in May 2025, and as of the preparation of this report, CRI-Help has not submitted a formal application to the City for this project. However, the organization has indicated its intent to operate the facility as an adult residential and outpatient substance use disorder (“SUD”) treatment center, including a Chemical Dependency Recovery Hospital (“CDRH”) that provides residential care. According to CRI-Help, the facility would operate as a short-term residential treatment center with an average length of stay of 30 days or less. All programs would be licensed and/or certified by the State of California and accredited by the Commission on Accreditation of Rehabilitation Facilities (“CARF”). Participation in the program would be voluntary, and patients would be required to verify compliance with treatment requirements. The residential component would be structured and supervised, and residents would not be permitted to leave the premises without supervision or prior approval. There is no proposed long-term residential living. Because no formal application has been submitted, the precise land use classification of the proposed facility has not been determined. The property is located within the Downtown Mixed Use (“DMU”) Zone, and the permissibility of the proposed use depends on how the primary use is classified under the Arcadia Development Code. • If the use is considered supportive housing, it would be allowed by-right in this Zone. Supportive housing generally does not impose limits on the length of tenancy and is designed for residents rather than patients or clients. While supportive housing may provide access to voluntary supportive or treatment services, participation in such services is typically not a condition of residency. • If the use is considered a residential care facility or recovery treatment facility with seven or more patients, providing 24-hour supervision and supportive services, such use would be prohibited in this Zone. Recovery treatment facilities operate structured, time-limited programs. Lengths of stay commonly range from approximately one week to 90 days, depending on the program Resolution No. 7677 and Informational Update March 3, 2026 Page 5 of 7 and individual treatment needs. These facilities provide 24-hour supervision and structured services, including behavioral interventions and substance use disorder treatment, and are more comparable to residential care facilities than to long-term housing. • If the primary use was classified as a Medical Clinic (Outpatient), defined by the Arcadia Development Code as a facility providing medical or substance abuse for an outpatient basis without overnight lodging, such use would be prohibited in this Zone. Accordingly, the final determination will depend on how the facility is operated and how the Applicant characterizes its primary use, including whether it is considered supportive housing, a residential care facility, or an outpatient medical clinic. Nevertheless, the proposed use as described in the grant documents and by the potential operators does not appear to be permitted in the DMU Zone under the relevant classifications discussed above. Moreover, the City home rule authority over its municipal affairs, including its land use policies. The City Charter specifically states: Section 807.c. General Plan – Land Use Policies. Land use policies and regulation of zoning and development standards, including but not limited to policies contained within the General Plan, are municipal affairs and this Charter shall prevail over state statutes regulating land use within the City. The Council shall have plenary authority over land use policies and regulation of zoning and development standards. The Downtown Mixed Use (“DMU”) Zone is intended to promote an active, pedestrian-oriented, and commercially vibrant environment that supports retail, dining, entertainment, office, and residential uses that contribute to street activity and economic vitality. While residential care and recovery treatment facilities may be permitted in other zoning districts within the City, such uses are not permitted in the DMU Zone due to the distinct planning objectives established for the downtown area. The attached resolution is not intended to specifically oppose the potential use at 401 E. Santa Clara St., described above, nor to prohibit CRI-Help or Bricks from Resolution No. 7677 and Informational Update March 3, 2026 Page 6 of 7 establishing a treatment facility elsewhere in Arcadia. Rather, it reaffirms that the City Council, acting under its authority as a Charter City, has deliberately established land use regulations for the properties in the DMU Zone as well as Citywide. As such, uses should not be permitted to be established in any Zone where such use is expressly prohibited. ENVIRONMENTAL ANALYSIS A resolution to reaffirm the land use, zoning, and development authority granted under the Arcadia City Charter does not constitute a project under the California Environmental Quality Act (“CEQA”). If the project progresses and formal applications are submitted for this work, any environmental impacts will be evaluated at that time, including potential mitigation. FISCAL IMPACT The Extended Stay America operates as a hotel use in Arcadia. Hotels in Arcadia are subject to City’s Transient Occupancy Tax (“TOT”) rate of 12%. A review of City tax revenue over the past three fiscal years shows that this Extended Stay America generated an average of $273,000 per year in TOT collections. With a potential conversion from a hotel to a substance abuse disorder treatment facility, the City’s General Fund will lose approximately $273,000 in TOT revenue annually. Additionally, non-profit operators are usually exempt from Property Tax collections under the state’s Welfare Exemption, which would result in further reductions in tax collections to Arcadia. With the information provided by CRI-Help thus far, it is not anticipated that this facility will generate a greater level of service calls for police, fire/medical, code violations, or other enforcement activities than the current use; however, Arcadia does not have a comparable facility in its boundaries and to help validate that assumption. RECOMMENDATION It is recommended that the City Council determine that this action does not constitute a project under the California Environmental Quality Act (“CEQA”); and Resolution No. 7677 and Informational Update March 3, 2026 Page 7 of 7 adopt Resolution No. 7677 reaffirming the authority granted under Section 807 (General Plan) of the Arcadia City Charter. Attachment No. 1: Resolution No. 7677 Attachment No. 2: May 15, 2025, City Manager’s Weekly Report 1 RESOLUTION NO. 7677 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF ARCADIA, CALIFORNIA, REAFFIRMIMG THE AUTHORITY GRANTED UNDER SECTION 807 (GENERAL PLAN) OF THE ARCADIA CITY CHARTER WHEREAS, the Arcadia City Charter, first adopted by a vote of the people on April 24, 1951, sets out the organic law of the city under the Constitution of California; and WHEREAS, the State of California recognizes charter cities as municipalities with constitutional authority over their own municipal affairs, including land use, zoning, and development regulations; and WHEREAS, amendments to the Arcadia City Charter were last approved by voters in November 2022, with the addition of Section 807 (c) – Land Use Policies, which affirms local authority over land use, zoning, and development in Arcadia; and WHEREAS, the City of Arcadia maintains a valid City Charter and General Plan that should prevail over any state statute that seeks to regulate land use within the City; and WHEREAS, local control enables municipalities to respond effectively to community needs, infrastructure capacity, environmental constraints, wildfire risk, water availability, historic preservation, and neighborhood character; and Attachment No. 1 2 WHEREAS, decisions regarding land use, density, and the built environment are best suited for local elected officials who are accountable to their constituents; and WHEREAS, California law has increasingly attempted to undermine local authority by providing waivers, exemptions, and by-right approvals that bypass local policies and regulations; and WHEREAS, under the guise of “statewide concern”, numerous one-size-fits-all mandates have been imposed on local governments that fail to account for impacts to the built environment, city revenues, and community needs; and WHEREAS, many municipalities and organizations like the League of California Cities have advocated for the protection of local decision-making and the preservation of home rule authority; and WHEREAS, Arcadia calls upon the Governor and the California State Legislature to respect the constitutional rights of charter cities and to pursue collaborative approaches to matters of local concern. NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF ARCADIA, CALIFORNIA DOES HEREBY FIND, DETERMINE AND RESOLVE AS FOLLOWS: SECTION 1. The City Council of Arcadia reaffirms its constitutional authority, as a charter city under the State of California, to govern its own land use policies and regulations. 3 SECTION 2. The City Council reaffirms its authority under Section 807 (c) of the Arcadia City Charter to establish and determine land use policies, zoning regulations, and development standards. SECTION 3. The City of Arcadia opposes legislative actions that attempt to preempt the constitutionally-protected authority of charter cities to exercise home rule over its municipal affairs, including discretionary land use decisions. SECTION 4. The City of Arcadia supports dialogue between state legislators and local governments to create solutions that balance statewide needs with local interests, while respecting the home rule authority that is embedded in the California Constitution. SECTION 5. The City Clerk shall certify to the adoption of this Resolution. [SIGNATURES ON NEXT PAGE] 4 Passed, approved and adopted this 3rd day of March, 2026. ______________________________ Mayor of the City of Arcadia ATTEST: __________________________ City Clerk APPROVED AS TO FORM: ___________________________ Michael J. Maurer City Attorney CITY MANAGER’S WEEKLY REPORT Office of the City Manager Dominic Lazzaretto May 15, 2025 DRUG/MENTAL HEALTH COUNSELING CENTER MAY BE COMING TO ARCADIA This week, the California Department of Health Care Services released $3.3 billion dollars in bonds toward expanding the State’s “Behavioral Health Infrastructure”. Included in that funding is a line item of $54 million for converting the existing Extended Stay America Hotel in Arcadia into a substance abuse disorder facility known as CRI-Help Arcadia. See right for a copy of a Facebook post made by Cri-Help celebrating the funding and announcing an expected opening “in 2027”. We had received a call in early January inquiring about the site as a potential conversion, but had strongly discouraged them, citing the community response to the Elara Project on Live Oak. From January until now, we had not heard anything further, so we expected that the idea may have died (CRI-Help had stated that they do not like going into communities where they will not be welcomed). Unfortunately, it seems that they were simply awaiting funding from the State. Here are some details that we can glean at this time on their proposal: Bricks/Cri-Help Arcadia: •Address: Extended Stay America Arcadia, 401 E Santa Clara St, Arcadia, CA •Proposed Usage: Substance Abuse Disorder Facility •Project Scope: Conversion of existing Extended Stay America hotel into Substance Abuse Disorder recovery facility •Number of Beds: 140 (124 residential, 16 detox) •The company is Bricks Behavior Health Foundation: https://www.bricksfoundation.org/ As we told these folks back in January, I would expect that this will create a lot of concern in the community when the proposal is known. Be aware that these types of conversions and uses are generally considered a “use -by-right” under state regulations these days; therefore, it is not likely that they would need a full entitlement review and City staff would likely be compelled approve the conversion ministerially. Meaning, there probably isn’t much we could do to stop the project, if we wanted to. We could only ensure that it met all health and safety codes and operated in a manner that didn’t negatively impact the area. The rendering shown in the post seems to be generic and not representative of the Arcadia site specifically, but it is similar to what they told us in January would be the layout of Attachment No. 2 City Manager’s Weekly Report May 15, 2025 Page 2 of 5 the site. They seem to anticipate the construction of a large perimeter fence and to convert most of the parking lot into a recreation area. These items would require a review and permitting of some kind. Keep in mind, though, that while we might be able to maintain the number of parking spaces, we shouldn’t expect to be able to outlaw the use altogether, if this is ultimately determined to be a use-by-right. We have not received any applications or seen anything formal from this group yet, so I can’t tell you for sure that this will not need any use entitlements or public review, but I did want to ensure that you know this is potentially coming our way and that a more likely outcome is that this could be approved without the public processes we typically re quire. We reached out to our contacts from January expressing frustration and surprise and were told the following in response: Our intention is to work collaboratively with your team, Arcadia residents, and other stakeholders so that we do not disrupt the neighborhood and that our presence is a value added to an established community…At this time, we would very much appreciate the opportunity to reconnect with you and your team and discuss our vision and proposed plan for the site. We will be setting up meetings with their team as quickly as possible to review their plans in detail and to see whether it meets state requirements for a use-by-right or if it would be a more robust review process. Regardless, we would also work to ensure that they have a communications plan in place so the public can be aware of this transition well in advance of its opening. On a financial note, the current hotel generates about $260,000 of transient occupancy taxes each year, which would go away if this conversion happened. It could also possibly be exempted from property taxes as a non -profit use serving charitable purposes. MOTEL 6 MAY BE SOLD FOR NEW HOUSING PROJECT On a related note, we have heard that the Motel 6 is in escrow with a local developer, who would want to raze the site and build new multifamily housing there. The developer has successfully built low density, market rate, multifamily projects in Arcadia over the years, so it might be a lower impact use than the current motel use. We are also hearing that the same developer may acquire the nearby CA Thoroughbred Association site for a similar development; if that happened, these two sites could be a nice tr ansitional buffer to the new hotels coming to the immediate area. Motel 6 brings in $290,000 annually in hotel taxes, so we’d also have to plan for that loss in future years; however, that amount would be partially offset by an increase in property values. But all of this is highly speculative at this point. For now, just keep in mind that you will likely be hearing chatter about this motel going away (and people possibly confusing this site with the one mentioned above). GOVERNOR RELEASES MODEL ORDINANCE ON HOMELESSNESS Earlier this week, Governor Newsom released a model ordinance to address homelessness locally. He did this at the same time as he encouraged cities to clear all encampments in their communities , so many assumed that the ordinance would be aggressive in encouraging enforcement. While we agree with the sentiment that encampments should be prevented and addressed when they arise, the model ordinance sends some mixed messages on that front. We have an established “care first” approach here, where we always offer services before going to enforcement