Title
Recommendation to Approve the Implementing Regulations Governing a Request for Proposals (RFP) Process for Allocating Limited Privilege to Apply for a Cannabis Business Permit and the Request for Proposals. (City Manager 1010)
Body
To: Honorable Mayor and Members of the City Council
From: Elizabeth D. Warmerdam, Acting City Manager
Re: Recommendation to Approve the Implementing Regulations Governing a Request for Proposals Process for Allocating Limited Privilege to Apply for a Cannabis Business Permit and the Request for Proposals
BACKGROUND
On November 1, 2016, the City Council approved a referral directing staff to study updated regulations for, and potential taxation of, commercial cannabis activities. On July 5, 2017, a second referral related to cannabis business activities was approved by the City Council. The July 5 referral directed staff to propose regulations to permit convenient and safe cannabis businesses in Alameda including dispensaries, cultivation, manufacturing, and purity and potency testing laboratories and quality control facilities.
City Council held meetings on September 5, 2017 and October 21, 2017 to hear public comments on allowing cannabis businesses, discuss the draft cannabis ordinances and provide staff with direction for preparing final cannabis related ordinances for adoption. On November 7, 2017, the City Council introduced two ordinances: (1) an ordinance covering all aspects of regulating the operations of cannabis businesses, including requiring an operator’s permit and granting the Community Development Department the authority to adopt implementing regulations (“regulatory ordinance”), and (2) an ordinance amending the City’s smoking ordinance to regulate smoking of cannabis in the City of Alameda. On December 5, 2017, the City Council introduced a separate ordinance governing land use. These three ordinances were all in effect as of January 18, 2018.
The regulatory ordinance requires a Cannabis Business Operators Permit (CBOP) for the following cannabis businesses:
• One nursery cultivation (including distributor’s) permit
• Four manufacturing permits (including distributor’s) permit
• Two testing laboratory permits
• Two medicinal retail dispensary permits (including delivery permits)
Because the ordinance caps the maximum number of permits to be issued by business category, staff recommended, and the Council agreed, that a Request for Proposals (RFP) process should be utilized to select the businesses in each category who would be eligible to move forward with applying for and obtaining the requisite approvals.
At the March 6, 2018 City Council meeting, staff presented the form of the RFP and, pursuant to Section 6-59.16 of the regulatory ordinance, staff prepared implementing regulations governing a RFP selection process for City Council review and approval (Exhibit 1). The City Council requested that staff refine the RFP process with subcommittee input on the following areas:
• Objectivity in Scoring/Evaluation. Ensuring proposals are scored and evaluated objectively, including developing a scoring rubric and evaluation criteria, scoring/evaluating separately local hire and local ownership, reducing points awarded for the oral interview, determine a method to blind score proposals, determine a means of selecting a winning proposal in the event of a tie, etc.
• Selection Panel. Expand and diversify the Selection Panel.
• Site Control. Specify and define the types of documents used to evidence site control as part of the Letter of Intent (LOI).
DISCUSSION
Based on feedback from the Council and subcommittee, staff has revised the RFP (see Exhibit 2). A summary of the revisions from staff’s proposal on March 6, 2018 is provided below.
The goal of the RFP process is to provide businesses the opportunity to make their best case as to why their experience, approach to the business, resources to be dedicated to the company, etc. makes them most qualified to be awarded an opportunity to secure the requisite approvals, consistent with local requirements, to operate a cannabis business in the City.
The RFP process requires: (1) submission of a LOI, (2) review of the LOI for minimum requirements, (3) submission and review of proposals based on an objective scoring rubric and evaluation criteria, including specific questions for the oral interview that will be asked of all qualifying proposers, (4) issuance of a conditional award letter, and (5) maintenance of a waiting list of the balance of qualified proposers.
Minimum Requirements
The minimum requirements remain unchanged; only the deadlines have shifted:
|
LOI was submitted on or before the May 14, 2018 deadline |
Pass/Fail |
|
Pre-Application Review Deposit of $1,000 paid on or before the May 14, 2018 (LOI deadline) |
Pass/Fail |
|
Evidence that a proposed location for the cannabis business has been secured |
Pass/Fail |
|
Evidence that the proposed location is outside of cannabis buffer zones for sensitive uses |
Pass/Fail |
Evaluation Criteria
Below is the proposed scoring rubric by evaluation criteria, detailed in Exhibit 3. As requested, local hire and local ownership have been separated into different evaluation categories. The broad evaluation criteria categories are as follows:
|
Evaluation Criteria Category |
Points |
|
1. Statement of Qualifications describing the company’s experience, abilities, knowledge, and overall qualifications to run the type of cannabis business for which it is seeking the requisite approvals |
25 |
|
2. Verifiable detailed description of persons and type of resources, including financial resources, committed to implement the proposal |
20 |
|
3. Description of company’s understanding of, and approach to, running the cannabis business |
15 |
|
4. Local hire program (optional) |
5 |
|
5. Local ownership (optional) |
5 |
|
6. Community benefits (optional) |
5 |
|
7. Proposed schedule |
5 |
|
Total |
80 |
Staff worked, with subcommittee input, to develop specific questions for the oral interview. These questions will be asked of all interviewees, but will not be provided in advance to ensure the questions solicit candid and unscripted responses. Each interviewee will be provided 15 minutes to present his/her proposal. The Evaluation Panel will then ask the standardized questions. The oral interview will be worth 20 points for non-dispensary cannabis businesses and 24 points for dispensary cannabis businesses.
Blind Scoring
To ensure scoring is blind, only the proposers’ owners’ names will be redacted; all other names and references will remain a part of the proposal.
Tie Breaker
The Community Development Director will have the discretion to select a computer-generated method to break a tie. At present, in the event of a tie, staff is proposing the use of a computer-generated program called Tie Break to select the winning proposal at random. Tying proposers will pick a number between zero and 100, and Tie Break will randomly select the winning number. After each tying proposer makes their numerical selection, a random number is generated and the winner is revealed on the screen.
Evaluation Panel
Several Councilmembers asked whether or not it would be appropriate for members of the community to participate on the evaluation panel. The City Attorney explained that Council-appointed community member participation would require that panel meetings be subject to the Brown Act. Therefore, all materials and deliberations would become matters of public record. The City Attorney also clarified that when community members participate on City hiring panels, the same public meeting requirements are not triggered as hiring is a personnel matter and handled confidentially. With that information, the Council determined to move forward with an evaluation panel consisting of City staff.
City Council requested that the evaluation panel be expanded to include five evaluators and include a Planner, staff familiar with business pro formas, real estate, and financial statements. City Council encouraged use of contract staff, consulting staff, and staff outside of Community Development Department. There was also a request to have an evaluator with a background in health.
Staff is proposing, with subcommittee input, the following panel:
|
Panelist Slot |
Proposed Panelist |
|
1. Technical Support to Panel (non-voting) |
Lois Butler, Economic Dev. Mgr. |
|
2. Real Estate/Property Mgmt. |
Nanette Mocanu, Asst. Community Dev. Mgr. |
|
3. Finance |
Edwin Gato, Financial Services Mgr. |
|
4. Health |
Jackie Krause, Mgr., Mastick Senior Center |
|
5. Planning |
Kathleen Livermore, Alameda Contract/PT Planner |
|
6. Other City Dept. (Unrelated to Cannabis) |
Liam Garland, Public Works Director |
Evidence of Site Control
The following examples of documents evidencing site control, with definitions, have been added to the RFP:
• Real Estate Letter of Intent
• Real Estate Purchase/Lease Option
• Purchase Agreement
• Lease Agreement
• Proof Ownership
RFP Schedule
The schedule for the RFP is as follows:
|
Description |
Date |
|
RFP Issued |
April 23, 2018 |
|
Written Questions from Anticipated Responders |
May 7, 2018 |
|
Letter of Intent to Submit RFP (required) |
May 14, 2018 |
|
City to Issue Letter for Approval to Submit Application to Qualifying Companies in Qualifying Categories |
May 21, 2018 |
|
Answers to Written Questions Issued |
May 21, 2018 |
|
Proposals Due |
June 11, 2018 |
|
Initial Review |
week of June 11, 2018 |
|
Interviews (tentative) |
June 25, 2018 |
|
Announcement of Selected Proposers and Letters Issued to Successful Proposers |
July 9, 2018 |
FINANCIAL IMPACT
There is no financial impact to the City’s General Fund by approving the form of RFP and the selection process. The cost of staff work related to cannabis business activities will be borne solely by cannabis businesses. A fee study is currently underway and the City’s 2017 Master Fee Schedule includes a Community Development Department Pre-Application Review Rate that allows the City to recover the cost of conducting this RFP process as it is a required Pre-Application step.
In addition to full cost recovery, staff anticipates there will be a future ballot measure to consider taxing cannabis businesses. Prior to such a ballot measure, cannabis businesses will be required to pay the City’s business license tax as applicable.
MUNICIPAL CODE/POLICY DOCUMENT CROSS REFERENCE
Approval of implementing regulations governing a Request for Proposals process for allocating limited privilege to apply for a cannabis business permit and the issuance of the Request for Proposals is in conformance with the Alameda Municipal Code, section 6-59.1 et seq.
ENVIRONMENTAL REVIEW
The California Environmental Quality Act (CEQA) applies only to projects, which have the potential for causing a significant effect on the environment. Adoption of these regulations and issuance of the RFP is not a project and is exempt from the California Environmental Quality Act (CEQA) pursuant to CEQA Guidelines, sections 15378 and 15061(b)(3) (General Rule).
RECOMMENDATION
Approve implementing regulations governing a Request for Proposals process for allocating limited privilege to apply for a cannabis business permit and the Request for Proposals.
Respectfully submitted,
Debbie Potter, Community Development Director
By,
Lois Butler, Economic Development Manager
Financial Impact section reviewed,
Edwin Gato, Interim Finance Director
Exhibits:
1. Implementing Regulations Governing RFP Process
2. Request for Proposals for CBOP
3. Evaluation Criteria