HomeMy WebLinkAbout05-21-2019 Item 16 - MOU for Upper Downtown Parking StructureDepartment Name: Public Works
Cost Center: 5101
For Agenda of: MAY 21, 2019
Placement: Business
Estimated Time: N/A
FROM: Daryl Grigsby, Director of Public Works
Prepared By: Timothy Scott Bochum, Deputy Director of Public Works/Interim Parking
Services Manager
SUBJECT: MEMORANDUM OF UNDERSTANDING BETWEEN THE CITY OF SAN
LUIS OBISPO, COUNTY OF SAN LUIS OBISPO, AND 1144 HIGUERA
INVESTMENTS LLC FOR A POTENTIAL PUBLIC-PRIVATE PARKING
STRUCTURE IN THE UPPER DOWNTOWN
RECOMMENDATION
1. Authorize the City Manager to execute a Memorandum of Understanding (MOU) between
the City of San Luis Obispo, County of San Luis Obispo, and 1144 Higuera Investments,
LLC; and
2. Approve a new capital project “Higuera Parking Structure” and direct the Public Works
Department to engage in design-build project delivery (Phase 1) with the County and allocate
90,000 in matching funds to the County for Phase I activities; and
3. Authorize the City Manager, or his designee, to negotiate final terms for a Ground Option
Lease and Final Lease Option for the project and return to Council with final
recommendations for consideration; and
4. Authorize the Public Works Director to exercise, if necessary, any termination clauses in the
MOU.
DISCUSSION
The City currently operates three parking structures in the downtown at 842 Palm Street, 871
Marsh Street, and 919 Palm Street and is currently in the process of completing the design for a
fourth parking structure at the corner of Palm and Nipomo to serve the parking needs at the south
end of the City’s Downtown. The City is interested in entering into a Memorandum of
Understanding (Attachment A) with the County of San Luis Obispo and Mr. Nick Tompkins (1144
Higuera Investments, LLC.) to develop a fifth parking structure in the one block area bounded by
Santa Rosa, Monterey, Higuera, and Toro street (Attachment B - Exhibit A to MOU).
This new structure will be incredibly important as the City evaluates potential land use and
zoning changes in the Downtown and upper Monterey as the viable available sites for an
economical and functional parking structure are extremely limited. Consolidating land in this
area for a large parking project would be difficult for the City and likely take many years. This
proposal gives the City and County an opportunity to coordinate development within the area
both for public and private purposes.
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Item 16
This property represents a unique opportunity to partner with a landowner and the County to
leverage efficiencies in creating parking capacity for upper Monterey Street and the surrounding
area. As the City expands permit parking into residential areas, free parking utilized by County
staff will continue to be reduced while staff and services are expected to grow over the next 20
years. Depending upon final design needs, the structure will provide between 500 – 600 spaces
for a variety of uses. As part of the MOU, the property owner (Mr. Tompkins) will be entitled to
82 spots leaving the remaining spaces to be utilized by the County and City to address employee
demand, residents and visitor needs, downtown workers and to offset some future development
in the area.
The purpose of the MOU is to identify a basic framework between the County, City, and 1144
Higuera Investments for Phase 1 efforts related to developing a mutually beneficial parking
structure to meet current and future needs of the community and the parties involved. The parties
will work collaboratively on the recommendation for parking structure proposals to both the
County and the City elected officials.
The current language in the MOU was developed collaboratively with the County and 1144
Higuera Investments LLC. As the City and County proceed through their phase one work efforts
and financial due diligence, the final terms of a ground lease option will be negotiated, including,
but not limited to, purchase options, parking spot designations, and operating/maintenance
expense allocation. Potential financial implications of the MOU and Option Agreement are
discussed below.
The MOU provides that all three parties will initiate work efforts such as site remediation,
conceptual design, environmental documents and the solicitation of proposals from Construction
Management/Master Architect firms. The first work phases of the MOU will address the design
and number of parking stalls that will meet all parties’ needs and if the initial cost estimates for
construction are reasonable and no environmental issues or design conditions exist that would
make the project infeasible. The MOU provides “offramps” or inflection points at different
stages of the preliminary schedule (Attachment C - Exhibit B to MOU) should any of the parties
choose to not continue this effort.
The MOU also establishes that the City and/or County would enter into a ground lease with the
property owner with the precise terms being negotiated over the next several months. It is
anticipated the City will operate and maintain the structure and the County will take lead on
construction of the structure. The parties are in discussions regarding the appropriate lead agency
for environmental review.
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Item 16
Previous Council Action
On March 19, 2019, the City Council approved the appropriation of $125,000 from the Parking
Fund for use in advance development work for this potential public-private partnership and
authorized the City Manager to negotiate the final terms and scope of services, not to exceed
35,000 with consultants Public Financial Management (PFM) to provide financial guidance for
future Council consideration of this project.
Policy Context
1) Land Use Element - Special Planning Area 8.2.2 establishes this area seeking revitalization
and redevelopment including parking facilities
2) City’s Access and Parking Management Plan (Attachment E):
a) Policy 5.1 - Parking should be provided in the commercial core for shoppers, tourists,
employees and patrons of government and private offices.
b) Policy 5.4 - Parking structures and surface lots should be located along the periphery of
the commercial core as a means of eliminating traffic congestion and enhancing pedestrian
activities.
Public Engagement
On November 13, 2018 a study session was held on Parking Management Issues and Strategies
leading to the upcoming update to the Parking and Access Plan. Community members had an
opportunity for public comment and to weigh in ahead of time via an online survey through
Open City Hall. Responses to the survey were provided to the City Council as part of the study
session.
After approval of this MOU, staff anticipates the need to hold at least one public workshop (prior
to execution of the purchase option) to discuss the project with area businesses, residents and
property owners. At that workshop issues such as potential project features, environmental
concerns, costs and potential funding options will be discussed.
CONCURRENCES
The County of San Luis Obispo has reviewed the draft MOU and is recommending consideration
and approval by the County Board of Supervisors on May 21, 2019.
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Item 16
ENVIRONMENTAL REVIEW
The California Environmental Quality Act does not apply to the recommended action in this
report, because the action does not constitute a “Project” under CEQA Guidelines Sec. 15378
and is otherwise categorically exempt from environmental review per CEQA Guidelines 15306,
Information Collection.
Additional environmental review will be conducted for the project as preliminary designs and
other Phase 1 activities are completed.
FISCAL IMPACT
Budgeted: Yes Budget Year: 2018-19 via Council Action
Funding Identified: Yes – Parking Fund
Fiscal Analysis:
Funding
Sources Total Budget
Funds
Committed to
Date
Current
Funding
Request
Remaining
Balance
General Fund
Parking Fund $125,000 $35,000 $90,000 $0.00
Total $125,000 $35,000 $90,000 $0.00
The work efforts for Phase 1 of this project, outlined in the MOU, includes a 50/50 cost share
between the County and the City for $180,000. If additional Phases are to be considered in the
future, additional costs to the City may arise (Attachment D - Exhibit C to MOU). Approval of
this MOU by the Council will commit the City to $90,000 that will reimburse the County for
Phase I activity for the project.
On or before December 1, 2019, and conditioned on completion of the Remediation Work, a
lease option regarding the NKT Site (the “Lease Option”) shall be executed between 1144
Higuera Investments LLC, and the County and/or City in exchange for an option consideration
payment by the County and/or City in the amount of $288,000. The MOU commits the City and
the County to enter into a Ground Lease Option Payment in order to retain the properties for the
project to continue to be worked on. There will also be additional costs associated with the Lease
Option having to do with the costs of acquiring and remediating a part of one final property – the
Adler” site and caps this amount at 8% of these costs. The Lease Option Payment will be split
equally by the City and County.
When the final Option amount is known staff will return with a budget item request to fund the
payment and with final terms of the agreement. All cost will be paid through the City’s Parking
Fund.
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ALTERNATIVES
Council can deny the City Manager authorization to execute a MOU between the City of San
Luis Obispo, County of San Luis Obispo and 1144 Higuera Investments, LLC and project
exploration would cease. This is not recommended as the MOU provides several clauses by
which the Public Works Director can terminate the MOU at a later date.
Attachments:
a - Memorandum of Understanding (MOU)
b - Exhibit A to MOU - Site Map
c - Exhibit B to MOU - Preliminary Project Schedule
d - Exhibit C to MOU - Cost Estimate for Programming and Conceptual Design Work
e - READING FILE - 2011 Access and Parking Management Plan
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VICINITY MAP PROPOSED PARKING GARAGESan Luis Obispo, CA
COUNTY OF SAN
LUIS OBISPODEPARTMENT
Exhibit C:
Higuera St.Parking Structure
Cost Estimate thru selection of CM/PM off ramp one)
TASK Estimated Cost
Consultant Fees:including County administrative charges)
Conceptual Design Parking Layout $32,000
Geotech report $37,000
Site Survey $16,000
Hazmat report soil assessment)See Note 1 below
Staff Time:
MOU/PW Admin $10,000
Conceptual Design Informal RFP Design Phase $10,000
Prepare CM/PM RFP 20,000
Bidding/Consultant Selection Process $40,000
Contingency $15,000
TOTAL COST: $180,000
Note 1:
1.It is assumed that Developer will deliver a clean site to the County/City.
2.If needed,the Geotech and site survey can be secured after the CM/PM
is on board
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Item 16
05-21-2019 Item 16 - Staff Presentation
1
CITY OF SAN LUIS OBISPO
Higuera Parking Structure – MOU 5/21/19
1
Tonight
2
Receive a presentation on the Proposed MOU between the
City, County of San Luis Obispo and 1144 Higuera
Investments, LLC.
1
2
05-21-2019 Item 16 - Staff Presentation
2
Recommendations
3
1. Authorize the City Manager to execute a Memorandum of Understanding
MOU) between the City of San Luis Obispo, County of San Luis Obispo, and
1144 Higuera Investments, LLC; and
2. Approve a new capital project “Higuera Parking Structure” and direct the
Public Works Department to engage in design-build project delivery (Phase 1)
with the County and allocate $90,000 in matching funds to the County for
Phase I activities; and
3. Authorize the City Manager, or his designee, to negotiate final terms for a
Ground Option Lease and Final Lease Option for the project and return to
Council with final recommendations for consideration; and
4. Authorize the Public Works Director to exercise, if necessary, any termination
clauses in the MOU
Project Location
4
HigueraMarshSantaRosaToroOld
BOA
BOA
County
Admin
County P&R
and Expansion
New
MU
3
4
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Project Location
5
Downtown Physical Concept Plan - 1993
6
5
6
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Downtown Physical Concept Plan - 2018
7
8
7
8
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5
City Of SLO Needs
9
Upper Monterey Special Planning Area
Downtown Residential
Address Neighborhood Parking Intrusion
Design Flexibility
City of the Future
10
Future
Downtown
Concept Plan
Downtown
Residential
Districts
Individual
Projects
9
10
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Other Potential Benefits
11
Potential Individual Property Enhancements
Project Statistics
12
Project consists of up to 600 parking Spaces
Three party agreement working towards implementation
sharing of spaces
1144 Higuera Investments, LLC (82 Spaces)
County of San Luis Obispo (Min. 250 spaces)
City of San Luis Obispo (remainder)
1144 Higuera – acquires property and gets site ready
County & City – Design, Construct, Operate and Maintain
11
12
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The How
13
Memorandum of Understanding (MOU) – Tonight
Subsequent environmental, preliminary design, financial &
technical work – now until November
Negotiate Final Property Lease Option Agreement –
Nov/Dec 2019
Final Property Lease Agreement – no later January 2022
Construction documents, operating agreements, funding
agreements
MOU Terms- Acquisition
Ground Lease Option
14
Issue Terms
Acquisition and remediation of
properties
Sole Responsibility of 1144 Higuera
Investments
Ground Lease Option On or Before December 2, 2019
Ground Lease Option Cost $288,000 plus: 8% of remediation
costs + 8% of remaining cost of
Acquisition of Adler Parcel
Ground Lease Option Cost Sharing TBD: Currently 50/50
13
14
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Terms - Ground Lease Outline
15
Issue Terms
Ground Lease Prior to Construction & no later than
January 1, 2022
Ground Lease Initial Base rent $288,000 plus: 8% of remediation
costs + 8% of remaining cost of
Acquisition of Adler Parcel; or
City/County can pay all remediation
costs up front lowering annual
payments
Ground Lease Term Initial 50 Year Term with 4
consecutive 10 year extensions and 1-
9 Year term (total 99 years)
Ground Lease Extension Cost FVRV at time of extension (92% or
more than 103% prior year)
Additional Extension Costs 10% every 5 years
Terms – Misc. Provisions
16
Issue Terms
Property Sale During Lease, City/County have first
right to negotiate
180 to negotiate
If no agreement –property can be sold
outright with lease intact
Option Purchase Shall include potential purchase
option for city/county (tbd)
Ground Lease Use Limitations Lease establishes building and
operating a parking structure as
limited use on property
Termination MOU terminates if GL Option or GL
are not executed pursuant to MOU
15
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Funding
17
MOU establishes 50/50 split with County through Ground
Lease option
Ground Lease Split – TBD
City – How to Fund GL Option?
Proposed Financial Plan (June 4 CC) – Parking Fund
includes CIP proposal to begin setting aside
250K/year to acquire lots, leases, etc. FY 2019-20
can be used for GL Option
Funding
18
Ground Lease, Construction, Operating
Current Parking Revenue Projections not likely to cover
these costs.
Will need to pursue new funding sources:
1. New/Expanded Parking In Lieu Fee area program
2. Direct Private Participation
3. Other Public Participation (Superior Courts, etc.)
4. Assessment District/Mello Roos Formation
5. Public Facilities Financing District
6. Meters, rates, other parking revenue sources
17
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Funding
19
City has hired in PFM Consulting to conduct fiscal analysis
of the project and to make recommendations for potential
funding strategies – already funded.
Part of Tonight’s recommendation – Approve $90k in
existing funds to be used to match County funds as we
complete project background, environmental, etc.
Schedule – Where to From Here
20
Milestone Date
1) Provide updated draft term sheet for ground lease (1144) 6/1/2019
2) Complete Site Remediation Work (1144) 6/28/19
3) Initiate Environmental studies (City/County) 7/2/19
4) Prepare initial financial analysis of proposed parking alternatives
City)
7/28/19
5) Prepare RFP for Construction Manager/Master Architect (County) 8/2/19
6) Complete parking conceptual design (County) 8/19/19
7 Complete Geotech/Survey (County) 9/2/19
8) Complete property acquisitions (1144) 10/1/19
9) Select Construction Manager/Master Architect (County) 10/15/19
10) Present CM/MA contract for City and County approval to proceed 11/19/19
11) Lease Option and Ground Lease completed – Initial Payment
Lease Option fully executed with attached Ground Lease)
12/2/19
19
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Benefits
21
Acquires property for parking and access use quicker
than a public only project
Can immediately address neighborhood parking
intrusion of downtown employees, current demand
issues
Allows for greater flexibility in individual project design
and property redevelopment
Can help meet City housing, zoning, planning objective
for Downtown and Upper Monterey
Promotes partnership with major stakeholders, such as
the County, as an incentive to stay Downtown
Recommendations
22
1. Authorize the City Manager to execute a Memorandum of Understanding
MOU) between the City of San Luis Obispo, County of San Luis Obispo, and
1144 Higuera Investments, LLC; and
2. Approve a new capital project “Higuera Parking Structure” and direct the
Public Works Department to engage in design-build project delivery (Phase 1)
with the County and allocate $90,000 in matching funds to the County for
Phase I activities; and
3. Authorize the City Manager, or his designee, to negotiate final terms for a
Ground Option Lease and Final Lease Option for the project and return to
Council with final recommendations for consideration; and
4. Authorize the Public Works Director to exercise, if necessary, any termination
clauses in the MOU
21
22
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Questions
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