HomeMy WebLinkAbout09 COUNSEL FOR LEGACY 06-07-04
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AGENDA REPORT
Agenda Item 9
Reviewed: If
City Manager
Finance Director
MEETING DATE:
June 7, 2004
FROM:
WILLIAM A. HUSTON, CITY MANAGER
CHRISTINE SHINGLETON, ASSISTANT CITY MANAGER
TO:
SUBJECT:
SPECIAL COUNSEL-REAL ESTATE SERVICES FOR TUSTIN LEGACY
SUMMARY
Given the size and scope of the Master Developer solicitation for the Tustin Legacy
Project and current and anticipated real estate negotiations for the project, authorization
for special real estate attorney services is being requested.
RECOMMENDATION
It is recommended that the City Council authorize the appointment of Steefel, Levitt &
Weiss as special counsel under the City Attorney's office for real estate services for
Tustin Legacy effective June 1, 2004, authorize City Manager execution of the
engagement letter, and also authorize City Manager termination of Gilchrist & Rutter
services.
FISCAL IMPACT
The City's current Fiscal Year 2003-04 MCAS Tustin Legacy Enterprise Fund and
proposed 2004-05 Tustin Legacy Enterprise Fund anticipated funding for legal services.
Legal charges related to real estate transactions for the Tustin Legacy Master
Developer negotiations are also recoverable from developer deposits as part of the
Exclusive Negotiation Agreement with the Master Developer, developer negotiation
deposits from other transactions, as applicable (I.e., Vestar) and are authorized
expenses against future anticipated land sales within the Tustin Legacy project.
BACKGROUND/DISCUSSION
In December 2002, the City Council authorized the appointment of the firm of Gilchrist
and Rutter as special counsel under the City Attorney's office for real estate services for
Tustin Legacy. These services were to support implementation activities associated
with the Tustin Legacy project including major real estate disposition activities. It was
determined at the time that the ability to meet critical schedules required the full and
undivided attention of special legal counsel for an extended period of time. The
William A. Huston
Special Counsel-Real Estate Services for Tustin Legacy
June 7, 2004
Page 2 of 2
complexities of the size and scale of the real estate transactions envisioned for Tustin
Legacy made it extremely important that the City retain such legal real estate resources.
The experience brought to the negotiation table as a result of the selection of special
counsel has been a tremendous help to City staff and the City Attorney's office and has
placed the City on an equal footing with the legal counsel available to private
developers in completing transactions for the project.
The engagement relationship with Gilchrist and Rutter committed two primary attorneys
with the firm to the Tustin Legacy Project: James R. Andrews and Amy Freilich. The
selection of the firm as special real estate counsel in late 2002 was strongly influenced
by the background and more recent experience demonstrated by Amy Freilich,
particularly on large, complex public agency real estate transactions.
Amy has been a tremendous asset and has done the bulk of the negotiations and
transactional work completed by the firm. Unfortunately, she has recently decided to
leave Gilchrist & Rutter and will be heading up the Southern California real estate and
land use division of Steefel, Levitt & Weiss. Given the tremendous amount of effort that
Amy has put into the Tustin Legacy project, her experience and knowledge of the
Master Developer process and all developer negotiations underway at Tustin Legacy, it
is critical from the prospective of the City Attorney's office and staff that the City
continue its relationship with Amy Freilich in her new role with Steefel, Levitt & and
Weiss.
A copy of the firm's background is attached along with a recommended engagement
agreement. Amy has agreed to hold her current billable rates for the term identified in
the engagement letter and has identified additional resources that would be available to
support Tustin Legacy activities.
During the transition and after designating Amy Freilich as special real estate counsel
for the Tustin Legacy project in her new position at Steefel, Levitt & Weiss, we would
request that Gilchrist & Rutter deliver all City project files to the Los Angeles office of
Steefel, Levitt & Weiss as soon as possible (including those files which are electronic
and documents). In addition, there are a number of small tasks that need to be
completed by Gilchrist and Rutter that would not be efficient to move to Amy's new firm.
We would, therefore, recommend that the City Attorney and staff be authorized to
ensure completion of these tasks under the engagement letter and current billable rates
of Gilchrist and Rutter. Termination of Gilchrist & Rutter services would occur once
these tasks are completed.
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STEEfEL LEVITT & WEISS
A Professional Corpora1ion
May 28,2004
Mayor and Members of the City Council
City of Tustin
300 Centenoial Way
Tustin, California 92780
Attn: Lois E. Jefftey
City Attorney
Re:
Eneaeement AlZreement for Special Counsel Services
Dear Honorable Mayor and Members of the City Council:
Steefel, Levitt & Weiss is pleased to have the opportunity to represent you as
speciaJ counsel with respect to real estate services at the former Marine Corps Air Station in
Tustin. This work will include providing advice and preparing necessary documents in
conoection with the sale and disposition of property owned by the City of Tustin at MCAS
Tustin. This letter will set forth the general terms of our representation in this matter and any
other matters as to which you request our services, including our fees and billing policies and
procedures, as follows:
I.
I will be the attorney primarily responsible for this matter. As we discussed,
Clayton Gantz, an experienced transactional real estate attorney and the chair of
Steefel's reaJ estate practice group, will work closely with me to provide senior
level legal services on this matter and will assist me in ensuring that we are
properly staffing matters for the City of Tustin. Billing rates for shareholders and
of counsel at the firm range from $300 per hour to $525 per hour. For purposes of
this engagement, my time will be billed at $341 per hour and Clayton Gantz' will
be billed at $350 per hour. When it is economically efficient to do so, we may
employ one or more other attorneys or legal assistants to assist us on this matter.
At present, our rates range from $95 per hour to $180 per hour for legal assistants
and $195 per hour to $315 per hour for associates. Our rates are adjusted from
time to time (generally once a year but sometimes more frequently with respect to
some or all of our rates) and therefore are subject to change during the course of
this engagement. We agree not to modifY rates for this engagement more than
once a year and that any modification of rates will be at the same rate of increase
as the rate of increase of the consumer price index. We also agree that we will not
charge for travel time or cost of travel between our offices and Orange County
and that we will not modifY our rates for this engagement prior to February 2005.
2.
In addition, we also charge separately for certain costs and expense
disbursements, including telephone, messenger, courier and other
..--. -.--
550 South Hope S1reel Suits 1665. Los Angeles. CalWom~ 90071-2650. Phone: (213) 59~' Fax: (213) 599-3450
San Francisco. CA Los Angeles. CA Siamfool. CT www.steeIeI.oom
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Mayor and Members of the City Council
City of Tustin
May 28, 2004
Page Two
communications costs, reproduction, document retrieval, and computerized legal
research facilities. The rates for these costs may change from time to time as our
actual costs change. We may send to you for direct payment to the supplier
certain substantial disbursements, such as for court reporters, consultants,
appraisers, expert witnesses, or investigators. We will seek your approval in
advance for any anticipated expenses which are out ofthe ordinary or otherwise
substantial.
3.
Our attorneys, legal assistants and certain other employees maintain time records
for each client and matter- I will review the time records before sending you the
billing statements. Our billing statements typically will list time charged by
person, task and day and will be sent to you on a monthly basis. Our billings will
commence from the day of our first consultation and will include the time spent
during that initial consultation. While we will make every effort to include all
fees and disbursements in the billing statement for the month in which the fees
and disbursements were incurred, there are occasions when fees and
disbursements are not recorded until a subsequent month. In such cases, these
fees and disbursements will be included in our next billing statement.
4-
You agree to pay the amounts stated on each billing statement within 30 days of
your receipt of the statement. If you question any of the amounts shown on the
statement, you may withhold payment as to such amounts until the propriety
thereof can be reasonably determined but you will pay all unquestioned amounts
within the above 30-day period. A late charge will be assessed on unquestioned
amounts not paid by the due date at the rate of 1 % per month-
If any dispute arises regarding any aspect of our legal representation, including
services performed, billings, fees charged, costs incurred, claims of alleged
malpractice, unpaid fees or costs, or any other matter relating to our engagement
or this letter agreement, such dispute will be submitted to binding arbitration and
will not be determined by the courts or a jury, except as California law provides
for judicial review of arbitration proceedings. All disputes will be arbitrated by
the Judicial Arbitration and Mediation Service ("JAMS") or any other arbiter
jointly selected by you and us, after we offer you the initial option of Bar
Association-sponsored arbitration. If an arbitrator canoot be agreed to within ten
(10) days after written notification of any dispute about fees, an arbitrator will be
selected by JAMS to resolve the dispute.
5.
6.
You may discharge us at any time for any reason, and we may withdraw from
representing you for any reason, including nonpayment of fees or costs. Promptly
following any such discharge or withdrawal, you will pay to us all fees and costs
you owe.
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Mayor and Members of the City Council
City of Tustin
May 28,2004
Page Three
7.
It is our policy to obtain an advance retainer from new clients, and from existing
clients in circumstances where substantial work is anticipated. All retainer
amounts are deposited into our general account and are refundable, without
interest, to the extent not applied against invoices. For this engagement we have
agreed not to require a retainer or deposit.
8.
For your information, our professional malpractice insurance coverage is
maintained with Lloyds of London. Our coverage is $10 Million per event and
$10 Million anoual aggregate. Our self-insured retention is $250,000. Our
current policy period is March II, 2004 through March 11, 2007. Pursuant to
your request, the City of Tustin will be added on to our comprehensive general
liability coverage as an additional insured. Please provide us with the precise
name and the mailing address of the entity to be added. This coverage does not
apply to any automobile-related loss.
If the above terms meet with your approval and you wish us to proceed with
providing you legal services in accordance with such terms, please sign and return the enclosed
copy of this letter to me, together with the requested retainer, in the provided envelope.
Please do not hesitate to call me if you have any questions regarding this letter.
We appreciate your decision to select us to represent you, and we look forward to working with
you.
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Mayor and Members of the City Council
City of Tustin
May 28, 2004
Page Four
Dated:
Accepted and Agreed to by:
City of Tustin
By:
ADMIN,6.'906,")
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Sincerely yours,
By:
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STEEfEL LEVITT & WEISS
A Professional Corporation
May 28, 2004
Lois E. Jefftey, Esq.
City Attorney
City of Tustin
701 S. Parker Street, Suite 8000
Orange, CA 92868-4760
Re:
Steere!, Levitt & Weiss Eneaeement Letter; MCAS Tustin
Dear Lois:
As you requested, I have attached the form of engagement letter which Steere!,
Levitt & Weiss ("Steefe!") proposes to use in provision of Special Counsel services for MCAS
Tustin real estate matters. Please let me know whether you have any questions or comments
about the letter. I understand that if acceptable to you, you will present this letter to the City
Council for review and approval on June 7, 2004, but that the contract, if approved, will be
effective as of May 28, 2004.
In response to the City's request, I also wanted to take this opportunity to provide
you with some additional information about Steefel and the attorneys whom I propose to have
assist me in MCAS Tustin matters. At Chris Shingleton's request, the firm has previously
provided the City with its firm brochure and a description of the extensive real estate and land
use services that the firm provides and I have transmitted a copy of that brochure to your office
together with a hard copy of this letter.
Chris Shingleton has asked that I make available the services of another senior
real estate attorney in order to assure that we can fully meet the City's real estate legal service
requirements on MCAS Tustin matters. I am delighted that Clayton Gantz, a senior shareholder
in the firm and the chair ofSteefel's real estate practice group, has enthusiastically agreed to
work closely with me in order to provide these services to the City. I have consulted with
Clayton in putting in place efficient associate staffing of this matter as well. To that end, we
currently anticipate utilizing, as needed, the services of three additional real estate attorneys,
Adria Cheng, a senior real estate associate, and Ted Saibeni and Matthew Ellis, capable junior
real estate lawyers. For your convenience- I have briefly described the practice and experience
of each of these attorneys below:
Clayton Gantz has substantial experience representing governmental agencies
and private developers in public/private partnerships. Representative transactions on which Mr.
Gantz has worked include the following:
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550 South Hope street, Suits 1665. Los Ange~. C.lllom~ 90071-2650. Phone: (213) 599-3400 . Fax: (213)599-3450
San Francisco, CA Los A~s, CA Slamfool. CT www.slaefel.com
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Lois E. Jeffrey. Esq.
City Attorney
May 28. 2004
Page Two
. Yerba Buena Gardens. Representation of the San Francisco Redevelopment
Agency in conoection with the development of the Yerba Buena Gardens, the
City's largest redevelopment project. The development includes a 1,500 room
Marriott hotel, the 350,000 square foot Sony Metreon, the nation's first computer
entertainment center, the Mexican Museum, the Jewish Museum and the Four
Seasons Tower, a mixed-use development comprised of condominiums, retail,
hotel, health club and retail connector uses.
.
Foster Citv Redevelooment. Representation of a developer in the development of
a mixed-use commercial and residential development in Foster City. The project
involves a public/private partnership with the Community Development Agency
of the City of Foster City, as well as ajoint venture between our client (an
apartment developer) and a major commercial developer. We represented our
client in the acquisition of the five parcels that comprised the site (three through
condemnation), the structuring and documentation of the joint venture agreement
with the commercial developer, the negotiation of a Disposition and Development
Agreement with the Community Development Agency, the construction financing
of the commercial portion ofthe project, and the construction and tax-exempt
bond financing of the residential portion of the project.
.
Boise Idaho Redevelooment. Representation of the construction lender in
conoection with financing, through the credit enhancement of tax-exempt bonds,
of apartments, retail and public and private parking on land subject to a
participating ground lease from the Capital City Development Corporation (Boise
Idaho's Redevelopment Agency). The project involves the redevelopment of two
square blocks in downtown Boise. The financing of this transaction involved
public participation on a massive scale, with grants and loans being extended by
six public and quasi-public entities, including the CapitaJ City Development
Corporation, the City of Boise, Ada County, the University of Idaho and the
University ofIdaho Foundation.
Adria Cheng is a senior real estate associate at Steefel and in this capacity
represents developer clients, governmental agencies and lending entities in a wide variety of real
estate transactions, including acquisition and sales transactions, development activities, financing
transactions and leasing activities. Ms- Cheng has significant experience representing the San
Francisco Redevelopment Agency in connection with the Yerba Buena Gardens project
described above. Ms. Cheng received her RA. from Smith College in 1994 and her J.D. from
University of California, Hastings College of the Law in 1997.
Ted Saibeni is an associate in the Real Estate Group at Steefel, Levitt & Weiss.
Prior to joining Steefel, Mr. Saibeni served as Vice President & Regional Counsel of First
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Lois E Jeffrey, Esq.
City Attorney
May 28. 2004
Page Three
American Title Company of Los Angeles. Mr. Saibeni received his B.A. (With Highest Honors)
in Cultural Anthropology from the University ofCalifomia, Santa Barbara in 1994 and J.D. from
the University of California, Hastings College of the Law in 1997.
Matthew Ellis is an associate in the Real Estate Group at Steefel, Levitt & Weiss.
Prior to joining the firm, Mr. Ellis worked as an auditor for PricewaterhouseCoopers and became
a certified public accountant. Mr. Ellis received his B.S. from the University ofCalifomia,
Berkeley in 1996 and his J.D. from Santa Clara University School of Law in 2002. While at
Santa Clara, Mr. Ellis served as Business Editor for the Santa Clara Law Review.
Needless to say, we would anticipate involving these lawyers only as appropriate
for the deal-Steefel prides itself on being an efficient, cost-effective provider of legal services.
However, I wanted to give you a sense of the depth of experience and expertise that Steefel could
bring to bear in conoection with the MCAS Tustin project.
[ have spent many hours with Mr. Gantz and the attorneys at Steefel on both legal
and non-legal matters and have come away quite impressed with their skill, knowledge,
experience and dedication. I look forward to making these talented individuals available to meet
the City's real estate needs. Please let me know whether you or the City Council members
would like any additional information about Steefel.
ADMIN:6]<J()654.1
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