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The Eureka City Council took several actions on Tuesday to further the development of affordable housing in downtown and Old Town.

The action came just one day after Citizens for a Better Eureka announced that it would sue the City of Eureka over its big push to develop affordable housing on downtown parking lots. The group includes several former elected officials and candidates, property owners and business owners. The 32 petitioners claim the City of Eureka “failed to meet the requirements under the California Environmental Quality Act (CEQA) to properly assess the environmental impacts of the housing developments planned for city parking lots.”

As of this writing, the group has not filed the lawsuit.

It’s no surprise that Security National Servicing Corporation, a Eureka-based company dealing in real estate acquisition and management, is leading the charge against the city. Earlier this year, the company’s president and CEO Rob Arkley vowed to move his company’s headquarters outside city limits in response to the ​​city’s recent efforts to convert municipal parking lots into affordable housing developments.

This week’s Eureka City Council meeting focused on a cluster of vacant parcels along the city’s waterfront. The three parcels occupy a four-and-three-quarter-acre stretch along the boardwalk between the C and F street plazas. The land is zoned waterfront commercial, which also allows hotels and motels as principally permitted uses. With a conditional use permit, the properties could also include professional offices, warehouses, multi-family units and upper-floor residences.

The city council was tasked with deciding whether or not the city-owned parcels should be declared “surplus,” in accordance with the California Land Surplus Act, to allow the city to lease or sell the properties to make way for affordable housing and mixed-use development.

Several representatives of Security National spoke up during the public comment portion of Tuesday’s meeting. One employee, Allison Holland — Arkley’s daughter — said she could understand that the “city is under significant pressure to comply with the state housing requirements” and supports “finding ways to meet those housing needs,” but said the company “cannot stand by [the city’s] proposal to reshape our downtown in a way that is short-sighted.”

“The waterfront is one of our city’s greatest assets and we need to make sure that it’s safe and accessible for everyone,” Holland said. “While you’re saying that you’ll put retail on the street level and multifamily housing above, there are numerous flaws with your plan.”

Holland

Holland asserted that the waterfront parcels were contaminated, “making it impossible to build housing and retail buildings without major remediation and cost.” Development of the parcels would also impact surrounding wildlife, she said, and obstruct the view of Humboldt Bay. She suggested that the city scrap the plan and allow her employer to purchase the waterfront property and turn it into a park.

“Security National Properties is wanting and willing to buy all three parcels and turn them into a park that will be accessible for all of the residents and visitors to downtown,” she said. “This will further the vision of a beautiful and accessible Eureka waterfront. Let’s turn these parcels into a park and take away the controversies. Please table this agenda item until you heard our full offer and thoroughly assessed the pros and cons of using our waterfront property – the gem of our town – for housing.”

Eureka architect John Ash suggested the city use the parcels for a waterfront hotel. He and his wife, Delores Vellutini, spent years trying to develop a mixed-use project with retail, office and residential space on the site but after a series of setbacks, including a lawsuit and an appeal to the California Coastal Commission, they switched gears and decided to pursue a waterfront hotel project. That, too, failed to come to fruition.

“We got a project that we brought to the city back in 2010 for a Marriott Hotel with 170 units,” he said. “I did some analysis on it at the time and updated it. Assuming a conservative room rate of $150 a night and an average occupancy of 70 percent, the total room revenue for the hotel would exceed $7,590,000 annually. That’s at 70 percent of occupancy. The city’s current [transient occupancy] tax … at 12 percent would [bring in] $911,000 annually … that could be used to solve a lot of challenges for providing housing for the city.”

He acknowledged that the Marriott plan was no longer an option but said, “other hotels would be interested in coming here.”

Speaking shortly after her husband during public comment, Vellutini called the proposal “offensive” and said the development of low-income housing on the parcels would violate the California Coastal Act.

“The California Coastal Commission has the condition that any development or use of waterfront property in the Coastal Zone should be consistent with a Coastal Act’s policies, which include protecting and enhancing public access to and along the coast,” she said. “The Coastal Act defines visitor-serving uses as providing recreational and educational opportunities for the public, such as hotels, restaurants, parks and other similar facilities. Not low-income or [very-low-income] housing … to solve [the city’s] homeless challenges.”

Several other speakers took issue with the fact that the development would host very-low-income to low-income housing, arguing that it would decrease property values and lead to an uptick in crime in Old Town.

“I have three legally permitted Airbnbs in Old Town and I have had many tourists cancel their stay before they even get to my property just from driving in the neighborhood due to feeling unsafe from the issues of transients in the area,” said Tia Hampstead. “I believe these cancellations will increase if very-low-income housing gets put here. … We have so many empty buildings in Old Town due to businesses suffering from this economy but mainly from theft and vandalism, which has gotten worse and most likely won’t improve with the addition of low-income housing.”

And, of course, there’s the issue of parking. Eureka resident Minnie Wolf said she is already “very concerned about the parking situation” in downtown and Old Town. If the waterfront parcels were to be developed, it would only exacerbate existing issues, she said.

Wolf

“I leave if I cannot find a parking place and it’s really, really frustrating,” Wolf said. “If you want to get a burrito from the burrito place near the parking lot on D Street [and] you can’t find a parking place, I guess you just leave because there’s nowhere to park and you can’t get your burrito. … It’s like the city council doesn’t want businesses to survive in Old Town.”

Adam Dick and Dustin Taylor, the owners of Dick Taylor Craft Chocolate, agreed that the city needs more housing but asked the city to reconsider potential development on the parcel that runs parallel to the waterfront next to their business.

“The third parcel that borders the boardwalk to me is very, very different [from the others],” Dick said. “The activities that I see going on there daily are very, very different. I think we have this impression that there’s, like, the riff-raff and the tweakers are all hanging out there, but I see people feeding the birds all day long. I see people walking their dogs all day long. I see FedEx guys taking their lunch breaks there. … Let’s figure out a better way that continues to enhance the user experience down there on the waterfront rather than cutting off a piece of property that I feel like people are already actively using.”

Only a few members of the public spoke in favor of the proposed housing development. Eureka resident and local business owner Jenna Catsos said she would support “any housing projects that [the city] might bring forward.”

“I think everyone understands that we have a housing crisis that we’re facing, and at some point, we need to build housing to fix that crisis,” she said. “We could spend all day coming up with every single little problem that we might see with every single proposal that will come in front of [the council], or we can finally prioritize our friends and neighbors who need this housing.”

Catsos added that “low-income is not a dirty word,” as other speakers had implied. “I think that a lot of us would be alarmed by what the income level is that qualifies as low income,” she said. “A lot of us fall into that category and we all need housing.”

Another resident, Althea Christensen, spoke in favor of mixed-use development on the parcels. “If you say the waterfront should [have] cafes and restaurants and retail stores and, you know, aquatic serving businesses, that’s fine. That can still happen. Just put a floor or two of apartments above them. That’s what this is.”

And if more people live in Old Town, it will make the whole area safer, said Eureka resident Caroline Griffith. “When I lived down there, oftentimes in the evening I would go for walks and it would just be empty, which really feels kind of sketchy and dangerous,” she said. “So having more folks actually living in the area does a lot to help make the community feel more vibrant, safer and more livable.”

Following the lengthy public comment period, Mayor Kim Bergel asked staff to clarify what level of income constitutes low-income and very-low-income. “It’s not necessarily people living at the [Rescue] Mission, is what I’m trying to say.”

According to the State Income Limits for 2022 from the California Department of Housing and Community Development (HCD), the average median income for a single person living in Humboldt County in 2022 is $56,200 per year. A person making $43,650 would be considered low-income. 

“Every year that gets updated and there’s usually a slight increase in the number,” said City Manager Miles Slattery. “Depending on when these are built and when they’re ready for tenants, it will be based on the current median income.”

Slattery

“So, what I’m hearing is … these are people that work in restaurants, people that work in hotels, these are teachers,” Bergel said. “I just wanted to clarify that before we moved on because I heard a lot of talk of negative talk about what this might look like.”

Councilmember Scott Bauer asked staff if the parcels were contaminated, as a few speakers had suggested. Principal Planner Kristen Goetz said there could be an “issue with a diesel spill that happened a number of years ago” on the westernmost parcel, according to a previous environmental site assessment (ESA). However, she said the ESA “didn’t find any significant issues” regarding contamination.

Bauer also asked if the city had received any offers to develop the parcels in the last five years. 

Slattery said he “get[s] calls all the time from hoteliers,” locally and from out of the area, and has had conversations with them about integrating housing into a potential development. “It’s totally feasible and totally can happen,” he said. “Do the finances pencil out? Typically no, but there is that ability to do that. … As council knows, this has been through two previous processes and both of them ended up in lawsuits and didn’t go anywhere.”

“So, by surplussing the property, we’re not precluding those other activities?” Bauer asked.

“No, not at all,” Slattery said.

Bauer also asked why the parcels would be exempt from environmental review in accordance with CEQA. “I know there were some questions about CEQA and, just to kind of clarify to people, surplussing is not really a CEQA event,” Bauer said. “Future activities, like development, will have to go through CEQA, correct?”

“That’s absolutely correct,” Slattery said. “There is a specific exemption when you’re going through the Surplus Land Act process, and that’s the exemption that we’re using for this particular action. But for future development on that property, we will certainly revisit CEQA at that time.”

Slattery added that the Surplus Land Act requires municipalities to promote affordable housing development on unused or underutilized public land. “We can’t just sell it to whoever we want for whatever we think is appropriate,” he said. “If there is a denial of this surplus, we would not be in good standing with the housing element. We could be faced with potential action by the state, which they’ve done most recently with a bunch of cities that have passed legislation that is against housing.”

Councilmember Kati Moulton asked why nothing ever came out of the design charrette process back in 2015. Slattery said the majority of the designs simply weren’t feasible.

“All of the issues concerning buildings being close to the road, almost all of the design charrettes have that but they also have a lot of open space between the buildings and the boardwalk to avoid shading,” he said. “Those things are a high priority [and] listed in the [request for proposals] RFP for [developers] to consider.”

Councilmember G. Mario Fernandez asked about the next steps in the RFP process if the council were to approve staff’s recommendation to surplus the parcels. Goetz said the council would also have to adopt a resolution to authorize the release of the RFP (more on that below). Once that’s done, she said the city will open the RFP and invite respondents to an informational meeting about the process and the city’s priorities for the parcels. The respondents will have 60 days to respond to the RFP, then there will be another 90-day period in which the city can negotiate with the respondents.

“Normally what we would do is the city manager would appoint a review panel to review all of the responses to the RFP and they would make a recommendation to council and then the council would go from there,” she said.

Councilmember Leslie Castellano asked what would happen if the city didn’t like any of the proposals. “Or, let’s say someone does meet [our parameters] but we don’t think it fits the City of Eureka. … What’s our obligation at that point?” she asked.

“That’s part of the 90-day negotiating period,” Slattery said. “We could go through that [process] and there could be a decision that we’re just not happy and then we would still own the property. The property would still be a part of our housing element. We’d still have a requirement to fulfill that part of our [Regional Housing Needs Allocation] and create 95 units, but if it came to that point, we can say negotiations fell out and we’re not proceeding.”

At that juncture, the city could initiate a second RFP process, he added.

Councilmember Renee Contreras-DeLoach asked why the city was required to put 95 affordable housing units on the three parcels. Slattery explained that the city is required to create a certain number of housing units in accordance with the housing element for 2019-2027 and, in essence, previous plans to develop specific properties fell through and the city found itself at a housing deficit. 

Contreras-DeLoach noted that community members don’t seem to object to mixed-use development on the parcel — the big concern, she said, is high-density development.

“You know, 95 units is quite a lot,” she said. “That’s either going to have to sprawl [across] the entire lot, be incredibly small or it has to go up into four stories, or three stories at least.”

“With three acres, if you were to do studios, I think there’s more than ample room,” Slattery said. “Doing it two stories would be available if you used all of that space. If you look at Seventh and Myrtle, there are 37 units there and they’re two bedroom … and that’s maybe on a third of an acre.”

Goetz corrected Slattery and noted that the development has a mix of studios, one-, two- and three-bedroom apartments.

After a bit of additional discussion, Moulton made a motion to approve staff’s recommendation and declare the three city-owned parcels as surplus. Fernandez offered a second and the motion passed in a 4-1 vote, with Contreras-DeLoach dissenting. 

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The council also approved a resolution to declare the parking lot at Fifth and D Streets, next to the Lloyd building, as surplus to make way for affordable housing. The conversation was much shorter than the waterfront parcel discussion and was approved in a unanimous vote.

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The last agenda item of the evening was a request from staff to initiate the RFP process for the development of affordable housing on five city-owned sites, including the three aforementioned waterfront parcels, the parking lot at Fifth and D Streets and the parking lot next to Eureka City Hall at Sixth and L Streets.

The conversation focused on many of the same concerns raised during the previous discussion about the waterfront lots, the difference with this item being that it focused on the draft RFP guidelines.

The council went round and round discussing potential restrictions on building height and whether the RFP guidelines should require developers to include a set amount of public and/or open space within the design. 

Castellano strongly advocated for a longer RFP process to provide the respondents with more time to come up with a design. Rather than 60 days, she suggested they provide the respondents with 180 days. She eventually whittled that number down to 120 days.

About halfway through the discussion, Fernandez suggested the council split the item in two and vote approve the RFP for the lots at Fifth and D Streets and Sixth and L Streets because the council’s discussion remained focused on the waterfront lots. He made a motion and Bauer offered a second. 

Castellano asked Fernandez if he would be open to a friendly amendment to the motion that would allow for more housing units to be built on each of the lots. He said yes and the motion passed in a unanimous vote.

The council spent another half hour discussing the guidelines for the waterfront lots. There were a couple of attempted motions and substitute motions that failed. 

Fernandez eventually made a motion to authorize staff to issue an RFP to be opened for 120 days, with 15 points added for 25 percent public space, 15 points for visitor-serving elements on the first and top floors of the development, and another 15 points for design continuity to other Old Town buildings. The motion passed 3-2 with Contreras De Loach and Moulton dissenting.