This report transmits draft materials for the Council’s consideration related to a proposal to contract with Stainback Public/Private Real Estate (SPPRE), a private consulting firm, to manage the developer solicitation process and negotiations for developing Town Parking Lots 2 and 5. Attached for the Council’s review are:
· Draft Summary of Tasks and Fees (Attachment 1)
· Draft Detailed Schedule Timeline (Attachment 2)
· Draft Work Statement (Attachment 3)
BACKGROUND
At a Council Work Session on June 10, 2002, the Town Council reviewed concepts for Parking Lots 2 and 5 and other sites developed at the Downtown Design Workshop in February and March 2002.
On June 10, 2002, the Council formed the Council Committee on Lots 2 and 5 to review in greater detail options for implementing a process to develop the two parking lots, possibly by inviting developers to respond to a Request for Proposals, followed by Council selection of a development team and negotiation of a development agreement. Members of the Council Committee are Bill Strom, the Chair of the Committee, Pat Evans, Ed Harrison, Mark Kleinschmidt, Dorothy Verkerk, and Jim Ward.
On February 24, 2003, the Town Council adopted Principles and Priorities for developing Lots 2 and 5 recommended by the Council Committee. In addition, the Council adopted a resolution directing the Town Manager to hire an economic development consultant to work with the Council and Staff in soliciting and analyzing developer proposals and negotiating and executing a development agreement.
In May, eleven (11) firms responded to the Town’s initial Request for Qualifications; the Council Committee reviewed the firms’ responses before deciding to invite four of the firms to submit more detailed proposals for the Committee’s consideration.
In August, the Council Committee and Staff reviewed proposals received July 30 from the four firms. The Committee interviewed representatives from each firm on August 13 and 14. On August 18 the Committee voted unanimously to continue discussions with Stainback Public/Private Real Estate LLC of Malvern, Pennsylvania. This report summarizes the results of staff discussions with Mr. Stainback to date.
DISCUSSION
PROPOSED CONSULTANT TEAM
The Council Committee has recommended continuing discussions with Stainback Public/Private Real Estate. Stainback Public/Private Real Estate has demonstrated experience in the public-private real estate development field and is proposing a thorough approach that promises to put the Town in a position to negotiate a favorable development agreement.
We are in the process of checking the firm’s business and financial references and conducted a background check and have discovered no concerns about the firm’s ability to deliver on the contract. We found that John Stainback, managing partner of Stainback Public/Private Real Estate who would serve as project manager, is highly regarded in the field of public-private finance.
The firm is based in Malvern, Pennsylvania. Mr. Stainback proposes to work as the project manager as well as personally handle the majority of the tasks that involve his firm. At his current firm and with previous employers, including LCOR, Inc., and Ernst & Young, Mr. Stainback has worked on behalf of public entities as well as developer on multi-million dollar projects. Examples include development of a $244 million mixed-use development in Morgantown, W.V. (he was co-developer), management of a public-private development process for a $100 million entertainment/retail development in Long Beach, California, and development of a public-private financing plan for the redevelopment of a school site in downtown Washington, D.C.
For the Market Demand Study, Stainback Public/Private Real Estate will subcontract with Economics Research Associates, a national real estate research and analysis firm.
To complete Master Plans for the two sites, Stainback Public/Private Real Estate will subcontract with HKS Architects, an architecture firm in Dallas, Texas. Stainback Public/Private Real Estate will subcontract with a local construction firm to provide a third-party cost estimate of the Master Plan concepts.
DesignVision of Lafayette, Louisiana, which produced computer illustrations for the Downtown Chapel Hill Design Workshops in 2002, would be engaged to generate computer illustrations of the final master plan concepts approved by the Council, should the process reach that stage. These images will enable the Town to present the Master Plan concepts in detail and make them available via a website and CD-ROM to potential respondents to the Town’s Request for Qualifications and Request for Proposals.
GENERAL TERMS
The draft Work Statement and contract with Stainback Public/Private Real Estate would include the following general terms (please see Attachment 1, Draft Summary of Tasks and Fees):
The contract would allow the Town Council to terminate the contract at major decision points of the project should circumstances warrant not proceeding with the project. For example, the Market Demand Study would determine whether market support existed for developing particular uses at the sites; if the results were unsatisfactory to the Town Council, the Council could stop the project at that point without incurring the financial obligations of the remainder of the contract. In addition, either party could terminate the contract with 10 days notice.
In addition, at some point in the process the Town Council could decide to pursue the development of either Lot 2 or Lot 5, rather than both sites as contemplated in this Work Statement. If the Council decided to consider development proposals for just one of the two sites, the Town and SPPRE would negotiate reducing the professional fee and subcontractor fees for unfinished tasks to adjust for the corresponding reduction in the amount of work.
SCHEDULE AND PROCESS
The attached draft schedule (please see Attachment 2) outlines a potential process leading to the negotiation of a development agreement. The process calls for the consultant to work closely with the Council Committee, which would forward recommendations to the Town Council for consideration. Public forums would be held at key stages of the process, as summarized below.
Contract Approval: The schedule contemplates review by the Council Committee on Parking Lot 2/5, followed by Council consideration of the contract.
Part 1A. Market Demand Study: This phase of the contract would begin with an introductory work session with the public, followed by a Council Committee work session on the Market Demand Study draft Scope of Work. When the draft Study is received, the Town Council would conduct a Public Forum on the study, followed by review by the Council Committee and full Town Council. At this decision point, the Council could decide whether to proceed to the next phase, or not.
Part 1B. Development of Master Plans for the Sites: This phase would involve the development of concept plans for the sites. The process would include design review sessions with the Council Committee to develop a Master Plan concept. Once a draft concept was developed, the Council Committee would host a Public Forum. After the Forum, the Council Committee would forward its recommendation to the full Town Council for consideration. At this decision point, the Council could decide whether to proceed with detailed cost estimating.
Part 1C. Cost Estimation/Financial Analysis: In this phase, the emphasis would be on the production of detailed scenarios and financing plans with the Council Committee. It would include a Public Forum as well, held by the Town Council, followed by a Town Council work session. The Council would then decide whether to proceed with the Request for Qualifications/Request for Proposals stage.
Part 2. Developer Solicitation: The phase of soliciting a Request for Qualifications, followed by a Request for Proposals, would include Council Committee review and full Town Council authorization of each document. This phase also would include a public participation component in the developer interview process. The process contemplates interviews held by the Council Committee, with reporting to the full Council at key stages in the process.
Part 3. Development Agreement Negotiations: This phase would involve the Council Committee and full Council in detailed negotiations with a potential developer.
Part 4. Management of the Agreement: Once a contract was signed, the consultant would manage the agreement acting as the Town’s representative over the term of the construction of the project.
ESTIMATED COSTS
The draft Work Statement (please see Attachment 3) would be structured in six sections – Parts 1A, 1B, 1C, 2, 3 and 4. The Town Council would have the option to discontinue the project and terminate the contract with the completion of each section, or upon 10 days notice at any time in the process. Below are the sections and estimated costs, including professional fees, subcontracting fees, and estimated project-related expenses such as overhead and travel expenses. Detailed cost estimates are provided in Attachments 1 and 3.
Completion of a Market Demand Study (Part 1A) $51,250
Development of Master Plans (Part 1B) $51,600
Cost Estimation and Financial Analysis (Part 1C) $74,700
Developer Solicitation (Part 2) $99,350
Development Agreement Negotiations (Part 3) $54,750
SUBTOTAL of Estimated Costs (Parts 1-3) $331,650
Plus Serving as Owner’s Representative (Part 4) $500,000
TOTAL $831,650
Funds are reserved in the fund balance in the General Fund the amount of $105,000 to begin this project. Last fiscal year, the Council reserved a total of $150,000 for economic development consulting services and for a parking study. On June 23, 2003, the Council authorized $45,000 for the parking study, leaving $105,000 for economic development consulting services available.
NEXT STEPS
If authorized to do so by the Council, the Manager would contract with Stainback Public/Private Real Estate, with work likely to start in November.
Upon execution of the contract, Stainback Public/Private Real Estate will subcontract with Economics Research Associates on a Market Demand Study on housing, retail and office uses for the two sites, a study that will be applicable to downtown as a whole as well. The process we have outlined would provide the Council Committee the opportunity to review and authorize the Market Demand Study Scope of Work following an introductory work session in November.
We anticipate that the Council would have the results of the Market Demand Study by January 2004, at which time the Council could decide whether to move forward with the development of Master Plans for the two sites. Though it is difficult to determine given the number of tasks involved, we anticipate the Town Council could be in the position of issuing a Request for Qualifications, followed by a Request for Proposals, in late 2004, followed by executing a development agreement in 2005.
RECOMMENDATION
That the Council discuss tonight and refer these materials to the Council Committee on Parking Lots 2 and 5 for a recommendation by the October 27, 2003 Council meeting.
ATTACHMENTS