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2006-12-06 ARRA PacketAGENDA Regular Meeting of the Governing Body of the Alameda Reuse and Redevelopment Authority .****** ** Alameda City Hall Council Chamber, Room 390 2263 Santa Clara Avenue Alameda, CA 94501 . ROLL CALL 2. CONSENT CALENDAR Wednesday, December 6, 2006 Meeting will begin at 7:00 p.m. Consent Calendar items are considered routine and will be enacted, approved or adopted by one motion unless a request for removal for discussion or explanation is received from the Board or a member of the public. 2 -A. Approval of the minutes of the Regular Meeting of November 1, 2006. 2 -B. Approval of Sublease for Architectural Glass and Aluminum at Alameda Point. 2 -C. Approval of a 7.5 -year lease with Area 51 (retroactive to October 2005), including a Workout Plan as Conditions of the New Lease for Hangar 24. 3. REGULAR AGENDA ITEMS 3 -A. Alameda Point Project Update 4. ORAL REPORTS 4 -A. Oral report from Member Matan-ese, Restoration Advisory Board (RAB) representative. 5. ORAL COMMUNICATIONS, NON - AGENDA (PUBLIC COMMENT) (Any person may address the governing body in regard to any matter over which the governing body has jurisdiction that is not on the agenda.) 6. COMMUNICATIONS FROM THE GOVERNING BODY 7. ADJOURNMENT This meeting will be cablecast live on channel 15. 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. ■ Audio tapes of the meeting are available for review at the ARRA offices upon request. APPROVED MINUTES OF THE REGULAR MEETING OF THE ALAMEDA REUSE AND REDEVELOPMENT AUTHORITY Wednesday. November 1, 2006 The meeting convened at 7 :19 p.rn. with Chair Johnson presiding. . ROLL CALL Present: Marie Gilmore, Boardrnember, City of Alameda Doug deHaan, Boardrnember, City of Alameda Frank Matarrese, Boardrnember, City of Alameda Tony Daysog, Boardmernber, City of Alameda Absent: Beverly Johnson, Chair of Alameda 2. CONSENT CALENDAR 2 -A. Approval of the minutes of the Regular Meeting of October 4, 2006. Member Daysog pulled Item 2 -A to articulate what he meant when he referenced certain letters regarding the ARRA's No -Cost EDC with the Navy. He reiterated his point that if we could return to the original understanding of the housing units that could be built -out per the documents agreed to by the ARRA and the Navy, perhaps we would not have to pay the S 108,000 million the navy is now requiring. Member Daysog wanted to make sure this point was captured in this evening's meeting, since it was missed in the Minutes of October 4th. 2 -B was motioned by Member Daysog, seconded by Member deHaan and passed by the following voice vote: Ayes — 3; Noes — 0; Abstentions —1 (Member Gilmore was not present at the 10 -4 -06 ARRA meeting). 2 -B. Recommendation to approve consultant agreement with Moffatt & Nichol Engineers for Pier Condition Analysis at Alameda Point in an amount not to exceed $170,226 Approval of 2 -B was motioned by Member Daysog, seconded by Member deHaan and passed by the following voice vote: Ayes — 4; Noes — 0; Abstentions — D . 3. REGULAR AGENDA ITEMS 3 -A. Alameda Point Project Update Debbie Potter, Acting Alameda Point Project Manager, gave an overview on the Master Developer RFQ process. At the direction of the Board, the RFQ was issued on October 19th with a mandatory bidder's conference on Monday, October 30th. There were 20 firms that attended the bidder's conference. All due diligence documents were provided on a CD and an FTP site available for all interested firms, and a comprehensive download of the land planning, the environmental issues, the public trust, summary of term sheet; and an opportunity for those present to ask questions. One -on -one meetings were also offered with the firms intending to respond, with nine firms signed up. Responses are due December 4, 2006 and need to be Page 2 accompanied by a $20,000 non - refundable filing fee. The responses received will be evaluated and brought back to the ARRA should we receive responses with a recommendation to enter into a 45 -day negotiation period. There was one speaker slip, Andrew Slifka, long-time Alameda resident and also a representative of the Carpenter's Union in Alameda County, and speaking on behalf of the Construction Building Trades Council of Alameda County. Mr. Slifka addressed concerns and disappointment with the Alameda Point Community Partners (APCP) withdrawal from the project since they had a Project Labor Agreement with APCP. He urged the Board to look at the same requirements for any developer that should come forward, because Project Labor agreements bring value to the community, well- paying jobs with benefits, careers and local work opportunities. Member Daysog asked if specific questions regarding the financing of the project were outlined in the RFQ. He commented on the financing /business model associated with revitalizing the Catellus project and how it was distinct from the business model that was employed for the rest of Alameda Point. He also discussed incorporating a different business model. David Brandt, Deputy Executive Director, responded that developers will be asked who their source of capital is and for a deposit of "earnest money" in the amount or $ 1 million before a developer is selected. This information will be provided to the Board. Member Daysog asked if the potential developers understood the amount of property open for redevelopment. Ms. Potter responded that the $108 million purchase price is based on Phases 1 and Phases 2, which is essentially everything but the Wildlife Refuge and the area south of Atlantic Ave. and north of the 26 -acre park, plus the golf course. David Brandt also clarified that we were careful to let the developers know that the PDC wasn't an entitlement. Member Matarrese asked whether a Project Labor Agreement (PLA) was presented to the bidders as part of the package that APCP (former master developer) put together. Debbie Potter responded that a PLA was not included in the RFQ and that it was not a requirement of the City when the first master developer was selected; but that a PLA was voluntarily agreed to by at least two out of the three finalists during the first master developer selection process. Member Matarrese requested that bidders be notified that a PLA was part of the original agreement and that the City does have a policy on prevailing wage. He was concerned that bidders would try to make their numbers work at the cost of labor. Ms. Potter said that a copy of the previously agreed -to document will be posted on the RFQ FTP site. Member deHaan discussed extending the current month -to -month leasing policy to a year -to- year policy in anticipation that the master developer would start taking down property. David Brandt acknowledged that the current ARRA direction is that all leases over a year come to the ARRA, and that potential tenants are told that redevelopment is imminent so long term leases are not being offered. This is being reevaluated to decide whether to start bringing longer term leases to the ARRA. Page 3 Leslie Little, Development Services Director, agreed to revisit the leasing policy at the beginning of next year in anticipation of activity after the master developer selection process. She added that some tenants, approved by ARRA, have longer leases because they are making significant improvements and receive rent credit for those investments, not done by ARRA. Member Gilmore wants the public to know what kind of timeline we're working with and asked what was the soonest possible time frame after the master developer is selected will we enter into an agreement (not even actually shoveling dirt or tearing down buildings, etc.) David Brandt responded that the soonest would be two years. Member Gilmore commented that this increases the timeframe "window" and recommended that when staff returns in January with the study session of the leases, it might be worthwhile to take a look at not just the 3rd and 4th phases, but the tst and 2nd phases, too. Ms. Little clarified that we will be presenting an entire overview of all the leasing and it can be compared against the PDC. No action was taken on this item -- it was an update and for informational purposes only. 3 -B. Alameda Point Environmental Remediation Update: Western Shoreline — IR Sites 1,2, and 32, Soil at IR Site 25 (Coast Guard North Housing), and Compliance with Marsh Crust Ordinance Debbie Potter gave an update on the clean -up status of these specific IR sites, as requested at the October 4 ARRA meeting. Peter Russell, environmental consultant from Russell Resources, was available to answer questions from the Board as a follow -up to the staff report provided. Member Matarrese's main concern was the Navy's option to install an engineered cap rather than a soil cover over landfill waste. Member Matarrese, along with the rest of the Board members, discussed at length their preferred alternative: having the Navy scoop out the landfill sites and haul it away. Debbie Potter discussed the process by which Peter Russell reviews all documents the Navy promulgates regarding all IR sites. She explained that we comment during the public comment period, but we do it at a staff level. She agrees with Member Gilmore about the policy -level decision that we want clean -up to a level that supports the community reuse plan and the PDC, and that the Navy has committed to clean -up to the reuses that are identified in the PDC. Ms Potter further explained, and reiterated by Peter Russell, that the ARRA- preferred option to scoop and haul the landfill is not economically feasible -- and an engineered cap is potentially equally effective. She said that the City advocated the engineered cap since the beginning when we secured the pilot grant from EPA. Ms. Potter stated that the engineered cap is financially viable and is scientifically the best solution, a decision staff concluded in consultation with environmental experts. Member Matarrese commented that he had issues with the feasibility, that it didn't sound so daunting at the RAB meetings and that the scoop and haul option is actually feasible. Peter Russell responded that from a technical standpoint, the scoop and haul option would cost more. Debbie Potter sought direction from the ARRA as to a response for the public comment period due to the Navy by Nov. loth. Page 4 Member Matarrese motioned to direct staff to submit a letter to the Navy during the public comment period to include the ARRA policy aspect and endorse the preferred solution of scoop and haul, rather than an engineered cap. This motion was seconded by Member Daysog and passed by the following voice vote: Ayes — 4; Noes -- 0; Abstentions -- 0. 4. ORAL REPORTS 4 -A. Oral report from Member Matarrese, RAB representative. Report was covered in discussion of Item 3 -B, above. ORAL COMMUNICATIONS, NON - AGENDA (PUBLIC COMMENT) Mayoral Candidate, Kenneth Kahn, stated that it would be an honor to serve with all of the members of the Board. 5. COMMUNICATIONS FROM THE GOVERNING BODY Member deHaan clarified a comment that was made regarding parolees working at Alameda Point. He stated that we indeed had parolees working at Alameda Point about 10 years ago through the Volunteers of America Program, under the control of the Navy. He explained that we were short of man- power, so we utilized San Quentin inmates that were being transitioned for landscaping and maintenance. 6. ADJOURNMENT Meeting was adjourned at 8:37 p. Respectfully submitted, Irma Glidden ARRA Secretary Alameda Reuse and Redevelopment Authority Interoffice Memorandum December 6, 2006 TO: Honorable Chair and Members of the Alameda Reuse and Redevelopment Authority FROM: Debra Kurita, Executive Director SUBJ: Approval of Sublease for Architectural Glass and Aluminum at Alameda Point Background At the December 2004 ARRA Board Meeting, the ARRA elected to review and approve all subleases at Alameda Point. Discussion The subject action is a renewal of the lease with Architectural Glass and Aluminum for Building 117. The rent will be $0.12 per square foot or $87,588 annually for this structure which is a warehouse in fair to poor condition with no loading docks. Attachment A describes the business terms for the proposed sublease. Fiscal Impact The rent for Architectural Glass and Aluminum is $87,588 annually or $0.12 per sq. foot. Recommendation Approve the proposed sublease. By: Attachment: A. Proposed Sublease Business Terms B. Site Map Respectfully submitted, Leslie Little Development Services Director Nanette Banks Finance & Administration Manager Honorable Chair and Members of the Alameda Reuse and Redevelopment Authority ATTACHMENT A PROPOSED SUBLEASE BUSINESS TERMS December 6, 2006 Page TENANT BUILDING SIZE (SF) TERM RENT Architectural Glass & Aluminum Portion of Building 117 60,828 1 year and 2 months $7,299/mo. ATTACHMENT B Itm N I in s NO180 I \• \\N \‘ \\\\\ \\\\\ A\\ \\\\ • ,\\\ • \.,\•,_. TL2 N -1 CY) 0 LLNIOd AZ:P114 Alameda Reuse and Redevelopment Authority Interoffice Memorandum December 6, 2006 TO: Honorable Chair and Members of the Alameda Reuse and Redevelopment Autho FROM: Debra Kurita, Executive Director SUBJ: Approval of a 7.5 -year lease with Area 51 (retroactive to October 2005), Including a Workout Plan as Conditions of the New Lease for Hangar 24 y Background Since 1997, the ARRA periodically awarded licenses to Area 51, a special events production company, to hold events at Alameda Point. In early 2001, Area 51 was awarded a license for a portion of Hangar 25 on a periodic basis to facilitate these events. In 2002, they were awarded a license for a portion of Hangar 24, instead of Hangar 25, on a full time basis. In early 2003, a lease proposal was prepared that allowed Area 51 to occupy Hangar 24 for five years. The term of the proposed lease was March 1, 2003 to February 28, 2008 at a rate of $16,974.00 per month. During the course of the lease negotiations, the then leasing agent, Industrial Realty Group, allowed Area 51 to occupy the space prior to finalizing the terms of the agreement. In the period of time between. October 2003 and February 2005, Area 51 constructed $207,481 in tenant improvements required in order to obtain a Certificate of Occupancy (C of 0) for the building. Based on the leasing agent's estimate to obtain a C of 0 for the building, the terms of the lease provided that $100,000 of the costs for these improvements would be credited toward the payment of rent. However, during that period, the tenant paid rent for only nine of the 16 months. In December 2004, after considering a recommendation to file an unlawful detainer to evict Area 51 from the premises, the ARRA Board directed staff to continue to negotiate with the tenant in an attempt to cure the defaults. In those negotiations, which were lead by Interim City Manager Norton, Area 51 requested a significant rent reduction, repayment of the arrears over 7.5 years, a longer lease term with renewal options and an expansion of the leased premises. In the interim, Area 51 continued to occupy Hangar 24 and in October 2005 made one additional payment of $16,400 in order to obtain licenses for three special events they scheduled for the fall. As of October 31, 2006, Area 51 is $504,034 (including the $100,000 credit) in arrears, is not paying rent, and ARRA staff has suspended issuing Honorable Chair and Members of the December 6, 2006 Alameda Reuse and Redevelopment Authority Page 2 license agreements for new events. Up to this time, Area 51 paid for licenses totaling 590,000. Over the course of the past two years, staff and representatives from Area 51 have continued to negotiate regarding the terms of a long - term lease and a workout plan. Recently, there was a change in Area 51's negotiating team, and the parties have come to a resolution that utilizes a different rent structure and model for performance. Discussion ARRA staff is proposing a lease workout and new lease. In exchange for accepting the workout proposal, the ARRA will receive access to the large event space improved by Area 51 during the term of their lease. The ARRA will be able to market and lease this space to generate additional revenue. Workout Proposal Area 51 did complete $207,481 in required tenant improvements to the building. Consistent with the lease terms, they were credited for only $100,000 of those documented improvements against rental payments, resulting in adjusted arrears because the leasing agent estimated that the cost of C of 0 improvements would be approximately $100,000. The 5207,481 in actual cost has been documented by receipts. The workout proposal includes: 1. Crediting Area 51 with an additional $107,481 in tenant improvement /C of 0 credits. 2. Rewriting the current lease retroactive to October 2005, to release Area 51 from rent for two 20,000 sf bays of Hangar 24, totaling $161,600. 3. Auditing Area 51 operations for the actual days used from October 2005 to present and charging a fee at the rate of $750/day for set-up and S1500/day for production activity for those days. 4. Creating an unsecured note for the $178,311 and a payback schedule of equal payments ($4,953) over 36 months from the time a revised lease is executed to repay the amount past due. New Lease The new lease proposed for Area 51 is a 7.5 -year lease for only the office space and some limited storage space at Hangar 24 at a rate of $500 per month beginning October 2005 and ending March 31, 2012. The retroactive effective date gives Area 51 6.2 years of amended lease terms going forward. In addition, Area 51 would be required to license on a case-by-case basis, portions of Hangar 24, if available, and continue to license the taxiways, that Area 51 uses regularly for special events. Honorable Chair and Members of the December 6, 2006 Alameda Reuse and Redevelopment Authority Page 3 Fiscal Impact ARRA will receive $4,953.08 a month for 36 months in delinquent rent for a total of S 178,311 and $500 a month for office space and storage space, and special event license revenue. The audit of event activity from October 2005 to present: will result in an . unknown amount of additional revenue. Area 51 will receive a write -off of S 161,600, but the ARRA will gain access to event space for leasing it would not have had, creating an opportunity to recoup this credit. Recommendation Approve the 7.5 -year lease with Area 51 (retroactive to October 2005), including the Workout Plan as conditions of the new lease for Hangar 24. Respectfully submitted, Leslie Little Development Services Director By: Nanette B ariks Finance & Administration Manager DK LAL /NB:dc Attachments: i . Map of Leased Premises Lease is on file in the City Clerk's office 599 ATTACHMENT 1 z3naoZIa Alameda Reuse and Redevelopment Authority Interoffice Memorandum December 6, 2006 TO: Honorable Chair and Members of the Alameda Reuse and Redevelopment Authority FROM: Debra Kurita, Executive Director RE: Alameda Point Project Update Background on October 4, 2006, the ARRA Board directed staff to initiate a Request for Qualifications (RFQ) process to determine if there is a qualified developer interested in assuming master developer obligations and rights pursuant to the draft conveyance term sheet negotiated with the Navy in June. On November 1, 2006, staff provided the Alameda Reuse and Redevelopment Authority (ARRA) with a project update, including an update on the status of the RFQ process. Discussion The RFQ and a press release notifying the public of the availability of the RFQ for an Alameda Point Master Developer was issued on Thursday, October 19, 2006. On October 30, 2006, there was a mandatory bidders conference with 20 firms attending. Presentations on land planning, environmental issues, the public trust, and the conveyance term sheet were provided. An opportunity for those present to ask questions followed the presentations. All due diligence documents were provided on a CD and an FTP site is available for all interested firms. On November 14th and 15th, staff held one -on -one meetings with a total of eight firms interested in responding to the RFQ. Based on several requests during these meetings, the proposed Exclusive Negotiation period following selection of a master developer was extended from 45 days to 60 days. On November 20th, a two hour teleconference was scheduled with the environmental consultant, Peter Russell of Russell Resources. There were 12 participants representing six firms on the call. The conference call provided an opportunity for firms to ask in -depth and technical questions regarding the environmental status of the property. Responses to the RFQ are due on December 4, 2006. Along with their qualifications material, the developers will be obligated to submit a non - refundable fee of $20,000 in order to be considered. Staff will report to the ARRA at the regular meeting on December 6th regarding the outcome of the RFQ process. Honorable Chair and Members of the December 6, 2006 Alameda Reuse and Redevelopment Authority Page 2 Fiscal Impact It is anticipated that all costs to evaluate the developer qualifications will be covered by the responders' 520,000 non - refundable deposits. Recommendation This report is for information only. Respectfully submitted, David Brandt Assistant City Manager B y: ebbie Acting Alameda Point Project Manager