AGENDA #8

 

MEMORANDUM

 

TO:                Mayor and Town Council

 

FROM:          W. Calvin Horton, Town Manager

 

SUBJECT:     Economic Development Consultant Contract

 

DATE:           October 27, 2003

 

 

Attached for Town Council consideration is a proposed Contract for Consultant Services with Stainback Public/Private Real Estate LLC of Malvern, Pennsylvania, for providing economic development consultant services for the development of Parking Lots 2 and 5 (please see Attachment 1). The attached resolution would authorize the Manager to execute a contract with Stainback Public/Private Real Estate based on the terms in the Contract.

 

The attached budget ordinance amendment totaling $120,000 would provide sufficient funding to complete Parts 1A and 1B in the Work Statement (Exhibit A) based on the intended work and estimated costs.

 

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, the Council formed a committee to review in greater detail options for proceeding, possibly leading to the issuance of a Request for Proposals to develop the two parking lots. Council members participating in the Committee meetings were Pat Evans, Ed Harrison, Mark Kleinschmidt, Bill Strom, Dorothy Verkerk, and Jim Ward.

 

On February 24, 2003, the Town Council adopted Principles and Priorities recommended by the Council Committee on Lots 2 and 5. In addition, the Council adopted a resolution directing the Town Manager to seek proposals for an economic development consultant to work with the Council and Staff in soliciting and analyzing developer proposals and negotiating and executing a development agreement.

 

On April 28, 2003, the Council authorized proceeding with a Request for Qualifications/Request for Proposals consultant selection program.

 

In August, the Council Committee interviewed four consulting firms that had responded to the Town’s Request for Proposals. On August 18, the Committee voted unanimously to continue discussions with Stainback Public/Private Real Estate LLC of Malvern, Pennsylvania.

 

At a Work Session on October 8, the Council authorized the Town Manager to negotiate a contract with Stainback Public/Private Real Estate after reviewing a draft Work Statement outlining a scope of work, fees and a proposed schedule.

 

DISCUSSION

 

The proposed Work Statement and Contract with Stainback Public/Private Real Estate (SPPRE) would include the following general terms (with preliminary timeframe and estimated cost in parentheses):

 

• Part 1A: Market Demand Study – Complete a market demand study for determining the market support for the project (November 2003 to March 2004, $51,250 plus direct expenses).

 

• Part 1B: Development of Master Plans for Sites – Develop master concept plans illustrating the Council’s preferences for developing the two sites (March to April 2004, $51,600 plus direct expenses).

 

• Part 1C: Cost Estimation/Financial Analysis – Estimate costs and conduct financial analysis for understanding the financial feasibility and cost implications of the Town’s preferred development scenario and identifying the Town’s potential role in a public-private development project (May to June 2004, $74,700 plus direct expenses).

 

• Part 2: Developer Solicitation – Solicit and evaluate the quality of development teams and their proposals to help the Council determine the top-ranked developer for negotiating an agreement (July 2004 to March 2005, $99,350 plus direct expenses).

 

• Part 3: Development Agreement Negotiations – Negotiate the terms of a development agreement for the Council’s consideration (April to July 2005, $50,000 cap on fees plus allocated expenses and direct expenses).

 

• Part 4: Management of Development Agreement – Manage the Development Agreement acting as the Town’s representative during construction of the project (2006 to 2008, 1.25 percent of total development budget).

 

The Work Statement includes opportunities for public input at each key stage of the process.

 

The Contract allows the Town Council to terminate the contract at major decision points of the project should circumstances warrant not proceeding with the project. In addition, either party could terminate the contract with 30 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. The contract also allows for tasks to be added if needed, with fees based on hourly rates.

 

FUNDING CONSIDERATIONS

 

Adoption of the attached budget ordinance would allocate $120,000 from the General Fund Balance for this project, which is sufficient funding to pay estimated fees for Parts 1A, completion of a Market Study, and 1B, development of Master Plans for both sites based on current work estimates.

 

The Council had reserved $105,000 in 2003-2004 for this project. Because the project was not underway by the end of the fiscal year, funds now need to be reappropriated from fund balance in the General Fund. In addition, we recommend budgeting $15,000 from Fund balance for direct expenses to be billed separately (principally for travel to Chapel Hill).

 

Supplemental appropriations would be needed to continue with Part 1C, cost estimation and financial analysis, during this fiscal year. Based on the proposed schedule attached to the Contract as Exhibit B, funding for Part 2, developer solicitation and selection, and Part 3, developer negotiations, would be needed in Fiscal Year 2004-2005. Part 4, serving as owner’s representative during construction, would begin in summer 2005.

 

NEXT STEPS

 

The process outlined in the Contract calls for Stainback Public/Private Real Estate to meet in November with key potential public partners to discuss the project, followed by a meeting with the Council Committee on Lots 2 and 5 to review options on proceeding with the Market Demand Study. Economic Real Estate Associates would conduct the market study as a subcontractor to Stainback, which would be completed by mid to late January. A Council forum on the Market Demand Study is contemplated for late January or early February 2004.

 

RECOMMENDATION

 

That the Council enact the attached budget ordinance and adopt the attached resolution to authorize the Manager to execute a contract with Stainback Public/Private Real Estate based on the terms in the attached Contract for Consultant Services.

 

ATTACHMENT

 

1. Contract for Consultant Services (with Exhibits A, B and C) (p. 6).

 

A RESOLUTION AUTHORIZING the Manager to EXECUTE A contract With Stainback Public/Private Real Estate (2003-10-27/R-15)

 

WHEREAS, the Comprehensive Plan and Downtown Small Area Plan identify Town Parking Lots 2 and 5 as key redevelopment sites; and

 

WHEREAS, the Town Council has established principles and priorities for development of Town Parking Lots 2 and 5; and

 

WHEREAS, the Council on February 24, 2003, authorized the Town Manager to develop a request for proposals for economic development consultant services to help plan and manage the options for proceeding with the development of Town Parking Lots 2 and 5 and help represent the Town’s interests in any development agreement; and

 

WHEREAS, on April 28, 2003, the Council authorized proceeding with a Request for Qualifications/Request for Proposals selection program; and

 

WHEREAS, the Council Committee on Lots 2 and 5 in August 2003, voted unanimously to continue discussions with Stainback Public/Private Real Estate LLC of Malvern, Pennsylvania, on a consulting contract after interviewing representatives from four prospective consulting firms; and

 

WHEREAS, the Council on October 8, authorized the Town Manager to negotiate a contract with Stainback Public/Private Real Estate for Council’s consideration;

 

NOW, THEREFORE, BE IT RESOLVED by the Council of the Town of Chapel Hill that the Council authorizes the Town Manager to execute a contract with Stainback Public/Private Real Estate based substantially on the terms in the attached Contract for Consultant Services included as Attachment 1 to the Manager’s memorandum to Council of October 27, 2003.

 

This the 27^th day of October, 2003.

 

 

 

 

AN ORDINANCE TO AMEND “THE ORDINANCE CONCERNING APPROPRIATIONS AND THE RAISING OF REVENUE FOR THE FISCAL YEAR BEGINNING JULY 1, 2003 (2003-10-27/O-8)

 

BE IT ORDAINED by the Council of the Town of Chapel Hill that the Budget Ordinance entitled “An Ordinance Concerning Appropriations and the Raising of Revenue for the Fiscal Year Beginning July 1, 2003” as duly adopted on June 9, 2003, be and the same is hereby amended as follows:

 

ARTICLE I

 

                                                  Current                                                                       Revised

APPROPRIATIONS                  Budget                Increase           Decrease                  Budget

 

GENERAL FUND

           

            Planning                     1,065,907                120,000                                      1,195,907

 

 

ARTICLE II

 

                                                  Current                                                                       Revised

REVENUES                               Budget                Increase           Decrease                  Budget

 

GENERAL FUND

           

            Fund Balance             2,336,198                120,000                                      2,456,198

 

 

This the 27^th day of October, 2003.