Meeting Date: January 8, 2013
Prepared by: Brian Roseth/Marc Wiener
City Council
Agenda Item Summary
Name: Review and consider the Recirculated Final Environmental Report for the Flanders Mansion property, including consideration and determination of several specific questions related to the adequacy of the EIR and the conformity of the EIR to the General Plan.
Description: At this public hearing, Council will consider the Sale of Flanders Mansion project. As part of this review, the Council must determine the adequacy of the Recirculated Final Environmental Impact Report; select a project for implementation; and affirm that the project or alternative selected for approval conforms with the General Plan. Legal counsel and staff will then prepare findings and implementing resolutions for the City Council to approve at a subsequent meeting.
At this meeting, Council must respond to the following questions: Is the EIR adequate for decision-making? Would a sale or lease conform to the General Plan, and if so what land uses? Should the original project or any of the alternatives be selected for implementation? If a lease or sale is selected, which parcel boundary should apply? Should the mitigation measures be adopted? If not, why not? If the environmentally superior alternative (lease) is not selected, and a sale is to be approved instead, what are the overriding considerations to justify this decision?
Staff Recommendation: Staff recommends that the City Council find the 2012 EIR to be adequate. Given that the sole reason for failure of the 2009 EIR was lack of adequacy, however, staff encourages City Council members to carefully review the EIR. Further staff recommendations include:
• Determine that a sale, with mitigations, is consistent with the General Plan;
• Approve either a lease or a sale;
• Limit future occupancy to a single-family resi~epce;
• Select Alternatives 6.7 or 6.5A for the boundary for the sale or lease;
• Determine that all proposed mitigation measures should be adopted; and
• Direct staff and legal counsel to prepare written findings and implementing resolutions for final action at the Council's March 5, 2013 meeting.
Important Considerations: Staff has determined that the 2012 EIR contains all the content and substantive elements required by CEQA and meets the standards for adequacy in Section 15151 of the CEQA Guidelines. The Forest and Beach Commission, Historic Resources Board and Planning Commission all have concluded that the EIR is adequate.
Reviewed by:
Jason Stilwell, City Administrator Date
CITY OF CARMEL-BY-THE-SEA
DEPARTMENT OF COMMUNITY PLANNING AND BUILDING
STAFF REPORT
THROUGH: JASON STILWELL, CITY ADMINISTRATOR
FROM: MARC WIENER, ACTING PLANNING SERVICES MANAGER AND
BRIAN ROSETH, PLANNING CONSULTANT
DATE: 8 JANUARY 2013
SUBJECT: CONSIDERATION OF PLANNING ISSUES RELATED TO TH RECIRCULATED FINAL ENVIRONMENTAL IMPACT REPORT AND THE SALE OF THE FLANDERS MANSION PROPERTY
I. EXECUTIVE SUMMARY
To act on the Sale of Flanders Mansion project the City Council must respond to the questions below. In taking action, it is important to state the reasons for each decision. This will assist staff in preparing legally-defensible findings for approval at the Council meeting on March 5, 2013. The decisions will not be final until findings and implementing resolutions are approved.
1.) Is the EIR adequate for decision-making?
o Does it identify the impacts of a sale or lease?
o Does it provide appropriate mitigation measures to reduce the impacts?
o Does it provide a reasonable range of alternatives that could reduce the impacts?
o Does it respond adequately to public comments received on the Draft EIR?
2.) Would a sale or lease conform to the General Plan? What land uses would be in conformity with the General Plan (single-family residential, public/quasi-public, etc.)
3.) Should the original project or any of the alternatives be selected for implementation? If a lease or sale is selected, which parcel boundary should apply?
4.) Should the mitigation measures be adopted? If not, why not?
5.) If the environmentally superior alternative (lease) is not selected, and a sale is to be approved instead, what are the overriding considerations to justify this decision?
The fact that a lease does not satisfy the project purpose (divestment) can be the first reason, but Council findings citing why the environmentally superior alternative is "infeasible for specific economic, legal, social, technical, or other considerations" is required by law. Explaining why the project benefits outweigh the significant impact is also helpful.
II. INTRODUCTION
The City Council will consider the Sale of Flanders Mansion project at a public hearing on 8 January 2013. As part of this review, the Council must (1) determine the adequacy of the Recirculated Final Environmental Impact Report (2) select a project for implementation, and (3) affirm that the project or alternative selected for approval is in conformity with the General Plan. Legal counsel and staff will then prepare findings and implementing resolutions for the City Council to approve at a subsequent meeting.
III. ENVIRONMENTAL IMPACT REPORT BACKGROUND
The 2005 Environmental Impact Report
In 2005 the City prepared an Environmental Impact Report (EIR) for the sale of the Flanders Mansion property. The stated purpose of the project was to (1) generate funds for needed capital improvements involving a number of municipal facilities and (2) divest the City of a property needing significant funding for rehabilitation. Several secondary objectives were added to the Final EIR in response to public comments. All required CEQA processes were carried out and the City Council certified the Final EIR as adequate.
The City Council subsequently approved the proposed project (sale of the Mansion on 1.252 acres) and adopted mitigation measures to reduce impacts. The City Council rejected the environmentally superior alternative, as identified in the EIR (Lease Alternative), based on its conclusion that leasing the Mansion was not economically feasible. Following these actions, the Flanders Foundation, a 501c3 nonprofit organization,
successfully challenged the City’s decisions in Superior Court.1
1 Flanders Foundation vs. City of Carmel-by-the-Sea and City Council of the City of Carmel-by-the-Sea (Mont. Co. Super. Ct. Case
number M76728).1.
The Court upheld the City’s determination that the approved project was in conformity with the General Plan but found that the City lacked sufficient economic evidence to support its finding that the environmentally superior alternative, the lease alternative, was infeasible. The Court ordered the City to set aside its certification of the Final EIR and its approval of selling the Flanders Mansion.
The 2009 Environmental Impact Report
Pursuant to the Court’s determination, the City prepared a Recirculated Draft EIR in 2009.
That EIR revised the project purpose to eliminate fund raising for capital improvement projects. The EIR defined the project purpose and secondary objectives as follows:
Primary purpose: To divest the City of the Flanders Mansion property which is in need of significant short-term and long-term repair and rehabilitation.
Secondary objectives:
1) To ensure that the Flanders Mansion is preserved as an historic resource;
2) To ensure that the Flanders Mansion building and property are put to productive use;
3) To ensure that future use of the Flanders Mansion and property will not cause significant traffic, parking or noise impacts on the surrounding neighborhood;
4) To ensure that future use will not significantly disrupt the public’s enjoyment of the Mission Trail Nature Preserve or the Lester Rowntree Native Plant Garden;
5) To ensure that environmental resources of the park are protected; and
6) To ensure that the Flanders Mansion parcel continues to provide the public with as many park benefits as are practical.
Also in response to the Court's decision, in 2009 the City retained CBRE, an experienced real estate economics firm, to prepare a thorough economic study to compare sale and lease alternatives. Based on this study, and a number of other factors, the City Council determined that the environmentally superior alternative identified in the 2009 EIR (Lease Alternative) was not feasible. Instead, the City Council adopted an alternative to sell the Mansion property (1.252 acres) with easements and mitigation measures to address
environmental impacts identified in the EIR. The City Council adopted extensive findings to justify its actions. The City Council's decision was again challenged in Superior Court by the Flanders Foundation.
Since the City Council's decision involved the sale of parkland, the California Surplus Lands Act required additional public review and a majority vote of the electorate on a ballot measure for final approval. The City Council decided to implement the Surplus Lands Act process while also fighting the lawsuit in Superior Court. The Court issued a mixed decision with both parties losing on some issues. Both parties appealed the Superior Court decision to the California Court of Appeals. The City prevailed in the lawsuit on all
challenges except one: its failure to respond adequately to a public comment suggesting that the City should consider smaller parcel sizes as a means of reducing the significant impact of selling parkland.
The 2012 Environmental Impact Report
The Court of Appeal reasoned that since the project's significant environmental impact is the loss of parkland, this impact might be reduced by selling less parkland. The 2012 EIR incorporates by reference all prior EIRs and focuses on reduced parcel sizes. When these alternatives were studied in the new EIR, it was found that altering some of the boundaries of the Flanders Mansion parcel could improve public access to trailheads, views and other park benefits. Based on public comments received, the Final EIR also responded to some new issues.
IV. EIR ADEQUACY
An EIR must be “adequate” to enable informed decision-making and effective public participation. An EIR must provide a sufficient analysis of impacts, mitigations and alternatives. The Final EIR also must provide a reasonable response to all public comments received.
Staff has determined that the 2012 EIR contains all the content and substantive elements required by CEQA and meets the standards for adequacy in Section 15151 of the CEQA Guidelines. The Forest and Beach Commission, Historic Resources Board and Planning Commission all concluded that the EIR is adequate.2 Staff recommends that the City Council find the 2012 EIR to be adequate. However, given that the sole reason for failure of the 2009 EIR was lack of adequacy, staff encourages City Council members to review
the EIR carefully.
V. GENERAL PLAN CONFORMITY
2 See Attachment #1: Flanders Update: Recommendations from Advisory Bodies
California statutes require a determination of General Plan conformity whenever a City property or building is proposed to be sold3. The proposed land use for the property also must conform to the General Plan. Carmel’s General Plan does not contain decisive policies on the issue of whether to sell Flanders Mansion, lease it, or keep it for Municipal uses. However, the General Plan does include policies that anticipate a sale of the Flanders Mansion property. (In the policies below, the Flanders Mansion is referred to by its
historical name: Outlands)
P5-141 If retained by the City, preserve the Outlands property and grounds at Mission Trail Nature Preserve consistent with its status as a nationally registered historical resource.
P5-142 If retained by the City, utilize the Outlands property at Mission Trail Nature Preserve in a manner beneficial to the residents of Carmel-by-the-Sea while minimizing its expense to the City.
P5-143 If retained by the City, support uses at the Outlands property that are compatible with its location in Mission Trail Nature Preserve and adjacent to the Rowntree Native Plant Garden and Hatton Road neighborhood.
Each policy has two clauses. The first clause makes the second clause apply if the City does not sell the Mansion. Each of the second clauses contains a specific mandate. The implication of the first clause is that there is a choice to be made, and that the General Plan allows this choice--it does not prohibit it. This language is included in the General Plan in spite of other policies that appear to oppose a sale. By law, a General Plan must be internally consistent. Therefore, staff concludes that, with appropriate mitigations, a sale of the Mansion can conform to the General Plan. Staff's recommendation on this question also is influenced by the Planning Commission and City Council decisions in 2005 and 2009, and the passage of the 2009 ballot measure. Current Planning Commission recommendations will be reported orally to the City Council at the January 8 meeting.
The counterargument to the analysis above derives from other General Plan policies that apply to parks and natural resources throughout the City. The 2009 EIR identified 37 policies in the General Plan that have relevance to selling the Mansion4. These policies support the preservation of natural resources, parks and open space, enhanced use of parks
3 The lease alternative is assumed to be consistent with the General Plan and requires no special determination.
4 See Pages 4.4-10 through 4.4-15 of the 2009 Draft EIR.
by the public and acquisition of additional parkland. Many of these policies have a clear application to the Flanders Mansion property and would be most effectively implemented by not selling the Mansion.5 For nearly all of the policies, the EIR concludes that General Plan consistency will be achieved if the proposed mitigation measures are adopted. The EIR identified just four policies classified as "potentially inconsistent" with a sale of Flanders Mansion, due to the loss of public parkland:
Goal: G5-6: Preserve and acquire open space and parks.
Objective O5-21: Optimize public use of City parks.
Policy P5-46: Preserve and protect areas within the City’s jurisdiction, which due to their outstanding aesthetic quality, historical value, wildlife habitats or scenic viewsheds, should be maintained in permanent open space to enhance the quality of life. Such acquired areas would be left in a natural state or restored for
aesthetic and/or wildlife purposes.
Policy P5-107: Provide for public access and passive enjoyment of City parks and open space.
So, three policy statements anticipate a sale, yet four policy statements appear to conflict with a sale. The EIR classifies these policies as “potentially inconsistent” with selling the Mansion. Only the City Council can make a final determination on the meaning of the General Plan.
A General Plan analysis must assume that policies appearing to be in conflict can be harmonized. If the policies are viewed within a City-wide context, the various policies in the City’s General Plan may not necessarily be in conflict. The Plan can support parks, conservation and recreation in general terms while permitting a sale of parkland at a specific site.
The Flanders Mansion property is an important site. Although it represents just 2% of Carmel’s total parkland, it provides a disproportionally large number of benefits and is an integral part of the Mission Trails Nature Preserve. If the property is sold, mitigation measures and alternatives should be adopted to lessen impacts on views, aesthetics, historic preservation and trail access; this will reduce potential conflicts among General Plan policies.
5 Representatives of the Flanders Foundation have argued that selling the Mansion conflicts with the General Plan.
Ultimately, the City Council must balance the competing policy objectives to reach a determination regarding General Plan consistency. In 2005 and 2009, both the Planning Commission and the City Council determined that selling the Flanders Mansion property was not inconsistent with the General Plan. The Superior Court upheld this determination and stated “The City is entitled to deference in its determination of conformity with the General Plan.”
Regardless of whether the property is sold or leased, a determination also must be made regarding allowed land uses. The EIR studied residential, commercial and public/quasipublic uses. The Planning Commission recommends that occupancy of the Mansion be limited to single-family residential use. The building was designed for residential dwelling purposes and its location inside a park, adjacent to a residential neighborhood, argue for a low-impact use. Staff concurs with the Commission's recommendation.
VI. PROJECT SELECTION AND MITIGATION MEASURES
There are three criteria that apply to selection of a project:
1.) Does the alternative satisfy the project purpose (divestment) and the secondary project objectives to a reasonable degree? This criterion can be used to eliminate alternatives.
The City Council also is free to adopt an alternative that does not satisfy the project purpose.
2.) Does the alternative conform to the General Plan? This is a requirement.
3.) Is the alternative one of the environmentally superior options identified in the EIR? If not, the City Council will be required to justify its action by adopting "findings of overriding consideration". Failure to achieve the project purpose can be one finding.
Additional findings explaining how the environmentally superior alternative is infeasible due to specific economic, legal, social, technical, or other considerations are needed. Failure to adopt such findings will violate CEQA and would be grounds for a legal challenge. Additional findings explaining why project benefits outweigh the environmental impacts are helpful in defending a decision not to adopt an
environmentally superior alternative.
The following summary applies these three criteria to the alternatives:
Original Proposed Project (Sell 1.252 acre parcel with no mitigations and several allowed
uses)
Purpose: Satisfies the project purpose, but may conflict with four of the secondary
objectives.
General Plan: May be consistent with the General Plan. This requires a City Council
judgment on whether a sale is consistent with the General Plan.
Environmental: This is the least environmentally sensitive alternative studied.
No Project Alternative
Purpose: Fails to satisfy the project purpose and two of the six secondary objectives.
General Plan: Inconsistent with the General Plan (Policies P5-141, P5-141 and P5-143).
Environmental: This is the most environmentally superior alternative. CEQA allows a
No Project alternative to be rejected if it fails to satisfy the project purpose, even if it is
the most environmentally superior alternative.
Lease Alternatives with all Proposed Mitigation Measures--This alternative can be
limited to single-family residential use or can include public/quasi-public uses. A parcel
size needs to be specified.
Purpose: Fails to satisfy the project purpose (divestment), but could satisfy all six of
the secondary objectives depending on the terms of the lease and assuming a reduced
parcel size boundary. If the primary goal of divestment is to avoid rehabilitation and
maintenance costs, the City could achieve most of the project purpose (except a change
of ownership) if it is feasible to find a lessee willing to cover these costs.
General Plan: A lease is consistent with the General Plan only if all of the mandates in
Policies P5-141, P5-142 and P5-143 are achieved (see page 4 of this Staff Report.)
Environmental: This is the second-most environmentally superior alternative, after the
No Project alternative.
Sale with Reduced Parcel Boundary Alternatives and with all Mitigation Measures.
This alternative is really a group of boundary options identified in the EIR as 6.6, 6.7 and
6.7A.
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Purpose: Satisfies the project purpose (divestment) and could achieve all six secondary
objectives, depending on the parcel boundary. Larger parcel boundaries have greater
impact on public access to trailheads, views and other resources of the park. Most of
these impacts can be mitigated.
General Plan: Alternatives 6.6 and 6.7 may be consistent with the General Plan. This
requires a City Council judgment on whether a sale is consistent with the General Plan.
Alternative 6.7A conflicts with General Plan policies related to historic preservation.
Environmental: Alternatives 6.6 and 6.7 are the next most environmentally superior
alternatives after the Lease Alternatives. Approval of these alternatives will require
adoption of findings of overriding consideration showing why the lease alternatives are
not feasible. Alternative 6.7A conflicts with environmental standards related to historic
preservation.
Sale with Conservation Easements and Mitigation Measures (from the 2009 EIR)
This alternative includes two variations. Alternative 6.5 would establish conservation
easements over approximately one-half acre of the parcel to address environmental and
public access issues. Alternative 6.5A would reduce the parcel size by subtracting most of
the area contained within those easements from the parcel boundary.
Purpose: Satisfies the project purpose and all six of the secondary objectives.
General Plan: May be consistent with the General Plan. This requires a Council
judgment on whether a sale is consistent with the General Plan.
Environmental: These alternatives are the next most environmentally superior, after the
other Reduced Parcel Boundary alternatives. Approval of alternatives 6.5 or 6.5A will
require adoption of findings of overriding consideration showing why the lease
alternatives and the reduced parcel alternatives are not feasible.
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VII. RECOMMENDATIONS
Staff recommends the following actions:
1. Determine that the EIR is adequate.
2. Determine that a sale, with mitigations, is consistent with the General Plan.
3. Approve either a lease or a sale.
4. Limit future occupancy to a single-family residence.
5. Select Alternatives 6.7 or 6.5A for the boundary for the sale or lease.6
6. Determine that all proposed mitigation measures should be adopted.7
7. Direct staff and legal counsel to prepare written findings and implementing
resolutions for final action at the Council's 5 March 2013 meeting.
6 The other boundaries are either impractical (6.6), violate the General Plan and CEQA (6.7A), or involve the
complications inherent in easements and require more difficult CEQA findings (6.5).
7 This should include the edits to mitigation measure 4.3-1 as recommended by the Historic Resources Board and the
Planning Commission--see Attachment #1.
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CITY OF CARMEL-BY-THE-SEA
DEPARTMENT OF COMMUNITY PLANNING AND BUILDING
STAFF REPORT: ADDENDUM
TO: MAYOR BURNETT AND CITY COUNCIL MEMBERS
THROUGH: JASON STILWELL, CITY ADMINISTRATOR
FROM: MARC WIENER, ACTING PLANNING SERVICES MANAGER AND
BRIAN ROSETH, PLANNING CONSULTANT
DATE: 8 JANUARY 2013
SUBJECT: CONSIDERATION OF PLANNING ISSUES RELATED TO THE
RECIRCULATED FINAL ENVIRONMENTAL IMPACT REPORT AND THE
SALE OF THE FLANDERS MANSION PROPERTY
I. INTRODUCTION
This Staff Report addendum provides new information not covered in the original Staff Report
distributed to the City Council on 21 December 2012.
II. SUMMARY OF ACTIONS OF ADVISORY BODIES
Three advisory bodies reviewed the EIR and each provided conclusions and recommendations
regarding their areas of expertise, as follows:
Forest and Beach Commission
On 10 December 2012 the Forest and Beach Commission reviewed the 2012 FEIR for adequacy.
The Commission found the document to be legally adequate and recommended certification.
Historic Resources Board
On 10 December 2012 the Historic Resources Board reviewed the FEIR for adequacy. The
Board found the document to be legally adequate but forwarded to the Planning Commission a
recommended amendment to mitigation measure 4.3-1 (shown in Attachment #1).
Planning Commission
On 12 December 2012 the Planning Commission reviewed the FEIR for adequacy. The
Commission found the document to be legally adequate. Pursuant to its responsibilities under
Section 65402 of the California Government Code, the Commission also considered whether a
sale of the Flanders Mansion property is consistent with the City's General Plan. The
Commission did not reach a definite conclusion on this question but recommended a residential
lease as the best option for the City. The Commission also concurred with the Historic
Resources Board and supported amending Mitigation Measure 4.3-1 as recommended by the
Board.
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On 3 January 2013 the Planning Commission reconsidered the issue of General Plan conformity.
The results of this meeting will be reported to the City Council orally.
III. ECONOMIC REPORT
Attachment #2 is an update to the economic report developed by CBRE in 2009 comparing lease
and sale alternatives. The update provides revised sale and lease values that reflect the new
alternatives appearing in the 2012 EIR, including the reduced parcel alternatives. As background
to the updated material, the conclusions of the 2009 report are attached as well. The detailed
analysis from CBRE that support these conclusions is available at City Hall.
IV. RESPONSE TO NEW PUBLIC COMMENTS
The following comments were received during the public hearings held by the Forest and Beach
Commission, Historic Resources Board, Planning Commission and in correspondence received
since publication of the Final EIR. Staff has provided a response to each comment related to
adequacy of the EIR or the Staff Report.
Comment: The Staff Report states that even though the City eliminated financial return as a
project purpose in 2009, the City Council is still justified in considering economics when it
makes decisions about Flanders Mansion because the City Council has a fiduciary responsibility
to manage City assets for the benefit of the public. The commenter argued that the City
Council's fiduciary responsibility is not just monetary and extends to managing the Mission
Trails Nature Preserve as one of the City's important assets. Therefore, the decision must take
into account what is good for the park as a whole.
Response: Staff concurs.
Comment: The EIR does not provide sufficient coverage of a Life Estate or a Curatorship.
These would allow the City to retain the Mansion in City ownership while providing a lease that
was long enough for a lessee to be willing to expend sufficient funds to rehabilitate the Mansion.
Response: The purpose of the EIR is to expose potential environmental impacts of a project and
define alternatives and mitigation measures to offset those impacts. The EIR is not required to
address economic or ownership issues. The EIR provides more than adequate coverage of the
potential environmental impacts of "lease alternatives" as a general category. Extending the term
of a lease does not raise new impacts relevant to an EIR. The 2012 Final EIR addresses this
topic in response 3b. The 2009 Final EIR addresses this topic in its response to comment letter
CC. A Resident Curator or Life Estate lease would result in substantially the same level of
impacts as the single-family lease alternative. Impacts to parkland would continue to occur
under this alternative, contingent upon the nature of the agreement. Impacts to parkland,
however, would be limited to the term of the agreement.
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ATTACHMENT #1
RECOMMENDED AMENDMENTS TO MITIGATION 4.3-1
Recommended by the Historic Resources Board and Planning Commission
Mitigation 4.3-1
The terms of any sale or lease shall be subject to Conditions of Sale requiring recordation of
a deed restriction, recordation of a historic preservation easement, or similar legallybinding
document which shall run with the land and be binding upon all owners and
successive owners, requiring the adherence to a comprehensive Preservation Plan for the
Flanders Mansion historic resource consistent with the Secretary’s Standards and the
Carmel-by-the-Sea Municipal Code historic preservation provisions. The easement shall
encompass the entirety of the historic resource as documented in the National Register of
Historic Places nomination papers and shall apply to all owners and lessees of the property
contained therein. The Preservation Plan shall require approval by the City's Historic
Resources Board. In general, the Preservation Plan shall identify changes to the property
that could reasonably be expected to occur and make recommendations so that the changes
would not disrupt the historic integrity of the resource. The Preservation Plan shall be
prepared by a qualified professional and would shall provide practical guidance to the new
all owners and lessees of the Flanders Mansion historic resource. Said Preservation Plan
shall include: 1) a history of the Flanders Mansion; 2) an assessment of the current
condition of the property (building and grounds) and detailed descriptions of the
character-defining features; and 3) recommendations following the Secretary’s Standards
for the appropriate treatment of these features. Specific standards and requirements of the
plan follow:
A qualified specialist who meets the Secretary of the Interior’s Professional Qualification
Standards should shall prepare the preservation plan that shall, at a minimum, include the
following information:
• A detailed history of the Flanders Mansion;
• A discussion of its historical significance (i.e. why the building resource is listed in
the National Register);
• A comprehensive list of the features of the building and grounds that contribute to
its historical significance;
• A detailed description of the current condition of the building and grounds and its
integrity relative to the National Register criteria;
• A discussion of the Secretary of the Interior's Standards for the Treatment of
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Historic Properties;
• Specific standards and recommendations for the care and treatment of the Flanders
Mansion building and grounds. These standards in this section of the plan should be
based on the identified character-defining features and include relevant standards
outlined by the Secretary of the Interior, and the Secretary’s guidelines in applying
these standards.
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January 3, 2013
Mayor Jason Burnett and
City Council Members
City Hall
Carmel-by-the-Sea
Carmel, CA.
Re: Market Value Impact of Reduced Parcel Size EIR Alternatives,
Flanders Mansion property, Carmel-by-the-Sea, CA
Dear Mayor Burnett and Members of the City Council:
As requested by the City of Carmel-by-the-Sea , Sedway Consulting has evaluated the impact
of a number of reduced-parcel EIR alternatives on the market value of the Flanders Mansion
property in Carmel-by-the-Sea, California. This letter represents an amplification of the
report prepared by CBRE Consulting for the City of Carmel-by-the-Sea dated February 23,
2009. Lynn M. Sedway, CRE, was the primary author of that report, which included an
appraisal of the property prepared by CB Richard Ellis Valuation and Advisory Services.
That 2009 appraisal estimated a value of the City-owned property as a private single-family
residence at $4.0 million, assuming completion of significant restoration costs estimated at
$1.157 million provided by Architectural Resources Group as of January 15, 2009. It should
be noted that the restoration cost estimates addressed primarily safety and some historical
and interior restoration.
REDUCED PARCEL ALTERNATIVES
The potential reduced-parcel alternatives at the property were provided by Denise Duffy &
Associates. The following table summarizes the alternatives and the resulting lot sizes:
Summary of Potential Reduced-Parcel Alternatives
Proposed
Project
Home Size (SF) 6,019 6 ,019 6,019 6 ,019 6 ,019 6,019
Lot Size - SF 5 4,537 54,537 33,628 10,019 36,154 2 1,780
in Acres 1 .25 1.25 0.77 0.23 0 .83 0 .50
Easement-SF - 20,909 - - 3,049 -
in Acres - 0.48 - - 0 .07 -
Net Lot Size-SF 5 4,537 33,628 33,628 10,019 33,105 2 1,780
in Acres 1 .25 0.77 0.77 0.23 0 .76 0 .50
Alternative 6.7a
Revised Design
Reduced Parcel
Alternative 6.5
With Easement
Alternative 6.5a
Easement Areas
Removed
Alternative 6.6
Building Only
Alternative 6.7
Reduced Parcel
Sources: Denise Duffy & Associates; and Sedway Consulting.
As shown, the alternatives indicate a reduced net parcel size ranging from 0.23-acre to .77-
acre. As a percentage of the parcel size indicated in the 2009 report, the reduction in parcel
Attachment "B" 99
Mayor Jason Burnett and City Council Members
2
size ranges from 38 percent in Alternatives 6.5 With Easement and 6.5A Easement Areas
Removed to 82 percent in the 6.6 Building Only Alternative. The City has indicated that
property boundaries have been drawn to maximize park benefits, including maximum
public access to trails and full retention of the Lester Roundtree Arboretum. These
alternatives are illustrated in Figures 6.1 through 6.4 of the REIR under Discussion of
Reduced Parcel Alternatives.
There are several aspects of the Flanders Mansion property that already pose a significant
marketing challenge. Specifically, marketing of the home with its historic status and the
associated renovation limitations, the significant cost of required renovation, and the
location in the park requires a unique buyer. The potential to successfully market the
Flanders Mansion property is limited to an even greater extent with the constraint of a
smaller parcel size as specifically depicted in the EIR alternatives. Burdening the marketing
with a reduced parcel size raises many challenges, including the following:
• Limiting the parcel size as depicted in the alternatives greatly impacts the privacy of the
mansion because the trails pass very close to its windows.
• The reduced parcel sizes are not created in an effort to enhance the Flanders Mansion
property as a private residence, but rather to enhance park benefits and public access.
• The outright reduction in parcel size versus the use of easements is considered to have a
similar impact on value because both diminish the utility of the parcel in terms of
privacy and security.
• The mansion is further burdened by being isolated, so there are security issues due to
the potential for homelessness and crime, a common occurrence in park settings.
• It is anticipated that the reduced parcel size will lessen the potential to gain approvals
for additional construction of even a deck or renovation of the garage, for example.
• The aforementioned factors also are anticipated to increase the time necessary to
market the property, further negatively impacting value.
The above considerations all reduce the utility, desirability, and thus the value of the
property as a potential private single-family home.
ESTIMATED VALUE IMPACT OF REDUCED PARCEL ALTERNATIVES
In estimating the value impact of the reduced parcel alternatives, the unique nature of the
property and the overall Carmel-by-the-Sea location increase the difficulty of such a task.
Therefore, Sedway Consulting believes that identifying a reasonable range of value impact is
an appropriate approach to estimating the impact on value. In terms of estimating the
impact of the reduced parcel size on value given the above constraints, there were several
considerations:
• The scope of the assignment does not encompass an updated appraised value of the
property based on current market conditions.
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Mayor Jason Burnett and City Council Members
3
• Based on the methodology presented in the residential home comparison adjustment
grid, the 2009 appraisal utilized an approximate $10.50 per square foot of land
adjustment for parcel size differences.
• It is estimated that land represents about 50 percent of the home value in the Carmel
area, due to the desirability and uniqueness of the location.
• The various added constraints on the property and the added marketing challenges are
estimated to decrease its value by 25 to 35 percent, reducing the value to $2.6 million to
$3 million, assuming completion of the restoration. Subtracting the estimated cost of
renovation of $1,157,000 results in an estimated as-is value range of $1,443,000 to
$1,843,000 for four of the five alternatives (except Alternative 6.6 Building Only), as
opposed to the “as is” value of $2,843,000 for the property estimated in 2009 prior to
the reduced parcel size analysis.
• The Building Only Alternative 6.6 scenario essentially results in the property having no
land except for a small rectangle encompassing the building footprint. This severe
reduction in parcel size (by 82 percent from the original 1.25 acres), combined with the
restoration challenges, is considered to render the property virtually non-marketable.
The following table summarizes the estimated as-is value ranges and impact of the reducedparcel
EIR Alternatives. As shown, the value impact ranges from $1.0 to $1.4 million, with
the exception of the Building Only Alternative 6.6 scenario, where the alternative is
considered to be not marketable.
Summary of Value Impact of Reduced-Parcel Alternatives
Proposed
Project
Home Size (SF) 6,019 6 ,019 6,019 6 ,019 6 ,019 6,019
Net Lot Size-SF 5 4,537 33,628 33,628 10,019 33,105 2 1,780
in Acres 1 .25 0.77 0.77 0.23 0 .76 0 .50
Actual Size Reduction - -38% -38% -82% -39% -60%
Value Reduction Range - -25% to -30% -25% to -30% Not Marketable -25% to -30% -30% to -35%
Estimated As Is Value $2,843,000 $1,643,000 $1,643,000 Not Marketable $1,643,000 $1,443,000
$1,843,000 $1,843,000 $1,843,000 $1,643,000
Value Impact - ($1,200,000) ($1,200,000) ($1,200,000) ($1,400,000)
($1,000,000) ($1,000,000) ($1,000,000) ($1,200,000)
Alternative 6.7a
Revised Design
Reduced Parcel
Alternative 6.5
With Easement
Alternative 6.5a
Easement Areas
Removed
Alternative 6.6
Building Only
Alternative 6.7
Reduced Parcel
Sources: Denise Duffy & Associates; and Sedway Consulting.
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Mayor Jason Burnett and City Council Members
4
The contents of this letter are subject to the attached assumptions and general limiting
conditions. Specifically for this assignment, Sedway Consulting includes a special limiting
condition to the analysis in that the subject property is a very unique property with no
really good comparables. This is especially the case in the reduced parcel alternatives with
the lack of privacy.
Sincerely,
Lynn M. Sedway, CRE
102
Mayor Jason Burnett and City Council Members
5
A S S U M P T I O N S A N D L I M I T I N G C O N D I T I O N S
Sedway Consulting has made extensive efforts to confirm the accuracy and timeliness of the
information contained in this study. Such information was compiled from a variety of
sources, including interviews with government officials, review of City and County
documents, and other third parties deemed to be reliable. Although Sedway Consulting
believes all information in this study is correct, it does not warrant the accuracy of such
information and assumes no responsibility for inaccuracies in the information by third
parties. We have no responsibility to update this report for events and circumstances
occurring after the date of this report. Further, no guarantee is made as to the possible
effect on development of present or future federal, state or local legislation, including any
regarding environmental or ecological matters.
The accompanying projections and analyses are based on estimates and assumptions
developed in connection with the study. In turn, these assumptions, and their relation to the
projections, were developed using currently available economic data and other relevant
information. It is the nature of forecasting, however, that some assumptions may not
materialize, and unanticipated events and circumstances may occur. Therefore, actual
results achieved during the projection period will likely vary from the projections, and some
of the variations may be material to the conclusions of the analysis.
Contractual obligations do not include access to or ownership transfer of any electronic
data processing files, programs or models completed directly for or as by-products of this
research effort, unless explicitly so agreed as part of the contract.
This report may not be used for any purpose other than that for which it is prepared.
103
CBRE CONSULTING, INC.
Four Embarcadero Center, Suite 700
San Francisco, CA 94111
T 415 781 8900
F 415 733 5530
www.cbre.com/consulting
To: City of Carmel-by-the-Sea and City Council
c/o Rich Guillen, City Administrator
From: Lynn Sedway, Executive Managing Director
Jonathan Kuperman, Director
Date: February 23, 2009
Re: Flanders Mansion Property – Economic Feasibility Analysis
At the request of the City of Carmel-by-the-Sea (“Carmel” or “City”), CBRE Consulting
performed an economic analysis of the City-owned Flanders Mansion Property
(“Flanders Mansion” or “Property”), a 6,0191-square-foot house built in 1924 and
situated on approximately 1.25 acres in Carmel.
STUDY BACKGROUND AND PURPOSE
Carmel purchased the Flanders Mansion Property in 1973. The property is listed on
the National Register of Historic Places as well as similar state and local registries. Its
location is within the Mission Trails Nature Preserve (“Preserve” or “Park”), which
includes the adjacent Lester Rowntree Native Plant Garden.
The City has proposed disposition of the Flanders Mansion Property, which needs
significant rehabilitation and ongoing maintenance. In addition to the primary
objective of divestment to avert these expenses and potential liability, the City has
several secondary objectives:
1 The livable area is based on calculations from plans, provided by the City,
dated November 1984. A 2005 appraisal of the Flanders Mansion Property estimates
a livable area of 5,577-square-feet.
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1. To ensure that the Flanders Mansion Property is preserved as a historic
resource;
2. To ensure that the Flanders Mansion building and property are put to
productive use;
3. To ensure that future use of the Flanders Mansion Property will not cause
significant traffic, parking, or noise impacts on the surrounding neighborhood;
4. To ensure that future use will not significantly disrupt the public’s enjoyment of
the Mission Trails Nature Preserve and the Lester Rowntree Native Plant
Garden;
5. To ensure that environmental resources of the park are protected; and
6. To ensure that the Flanders Mansion Property continues to provide the public
with as many park benefits as are practical, given the proposed use.
DISPOSITION ALTERNATIVES
Multiple alternatives to retaining the Flanders Mansion Property are evaluated in this
report:
Alternative 1 – Sale as a single-family residence, with the City or the buyer
responsible for rehabilitation;
Alternative 2 – Lease by the City as a single-family residence, with the City or the
lessee responsible for rehabilitation;
Alternative 3 – Sale as a low-usage non-residential property, with the City or the
buyer responsible for rehabilitation;
Alternative 4 – Lease by the City as a low-usage non-residential property, with the
City or the lessee responsible for rehabilitation.
STUDY TASKS
CBRE Consulting performed several tasks in the course of this study, including the
following:
• Reviewed pertinent information regarding the site, including the previous
Environmental Impact Report (EIR), the cost estimate report prepared by
Architectural Resources Group2, the 2005 Mitigation Monitoring and Reporting
Program ("MMRP"), the 2005 Conditions of Sale, and other relevant codes,
standards, and restrictions;
2 The Flanders Mansion Cost Estimate report prepared by Architectural Resources
Group can be found in Addendum C of the Appendix.
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• Performed local reconnaissance to develop an understanding of the site and its
environs;
• Inspected the site to determine potential and assess existing conditions related
to access, parking, visibility, topography, and views;
• Observed adjacent properties and surrounding neighborhoods to further our
understanding of potential value and use;
• Developed case studies involving comparable properties, to provide added
perspective on the City’s aforementioned alternatives;
• Analyzed key local property-market statistics and trends affecting the value of
the Property;
• Conducted an appraisal of the market value of the Flanders Mansion Property,
through CBRE’s Valuation & Advisory Services group;
• Evaluated the feasibility and likely value outcome of each disposition
alternative.
STUDY RESOURCES
CBRE Consulting relied upon myriad sources of information for this economic analysis,
including but not limited to (i) Denise Duffy & Associates, (ii) City of Carmel by-the-Sea
staff and records, (iii) the cost estimate report prepared by Architectural Resources
Group, dated January 15, 2009, (iv) the Multiple Listing Service for the Monterey Bay
area, (v) summary appraisal report prepared by CBRE Valuation & Advisory Services,
dated October 24, 2008, and (vi) other documents and sources, including those noted
in the Case Studies section of this report.
APPROACH TO ESTIMATING VALUE
In estimating the value of the Flanders Mansion Property for each alternative involving
a sale of the property, CBRE Consulting judged the sales comparison approach most
appropriate. Briefly, this standard valuation method uses data from the sale of
comparable properties to indicate a value for the subject. For the lease alternatives,
CBRE estimated the property’s income-producing potential.
CBRE Consulting understands that the economic analysis of the Flanders Mansion
Property performed for the prior EIR utilized the summary appraisal report prepared by
Mark S. Askew and dated June 24, 2005. We regarded that appraisal as obsolete for
the purpose of our study and conducted a new appraisal through CBRE’s Valuation &
Advisory Services group. The resulting summary appraisal report, including the
specific comparables and assumptions relied upon in this analysis, can be found in the
Appendix of this study.
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SUMMARY OF VALUE ESTIMATES
The City requested CBRE to analyze two types of alternatives, sale and lease, and to
consider two types of occupancy, single-family residential and nonresidential. A
summary of the estimated value of these combinations is presented below.
Sale Alternatives
CBRE’s appraisal report (accompanying this report as an Appendix) estimates the
following values associated with sale of the Flanders property. In our opinion,
estimates of market values for the Flanders Mansion Property are not affected
significantly by whether the City or another party completes the restoration.
The budgeted rehabilitation cost3 was deducted to estimate the as-is value in each
scenario. The major components of the rehabilitation costs and estimates relate to site
work, the building’s exterior, and the building’s interior. The largest line items are for
re-roofing the building and for shoring the southeast corner of the house and
installing a perimeter foundation wall.
In the following table, the difference between the as-rehabilitated value of $2,040,000
for sale as non-residential property and the as-is value of $890,000 is $1,157,000 for
restoration. In all scenarios, CBRE Consulting used the restoration budget estimate
pertaining to residential use, recognizing that adaptive reuse of the Property as a
nonresidential property may incur higher restoration costs. The restoration cost for a
nonresidential use would likely fall between the amount budgeted for residential use
and use by the City itself as a public facility, which Architectural Resources Group
estimated at $1,409,716.
SUMMARY OF ESTIMATED VALUES FOR SALE ALTERNATIVES
Sale as a Single-Family Residence to Owner/Occupant
As-Rehabilitated (Restored) $4,000,000
As-Is (Unrestored) $2,843,000
Sale as Non-Residential Property for Owner's Use
As-Rehabilitated $2,040,000
As-Is $890,000
3 The January 15, 2009 report prepared by Architectural Resources Group
concludes that the restoration cost to a purchaser or the City would amount to
$1,157,000 if the property is leased or sold to an owner-user.
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Lease Alternatives
As an alternative to a sale, the City may lease the Flanders Mansion Property as a
home or non-residential property. CBRE’s appraisal report estimates the annual net
operating income associated with the two scenarios. We used these figures to
illustrate approximately how long would be needed for the City to recover the full cost
of restoration.
A dynamic model employing rental rate and operating expense adjustments over time,
as well as net present value calculations, could be constructed. However, such an
analysis would rely on necessarily imprecise assumptions and forecasts and would
ultimately, in our opinion, make a similar demonstration of the economics of these
alternatives.
It is also important to note that the market for comparable single-family rentals is
exceedingly thin in the vicinity of the Flanders Mansion Property and, in fact, nonexistent
where lessees are responsible for rehabilitating a property. Similarly, in the
Property’s immediate area, CBRE Consulting found a very limited market for
comparable non-residential rentals, and here again, a non-existent market for nonresidential
rentals when the lessee is required to rehabilitate the property.
SUMMARY OF BREAK-EVEN ANALYSIS FOR LEASE ALTERNATIVES
Lease as Single-Family
Residence
Lease as Non-
Residential Property
Potential Rental Income $102,000 $144,456
Vacancy & Credit Loss (5.00%) (5,100) (7,223)
Net Rental Income 96,900 137,233
Expense Reimbursements 0 45,579
Vacancy & Credit Loss (5.00%) 0 (2,279)
Effective Gross Income 96,900 180,533
Operating Expenses (28,691) (47,686)
Annual Net Operating Income $68,209 $132,847
Estimated Cost of Restoration ($1,157,000) ($1,157,000)
Years to Recover Restoration Cost 17.0 8.7
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At present, the Property has shared public street access. The appraised values
presume that a perpetual easement, providing site access from Hatton Road, is
granted prior to sale or lease. Without such access, achievable disposition values
would be significantly lower.4
Moreover, the restoration budget does not include costs of certain interior
improvements likely desired by a buyer or lessee, such as floor plan modifications that
would make the Property more usable and more competitive with comparable homes
or non-residential properties in the market.
ECONOMIC FEASIBILITY FINDINGS
The purpose of this study is to analyze the economic feasibility of the City’s disposition
alternatives for the Flanders Mansion Property. It is our understanding that for an
alternative to be judged economically infeasible, it must be impractical either due to
sufficiently severe additional cost or lost profitability, or by virtue of a severely limited
or non-existent market for that alternative. An evaluation of the feasibility of each
disposition alternative for the Flanders Mansion Property follows.
Alterative 1. This alternative satisfies both tests of feasibility, provided the Property is
sold to an owner/occupant. CBRE Consulting determined a market for the Flanders
Mansion Property as a single-family home and estimated sale proceeds to the City, net
of restoration costs, of $2,843,000. Whether the City did the restoration or the buyer
did it would not change the economic outcome.
Alternative 2. CBRE Consulting considers this alternative economically infeasible
under both tests. In the vicinity of the Property, the market for comparable singlefamily
rentals is exceedingly thin and, in fact, non-existent where lessees are
responsible for rehabilitating a property. Additionally, with the estimated income
stream from this alternative, the City would not recover its restoration costs for
approximately 17 years.
Alternative 3. It is our opinion that, on balance, this alternative has remote economic
feasibility. In the Monterey Bay area, the sale market for non-residential properties
comparable to the Flanders Mansion Property is highly limited. Indeed no
comparables were identified in Carmel. Furthermore, no market was found for
comparable properties requiring restoration.
Alternative 4. This alternative did not meet the tests of economic feasibility. In the
Property’s immediate area, CBRE Consulting found a very limited market for
4 CBRE Consulting presumes that the City would provide a perpetual access
easement to a private owner since the Property would have limited value without such
access.
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comparable non-residential rentals, and here again, a non-existent market for nonresidential
rentals when the lessee is required to rehabilitate the property.
Furthermore, with the estimated income stream from this alternative, the City would
not recover its restoration costs for approximately nine years.
CONCLUSIONS
CBRE Consulting found that use of the Property as a single-family residence is most
compatible with surrounding land uses, location attributes, legal restrictions, and other
factors. Furthermore, our estimates of potential sale proceeds, lease income, and
marketability support the conclusion that sale of the Flanders Mansion Property as a
single-family home to an owner/occupant is the only disposition alternative that is
economically feasible.
USE RESTRICTIONS AND POLITICAL ISSUES
The Flanders Mansion Property is subject to numerous restrictions. Its current zoning is
P-2 (Improved Parkland). Allowable uses in this zoning district include park and
recreation, single-family residential, municipal offices, small meeting or event space,
and assorted cultural facilities.
Other restrictions result from the adjacency of the Flanders Mansion Property to the
Lester Rowntree Native Plant Garden and its location within the Preserve—both of
which contain Environmentally Sensitive Habitat Areas (ESHAs). Moreover, the City
and the Property are within the California Coastal Commission’s jurisdiction and are
recognized as sensitive habitats for a variety of animal and plant species.
The Flanders Mansion Property is designated a historic landmark on the National
Register of Historic Places5, and it is listed on the City of Carmel-by-the-Sea’s Historic
Inventory. The City is obligated to ensure that it is preserved.
Although the Mitigation Monitoring and Reporting Program (MMRP) and Conditions of
Sale for the current analysis and proposed project have not yet been finalized or
adopted, it is expected that the same or substantially similar conditions as approved in
2005 will be imposed when the City ultimately selects a project following completion
5 It is our understanding that there are no federal historic property designations
that place federal restrictions on private property owners. Listing in the National
Register only confers honor. Under federal law, private property owners can do
anything they wish with their National Register-listed property, provided that no federal
license, permit, or funding is involved. Under the federal standards, owners have no
obligation to open their properties to the public, to restore them, or even to maintain
them, if they choose not to do so. (Federal Regulation Title 36, Chapter 1, Section
60.2)
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of the current environmental analysis and public review process. Any owner of The
The Flanders Mansion Property must comply with the Flanders Mansion MMRP, and is
subject to detailed Conditions of Sale. The Conditions of Sale and MMRP were
adopted as a mitigation measure for many of the issues raised in the prior EIR. The
Conditions of Sale will be recorded as covenants or conditions and will run with the
land.
The restrictions described above significantly affect ownership costs and possible uses
of the Flanders Mansion Property. Those factors in turn affect the City’s disposition
alternatives. CBRE Consulting believes that many of the restrictions both constrain and
enhance potential value. From a buyer or tenant perspective, the historic status of the
Flanders Mansion Property may be viewed as desirable, due to the associated
prestige. However, the historic designations limit significantly the potential use of the
Property, given that certain alterations must meet rigorous federal, state, and local
standards.
In like manner, the parkland surrounding the Flanders Mansion Property on balance
contributes positively to its setting. At the same time, owners and occupants must
ensure that use of the Property does not disturb sensitive habits or public enjoyment of
the park. Past experience with other properties indicates that allowing public access to
the grounds would not have a major negative impact on the ability to achieve the sale
of the property at the value as appraised by CBRE. Furthermore, retention of the
ability of the public to access the Flanders Mansion Property as part of the park is
consistent with the desires of the neighborhood. Given these competing forces, no
premium or discount related to the use restrictions of the Flanders Mansion Property is
factored into comparable sales and rentals. However, the various use restrictions do
affect potential disposition alternatives and values.
CASE STUDIES
Approach
CBRE Consulting developed case studies of three comparable properties to help the
City evaluate its disposition alternatives for the Flanders Mansion Property. We
searched for significant historic homes meeting at least the following criteria:
• Located in a residential neighborhood, with an affluent population and close to
a park or other public open space;
• Recently restored or repaired;
• Currently or formerly publicly owned.
The following three cases possess a range of characteristics shared by the Flanders
Mansion Property. Information was obtained by interviewing personnel from the City
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of San Juan Capistrano, the National Trust for Historic Preservation, and the Doris
Duke Charitable Foundation. Additional information was gathered from news articles
published by The New York Times and Los Angeles Times. Other sources included
websites for the National Trust for Historic Preservation, the Ennis House Foundation,
the Doris Duke Foundation for Islamic Art, the Doris Duke Charitable Foundation, and
the California Office of Historic Preservation.
Summary
The following case studies range considerably in their comparability to the Flanders
Mansion Property case. However, they help to inform the following observations
about the historic reuse of single-family residences with similar characteristics and
neighborhood settings:
• Some non-residential uses involve little or no significant public access or
activity. However, if there is some level of access activity, extensive public
outreach has been successful in mitigating neighborhood concerns. The public
process may also aid in fundraising efforts.
• For a non-residential use traffic and parking impacts may be addressed
through detailed conditional use permit requirements, mitigation measures
and/or conditions of sale drafted to take into account the comments of the
community. These conditions may limit the volume and timing of visits.
Transporting visitors to the property from a remote location may be a possible
solution.
• Most importantly, generation of revenue for repairs, rehabilitation, and
subsequent maintenance is a sizable challenge. Visitor fees cannot be expected
to cover costs associated with repairs and rehabilitation, or even ongoing
maintenance. In one case study, we found that residential rental income might
almost offset the City’s ongoing maintenance responsibilities; however, it is
essential to note that rehabilitation has already occurred, and at a small
fraction of the cost currently estimated for the Flanders Mansion Property.
Case Study 1 – Ennis House
2655 Glendower Avenue, Los Angeles, California
Property Description. The Ennis House is the largest of four concrete block homes
designed by Frank Lloyd Wright. The house was built for Mabel and Charles Ennis in
1924, and held by other private owners after the Ennis family until the death of its last
private owner, Gus Brown, in 2002. Brown bestowed the property to the Trust for
Preservation of Cultural Heritage, a non-profit organization that he founded to raise
funds for rehabilitation of the house. The house is now owned by the Ennis House
Foundation, a renamed and re-organized legacy of Gus Brown’s original non-profit.
The property is listed on the National Register of Historic Places, was declared a
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Cultural Heritage Monument by the City of Los Angeles, and was designated a
California State Landmark.
Rehabilitation and Maintenance. The Ennis House suffered severe damage during the
1994 Northridge earthquake, then again in 2005 when the Los Angeles area
experienced an unprecedented volume of rainfall. Following these incidents, the
National Trust for Historic Preservation listed the site as one of America’s 11 most
endangered places in 2005. In 2004 and 2006, the World Monuments Foundation
also listed it as one of the world’s 100 most endangered places.
The first rehabilitation of the house was completed between 2005 and 2007 and cost
approximately $6 million. It addressed major structural repairs required to keep the
property from further deteriorating, including stabilization of the motor court and a
35-foot tall concrete block retaining wall. The remaining restoration involves
stabilizing the house, replacing the roof, and conserving the stained glass windows.
This may require as much as $10 million.
Sources of Revenue. The Federal Emergency Management Agency (FEMA) approved a
$3.1 million grant following the Northridge earthquake, contingent on Brown
matching the grant through fundraising, which was unsuccessful. FEMA only granted
$1 million.
The major repairs commencing in 2005 were made possible through more successful
fundraising by the Ennis House Foundation. FEMA granted the remaining $2.1 million
in relief funding once the Foundation raised matching funds from the Getty
Foundation, the Parsons Foundation, Save America’s Treasures, Friends of Heritage
Preservation, the National Trust for Historic Preservation, and American Express.
Finally, a $4 million construction loan was obtained for the project.
Use and Neighborhood Conditions. The Ennis House is located in an affluent
residential neighborhood overlooking downtown Los Angeles. Even though the
property is zoned for single-family residential use, Gus Brown raised funds for
ongoing maintenance by offering tours, selling souvenirs, and renting the landmark
for Hollywood film productions. But after Brown died, neighbors complained that
these activities were conducted illegally, and voiced their opinion that the house should
be sold for residential use only. The Ennis House Foundation would like the property
to be available to the public for tours once construction work is complete. Reportedly,
they have gained support from neighbors by engaging in ongoing public outreach
efforts. Encouraging, positive press has helped fundraising efforts and gained public
support. Some neighbors now accept public tours as a use for the property if they are
free of charge and limited in size so that traffic impacts are mitigated.
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Case Study 2 – Shangri-La
4055 Papu Circle, Honolulu, Hawaii
Property Description. Shangri-La is a five-acre property overlooking the Pacific Ocean
in the exclusive Black Point residential neighborhood near Diamond Head, Honolulu,
Hawaii. The Islamic-style mansion was constructed in 1937 for Doris Duke, in
collaboration with architect Marion Simms Wyeth. It houses Duke’s extensive
collection of Islamic art, artifacts, and furniture.
Rehabilitation and Maintenance. Rehabilitation, modification, and restoration of the
property were ongoing throughout Doris Duke’s life, as she continued to modify the
mansion to accommodate her growing collection of art and furniture. Consistent with
Duke’s will, upon her death in 1993 Shangri-La was transferred to the Doris Duke
Foundation for Islamic Art (DDFIA), a charitable foundation whose mission is to
promote the study and understanding of Islamic arts and cultures. After Duke’s death,
a multi-year master plan was developed for Shangri-La to address the preservation
and adaptive use of the historic residence and grounds. “The plan is currently in its
fourth year and includes such challenges as refurbishing corroded bronze window and
doorframes, restoring original light fixtures, extensive repairing of concrete and plaster
walls and roofs, removing hazardous materials, painting, rewiring, and other work.
From 2001-2002, the public rooms of the estate were restored to reflect their
appearance during Doris Duke’s lifetime. Preservation efforts are currently focused on
the landscape and Playhouse in support of diversified, on-site future programming.”
Sources of Revenue. Public tours commenced in November 2002. Although these
tours provide some revenues, the vast majority of the operating budget and capital
improvements are funded through the Doris Duke Charitable Foundation, which was
set up in Duke’s will and has current assets exceeding $1 billion. The DDFIA is
currently working to increase revenues from commercial activities, through two
different programs in nascent stages. The first is a lecture series put on by a
prospective artist-in-residence or scholar-in-residence. The second program would
offer “specific tours,” targeted towards second- and third- time visitors interested in a
more in-depth examination of the property and its artifacts. Neither the in-residence
program nor the “specific tours” program currently generates revenues.
Use and Neighborhood Conditions. In 2002, the City and County of Honolulu issued
a conditional use permit that allows Shangri-La to engage in commercial activities
within the residential neighborhood of Diamond Head. The terms of commercial use
are highly restrictive. Parking for Shangri-La is unavailable on the property and
forbidden in the surrounding neighborhood, so visitors are transported via minivan
from the Honolulu Academy of Arts museum 15 minutes away; public tours of the
property are limited to 96 visitors per day and 12 people per tour.
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Case Study 3 – Roger Williams House
29991 Camino Capistrano, San Juan Capistrano, California
Property Description. The Roger Williams House was constructed in 1923 for Judge
Roger Williams and his family, on 32 acres of land. The Williams property is
surrounded by another 38 acres of open space and orchards. The vacant house and
surrounding land is owned by the City of San Juan Capistrano. In 2007, the house
was listed on the National Register of Historic Places.
The City of San Juan Capistrano is in the conceptual planning stages of converting the
land surrounding the Roger Williams House into a public park. Once the park is
planned, the house may become a park building, event facility, museum, or bed and
breakfast.
Rehabilitation and Maintenance. Lead paint abatement, re-painting, and exterior
repairs were performed in 2005. Interior repairs and re-painting were performed in
2007. These projects cost approximately $100,000, including administration and City
staff time.
Sources of Revenue. For the rehabilitation performed between 2005 and 2007,
monies were allocated from a City account that receives income from the sale of
oranges grown on the Roger Williams House property.
Potential future revenues from the property will depend on its use. Two commercial
users expressed interest in the house, one as an animal care facility and the other as a
wine tasting room. However, these negotiations never resulted in an agreement. In
the interim, before the park is planned, the City plans to lease the home as a
residential unit, and already has approximately 10 interested tenants. The City
Council is expected to execute a contract soon with a property management company
that will manage the property during its residential use. Under the agreement, the
tenant will be responsible for day-to-day maintenance and cleaning of the property
(which will exclude the open space and orchards), while the city will pay for structural
repairs and major maintenance items. It is expected that a market rate rent of
approximately $2,500 per month will easily cover the City’s costs.
If the City leases the building to a non-profit organization once the park is planned, it
does not expect to generate significant income, as the City has a policy of renting to
non-profits for little or no rent.
Use and Neighborhood Conditions. The Williams House is isolated by virtue of its
location adjacent to the open space corridor and Interstate 5, so neighborhood
concerns about its future use have not been an issue. However, the City expects that
parking, traffic, lighting, and signage concerns would be voiced by neighbors if the
house were to be used commercially.
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City of Carmel-by-the-Sea -- Flanders Mansion Property Economic Analysis
February 23, 2009
ASSUMPTIONS AND GENERAL LIMITING CONDITIONS
CBRE Consulting has made extensive efforts to confirm the accuracy and timeliness of
the information contained in this study. Such information was compiled from a variety
of sources, including interviews with government officials, review of City and County
documents, and other third parties deemed to be reliable. Although CBRE Consulting
believes all information in this study is correct, it does not warrant the accuracy of such
information and assumes no responsibility for inaccuracies in the information provided
by third parties. We have no responsibility to update this report for events and
circumstances occurring after the date of this report. Further, no guarantee is made as
to the possible effect on development of present or future federal, state or local
legislation, including any regarding environmental or ecological matters.
The accompanying projections and analyses are based on estimates and assumptions
developed in connection with the study. In turn, these assumptions, and their relation
to the projections, were developed using currently available economic data and other
relevant information. It is the nature of forecasting, however, that some assumptions
may not materialize, and unanticipated events and circumstances may occur.
Therefore, actual results achieved during the projection period will likely vary from the
projections, and some of the variations may be material to the conclusions of the
analysis.
Contractual obligations do not include access to or ownership transfer of any
electronic data processing files, programs or models completed directly for or as byproducts
of this research effort, unless explicitly so agreed as part of the contract.
This report may not be used for any purpose other than that for which it is prepared.
Neither all nor any part of the contents of this study shall be disseminated to the public
through publication advertising media, public relations, news media, sales media, or
any other public means of communication without prior written consent and approval
of CBRE Consulting.
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City of Carmel-by-the-Sea -- Flanders Mansion Property Economic Analysis
February 23, 2009
Page 14 of 14
Appendix: Summary Appraisal Report by CBRE Valuation & Advisory Services
(including the Flanders Mansion Cost Estimate report prepared by
Architectural Resources Group, the 2005 Flanders Mansion Monitoring
and Reporting Program, and the 2005 Flanders Mansion Conditions of
Sale.)
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Attachment "C" Correspondence Received 118
From: "Francis P. Lloyd"
Date: December 23, 2012, 4:27:20 PM PST
To: '"Jason Burnett"'
Subject: Flanders professional re: advice re: potential lease and sale
Jason:
In the midst of last minute Christmas wrapping and packing, I did not want to fail to mention the following, as we
will be away all next week and things are moving ahead:
In reviewing the CBRE report done last go around comparing sale vs. lease, which was used as the basis of
overriding considerations favoring a sale as a lease would not be economical, I noted that CBRE compared the sale
alternative to a lease alternative where the City fixed up the mansion at its expense and then leased it. The "lease"
(curatorship) option was not analyzed by CBRE. Obviously, it would be important to have the curatorship option
analyzed by the professional (as you pointed out so well that the professional should have experience with leases of
historic properties) as one of the options which might be explored. This is covered as an option in the RDEIR for the
first time, so it has coverage, without political overtones, as one option which the City should consider at this point,
so the professional should be tasked with reviewing this option.
Incidentally, when I did my "horseback" analysis, it looked as if $100,000 was a fair allocation to the mansion and
the 1.25 acres of the portion of the purchase price paid in 1972 of the entire Flanders property of which the mansion
and 1.25 acres was a part. The appraisal in 2009 was for $2,843,000 for the mansion and the 1.25 acres, as is, so the
appreciation was 284.3% until then, the point being that if the "lessee" fixed up the mansion and the grounds and the
mansion were maintained until the expiration of the "lease" and then the City received possession of the mansion
and the property, all fixed up, the ultimate economic return to the City could substantially exceed what it could
expect from and outright sale and investment of the proceeds. It proves the local investment adage to never sell
Carmel real estate unless one has to do so. This is even without the benefits of the flexibility which can be
negotiated with a curator regarding the surrounding property, including maybe even re: parking, etc. and the far
preferable control over things done to or on the grounds of the parcel.
P.S.: re: Paul Miller's editorial, I would note that if the curatorship " lease" idea was not analyzed in any prior
versions of the EIR and it now is raised in the new RDEIR, all concerned City bodies, in considering the subject
now, should consider this option in weighing the best alternatives, (leasing being the environmentally preferable
project) as it was not an option considered before. (Especially if it has favorable economic aspects.)
I hope the smaller parcel alternative (see figure 6.3 of the RDEIR as alternative 6.7) in not lost in the mix, for the
reasons I expressed in my comments on the draft of the RDEIR.
Thanks again for meeting with me the other day. I know that you made a special exception to invade your home life
to do so and I appreciate that.
I do believe that the curatorship is doable and saleable, if there are legitimate parties out there who would be
interested and can perform.
Merry Christmas to you and your family and the same for all of the Holidays and the New Year, as well.
Skip
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From: Paterson [mailto:SebViz2@sbcglobal.net]
Sent: Thursday, December 27,2012 8:19AM
To: Marc Wiener
Cc: Jason Stilwell
Subject: Public Comment, Planning Commission Special Meeting January 3, 2013 Flanders Mansion
Planning Commissioners Steve Dallas, Don Goodhue, Keith Paterson, Michael LePage, Vice-Chair and Janet
Reimers, Chair:
Re: PLANNING COMMISSION AGENDA, Special Meeting, Thursday, January 3, 2013, Flanders Mansion, City
of Carmel, 25800 Hatton Road
I am writing to address recent comments by Planning Commissions Steve Dallas and Janet Reimers, Chair.
Re: Planning Commissioner Steve Dallas "suggested exploring the possibility of selling the building but retaining
the land underneath it," as reported in the 14 December 201 2 issue of The Carmel Pine Cone.
For context, I submit as an attachment an email from Flanders Foundation attorney Susan Brandt-Hawley dated
July 3, 2012. It states, in part, as follows:
"The Mayor's proposed agreement for the Foundation and the City to work together to engage a good realtor and
market Flanders Mansion for a lease of some kind/curatorship option etc. for a reasonable time period sounds great."
"However, I understand that if those good-faith efforts are not successful, the Foundation is also being asked to
agree that the City may sell the Mansion and lease the land without legal challenge from the Foundation and without
a new public vote. The legal problem with that is that the City cannot lawfully separate the land from the Mansion:
both are parkland. That has already been decided by the Court, and so a public vote is required to sell the Mansion
even if the underlying land is leased."
Re: "There are more reasons for my position, but mostly, I want to be clear hat I believe a recommendation to lease
is not the best answer at this time and, also, ignores the vote of the majority of the citizens of Carmel by the Sea."
Source: -----Original Message-----
From: janreimers@aol.com
Sent: Wednesday, December 12, 2012 10:55 PM
To: Marc Wiener
Subject: Fwd: (No subject)
On the Planning Commission's 12 December 2012 Agenda was as Agenda Item regarding Flanders Mansion,
specifically "Consideration of the recirculated fmal environmental impact report for the sale of the Flanders
Mansion Project and advise the City Council on its adequacy for decision making and on consistency of project
alternatives with the General Plan." Relevant to this Agenda Item are certain " Duties and Responsibilities" of the
Planning Commission, as follows:
To develop and maintain a General Plan.
To review Environmental Impact Reports and Initial Studies.
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..
To interpret the meaning and intent of the City's Land Use Code.
To determine the consistency with the General Plan of capital improvement projects and programs.
Planning Commissioners would be well advised to be guided in their decision-making process by their duties and
responsibilities, planning issues and the Carmel-by-the-Sea General Plan/Coastal Land Use Plan, not political issues,
including an invalidated public vote on the sale of the Flanders Mansion Property and a political decision of a
former mayor and city councils to divest the City of this National Register of Historic Places property in the City's
largest park, Mission Trail Nature Preserve.
Sincerely,
Ms. L.A. Paterson
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From: Francis P. Lloyd [mailto:fplloyd@redshift.com]
Sent: Thursday, January 03, 2013 8:32AM
To: 'Marc Wiener'
Subject: Flanders
Marc: These are my comments re: the meeting today. If you care to share them with other
commissioners in advance of the meeting, please do so.
Skip
January 3, 2013
To: Planning Commission, Carmel by the Sea
Re: Planning Commission special meeting of January 3, 2013
The following comments are submitted for the consideration of the commissioners regarding the
sole agenda item for the above referenced meeting. (These are the personal comments of the
undersigned and are not offered on behalf of any other person or organization.):
A. RFEIR:
This document was previously considered by the Planning Commission on December 12,
2012 and found to be adequate and such advice was to be forwarded to the City Council.
There is no cause to reconsider this finding of adequacy of that document itself.
B. Lease for a single family residence alternative.
The Planning Commission on December 12, 2012, found this to be the preferred alternative
for the project under the RFEIR. This was consistent with the finding to that effect in the
RFEIR itself that such a use is the least damaging to the environment alternative. There is no
cause to change this finding.
C.Consideration of Sale alternative.
!.Procedure:
It is not clear from the agenda or the staff report for this meeting whether this agenda
item is intended to be a reconsideration of the December 12, 2012 decisions of the
Planning Commission or whether it is an item for supplementary consideration
because not specifically addressed at the December 12, 2012 meeting. Inasmuch as
the December 12, 2012 meeting was regularly noticed and conducted in all respects,
there is no cause, legal or otherwise, for reconsideration of the December 12, 2012
actions of the Planning Commission.
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2. Substance:
It is clear that a lease for a single fami ly residence alternative can comply with the
general plan.
It is equally clear that a sale alternative conflicts with the general plan and that,
contrary to the staff report for this meeting, cannot be made consistent with the
general plan merely by adopting mitigations. Acting Planning Services Director Marc
Weiner, in his memorandum ofNovember 30, 2012, correctly referred the City
Council, the Planning Commission, the Beach and Forest Commission and the
Historic Resources Board to the 2009 RFEIR as the current valid document, except
with respect to the reduced parcel alternative. The 2009 RFEIR states clearly that sale
of the Flanders Mansion Property would result in the permanent loss of parkland,
with conflicts with several provisions of the General Plan, which cause potentially
significant impacts which cannot be reduced to a less-than-significant level. (Please
refer to the attached copy of page 4.4-8 of the 2009 RFEIR, which has not been
modified.) It is recognized that it may be inferred that the City Council may act to
divest itself of the Flanders property, but doing so will, as stated, still be contrary to
the identified general plan policies. Whatever the City Council might decide to do
about that (i.e. through mitigations), in doing so it would have to make a policy
decision to make such an invasion of established general plan policies previously
adopted by the City Council itself. It should be noted that CEQA requires a finding of
overriding circumstances if the City Council is not to adopt the least environmentally
damaging alternative. The City Council's 2009 decision to sell the Flanders property,
rather than lease it (the preferred environmental alternative), was based upon
economic considerations, which the planning staff has cautioned the Planning
Commission to avoid in its deliberations.
Therefore the fact is clear that a sale alternative will violated Carmel's General Plan.
Only the City Council may modify the General Plan.
Inasmuch as the sale alternative violates the General Plan and as lease for a single
family residence is the preferred environmental alternative which can only be
overridden, under CEQA, by a finding by the City Council of overriding
circumstances, and as the basis of such a finding must be based upon economics, as it
was in the now set aside decision of the City Council in 2009, the Planning
Commission should take no action with respect to General Plan issues beyond its
previous finding of December 12, 2012, that the RFEIR, which contains a complete
exposition of General Plan impacts of a sale of the Flanders property, is adequate.
B. Conclusion.
It is submitted that the Planning Commission, on January 3, 2013, at most, should only
advise the City Council as follows: (1) That alternative 6.4 (lease for a single family
residence) can comply with the General Plan, and (2) that alternatives 6.5, 6.5A, 6.6 and 6.7
do not comply with the General plan but, if the City Council, as a policy matter based o
overriding circumstances, decides to sell the property, then the Council could mitigate the
General plan violations attendant to a sale to a substantial extent, as suggested in the RFEIR,
so that most of the General Plan objectives could be met.
Francis P. ("Skip") Lloyd
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