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Downtown Oceanside development means millions in fees for city services

OCEANSIDEOCEANSIDE — An eight-story complex proposed for North Coast Highway would bring Oceanside about $9.2 million in development impact fees, according to a representative of the Modera Neptune project.

The combination of 360 apartments and 62 hotel rooms would replace an old Motel 6 that some have called “an eyesore” north of Neptune Way near the state Route 76 entrance and exit ramps. The 1.72-acre site just off Interstate 5 is considered a gateway for visitors arriving in Oceanside.

The fees help offset the city’s costs for a variety of services related to the development, from water and sewer connections to parks and community centers.

Part of the money, about $1.8 million, would go to the Oceanside Unified School District where some of the apartments’ younger residents could attend classes, said Dan Niebaum of the Lightfoot Planning Group in Carlsbad, who represents the developer.

“We’ve revitalized a problem area,” Niebaum said. “This project will provide a high quality of life for the people who are in it.”

In addition to the one-time development fees, the Modera Neptune project would produce an estimated $161,000 annually to help cover the cost of police and fire services in a new community facilities district the Oceanside City Council formed in 2022, Niebaum said at a recent meeting of the city’s Downtown Advisory Committee. The committee voted 7-1 to recommend approval.

The project is tentatively scheduled to go to the Oceanside City Council for a decision at its May 22 meeting.

MCRT Investments LLC, the Mill Creek Residential Trust, is the developer. The company is based in Florida and has offices in San Diego and other cities across the United States.

MCRT has built apartment complexes across the country, including the seven-story, 368-unit Modera San Diego that opened in 2021 on K Street near Petco Park. The complex there includes a rooftop pool, bowling lanes, a fitness studio and clubhouse.

Oceanside approved another MCRT project in April 2023, Modera Melrose, a six-building, multi-story, mixed-use development to be built near the Vista border with 323 apartments, a parking garage and ground-floor space for restaurants and shops.

Every development pays a host of fees to help cover its share of the services it needs from public agencies. The numbers provided for the Melrose Neptune project are estimates and could change as plans proceed.

Actual amounts will be calculated based on the applications filed within various departments, City Planner Sergio Madera said Thursday. The payments are due when the developer receives the required permits for the project. It also will create new jobs and generate city revenue from property, sales, and hotel room taxes.

Despite the apparent windfall for the city budget, some people have expressed concerns about the project, its size, and the traffic it would bring.

“There is a lot going on downtown, especially with (other) new development,” said committee member Jane Marshall. She asked whether the developer and city planners have taken into account the changes planned for the Coast Highway corridor, which could include lane reductions and roundabouts.

“There’s all these overlapping projects,” Marshall said. “I want to make sure we are looking at the whole combination of things.”

Those things have been considered, said Madera, the city planner. Oceanside officials worked with the developer to assure traffic will flow smoothly through the nearby intersections, including the traffic from other developments.

“Those signals are going to be linked so they are timed consistently,” Madera said.

Committee member Rick Wright called it “a great project” with “beautiful architecture.”

“We have been seeing a lot of cracker boxes lately,” he said, and the Modera project will be an improvement.

Wright said his concern was “the breathtaking number of waivers” requested by the developer for things such as building height, property boundary setbacks, parking requirements and more.

Modera Neptune is considered a density bonus project because it includes 36 apartments reserved for low-income tenants. As a result, under state law the building can be taller, with more apartments, fewer parking spaces and less landscaping than otherwise allowed by the city. The builder has requested a total of nine waivers.

“These rules were established for good reasons, and we are sort of throwing them all out to get these units built,” Wright said.

Niebaum said the city’s building code is “a bit dated,” and that the state’s density bonus rules were created “under the umbella of … getting a better design” and to address the regional housing shortage.

Modera Neptune’s hotel and apartments will be in separate buildings sharing a common wall.

Apartments will occupy the majority of the site, fronting North Coast Highway, Neptune Way and Tremont Street, with seven levels of apartments above the ground floor.

A majority of the apartments, or 260, will be 700 to 900 square feet with one bedroom, and 100 will average 1,111 square feet with two bedrooms.

Parking will be in a three-level subterranean structure, with hotel and guest parking on the top level, just below the ground floor. The building will have a 6,000-square-foot central courtyard and a roof-top deck with a swimming pool.

Niebaum said the location is good for several reasons.

“It’s recognized by (the San Diego Association of Governments) as a smart growth opportunity area,” he said.

“There are a number of things in play on this site that this project speaks to well,” Niebaum said. “In addition to a beautiful new project, it’s important to realize the community benefits.”

Smart growth areas are usually found in urbanized neighborhoods near public transportation, jobs and services, according to SANDAG. State incentives encourage developers to build taller, more densely occupied buildings in those areas to meet the region’s housing needs.