Title
Recommendation to Provide Direction on an Outline for a Request for Qualifications and Form of Exclusive Negotiation Agreement for a New Development Site in the Main Street Neighborhood at Alameda Point. (Base Reuse 819099)
Body
To: Honorable Mayor and Members of the City Council
From: Jill Keimach, City Manager
Re: Recommendation to Provide Direction on an Outline for a Request for Qualifications from Developers and Form of Exclusive Negotiation Agreement for a New Development Site in the Main Street Neighborhood at Alameda Point
BACKGROUND
On March 21, 2017, the City Council adopted an ordinance approving the Main Street Neighborhood Specific Plan (MSN Plan). The MSN Plan fulfills the General Plan policy objectives for a transit-oriented mixed-use, mixed income neighborhood with diverse housing options, parks and open spaces, neighborhood serving businesses and transitional commercial uses. The City Council’s action was a key milestone in that the MSN Plan’s adoption is a required first step for development to occur as required in the 2014 Zoning Ordinance Amendment.
On April 4, 2017, the City Council approved an Implementation Term Sheet with Mid-Pen Housing, Alameda Point Collaborative, Building Futures with Women and Children, and Operation Dignity (“The Collaborating Partners”) for the relocation and construction of new supportive housing facilities on a 10.4-acre parcel (Collaborating Partners Site) south of W. Midway, in the northeastern corner of the Main Street Neighborhood bounded by Orion Way and Main Street (Exhibit 1). One of the key business terms in the term sheet is the City’s responsibility to make best efforts to enter into an agreement with a qualified developer to provide the backbone infrastructure for the Collaborating Partner’s site consistent with the Master Infrastructure Plan (MIP) and their development plans.
Similar to the adoption of the Waterfront and Town Center Plan, which initiated the Request for Qualifications (RFQ) from developers process for Site A, staff proposes to issue a RFQ from developers for a development site at Alameda Point, referred to in the attached map as Main Street South (Exhibit 1) in the Main Street Neighborhood Sub-district. The new development site, Main Street South (Site) consists of 22.8 acres, south of West Midway, bounded by Main Street on the east, Pan Am Way on the west and West Tower to the south, excluding the Collaborating Partner’s site.
The selection of the Site for a first phase of development in the Main Street Neighborhood is consistent with the Phasing Plan in the MSN Plan, which proposes that the first phase of development facilitate the construction of a sufficient amount of appropriate market rate housing to help finance the relocation of the Collaborating Partners to their preferred site by constructing all of the infrastructure (including demolition, grading, and all backbone utilities) of both the Site and the Collaborating Partners’ site.
Staff seeks Council input on a detailed outline of the proposed RFQ that will guide the preparation of the RFQ and the type of new development the City would like to see in this first phase of the Main Street Neighborhood.
DISCUSSION
Staff has prepared a detailed outline of the proposed RFQ for Developers (Exhibit 2) and a form of Exclusive Negotiation Agreement (ENA), which will be attached to the RFQ (Exhibit 3). The successful developer and/or users will be required to enter into an ENA substantially in the form of the attached ENA. The RFQ will focus on attracting development opportunities consistent with the City’s existing entitlements, such as the General Plan, Zoning Ordinance Amendment, MIP, MSN Plan, and Alameda Point EIR. Staff will issue the RFQ in September 2017, after it has been determined if the Site A development is going forward. Regardless of the Site A outcome, this will provide more certainty for interested developers, as described in more detail below.
As outlined in Exhibit 2, the RFQ will include a description of the Alameda Point property; the proposed development opportunity; prospective 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 Opportunity. As described above, the Main Street South Site is proposed for a transit-oriented mixed-use, mixed income neighborhood with diverse housing options, parks and open spaces, and a mix of commercial uses. As described above, developers must provide a sufficient amount of market rate housing to pay for the construction of infrastructure for the entire area south of W. Midway and meet the 9% affordable housing requirement for moderate income households. The Collaborating Partners site would construct the adjacent affordable units to meet the low- and very-low income requirement for the proposed development. The MSN Plan Development Standards also require at least 10% of units be designed to be affordable to households with a household income between 120% and 180%, referred to in the MSN Plan as workforce housing.
On March 21, 2017, as part of the presentation on the MSN Plan, staff presented an analysis of four different development scenarios each with a mix of different housing types and numbers of units as an example of how the 10% workforce housing requirement might be implemented (Exhibit 4). At that meeting, the City Council indicated a preference for the scenario which maximized the number of workforce housing units (approximately 45%) beyond the 10% required in the MSN Plan by using all of the remaining 291 units for market rate and moderate income households in the South of W. Midway area (less the Collaborating Partners 267 units) within the 1,425-unit cap in the General Plan for Alameda Point. As a result, staff recommends offering the maximum 291 units in the RFQ and give preference to developers that commit to a higher percentage of workforce housing.
In a preliminary financial analysis, this preferred option generated a positive net residual value based on an approximate $53 million cost for infrastructure for both the Main Street South Site and the Collaborating Partners site. That said, given the cost escalation currently experienced by many Bay Area development projects, including Site A, the exact percentage of workforce housing units will require additional feasibility analysis and negotiation with prospective developers
Additionally, commercial development within Main Street South will also be highly encouraged around the southeastern and southern edges of the area. Consistent with the MSN Plan, permitted and conditionally permitted commercial uses which complement current and envisioned uses in the Adaptive Reuse and Town Center areas, such as “maker” spaces, assisted living, light industrial, neighborhood serving retail, and work/live, will also be encouraged in the RFQ.
The RFQ will require developers to: 1) submit a project description (i.e., number of total units, number of workforce housing units, and amount and type of commercial square footage; 2) require them NOT to submit a site plan or any design renderings of a proposed development at Main Street. The selection of the developers will solely be based on the qualifications of the developer and the quality of their submittal, including past projects, not on the quality of any design drawings or of their consultant team. This is consistent with the process used to select a developer for Site A. As part of the ENA process, the preferred developer will be required to proceed with a public Development Plan process so that the community, boards and commissions, and the City Council will have opportunities to review the plans before entering into a binding DDA.
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.
3. Infrastructure Packages and Fees. Based on the MIP, staff and its civil engineering consultants have assigned specific infrastructure improvements to the Site that the successful developer will be required to construct as part of the project (Infrastructure Package). The Infrastructure Package includes demolition and site grading, flood protection measures, backbone streets and utilities required for use of the property, the main 3-acre Central Park, and protected bikeways and bike paths. The Infrastructure Package will also include demolition, geotechnical mitigation, grading and construction of backbone streets and utility connections for the Collaborating Partners site. Exhibit 1 provides a map highlighting the improvement to be included in the Infrastructure Package. To the extent the cost of the ultimate Infrastructure Package does not meet or exceed the developer’s required “fair-share” of the overall MIP infrastructure for Alameda Point, the developer will be required to pay an additional fee to the City for MIP-related improvements to meet that “fair-share” amount. If the Site A development does not move forward by August 9, 2017 (the time by which Site A financial issues must be resolved), the Infrastructure Package in the RFQ for the Main Street South site would need to be revised to include additional backbone infrastructure requirements currently being provided by Site A. This could affect the ability to provide other aspects of the proposed project, such as the target amount of workforce housing.
4. RFQ Selection Process. Developers will have six weeks to respond to the RFQ. An inter-departmental team of staff will review the Statement of Qualifications (SOQ) and select no more than ten teams for an interview. The interview panel(s) will also include members of the community and stakeholders. Staff will then summarize all of the responses to the City Council and recommend no more than three developers to the City Council in a public hearing for further negotiation of a potential term sheet, which staff anticipates in early December 2017. The finalists are required to present their SOQs at a community open house at a time/date to be determined. 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 payment for the Site. Finally, staff will return to the City Council for a public hearing for approval of an ENA with a preferred developer for the Site, including a final negotiated term sheet attached to the ENA, which is currently envisioned for March 2018.
5. Transaction and Development Process. As demonstrated by the form of the ENA in Exhibit 3, the ENA period is contemplated as a 12-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 the developer and to considering approval of the Development Plan, as nothing obligates the City to actually approving it. 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 minor changes as part of the RFQ process in response to unique developer proposals, it is staff’s intention that the basic terms of the ENA remain consistent with the attached form of ENA.
Next Steps
After receiving the City Council’s direction on the RFQ Outline and Form of ENA, staff will incorporate comments and return to City Council for final approval of the full RFQ in July 2017. The full RFQ is anticipated to be released in September after the status of the Site A development is determined.
FINANCIAL IMPACT
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.
ENVIRONMENTAL REVIEW
No environmental review is required as approving an RFQ outline and form of ENA is not a project under CEQA. CEQA Guidelines, section 15378 (b).
RECOMMENDATION
Provide direction on an outline for Request for Qualifications and form of Exclusive Negotiation Agreement for a new development site in the Main Street Neighborhood at Alameda Point
Respectfully submitted,
Jennifer Ott, Base Reuse and Transportation Planning Director
By:
Michelle Giles, Redevelopment Project Manager
Financial Impact section reviewed,
Elena Adair, Finance Director
Exhibits:
1. Map of Development Site and Collaborating Partners Site with Infrastructure Package
2. Request For Qualification Outline
3. Form of Exclusive Negotiation Agreement
4. Main Street Workforce Housing Analysis