2008-06-04 ARRA PacketAGENDA
Regular Meeting of the Governing Body of the
Alameda Reuse and Redevelopment Authority
Alameda City Hall
Council Chamber, Room 390 Wednesday, June 4, 2008
2263 Santa Clara Avenue Meeting will begin at 7:00 P.M.
Alameda, CA 94501
1, ROLL CALL
2. CONSENT CALENDAR
Consent Calendar items are considered routine and will be enacted, approved or adopted by one motion unless a
reauest for removal for discussion or ex0anation. is received from the Board or a member of the T)ublic.
2 -A. Approve the minutes of the Regular Meeting of May 7, 2008.
2-B. App
rove the First Amendment to the Lease Agreement for St. George Spirits at Alameda
Point.
2 Pp
-C. Approve a Second Amendment to the Agreement with Marc Associates to Extend the Term
for Seven Months and. Add $45,000 for a Total Budget of $120,000 for Provision of
intergovernmental Relations Services.
3, REGULAR AGENDA ITEMS
3--A. Alameda Point Update
4. ORAL REPORTS
4 A. Oral report from Member Matarrese, Restoration Advisory Board (RAB) representative.
5. ORAL COMMUNICATIONS, NON AGENDA (PUBLIC COMMENT)
(Any address the overning body in regard to any matter over which the
p erson may g
governing ning body has jurisdiction that is not on the agenda.)
6. COMMUNICATIONS FROM THE GOVERNING BODY
7. ADJOURNMENT
ARRA Agenda —May 7, 2008
This meeting will be cabecast live on channel 15.
Page 2
Notes
Sign language interpreters will be available on request. Please contact the ARRA Secretary at 749 -5800 at
least 72 hours before the meeting to request an interpreter.
Accessible seating for persons with disabilities (including those using wheelchairs) is available.
Minutes of the meeting are available in enlarged print.
0 Audio tapes of the meeting are available for r6iew at the ARRA offices upon request.
CITY OF ALAMEDA* CALIFORNIA
SPECIAL JOINT MEETING OF THE CITY COUNCIL,
ALAMEDA REUSE AND REDEVELOPMENT AUTHORITY (ARRA) AND
COMMUNITY IMPRO VEMENT COMMISSION (CIC)
WEDNESDAY JUNE 4 2008 7:01 P.M.
Location pity council Chambers, city Hall, corner of Santa Clara
Avenue and oak Street.
Public Participation.
Anyone wishing to address the council/Board /Commission on agenda
items or business introduced by the Council/Board/Commission may
speak for a maximum of 3 minutes per agenda item when the subject
is before the Council /Board /Conn.ission., Please file a speaker's
slip with the Deputy City clerk if you wish to speak.
1. ROLL CALL city Council, A.R.RA, CIC
2. AG ENDA I'T'EM
2-.A. Authorize the Executive Director /City Manager to Execute a
Transfer of the Exclusive Negotiation. Agreement with SCC
Alameda Point I..,I.,.,C to a New Entity with D.E. Shaw or a Transfer
of an ownership Interest in the Master Developer Entity, SCC
Alameda Point LLC to D.E. Shaw, Pursuant to Specific Terms and
Conditions. (Development Services)
3. ADJOURNMENT City Council, AR.RA CIC
Redevelopment .Authority and
Community Improvement Commission
understanding of using monetary expenditure as a baseline, but was concerned that spending
money doesn't necessarily mean progress. He would like a break -down in more incremental,
more defined product. Mr. Keliher acknowledged Member deHaan's concerns, and offered to
choose core topics that ARRA would like to have reports on, and speak about substantive issues
at the meetings. Chair: Johnson. discussed that the milestones are already in place and it's not
necessary to add extra `interim' milestones. Member deHaan explained that all he's requesting
is for SunCal. to stick with timeline, report on current activities, and provide a progress report on
key issues and accomplishments. Member Gilmore requested a brief description, and to provide
context for what's going on., rather than just. the dry milestones that are shown on the chart.
Member: Matarrese agreed and said it is worthwhile to list whether we're behind, or on, schedule;
and to show progress on something that is significant as a milestone so that the public can
anticipate what's going to happen. It is also useful. to check things off. Member deHaan
expressed that he just doesn't want to see SunCal in the same position they were when. they had
to request an. extension, as Septern.ber is approaching quickly. Member Gilmore requested no
powerpoints, explaining that time spent making the presentation should not take away from. time
spent working on the project. Mr. Kel.i.her agreed.
There was one public speaker, Bill Smith, who spoke on various topics, including public transit.
4. ORAL REPORTS
4 -A.. oral report from Member Matarrese, Restoration Advisory Board (R.A.B)
representative,
Member Matarrese was unable to attend the meeting and did not have a report.
5. ORAL COMMUNICATIONS, NON AGENDA (PUBLIC COMMENT)
There were no speakers.
6. COMMUNICATIONS I ROM THE GOVERNING BODY
Member deHaan provided feedback and expressed his concerns about the May 5' community
meeting regarding 'T'ransit oriented Alternatives. He was concerned that the poor turnout was
due to lacy of publicity about the m.eeti.n.g, that notice of the meeting was not posted on the main
bulletin board at City Hall., and there was no newspaper release, except for a 118 page
advertisement. He discussed that last year's meeting on. the same topic, held at Mastick Senior
Cente 1, had strong community input, lots of interest, lots of dialogue and the community was
engaged. It was well- publicized and got the community talking about the issue. Debbie Potter
explained that the meeting was noticed on the Alameda Point website, and an. email. blast to all.
previous interested -party lists was sent, as well as an email blast to SunCal.'s list. There was also
a 1 Ia page advertisement which ran three times in. the newspaper. She acknowledged that the
notice was not posted on the bulletin board; but that the methods of publicity for this meeting
were actually the same, if not more, than what has been. done in the past, with the addition of
SunCal's email list, and has been an. effective way of notifying people who have interest.
Member deHaan expressed the importance of public relations and requested he receive the
handouts prior to the meetings.
7, ADJOURNMENT
Meeting was adjourned at 7:55 p.m. by Chair Johnson.
Respectfully submi tted,
j
x
.Irma Glidden
ARR. A Secretary
Alameda Reuse and Redevelopment Authority
Interoffice Memorandum 2_B
June 4, 2008 RUNOW
TO: Honorable Chair and Members of the
Alameda Reuse and Redevelopment Authority
FROM: Debra Kurita, Executive Director
SUBJ: Approve the First Amendment to the Lease Agreement for St. George Spirits at
Alameda Point
BACKGROUND
The Alameda Reuse and Redevelopment Authority (ARRA) governing body approves all Alameda
Point subleases with a lease term greater: than one year. The proposed first amendment to the St.
George Spirits lease is for five years, plus five one -year options to extend.
St. George Spirits entered into a ten -year Lease agreement for Hangar 21 with the ARRA in February
2005. Hangar 21. is 65,000 sq. ft. At that time the developer, Alameda Point Community Partners,
structured the lease with 10% increases every year for the first five years, then. a reduction from.
$0.651 sq. ft to $0.521 sq. ft beginning in the sixth year through the tenth year. Additionally, St.
George Spirits was given the right to terminate the Lease, at their determination, between months 60
and 66 of the term. Consideration for the termination is the equivalent of six months rent.
D CT S S TON
In March 2008, St. George Spirits, through. Cushman Wakefield of California, submitted a
proposal. to extend their lease for an additional ten years, plus two, five -year options to extend; and to
reduce the monthly rent from $35,750 per month to $26,000 per month, or .40 /sq. ft. This rate brings
the monthly rent more in line with. current market rate leases for the west hangers, with the average at
$0.381 sq. ft.
St. George Spirits is very concerned about the uncertainty of the development on the wildlife refuge,
specifically the potential construction of a Veteran's Administration facility (Attachment 1). They do
not want new development to obstruct the views of San Francisco and the Bay from their tasting
room. Therefore, the proposed amendment includes an option. to terminate the lease at the end of the
fifth. year of the new term.
The proposed amendment will reduce the rent to $27,300 per month beginning May 1, 2008, with
3 annual increases. There will be an initial. five -year term, with five one -year options to renew. St
George will. need to give six months termination notice from the end of the current term, which
affords them an option to move should their views become impaired. If St. George Spirits chooses to
terminate the lease during the option period, they will be required to pay the rent owed through the
end of the current Term.
Honorable Chair and Members of the June 4, 2008
Alameda Reuse and Redevelopment Authority Pg. 2 of 2
BUDGET CONSIDER 1 FINANCIAL IMPACT
This amendment reduces the annual rent from $507,000 to $327,600 in the first year, with 3%
increases annually through the remainder: of the term, and retains a high profile, sales tax generating
tenant in Alameda.
RECOMMENDATION
Approve the proposed first amendment to the lease agreement for St. George Spirits at Alameda
Point.
Resp tfully submitted,
l
Leslie Little
Develops nent Services Director
By: Nanette Banks
Finance Administration Manager
Attachment 1. VA Preliminary Site Concept
�v
rn
rn
_J6
L3
rn
CD
CD
tn
Alameda Reuse and Redevelopment Authority
Interoffice Memorandum 2_C
June 4, 2008
TO: Honorable Chair and Members of the
Alameda Reuse and Redevelopment Authority
FROM: Debra K.urita, Executive Director
SUBJ: Approve a Second Amendment to the Agreement with Marc Associates to Extend
the Term. for Seven Months and Add $45,000, for a Total Budget of $120,000, for
the Provision of Intergovernmental Relations Services
BACKGROUND
The Alameda Reuse and Redevelopment Authority (ARRA) initially retained Marc Associates in
January 2006 to provide intergovernmental relations services for Alameda Point. As part of that
work. effort, Marc Associates assisted the ARRA in negotiations with the Navy on the draft
conveyance terns sheet. Following the withdrawal of Alameda Point Community Partners as
master developer, Marc Associates was not re- engaged to provide services. However, with. the
selection. of SunCal as the new master developer, Marc Associates was retained in September
2007. The current agreement must now be amended to extend the term. for seven months to
December 31, 2008, and $45,000 must be added to the budget for a total budget of $120,000.
The proposed second amendment is attached.
DISCUSSION
The ARRA has been working with the Navy for the past 15 years on the conveyance of Alameda
Point. As these conveyance efforts have continued, it has become important to brief and update
Alameda's Congressional. delegation and the Governor's office on the progress and status of the
conveyance. In addition., ARRA staff works closely with other Bay Area Local Reuse
Authorities (LRAs) to coordinate base closure activities.
The ARRA. can enhance the effectiveness of its federal efforts with. intergovernmental relations
assistance from a firm based in Washington D.C. These services are essential for drafting,
sponsoring, and enacting special legislation.. The ARRA is currently sponsoring special Federal
legislation to provide for a range of conveyance options for. transferring Alameda Point. The
legislation is contained in H.R. 5658, the "Duncan Hunter National Defense Authorization Act
for Fiscal Year 2009," which passed out of the House of Representatives on May 22. If the bill. is
approved by the Senate and signed by the President, it will become effective on October I 2008.
Marc Associates has been instrumental in this special. legislative effort. over the next seven
months, Marc Associates will continue to assist the ARRA with its education and outreach to the
Members of Congress, the Governor's office, and other Bay Area LR.A s regarding conveyance of
Alameda Point.
Honorable Chair and Members of the June 4, 2008
Alameda Reuse and Redevelopment Authority Page Z of 2
BUDGET CONSIDERATION 1 FINANCIAL IMPACT
The cost of providing intergovernmental relations services, $120,000, is an ARRA Third Party
expense that is paid by Sun.Cal.. Therefore, there is no impact on the City's General Fund.
R ECOMMENDATION
Approve a second amendment to the agreement with Marc Associates to extend the term for
seven. months and add $45,000, for a total budget of $1.20,000, for the provision. of
intergovernmental relations services.
ectfully submit ed
Leslie Little
Development Services Director
B eb 1e otter'
Base Reuse and Community Development
Manager
LL :DP: sb
Attachment:
I. Second Amendment to Consultant Agreement
SECOND AMENDMENT TO AGREEMENT
This Amendment of the Agreement, entered into this 4th day of Julie 2008, b and
between ALA.MEDA REUSE AND REDEVELOPMENT AUTHORITY, a Joint: Powers
Authority (hereinafter r eferred to as "ARRA"), and MARC Associates, Inc., a corporation,
whose address is 1101 17"' Street, N w. Suite 1102, Washington, DC 20036 4707
(hereinafter referred to as "Consultant is made with reference to the following:
RECITALS:
A. 0n August 1, 2007 an agreement was entered into by and between ARRA and
Consultant (hereinafter "Agreement"
B. On April 30, 2008, an ann.endment to agreement was entered into by acid between
ARRA and Consultant.
C. ARRA and Consultant desire to iiiodi fy the Agreement on the terns and
cond itions set forth herei 1i..
NOW, TI:IEREFO E, it is mutually agreed by and between and undersigned parties as
follows:
1. Paragraph I ("Teriii") of the .Agreenneiit is iiiodilled to read as follows:
"The term. o f th i s A.grecrnent shall commencc on the 1 st clay o S eptenibcr 2007 and shall
terminate on the 31st clay of Dccembcr 2008, Ll11less WI 1* nated ear IIel as set forth 11erei11."
2. Paragraph 3 "Compens;cation to Consultant. cif the Agreenient is nnodi ficd to read as
follows:
Consultant shall be compensated for services perfarnned pursuant to this Agreement ill
the �imou nt not to exceed $120,000,00 (Exhibit "A-2"
3. Except as expressly modified herein, all other terns and covenants set forth in the
Aoreemcnt shall remain the sain.e and shall be in frill force and effect.
IN' WITNESS WHEREOF, the parties hereto have caused th is modif icatioii of
Agrecment to be executed oil the clay and year first above written.
M.AI�C Associates, Inc. ALAMED.A REUSE
REDEVELOPMENT AUTHORfTY
Bye EVC. C�� ��c�
Titic:
SeNi`c��. V��cc arc- s►ctev�-
11111U. A. sociales, hire.
June 2008
Debra I .urita
.Executive Director
Page I q f 2
J';
RE fl� �ND" TOR. APPROVAL:
A. Littl
Development Services Dlrc�Ctor
Dcbble Pottu, M.anagcr.
Base Reuse Community Developrnunt
APPROVED AS TO FORM.:
Teresa Highsmi
C ity A.ttorney
A4111ff: Associates. hfcr
Exhibit A-2
SCOPE OF WORK
FOR ALAMEDA POINT
MARC Associates, Inc., founded in 1985, is a Washin -based g overnment relations firm that
specializes in public sector strate services. The firm creates and mana federal strate
for clients before the Con the Executive Branch and re a providin the
necessar strate political, and technical support needed to win.
The 14-member firm was founded 20 y ears a b Dan Maldonado, who brin over 30 y ears
of Federal experience. He served 11 y ears as Chief of Staff and appropriations staff member for
former California Con Edward Ro He also served in the Executive Branch as a
Senior Le and Inter Director, and in the President's Re Council as
an Associate Director.
The firm prides itself on its stron work ethic and is known for its inte and results. The firm
delivers access to top decision-makers in Con and the Administration, and has an
impressive record of assistin clients in achievin project and pro objectives, pursuin
g overnmental fundin opportunities, and buildin political relationships and strate in support
of a client's objectives.
MARC's lon bipartisan ties enhance our abilit to work effectivel for our clients-
re of the part in power. Our firm levera its stron relationships with the California
Senators; the California Con dele House and Senate leaders Chairs and
Rankin Members of ke Committees and Subcommittees; the White House and ke
Departmental and re officials.
STRATEGIC OBJECTIVE
Provide inter relations services in support of conve of Alameda Point to
ARRA.
PROPOSED APPROACH
In order to achieve this objective, Marc Associates will provide the followin strate
representational and support services:
1. Work closel with ARRA in developin Federal le and regulator positions and
Federal strate
Maintain constant contact with ARRA on strate implementation, makin
ad to positions and strate as Federal political and
le factors evolve.
2. Track Federal le and re developments affectin ARRA and Alameda
Point.
3. Assist with development of ke materials and documents.
Assist with the preparation of fact sheets to support le and
re positions, as well as letters to House and Senate Members and
Administration officials.
Assist- in the draftin of le proposals, amendments, and Committee
report language.
4. Provide ener representation.
Activel work with Con and Federal department/a officials to achieve
Federal objectives.
V Activel involve ARRA in advocac efforts.
Keep ARRA apprised of the latest developments on Federal activities throu
constant updates.
5. Maintain stron liaison with Alameda's Con dele and California Senators.
Work with Alameda's House and Senate dele to achieve success on
Federal ob
N Work with ARRA to respond to in and concerns from Alameda's House
and Senate dele
6. Or trips and meetin
Make all arran necessar for trips to Washin DC, includin
Arran meetin with Alameda's Con dele California
Senators, ke House and Senate Members, and ke Department/a
officials.
Assist with preparin materials for trips and meetin includin briefin
materials and development of j ustification packets.
COORDINATION
After the development of the initial strate for Alameda Point, assist in the implementation of
those strate the timin and se of action steps and ad to strate on an
on basis. This work will re on communication, alon with periodic meetin with
ARRA.
ASSIGNMENT OF WORK
MARC will mana the da Federal representation in the followin manner: MARC will
provide two senior mana Eve M, O'Toole, Senior Vice President, will serve as the primar
mana and ensure that all aspects of the work are accomplished in a timel complete and
effective manner. Dan Maldonado, the firm's CEO, will serve as the co-mana in
implementin the Federal a In developin strate MARC will utilize its Senior
Strate Jud Lemons, former Chief of Staff to House Democratic Leader Nanc Pelosi,
BUDGET
A fixed monthl fee of $7,500 over a sixteen-month period. Reimbursement for an travel and
related expenses must be approved in advance b ARRA.
Alameda Reuse and Redevelopment Authority
Interoffice Memorandum
June 4, 2008
TO: Honorable Chair and Members of the
Alameda Reuse and Redevelopment Authority
FROM: Debra R.urita, Executive Director
3 -A
NNEW011
SI BJ: Alameda Point Update
j
B ACR.0 ROUND
As part of regular monthly Alameda Reuse and Redevelopment Authority (ARRA) meetings,
staff provides an update on Alameda Point activities, with a focLIs on SunCal's activities as
master developer. Sun.Cal provided a quarterly update of the project master schedule at the
A.RRA' s May meeting. SunCal. continues to work on updating its infrastructure cost
asSUmptions. These new assumptions will help inform the revised project pro forma, which is
Under development. In addition, SunCal has been working on retaining a financial partner to
assist with its obligations under the Exclusive Negotiation Agreement (ENA). SunCal.'s request
for a transfer of the ENA to a new entity or transfer of an ownership interest in SCC Alameda
Point LLC will be considered on June 4, 2008, at a special meeting of the ARRA, Community
Improvement Commission (CIC), and City Council.
Staff has been working on special. legislation over the last three months to provide several
options for conveying Alameda Point from the Navy to the ARRA, and ultimately to a master
developer. The legislation is now part of H.R. 5658, the Duncan Hunter National. Defense
Authorization. Act for Fiscal Year 2009. Section 2851 of the Act, dealing with. the Alameda
Point land conveyance, is attached.
DISCUSSION
In January 2008, the Navy transmitted a letter to the ARRA objecting to the ARRA' s extension
Of SunCal's Milestone Schedule and reiterating its unwillingness to renegotiate its price terms in
the existing draft conveyance Term Sheet. In response, the ARRA sent the Navy a letter
suggesting that the ARRA and Navy cooperate in the initiation of federal legislation to provide
for a new means of conveying the former NAS Alameda Property to the ARRA. The Navy
accepted the ARRA 's suggestion.
Subsequently, in Late April 2008, Alameda proposed special. Federal legislation in consultation.
with the Navy that would authorize an expedited property transfer of the former Naval. Air
Station (NAS) Alameda, now Alameda Point, identified for closure pursuant to Public Law 101-
510 (1990). Since 1993, the ARR.A. and the Navy have worked towards the reuse and
redevelopment of Alameda Point. To date, transfer and redevelopment of .Alameda Point has
Honorable Chair and Members of the
Alameda Reuse and Redevelopment Authority
June 4, 2008
Page 2 of 4
Primarily been. impeded by shifts in the local real estate market, the existence of public trust
requirements governed by the State of California, and the extent of environmental remediation. to
be conducted. Given the complexities of conveyance, it was determined that special legislation
to create a statutory framework for transferring Alameda Point from. the Navy to the ARRA could
simplify the process.
The three conveyance options proposed under: the legislation are as follows:
Conveyance Based on the Term Sheet The first option i.s consistent with the ARRA's ENA
with SunCal. As contemplated in the ENA, the first option provides that SunCal can accept
the Term. Sheet as negotiated, or it can work with the ARRA and the Navy to re-- negotiate
the Term Sheet. The legislation requires that this option be exercised, i.e., that there be an
executed Term. Sheet, by July 2009. This date coincides with the ENA's expiration. date, and
it addresses the ARR.A's, Navy's, and SunCal's concern that negotiations could continue on
well. beyond the ENA term..
The legislation provides an additional incentive for SunCal, via the ARRA, to conclude a
Terra Sheet with. the Navy. Currently, approximately 100 acres of Alameda Point property,
referred to as Phase 3, are not included in the master developer footprint. Linder the current
Term Sheet, the Navy is retaining Phase 3 to auction, as it is the only portion of the property
that is not subject to the Public Trust. Under: the legislation, the Navy has agreed to
negotiate with SunCal. for a land price for Phase 3 and forgo its decision to auction the
property, if SunCal is interested in acquiring Phase 3. SunCal has expressed interest in
owning and developing Phase 3 in the past.
Conveyance Based on a Land Price Formula This option is also consistent with the ENA.
Option 2 provides for a pre determined land price formula. This approach removes any
uncertainty in establishing a land price and eliminates the need for lengthy negotiations with
the Navy. Under this option, SunCal would make a $10 million down payment to the Navy
and pay the Navy 1 .2% of its gross residential. and commercial building proceeds from sales
to third party buyers. Buildings and lands held in the Public Trust or used for construction
of affordable housing would be exempt from the required 12% of proceeds payment to the
Navy. SunCal could select this option if it determined that it could not successfully re--
negotiate the Tern Sheet as provided for in option 1, or if option 2 is a more viable
approach for establishing the land purchase price. SunCal would have an opportunity to
develop Phase 3 Linder this option.
Conveyance Based on Public Bids option.. 3 is the option the ARRA, working with the
City, would pursue in the event SunCal does not go forward with the project. option 3
provides that the City would, with the Navy's cooperation, conduct a public bid process to
sell Alameda Point. The Navy would receive 80% of gross sales proceeds. If the City
conducts the bid process, the conveyance would be consistent with the Public Trust
requirements because the City, as Trustee, will execute the Public Trust Land Exchange
Agreement prior to the public bid process or following selection of the buyer(s). with the
City conducting the auction, prospective buyers have certainty that the City, as Trustee, can
Honorable Chair and Members of the
Alameda Reuse and Redevelopment Authority
June 4, 2008
Page 3 of 4
complete the land exchange and provide the necessary land for the mixed -use project. The
Navy cannot provide this certainty as it is not the Trustee. Potential bidders would
determine their land payment offers based on the potential Alameda Point land uses
contained in. the City's General Plan. Unlike the CIC's upfront commitment to pledge tax
increment under the existing Term. Sheet, the CIC would negotiate its financial contribution
to the project after the buyer is selected. Public amenities would also be negotiated at that
time. The selected bidder would assume all entitlement risk.
In addition to specifying conveyance options, the legislation addresses Federal- to- Federal.
property transfers that are currently under negotiation between the Navy, the United States Fish
and wildlife Service (USF&W), and the Department of veterans Affairs (VA). The Navy's
obl.i.gation. to provide environmental remediation to specific standards is also addressed.
The attached legislation, which has been adopted by the Mouse of Representatives, was modified
from the draft legislation provided by ARRA staff to the House Armed Services Committee.
There are now several provisions, including the ARRA's obligation to make reasonable efforts
over a three -year period to accommodate the continued use of the property by Federal agencies,
specifically the USF &w and VA, that the ARRA and Navy will seep to modify through the
legislative conference committee process. It is anticipated that that process will get underway in
raid -June and will conclude later in the summer. If the House and Senate adopt the legislation, it
will take effect on October 1, 2008.
In anticipation of legislation being passed that will provide a statutory deadline for concluding
negotiations on a term. sheet, staff is exploring a possible amendment to the ENA that would
establish. execution of a conveyance term sheet with the Navy as a mandatory milestone.
Currently, the ENA has a number of non-mandatory milestones that generally are work products
that involve third party agencies such as the Navy, the State Office of Historic Preservation,
USF&w, and environmental. regulators, which SunCal cannot directly control.. If the Legislation
is approved, a set deadline for concluding a conveyance term sheet is established, and it may be
appropriate for that work task to become a mandatory milestone.
BUDGET CONSIDERATION FINANCIAL IMPACT
Work on special Federal legislation addressing conveyance options for Alameda Point is being
carried out as part of Alameda's obligations pursuant to the ENA with SunCal, and SunCal
reimburses costs associated with this effort. Therefore, there is no impact on the City's General
Fund.
RECOMMENDATION
This report is for information only. No action is required.
Honorable Chair and Members of the
Alameda Reuse and Redevelopment Authority
June 4, 2008
Page 4of4
R p idly submitted
/7
Leslie Little
Development Services Director
By: bie o ter
Base Reuse and Community Development
Manager
Attachment: 1. Alameda Point Legislation
ATTACHMENT
SEC. 2851. LAND CONVEYANCE, FORMER NAVAL AIR
STATION, ALAMEDA, CALIFORNIA.
(a} Conveyance Required The Secretary of the Navy shall convey to
the redevelopment authority for the former Naval Air Station Alameda,
California (in this section referred to as the 'redevelopment
authority'), all right, title and interest of the United States in and to
the real and personal property comprising Naval Air Station Alameda,,
except those parcels identified for public benefit conveyance and
certain surplus lands at the Naval Air Station Alameda described in the
Federal Register on November 5, 2007. In this section, the real and
aersonal properly to be conveyed under this section is referred to as
the NAS Property'.
(b) Multiple Conveyances- The conveyance of the NAS Property may
be conducted through multiple parcel transfers.
(c) Consideration Options- As consideration for the conveyance of the
NAS Property under subsection (a), the Secretary of the Navy and the
redevelopment authority shall agree upon one of the foliowinq options:�
(1) Not later than" nine months after the date of the enactment
of this Act, the redevelopment authority shall accept the
consideration terms described in the document negotiated
'between the redevelopment authority and the Secretary of the
Navy known as the draft 'Summary of Acquisition Terms and
Conditions and dated September 18, 2006, as such language
,,may be amended, with value to be determined for the portion of
'the NAS Property known as Parcel 3, and subsequently make
!payments to the Secretary in accordance with such document.
(Z)(A) The redevelopment authority shall ensure that the entity
,that acquires title to the NAS Property for development (in this
paragraph referred to as the `development entity`) submits to
the Secretary of the Navy a down payment of $10,000,000
[dollars at the time the initial portion of the NAS Property is
conveyed to the development entity.
(e) In addition, the redevelopment entity shall submit to the
(Secretary 12 percent of all gross residential and commercial
building sales to the first bona -fide, arms length third -party
jbuyer, whether as new construction or the sale of rehabilitated
,existing structures. In the event that the development entity
transfers all or any portion of the NAS Property to a third party,
including any subsidiaries, before the completion of new or
rehabilitated construction, the development entity shall satisfy
the payment requirement as prescribed in this paragraph at such
Mime as the NAS Property is conveyed to a bona -fide, arms-
len third-part bu This obli shall not appl to the
sale of an buildin on land held in the public trust b the State
of California or sales of land or buildin for the purposes of
constructin or otherwise providin affordable housin as
determined b the Secretar
(3)(A) The redevelopment authorit shall submit 80 percent of
the g ross proceeds received b the redevelopment authorit
from the redevelopment authorit competitive solicitation of
an portion of the NAS Propert not encumbered b the public
trust.
(B To compl with this para the redevelopment authorit
shall--
i prepare,, for review and approval b the Secretar of
the Nav commerciall reasonable solicitation materials
consistin of a re for q ualifications and a re for
proposals for the conve or lease of the NAS Propert
as appropriate,, in accordance with established contract
principles, and such approval b the Secretar shall not be
unreasonabl withheld and
(ii) pa to the Secretar the re share of monies
received b the redevelopment authorit b reason of an
contract or a executed as a result of the
solicitation
I., I.....".,
(d) Existin Uses- Durin the three- period be on the date
on which the first conve under this section is made,, the
redevelopment authorit shall make reasonable efforts to
accommodate the continued use b the United States of those portions
of the NAS Propert covered b a re for Federal Land Transfer so
lon as the accommodation of such use is at no cost or expense to the
redevelopment authorit Such accommodations shall provide
ade protection for the endan California Least Tern in
accordance with the re of the existin Biolo Opinion for
Naval Air Station Alameda dated March 22, 1999, and an future
amendments to the Biolo Opinion.
(e) Remediation- The Secretar of the Nav shall, to the extent
practicable, remediate the NAS Propert to the standard included b
the Secretar and the redevelopment authorit in the document
referred to in subsection (c)(1).
(f Savin Provision- Nothin in this section shall be construed to
affect or limit the application of, or an obli to compl with, an
environmental la includin the Comprehensive Environmental
Response,, Compensation, and Liabilit Act of 1980 (42 U.S.C. 9601 of
sea.) and the Solid Waste Disposal Act (42 U.S.C. 6901 et sea.).
_..::..:...,,.,.....a..._:. 4-.:. :I :,:,.,W,,
(g) Description of Property- The exact acreage and legal description of I
I
the real property to be conveyed under this section shall be
3
determined by a survey satisfactory to the Department.
(h) Master Lease- The Lease in Furtherance of Conveyance, dated .dune
.2 000, as amended, between the secretary of the Navy and the
redevelopment authority shall remain in full force and effect until
conveyance of the IVAS Property in accordance with this section, and a
lease amendment recognizing this section shall be offered by the
secretary.
(i) Treatment of Amounts Received- Amounts received by the United
states under this section shall be credited to the fund or account
,intended to receive proceeds from the disposal of the NAs Property
i
pursuant to the Defense Base Closure and Realignment Act of 1 990
of title XXIX of Public Law 101 -510; 10 U.S.C. 2687 note).
(j) Additional Terns and Conditions- The secretary of the !Navy may
require such additional terms and conditions in connection with the
=conveyance under subsections (a) as the secretary considers
riate to
PP rotect the interests P
erests of
W- _.i N........ w.._w the united staf. te s -.._.-_._.m-
`,:k Via'►,
CITY OF ALAMEDA CALIFORNIA
SPECIAL, JO INT MEETING OF THE C ITY COUNCIL,
ALAMEDA REUSE AND REDEVELOPMENT AUTHORITY (ARR..A.) AND
COMMUNITY IMPROVEMENT COMMISSI (C I C)
WEDNESDAY JUNE 4 2 008 7:01 P.M.
Location C3'-ty C cal• Chambers, City Hall, corner of Santa Clara
Avenue and Oak Street.
i
Public Participation
Anyone wishing to address the Counc on agenda
items or business introduced by the Council/Board/Commission may
speak for a maximum of 3 minutes per agenda item when the subject
is before the Council /Board /Commission. Please file a speaker's
slip with the Deputy Ci Clerk if you wish to speak.
1. ROLL CALL C council ARRA C I C
2. AGENDA ITEM
2 A. Authorize the City Manager/ Executive Director to Execute a
Transfer of the Exclusive Negotiation Agreement with SCC
Alameda Point LLC to a New Entity with D.E. Shaw or a Transfer
of an ownership Interest in the Master Developer Entity, Scc
Alameda P oint LLC to D.E. Shaw, Pursuant to Specific Terms and
Conditions. (Development Services)
3. ADJOURNMENT city Counci ARRA, C IC
Redevelopment Authority and
community Improvement Commission
CITY OF ALAMEDA
Memorandum
To: Honorable Mayor and
Members of the city council
Honorable Chair and
Members of the Alameda Reuse and Redevelopment Authority
Honorable chair and
Members of the Community Improvement commission
From: Debra Kurita
City ManagerlExecutive Director
Date: June 4, 2008
Re: Authorize the city ManagerlExecutive Director to Execute a Transfer of
the Exclusive Negotiation Agreement with SCC Alameda Point LLC to a
New Entity with D.E. Shaw or Transfer of an ownership Interest in the
SCC Alameda Point LLC to D.E. Shaw Pursuant to Specific Terms and
Conditions
BACKGROUND
On July 18, 2007, the Alameda Reuse and Redevelopment Authority (ARRA),
Community Improvement commission (CIC), and city (together "Alameda approved
an Exclusive Negotiation Agreement (ENA) with scc Alameda Point LLC (Developer),
which is an entity of SunCal companies (SunCal), for the redevelopment of Alameda
Point. The 24 -month ENA established key performance milestones; provided for
reimbursement of ARRA staff and third party costs; identified activities to be completed
involving third party entities; specified key personnel assigned to the project; and
described the process for transferring the ENA.
The ENA was amended in March 2008 to provide more time to complete two tasks:
preparation of the Development concept and related documents, and preparation of the
draft master plan. In addition, Suncal was required to deposit $350,000 a quarter, and
spend $117,000 a month, for consultant costs to ensure progress on developing the
required documents.
suncal has now requested authorization to secure a financial partner to complete its
obligations under the ENA. The addition of a financial partner is considered a Transfer
under the ENA and requires approval by the boards of the ARRA and the CIC, and by
the city Council.
Agenda Item #2 -A CC/ARRA/CIC
8 -4 -08
Honorable Chair and June 4, 2008
Members of the Alameda Reuse and Redevelopment Authorit Pa 2 of 5
Honorable Ma and
Members of the Cit Council
Honorable Chair and
Members of the Communit Improvement Commission
I
DISCUSSION
Alameda selected SunCal as the Alameda Point master developer based on its
expertise in developin complex mixed-use projects, the experience of its ke
personnel, and its financial wherewithal to spend the necessar funds to entitle a lar
project over a 24-month timeframe. Each of these factors is critical to assurin the
successful completion of propert conve from the Nav environmental
remediation of the site, and receipt of plannin approvals to build a mixed-use pro
Althou SunCal indicated from the be that it would secure a financial partner to
assist in redevelopin Alameda Point, the compan initiall said that it would self-fund
the ENA-period expenditures. However, with the chan real estate market, SunCal
is now re authorization to either transfer the ENA to a new developer entit or
to transfer an Ownership Interest (as defined in the ENA) in the master developer entit
SCC Alameda Point LLC, to a financial partner. Given the importance of the master
developer's role in redevelopin Alameda Point, the decision to modif the master
developer entit SCC. Alameda Point LLC, is si Therefore, transferrin the
ENA or transferrin an interest in the existin master developer entit is prohibited
under the ENA without the prior written consent of Alameda, which is g iven at
Alameda's sole discretion.
SunCal has selected D.E. Shaw, an international hed fund head in New
York, as the financial partner. D.E. Shaw is SunCal's financial partner on a 57,000-acre
pro outside of Albu New Mexico. That project is currentl in the pre-
development sta Financial information on D.E. Shaw was delivered to the Cit
economic consultant, Economic Plannin S (EPS), and EPS confirmed that
D.E. Shaw has li assets sufficient to full fund the investment re to develop
an foreseeable Alameda Point development plan. The anal b EPS indicates that
D.E. Shaw's core areas of investment are in hi tech companies. Althou its portfolio
includes some si investment in real estate, D.E. Shaw's experience with the
development of complex real estate pro is limited in comparison to other
specialized real estate funds.
SunCal and D.E. Shaw have ne a term sheet that will form the basis of an
operatin a for the new relationship. The term sheet has been si b the
parties, and, pursuant to the ENA, was delivered to EPS on Wednesda Ma 28, 2008.
SunCal has elected to treat this information as confidential, which is its ri under
Section 10 of the ENA. Conse the term sheet was made available onl to EPS
and is not available for review b the ARRA staff, Alameda, or the public.
Honorable chair and June 4, 2008
Members of the Alameda Reuse and Redevelopment Authority Page 3 of 5
Honorable Mayor and
Members of the city council
Honorable chair and
Members of the community Improvement Commission
A typical term sheet contains provisions such as the amount of money pledged by each
party, how the money will be spent, which party is responsible for day -to -day project
management, how profits will be disbursed among the parties based on an established
internal rate of return, and under what circumstances the managing member of the
partnership and its key staff can be fired. These issues were of key concern to
Alameda when the ENA was originally approved last July and are reflected in the ENA
provision that gives Alameda the absolute discretion to approve or reject any proposed
transfer of an ENA interest.
The executed terra sheet, which is a non binding summary of terms and conditions,
addresses some of these issues but leaves much of the detail to be specified in an
operating agreement, which has yet to be finalized, without an operating agreement
that contains the precise business provisions of the new relationship or entity, and that
reflects key provisions essential to successful project execution, it may not be
appropriate to consent to the requested transfer of the ENA or transfer of an ownership
Interest in the ENA. Therefore, staff is recommending the ARRA Board, C1C, and city
Council establish key provisions that must be part of any executed term sheet, leading
to a fully signed and negotiated operating agreement, as a condition of consenting to
the requested transfer.
Staff is recommending that any terra sheet or operating agreement introducing a new
partnership entity include a limited number of core provisions. These provisions are
largely based upon the concerns expressed by Board members during the hearing at
which the original ENA was approved and are as follows:
Suncal retains responsibility for the day -to -day management of the new entity.
Suncal was selected as master developer because of its expertise, and the new
entity should retain that expertise to move Alameda Point through the entitlement
process. This is especially important if the new financial partner is less experienced
with complex real estate development projects.
Suncal maintains 15% of the equity in the new relationship or entity through the
term of the ENA. Suncal has self funded its due diligence and ENA activities to
date. It should retain a financial stake in the new venture to help ensure its
commitment to the project.
Suncal cannot be removed as managing partner during the term of the ENA except
for cause, such as breach of fiduciary duty or causing a default under the ENA, and
then only if Alameda accepts the replacement managing member. This provision
ensures that Alameda receives the experience and expertise it bargained for when it
Honorable Chair and June 4, 2008
Members of the Alameda Reuse and Redevelopment Authority Page 4 of 5
Honorable Mayor and
Members of the city council
Honorable chair and
Members of the community Improvement commission
selected Suncal as its master developer and entered into an ENA for entitlement of
Alameda Point as a mixed -use project.
Require an initial capital contribution from the members of the entity of $10 million.
Staff estimates that $10 million will be required to conduct all of the obligations under
the ENA, such as preparing the Development concept and master plan, conducting
environmental review, completing conveyance, and negotiating the Disposition and
Development Agreement (DDA). Staff recommends that the entity have sufficient
funds available and under the control of the managing partner to fulfill its obligations
under the ENA.
As managing member, Suncal should retain the authority to make all decisions
except major decisions. Major decisions should be limited to the terms and
conditions of the conveyance of Alameda Point from the Navy and the terms and
conditions of the DDA. Retaining decision- making authority is key to carrying out the
obligations of master developer and ensuring timely completion of the project. It is a
key interest of Alameda that its selected master developer, Suncal, retain complete
control over the master planning and entitlement process.
Prohibit cross default and cross- collateralization. D.E. Shaw is a financial partner
with Suncal on other real estate deals. In no event should the operating agreement
for the Alameda Point entity provide that a default by a party under a different
agreement be a default under the operating agreement, nor should the operating
agreement provide an opportunity for funds generated by this project, or the value
created through successful entitlement of Alameda Point, to be pledged to another
project, thereby adversely affecting the viability of Alameda Point.
EPS's review of the executed non binding term sheet has concluded the following:
Suncal will have day -to -day management responsibility, but D.E. Shaw retains
complete discretion on removing Suncal and providing a "Replacement Managing
Investor" subject to Alameda's approval. This would permit Suncal to be removed
for any reason including a cross default on another project.
The term sheet does not require Suncal to have an equity investment in the entity.
There is no minimum financial commitment or initial up -front contribution of dollars.
Honorable chair and June 4, 2008
Members of the Alameda Reuse and Redevelopment Authority Page 5 of 5
Honorable Mayor and
Members of the City council
Honorable chair and
Members of the Community Improvement commission
SunCal will have authority to tale actions to complete the obligations of the ENA, but
D.E. Shaw must authorize all major decisions. Major decisions are not defined in
the term sheet.
Staff recommends that if suncal provides Alameda with an executed term sheet
containing the provisions recommended by staff and outlined above, then the Executive
Director/City Manager should grant written approval of the Transfer, pending receipt of
an executed operating agreement consistent with the provisions of the term sheet as
outlined in this staff report within 30 days of Alameda action. In the event that the
executed term sheet and/or operating agreement does not contain the provisions
outlined above, staff would seek direction from the ARRA Board, the CIC, and the city
Council regarding the requested transfer and proposed conditions.
BUDGET CONS IDERATIONIFINANCIAL IMPACT
Authorizing the Executive Director/City Manager to execute a transfer of the ENA or a
transfer of an ownership Interest in the master developer entity, SCC Alameda Point
LLC, does not modify the financial provisions contained in the ENA regarding
reimbursement of staff and ARRA third party consultant costs. Therefore, there is no
fiscal impact to the city's General Fund to granting a transfer of the ENA or a transfer of
an ownership Interest in the master developer entity, SCC Alameda Point LLC,
RECOMMENDATION
Authorize the Executive Director/City Manager to execute a transfer of the Exclusive
Negotiation Agreement with SCC Alameda Point LLC to a new entity with D.B. Shave or
a transfer of an Ownership Interest in the master developer entity, SCC Alameda Point
LLC, to D.E. shag, pursuant to the terms and conditions outlined above.
Res e Il submitted,
s Vel I y
Leslie Little
Development services Director
By. Debbie Potter
Base Reuse and Community Development Manager