Memo from City Manager to City Courncil Regarding Recommendation to Reject the Developer Finalists for Site B and Postpone the Decision on Development of Site B at Alameda Point for Six Months, December 2, 2014



In April 2014, the City Council provided direction to staff to issue a Request for Qualifications (RFQ) from developers for an 82-acre commercial development site at Alameda Point (Site B) and a 68-acre mixed-use development site (Site A) (Attachment 1) consistent with the recently approved rezoning, Town Center Plan and Master Infrastructure Plan. The Site B RFQ was issued on May 1, 2014 and solicited interest from developers/users interested in developing commercial projects with a focus on a corporate "build-to-suit" user(s) that generates significant jobs, business-to-business sales tax or other catalytic economic benefits consistent with the City's regulatory documents. The SOQs were due to the City by June 16, 2014 and the City received seven responses to the Site B RFQ. 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 four complete qualified responses to the Site B RFQ:

1. Catellus Development Corporation (Catellus)
2. CIM Group
3. Mission Bay Development Group (MBDG)
4. Trumark Homes

While the RFQ stated that the City would give preference to a developer that included a letter of intent from a specific business user as part of their submittal, none of the developers furnished a letter of intent or included a corporate tenant as part of their team. City staff reviewed and evaluated all the responses and, in concert with community stakeholders, interviewed three of the top development firms. The Site B interview panel recommended two developers as finalists for Site B: CIM Group and MBDG. However, CIM Group withdrew their interest in Site B due to the uncertainty of the market for commercial uses at Alameda Point. As a result, staff selected Catellus as the other proposed finalist for Site B.

On September 16, 2014, the City Council approved Catellus and MBDG as the two developer finalists for Site B. On September 29, 2014, the City held an open house for the developer finalists, which gave the Alameda community an opportunity to meet the developers and discuss their past projects. Over the last two months, City staff negotiated potential business and financial terms of a subsequent Disposition and Development Agreement (DDA) for Site B with each of the two finalists.

During these negotiations, neither of the developers were willing to commit to upfront infrastructure, land payments or a milestone schedule for implementing Site B development due to the uncertainty of the market for new commercial development at Alameda Point and the high cost of infrastructure. As a result, City staff is recommending postponing any decision on Site B until next year.