Loading...
HomeMy WebLinkAboutMinutes 2018-07-11 @6:00MINUTES JOINT SPECIAL o � J MEETING c9llFb'R1A CITY COUNCIL SUCCESSOR AGENCY 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, JULY 11, 2018 6:00 p.m. CALL TO ORDER TIME: 6:01 p.m. ROLL CALL PRESENT: Councilmembers Addiego, Garbarino and Gupta, Mayor Pro Tem Matsumoto and Mayor Normandy.* ABSENT: None. *For purposes of these minutes Successor Agency Member titles are assumed in the reference to Councilmembers titles and all actions and discussions are on behalf of the Council and Successor Agency unless otherwise specified. AGENDA REVIEW None. PUBLIC COMMENTS - comments are limited to items on the Joint Special Meeting_ None. ADMINISTRATIVE BUSINESS City Council only: 1. Report regarding a resolution approving an Exclusive Negotiating Rights Agreement with SSF PUC Housing Partners, LLC, an affiliate of AGI Avant Group, Inc. and KASA Partners ( "AGI -KASA" or "developer ") for the development of a former South San Francisco Redevelopment Agency property known as the PUC Site (APN 011 -312 -060), and authorizing the City Manager to execute an Exclusive Negotiating Rights Agreement on behalf of the City. (Mike Lappen, Economic Development Coordinator) 1 a. Resolution No. 111 -2018 approving an Exclusive Negotiating Rights Agreement (ENRA) with SSF PUC Housing Partners, LLC, an affiliate of AGI Avant Group, Inc. and KASA Partners ( "AGI -KASA" or the "Developer ") for the development of a former South San Francisco Redevelopment Agency property known as the PUC Site (APN 011- 312 -060), and authorizing the City Manager to execute an Exclusive Negotiating Rights Agreement on behalf of the City. Community Development Coordinator Lappen presented the staff report recommending that Council adopt a resolution approving an ENRA with SSF PUC Housing Partners, LLC, an affiliate of AGI Avant Group, Inc. and KASA Partners for the development of a former South San Francisco Redevelopment Agency property known as the PUC Site and authorizing the City Manager to execute an ENRA on behalf of the City. Coordinator Lappen explained the ENRA would encompass about six (6) acres of the 21 acre PUC site that was acquired by the Redevelopment Agency in 2007. After the dissolution of the Redevelopment Agency, the State approved a long range property management plan (LRPMP) to develop the site for mixed use housing, which includes high density housing. In October 2017, as part of the developer selection process, staff issued an RFP to six (6) finalist developers, five (5) of whom responded in February with proposals. In March, the Housing Standing Committee of the City Council and Planning Commission interviewed the developers, recommending AGI -KASA and Blake Griggs to the City Council. In April, two (2) public meetings were held to gather community feedback and all five (5) developers were invited before Council to make proposals. In May, the City Council selected AGI - KASA to enter into an ENRA and move forward with the project. This evening, the Council was being presented with the ENRA. Neither the Council nor Successor Agency would be evaluating or approving a project at this point. Project approvals would come much later in the process. The ENRA Agreement between the Developer and the City would allow staff and the Developer to begin the community engagement process and shape the type of project the community would accept and enjoy. Coordinator Lappen then moved to a discussion of the proposed ENRA terms as follows: 1) A one (1)- year term; 2) A deposit of $150,000 (extending the term six (6) months would require additional deposits); and 3) The community outreach plan would be due within 30 days after approval of the ENRA. At the end of the ENRA term, Council would consider the key documents that would drive the project: a Development Agreement; a Purchase and Sale Agreement; and Affordable Housing Agreements. He closed the staff report with the recommendation that Council adopt a resolution approving the ENRA with SSF PUC Housing Partners, LLC to develop the PUC site. Councilman Gupta asked about the agreement's first phase plan to build affordable residential units. SPECIAL JOINT CITY COUNCIL AND SUCCESSOR AGENCY MEETING JULY 11, 2018 MINUTES PAGE 2 Coordinator Lappen responded that the ENRA provides flexibility at this phase to permit financing on the affordable housing side. At the appropriate time later in the process, staff and the Developer will look at the phasing more closely. The ENRA is not the Purchase and Sale Agreement so more flexibility is permissible. Councilman Gupta was sympathetic to this concept, but emphasized the significance of affordable housing and its inclusion in the project. Mayor Pro Tem Matsumoto questioned the year -long as opposed to 90 -day term of the ENRA. She expressed concern about the length of the term with respect to this specific project given its impact on the planned Community Civic Process. Deputy Director of Economic and Community Development Selander explained the rationale behind the longer ENRA, which included a compressed timeline on the significant project documents, including the Development Agreement, the Purchase and Sale Agreement and other project approvals. Instead of a shorter ENRA term followed by a longer period of time in which the Developer would seek entitlements and negotiate the Purchase and Sale Agreements, the first two (2) phases would be condensed into one (1). She further noted that the ENRA included reporting requirements as touchstones along the way. For example, the Developer was required to provide the City with benchmark reports every 60 days. Staff intended to provide these reports to Council. Mayor Pro Tem Matsumoto reiterated her concern that if the ENRA unravels after nine (9) or 11 months, the City will have lost a year while the project restarts back at square one (1). Councilman Addiego called out a term establishing the City Manager's discretion with respect to affordable units stating the significance of the Council's position with respect to decisions impacting project direction. Coordinator Lappen stated the provision was intended to permit flexibility with respect to negotiations. Council would ultimately approve the project. Councilman Addiego shared Mayor Pro Tem Matsumoto's concerns about the duration of the ENRA. He questioned whether the $150,000 initial deposit would be enough to offset the time loss if the ENRA unraveled. Mayor Pro Tem Matsumoto read from the ENRA, section 1 c stating: "If the parties proceed to negotiate diligently in good faith but are unable to reach agreement on the terms of disposition and development, then City will return a prorated portion of the ENRA Deposit and any unspent portion of the Reimbursement Deposit to Developer in accordance with the provisions of section 5c of this Agreement and neither Party will have any further rights against or liability to the other under this Agreement, except as set forth in Section 15 of this Agreement." She believed this provision to be of major concern. Councilman Addiego noted $150,000 is a pittance against the impact to both parties- but especially to the City which would have to start over. Further, the deposit accrues interest pushed against the purchase price, which could significantly raise it. Coordinator Lappen clarified the deposit terms as follows: 1) A developer deposit of $150,000; 2) A SPECIAL JOINT CITY COUNCIL AND SUCCESSOR AGENCY MEETING JULY 11, 2018 MINUTES PAGE 3 separate account for the Developer's deposit of funding to pay for staff time. Councilman Addiego was more concerned with whether the ENRA deposit would offset the lost time that occurs if the City had to switch gears and go to a second developer. Deputy Selander responded that the deposit was similar to the standard deposit required on City projects and consistent with past practices. Councilman Addiego believed this to be a remarkably larger project than was typical for the City. Deputy Selander acknowledged the atypical scope and noted the project similarly impacted the Developer's upfront risk. A large upfront Developer investment would be required based upon the amount of community outreach it would engage over the next six (6) -nine (9) months. It was unusual for a developer to bear these significant up -front costs in advance of a Purchase and Sale Agreement and /or Development Agreement. Due to that risk, staff's efforts to push -back and increase the deposit yielded the present $150,000 term. In response to an inquiry from Councilman Garbarino regarding a one (1) year ENRA term on a prior project, Councilman Addiego noted he believed the Cadence project had a long ENRA term. Mayor Pro Tem Matsumoto stated she would be more comfortable with a six (6) month term. Coordinator Lappen acknowledged validity of the concerns. He confirmed the uniqueness of the project against others noting the City's practice is to have a much tighter ENRA period of 90 days. But he pointed to recent significant projects that varied from standard practice. For example, he believed 200 Linden included an 11 month ENRA term for 31,000 square feet. Regarding the complexity of the current project, because BART was involved, the Developer would have to resolve many planning, engineering and infrastructure issues upfront. There was also a community process that would be very in- depth. In essence, the project would involve a very complex design and development process in which the Developer would likely need to commit in excess of one (1) million dollars upfront. Accordingly, the Developer would need the assurance that it's going to have the time and ability to make those investments worthwhile. On the other hand, it's important for the City to have the benchmarks, milestones and deadlines that have been built into the ENRA in return. With respect to the deposit, the Developer Council selected is a less capitalized, smaller, more community oriented developer. Staff negotiated the deposit to be consistent with the significant investment required during the design phase. Mayor Pro Tern Matsumoto disagreed with the 200 Linden Ave. comparison based on the developers involved. She reiterated that she'd agree with a six (6) month term. Mayor Normandy invited Andrew Kawahara, a partner with AGI -KASA, to address Council. Mr. Kawahara stated his firm originally tried to negotiate an 18 -month term due to the required and extensive community outreach program. After negotiations, the Developer agreed to a reduced 12 -month term. He believed his firm would need every bit of the 12 -month term to get through the process. Mayor Pro Tern Matsumoto queried the extent of expected outreach. She referenced the Developer's sign -in sheets at a past event that had only 100 -120 people listed out of a population of over 65,000. SPECIAL JOINT CITY COUNCIL AND SUCCESSOR AGENCY MEETING JULY 11, 2018 MINUTES PAGE 4 Mr. Kawahara responded that his team is required to meet with multiple stakeholders regarding this project, including neighborhood groups. In addition 150 people had already signed up for information in this very early phase of the project. Councilman Addiego stated that what drew him to select AGI -KASA on the ENRA was its history of community focused projects and engagement. It was part of the Developer's uniqueness and suitability for this project. The Councilman expected community outreach to be expensive given the scale. Mr. Kawahara responded his team estimated upwards of a $1,000,000 community engagement budget. Another Principal from AGI -KASA addressed Council. He reiterated the Developer's commitment to the community engagement process. He reminded Council of other stakeholders related to the project and the need to engage them early on, including BART and the Army Corps of Engineers which would likely assume the Canal. Additionally, several state and local agencies would be a parallel part of the process. Next, he addressed Mayor Pro Tem Matsumoto's question regarding the expected extent of outreach. He noted that pursuant to the ENRA, the team was obligated to draft a program including an explicit plan for community engagement within the first 30 days of the ENRA. Councilman Garbarino commented on the time necessary to meet the community commitments that were part of the developer selection deliberations. Councilman Addiego stated negotiations with the Army Corps of Engineers are time consuming. Councilman Gupta noted the substantial community engagement commitments bythe Developer. While he agreed with Mayor Pro Tem that six (6) months might be a good compromise, he heard the Developer say it wouldn't be able to meet its community engagement obligations in that amount of time. Accordingly, he was willing to extend the courtesy of a year unless convinced otherwise. Mayor Pro Tem Matsumoto requested a clarification from staff regarding the Oak Ave Extension. She noted a term stating "Developer shall fund and construct the Oak Ave Extension as designed by the City in consultation with interested parties including the Developer. The City and the Developer shall mutually agree upon the final cost of construction of the Oak Avenue Extension. Developer will contribute their fair share to the overall cost of the Extension and will be reimbursed for the remaining construction costs." She couldn't understand whether the developer would be paying for the extension or whether it would be a partner. City Manager Futrell responded that staff believes it is more cost effective to have the developer build the road while they're mobilized. The Developer will contribute $3.2 million to the cost and has further agreed to a Community Facilities District. That's the financing mechanism for the Extension. Mayor Pro Tem Matsumoto supports CFDs, but was concerned with impacted properties and queried whether there was a proposal for including properties. City Manager Futrell responded that was a key point under discussion and a study session was planned on the subject at the appropriate time. In response to a follow -up question from Mayor Pro Tem Matsumoto regarding the expected cost of the SPECIAL JOINT CITY COUNCIL AND SUCCESSOR AGENCY MEETING JULY 11, 2018 MINUTES PAGE 5 extension, City Manager Futrell advised the estimate from Public Works /Engineering was $15,000,000. The Mayor Pro Tem queried whether the Developer's community outreach would include management of the Serra Highlands Neighborhood's opposition to the Oak Avenue Extension. The City Manager recognized that that community outreach relative to this new road was necessary. The ENRA requires the developer to present the City with a community outreach plan. Staff could work with the Developer to make sure that that was covered, although it would likely require more staff interaction since it's a public road. Mayor Normandy stated her belief that the 12 -month term was reasonable in light of the project demands. Motion — Councilman Addiego /Second— Councilman Garbarino: to approve Resolution No. l 11 -2018. Approved by the following roll call vote: AYES: Councilmen Addiego, Garbarino and Gupta and Mayor Normandy; NAYS: Mayor Pro Tem Matsumoto; ABSTAIN: None; ABSENT: None. CLOSED SESSION 2. Closed Session: Conference with Real Property Negotiators: (Pursuant to Government Code Section 54956.8) Properties: 216 Miller Ave (APN 012 - 314 -220) City Negotiators: Alex Greenwood and Nell Selander Negotiating Parties: City of South San Francisco, South San Francisco Successor Agency and Sares Regis Under Negotiations: Price and terms Time entered Closed Session: 6:31 p.m. Meeting recessed: 7:04 p.m. Meeting and Closed Session resumed: 8:12 p.m. Open Session resumed: 8:26 p.m. Report out of Closed Session by Mayor Normandy: No reportable action. ADJOURNMENT Being no further business, Mayor Normandy adjourned the meeting at 8:26 p.m. ed: el i, ity Clerk City of Soutj;�,8an Francisco Krista'J--A4.a.i-htte9i, City Clerk City of South San Francisco Approved: Liza o andy, Mayor City o South San Francisco Li o andy, air City of outh San Francisco SPECIAL JOINT CITY COUNCIL AND SUCCESSOR AGENCY MEETING JULY 11, 2018 MINUTES PAGE 6