HomeMy WebLinkAbout10/16/2007, C5 - REVIEW OF A 10-LOT RESIDENTIAL DEVELOPMENT INCLUDING: A VESTING TENTATIVE TRACT MAP, PLANNED DEVELO counat M.WgD� o �� 07
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CITY OF SAN LUIS OBISPO
FROM: Shelly Stanwyck, Assistant City Administrative Officer
Prepared By: Claire Clark,Economic Development Manager
SUBJECT: AUTHORIZE PREPARATION OF A FISCAL IMPACT ANALYSIS OF
THE PROPOSED CHINATOWN PROJECT
CAO RECOMMENDATION
Authorize the Mayor to execute an agreement with Allan D. Kotin and Associates for preparation
of a Fiscal Impact Analysis of the proposed Chinatown Project as outlined in AD Kotin and
Associates' Memorandum of August 6, 2007.
DISCUSSION
Background
The Chinatown Option Agreement
The City entered into an agreement concerning an Option to Purchase Real Property with Court
Street, LLC (a Limited Liability Corporation controlled by Tom and Jim Copeland) (Attachment
1) effective November 3, 2003. The Option to Purchase Real Property (hereinafter referred to as
the "Chinatown Option Agreement") arose out of negotiations spanning several years over the
revitalization of several downtown properties between the City and the Copelands. The parties
began complex talks about the revitalization efforts in 1999 because each owned real property
that could be put to better use by the other party. The fruition of these original talks and
agreements is now seen in the Court Street Project, which was built on a former City-owned
property, and the 919 Palm Street Office and Parking Garage, built on property formerly owned
or controlled by the Copelands.
Underlying the Chinatown Option Agreement is the desire to accomplish urban redevelopment in
furtherance of the public good without the benefit of a redevelopment agency. It is not simply a
real estate transaction where price is the primary determinate of value. With the Chinatown
Option Agreement, the City set out to work with Copeland to accomplish larger community goals
of increased housing and vitality in the Downtown.
Review and Processing of the Chinatown Historic District Project
In 2003 when the Chinatown Option Agreement was signed, the conceptual Chinatown Project
was largely a residential and retail project set on the City's parking lots between Palm and
Monterey, the former Public Works building, and one adjacent property owned by Copeland
located at 861 Palm. In 2006, the project was expanded to include additional adjacent properties
fronting Monterey Street, adding uses not originally contemplated including a hotel and attendant
meeting space. These changes presented new complexities affecting development review of the
project and adding to the scope of the EIR.
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AUTHORIZE PREPARATION OF A FISCAL IMPACT ANALYSIS OF THE PROPOSED
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At this time, City review of the project is well underway. The public comment period for the
Draft EIR closed on July 25, 2007 with written comments and public testimony before the
Planning Commission. The Final EIR was released on September 26, 2007 and contained
recommendations for mitigations as well as alternatives. Review by the advisory bodies is
expected to commence with the October 22 Cultural Heritage Committee review. Architectural
Review Commission consideration and Council action on the EIR is anticipated before the end of
2007. In an effort to respond to the input already provided by advisory bodies, as well as input
from the community, the applicant provided a revised project plan to staff on September 18,
2007. The revised project plan scales back the project significantly and addresses mitigations
suggested in the draft EIR.
Fiscal Impact Analysis of Proposed Chinatown Project
Consistent with recent Council discussions about the Chinatown Project, a proposal for a Fiscal
Impact Study was obtained. Council expressed concern about the fiscal impacts associated with
redevelopment on the General Fund as well as the fiscal impacts on the Parking Fund. For this
reason, Allan Kotin & Associates was contacted to provide a scope of work proposal for this
study.
The fiscal impact analysis will provide information about the proposed Chinatown Project's
fiscal impacts to complement Environmental/EIR mitigation measures and alternatives.
Assessing the fiscal impacts on the General Fund and the Parking Fund allows decision-makers
to better determine the value of the urban redevelopment being proposed. To adequately assess
these impacts, a scope of work was obtained from Allan D. Kotin and Associates (Attachment 2)
for a fiscal impact analysis. The scope of work proposes to divide the analysis into two tasks.
Task 1 will include collection and examination of baseline data on impacts to the General Fund
and the Parking Fund. In the case of the Parking Fund, baseline data may include the current and
proposed status of the in lieu parking fee, the cost of actual replacement of the public parking lost
via this development, and the location of the proposed replacement parking, among other issues.
Task 2 will be an application of the information collected in Task 1 to the City budget through
detailed review with affected City departments, and most particularly with the Finance
Department to determine the probable gross revenue impacts of the project in terms of property
tax, sales tax, transient occupancy tax and other associated taxes.
The consultant also proposes to develop independent estimates of the transfer effect and the
extent to which the gross revenues should be discounted. To measure the fiscal impacts, it is
necessary to study the impact on other businesses, the transfer effects on tax revenues seen when
the new business does not create additional tax revenue but rather pulls tax revenue away from
existing sources. Also taken into consideration will be potential costs associated with
replacement parking and the potential for augmented municipal services requirements. It is
possible that the development will have a catalytic effect on surrounding lands (where
development is spurred on adjacent parcels) or counter-catalytic effects slowing the development
of adjacent properties. These and other issues that arise from the analysis will be taken into
account.
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AUTHORIZE PREPARATION OF A FISCAL IMPACT ANALYSIS OF THE PROPOSED
CHINATOWN PROJECT Page 3
Staff requests authorization to contract with Kotin and Associates as a sole source contractor so
that the City can obtain, in a timely fashion, the information necessary to assess the Chinatown
project's fiscal impacts.
Sole Source Contract
The necessity for a sole source contract arises from two primary factors. Allan D. Kotin and
Associates (Kotin) have an in-depth and unique knowledge of the City's fiscal environment, have
conducted similar analyses in the City, and is familiar with the agreements underlying this project
proposal thus making it the best candidate for the analysis. As the fiscal impact information is
distinct from environmental review and is a necessary complement for complete understanding of
the issues prior to Council's action on the Environmental Impact Report (EIR), the study must be
accomplished in a timely fashion relative to the Council's consideration of the Chinatown Project
EIR. Kotin's depth of understanding will facilitate timely completion of the fiscal analysis of the
proposed Chinatown project.
Next Steps
Following Council authorization, Allan D. Kotin and Associates will complete the Fiscal Impact
Analysis. In this instance, as the City has already received funds from Copeland for this contract,
no third party agreement is required.
FISCAL IMPACT
A deposit in the amount of$28,000 has been provided by Copeland for the anticipated cost of the
Fiscal Impact Analysis.
ALTERNATIVES
1. Determine that a Fiscal Impact Analysis is not necessary. Due to the changes made in the
project proposal, the Council may decide that a Fiscal Impact Study is not necessary. Staff
discourages this alternative because the loss of public parking (and attendant revenues), potential
for transfer effects from existing sales tax generators, and impacts to the general fund via
provision of services remain important and unexamined issues. The need for the study has not
changed with the change in the project proposal.
2. Change the scope of the Fiscal Impact Analysis. Extensive discussion about the scope of a
fiscal impact study for this project has been undertaken. Input from the Finance Director,
Community Development Director and staff, and the Chinatown Steering Committee members
representing all City departments was used in formulating the proposed scope of the analysis.
The existing scope was agreed upon following extensive consideration and a request for a change
in the scope would result in further delays.
ATTACHMENTS
1. Option to Purchase Real Property between the City and Copelands
2. Fiscal Impact Analysis of Proposed Chinatown Project. Allan D. Kotin and Associates dated
August 6, 2007.
3. Proposed Agreement with Allan Kotin.
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T:\Chinatown\CAR-ChinatownFiscal mpactStudy2007
ATTACHMENT �
OPTION TO PURCHASE REAL PROPERTY
This Option Agreement is made as of : by and between THE CITY OF'
SAN .LUIS. 'OBISPO, a municipal corporation; and charter city ("City'), and SAN LUIS OBISPO
COURT STREET,LLC, a.Califbmia limited liability company("Copelands' .
THE PARTIES HEREBY AGREE AS FOLLOWS:
1. The NDDOVt . The property (hereinafter, the "Property') consists of the five (5) parcels
located'in the block between Palm and Monterey Streets and.Morro and Chorro Streets, m San Ws
Obispo County, California; identified as portions of APN#002-416-034, #002-41,6-034, #002-416-029,
#002-416-029, and #002-416-029, together with any improvements made thereon. A legal description
of the Property is attached hereto and incorporated herein as Exhibit A.
2. Grant of.Option. In consideration for the payment of Eighty-eight Thousand Five
Hundred Dollars•($88,500) (the"Initial Option Price')on or before the Cl g, as that term is defined
in that certain Real Property Exchange Agreement, dated.as of February 2003,between the City
and the Copelands;the City hereby grants to Copelands an.option{"Option')to purchase the Property at
the Purchase Price on the terms and conditions set forth in this Option Agreement:.
3. Term of Option. (a) The term of this Option shall commence as of the date of this
Agreement and shall expire at 5 p.m., on the date which is eighteen months thereafter("InitialOption
Term'), unless extended as provided:in the following sentences.or otherwise by the written agreement of
the parties. Copelands may extend the term of the Option (the."Option Term') up to three times for an
additional year(each an`Additional Option Term')each,by paying to the Citythe sum of Twenty-nine
Thousand Five Hundred Dollars($29,500) (each an "Additional Option Price") for each such one year
extension. Notwithstanding the foregoing, Copelands shall,not be entitled to the first Additional'Option
Term unless prior to the end of the Initial Option Term, Copelands has submitted an application.to the,
City for development(the"Development Application')of the project known as the"Chinatown Project"
(the "Project') to be built.on the Property consistent with paragraph 4A below and the Copelands shall
not thereafter be entitled to any;subsequent Additional Option Term unless, at the end of each
Additional Option Period,either(i) the Development Application has been approved and has not been
terminated and has not expired or(ii)it remains pending. Each Additional Option Price shall be paid to
the City, if at all,prior to the expiration of the immediately preceding Option Term or Additional Option
Tenn, as the case may be. The Option Term or any Additional Option Term may be terminated earlier
by written agreement of the parties hereto.
4. Conditions of Exercise of the Option. The option is to be exercisable on the following
conditions:
A. The Option must be exercised, if at all, during the Option term or any duly
exercised Additional Option Term During such period, the Copelands shall pursue the issuance of
building permits and other required regulatory entitlements (if any) ("Permits') for construction of a
development on the Property consistent with paragraph 7 below
B. The Option can be exercisedonly if all of the following conditions have been.
satisfied:
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i. The,Pennits for construction of the Project have:been,issued and•have,Aot
expired;
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U. the Copelands,have submitted,evidence to City that the Copelands have
the-financial resources, from lenders and from equity funds and investors as may be necessary, in a
sufficient amount to complete the construction and equipping of the Project.in accordance with a budget
prepared by Copelands;
iii. the Copelands have, entered into construction contracts for the Project
evidencing that the work of construction,can be completed within the budget;
iv. Construction of the Retail Complex on the.Court Street Project Property
shall have been commenced as required under the ReaLProperty Exchange Agreement referred to above,
and,if construction shall have already commenced, construction to completion of the Retail Complex is
being diligently purstred.
S. Restrictions on Title to the Prooertv. The parties agree, and the Deed transferring tide to
the.Property to Copelands shall reflect, that until substantial completion of the Project substantially in
accordance with the Pertnit (i)the use of the Property shall be limited and restricted to the construction
of the Project, (ii) the Copelands shall not encumber the: Property except as security for construction
loans to finance the construction of the Project, and(iii). the City has the right of reverter and a power of
termination(Civil Code section 885.010)to cause the title of the Copelands to the Property to terminate
and to revert to the City if the construction of the Project pursuant to the Permit does not commence as
required by this Agreement,or if construction is commenced,such construction is not completed. Upon
the substantial completion of the Project in accordance with the Permit, the City shall execute and
deliver to the Copelands, a Certificate of Completion in substantially the fohin attached hereto as Exhibit
Bi which shall,acknowledge that the deed restriction and any right of reverter in favor of the City shall
have terminated. In the event the City,being entitled to-do so,causes the title to the Property to revert to
the City, the City shall pay to the Copelands an amount equal to the Purchase Price(as defined below).
6. Me Diligence Inspections by Covelands. Prior to the exercise of-the option, the
Copelands shall first have performed such due diligence as it elects to perform as to the condition of the
title to the property and the suitability of the site of the property, for the proposed uses and,construction,
and shall have inspected, investigated and tested the condition of the soil and the,geology of the site and
the presence of hazardous substances or archaeological materials and shall have accepted such
conditions"as-is"with all defects,known or unknown,.and without warranty,representation or promises
of remediation or.cure by the City.
7. The Project. The Project shall incorporate a retail and office space, as well as a,
downtown residential component for the upper floor or.floors of the Project. In connection with the
Project, Copelands shall be responsible:to comply with all laws and io conform to all land use, building
and safety and other regulatory laws, to bear the cost of any compliance with the California
Environmental lQuality Act or other laws, and to apply for and obtain any variances, zoning changes or
other special permits as the Project may require,all of which shall be accomplished and obtained within
the time allowed for exercise of this Option. This Option Agreement,shall not constitute any agreement
by the City to agree to take any action in its regulatory function to implement-or favor the Project, to
waive or reduce any fees,charges or exactions that are otherwise applicable or to agree to grant or issue
any entitlement or permits. Copelands understands that it may be required to pay in-lieu parking fees in
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connection with the Project, as required by the City's then applicable ordinances and regulations,
without.anypreference or reduction.
.8. Exercise of the.Option Provided that Copelands is not in default under any tern or
provision of this Option.Agreement,the conditions to the exercise of the Option have been satisfied and
the City has certified in writing that Copelands have submitted evidence satisfactory-to City•that the
conditions to the exercise of the Option referred to above have been satisfied, the Option may be
exercised by Copelands delivering to Escrow Holder, as defined below, with a copy to the City;a copy
of the Exercise Notice, in the form attached hereto as Exhibit C,,and a copy of the Purchase Agreement
and Sale Agreement in the fornr attached hereto as Exhibit D("Purchase Agreement'j. Prior to the time
the Property is transferred, Copelands shall determine the status of title to the Property and accept it as
is. The City agrees not to add any encumbrance or lien, or suffer any such encumbrance or lien to exist,.
on the Property hereafter. The City shall not have any obligation to eliminate any exceptions identified
in a title report obtained by the Copelands unless the City is not in compliance with the foregoing
sentence.
A. Purchase Price. The Purchase Price for the purchase.of the Property if the title to
the Property is vested in the Copelands, or its designee, during the initial. 18 months shall be
$2,950,000, net of all expenses and costs of such escrow and the transfer of title to the Property;
provided that if the title to the Property is not vested in the Copelands during the Initial. Term, the
Purchase Price shall be increased at the rate of.0833% of$2,950,000 for each month or part thereof
from the effective date of this Option until title is vested in the Copelands pursuant to the exercise of this
Option. At the closing of escrow for the Property, Copelands shall be entitled to a credit against the
Purchase Price for the Initial Option Price.plus any.Additional Option Price already paid to the City.
B. Escrow. The escrow holder shall be Chicago Title Insurance Company("Escrow
Holder'). Upon delivery by Copelands to Escrow Holder of.the Exercise Notice as provided above,
Escrow Holder shall deliver the grant deed conveying the Property to Copelands in compliance with the
escrow instructions provided in the Purchase Agreement and any further escrow instructions that may be
submitted by both parties to Escrow Holder.
9. Specific Performance. Without waiving any other available rights or remedies,
Copelands shall specifically have the right,if applicable,to sue in equity for specific performance of this
Option Agreement or any part of this Option Agreement, and expressly the.right to file a notice of
pending action against the Property as provided in California Code of Civil Procedure Section 409 and
Civil Code Section 1214, subject to all defenses, claims and rights to defend against such suits or to
eliminate such notices if such notice or filing is found not to be appropriate or warranted Except as
Provided by the foregoing, nothing contained herein shall be deemed an agreement by the City to grant
rights to Copelands for specific performance, suits in equity, for the filing of notice of pending actions
or other remedies that are not afforded to Copelands.without agreement by City, by applicable law.or
principles of equity,nor shall City be deemed to,waive or surrender any rights or remedies that City may
have due to such actions by Copelands.
10. Disclaimer of Warranties. The City makes no representations or warranties regarding the
Property.
11. Inspection: Indemnification.
A. During the Option Term, Copelands and its designated agents and independent
contractors, shall have the right, at their sole risk and expense, to enter onto the Property to the extent .
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necessary for the purpose of conducting such surveys, tests and inspectionsas Copelands shall
reasonably require,.provided that Copelands shall'not make any alterations to the. Property, use any of
the City's personal property in such survey, test or inspection or interfere with the City's use of the
Property without the prior written consent of the City. Copelands shall leave the Property:in the same
condition as it was prior to such survey,test or inspection.
B. Copelands agrees to indemnify and hold the City, its officers, shareholders and
directors, employees, agents and representatives harmless. from any and all costs, claims, expenses,
liability and damages of any kind arising from-or in connection.with the conduction of such inspection,
testor survey on theProperty.
12. Failure to Exercise. Time is of the essence of this Option Agreement. If the Option is
not:exercised.in the manner provided in Section 4 above before expiration of the Option Term or any
Additional Term, as the case maybe, this Option shall automatically terminate, and .Copelands shall
have no interest whatever in the Property. If the Closing never occurs or the Initial Option Price is not
paid. in a timely manner, then the Initial Option Term shall never commence, 'thi" Option shall
automatically terminate,and Copelands shall have no interest whatever in the Property.This Option may
not be revived.by any subsequent payment or further action by Copelands, without the express written
consent of the City._
13. Quitclaim: If. this Option Agreement expires or is terminated, Copelands agrees,. if
requested by the City,to execute, acknowledge and deliver to the City 4 quitclaim deed within ten (W)
days after such request quitclaiming its interest in this Option Agreement or the Property and to execute,
.acknowledge,and deliver any other-documents required by the.City or any title company to:remove the
cloud of this Option from theProperty.
14. Expenses. Each of the parties shall bear its own respective costs,and expenses incurred
or to be incurred by it in negotiating and preparing this Option Agreement and in closing and carrying
out the transactions contemplated by this Option Agreement, except .as specifically provided in this
Option Agreement.
15: Broker's Commission. The City and Copelands ("Indemnitors') hereby represent that
there are no broker's commissions or finder's fees payable regarding this transaction and that neither the
City nor Copelands has entered into any agreements or understandings with any broker or finder
regarding this transaction. Indemnitors each agree to indemnify, defend and hold the other harmless
from and against all liability,claims,demands,damages and costs of any kind arising from or"connected
with any broker's or finder's fees or commission or charge claimed to be due any person arising from.
any Indemnitors'conduct regarding this transaction.
.16. Effect of Headings. The subject headings of the sections, paragraphs and subparagraphs
of this Option Agreement are included for convenience only., and shall not affect the construction or
interpretation of any of its provisions.
17. Modification: Waiver. and Entire Agreement: This. Option Agreement and the Exhibits
hereto constitute the entire agreement between the parties pertaining to the subject matter contained in it
and supersedes all other prior and contemporaneous agreements, representations and understandings of
the parties. No supplement, modification or amendment of this Option Agreement shall be binding
unless executed in writing by all the parties. No waiver of any of'the provisions of this Option
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Agreement shall be deemed,or shall constitute,a waiver of any other pivvisions;whether or not similar;
nor shall any waiver constitute a:continuing;waiver. No waiverr shall be binding unless executed in
writing by the party malting the waiver. A Memorandum of Option shall be executed by the parties in
recordable form which may recorded by the Copelands,but in the event of
:any inconsistency between
the Memorandum and this Option Agreement,this Option Agreement shall prevail.
18. Counterparts. This Option Agreement may be executed simultaneously in one or more
counterparts, each of which shall be deemed an original, but all of which together shall constitute one
and the same instrument.
19. Partial Invalidity. The conditions and provisions of this Option Agreement shall be,
interpreted in such a'manner as to enhance their enforceability, nonetheless, if any term, covenant,
condition or provision of this Option Agreement is held by a court of competent jurisdiction to be
invalid, void orunenforceable, the remainder of the provisions hereof shall remain in full force and
effect and shall in no way be affected,.impaired,or invalidated thereby.
20. Parties in Interest. Nothing in this Option Agreement, whether express or.implied, is
intended,to confer anyrights or remedies under or by reason of this Option Agreement on any persons
other than the parties to it and their respective successors and assigns, nor:is anything in this Option
Agreement intended to relieve or discharge the obligations or liability of any third persons to any party
to this Option Agreement, nor shall any provision give any third persons any right of'subrogation or
action against any party to this Option Agreement.
21. Successors and Assigns. Notwithstanding Section 22 below,this Option Agreement shall
be binding on, and shall inure to the benefit of, the parties to it and their respective heirs, legal
representatives,successors and assigns.
22. Assignment: Copelands may assign this Option Agreement to an affiliate controlled by,
or under common control with,Copelands without the prior written consent of the City.
23. Recovery of Litigation Costs. If any legal action or other proceeding is brought for the
enforcement of this Option Agreement, or because of an alleged dispute, breach, default or
misrepresentation in connection with any of the provisions of this Option Agreement, the successful or
prevailing party shall be entitled to recover reasonable attorneys' fees and other costs incurred.in that
action or proceeding,in addition to any other relief to which it or they may be entitled.
24. Notice of Party Defaults. If the City or Copelands defaults in the due and timely
performance of any of their warranties,covenants or agreements under this.Option Agreement, the non-
defaulting party or parties may give notice of such default in the manner provided in.Section.26 below.
The notice shall specify with particularity the default or defaults on which the notice is based and the
defaulting party shall be given ten (10) days from the receipt of notice to cure its default. If the
defaulting party does not cure its default within such ten-day(10-day) period, the non-defaulting party
may avail itself of all legal rights and remedies available,subject to the terms of this Option Agreement.
25: Applicable Law. The validity, performance and enforcement of this Option Agreement
shall be construed under the laws of the State of California applicable to agreements fully executed and
to be performed in such state.
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26. Consent to Jurisdiction. The City and Copelands,agree that anyytim-4 action or other legal
proceeding MCI'Sng' out of or in .MdOn with thisOption Agreement may be brought, and shall be
brought only,in a superior or municipal court of the County of San Luis Obispo, State of California and
hereby consent to the jurisdiction of any:such court in any such-suit, action or proceedings. The City
and Copelands hereby.waive any objection which such party. may have to the laying of any such suit,
action or proceeding in any such court.
.27. Notices. All notices, requests, demands and other, communications under this Option
Agreement,.except for the Exercise Notice which-shall be,personally delivered under Section 4 above,
shall be in writing and shall be deemed to have been duly given on the date of 'v* if served
service
personally, by.reliable overnight courier, or by telecopy transmission for receipt during the receiving
parties'normal business hours to the party to whom notice is to bei
given, or on the third(3rd)day after
mailing if mailed to the party to whom notice is to be given, by first class mail, registered or certified,
return receipt requested,postage prepaid,and properly addressed as,follows:
City: City of San LuisObispo
9.00 Palm Street
San Luis Obispo,California 93401w3249
Attention: City Administrative Officer
Facsimle: (805)781-7109
With a copy to: City Attorney
City of San Luis Obispo
990 Palm Street
San Luis Obispo,California 93401-3249
Facsimile: (805) 181-1460
Copelands: Court Street Partners,LLC
Post Office Box 1348
San Luis Obispo,California 93406
Attention:.Tom Copeland
With a copy to: K:Robin Baggett,Esq.
Sinsheimer, Schiebelhut,&Baggett
1010 Peach Suva
San Luis Obispo,California 93401
Facsimile: (805):541-2802,
Any Party may change its address for purposes of this Section 26 by giving the other
parties wfitten,notice of the new address in the manner set forth above.
28. Interpretation. This Option Agreement has been negotiated by the parties and each party
had the opportunity to have this document reviewed by their respective legal counsel. That a party
drafted the language of this Option Agreement shall not cause such language to be interpreted for or
against such party.
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ATTACHMENT �
IN WITNESS WHEREOF, the parties to this Option Agreement have duly executed it as of the
day and year first written above.
SAN LUIS OBISPO COURT STREET,LLC,.
a California limited liability company
By:
Tom Copeland
Its: Managing Member
CITY OF SAN LUIS OBISPO,
a municipal corporation and Charter City
BY:
David F. Romero
Mayor
.Attest:
By
Lee Price
City Clerk
Approved as to Form:
Y
Gilbert A.Trujill
Acting City Attorney
By:
Herb Weiser
City Special Counsel
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ATTAk.o;MENT Z
INDK&R ' 3ta.623,3841
213.623.3841
Fax 213.623.4231
Allan D. Kotin &Associates
Real Estate Consulting for Public Private Joint Ventures
949 S..Hope Street,Suite 200, Los Angeles, CA 90015 akotin@adkotin.com
Memorandum
TO: Claire Clark and Shelley Stanwyck, City of San Luis Obispo DATE: August 6,2007
CC: Bill Statler
FROM: Allan D. Kotin
RE: FISCAL IMPACT ANALYSIS OF PROPOSED CHINATOWN PROJECT
At your request, Allan D. Kotin & Associates (ADK&A) has prepared this proposal for consulting
services. Some time ago, in connection with the project that later became known as the Court Street
Project, an option was granted to Tom Copeland and his special purpose entity, for the purpose of
acquiring the City parking lot generally known as the Chinatown Lot. At that time, Copeland
contemplated development of a mixed-use retail and residential project. At this time, apparently the
project has been expanded to also incorporate a proposed hotel.
Since the project represents a major new element in the downtown landscape and, while arguably
consistent with the general principles of the downtown strategic plan, it potentially represents a
departure of specific land uses, the City wishes to understand more clearly its fiscal impact.
Overview of Scope and Phasing
In general, the purpose of this fiscal impact analysis will be to identify the revenue and cost impacts
on both the City's general fund and on its parking fund. There are numerous complexities
associated with this measurement. These include, but are not limited to, the impact on other
businesses, the transfer effects, potential costs associated with replacement parking, potential for
augmented municipal services requirements, potential catalytic effects or, conceivably, counter-
catalytic effects on adjacent land uses.
Because of the complexity, ADK&A proposes to break the fiscal impact analysis into two
sequential tasks. The first task will be a clear identification of the issues to be considered and the
establishment of baseline data from which to measure future impacts.
Once the baseline has been established and there is agreement on the scope and issues to be
considered in the analysis, then the actual analysis will be undertaken as the second task.
Task 1 Objectives and Process
The incorporation in the same project of hotel, retail, and residential uses poses particular challenges
for parking analysis and parking impacts. Clearly, there is a need for on site dedicated parking for
the residential, while at the same time retail parking may well be managed through the payment of in
- lieu fees or the use of common public parking facilities. Hotel parking poses particular problems
insofar as all or most hotel parking is typically provided on site. The situation is significantly
ppq�
nDK&11 ' ATTACY HENT �
Memorandum
RE: FISCAL IMPACT ANALYSIS OF PROPOSED CHINATOWN PROJECT
Working Draft Subject to Change
complicated by the fact that apparently the proposed hotel will have significant meeting and banquet
space. This tends to create peak demand for parking of a different nature which exacerbates parking
shortages at key time periods.
Also to be considered are the scale and scope of potential transfer effects insofar as other hotels are
currently proposed for development and it is not clear whether the significant portion of the business
for this Chinatown hotel will be new or simply a transfer of other business.
The scope and character of municipal services also needed to be considered because this will be an
unusually intense use and may make demands on water, waste water, public works and other
services not contemplated in the more general downtown strategic plan.
All of these issues need to be identified and a set of baseline data established. The guiding source
for this will be the Draft EIR and the comments submitted on it. In some cases, the baseline data
may involve additional projections and comparisons of other projects in the pipeline, notably
including the Garden Street Project with its hotel and the proposed Marriott Hotel.
At the conclusion of Task 1, there will be a detailed written scope for the implementation phase of
the fiscal impact analysis and a set of baseline data on costs and revenues. This baseline data will
cover impacts on both the general fund and the parking fund. In the case of the parking fund,
baseline data may include,among other things, the current and proposed status of the in lieu parking
fee, the cost of actual replacement, the location of proposed replacement parking etc.
Task 2 Implementation Analysis
Phase 2 will largely be a fairly detailed exercise fulfilling the scope and addressing the issues
identified in Task 1.
Particular subtasks include interviewing the affected City departments and, with them, building up
analyses of potential incremental budgets. Also included will be a detailed review of the parking
situation with the City's parking department and, as needed with outside parking experts. It will also
involve estimates of new public parking construction costs.
The consultant will work closely with the Department of Finance to establish the probable gross
revenue impacts of the project in terms of property tax, sales tax, transient occupancy tax and other
associated taxes. At the same time, the consultant will develop independently estimates of the
transfer effect and the extent to which these gross revenues should be discounted.
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Allan D. Kotin&Associates Page 2 8/20/2007
'RDK&R ATTACHMENT �
Memorandum
RE: FISCAL IMPACT ANALYSIS OF PROPOSED CHINATOWN PROJECT
Working Draft Subject to Change
Budget and Schedule
Task 1 can be completed in two to three weeks from the receipt of an initial project description and
authorization to proceed. Component subtasks will include:
1. A thorough review of the of the Draft EER
2. Obtaining and reviewing some level of pro forma financial projections for the project to be
provided by the developer
3. Scheduling a debriefing meeting with the developer to resolve any remaining questions about
the proposed development;
4. Concurrently scheduling a multi-departmental debriefing meeting with City staff so as to
identify critical issues and begin to sort out which issues must be included and which can be
safely excluded from the analysis;
5. Concurrent identification of other information needed to establish critical baselines;
6. Collection of remaining information and generation of initial outline;
7. A second meeting—or possibly teleconference---with key City officials to review the
proposed approach
ADK&A will then circulate a Task 1 progress report with, scope, identification, issues and baseline
estimates.
Key Steps for Task 2 Implementation
In this phase, the director of parking and managers of other affected departments in the City will be
interviewed with the intention of jointly developing fairly detailed estimates of the incremental costs
associated with servicing this new project.
The director of planning, the director of economic development and the assistant CAO will also be
meeting to identify and characterize with whatever precision is possible, the timing and scale of
potential competitive developments coming on line during the same period so as to provide a basis
for the estimation of transfer effects.
ADK&A will, during this period, generate from baseline data an initial estimate of the gross and net
revenue impacts of the project.
This phase should be completed within not more than three weeks after the completion of Task 1.
Assuming that ADK&A is authorized to proceed within the by August 20, it should be possible to
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Allan D.Kotin&Associates Page 3 8/20/2007
I i i
a4T'P'd4CF'IMENT 2.
Memorandum
RE: FISCAL IMPACT ANALYSIS OF PROPOSED CHINATOWN PROJECT
Working Draft Subject to Change
complete the work by November 1 at the latest. Note that I will be away on vacation from
September 4 through September 17.
The budget for this assignment is $28,000 which includes one trip for two persons in Task 1 and up
to the four trips, including a final presentation in Task 2.
The senior sub-consultant for this project would be one of two long time associates of mine now
employed at CB Richard Ellis Consulting who have worked with me extensively on fiscal impact
analysis in the past and one of whom would assist me in this project. One is Tom Jirovsky with
whom some of you have already had contact and who recently did the re-use appraisal on the
Garden Street project. The other, and more likely, participant would be Ross Selvidge, a long time
associate of mine who actually worked on the first fiscal impact study we did for the Marketplace.
The actual choice of individual will depend in part on scheduling issues. Hourly rates for personnel
involved will be $195 for me and up to $275 per hour for senior CBRE personnel.
The City would, of course, be charged only for the time expended and the total budget of $28,000
would not be exceeded without the City's prior written consent.
Based on my long association with the City, I am willing to proceed immediately upon your verbal
authorization so as to assure completion this year. For more formal authorization, you may either
direct me to incorporate the terms of this memo in a formal proposal or choose to issue a City
purchase order or form contract which includes the salient terms of this proposal by incorporation or
reference.
C:\Documents and Settineslslouser\Local Settin s\Temporary Intemet Files\OLK21\Chinatown Fiscal Impact Proposal doc
Allan D. Kotin&Associates Page 4 8/20/2007
ATTACHMEW
AGREEMENT
THIS AGREEMENT is made and entered into in the City of San Luis Obispo on October_, by and
between the CITY OF SAN LUIS OBISPO,a municipal corporation,hereinafter referred to as City,and ALLAN D.
KOTIN&ASSOCIATES,hereinafter referred to as Contractor.
WITNESSETH:
WHEREAS, the City wants to secure financial consultation and representation for the analysis of the fiscal
impacts of the Chinatown Project;
WHEREAS, Contractor is qualified to perform this type of service and has submitted a proposal to do so
which has been accepted by City;
NOW THEREFORE, in consideration of their mutual promises, obligations and covenants hereinafter
contained,the parties hereto agree as follows:
1. TERM. The term of this Agreement shall be from the date this Agreement is made and entered,as
first written above,until acceptance or completion of said services.
2. CITY'S OBLIGATIONS. For providing services as specified in this Agreement, City will pay
and Contractor shall receive therefor compensation in a total sum not to exceed$25,000.
4. CONTRACTOR'S OBLIGATIONS. For and in consideration of the payments and agreements
hereinbefore mentioned to be made and performed by City, Contractor agrees with City to provide services as set
forth in Exhibit A attached hereto and incorporated into this Agreement.
5. AMENDMENTS. Any amendment, modification or variation from the terms of this Agreement
shall be in writing and shall be effective only upon approval by the City Administrative Officer of the City.
6. COMPLETE AGREEMENT. This written Agreement, including all writings specifically
incorporated herein by reference, shall constitute the complete agreement between the parties hereto. No oral
agreement, understanding, or representation not reduced to writing and specifically incorporated herein shall be of
any force or effect, nor shall any such oral agreement, understanding, or representation be binding upon the parties
hereto.
ATTACHMENT 3
Exhibit B:Contract Performance Terns Page B-2
7. NOTICE. All written notices to the parties hereto shall be sent by United States mail, postage
prepaid by registered or certified mail addressed as follows:
City City Clerk
City of San Luis Obispo
990 Palm Street
San Luis Obispo,CA 93401
Contractor Allan D. Kotin
Allan D.Kotin&Associates
949 South Hope Street,Suite 200
Los Angeles,CA 90015
8. AUTHORITY TO EXECUTE AGREEMENT. Both City and Contractor do covenant that each
individual executing this agreement on behalf of each parry is a person duly authorized and empowered to execute
Agreements for such party.
IN WITNESS WHEREOF, the parties hereto have caused this instrument to be executed the day and year
fust above written.
ATTEST: CITY OF SAN LUIS OBISPO,A Municipal Corporation
By:
City Clerk,Audrey Hooper Mayor Dave Romero
APPRO D AS TO FO CONTRACTOR
/14 By:
uy Attorney,Jonathan Lowell