April 11, CONTACT PERSON: Todd Leon, Development Director. RECOMMENDATION: Adopt a Resolution that:

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1 April 11, 2017 TO: CADA Board of Directors SUBJECT: April 21, 2017, Board Meeting AGENDA ITEM 6 SITE 21 - PROPOSALS AND DEVELOPER SELECTION (SOUTHWEST CORNER 14 TH AND N STREETS) CONTACT PERSON: Todd Leon, Development Director RECOMMENDATION: Adopt a Resolution that: 1. Selects Cresleigh Homes to develop CADA Residential Site 21; and 2. Authorizes the Executive Director to enter into negotiations with Cresleigh Homes on an Exclusive Negotiating Agreement (ENA) for Site 21 and to return to the Board for review and approval. BACKGROUND On December 5, 2016, CADA issued a Request for Proposals (RFP) for the design and construction of a midrise condominium development on CADA Residential Site 21, located at the southwest corner of 14 th and N Streets. On Friday, February 17, 2017, five proposals were submitted. After review of the proposals, four were determined to be responsive to the RFP and one was determined to be non-responsive. The four responsive proposals were submitted by the following developer-led teams: 1. Clippinger Investment Properties 2. Cresleigh Homes 3. SKK Developments and the Grupe Company 4. UrbanCore Development, LLC and Pilot Real Estate Group, LLC A summary table of the four proposals can be found as Attachment 1. CADA staff s review of the four proposals was conducted by the Executive Director and by a fivemember Selection Advisory Committee. The Advisory Committee included Leslie Fritzsche, City of Sacramento Economic Development Department; Chester Widom, California State Architect; Costa Apostolos, Friends of Fremont Park member and Capitol Neighborhood resident; and Todd Leon and Tom Kigar, CADA staff. The Committee was assisted by CADA financial consultants Anastasia Efstathiu and Don Fraser. On March 9, 2017, the CADA Site 21 Selection Advisory Committee met to discuss the proposals. The Committee identified aspects of each proposal that required clarification as well as additional information needs. Staff subsequently transmitted questions in writing to the Developers and

2 responses were received on March 15 th. The Committee met again on March 16 th to evaluate the responses and to prepare for the Developer Team interviews on March 21 st. On March 21, 2017, a Special CADA Board Meeting was held and the Development teams presented their proposals and responded to questions. In addition to the CADA Board of Directors, the Selection Advisory Committee and CADA staff participated in the meeting. On March 29, 2017, the Selection Advisory Committee conducted a final meeting to consider each Developer team s proposal, their written responses to questions, and their presentations and interviews at the March 21 Special Board Meeting. After reviewing each proposal against the RFP goals, objectives, and selection criteria, the Committee recommended Cresleigh Homes be awarded the opportunity to develop Site 21. The Committee presented its recommendation to CADA Executive Director Wendy Saunders, who concurred with the recommendation. Cresleigh Homes has proposed to build a 78 unit, nine story condominium project that includes 80 parking spaces and 4,800 square feet of ground floor retail. ANALYSIS Review Committee Recommendation The Committee was impressed with the strength of each of the development proposals. In its deliberations, the Committee prioritized the goals and objectives set forth in the RFP in the following order: 1. Financial feasibility of the project and ability of the team to finance and deliver the project without CADA assistance. 2. Qualifications and Experience of the team and the capacity to develop this type of project. 3. Overall project design, program and development approach. The Review Committee recommended selection of Cresleigh to develop Site 21 for the following reasons: 1. Project Feasibility and Ability to Finance and Deliver the Project Cresleigh Homes provided a project budget and pro forma, that, while conservative in regard to unit pricing and the unit mix, revealed a feasible Site 21 project. Cresleigh s conservative approach to Site 21 leaves room to refine the project to respond as necessary to potential market shifts over the next two years. The strongest component of Cresleigh s proposal is the amount and source of equity they will bring to the project. Cresleigh will provide the entire 40% equity stake needed to secure project construction financing itself without the need to secure investments by equity partners. This estimated developer equity amount of $19.3 million pledged by Cresleigh is a substantial and indicates the firm s strong commitment to the project. CADA s consultants review of Cresleigh s tax returns and financial statements confirmed Cresleigh s financial strength and capacity to deliver on its pledge. 2. Developer Qualifications and Project Team Although Cresleigh Homes has limited experience as a developer of mid-rise condominium projects, they have significant experience building and selling a variety of types of housing products. In addition, Cresleigh s parent company also owns Stanford Hotels,

3 which builds and owns mid- and high-rise hotels. This has exposed the developer to mid and high-rise development and construction. Cresleigh has assembled a capable project team that appears to have the capacity to plan and develop the project as proposed. The selection committee was impressed with the quality resumes of all the team members. The design team pairing of Vrilakas Groen Architects and HKS Architects brings to the project two well respected and successful firms. Vrilakas Groen Architects, the project design architect, has established a solid reputation in Sacramento for creating award-winning designs for urban infill sites, and HKS Architects, the executive project architect, has a strong resume of designing Type I, mid-rise condominium buildings in Northern California. 3. Quality Project Design CADA staff and the Selection Committee concluded that the design proposed by the Cresleigh team is impressive. The design fits well with the neighborhood including the other buildings that front Capitol Park. The exterior design utilizes quality materials and the openness of the N Street façade takes advantage of the Capitol Park views. The ground plane of building interacts with the public realm in a way that will be interesting to pedestrians. The Selection Committee was also impressed by the project density. Lastly, the project proposal exhibits a strong commitment to green building features and a practical approach to achieving the LEED Gold standard as required by the RFP. The staff, with the assistance of State Architect Chester Widom, will work with the Cresleigh team to refine the project design and program during the ENA period. Recommended Board Action The recommended board action accepts the Selection Committee s and staff s recommendation to select Cresleigh Homes. This recommendation is largely based upon Cresleigh s project feasibility, financing approach, overall project team experience, and the proposed project design. If the Board approves staff s recommendation, staff will immediately begin ENA negotiations with Cresleigh Homes. Staff anticipates a month to negotiate ENA terms with Cresleigh. Staff has tentatively scheduled approval of a Site 21 ENA for the June Board Meeting. The Site 21 Draft ENA can be found as Attachment 2 in this staff report. When the ENA is executed, the $30,000 Option Fee submitted by Cresleigh Homes will be deposited by CADA. If an ENA is not executed, the Option Fee will be refunded to Cresleigh Homes and the Executive Director will return to the Board with a recommendation to select one of the other three developers, issue a new RFP, or place the site on hold. The draft ENA, including Significant Deadlines for Performance (Exhibit 3 to the attached ENA), was included in the RFP. The Significant Deadlines are as follows:

4 Days Following Effective Date of ENA Task Date CADA Board selects Developer Board Meeting June 23, 2017 N/A CADA Board approves ENA Board Meeting Developer submit Executed Agreements with July 24, Service Entities (Section 3.3) Developer Submit Refined Development Proposal September 21, 90 (Section 3.4) 2017 Developer Submit Development Entity Formation September 21, 90 Document (Section 3.5) 2017 CADA, State, Committee and City review Development Proposal. CADA reviews and approves Development Proposal (Section 4.2) Developer submits DDA Term Sheet (Section 3.6) February 19, days from date Development Proposal is received by CADA Developer submits evidence of Project Financing (Section 3.9) ENA Terminates/Developer & CADA Complete Negotiations, Prepare and Execute the DDA (Section 1.2) March 20, June 22, The above dates assume that the CADA Board selects a Developer at the April 21, 2017 Board meeting and approves an ENA at the June 23, 2017 Board meeting. It is possible that the Developer will be able to achieve the milestones more quickly than noted in the schedule. POLICY ISSUES Development of housing on Site 21, as outlined in the RFP, is consistent with the 1997 Capitol Area Plan that designates the site for residential development, and the Capitol Park Neighborhood Design Plan. Additionally, utilizing the RFP process to select a private development team and related proposed project is consistent with previous Board direction on October 28, 2017 authorizing issuance of an RFP for Site 21. Two of the stated goals in the RFP are to construct a for-sale condominium project and to provide the maximum number of residential units consistent with the height, density and massing limitations. Providing an exceptionally designed, ownership housing project at Site 21 supports CADA s goal of building neighborhood quality and complex infill projects. STRATEGIC PLAN The draft RFP addresses the Strategic Plan goals to develop complex infill projects, exhibit leadership in urban development, implement environmentally sustainable practices and focus on quality in design. FINANCIAL IMPACTS In accordance with CADA policy, as described in the Site 21 RFP, the selected development team s Negotiation Fee of $30,000 will be deposited upon approval of the ENA and will only be refunded if CADA fails to negotiate in good faith during the ENA Period or during the DDA period.

5 ENVIRONMENTAL REVIEW No environmental review is required in order to select a developer and proceed toward negotiation of an Exclusive Negotiating Agreement. Staff previously determined that development of a project consistent with the Site 21 RFP is categorically exempt from the California Environmental Quality Act (PRC , 2 CCR 15183). CONTRACT AWARD CONSIDERATIONS Should Cresleigh Homes not enter into the ENA, staff will return to the Board with a recommendation to enter into an ENA with one of the three other development teams who responded to this RFP, issue a new RFP, or place the site on hold. Attachments: 1. Site 21 Summary Table of Proposals 2. Draft Exclusive Negotiating Agreement