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Home My WebLink About07 RECOMMENDATION OF PROPOSALS TO PROCEED TO A FINAL ROUND OF NEGOTIATIONS FOR THE COMPETITIVE OFFERDocusign Envelope ID: CA99B341-9507-4190-B603-343EE6FCBE23 MEETING DATE TO FROM AGENDA REPORT OCTOBER 7, 2025 ALDO E. SCHINDLER, CITY MANAGER Agenda Item 7 Reviewed: Initial City Manager a`L� Finance Director NSA BRIAN MONCRIEF, DEPUTY CITY MANAGER — REAL PROPERTY SUBJECT: RECOMMENDATION OF PROPOSALS TO PROCEED TO A FINAL ROUND OF NEGOTIATIONS FOR THE COMPETITIVE OFFERING FOR 150 E. FIRST STREET SUMMARY: Two (2) proposals are recommended for City Council consideration to proceed to a final round of negotiations for the competitive offering for 150 E. First Street within Development Area 2 of the Downtown Commercial Core Specific Plan. RECOMMENDATION: It is recommended that the City Council take the following actions: 1. Authorize staff and the City's broker Professional Real Estate Services Inc. to inform two (2) proposers from the competitive offering for 150 E. First Street that they will be proceeding to a final round; and 2. Authorize staff to further reduce the number of proposals that will ultimately be recommended to the City Council for consideration at a later date. FISCAL IMPACT: There is no fiscal impact associated with this item. CORRELATION TO THE STRATEGIC PLAN: The recommendation of proposals to proceed to a final round of negotiations contributes to the fulfillment of the City's Strategic Plan Goal A: Economic and Neighborhood Development. Specifically, this item implements Strategy 14 which is to develop a strategic plan for Tustin's development which focuses on in -fill development in the Downtown Commercial Core and Red Hill Specific Plan areas. Docusign Envelope ID: CA99B341-9507-4190-B603-343EE6FCBE23 City Council Agenda Report Recommendation of Proposals to Proceed to Final Round October 7, 2025 Page 2 BACKGROUND AND DISCUSSION: On April 1, 2025, the City Council authorized staff to release a competitive offering for 0.4 acres of City -owned real property at 150 E. First Street within Development Area 2 of the Downtown Commercial Core Specific Plan (Site) pursuant to City Council Resolution 25-10. On May 20, 2025, the City Council authorized the City Manager to negotiate and execute a Listing Agreement for the Site with Professional Real Estate Services, Inc. (PRES) to market the site. On June 27, 2025, an Offering Memorandum (OM) for the Site was released by PRES. The OM (included as Attachment 1) included a general overview of the Site and the proposed timeline and process for the offering. The OM noted that the City "seeks to ground lease or sell the Property to a qualified Developer capable of delivering a high -quality project that furthers the vision of the Downtown Commercial Core Specific Plan." Proposals were due on August 29, 2025 at 5pm. A total of four (4) proposals were received by the offer deadline, broken down into broad land use categories as follows: - Childhood Education (2) - Mixed Use For -Sale Residential (1) - Mixed Use Multi -Family Rental (1) City staff and PRES identified two (2) of the four (4) proposals received as being most viable and best aligned with the City's vision for the site. The recommended proposals to proceed to a final round of negotiations are comprised of the following land use categories: - Childhood Education (1): Recommended proposal reflects a re -use of the existing building on the Site for childhood education. - Mixed Use For -Sale Residential (1): Recommended proposal reflects demolishing the building on site and constructing for -sale townhomes with ground floor retail. The anticipated timeline of the remainder of the offering process for the Site is as follows: - Q4 2025 Final round of negotiations - Q4 2025/Q1 2026 City Council open session: Proposal/Developer selection - Q2 2026 City Council open session: Purchase Agreement consideration - Q1 2027 City Council open session: Entitlements consideration Docusign Envelope ID: CA99B341-9507-4190-B603-343EE6FCBE23 City Council Agenda Report Recommendation of Proposals to Proceed to Final Round October 7, 2025 Page 3 Signed by: bnO,AA, AUIAtntf RF('R��FSQRf.74 FR Brian Moncrief Deputy City Manager — Real Property Attachments: Signed by: t4 -P, fiFRdFR1 �R�RAdfiS Kenneth Piguee Real Property Manager 1. Offering Memorandum 2. Offering and Recommendations Summary - � _ - _ `• . ��_ ,tom rF 71 _ 150 EAST FIRST STREE41, S wc{� d Y Yr• �,-�nt \\\\• \ 'A / A / f 150 EAST FIRST STREET TUSTIN, CA 92780 � 0. 43-Acre Opportunity FOR SALE/ GROUND LEASE Executive Vice President Senior Associate hforsythe@orescomoanies.com noeterson@prescomr)anies.com 949.283.0036 801.201.0477 P R ES License #CA-01033797 License #CA-02247435 Docusign Envelope ID: CA99B341-9507-4190-B603-343EE6FCBE23 150 EAST FIRST STREET PROPERTY HIGHLIGHTS PRIME LOCATION Located in the heart of Tustin's Downtown Commercial Core, 150 E 1st Street benefits from a high -visibility corner in Development Area 2 (DA-2). With proximity to El Camino Real and walkable access to Old Town Tustin, the property offers immediate connections to the City as well as the 55-Freeway and I-5 Freeway. GREAT NEIGHBORS Surrounded by national chains as well as local retail and just steps from Peppertree Park, the property sits within a dynamic, pedestrian -friendly corridor. The area continues to benefit from ongoing revitalization under the Downtown Commercial Core Specific Plan (DCCSP), supporting active storefronts and a thriving mixed -use environment. VERSATILE ZONING The DA-2 zoning allows for vertical mixed -use development with required ground -floor commercial and optional upper -floor residential (subject to RAR approval). The site is particularly well -suited for medical office development, including urgent care, or specialty clinics, given the visibility, access, and allowed use. APN: 401-583-01 f0.43 Acres - Zoning: Downtown Commercial Core Specific Plan UAY S FIRST STREET ;T HIGHLY - ACCESSIBLE LOCATION Strategically positioned near the junction of I-5 and SR-55 - - -- , �p�FORN�y 3 MIN 5 MIN TO I-5 FREEWAY TO SR-55 FREEWAY - _ s—yio Rik r 150 EAST �. FIRST STREET_ j TARGET AUDIENCE RESIDENTIAL & MIXED -USE DEVELOPERS Why: The f0.43-acre site is located within a designated mixed -use zone under the DCCSP and presents a compelling opportunity for residential development. By -right zoning allows for vertical mixed -use for residential projects. MEDICAL OFFICE FOOD & BEVERAGE PAD DEVELOPERS DEVELOPERS Why: The site is ideally sized and zoned for a Why: The f0.43-acre site offers strong small-scale medical office project, supported by visibility, access, and frontage, ideal for strong demand for healthcare services in Central single -tenant food and beverage users Orange County and flexible zoning under the operating on a ground lease or build -to -suit DCCSP. basis. Examples: Townhome developers, mixed -use Examples: Developers focused on infill specialists, small-scale condo or apartment delivering single -tenant or multi -tenant builders. medical buildings for urgent care operators, or outpatient surgery centers. Examples: Developers focused on delivering pads for Starbucks, Dutch Bros, Shake Shack (walk-up only), or other compact quick -serve concepts. BUILD -TO -SUIT OR PRE -LEASED DEVELOPERS Why: Developers can capitalize on tenant demand by securing pre -leases or build -to -suit agreements with local service providers or healthcare groups seeking modern, centrally located space. Examples: Specialty childcare centers, senior day facilities, private education academies, boutique fitness operators, veterinary clinics, and destination wellness concepts. Docusign Envelope ID: CA99B341-9507-4190-B603-343EE6FCBE23 150 EAST FIRST STREET Garden Grove W FIRSTS I 0 z rr ll Mlle Square V Regional park ntain alley nv� r�- Orange E -,11. N AVE Ial I UN W 171'H 5i t 17T�I g; Santa A a Tustin a x a TIJS RANCH eolnaEa a �w a¢ 4 by - 94 �4 a rqq 1M s r Irvine �layne � ni Port-arenga County {SNAI' 4� N.tt�r�naraae�v Cake COWAN a HEIGHTS a � Irvine Leke park NORTHWOOD ' Population 27,335 218,962 594,430 67,417 179,751 Households 9,374 Average Household Size 2.8 3.1 3.1 012 Total Businesses f26,464 17,083 43,126 Total Employees 129,424 350,022 36.6 36.6 Median Age 36.8 Median Household Income $76,901 $90,254 $98,176 150 EAST FIRST STREET OFFERING GUIDELINES FOR DEVELOPERS Project Vision The City of Tustin ("City") seeks to ground lease or sell the Property to a qualified Developer capable of delivering a high -quality project that furthers the vision of the Downtown Commercial Core Specific Plan (DCCSP). The selected Developer will acquire development rights to the land in its current condition, assuming full responsibility for all entitlements (including potential Specific Plan amendments) and infrastructure improvements. Developer Qualifications The City of Tustin is seeking qualified Developers to realize the vision of the project. Developers must meet the requirements outlined below and will be verified by PRES. • Proven success in executing and operating projects of comparable scale • Robust financial capabilities and consistent on -time project delivery Submission Process The City of Tustin and PRES will assess submitted proposals based on the criteria outlined in this offering memorandum. Following this evaluation, a recommendation may be made to the City Council for Developer selection. Upon selection, the City Council will enter into an Exclusive Negotiating Agreement (ENA) with the chosen Developer. This ENA will serve as the framework for negotiating the transaction details and entitlements. City Expectations Developer and City Expenses — The City of Tustin will expect developers to provide a deposit at ENA execution that will be replenished throughout negotiations, closing through certificate of compliance (project completion). This deposit is separate and distinct from any entitlement or construction deposits. Developer will be responsible for all development costs and expenses, including but not limited to the cost of design preparation, entitlement, and City transaction expenses, inclusive of, but not limited to, City staff expenses and third -party City project consultants, including City legal counsel. Conveyance — The Property will be conveyed or leased on an "as- is, where -is and with all faults" basis to Developer. Conveyance will occur subject to conditions within the Transaction Documents, which will include approved permit -ready plans. Project Performance — Developer will be selected for its ability to timely close and/or execute on the project. No speculation about land holding will be permitted. Project and schedule performance standards will be included within Transaction Documents to ensure timely execution. 150 EAST FIRST STREET OFFERING TIMELINE FOR DEVELOPERS I. Marketing Launch PRES will formally launch marketing for the property, with due diligence materials made available to qualified parties upon execution of a confidentiality agreement. III. Final Review II. Round One - Proposals Submitted a A call for offers date requesting Developers to submit a letter of intent and conceptual design proposal following the marketing period. 3 The City of Tustin reserves the right to advance the most advantageous proposal directly or to invite a select group of finalists to participate in a final round of negotiations, based on the overall strength and merits of the submitted proposals. ±30 DAYS PRES Professional Real Estate Services Exclusively listed by POINT OF CONTACT HOLLY FORSYTHE Executive Vice President hforsythe@prescompanies.com 949.283.0036 License #CA- 01033797 NICK PETERSON Senior Associate npeterson@,prescompanies.com 801.201.0477 License #CA-02247435 Docusign Envelope ID: CA99B341-9507-4190-B603-343EE6FCBE23 OA AC 150 E First Street Offering and Recommendations Summary Re -Use Existing Offered/Open to Recommended by PRES For Consideration No. Land Use Program Acres Structure? Ground Lease to Advance to Final Roun 1 Childhood Education Childhood education facility 0.4 ^r No Yes 2 Childhood Education Childhood education facility 0.4 No No 3 Mixed Use For -Sale Residential For -sale townhomes with ground floor commercial 0.4 No Yes 4 Mixed Use Multi -Family Residential For -rent apartments with ground floor commercial 0.4 No No No