A controversial affordable housing complex proposed for 320 Knob Hill has been taken off the table.
Redondo Beach Unified School District officials announced last week that negotiations with developer Allan Mackenzie, the president of Mar Ventures, have ended unsuccessfully.
“He was unable to meet the terms of the minimum deal point,” said Janet Redella, RBUSD chief business official. “When they took a look at what it would take to meet entitlements, the deal no longer worked.”
Specifically, Mar Ventures faced an uphill battle winning enough political support to change the zoning from its current public use designation to residential. The project – an estimated 100-unit workforce housing complex aimed at moderate income earners, such as teachers and firefighters – would have required approval by the city’s Planning Commission and likely the City Council.
The council in recent years, under pressure from “slow growth” activists Building a Better Redondo, has been reluctant to approve even multi-unit housing projects that already conform to existing zoning. In this instance, nearby residents organized as the Knob Hill Community Group were vociferously opposed to a housing project they argued was too dense for the mostly single-family neighborhood.
RBUSD Board of Education member Todd Loewenstein said it was uncertain if the board would seek more bids seeking a long-term tenant at the former school site at present.
“Right now, it’s just about recouping revenue,” Loewenstein said. “We need the dollars – if that is a short-term tenant, that’s fine. If that’s a short-term tenant with an eye on long-term, that’s even better. That is pretty much where it is.  And we will continue to work with the neighborhood to find a solution that works for everybody.”
Mar Ventures is the second bidder to drop out after being awarded the opportunity to negotiate lease terms. Ambassador High School, a fledgling Christian academy, was awarded the bid last October after offering $528,000 annually but was unable to meet the more immediate financial terms laid out in the district’s Request for Proposals.
Mackenzie, who had offered $502,027, was awarded the bid in January. He did not return calls seeking comment.
Loewenstein said given the site’s zoning, Mar Ventures proposal always seemed unlikely to proceed much further.
“It’s a difficult real estate market right now,” he said. “That, and the hurdles Allan Mackenzie faced with the city to get this passed – to me, this was a long shot, anyways. We were hoping it might be the solution. Right now, it’s back to the drawing board.”
The district has been seeking to increase lease revenue at surplus school sites, including its property at 200 N. Pacific Coast Highway, for nearly a half decade. The original RFP, based on a professional real estate appraisal, valued the 3.25 acre property at $14 million in sale value or $1.1 million in annual lease value. The district dropped its asking price to $700,800 annually in 2008 after the passage of Measure DD – which required a citywide vote on most significant zoning changes (but not affordable housing projects, which are exempted) – and later to $500,000 annually.
Redella said the downturn in the real estate market impacted the district’s ability to find a new tenant. But she said that there seems to be more interest now.
“Part of the problem is that the market really went south on us at about the same time we were trying to do this,” she said. “But I am getting tons of calls on the property now, which is really interesting. We haven’t had this many different interested parties before, so I have a feeling it’s going to be a different bid market. I’m hopeful.”
According to Redella, the site’s current tenant, the city of Redondo Beach, gave notice that it would be leaving Knob Hill in 2005. The city, and its subleasee, Carden Dominion School, pay $302,000 annually. The city, after operating on a month-to-month lease since 2006, in January announced its intentions to move its Recreation and Community Services Department to Artesia Boulevard. The city leaves at the end of June. Redella said that RBUSD is in discussions and hopes to retain Carden Dominion as a tenant.
The district faces a particularly tough economic scenario which could easily worsen. The school board has cut $8.8 million from what formerly was a $64 million annual budget over the last three years and may need to make more drastic cuts if Governor Jerry Brown’s proposed tax extensions do not make a state ballot in June.
Councilman Bill Brand, who advised the Knob Hill Community Group, said he is sympathetic to the district’s plight.
“I really hope the school district finds a use that earns them a better cash flow, and that the residents are happy with it,” he said. “I do want the school district to raise money. They are hurting. At the same time, I want residents to be happy.” ER
