SUBJECT: REQUEST FOR PROPOSAL AND REQUEST FOR QUALIFICATIONS (RFQ/RFP) TO DEVELOP OFFICE/RETAIL PROJECT IN CONNECTION WITH DOWNTOWN PARKING STRUCTURE

Recommendation:

That the City Council:

1. Direct staff to issue the RFP/RFQ incorporating City Council recommendations as required.
2. Direct staff to initiate an appraisal to determine fair market value for ground lease.

Background:

With construction of the North Pier Parking Structure underway, it is necessary to proceed with the process for selecting a developer to construct and operate the commercial building proposed to front on Hermosa Avenue. Staff has prepared a Request for Proposal and Qualifications Statement to develop the commercial building in connection with the downtown parking structure. The proposed project requirements include design, construction, leasing, maintenance and operation of the commercial building over a long-term 30-year ground lease with the City.

Analysis:

Staff has prepared a Request for Proposal & Qualifications Statement to be issued to qualified firms interested in developing the project. The RFP/RFQ contains submittal requirements and the following general goals:

• Providing an attractive commercial building to screen the parking structure from the street.
• Encouraging pedestrian oriented development
• Providing development consistent with the City's downtown
• Timely project completion relative to completion of the parking structure

The City Council may want to expand upon these goals as criteria in developing the project. In addition, staff contacted a real estate consultant, Lea Associates, to provide a proposal to determine the fair market ground lease value for the property for use in evaluating the submittals. The cost for the appraisal is $2,800. The RFP/RFQ schedule is as follows:

Issued March 24, 1999

Submittal Due April 14, 1999

Interview April 27, 1999

City Council Contract May 11, 1999

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COMMERCIAL BUILDING

NORTH PIER PARKING STRUCTURE

REQUEST FOR PROPOSAL

&

QUALIFICATIONS STATEMENT

March 24, 1999

REQUEST FOR QUALIFICATIONS AND PROPOSAL FOR DESIGN, CONSTRUCTION, LEASING, OPERATION AND MAINTENANCE OF A COMMERCIAL BUILDING IN THE CITY OF HERMOSA BEACH

1. INVITATION FOR PROPOSALS:

The City of Hermosa Beach invites the submittal of qualifications and proposals of firms providing development and management experience in the construction, leasing, maintenance and operation of a commercial building adjacent a City owned parking structure currently under construction.

1. BACKGROUND:

The City of Hermosa Beach seeks to develop a commercial building adjacent a City owned parking structure currently under construction. The City is requesting a qualifications statement and proposal from qualified firms to design, construct, lease and operate the commercial building under a long term ground lease with the City. The terms of the lease are set out in Section VI. The project site is located along a major commercial street within the City's downtown district. It is surrounding by retail and restaurant uses consistent with the C-2 commercial zone for the area. The selected firm will be responsible for assembly of a team to prepare conceptual design and construction drawings, obtain permits, obtain tenants through marketing or other means and for ongoing maintenance and operation of the building for the duration of the ground lease with the City.

1. PROJECT DESCRIPTION

The project site is located along Hermosa Avenue in the City's downtown, one block from a major pedestrian street known as Pier Plaza. The site is a portion of City owned property located between Thirteenth Street and Fourteenth Court and is located within the Coastal Zone. The site dimensions are 95 feet long by 24 feet in depth. (All site dimensions are approximate and must be confirmed by field measurement.) The site is currently being used for construction staging in connection with construction of the City's North Pier Parking Structure. The anticipated completion date of the parking structure is winter 2000.

The downtown has experience significant public and private reinvestment over the last four years. Over two dozen businesses have opened or expanded, Phase One of a new resort hotel opened in June 1998 with Phase Two expected to commence construction in 1999. The City has created a new pedestrian plaza, commenced with renovation of the Pier and is constructing a 480 car parking structure which will provide parking for this project and other downtown businesses. This project is an integral part of the City's on-going downtown revitalization effort. Some of the goals of the project include:

• Providing an attractive commercial building to screen the parking structure from view from the street.
• Encouraging pedestrian oriented development.
• Providing development consistent with the City's downtown.
• Timely project completion.

1. PROPOSAL CONTENT:

Statement of qualifications must include the following:

A. Overview of the firm; identify the members of the project team that will be performing the requested services, describe the role of each member of the team and provide a table of organization delineating the responsibilities of each member.

B. Provide a resume describing experience related to the services required to develop and manage the project.

C. Name of others project assigned to key project team members similar to the proposed project.

D. Name of Project Manager and point of contact for the City.

E. For all team members list:

• Firm name
• Address, telephone/fax number
• Principals in firm
• Description of services in firm to be performed
• Firms experience in providing the service

F. Firm's Project Approach:

• Narrative description of proposed project including functional uses, relationship between tenants, surrounding land uses and project design.
• Project schedule from design through construction and occupancy
• List projects where the firm has been engaged in similar design, construction, leasing and management.
• List of other projects assigned to key project team members during the design through construction phases of the project.
• Background and experience of the firm with public and private sector
• Background in leasing and managing of similar retail/office space.
• Knowledge of issues related to project.
• Financial statement covering the last five years of the firm.
• Financial capability to carry out the project.
• Status of on-going development projects.
• Site plan indicating access, adjacent uses, ingress, relation R.O.W.
• Floor plan indicating tenant space, mezzanines (if any).
• Rendering of completed project.
• Tabulation of gross floor area.
• Project schedule for construction, tenant leasing and occupancy.

1. PROPOSER'S RESPONSIBILITIES The selected firm will be responsible for all costs and expenses incurred in connection with the project including, but not limited to: costs associated with securing necessary entitlements and environmental documentation, site preparation construction, maintenance, utilities, insurance, taxes, permits, architectural and engineering studies, preparation of concept and construction plans and brokerage fees, if any.
   
   
2. DEVELOPMENT PROCESS & EXECUTION OF GROUND LEASE The City will ground lease the property to the selected firm for a thirty (30) year term. It is the City's intent to receive the fair market lease value for the property. The process for project development will involve selection the most qualified bidder with the best project proposal, execution of ground lease, processing of any entitlements if required, preparation of construction plans, project construction and occupancy.
   The City has processed all local development permit and an EIR in connection with the North Pier Parking Structure which includes the project site. Copies of the development permits and EIR are available at the City's Community Development Department. All zoning and development questions should be directed to the City's Community Development Department.
   
   
3. RFP/RFQ SCHEDULE:
   • RFP Issued March 24, 1999
   • Submittal Due Date April 14, 1999
   • Interview & Selection April 27, 1999
   • Contract Award May 11, 1999

1. PROPOSED GROUND LEASE
2. Provide ground lease rate.
3. Provide proforma describing proposed ground lease terms, lease rates, tenant leases, breakdown of total operating and common area maintenance expenses and extend out over five years from project completion date.
4. Specify legal entity which will execute the ground lease
5. Identify guarantor for ground lease and assets behind the guarantee.
6. Annual minimum guaranteed rental increase and formula for determining same.
7. Provide spread sheet for first 20 years of project containing the following information:
   • Architecture & Engineering costs
   • Development fees
   • Marketing costs
   • Financing costs
   • Total site costs
   • Net leaseable area
   • Total possible fixed rents
   • Total possible percentage rents
   • Gross possible income Less vacancy
   • Effective gross income

Less operating expensesLess ground lease to CityLess management expenses

• Net operating income
• Debt service
• Percentage return on investment

1. Provide sample tenant lease.

1. ADDITIONAL INFORMATION:
2. Limit proposals to no more than twenty (20) pages.
3. The City of Hermosa Beach reserves the right to reject any or all proposals, to choose one and to revise or terminate the process as it deems necessary.

X. SUBMITTAL INSTRUCTIONS:

A. Forward all proposals and inquires to:

Community Development Department

1315 Valley Drive, Hermosa Beach CA 90254

Attention: Director, Community Development Department

B. All submittals must be received by the City at the above address by no later than 4:00 p.m., Tuesday April 14, 1999 .

C. Seven (7) copies of the proposal must be submitted.

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