Westminster City Council
SUBJECT
Title
Outdoor Associates, LLC Project Entitlement Extension Request and Proposed Amendment to Operating Agreement No. 01-2021.
End
From: Adolfo Ozaeta, Assistant City Manager
Requested by: Administration
Prepared by: Ryan Salz, Senior Management Analyst
____________________________________________________________
RECOMMENDED ACTION
Recommendation
Adopt a Resolution entitled, “A RESOLUTION OF THE MAYOR AND CITY COUNCIL OF THE CITY OF WESTMINSTER, CALIFORNIA, TO APPROVE AN EXTENSION OF THE 7130 FENWICK LANE ELECTRONIC BILLBOARD PROJECT ENTITLEMENTS AND DIRECT THE CITY MANAGER TO APPROVE AN AMENDMENT TO SECTION 2.4 MITIGATION FEE OF OPERATING AGREEMENT NO. 01-2021 AND FINDING THAT THESE ACTIONS ARE EXEMPT FROM THE CALIFORNIA ENVIRONMENTAL QUALITY ACT.”
end
BACKGROUND
On October 13, 2021, the Mayor and City Council approved Operating Agreement 01-2021 which allowed Outdoor Associates, LLC (“Developer”) to construct and operate an electronic billboard (“Project”) at 7130 Fenwick Lane (Attachment 1). This action was taken following Planning Commission approval of a Conditional Use Permit and Variance for the Project on September 15, 2021.
The Developer contacted the City on December 10, 2024 to request a five-year extension to their building permit, citing an unforeseen Outdoor Advertising Permit denial from Caltrans as reasoning for the extension request. Section 10.10 Force Majeure of the Operating Agreement allows the Developer to request an extension in response to causes beyond the party’s reasonable control. “Government actions” are specifically referenced as a cause beyond the party’s reasonable control. Building permit 2022-0268 was issued by the City on April 9, 2024. Pursuant to California Building Code, a building permit will expire if the authorized work does not commence within 12 months after its issuance.
According to the Caltrans denial letter, the reasoning for denial is that the maturation of the plantings placed on the I-405 Freeway will not be deemed complete until 2027. The Developer is appealing the decision. The Developer contends that these plantings have no effect on the location of the proposed development because the area had already been declassified as a landscaped freeway on June 14, 2022. They also argue that the referenced regulations and law are not being applied as intended.
Although the Developer’s request to the City was found to be reasonable and directly aligned with the terms of the Operating Agreement, the Building Official is only authorized to grant permit extensions for periods not more than 180 days each. Due to this limitation in extension authority, staff and the Developer mutually agreed that an approval to extend the Project entitlements would satisfy the intent of the Developer’s initial request. The proposed Resolution (Attachment 2) would authorize the Community Development Director to issue a series of 12-month extensions to the Project entitlements, not to exceed four total extensions without further approval of the City Council. The Building Official would also be authorized to issue two consecutive 180-day extensions of the current building permit issued for the project, but if the Project is delayed beyond those extension periods the Developer will be required to submit a new building permit.
In addition to the building permit extension request, the Developer proposed an amendment to Section 2.4 Mitigation Fee of the Operating Agreement. Section 2.4 Mitigation Fee requires the Developer to pay a fee annually to the City. The current version of the agreement requires the fee to begin at $160,000 per year once the electronic billboard is constructed and becomes operational. This would increase by 10% every five years. In consideration of the unique circumstances related to the I-405 Improvement Project and associated delays in the Project, the Developer has offered to amend the Operating Agreement to start the Mitigation Fee at $176,000 per year. The proposed increase of the initial amount would result in $617,248 in additional revenue collected by the City over the life of the 30-year agreement.
While the Developer actively works to obtain the necessary State approval, staff recommends that the Mayor and City Council adopt a Resolution to approve an extension to the Project entitlements and an amendment to Operating Agreement No. 01-2021.
FISCAL IMPACT
Adoption of the Resolution would result in $617,248 in additional revenue collected by the City over the life of the 30-year agreement.
LEGAL REVIEW
The City Attorney’s Office has reviewed as to form.
CONCLUSION
The Developer recently contacted the City to request a five-year extension to their building permit, citing an unforeseen Outdoor Advertising Permit denial from Caltrans as reasoning for the extension request. The Developer also offered an increase to the initial value of the Mitigation Fee, as described in Operating Agreement No. 01-2021. Adoption of the Resolution will provide the Developer sufficient time to gain State approval and ultimately develop the electronic billboard previously approved by the City Council and Planning Commission in 2021.
ATTACHMENTS
1. City Council October 13, 2021 Staff Report
2. Resolution
REVIEWED BY
Erin Backs, Finance Director
City Attorney’s Office
Christine Cordon, City Manager