File #: 2014-360   
Type: Regular Agenda Item
Body: City Council
On agenda: 4/15/2014
Title: Recommendation to Approve Outline for Request for Qualifications and Form of Exclusive Negotiation Agreement for Two Development Sites at Alameda Point. (Base Reuse 819099)
Attachments: 1. Exhibit 1 - Map of Sites A and B Overlaid on Zoning Map, 2. Exhibit 2 - Map of Sites A and B Overlaid on Conveyance Map, 3. Exhibit 3 - Outline of Request for Qualifications for Developers for Sites A and B, 4. Exhibit 4 - Form Exclusive Negotiations Agreement, 5. Exhibit 5 - Evaluation Criteria for Alameda Point Development Proposals, 6. Exhibit 6 - Maps of Infrastructure Packages for Site A and Site B, 7. 2014-04-15 6-C Presentation
Recommendation to Approve Outline for Request for Qualifications and Form of Exclusive Negotiation Agreement for Two Development Sites at Alameda Point. (Base Reuse 819099)
To: Honorable Mayor and Members of the City Council
From: John A. Russo, City Manager
Re: Approve Outline for Request for Qualifications for Developers and Form of Exclusive Negotiation Agreement for Two Development Sites at Alameda Point
Now that the City owns significant portions of Alameda Point and has completed major entitlements for the property [i.e., environmental impact report, rezoning, and Master Infrastructure Plan (MIP)], City staff is focused on facilitating near-term construction at Alameda Point.  This construction has the potential of generating thousands of jobs, millions of dollars in tax revenue and over a thousand housing units. Additionally, the regional economy is currently very strong; the City must take advantage of these favorable market conditions to take the community's vision for Alameda Point from mere plan to concrete reality.
To begin near-term development at Alameda Point, City staff proposes issuing two Requests for Qualifications (RFQ) for two lynchpin development sites at Alameda Point, referred to in the attached map as Site A and Site B (see Exhibit 1).  Site A consists of 68 acres within the Waterfront Town Center (WTC) Sub-district and Site B consists of a total of 82 acres, of which 14 acres are within the WTC Sub-district, 38 acres within the Enterprise 1 (E-1) Sub-district, 23 acres within the Enterprise 2 (E-2) Sub-district, and seven acres within Enterprise 3 (E-3) Sub-district.  
Staff proposes that the RFQ for Site A solicit development interest for a residential/commercial mixed-use project consistent with the Town Center Waterfront Plan and MIP.  The RFQ for Site B should solicit interest in developing mixed commercial projects, with a focus on a major sales tax generator, such as a premium retail outlet (not a "big box" store).  The RFQ responses for Site B can also include corporate "build-to-suit" user(s) that generates significant jobs, business-to-business sales tax or other catalytic economic benefits (consistent with the Town Center Waterfront Plan, the rezoning and MIP).  Staff selected these two sites for a number of reasons, including:
·      They are planned for new development instead of reuse.
·      They include the "gateways" to the WTC and the Enterprise Sub-districts at Ralph Appezzato Memorial Parkway and Pacific Avenue, respectively, which will result in improved entrances and infrastructure serving the entire Alameda Point site.
·      They provide proximity to both Main Street, where certain key utilities are located, as well as the waterfront, where market potential is greatest.
·      They each include significant portions of land outside of the groundwater plume in the Phase 4 conveyance footprint (Exhibit 2), which facilitates early phases of near-term development.
Staff has prepared a detailed outline of the proposed RFQ for Developers (Exhibit 3) and a form of Exclusive Negotiation Agreement (ENA), which will be attached to the RFQs (Exhibit 4).  The successful developers and/or users will be required to enter into an ENA substantially in the form of the attached ENA.  Additionally, the evaluation criteria for development proposals approved by the City Council (Exhibit 5) will be attached to the RFQ and used by staff to evaluate submittals to the RFQ.  The RFQ will focus on attracting development opportunities consistent with the City's existing planning entitlements, such as the General Plan, Zoning Ordinance, MIP, Town Center Waterfront Plan and EIR.
As outlined in Exhibit 3, the RFQ for developers for Sites A and B will provide a description of the Alameda Point property; the proposed development opportunities; the envisioned roles of the developer/user and the City; the required contents of the submittal; the selection process; general conditions; a list of important documents and where to find them; and other relevant exhibits and attachments.  The following provides a summary of the key aspects of the RFQ:
1.      Development Opportunities.  As described above, Site A is proposed for a residential/commercial mixed-use project on 68 acres.  The RFQ will assign 800 units of the proposed 1,425 units planned for Alameda Point to Site A, and an undetermined amount of commercial development left to respondents to decide based on market potential.  The City's proposed development for Alameda Point includes 5.5 million square feet of commercial development, which allows both Sites A and B to propose significant amounts of commercial development without exceeding the total amount.  Site A includes the retail core of the project, which must be developed consistent with the Town Center Waterfront Plan that requires ground-floor retail along certain blocks and public plazas and amenities at the heart of the area.  Hotels and office development will also be highly encouraged.  Developers must propose on, and have the ability to develop, the entire 68-acre area.
The RFQ for Site B will be targeted to commercial developers and corporate users/businesses, and unlike Site A, respondents will be allowed to propose on sub-sets of the 82-acre area for as much commercial square footage as deemed marketable by respondents.  This approach allows the City to potentially attract interest from a large corporate user or retail outlet operator, who may not be interested in the entire area.  The City may be able to "mix and match" smaller proposals within Site B.  Also, preferences will be given to submittals that are directly from corporate users or are from developers able to furnish letters of interest from a corporate user or retail outlet operator as part of their response to the RFQ.
The RFQs will require developers to submit a project description (i.e., number of units and commercial square footage for Site A and commercial square footage for Site B), and will require them NOT to submit a site plan or any design renderings of any proposed development at Alameda Point.  The selection of the developers/users will be solely based on the qualifications of the developers/users and the quality of their submittal, including past projects, not on the quality of any design drawings purporting to show the future of Alameda Point.  Submission of a site plan or renderings at this stage of the process will result in disqualification of the responding entity.
2.      Developer Project Experience. The RFQ will require developers to demonstrate significant relevant project experience, including photos, site plans, cost and financial information, staffing, and references of completed projects.  Developers will need to assign a seasoned project manager with demonstrated experience on comparable projects.  Exhibit 3 includes a list of the relevant project experience being requested in the RFQ.
3.      Infrastructure Packages and Fees. Based on the MIP, staff and its civil engineers have assigned specific infrastructure improvements to Sites A and B that successful developers will be required to construct as part of their project (Infrastructure Package). The Infrastructure Package includes demolition and site grading, flood protection measures, backbone streets and utilities required for use of the property, as well as park improvements, including a neighborhood park, if applicable (Site A), and portions of waterfront trails and promenades (Sites A and B). Exhibit 6 provides  a general description of the improvements to be included in each of the Infrastructure Packages for Sites A and B.
Additionally, each developer will be required to pay a "fair-share" amount of site-wide infrastructure improvements outlined in the MIP. This fair-share amount for each Site will be paid through an additional Infrastructure Fee. The Infrastructure Fee includes site-wide benefiting improvements, such as flood and sea level rise protection improvements (levee), the Sports Complex, Seaplane Lagoon waterfront park, fire station, and sewer pump station replacements. To the extent a Site's Infrastructure Package includes construction of portions of the site-wide benefiting improvements then the Infrastructure Fee owed by that Site will be reduced accordingly.
4.      RFQ Selection Process. Developers/users will have six weeks to respond to the RFQ.  An inter-departmental team of staff will review the proposals and select no more than ten teams for an interview.  The interview panel(s) will include members of the broad community and specific stakeholder groups.  Staff will then summarize all of the responses to the City Council and recommend at a public hearing no more than three developers at each site for further negotiation of a potential term sheet.  Staff anticipates this staff summary and Council decision will be heard in early September 2014.  Staff may seek further direction from the City Council during closed sessions on term sheet negotiations with the finalists regarding the price and terms of payments for Sites A and B.  Finally, staff will return to the City Council for a public hearing for approval of an ENA with a preferred developer/user for both Site A and Site B, including a negotiated term sheet attached to the ENA, which is currently envisioned for November 2014.  In the case of Site B, it may be multiple proposals for multiple parts of the site.
5.      Transaction and Development Process.  As demonstrated by the form of ENA in Exhibit 4, the ENA period is contemplated as a compact 6-month process, which results in an approved Disposition and Development Agreement (DDA) (i.e., price and terms of payment for the land and development obligations), and an approved Development Plan (i.e., detailed site plan, including backbone and in-tract street alignments and sections, building footprints and massing, landscape concepts, and a phasing plan).  The ENA allows for two three-month administrative extensions by the City Manager.  The ENA also prohibits any assignments or transfers of the rights under the ENA to another developer and limits the City's obligations to negotiating exclusively the terms of the DDA with each developer and to considering approval of the Development Plan. There is no obligation by the City to approve the DDA or Development Plan.  The short timeframe and minimal City obligations substantially limit the City's liability.  The ENA also requires that the developer provide $150,000 in non-refundable funding for reimbursement of City expenses for negotiation of the DDA.  Funding for staff time for review and processing of the Development Plan will be handled through the City's standard planning process.  While these terms are subject to change as part of the RFQ process in response to unique developer/user proposals, it is staff's intention that the basic terms of the ENA remain consistent with the attached form of ENA.
Although subject to modification depending on the scope and scale of the preferred development proposals, the current expectation is that developers would complete infrastructure design and commence infrastructure construction for a Phase 1 project within six months of DDA approval and complete design review and commence building construction for a Phase 1 project within 12 months of approval of the DDA.  It is important to commence development according to an aggressive schedule in order to take advantage of the strong regional real estate market.
There is no financial impact to the City's General Fund or Base Reuse Department budgets related to the approval of the RFQ outline and form of ENA.
This action is not subject to the California Environmental Quality Act ("CEQA") because it is not a project as defined in CEQA Guidelines Section 15378 and will not result in a physical change in the environment pursuant to CEQA Guidelines Section 15060(c)(2).
Approve Outline for Request for Qualifications for Developers and Form of Exclusive Negotiation Agreement for Two Development Sites at Alameda Point
Respectfully submitted,
Jennifer Ott, Chief Operating Officer - Alameda Point
Financial Impact section reviewed,
Fred Marsh, Finance Director
1.      Map of Sites A and B Overlaid on Zoning Map
2.      Map of Sites A and B Overlaid on Conveyance Map
3.      Outline of Request for Qualifications for Developers for Sites A and B
4.      Form of Exclusive Negotiation Agreement
5.      Evaluation Criteria for Alameda Point Development Proposals (Approved by City Council on November 5, 2013)
6.      Maps of Infrastructure Packages for Site A and Site B