HomeMy WebLinkAboutPOWERPOINT - TUSTIN LEGACY DISPOSITION STRATEGYDISPOSITION STRATEGY
FOR FORMER MASTER DEVELOPER
FOOTPRINT TUSTIN LEGACY PROJECT
APRIL 25, 2011
1
Scope of Study
•Provide an Update and Background on Project
•Market Studies
•SWOT Analysis
•Identify and Evaluate Alternative Disposition Strategies
•Recommend any Master Plan/Specific Plan Modifications
•Recommend a Revised Disposition Strategy
•Outline An Implementation and Marketing Approach for
Developer Selection and Land Sales
2
Background
•Background and Land Use Framework
General Plan and MCAS Tustin Specific Plan
?
MCAS Tustin EIS/EIR, as amended
?
Final Design Guidelines
?
Master Block (Community Core) Implementation Plan
?
Neighborhood E Entitlement Approvals
?
Numerous Backbone and Local Infrastructure Studies
?
•2,104 dwelling units (453 affordable units & 6.7
million sq. ft. non-residential in 4 Neighborhoods
•Master Developer History & Termination
3
Background-cont.
Acreage:
820 ac. (Gross)
419 ac. (Net)
Homes:2,104 Units
Non-Residential:
6.7 Million Square Feet
Major Amenity:
2 Mile Long Linear Park
4 Neighborhoods:
Neighborhoods B, D, E, and G
4
5
Residential Market Highlights
•Major Competition
?Platinum Triangle
?IBC
?Irvine Ranch Projects
?Heritage Field at former MCAS El Toro
?Rancho Mission Viejo
•Early 2014 entry of for-sale product with 6 years
of absorption
•Mixed use products toward end of 6 year period
•Demand for apartments and growth market
?As much required Affordable Unit obligations in plan as possible
be accommodated in Apartment product
6
Residential Market Absorption
De201420152016201720182019Totals
nsity
/Acre
56901001007122439
5-7
7-103664126864740399
11-1688656820241
17-2048486242200
21-305550504030225
Over 30Apts-Apts-Apts-AptsAptsApts-380+*
TBDTBDTBDTBDTBDTBD
Over 30100120220
228322406398278982,104
Totals
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Non-Residential Market
Highlights
•Market Area-Central Orange County which includes
Tustin, Santa Ana, portions of Anaheim, Garden Grove
and Orange, Irvine and portions of Costa Mesa.
•Employment growth will drive demand
?Solid growth in 2011, followed by outsized growth in 2012-2014,
and normalized 2015+
•Market Competition
?Irvine Spectrum, Heritage Field, and higher office products in
Platinum Triangle and IBC; outside market area--South Coast
Metro and Aliso Viejo.
8
Non-Residential Highlights-cont.
•Office: Stabilization 3 rd Q 2013; 10-20% share of Class A
beginning in 2014; 20-30% share for Class B/C begins in
2014.
•Flex-space/R&D: Stabilization in 4 th Q 2012; 20-30%
share begins in 2013.
•Retail: Stabilization in 2012, largely internally driven
begins 2013
•Hotel: Stabilization in 2011, with market for at least 4
hotels through 2020.
•Other uses: largely internally driven
9
Non-Residential Uses Absorption
Product/2013-2016-2021-2026-2031-Totals
Uses20152020202620302035
135,000236,000365,000409,5071,146,507
OfficeA
360,000689,000821,500927,500290,0113,088,011
Office B/C
115,500221,000263,500297,50093,0231,110,523
Flex/R&D
5,345,041
Subtotal
120,100240,77196,700108,96854,866621,405
Retail
XXXX544,800
Hotels
158,994158,994
Congregate
Care
TBD TBDTBDTBDTBD48,000
OtherUses
6,728,240
Total
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SWOT Analysis
•Strengths
Location & Access to Freeways & Airport
?
Income Levels
?
Last large contiguous development area
?
Positive place to do business (Forbes)
?
Lowest development fees in County
?
Strong credit rating
?
Low-cost basis in property
?
City constructing Tustin Ranch Road
?
Favorable bid environment for infrastructure
?
Majority of demolition work done on site
?
Majority of regulatory requirements already met
?
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•Threats•Opportunities
SWOT Analysis-cont.
•Weaknesses
?Property not visible from major freeways
?Construction activity has slowed
?Leveraged financing, in private sector, requires substantial equity
?Over supply of particularly office products
?Pricing issues associated with school district boundaries
?Site soil deficit---portions of site require elevation.
?Cost of developing infrastructure
?Navy remediation slow
?High ground water levels
?Regulatory constraints tied to construction of Peters Canyon
Channel
?EIS/EIR Thresholds
?On-going site maintenance sites
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SWOT Analysis-
cont.
•Opportunities
?Construction of Tustin Ranch Road
?Superior Location for quality development
?Bring back momentum and reignite interest
?Provide better circulation to residential neighborhoods & District
?Create unique architectural and design
?Proximity to MetroLink station
?New Markets and development products.
?Taking advantage of existing infrastructure already built
?Taking advantage of current construction bid environment
?Potential for early term development
?Revenue from land sales for use to construction infrastructure
and complete environmental transportation mitigation
13
SWOT Analysis-
Cont.
•Threats
?Competition
?Over supply in near term of office products
?Limited capacity to fund backbone infrastructure
?Threats from Sacramento eliminate Redevelopment
?If unemployment continues
?Challenges of regulatory environment changes
?Legal threats
?Inability to stay with long term vision
?General economic weaknesses and slow recovery
?Financial risks
?Where City constructs or subsidies infrastructure, prevailing
wages would be applicable
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Alternatives Evaluated
•Alternative 1:
Remarket the Property to a New Master Developer
•Alternative 2:
City to act as Horizontal Land Developer
•Alternative 3:
City to act as Executive Master Developer
•Alternative 4:
The “Delay” Plan
There can also be other approaches involving combinations or
hybrids of any of the Alternatives
15
Master Plan Recommendations
•Broaden provisions in the Plan to permit transfer of
non-residential sq.fts. & units between
Neighborhoods.
•Increase number of Apts. -30% of Plan entitled units
based on market realities, need for more product
diversity, and to accommodate as much of
Affordable Housing requirements as possible.
Implications on Neighborhood D and G only.
•Eliminate an approx. 9 acre Park in Neighborhood E
•Eliminate mandate for 15% of single family homes to be
single story
16
Master Plan Recommendations-
Cont.
•Ensure adequate differentiation between
residential product types for a variety of lifestyles
and life stages
•Features in Project should include:
Smart technology in design
?
Encouraging walkability
?
Street character, landscaping, and provision of
?
green spaces
17
Master Plan Recommendations
(Cont.)
Water body features where possible in Linear Park
?
The Lineal Park and other park features originally
?
proposed
More blending of urban core and greater integration
?
of products, less product and neighborhood
segregation taking advantage of Tustin Metro-Link
location
•Create distinct architecture embracing indoor
and outdoor relationships
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Recommended Disposition
Strategy
•Alternative 3: City would serve in a more limited
Master Developer role in directing the marketing
of phased land sales, overseeing the overall
development and infrastructure strategies.
•The City would sell smaller segments or
Disposition Packages based on market factors,
land use product types, and priority and costs
associated with local and backbone
infrastructure.
19
Disposition Strategy-
Cont.
•10 Disposition Packages.
Certain Packages could
also be further segmented
into one or more sale
offerings based on land
uses and market
conditions.
•Proposed Land Use
Program within each
Disposition Package has
been identified
20
Recommended Disposition
Strategy-.
Cont
Basic Guiding Principles
•Maintaining the Master Plan Vision, with refinements as
market conditions require.
•Maximizing value of land as a City asset, managing risk
to extent possible, and balancing desire to see
momentum on project.
•Marketing smaller segments, or Disposition Packages,
by inviting a limited number of qualified developers to
operate and partner with City.
21
Recommended Disposition
Strategy
-Cont.
Basic Guiding Principles
•Maintaining the Master Plan Vision, with refinements as
market conditions require.
•Maximizing value of land as a City asset, managing risk
to maximum extent possible, while also balancing desire
to see momentum on project.
•Marketing smaller segments, or Disposition Packages,
by inviting a limited number of qualified developers to
operate and partner with City.
22
Recommended Disposition
Strategy
Basic Guiding Principles-
(continued)
•Creating Packages largely including similar or
compatible land uses.
•Ensuring achievement of:
?Logical, orderly & planned development
?A sense of place and recognition that a master planned
community is being developed
?Compliance with infrastructure phasing & EIS/EIR.
?Infrastructure funding largely by developers
23
Recommended Disposition
Strategy
Guiding Principles -
(Cont.)
•Establishing a process diligent in selecting a
limited number of qualified builders for
Disposition Packages that is not cost restrictive
or time consuming.
•Determining an appropriate time frame for sale
of Packages based on infrastructure constraints,
Navy remediation, market conditons.
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Early Development Opportunities
•4 Packages selected
where early
development possible.
•Will not limit other
solicitations but these
sites are initially
important to City.
•Other sites proceed
based on market.
25
Organizational Framework
•City Manager’s Office/Redevelopment
Agency provide administration with
support from Public Works.
•Support from specialized financial
consulting services and
management/developer advisor services.
•Support from City Operating Departments
26
Preliminary Marketing Schedule
Early Opportunity Packages
Submittal of
Final
Disposition Marketing/
Developer
Developer Land SaleDevelopment
PackageScreening
Proposals
Selection
(Top3 Developers)
1AJuly-Aug. Sept.-Dec. Dec. 2011Dec. 2011-Spring 2013-
20112011June 20122014+
1BJuly-Aug. Sept.-Dec. Dec. 2011Dec.2011-Spring 2013-
20112011June 20122014+
1CJuly-Aug. Sept.-Dec. Dec.2011Dec. 2011-Summer
20112011June 20122013-2015+
2July-Aug. Sept.-Dec. Dec.2011Dec. 2011-Summer
20112011June 20122013-2017+
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Necessary Initial Resources &
Expenditures
Fiscal Year
ending June
30th
20122013201420152016
In-House
Personnel533,833 486,777 486,777 486,777 486,777
Property
Management
Services435,000 355,000 285,000 205,000 165,000
Environmental
Insurance400,000 (145,000)(75,000)(65,000)(40,000)
Various
Professional
Consulting1,490,000 690,000 650,000 530,000 580,000
Contingency100,000 75,000 60,000 60,000 60,000
Overhead(15%)
428,825 208,017 202,017 173,517 178,767
TOTAL3,387,658 1,669,794 1,608,794 1,390,294 1,430,544
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Marketing and Developer
Selection
Two Step Process
•Step 1: Developer presentations before a
panel of experts concurred by City Council.
Recommendation of a list of three firms most
qualified to proceed.
•Step 2: Submission of detailed proposal, pro
forma and business offer in response to City
established terms and conditions.
•Recommendation to City Council and rankings.
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Acknowledgements
•Redevelopment Agency
•Public Works Department
•Community Development Department
•John Burns Real Estate Consulting
•The Concord Group
•RBF Consulting
•Developer’s Research
•Hunsaker & Associates
•SMS Architects
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