HomeMy WebLinkAbout20 DEVEL T LEGACY 04-07-03AGENDA REPORT
20
Agenda Item
Reviewed: ~
City Manager
Finance Director ~//~
MEETING DATE: APRIL 7, 2003
TO:
FROM:
SUBJECT:
WILLIAM HUSTON, CITY MANAGER
CHRISTINE SHINGLETON, ASSISTANT CITY MANAGER
CONDITIONAL SELECTION OF DEVELOPER FOR THE TUSTIN LEGACY
RETAIL SITE (MCAS Tustin Reuse Plan Disposition PARCELS 10 AND 11)
SUMMARY
The MCAS Tustin City Council Ad Hoc Committee supported by the Technical
Evaluation Team of City staff and consultants has reviewed responses to a Request for
Proposal for the disposition and development of the Tustin Legacy Retail Site (MCAS
Tustin Reuse Plan Disposition Parcels 10 and 11, also legally described as Parcels
I-C-1 and III-C- 3).
RECOMMENDATION
That the City Council conditionally select Vestar Development II, LLC as the developer
of the Tustin Legacy Retail Site (MCAS Tustin Reuse Plan Disposition Parcels 10 and
11) and direct staff to prepare an Exclusive Negotiation Agreement for the disposition
and development of the Site which addresses the general principles, terms and issues
identified in this report, to be brought back for City Council approval.
FISCAL IMPACT
The conditional selection of a developer has minimal fiscal impact since the developer
would be responsible for funding expenses incurred by the City during preparation and
negotiation of a Disposition and Development Agreement. Fiscal impacts of the sale of
the Tustin Legacy Retail Site to the developer and other impacts of the project on the
City will be evaluated in more detail as part of the negotiation process on the Disposition
and Development Agreement.
BACKGROUND
In October 2002, the City issued a Request for Proposals (RFP) to a short-list of pre-
qualified developers as part of the second phase of the disposition strategy and
developer selection process for the major retail parcel located at the northwest corner of
Barranca Parkway and Jamboree Road at Tustin Legacy. In the first phase, developer
William Huston
April 7, 2003
Page 2
qualifications were solicited and qualifications evaluated through the issuance of a
Request for Qualifications (RFQ) which resulted in a short list of developers most
qualified to proceed.
The approximate 56.7 acre Tustin Legacy Retail Site is a critically important parcel in
the overall development of the Tustin Legacy Project as it is a gateway site to Tustin
Legacy and a highly visible southern entrance to the City of Tustin. Given the site's
central location in Orange County, the site presents a unique opportunity to create an
extraordinary environment for retail and entertainment uses.
The City Council, in January 2002, established the Technical Evaluation Team review
process for the purpose of qualifying and evaluating detailed developer RFQ and RFP
proposals for development sites in Tustin Legacy and to recommend selection of
prospective developers to the full City Council. The Technical Evaluation review
process for review of the Retail RFP consisted of an Ad Hoc committee of two members
of the Tustin City Council supported by City staff consisting of the Assistant City
Manager and Agency staff real estate members, technical consultants with the firms of
Economic Planning Systems (EPS) and Barnes and Company, and special counsel with
the firm of Gilchrist & Rutter. As part of the RFP review process, City staff was also
tasked to ensure that review comments on the RFP were provided by the Community
Development and Public Works Departments.
DISCUSSION
The following two developers, shod listed during the first phase of the selection process,
responded to the RFP: Tustin Legacy Commercial Partners, LLC, a joint partnership
between Lennar Partners and Shea Properties (LennadShea) and Vestar Development
Company II, LLC (Vestar).
The technical review and analysis of responses was completed by the Technical
Evaluation Team based on submittals from each developer and each developer's
response to specific evaluation criteria identified in the RFP.
On March 31, 2003, developer interviews were conducted by the Technical Evaluation
Team. A framework of questions particular to each of the specific developer proposals
was asked of each developer. During the 1-1/2 hour interviews with each developer,
each developer was given an opportunity to make a presentation and to address
questions from the Technical Evaluation Team regarding its proposal.
William Huston
April 7, 2003
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Besides scoring on the oral interview, the Technical Evaluation Team reviewed each
developer's Business Plan against the following RFP Evaluation Criteria:
1. Approach to developing the Site
2. Public benefit
3. Project feasibility
4. Business offer
5. Implementation
After careful consideration of developer responses during the interview process,
including the review and analysis of each proposed Business Plan, the overall
assessment of each developer is attached as Exhibit A. In summary, developers were
ranked through the Technical Evaluation process as follows:
1. Vestar
2. Shea/Lennar
As such, the City Council Ad Hoc Committee and the Technical Evaluation Team
recommends that the City Council conditionally select Vestar as the developer of the
Tustin Legacy Retail Site, subject to further negotiation of the points set forth below
prior to an Exclusive Negotiation Agreement (ENA) being brought back to the City
Council for approval:
The DDA be negotiated exclusively for the sale and disposition of the
Tustin Legacy Retail Site (MCAS Tustin Disposition Parcels 10 and 11) at
this time.
The close of escrow for the Tustin Legacy Retail Site follow immediately
upon exhaustion of the appeal period on the tentative subdivision map,
concept plan and design review approvals by the City.
The price offered for the Site be satisfactorily resolved including: 1) the
minimum base purchase price; 2) participation in the project's cash flow in
the form of a share in percentage rents; 3) participation in project valuation
derived from refinancing(s) and any subsequent sale of the Site by
developer, and; 4) the enhanced value/financial benefits derived by the
project in the event a Community Facilities District or similar financing
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April 7, 2003
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mechanism is supported or created by the City for MCAS Tustin back-
bone infrastructure expenses or other eligible expenses.
The DDA include agreement on minimum standards for the project's
quality that may include, but not be limited to, a minimum project
investment by developer in construction materials and criteria to ensure a
Class A quality project with a maximum level of amenities and the
development of maintenance standards that would ensure a continued
high level of maintenance in the long term.
5. The DDA require City approved Partnership/Management Agreement
between Vestar and Kimco Realty, Vestar's equity partner in the project.
The developer separately discusses any public benefit contribution it
would volunteer to make on community projects such as the Tustin Library
Expansion Project.
The ENA require the developer to fund expenses incurred by the City
during negotiations after execution of the ENA until completion of a
Disposition and Development Agreement.
Following the conditional selection of Vestar, staff will meet with Vestar to discuss the
above items and prepare an ENA to be brought back for City Council approval. If City
Council approves the terms of the ENA, it will at that time direct staff to negotiate a
Disposition and Development Agreement which would be presented to City Council for
approval along with environmental documentation deemed necessary by the City, if any.
Tustin Legacy
Retail Site
Parcels 10 & 11
Technical Evaluation
Summary
Criterion Shea/Lennar Vestar
1. Approach to Developing the Site [35 points possible]
Developer's ability to understand the conceptual plan for the
Tustin Legacy Project must be demonstrated.
· Site Plan 23 26
· Continuity and Design Quality
· Longevity of the Plan and the Quality of the Products:
· Support of Community's Goals and Vision for the Site
· Innovative Approach to Development of the Site
2. Public Benefit [10 points possible]
Developer must demonstrate how the proposed project would
optimize public benefit 7 7
· Development and utility of public space(s).
· Installation of new public infrastructure systems and its
impact
3. Financial Feasibility/Business Offer [30 points possible]
Conceptual development plan must demonstrate marketability
and financial feasibility. Price offered for the site must be 19 24
consistent with development plan.
· Financial feasibility
· Market analysis
· Marketing strategy
· Price Offered for the Site including Base Purchase Price
and Participation Price
4. Implementation [25 points possiblel
Developer's ability to carry the proposed plan of development
through to completion. 21 18
· Background of the Developer's Track Record:
· Ability of the Developer's Team
· Resources of Developer
· Funding Sufficiency
· Schedule/Timeline
5. Oral Interview [50 points possiblel
33 41
TOTAL: 103 116