Recommendation to Approve Finalists for an Exclusive Negotiation Agreement (ENA) to Develop Site A at Alameda Point. (Base Reuse 819099)
Body
To: Honorable Mayor and Members of the City Council

From: John A. Russo, City Manager

Re: Approve Developer Finalists for Development of Site A at Alameda Point

BACKGROUND

In April 2014, the City Council provided direction to staff to issue two Requests for Qualifications (RFQ) from developers for two development sites at Alameda Point, as well as approved a form of Exclusive Negotiation Agreement (ENA). Attachment 1 depicts a map of Sites A and B. The RFQs were issued on May 1, 2014 (Attachments 2 and 3). An offering sheet summarizing the development opportunity and inviting developers to review and submit a response to the two RFQs was sent to an extensive list of developers; an ad was placed on the Urban Land Institute website (a national land development association); and prominent articles announcing the RFQs were run in the San Francisco Chronicle and the San Francisco Business Times.

Site A consists of 68 acres within the Waterfront Town Center (WTC) zoning sub-district and Site B consists of a total of 82 acres, of which 14 acres are within the WTC sub-district, 38 acres within the Enterprise 1 (E-1) zoning sub-district, 23 acres within the Enterprise 2 (E-2) zoning sub-district, and seven acres within Enterprise 3 (E-3) zoning sub-district.

The RFQ for Site A solicited interest from developers interested in developing a residential/commercial mixed-use project consistent with the recently approved Town Center Waterfront Plan and Master Infrastructure Plan (MIP). The RFQ for Site B solicited interest from developers/users interested in developing commercial projects with a focus on a major sales tax generator, such as a premium retail outlet (not a "big box" store) and/or a corporate "build-to-suit" user(s) that generates significant jobs, business-to-business sales tax or other catalytic economic benefits (consistent with the Town Center Waterfront Plan, the rezoning and MIP).

The RFQs required developers to submit a Statement of Qualifications (SOQ) that included a project understanding and approach; description of project team; project description; a summary of previous experience; financial qualifications; and an acceptance of conditions, including any requested modifications to any aspect of the form of ENA approved by the City Council on April 15th. The SOQs were due to the City by June 16, 2014.

The City received 10 responses to the Site A RFQ and seven responses to the Site B RFQ. One of the Site A responses and three of the Site B responses were not submitted in a timely fashion and/or did not meet the minimum requirements of the RFQ. These responses were disqualified and not reviewed. As a result, there were nine complete qualified responses to the Site A RFQ and four to the Site B RFQ. This evening's staff report focuses on the Site A solicitation process. Staff will bring recommendations regarding Site B developer finalists to the City Council at the upcoming September 16th meeting. The following summarizes the names of the developers who submitted qualified responses for Site A:

1. Alameda Point Partners (a partnership of Thompson Dorfman Partners, SRM Ernst Development Partners, Madison Marquette, Tableu Development Company, O2-blu, and Eden Housing)
2. Brookfield Residential
3. Catellus Development Corporation
4. CIM Group
5. Mission Bay Development Group
6. Rising Realty Partners and Summit Land Partners
7. Tim Lewis Communities
8. Trumark Homes
9. Williams & Dame Development in partnership with Bridge Housing Corporation, Zelman Development Company, Langley Investment Properties.

All qualified SOQs submitted in response to the Site A RFQ are attached (Attachment 4).

An inter-departmental team of City staff reviewed the submittals based on the evaluation criteria in the RFQ: (1) responsiveness to the RFQ; (2) evidence of relevant experience and proven track record; (3) technical capability and relevant experience of the project management staff; (4) evidence of financial capacity, resources, and relationships, and clear corporate/organizational structure; and (5) in depth understanding of, and reasonable approach to the project. Based on this evaluation process, City staff invited four developers for Site A to an interview. The interviews were held in July with an interview panel that included an inter-departmental team of City staff and members of the community, including representatives of the Planning Board, Alameda Point Collaborative, Association of Realtors, Alameda Point tenants, Chamber of Commerce, and West Alameda Business Association.
The Site A interview panel was unanimous in their decision to recommend two developers as finalists for Site A. The proposed developer finalists include Alameda Point Partners and Brookfield Residential. Both finalists included very qualified urban design and planning firms, architecture, and landscape architecture firms, presented in greater detail in their SOQs.

Additionally, both of the finalists are currently proposing a similar project description: 800 housing units and approximately 200,000 square feet of commercial uses. The details of an exact project description was not the primary focus of the RFQ process, but will be explored in much greater detail and more clearly defined during the ENA period.

DISCUSSION

The following provides a summary of each of the development teams and staff's rationale for selecting them as finalists:
Alameda Point Partners
Alameda Point Partners is a custom partnership created specifically for Alameda Point comprised of high-quality regional and national developers specialized in the various aspects of development relevant to Site A: base reuse, infrastructure, multi-family vertical mixed-use, retail and affordable housing development. Their SOQ demonstrated a proven track record in developing complicated, multi-year, mixed-use, waterfront retail and residential infill developments within the Bay Area and, in certain instances, in the country, and an in-depth understanding and knowledge of the site and Alameda community. The team of people the City would be working with on a day-to-day basis are the principals or high-level executives of these development firms, not junior staff. Their capital partner, Tricon Capital Group, attended the interview and expressed strong interest in funding this process, if selected. Alameda Point Partners proposes working with Field Paoli as their urban designer and planner for preparing detailed site plans during the ENA period.
The following provides an overview of the individual development partners:
· Thompson Dorfman Partners (TDP) specializes in urban, mixed-use development in the Bay Area, including the 380-unit residential component of Bay Street in Emeryville (teamed with Madison Marquette on the retail), and the Riverview project in San Jose, California, currently under construction, among many other projects.

· SRM Ernst Development Partners (SRM) specializes in infill office, industrial, mixed-use and turn-key build-to-suit development in the Bay Area, including the VF Outdoor campus and Peet's Roasting Facility at Harbor Bay in Alameda. Additionally, SRM is currently teamed with TDP on a 480-unit, 70,000-square-foot office, and 20,000-square-foot retail, mixed-use project in Emeryville and a 400-unit and 20,000-square-foot retail, mixed-use project in downtown Oakland. SRM's principal, Joe Ernst, who lives in Alameda, will be the day-to-day project manager for the Alameda Point Partners team. Staff is very familiar with Mr. Ernst and is very comfortable with his project management skills.

· Madison Marquette specializes in retail, specialty/entertainment, mixed-use development in urban and infill locations throughout the United States, including the 400,000 square feet of commercial uses at Bay Street in Emeryville, 500,000 square feet of waterfront development in Ashbury Park, New Jersey, and under construction, The Wharf development in Washington, DC.

· Tableu Development Company is a new development entity led by Jack Robertson, a former employee of Lennar Urban, who has 30 years of experience in acquiring, financing, and building communities throughout the United States and was involved in the redevelopment of Hunter's Point Shipyard in San Francisco.

· O2-blu development company is led by Phil Owen, a former employee of Mission Bay Development Group and Catellus Development Corporation, and specializes in infrastructure development for large-scale multi-year development projects, including experience at Mission Bay in San Francisco and Bayport in Alameda.

· Eden Housing is a well-established local affordable housing developer with extensive knowledge and successful experience financing and constructing affordable housing in the Bay Area, including projects in Hayward, Hercules, and Dublin.

Brookfield Residential
Brookfield Residential is the sixth largest land developer and home builder in North America with substantial financial resources. They have extensive experience developing large, complex projects and have assembled a strong advisory team, including Urban Community Partners and Main Street Properties. Brookfield's most relevant signature project includes the mixed-use Playa Vista project on 65 acres of land in West Los Angeles, which will consist of 5,846 homes (3,000 already occupied), 3.3 million square feet of office space, 230,000 square feet of retail uses (including a mixed-use village center) and 200 assisted living units and 47 acres of parks. At Playa Vista, Brookfield has already overseen the development of two condominium communities, three market rate apartment projects, three single-family communities, a senior affordable apartment project, approximately 200,000 square feet of mixed-use retail and several new creative office and corporate headquarter buildings. This project faces relevant complex issues related to transportation demand management, environmental remediation, environmental protection, project labor agreements and local hire programs.
Another relevant project includes the 365-acre Seton project in Calgary, Canada, which consists of 2.5 million square feet of office and retail, a 16-acre regional park, 1,300 multi-family housing units, a new South Health Campus, a hotel and recreation center, all within close proximity to a planned light rail station. Both of these major projects were self-financed by Brookfield, which is how they propose financing the Site A development. Brookfield has demonstrated strong financial capacity to finance both the ENA and development period.
The Brookfield team includes Urban Community Partners, a development advisory firm, comprised of individuals who have extensive development experience and led a complicated entitlement effort for redevelopment of portions of the former Fort Ord base. Additionally, one of their principals lives in Alameda and would be an integral part of the project management and entitlement team. Another key member of the Brookfield team is Main Street Properties, a retail real estate company that specializes in downtown and "town center" retail districts, who would advise Brookfield on the development of the retail portions of Site A. Main Street Properties is familiar with Alameda and was responsible for leasing the catalyst John Knowles Building in the Park Street business district at the corner of Park Street and Central Avenue. The Brookfield team plans to work with Urban Design Associates as their urban designer and planner for preparing the detailed site plans during the ENA period.
Next Steps for Pre-ENA Selection Process
If the City Council approves staff's recommendation, staff has developed a schedule and process for selecting a preferred developer for each site by November 2014 (Attachment 5). A summary of the process is outlined below:
1. August - Developer continues due diligence on sites.

2. September - City Council approval; City/developers start term sheet negotiations; and City hosts open house so that the community can meet prospective developers and learn about their past project experience.

3. October - Subsequent term sheet negotiations; City Council closed session; staff selection of preferred developer; and final term sheet negotiations.

4. November - Staff report recommending preferred developer for Site A and ENA (with final term sheet attached) released to public; and City Council public hearing.

Negotiating a term sheet with two finalists for each site instead of recommending a preferred developer at this stage of the process creates a competitive situation between developer finalists, which will result in a better deal for the City as it commences negotiation of a Disposition and Development Agreement (DDA) during the ENA period. Both of the development teams will need to provide evidence of having access to sufficient capital to not only fund the ENA period, but the entire development project. Staff will not recommend any team that is not able to demonstrate the financial capability of funding the project.
ENA and Post-ENA Transaction Process
The ENA period is contemplated as a compact 6-month process, which results in an approved DDA (i.e., price and terms of payment for the land and development obligations), and an approved Development Plan (i.e., detailed site plan, including backbone and in-tract street alignments and sections, building footprints and massing, landscape concepts, and a phasing plan). The ENA allows for two, three-month administrative extensions by the City Manager. The ENA also prohibits any assignments or transfers of the rights under the ENA to another developer and limits the City's obligations to negotiating exclusively the terms of the DDA with each developer and to considering approval of the Development Plan.

There is no obligation by the City to approve the DDA or Development Plan. The ENA also requires that the developer provide non-refundable funding ($200,000 for Site A) for reimbursement of City expenses for negotiation of the DDA. Funding for staff time for review and processing of the Development Plan will be handled through the City's standard planning process. The approval of a DDA and Development Plan at the end of the ENA period are intended to facilitate near-term development of Site A.
FINANCIAL IMPACT

There is no financial impact to the City's General Fund or Base Reuse Department budgets (Fund 858) related to the approval of developer finalists for Site A.

ENVIRONMENTAL REVIEW

No environmental review is required as approving developer finalists is not a project as defined under CEQA. CEQA Guidelines, section 15378(a).

RECOMMENDATION

Approve finalists for an Exclusive Negotiation Agreement (ENA) to develop Site A at Alameda Point.
Respectfully submitted,
Jennifer Ott, Chief Operating Officer - Alameda Point

Financial Impact section reviewed,
Fred Marsh, Finance Director

Exhibits:
1. Map of Site A and Site B Boundaries
2. Request for Qualification from Developers for Site A
3. Request for Qualification from Developers for Site B
4. Statements of Qualifications from Developers for Site A
5. Schedule for Pre-ENA Period for Sites A and B