Metro Unit Puts Brakes on Recommendation for Joint Development

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RAFU STAFF REPORT

After months of meetings with Little Tokyo stakeholders, Metro announced on Monday that it is withdrawing authorization to enter into an Exclusive Negotiation Agreement (ENA) with Innovative Housing Opportunities (IHO), the firm selected by Metro last March to develop the Little Tokyo/Arts District Joint Development site.

On Wednesday, Metro staff submitted an informational “receive and file” report to Planning and Programming Committee Chair Jacquelyn Dupont Walker, describing the next steps for development of the site.

Jacquelyn Dupont Walker

According to the Metro statement, “Over the past seven months, we have engaged with community stakeholders concerned about the selection process and aspects of the project scope. Both Metro and IHO have taken these concerns seriously and have worked collaboratively with the community to identify a path forward that would meet all parties’ needs. Unfortunately, alignment of all the goals necessary for a project to be successful has not been achieved.

“This difficult decision does not come without deep appreciation for the time and effort that was expended by IHO and community stakeholders who were transparent in their concerns and constructive in their engagement with Metro and the proposed developer.”

As the Regional Connector and the station portal near completion in 2022, what will be built on the site adjacent to the new station at Central Avenue and First Street has been the topic of considerable discussion. Once completed, the station will be a major gateway into Little Tokyo and the second-busiest station in the entire Metro network.

In mid-March, Metro staff recommended IHO after reviewing its proposal along with three other finalists — Centre Urban Real Estate Partners, Kaji & Associates, and Little Tokyo Service Center.

Rendering depicts IHO’s proposed Little Tokyo/Arts District Station. (Joint Development rendering)

The IHO proposal had called for 79 affordable-rate apartment units plus 10,000 square feet of ground-floor retail, galleries, and cultural amenities.

In the months since then, community members have expressed concerns about the selection process and a failure to address Little Tokyo’s priorities for the site. The Little Tokyo Business Association in April asked that Metro restart the process, stating that there had been mixed messages, conflicting instructions and inconsistencies.

On Nov. 11, the Japanese American National Museum added its voice in a letter to Metro CEO Phil Washington from JANM CEO Anne Burroughs and Norman Mineta, JANM board chair and former U.S. transportation secretary.

Mineta and Burroughs stated: “We are … troubled about the process followed by the Metro staff in selecting the developer for Metro’s Little Tokyo/Arts District Station Joint Development. Moreover, we are concerned about the fairness and transparency of the process and that the scheme selected does not serve the best interests of Little Tokyo, nor does it preserve its history and culture.”

Doug Aihara, Little Tokyo Community Council chairman, expressed appreciation for IHO’s efforts to address the community’s issues, but also explained where the proposal was lacking. The LTCC Board voted in October to ask Metro to restart the request for proposals (RFP) process.

“Metro conducted a faulty selection process; Innovative Housing Opportunity’s proposal lacks adequate and feasible affordable commercial and flexible community/arts spaces; and the proposed project lacks necessary parking,” Aihara’s letter stated.

“For the last eight months, LTCC Board has engaged in discussion with IHO and Metro’s Joint Development team to determine if the proposed project could meet our community priorities and vision. Per the Sustainable Little Tokyo Community Vision, our top priorities are affordable commercial space and flexible community/arts space.”

Jonathan Kaji, president of Kaji & Associates, expressed displeasure with the process in a statement read into the record on his behalf by Tom Hart, a member of the Ekibashi team. Kaji & Associates led the development team that proposed Ekibashi, a mixed-use commercial retail and office project, for the Little Tokyo station site.

“Our protest focused on the Project Evaluation Team’s lack of due process in analyzing our all-equity model and instead summarily dismissing it as ‘highly infeasible’ in spite of our 100-year history of success in funding both private and non-profit projects in Little Tokyo …

“We demand a fair and impartial review of our proposal. The Ekibashi proposal obtained the highest scores in all other categories and we believe that if our financial model was clearly understood through proper due diligence it would clearly establish Ekibashi as the best and top selection,” Hart said.

David Ikegami, LTBA Transportation Committee chair, emphasized, “Our objective has always been to stand up for our community’s best interests. As a community, we respect the close relationship we have had with Metro toward making the Regional Connector a reality, (and) we feel that Metro’s receive-and-file step (on Wednesday) is the right one.”

Scott Oshima, Sustainable Little Tokyo program director at JACCC, stated, “We are so thankful for Metro’s collaboration with the Little Tokyo community and for aligning with our decision to reject Innovative Housing Opportunity’s proposal. Despite IHO’s hard work, the project did not meet our community’s vision and priorities, especially for much-needed affordable business space and expanded cultural and community space. We look forward to finding a project that will better sustain our historic Japantown’s rich history and culture.”

As outlined in the receive-and-file, next steps are:

• Update the Joint Development policy and process in early 2021.

• Review potential opportunities and partnerships that might make the Metro site more viable.

• Consider requirements of the Surplus Land Act, as amended by AB 1486 (existing law that requires local agencies to sell or lease surplus land to a low-to-moderate income housing sponsor).

• Provide an update for the Metro board in the second half of 2021.

“To IHO, the developer who came to the table along with Little Tokyo stakeholders, on behalf of Supervisor [Hilda] Solis and her team…and Mayor [Eric] Garcetti’s team…it has been very important for us to hear and respond,” Dupont Walker said as she confirmed the receive-and-file action. “We thank everyone who has come to the table. We look forward to the reshaped opportunity for development in Little Tokyo.”

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