Craftsmans Mall sale could eliminate local control over site development

Kevin L. Hoover
Mad River Union

ARCATA – The just-announced $3.95 million sale of the 8-acre Craftsmans Mall to the Humboldt State University Foundation could eliminate the local planning process for future development of the site. In one possible scenario that the university isn't ruling out, the Planning Commission and Arcata City Council would have no regulatory involvement and little influence over a state-owned and directed project.

That possibility had been raised during the contentious hearings for The Village, the now-abandoned student housing project previously proposed for development at the site. At the time, state ownership and release from the local planning process was referred to as a "nuclear option."

"The HSU foundation, as a 501(c)(3), is subject to local regulation, including building and planning code," said Community Development Director David Loya. "However, the university is not. So, whether future development of the Craftsmans Mall would be subject to local regulation depends on how the property is held when it is developed."

Clarified Loya, "the Foundation can hold the property, then deed it to the state when it is ready for development."

The current Trinity Annex project, which will convert the former hospital to a children's center and child development lab, was purchased by the HSU Foundation, then turned over to the university for development.

"That's kind of an example of what could happen," acknowledged Frank Whitlatch, HSU vice president for University Advancement and the executive director of the HSU Foundation.

But, he stressed, the ownership structure would be determined by the type of project the university settles on, and all options are open.

During hearings for The Village, the maneuver had been suggested as a possibility, with Village developer AMCAL potentially deeding the property to state-owned HSU, which could then have proceeded with development unencumbered by local control. While AMCAL is no longer in the picture, the mechanism is still available to the new owner, the HSU Foundation.

"State law is exempt from local zoning, the General Plan or building standards," City Attorney Nancy Diamond stated at the time.

Councilmember Paul Pitino, who backed the housing project, had warned in 2018 of the potential for an HSU override, and the possibility of ending up with a less-desirable development on the site. "If we don't take a project we have control over, we'll get projects like Foster [the new apartment buildings on Foster Avenue]," Pitino said at the time. "We'd be missing an opportunity and ending up with a nightmare."

The Village project had included numerous traffic, viewshed, aesthetic, environmental and other mitigations demanded by neighboring residents and the City Council. But should the property come under university ownership, it could configure the property as it wishes – conformant with state law – without fear of disapproval by the city or area residents.

A state-owned project would still be subject to the California Environmental Quality Act (CEQA), and citizens would be able to comment on any project's environmental document. But the City of Arcata would be all but powerless to influence whatever project the university and CSU decide to install there.

The Arcata Citizens for Responsible Housing, a group backed by rival developers which opposed The Village, had acknowledged the possibility of exemption from local control, and called it a "worst case scenario."

Whitlatch said the foundation will manage the property in its present state for the time being. A local property manager will be hired to maintain the current rentals, and minor outstanding code violation will be addressed.

To purchase the property, the foundation diverted funding for its usual investments in mutual funds and other instruments, and now must earn income on it. "This has to make a return," Whitlatch said. "We'll try to make 6 percent a year."

While some parking for university staff and students will likely be installed, Whitlatch said anything more ambitious will be the result of a planning process that could take up to five years.

Whitlatch said the acquisition is a timely one, and well worth the cost. With the campus largely built out, the 8 acres just over U.S. Highway 101 could augment any and all services available on campus, from parking to instruction to housing, he said.

"Being able to get 8 acres nearby is really important," he said.

"This was a real success," Whitlatch said. "It took a lot of months to put together."




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