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File #: 2013-283   
Type: Regular Agenda Item
Body: City Council
On agenda: 11/5/2013
Title: Presentation on Exclusive Negotiation Agreements for Alameda Point Development Projects. (Base Reuse 819099)
Title
 
Presentation on Exclusive Negotiation Agreements for Alameda Point Development Projects.  (Base Reuse 819099)
 
Body
 
To: Honorable Mayor and Members of the City Council
 
From: John A. Russo, City Manager
 
Re: Presentation on Exclusive Negotiation Agreements for Alameda Point Development Projects
 
BACKGROUND
 
Now that the City owns significant portions of Alameda Point, the City is focused on facilitating near-term construction at Alameda Point. In the interest of commencing near-term development at Alameda Point, the City is preparing for City Council consideration in early 2014 a comprehensive zoning ordinance amendment (Zoning Amendment) and associated General Plan Amendments, a Master Infrastructure Plan (MIP), a Town Center and Waterfront Precise Plan (Town Center Plan), and an environmental impact report (EIR) for Alameda Point (collectively, Planning Approvals).    
 
As the now property owner of much of the Alameda Point property, the City Council also must decide how it will dispose and develop property.  As the Planning Approvals near completion, the next step will be for the City to negotiate disposition and development agreements (DDAs) with potential developers for sites within the Alameda Point property.  DDAs are detailed agreements where a developer and the City agree on where, how and what is developed on a particular site; any price and terms of payment for the property; and descriptions of both developer and City roles and responsibilities in developing the property.
 
The typical process for negotiating DDAs commences with entering into an Exclusive Negotiation Agreement (ENA) between a developer and the City.  In other words, the City agrees not to negotiate with any other developer regarding a particular property while both parties try to negotiate a mutually agreeable DDA within a certain timeframe.  The presentation this evening provides a high-level summary of the typical process and content of an ENA.
 
DISCUSSION
 
ENA Purpose
Staff recommends entering into ENAs with potential developers for individual sites within Alameda Point instead of issuing Request for Proposals (RFPs) from developers because of the scale and complexity of the Alameda Point property.  There is significant due diligence and complex problem solving among City staff and developers that will need to occur during ENA processes in order to determine the feasibility and potential success of a proposed development project.  Developers will need to expend significant resources in order to finalize a development proposal and are unlikely to make adequate assurances and to spend the necessary time and funds "to do it right" without having control over the site.  An RFP process on complicated properties at Alameda Point are likely to result in developers over-promising things that they have not evaluated sufficiently during an extensive due diligence and negotiation period in close coordination with City staff.  For development projects that are smaller and more standardized (e.g., a 20-acre residential subdivision), an RFP or bidding process makes more sense.  
ENA Process
Non-binding key business terms for a DDA (price and terms of payment) may be included in an ENA and may properly by discussed in a closed session of the City Council.  Any City Council action to approve the ENA itself must follow a public hearing.  ENAs can also be executed before completion of CEQA, assuming no aspect of the ENA pre-commits the City to a particular course of action.
 
Additionally, any action to approve a DDA that results from negotiations during the ENA period must also take place during a public hearing. There are also often planning aspects of the DDA negotiation that are likely to be discussed in public with community members, the Planning Board, and City Council.  
 
ENA Content
Every ENA must be tailored to the specific circumstances and conditions of the subject property and proposed development.  However, there are certain provisions that are typically found in ENAs.  The following provides a brief description of these provisions:
1.      Parties. The entities entering into the ENA.
 
2.      Property. The size and location of the property subject to the ENA.
 
3.      Term. The duration of the ENA and any provisions or conditions related to extending the term of the ENA.
 
4.      Termination. The provisions related to terminating the ENA before the term expires.
 
5.      Consideration. The amount, if any, of any payment from the developer in consideration for the exclusive right to negotiate on the property.  
 
6.      City Responsibilities during the ENA. Any responsibilities of the City during the ENA period to assist in negotiating a successful DDA.
 
7.      Developer Responsibilities during the ENA. Any responsibilities of the developer during the ENA period to assist in negotiating a successful DDA.
 
8.      Summary of Non-Binding Key Business Terms. In some cases, there is a non-binding summary of key business terms or letter of intent that may be attached to the ENA that will become the starting point of negotiating the business terms of the DDA.
 
9.      Other Miscellaneous Provisions.  All ENAs include other standard legal provisions, such as limits on liability and remedies; attorney's fees; assignment of rights and obligations; notices, severability, interpretation, etc.
 
FINANCIAL IMPACT
 
There is no financial impact to the City's General Fund or Base Reuse Department Revenue Fund.  
 
ENVIRONMENTAL REVIEW
 
No action is required; this is for information only.
 
RECOMMENDATION
 
This is for information only.
 
Respectfully submitted,
Jennifer Ott, Chief Operating Officer - Alameda Point
 
Financial Impact section reviewed,
Fred Marsh, Finance Director