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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 Page 3 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 William Huston April 7, 2003 Page 4 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