ANALYSIS:
I. Summary of the Proposed Project
1. The City currently owns the five parcels outlined in red on Exhibit "A" which contain 83 surface parking spaces.
2. North Beach Town Center Development, LLC ("Developer") owns the parcels outlined in yellow on Exhibit "A."
3. The portion of the project between Abbott and Byron would consist of two separate structures, consisting of 121,693 SF of retail in four stories and a 484-space parking garage. 384 of the parking spaces would be gated public parking spaces in a separate City-owned parking structure (the “Town Center Garage”), and 100 of the parking spaces would be for the sole use of the ground floor retail tenant on the Developer's property, which is projected to be a grocery store. The Town Center Garage property would also include approximately 4,362 sq. ft. ground floor restaurant/retail space.
4. The portion of the project between Abbott and Harding would consist of existing office buildings at 42,456 SF, and new a 134-unit residential building with 42,538 SF of ground floor retail uses and a 275-space parking garage, to serve the residential building and office tenants. City’s participation in the project between Abbott and Harding would be limited to City’s conveyance of the City-owned property located therein.
5. The City would convey its five parcels to Developer, and Developer would convey its parcels outlined in blue on Exhibit “A” to the City, for use for the 384 space Town Center Garage.
6. Developer will be responsible for designing, developing, permitting and constructing the 384-space City-owned Town Center Garage, with the City to reimburse Developer for the costs, based on the [TBD] final negotiated terms, which as of the date of this Committee memorandum remain pending.
7. Once the Developer completes the construction of the Town Center Garage, the City will condominiumize the City-owned parcels (outlined in blue in Exhibit “A”), with the City to own the 384 space Town Center Garage, and the Developer to own the 4,362 sq. ft. ground floor retail space.
II. Direction Provided by the Finance Committee, and the Developer’s Response
At the February 23, 2018 Finance Committee, the Committee reviewed the Developer’s proposed term sheet, and among other comments, provided the feedback to the Developer with respect to the main open issues. A summary of the Finance Committee direction, and the Developer’s updated proposed March 7, 2018 term sheet and draft development agreement, are highlighted in the table below:
FEBRUARY 23, 2018 DEVELOPER’S RESPONSE
FINANCE COMMITTEE DIRECTION AND ADMINISTRATION’S COMMENTS
|
1.
|
The Committee noted that the $40,000 per space costs for construction of the City garage were high, and indicated the Developer could do better.
|
Developer’s pricing remains at $40,000 per space.
NOTE: The Developer’s proposed $40,000 per space is only for construction. In the draft development agreement, the Developer proposes for the City to separately pay all design costs (which would generally be 6-10% of hard costs). By way of comparison, the City’s final costs for design and construction of the Collins Park Garage (which include expensive exterior features), was approximately $34,000 per space.
|
|
2.
|
The Committee unanimously disfavored the proposal, in perpetuity, for two hour free parking for the benefit of Developer’s retail customers. The Committee expressed concern with the high likelihood of annual operating losses at this garage, if 2 hour free parking is included, especially given the experience at the Alton & 5th Garage, which incurs losses even after factoring the significant annual payment (approximately $400,000) the City receives from that developer for the 2 hour free parking at that garage.
The Committee expressed a willingness to consider 2 hour free parking for a limited term of years (and specifically indicated two years).
|
Developer has maintained its proposal for two hour free-parking, in perpetuity, for the benefit of its retail customers (in exchange for a one-time payment of $700,000).
Developer’s new proposal expands on the 2 hour free parking concept, and calls for two hour free parking for the general public (and not just the developer’s retail customers), for the first three years. In exchange for this expanded 2 hour free parking rights, Developer has offered to cover the City’s operating losses for the first three years (subject to significant caveats, such as if the losses are due to “City mismanagement” or “other factors,” none of which Developer has specified.
NOTE: Under Developer’s proposal, after the first three years, City is solely responsible for all operating losses at the garage, in perpetuity.
Importantly, based on the 2014 Walker Parking Study, as 72 percent of week day parking stays, and 80 of weekend parking stays, are 2 hours or less, the City should reasonably anticipate that the loss of revenue associated with 2 hour free parking will result in significant annual losses at the Garage.
|
|
3.
|
The Committee unanimously disfavored the waiver of required concurrency fees, which the City has never done for a brick and mortar project.
|
Developer has not requested waiver of concurrency in its recent proposal.
|
|
4.
|
The Committee (and subsequently, the City Commission, at its February 28, 2018 Retreat), requested that the Administration provide options in terms of number of spaces for both this garage, and the proposed 72nd Street Parking Garage (located within a few blocks of the Developer’s proposed project).
|
In the developer’s most recent proposal, the Developer has increased the number of spaces from 371 to 384 City spaces.
NOTE: The Administration’s analysis is underway. The number of spaces remains a concern, when considering the proposed 384 spaces in conjunction with the proposed parking garage at 72nd Street, which is being programmed for 500 spaces (for a net additional 182 spaces beyond the existing parking lot).
|
On March 7, 2018, as part of a discussion of the Finance Committee report on the consent agenda, the City Commission referred the Developer’s proposal to the Planning Board at its April 17, 2018 meeting, as Section 1.03(b)(4) of the City Charter requires 4/7 approval of the Planning Board for the transaction. The intent is for the term sheet to be finalized prior to the Planning Board’s April 17, 2018 meeting; if not finalized, the matter will be opened and continued.
III. City’s Proposed Term Sheet, Consistent with Finance Committee’s Feb. 23, 2018 Direction
On March 9, 2018, consistent with the direction provided at the February 23, 2018 Finance Committee meeting, the City transmitted the City’s proposed term sheet to the Developer, a copy of which is attached hereto as Exhibit “B”. Subject to any additional direction the Finance Committee may provide, the City’s term sheet covers the points identified in the developer’s March 7, 2018 term sheet, as well as the material terms the City proposes be included in the draft development agreement.
For reference purposes, the Developer’s March 7, 2018 term sheet is attached as Exhibit “D”.
IV. The Administration’s Prior Analysis Regarding Main Open Issues.
For ease of reference, the Administration’s February 23, 2018 Committee Memorandum is attached hereto as Exhibit “C,” (without attachments, as the term sheet has been updated). The Committee Memorandum includes the Administration’s analysis regarding the policy matters at issue for this project, such as with respect to the two-hour free parking, the concern for the number of spaces and the potential for underutilization of parking at this garage, the Planning Department’s continued concerns regarding Developer’s proposed loading, the necessary legislative changes required for the project, and the necessary capital budget appropriation required for the project.
| | |