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Home My WebLink About12 TUSTIN LEGACY DEVEL 07-01-02 NO. 12 AGENDA REPORT o -o -o2 MEETING DATE: JULY 1,2002 400-10 TO: FROM: SUBJECT: WILLIAM A. HUSTON, CITY MANAGER REDEVELOPMENT AGENCY STAFF PLANNING AREA 20, TUSTIN LEGACY - SELECTION OF DEVELOPER TO ENTER INTO AN EXCLUSIVE NEGOTIATION AGREEMENT SUMMARY The M CAS T ustin Technical E valuation Committee h as reviewed a nd rated responses t o a Request for Proposals for the disposition and development of Planning Area 20 in the Tustin Legacy project and recommends the selection of John Laing Homes as the developer for the site. RECOMMENDATION It is recommended that the City Council select John Laing Homes and direct staff to prepare an Exclusive Agreement to Negotiate with the developer for the disposition and development of Planning Area 20 in the Tustin Legacy project. FISCAL IMPACT Selection of a developer in which to enter into an Exclusive Negotiation Agreement has no immediate fiscal impact. The developer selected for negotiations will be required to make a good faith deposit prior to entering into the exclusive negotiating period. The developer has agreed in concept to fund the expenses incurred by the City during the negotiating period including the negotiation of a Disposition and Development Agreement and other agreements directly associated with the project. There may be near to long-term financial impacts, which will be driven by the intensity of the proposed development, revenues from land sale proceeds, and project generated revenues. These fiscal impacts will be evaluated as part of the negotiation process on the Disposition and Development Agreement. BACKGROUND The selection of a developer for Planning Area 20 is the initial step in the redevelopment of Tustin Legacy project. Currently vacant, the site is 25.3 acres which is located at the northwest corner of Edinger and Harvard Avenues. There is also an immediately adjacent 4.1 acre parcel adjacent to t he site t hat is owned by t he Irvine Company t hat developers have been asked to address. The site is designated for medium-high density residential use (15-25 dwelling units per acre)in the MCAS Tustin Reuse Plan. City Council Report Tustin Legacy, Planning Area 20 - Developer Selection July 1, 2002 Page 2 of 5 The disposition strategy and developer solicitation process for the subject site was approved by the Tustin City Council in the fall of 1999. It involved a two phased selection process. In the first phase, developer qualifications were to be solicited and qualifications evaluated through the issuance of a Request for Qualifications (RFQ) with the result being a short list established of developers most qualified to proceed. The second phase of the selection process was designed to solicit and evaluate business proposals through the issuance of a Request for Proposal (RFP) with the conclusion of this phase being the selection of a single developer in which to enter into an Exclusive Agreement to Negotiate. The selection process is similar to the process used by the City and Redevelopment Agency in the disposition and development of similar properties of this nature. It is also the same process which has been successfully implemented by other public agencies in the disposition and development of publicly owned properties, including former military bases in California. Subsequent to the City Council's approval of the solicitation process, the City Council on January 3, 2000 established the developer Technical Evaluation Committee review process for the purpose of qualifying and evaluating detailed developer RFQ and RFP proposals for initial development sites in the Tustin Legacy project and to recommend selection of prospective developers to the full City Council. The Technical Evaluation Committee consists of two members of the Tustin City Council, the Assistant City Manager and Agency real estate staff members, City/Agency retained economic and financial consultants on the Tustin Legacy project, and the City Attorney. On January 21, 2002, the Tustin City Council concurred with the appointment of Mayor Thomas and Mayor Pro-tem Worley as the City Council representatives to serve on the Committee. As part of the initial staff review process, Agency staff were also tasked to ensure that representatives from the Community Development Department also reviewed and commented on all RFQ'S and RFP's. Listed below is the specific process that the City has conducted to date on the Planning Area 20 site. RFQ Phase - First Phase In June 2000, the Technical Evaluation Committee reviewed RFQ responses and the qualifications of sixteen (16) developers. In July 2002, the Technical Evaluation Committee recommended to the City Council that four (4) developers proceed to the proposal stage for the Tustin Legacy Medium-High Residential site known as Planning Area 20. It was also the Technical Evaluation Committee's recommendation that any development proposal for Planning Area 20 be for ownership tenure only. On July 3, 2000, the City Council confirmed the recommended list of developers as follows: Greystone Homes, John Laing Homes, Olson/Standard Pacific, and Shea Homes City Council Report Tustin Legacy, Planning Area 20 - Developer Selection July 1, 2002 Page 3 of 5 RFP Phase- Second Phase In November 2001, a Request for Proposals (RFP) was distributed to the selected short list of developers. The RFP required that each developer submit a Business Plan addressing, at a minimum, each of the Evaluation Criteria elements as follows: 1. Organization and Qualifications of the Development Team. 2. Approach to Developing the Site. 3. Market Analysis addressing the residential products proposed. 4. Marketing Strategy for selling the proposed products. 5. Financial Capacity and Resources of the developer to build the project as proposed. 6. Feasibility of the Project to be economically and financially viable. 7. Business Price Offer for the site and Benefits to City and Agency which also includes developer responsibilities. All four of the selected developers responded to the RFP by the February 19, 2002 submission date. Responses to the RFP were intensively reviewed and analyzed by the staff and consultant Technical Analysis Team with the timing of evaluations dependent on the business negotiations and final terms of the City's transaction with the Navy for conveyance of property at the former MCAS Tustin. The Team was comprised of the City's economic and financial consultants, Economic Planning Systems (EPS) a nd B ames a nd Company, both o f which h ave extensive experience in the disposition and development of large-scale public properties such as Tustin Legacy. In addition, Staff was part of the Team including key personnel from Redevelopment, Community Development and the City Attorney's Office. The technical analysis, completed by the Technical Analysis Team, was conducted based on the proposed Business Plans for each developer and how that proposed Plan addressed the Evaluation Criteria delineated in the RFP. Business Plans were then comparatively analyzed. Countless hours were spent by each Team member reviewing the submitted Business Plans and all supporting documents. Each specific complete RFP along with the comparative technical analysis of the proposed developer Business Plans were submitted to the Technical Evaluation Committee for review. This Committee was comprised of two members of the City Council; the City's consultant, EPS; and Agency staff. On June 18, 2002, developer interviews were conducted by the Committee with the four proposing developers. A framework of questions particular to each of the specific developer proposals was asked of each developer. During the interview, each developer was given an opportunity to make a brief presentation and address questions from Committee members regarding their proposed Business Plan. The Technical Evaluation Committee reviewed each developer's Business Plan against the RFP Evaluation Criteria and based on three items as follows: 1) the submitted Business Plan, 2) the City Council Report Tustin Legacy, Planning Area 20 - Developer Selection July 1, 2002 Page 4 of 5 technical analysis conducted by the consulting team and staff, and, 3) the interview conducted with each developer. These items were all considered in recommending the selection of a developer in which to enter into an Exclusive Agreement to Negotiate. In scoring the interviews, the Committee also used three broad categories for scoring responses to interview questions in addition to the technical ranking of the developers, they are as follows: 1. Creativeness in the Approach to Developing the Site 2. Public Benefit 3. Project Feasibility and Business Offer Ranking of Developers The assessment of each developer was independently conducted by each member of the Committee. The evaluation of each Committee member against specific criteria was then discussed with a vote taken on the assessment of each development team, and a majority opinion determining the Committee's overall assessment. After careful consideration of the developer responses during the interview process, including the review and analysis of the each proposed Business Plan, the developers were ranked by the Technical Evaluation Committee as follows: 1. John Laing Homes 2. Olson/Standard Pacific 3. Greystone 4. Shea Homes It is important to note that the Technical Evaluation Committee unanimously agreed on the overall assessment of each development team. In summary, the Committee's overall assessments of each development team and proposal relative to each of the Evaluation Criteria in the RFP and as a result of the oral interviews are attached as Exhibit A. John Laing Homes was ranked first in all of the RFP's Evaluation Criteria and in the oral interview ranking categories: 1) creativeness in the approach to developing the site, 2) public benefit, and 3) project feasibility and Business Offer. John Laing Homes has proposed a very creative site plan with a significant variety of ownership housing types and attractive design elements. Four product types including single family units, attached townhouses, attached cluster townhouses and live/work units are proposed. Although the project proposal was 111 units below the density that would be otherwise permitted by the City Council Report Tustin Legacy, Planning Area 20 - Developer Selection July 1, 2002 Page 5 of 5 MCAS T ustin Specific P lan, t he developer has a Iso agreed during the negotiation process to reduce the number of units further and increase the number of single family units in the project. The developer's proposal also satisfies all legal requirements for affordable housing in a redevelopment area, as well as the Housing Element RHNA allocations. A commendable public benefit proposal that the developer has also offered in their proposal is a million dollar contribution towards the Tustin Library project. The developer has offered to make this contribution in addition to any purchase price to be negotiated for the site. The proposed Business Offer by John Laing Homes for the subject site was also the closest of a ny of the developer proposals to market appraisal information for the MCAS Tustin site that had been obtained by Agency staff. Next Steps Following the selection of a developer, staff will prepare an Exclusive Agreement to Negotiate. After City Council approval of the Exclusive Agreement to Negotiate and during the negotiation period, the business points of a Disposition and Development Agreement (DDA) will be negotiated and subsequently brought back to the City Council for consideration along with any necessary environmental documentation. Christine Shi~ Assistant City Manager ~Buchanan "~Sehior Project Manager Attachment-Exhibit A RDA\CC Report\format.doc Table 1 Summary of MCAS Tustin - EDC-1 Business Plan Evaluations by Criterion (1) (2) Evaluation of Business Plan Proposals Tustin Legacy; EPS # 9100 Greystone John Olson / Shea Criterion Homes Laing Homes Standard Homes Complete Quality Complete Quality Complete Quality Complete Quality I. Development Entity and Team i 25 Devloper Entity · · · · · · · · Developer Team · · · · · · · · II. Approach to Developin~ Site [ 73 I [ 103 ] I 80 I [ 68 Site Plan · Design and Housing Products · Affordable Housing · · · · · · · Parks and Open Space · Circulation and Parking · · · · · · · · Infrastructure and Phasing Plan · · · · · ~) · · Utilities, Energy, Maintenance III. Market Analysis 22 Market Analysis · Pricing and Absorption IV. Market Stratel:ly & Prooram Target Markets Product Positioning Reaching Target Markets Implementing Program V. Financial Car) acitv Financial Statements · · · · · · · · Sources of Funds · · · · · · · · Equity Capital · · · · · · · · Debt Capital · · · · · · · · VI. Feasibility Analysis Static Analysis · · · · · · · Cash Flow Analysis · · · · · · Electronic Submission · · · · · · VII. Business Offer Purchase Price Offer · Benefits to City and Agency · Oral Interview TOTAL I (1) Proposals evaluated on the completion of submission as well as the quality of each business plan. Completeness: · = Complete; · = Partial; .i = Not Addressed. Quality: ·· = Superior; · = Adequate; · = Inadequate; .. = Not Addressed. (2) Scores shown reflect the average of 1) City of Tustin; 2) Economic & Planning Systems, Inc.; and 3) Barnes and Company. Scores submitted by each are shown in Table 4. Source: City of Tustin; Economic & Planning Systems, Inc. Economic & Planning Systems. Inc 6/26/2002 H t9100tusVfp~Vb_mod~ffed_9100§nc xls