Title
Selecting a Development Team for the West Midway Project and Authorize the City Manager to Negotiate and Execute an Exclusive Right to Negotiate Agreement (ENA) with the Selected Development Team. (Base Reuse 819099)
Body
To: Honorable Mayor and Members of the City Council
EXECUTIVE SUMMARY
On February 5, 2019, the City Council selected two developer finalists, Alameda Point Partners (APP) and Jamestown/Cypress Equity Investments (CEI) to move forward in the selection process for the West Midway Project, which included answering supplemental questions developed by a City Council ad hoc committee. Shortly afterwards, the two finalists decided to explore forming a partnership to develop the West Midway Project. Recently, Jamestown/CEI withdrew from the developer selection process. This report provides the responses to supplemental questions from the remaining finalist APP, for City Council review and to determine whether it wants to move forward and select the development team and authorize staff to negotiate and execute an Exclusive Negotiation Agreement (ENA) with the selected developer.
BACKGROUND
On July 10, 2018, the City Council authorized staff to issue a Request for Qualifications (RFQ) for development of the West Midway Project at Alameda Point, a 22.8-acre area within the Main Street Neighborhood sub-district, located south of West Midway and bounded by Main Street on the east, Pan Am Way on the west and West Tower to the south (Exhibit 1). The site was made available through the consolidation of the existing supportive housing on approximately 34 acres occupied by Alameda Point Collaborative, Building Futures with Women and Children and Operation Dignity (Collaborating Partners) into to a 9.7-acre site they will own.
On September 24, 2018, the City of Alameda (City) received seven qualified responses. Staff and community partners evaluated the responses and interviewed the top four development teams. On February 2, 2019, the City Council narrowed the field to two finalists: 1) APP (a partnership of Trammel Crow Residential (TCR) and srmErnst Development Partners (SRM)); and 2) Jamestown/CEI. As part of the selection process, the City Council appointed an ad hoc subcommittee (Councilmembers Tony Daysog and Jim Oddie) to develop supplemental questions for the developers to answer as a means of further distinguishing their vision and approach to developing the project. The supplemental questions were sent to the developer teams on February 26, 2019.
On March 11, 2019, the two developer teams notified staff that they were having initial discussions about a development partnership and requested additional time to determine if this approach was a viable alternative. On March 28, the developer teams indicated that their partnership discussions were progressing and requested 30 days to draft a partnership structure, a preliminary development program, and answers to the supplemental questions for consideration by City Council.
On May 6, 2019, the two developer teams submitted a combined response to the supplemental questions, a preliminary program description and partnership organizational structure. On May 21, staff was informed by Jamestown/CEI that it was withdrawing from the developer selection process due to uncertainty regarding the viability of commercial development, given the project phasing and increased costs of infrastructure.
DISCUSSION
Despite the withdrawal of Jamestown/CEI from the proposed partnership, APP remains interested in developing the West Midway project as proposed in its original submittal. APP has submitted its responses to the supplemental questions in Exhibit 2.
Supplemental Questions
Generally, the committee was interested in learning more about how the teams would ensure social equity given that this new neighborhood will be integrated with the Collaborating Partners project, Rebuilding the Existing Supportive Housing at Alameda Point (RESHAP), both physically and socially. APP has committed to seeking out best practices from several organizations to design effective job training and readiness programs, develop shared community spaces, and create a neighborhood for all. The subcommittee also wanted more information about the approach to weathering an economic downturn and ensuring the ability to complete the infrastructure required for the RESHAP project. APP anticipates relying on its experience with Site A to overcome challenges associated with the infrastructure and to achieve economies of scale by sequencing the West Midway Project with Site A, Phase 2 to maximize efficiency, cost-effectiveness, and coordination with the RESHAP project. Other supplemental questions addressed how the team would approach the phasing of infrastructure for RESHAP and to describe possible delays in completing the RESHAP infrastructure and West Midway project.
Next Steps - Exclusive Negotiation Agreement (ENA)
Once a development team is selected, the next step is approximately a 12-month ENA negotiation process, which is expected to result in an approved Disposition and Development Agreement (DDA) (e.g., price and terms of payment for the land and development obligations), and an approved Development Plan (e.g., detailed site plan, including backbone and in-tract street alignments and sections, building footprints and massing, landscape concepts, and a phasing plan). The ENA process consists of the following: 1) Council approval of a non-binding term sheet to establish the essential business terms and framework for the transfer and development of the property; 2) Planning Board approval of a Development Plan for the site; and 3) a negotiated DDA.
Staff has prepared a form of ENA attached as Exhibit 3. As drafted, the ENA allows for two three-month time extensions that can be granted by the City Manager. The ENA also prohibits any assignments or transfers of the rights under the ENA to another developer. The City’s sole obligations under the ENA are to negotiate in good faith the terms of the DDA, to not negotiate with any other parties regarding the sale of the West Midway Project site, and to cooperate with the selected developer in the consideration of the Development Plan. The ENA also requires that the developer provide a $150,000 non-refundable deposit 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 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. If the terms of the ENA differ substantially from the form of ENA, staff would seek City Council approval of the revised ENA.
Staff is requesting that City Council select a development team for the West Midway project and direct staff to negotiate and execute an ENA with the selected team.
ALTERNATIVES
There are several alternatives for next steps in the developer selection process for the West Midway project.
• One alternative would be for City Council to select APP. APP is the remaining finalist “short-listed” by Council at its February 2, 2019 meeting.
• An alternative is to re-consider Brookfield Residential and/or Catellus, as a result of changed conditions (the fact that the one of the finalist withdrew). This alternative would require the developer teams to confirm they are still interested in the development opportunity based on their original submittal, request that they (one or both teams) respond to the supplemental questions and/or undertake any additional process to allow City Council to make a final selection.
• An alternative is to re-initiate the RFQ process. This alternative would take approximately six to nine months before coming back to City Council for consideration of developer finalists. Staff does not believe that re-issuing the RFQ will result in significantly different development teams responding.
FINANCIAL IMPACT
There is no financial impact to the City’s General Fund related to the approval of a developer for the West Midway Project. The development team will reimburse staff and third party costs for negotiation of the DDA through a non-refundable $150,000 deposit.
MUNICIPAL CODE/POLICY DOCUMENT CROSS REFERENCE
Approving a developer for the project is consistent with the General Plan, Zoning Ordinance, Main Street Plan, and RESHAP DDA and Milestone Schedule approved by the City Council on May 15, 2018.
ENVIRONMENTAL REVIEW
No environmental review is required as approving developer finalists is not a project as defined under California Environmental Quality Act (CEQA). CEQA Guidelines, section 15378(a).
CLIMATE IMPACTS
There are no climate impacts with the approval of recommendation developer for the project. Climate impacts and associated mitigation measures will be addressed during the entitlement phase of the project.
RECOMMENDATION
Select a development team for the West Midway Project and authorize the City Manager to negotiate and execute an Exclusive Right to Negotiate Agreement with the selected development team.
CITY MANAGER RECOMMENDATION
The Community Development Director and City Manager jointly recommend that the City Council review the answers to the questions provided to APP. At the conclusion of your review we recommend that either the City Council move forward with an ENA with APP or that the City Council provide direction as to one of the two alternatives.
Respectfully submitted,
Debbie Potter, Community Development Director
By,
Michelle Giles, Base Reuse Manager
Financial Impact Section reviewed,
Elena Adair, Finance Director
Exhibits:
1. Project Site
2. Response to Supplemental Questions
3. Form of ENA
cc: Eric Levitt