City Council — 2023-12-18

Settlement Agreement and Permit Extensions for Multiple Development Projects

• The Council approved a settlement agreement resolving litigation regarding four specific development projects.
• The agreement secures 63 new units, including 31 affordable units, while preserving 25 existing bungalows at Mallory Way.
• A retroactive time extension for the Cottages Among the Flowers project was approved contingent on the settlement's execution.
• The resolution includes tenant protections, local hiring preferences, and requirements for landmark and Mills Act status applications.

Closed Session

• The City Attorney reported that a prior closed session was held to discuss litigation strategies for the development projects.
• A tentative settlement agreement was reached during that session to resolve disputes involving Simply Ojai and Ojai Bungalows LP.

Agenda Item 1: Consideration of a Retroactive Time Extension for Design Review Permits and Settlement Agreement for Multiple Development Projects

Discussion and Staff Report

• The City Attorney reported that the Council had met in closed session to discuss litigation regarding proposed development projects at 312 West Aliso Street (Cottages Among the Flowers), 412 Mallory Way (Mallory Way Bungalows), 107 North Ventura Street, 304 South Montgomery Street, and 510 East Ojai Avenue. A tentative settlement agreement was reached to resolve litigation involving Simply Ojai v. City of Ojai and Ojai Bungalows LP v. City of Ojai. The agreement covers four specific projects with the following terms:
• Cottages Among the Flowers (312 West Aliso Street): Extension of existing permits for 10 units (8 existing rehabilitated, 2 new) plus the addition of two 55-year deed-restricted affordable units (one very low-income, one low-income).
• Montgomery Street Project (304 South Montgomery Street): Construction of 15 new units (12 moderate-income, 3 low-income), all with 55-year deed restrictions.
• 510 East Ojai Avenue: Construction of 13 new units (2 very low-income, 2 low-income, 1 moderate-income), all with 55-year deed restrictions.
• Mallory Way Bungalows (412 Mallory Way): Preservation and rehabilitation of all 25 existing bungalows with no demolition. Four units may be moved on-site. Rehabilitation occurs only as tenants move out or are offered alternative units at current rent levels. The project includes 10 new deed-restricted affordable units (5 very low-income, 5 moderate-income). All units must remain 500–600 square feet, maintain existing bungalow character, and preserve oak trees to the maximum extent possible. The project is limited to two stories. The developer agreed to apply for landmark status and Mills Act status.
• The agreement includes tenant protections for existing residents at the Cottages and Mallory Way. Tenants are not required to move involuntarily unless offered a unit at another project site at their current rent level, subject to the City's Rent Stabilization Ordinance. A moving allowance of up to $2,000 is provided for tenants required to relocate. The agreement also includes a local preference for Ojai residents. In exchange, the City agreed to convey an unapproved 50-foot wide right-of-way adjacent to the Mallory Way project to the developer, subject to the Surplus Land Act and street right-of-way vacation laws, with the developer required to maintain a dirt or decomposed granite trail in this area.
• Staff noted that without the settlement, state law would allow for significantly different outcomes, including up to 48 market-rate units at Mallory Way with potential demolition, 280 market-rate units at the Cottages with zero affordable units, and fewer affordable units at Montgomery. The settlement results in a net of 63 new units (31 affordable, 32 market-rate) and the preservation of 25 existing units, totaling 98 units. This meets the City's Regional Housing Needs Allocation (RHNA) requirements. Staff proposed approving the retroactive time extension for the Cottages project contingent upon the execution of the settlement agreement, taking no action on the Mallory Way time extension as the developer will apply for a modified project, and approving the settlement agreement.

Public Comment

• Public commenters expressed support for the preservation of the Mallory Way bungalows, the addition of affordable housing, and tenant protections. Concerns were raised regarding the timing of the presentation, with requests for a delay to allow for thorough analysis. Other comments addressed environmental and wildlife impacts, definitions of affordability, and legal questions regarding the status of a referendum and the implications of new state laws effective January 1st. The City Attorney and Special Housing Counsel clarified that the settlement legally binds the developer to the agreed terms, preventing the use of new state density bonus laws to override the agreement. Clarifications were also provided regarding tenant income verification and the definition of comparable units for relocation. Concerns were raised that the "Cottages Among the Flowers" were not included in the landmark designation, which was limited to the Mallory Way bungalows. Staff clarified that landmarking the Cottages was not part of the negotiated settlement and pursuing it could void the agreement, though staff would not object to a future application.

Council Discussion

• Council members discussed the presentation and public comments, acknowledging the collaborative effort to reach a compromise. Discussion focused on the necessity of the agreement to avoid litigation and secure affordable housing, the importance of preserving trees and wildlife corridors, and the legal constraints limiting further negotiation. The Mayor suggested a review of details to address specific public concerns.

Motions and Decisions

• A motion was made by Council Member Whitman and seconded by Council Member Ruhl. The motion consisted of two parts: 1. To approve the settlement agreement as stated by the City Attorney and presented in the meeting materials. 2. To approve the time extension agreement resolution for "Cottages Among the Flowers," subject to the execution of the settlement agreement.
• The motion included a condition that the resolution's approval is contingent upon the developer executing the settlement agreement; if the agreement is not executed, the approval would be revoked, and a denial resolution would be considered. Following a roll call vote, the motion passed. The meeting was subsequently adjourned.