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HomeMy WebLinkAboutMinutes 2016-08-31 @6:00 MINUTE S et„ x SPECIAL MEET ING - J�-1 0 �9 g�1�. CITY COUNCIL OF THE CITY OF SOUTH SAN FRANCISCO P.O. Box 711 (City Hall, 400 Grand Avenue) South San Francisco, California 94083 Meeting to be held at: MUNICIPAL SERVICES BUILDING COUNCIL CHAMBERS 33 ARROYO DRIVE SOUTH SAN FRANCISCO, CA WEDNESDAY, AUGUST 31, 2016 6:00 p.m. Call to Order. TIME: 6:01 p.m. Roll Call. PRESENT: Councilmembers Garbarino, Matsumoto and Normandy, Vice Mayor Gupta and Mayor Addiego. ABSENT: None. Agenda Review. None. Public Comments—comments are limited to items on the Special Meeting Agenda. None. 1. Oyster Point Development Study Session. (Steve Mattas, Assistant City Attorney and Marian Lee, Assistant City Manager) Assistant City Manager Lee presented the staff report to Council regarding the Oyster Point Development study session. She stated this was the first meeting of many more to come regarding the topic. Staff is mobilizing and moving forward with the Oyster Point Development Project and this was the first meeting since the transfer of the Development Agreement(DA)and the Disposition and Development Agreement (DDA) to the new development team, also present. She advised staff has a two-part presentation by Assistant City Attorney Mattas and herself. Assistant City Attorney Mattas would be presenting the DA and DDA that were signed and in place, and she would follow and specifically talk about the Phase I milestone and also talk about the City team that has been formed to support the project. She introduced Steve Shanks and Julie Lee from the development team that would help with discussion and the questions and answers portion. Assistant City Attorney Mattas presented a PowerPoint presentation regarding the DA and DDA to the Council and went through the key points of the documents. Attorney Mattas advised the Council there were four (4) documents at play; (1) the DDA (Redevelopment Agency (now Successor Agency) and Oyster Point Ventures(now OPD)and City),(2)the DA(City and Oyster Point Ventures(now OPD),(3) the Harbor District Agreement (City and Successor Agency and San Mateo County Harbor District). Vice Mayor Gupta inquired about the dates on the DDA and DA and asked if Council would be reviewing the old 2011 agreements or updated agreements. Assistant City Attorney Mattas stated this evening's discussion was about the existing agreements and clarified the dates on the agreements were simply the dates the agreements were entered into. Assistant City Attorney Mattas continued with the presentation stating the fourth agreement was the Escrow Deposit and Trust Agreement (Successor Agency and Bank of New York). Assistant City Attorney Mattas moved on to the key elements of the DDA. He explained the DDA was the agreement that sets forth the price and terms. It also has extensive provisions regarding infrastructure development and cost sharing for that development.Assistant City Attorney Mattas continued by stating it also includes a right of first refusal. There would be phased development that would take place in a series of phases(IC,ID,IIC,IIID and IVD).The principal part of the discussion tonight would be focused on IC and ID, which are the areas that need to be conveyed. The DDA also talked about improvement costs and responsibility allocations and environmental remediation. Councilman Garbarino quarried whether Assistant City Attorney Mattas referred to relocation of revenues. Assistant City Attorney Mattas confirmed that some would be relocated from the site. Councilman Garbarino asked if the former King Venture properties were on the shore. Assistant City Attorney Mattas identified the properties in yellow on the map as the King Lease properties.There were plans for additional hotels with the entity from King Ventures,but King Ventures sold its interest to Oyster Point Ventures. Under the Joint Powers Agreement (JPA), the leases were actually between the Harbor District and the tenants. Assistant City Attorney Mattas continued with the presentation stating the last key elements to the DDA were the remedies and repurchase of King Leases. The next slide showed the property ownership post conveyance. The blue hash marks would be retained by the City and subject to the JPA with the Harbor District. The property in red would be sold to Greenland.The JPA would continue to apply to the property in the blue hash marks but would no longer apply to the conveyed properties. Assistant City Attorney Mattas continued to the next slide that showed specific plans as envisioned in 2011,recognizing they would be subject to change based on applications forthcoming from Greenland. The yellowish area represented where the office and R&D campus was scheduled to go.The area in blue SPECIAL CITY COUNCIL MEETING AUGUST 31,2016 MINUTES PAGE 2 represented the area that would remain as part of the JPA,which included the future recreation area and hotel site. Assistant City Attorney Mattas moved to the next slide regarding the property exchange and right of first refusal.The City would pass the property through the Successor Agency to Greenland under the structure of the DA. The conveyance would occur when the parties are prepared to initiate Phase I construction. The developer would, at close of escrow, assign the King Leases to the City. The developer would pay $5.6 million in three(3)installments for the property that was being conveyed to them.If the City/Agency contracts to sell or offer long-term ground lease for Parcel 4A before termination of DDA, the City/Agency must offer the same terms to the developer. Assistant City Attorney Mattas continued to the phased development slide and spoke about each phase in detail.Phase ID would include the 508,000 of square feet of office and R&D space construction,clay cap repair at Phase ID, cleanup of sump 1, methane mitigation systems and relocation of refuse. Phase IC would consist of streets and utilities at the hub and to the point,clay cap repair at Phase IC,reconfigured parking at the marina, recreation area, future hotel site, beach and park area and Bay trail and palm promenade. Councilwoman Matsumoto asked whether the properties would be dedicated back to the City once completed. Assistant City Attorney Mattas clarified the beach front park would be dedicated back to the City. Councilwoman Matsumoto queried who would be responsible for the maintenance of the park. Assistant City Attorney Mattas stated the City and the Harbor District would have discussions in the future on who would be responsible. Councilwoman Matsumoto inquired whether the future hotel development site whether it was the dry docks storage, because she had responded to a concerned constituent and advised she was unclear whether there would be any relocating of the facility. Assistant City Attorney Mattas advised it would be redeveloped at some point, but wasn't clear on the timing on when it would be relocated. He estimated relocation to be in 12 to 18 months from now due to the regulatory process that still needed to take place. Assistant City Manager Lee added one of the tasks staff needed to complete with the developer, was to lay out the timing of impact on existing uses. Councilwoman Normandy asked how Council got to a decision as far as a hotel site on the dry dock. Assistant City Attorney Mattas responded that the decision included in the DDA and DA approved from 2011, provided a site for the hotel. He stated a hotel is not locked in as a use and could be changed to something else if the Council elected to do so. City Manager Futrell advised the hotel was locked in, and if Council chose to do anything different,the item would have to go back to Council. SPECIAL CITY COUNCIL MEETING AUGUST 31,2016 MINUTES PAGE 3 Attorney Mattas continued with his presentation regarding Phase IIC stating the improvements were roughly estimated to be about$12 million in costs which includes the repaving parking and landscaping at BCDC. Mayor Addiego asked if the first phase needed to be completed before moving forward. City Manager Futrell responded Staff had engaged a hotel consultant to give staff the market research that was necessary to see if a hotel was advisable. Mayor Addiego queried whether Phase IC needed to be completed before moving forward. Assistant City Attorney Mattas confirmed in order to access the$30 million,the City would need to start with Phase IC. Mayor Addiego asked if staff had an idea on the back end. Assistant City Manager Lee responded the construction period would last approximately two (2) years with the first year focused on the infrastructure project and the second year on the actual building. She continued stating there was nothing to stop the City from issuing the Request for Proposal (RFP). Councilwoman Matsumoto voiced concern with the potential hotel site at the landfill.She referenced the multi-million dollar condos project in San Francisco and didn't want the City to be held liable. Assistant City Attorney Mattas stated in order for the City to even consider a hotel on that site, Council would need to enter into a lease and negotiate the issues of liability as part of the lease.Any development on the site would have to confront the fact that the developer would be piercing into a landfill and would be building on soil that would require certain types of construction methodologies. Councilwoman Matsumoto voiced concern regarding referenced Phase IC street improvements to clay cap over landfill. City Manager Futrell agreed those were valid concerns. At the next study session,two (2)months from today, he would bring more information for Council. Vice Mayor Gupta stated he believed this project to be well timed in terms of the global interest. Assistant City Manager Lee added in terms of process,the team fully recognized the complications of this project on a landfill site. One of the long lead items was coordinating with the two monitoring agencies (Water Regional Board and County Health). Assistant City Attorney Mattas continued with his presentation regarding Phases IID through IVD which would offer up to 1,746,230 gross square feet of office and R&D space. It would take streets and utilities all the way out to the business park,relocate a sewer pump station and landscaping at Bay Conservation and Development Commission (BCDC). He listed the Phase IC responsibilities which entail the developer being responsible for the design and construction.The developer and Agency would share the cost of identified infrastructure improvements(80%developer and 20%Agency)with the saving going SPECIAL CITY COUNCIL MEETING AUGUST 31,2016 MINUTES PAGE 4 towards the Agency Phase IIC costs. The developer would be responsible for up to$9,533,859 for palm promenade and the Agency set aside $18,399,460 in an escrow account. Vice Mayor Gupta asked for confirmation that the 80% developer and 20%Agency ratio is the driving point and not the absolute amount because the actual costs could vary in the future. Assistant City Attorney Mattas stated that was correct. He would talk in more detail about cost savings and cost overruns in the latter point of his presentation. When the DDA was negotiated, there were detailed cost estimates that were prepared for the project which were peer reviewed by independent engineers retained by the City. As part of the negotiation of the DDA,the parties have allocated out the responsibilities of cost overruns and the benefits of cost savings.Along with the developer,staff is in the process of updating the numbers to 2016 and is currently running an analysis of those numbers and would report to Council on its findings. He continued with the Phase ID improvements on conveyed property stating it entails repair clay cap over landfill on conveyed property,remediation and cleanup of the sump 1 area,installation of methane control and monitoring systems,relocation of refuse under buildings,other premiums to build on landfill and development of R&D and/or office building of not less than 508,000 square feet and not more than 600,000 square feet. As far as Phase ID responsibilities,the developer is responsible for all construction and funding, for all Phase ID cost overruns and savings, the developer may use a Community Facilities District (CFD) for clay cap repair and the developer must deliver$1.1 million to the City when the developer commences Phase ID construction. Assistant City Attorney Mattas went into detail on what a CFD could do. He stated CFDs are very common financing mechanisms. They are a special tax a property owner votes to levy on itself which generates a stream of revenue over a period of time and then one can issue bonds against that so one can finance portions of the infrastructure and pay it off over time. Assistant City Attorney Mattas continued with his presentation regarding Phase IIC improvements on non-conveyed City property.The improvements included installation of a new sewer pump station,repair clay cap over landfill on City property, repaving and landscaping tune-up of existing parking areas and landscaping of City property in the jurisdiction of BCDC. Phase IIC responsibilities consist of City/Agency responsibility for all Phase IIC construction,Agency responsibility for all Phase IIC funding, except Agency and developer share cost of new sewer pump station(68%Agency and 32%developer) and the developer being required to contribute a$839,490 portion upon commencement of excavation for the sewer pump station foundation. The Agency is also responsible for all Phase IIC cost overruns and may retain cost savings. Phases IID through IVD improvements on private Business Park properties entails developing streets and utilities,relocating and expanding Sewer Pump Station No. 1,landscaping within 100-foot shoreline band in BCDC area and developing buildings for R&D/offices of up to approximately $2.25 million gross square feet. He continued with the Phases IID through IVD responsibilities which include developer responsible for construction and funding, for cost overruns/savings and may use CFD bond funding. Assistant City Attorney Mattas continued his presentation regarding miscellaneous provisions. The Agency pays additional costs beyond those listed in DDA such as costs required by BCDC,costs related to agreements with the Harbor District and other changes in scope/quality requested by the City. The developer must accept conveyance of conveyed property by May 29,2018.The developer must construct within 270 days of conveyance and the developer must dedicate Beach Park to the City upon completion. The DDA environmental remediation consists of development environmental remediation measures such SPECIAL CITY COUNCIL MEETING AUGUST 31,2016 MINUTES PAGE 5 as cleanup of sumps on the marina property,methane monitoring system,relocation of refuse and repair and/or replacement of the clay cap covering the landfill. The City/Agency and/or Harbor District retain responsibility for methane and leachate control monitoring on all property and the Agency to indemnify the developer for any existing environmental conditions. Vice Mayor Gupta asked if the maintenance and continuous monitoring of water wells at the site was the City's or developer's obligation. Assistant City Attorney Mattas asked if Steve Shanks from SKS could speak on the issue. Steve Shanks advised the methane monitoring and the leachate monitoring would be the responsibility of the City. In the instance where the development would conflict with an existing well,the developer would be responsible for constructing a new well in an alternate location. Assistant City Attorney Mattas continued his presentation regarding the Development Agreement. He stated the DA was a 20-year term (2011 to 2031), the developer must pay specified City development fees, approval fees and fees for public services. The developer must complete Phase IC and ID improvements before Phase II and the developer must complete 30,000 square feet of shell space for amenities before starting Phase IID and the developer and City must comply with CEQA Mitigation and Monitoring Program(MMRP). The Harbor District Agreement is between the City,Agency and Harbor District(2011 to 2026). Upon conveyance of the marina property to the developer,the JPA between the City and the Harbor District must be amended to remove conveyed property. If the City/Agency terminates King Leases,the Agency must provide the Harbor District minimum rent through 2019 or until the debt is paid.Upon property conveyance,the City/Agency must lease 3,600 square feet of office space for the Harbor District.When Phase IC is complete,the City must lease space for$1/year for up to 40,000 square feet of harbor uses until 2026. Mayor Addiego asked if the 40,000 square feet were within the confines of the City. Assistant City Attorney Mattas replied it would be within the confines of the retained City property,not the conveyed property.The Escrow Deposit and Trust Agreement would be between the Agency and the Bank of New York. Funds in the escrow account totaled$29,463,231 (Phase IC$18,399,460 and Phase IIC$11,063,771).Disbursement of funds by written instruction from Agency,executed by both the City Manager and the City Attorney. If the developer would not accept conveyance, the Agency would disburse escrowed funds:purchase of the King Leases and distribute to the taxing entities via San Mateo County. Assistant City Manager Lee advised her part of the presentation was focused on Phase IC and ID. The completed tasks included the entitlements, environmental clearance, DA/DDA and ownership transfer. The current priorities included the team mobilization,the master schedule finalization, the Phase I cost update (hard and soft), the refuse relocation plan and the refined landscape design. She continued by exhibiting the Phase I proposed milestones by Greenland.Now through Summer 2017 would be the pre construction period. During the period the following would be taking place. Coordination with the City and stakeholders, construction documents, landfill and building permits, establishment of the CFD and conveyance of the property/transfer King Leases. Summer 2017 through 2018 would be the infrastructure construction consisting of demo of existing buildings,mass grading and landfill cap repair and streets and SPECIAL CITY COUNCIL MEETING AUGUST 31,2016 MINUTES PAGE 6 utilities/landscaping and hardscaping at parks. Summer 2018 through 2019 staff would venture into building construction of the 500,000 square foot development. Assistant City Manager Lee stated this project would be a unique challenge for the City. Not just a development project but a joint project and a lot of infrastructure work. She would be working closely with Assistant City Attorney Mattas and would focus on working with City departments regarding oversight and coordination. She introduced Dennis Wong from Swinerton and he would be on call to mobilize quickly. Vice Mayor Gupta queried the connections between the City and Greenland. Assistant City Manager Lee advised Steve Shanks could outline who would be sitting on their end. She stated both parties have been meeting on a weekly basis to go through all of the elements. Steve Shanks addressed the Council stating the property owner retained SKS to primarily guide the development process through Phase I and have a full host of design consultants on the team. Councilman Garbarino queried the feasibility of the hotel status. Economic and Community Director Greenwood stated the firm is known as PKF Consulting, highly regarded in the hotel industry and it has reached out to key people in the hotel market to test the market appetite and feasibility for a high end hotel at the four(4) star level. Councilwoman Normandy stated she doesn't want to spend money when not needed. She wanted confirmation that Drake's Marine is due to be demolished. City Manager Futrell confirmed that it is to be demolished. Councilwoman Normandy stated the plans do not show a dry dock but quoted Assistant City Attorney Mattas stating earlier that as much dry dock as possible would be retained. Assistant City Attorney Mattas stated staff would be having conversations with public outreach.The City retained property would still be bound by the leases so anyone with a current lease would have the right to occupy out there. As to the King Leases properties, the City would be getting control over them. City Manager Futrell advised the Yacht Club long term lease would continue to operate unaffected. Vice Mayor Gupta referenced section 3.1 of the DDA reading after the construction takes place, the developer would be responsible for maintenance and payments. He then mentioned BCDC having problems with water collecting on parts of the property and asked if the City and Harbor District were liable. Assistant City Attorney Mattas advised there would be obligations but would rather get back to Council on this later after taking a closer look at the agreements. SPECIAL CITY COUNCIL MEETING AUGUST 31,2016 MINUTES PAGE 7 City Manager Futrell clarified Assistant City Attorney Mattas might be talking about the Regional Water Quality Board which recently contacted the City about some ponding. He agreed on doing some further research and getting back to Council. Councilwoman Normandy asked who would be responsible for the TDM of the developments.She asked if it would be a Joint Partnership in expense and responsibility. Assistant City Manager Lee stated it would be one of the strategies identified in the MMRP,which stated the development team must develop the TDM plan for the City to review and approve. Assistant City Attorney Mattas clarified the City does have a TDM plan that was approved in 2001. Councilwoman Matsumoto asked who the identity of the State coders referred to in the staff report. Assistant City Manager Lee responded she was referring to the list of agencies such as the Regional Water Board, County Health, City of South San Francisco,Water Emergency Transportation Authority (WETA), Harbor District and BCDC. Councilwoman Matsumoto asked if the quality control role would be handled through Swinerton. Assistant City Manager Lee replied staff would like to have appropriate peer review,Swinerton would be helping City staff to make sure it all made sense and they would help City staff meet deliverables. City Manager Futrell added Swinerton would also help provide boots on the ground at the site. Councilwoman Matsumoto strongly recommended that staff pursue the idea of a dry dock as it would be a big revenue generator. Mayor Addiego stated it would be hard to envision a big asphalt surface as a big revenue generator. Councilwoman Matsumoto replied boats leave the City's docks and go elsewhere for that type of service. City Manager Futrell added staff's intention would be to tentatively hold a November 30th study session to get a lot of the issues flushed out. He continued by saying in order to have a successful marina, some landside services would be required. Councilwoman Matsumoto stated under the DA,under Parks and Recreation fee,it reads if implemented by December 31,2012,the developer would be responsible for such Park Facilities Fees. She asked if that ever came to fruition. City Manager Futrell replied not by that date. Councilwoman Matsumoto asked Greenland if it had conversations on what it would like to see done at the site. SPECIAL CITY COUNCIL MEETING AUGUST 31,2016 MINUTES PAGE 8 Steve Shanks stated it had considered that and spoke to Council last year but had not filed any proposals with the City.He continued by saying Greenland was still figuring out what it would like to do out on the site. Mayor Addiego asked if Greenland had a time frame on when it would know. Steve Shanks responded it is about a year out before any approvals are on the table. The focus is on implementing Phase IC and ID. Councilwoman Matsumoto expressed concerns for the impact of traffic and use of compatibility. Councilman Garbarino stated there was an agreement signed with the airport for restrictions but has been removed since. Councilwoman Matsumoto read an article on prevailing wage and wanted clarification as to whether it only applied when City land was involved. Assistant City Attorney Mattas confirmed the project is a prevailing wage project. City Manager Futrell advised the meeting was intended to be a baseline introduction to some complex issues and a chance to discuss staffing and how the City was proposing to discuss these complex issues. There would be subsequent study sessions that would build upon the knowledge,which was discussed today. The next meeting would be on November 30, 2016 when there would be an update on Phase I milestones and the questions that were asked today,but also take a deeper dive into the City's relationship with the Harbor District and what that would look like going forward. He was hopeful to have another study session the first quarter to look at some residential issues. ADJOURNMENT Being no further business, Mayor Addiego adjourned the meeting at 7:46 p.m. Submitted: Approved: Gabriel Ro nguez, Deputy City Clerk Mark A diego, Mayor City of South San Francisco City of South San Francisco SPECIAL CITY COUNCIL MEETING AUGUST 31,2016 MINUTES PAGE 9