CITY OF RANCHO SANTA MARGARITA CITY COUNCIL STAFF REPORT
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1 Page 1 CITY OF RANCHO SANTA MARGARITA CITY COUNCIL STAFF REPORT DATE: TO: FROM: BY: SUBJECT: June 8, 2016 City Council of the City of Rancho Santa Margarita Jennifer M. Cervantez, City Manager~ _ Cheryl Kuta, Director of Development S~ Discussion Regarding the Request for Proposals for Development Consultant Services for the Potential Future Development of the 92 Acre Open Space Property Commonly Known as Chiquita Ridge, Located in the Southern Portion of the City Recommendation 1) Council discussion regarding the presentations made by consulting firm candidates on May 11, 2016; 2) Provide direction to staff, as appropriate. Background and Discussion In 2009, the City acquired a 92-acre parcel, commonly known as Chiquita Ridge, located in the southern portion of the City along Antonio Parkway, through a Settlement Agreement with the County of Orange, the Endangered Habitats League and Rancho Mission Viejo. The Settlement Agreement includes many provisions, but generally allows for the development of this parcel on up to 55 acres, no less than 23 of which must be an active sports park. The remaining 32 acres may be developed as determined and desired by the City. Since acquisition, the City has engaged in various feasibility studies and analysis to determine the potential for development at this site. The most notable study was a comprehensive feasibility analysis conducted by Developers Research in The City has also met with numerous developers and retail brokers about the potential development opportunities at the site, and there has been some continuous interest in the property. Development of Chiquita Ridge in accordance with the terms and conditions of the Settlement Agreement is a challenging project, which is evidenced by the period of time that has lapsed since the Settlement Agreement was approved in At present, the site remains zoned Open Space, and significant topographic challenges exist. It is raw land with no infrastructure, grading or entitlements. Significant procedural and 06/08/16 Item No. 6.1
2 Discussion regarding the RFP for Development Consultant Services for Chiquita Ridge June 8, 2016 Page 2 Page 2 legislative actions must first occur before any entity can consider development of the property. In addition, there is the requirement of an active sports park that must be constructed at least simultaneously with (and not after) any other development on the property. This requirement results in financial and timing considerations that do not exist with typical retail and/or residential development projects. City Council direction to date has been to: 1) identify the policy and financial goals and objectives of the potential development; 2) select two preferred development scenarios; and 3) authorize the preparation and release of a Request for Proposals for a Development Consultant. The overarching goal of the potential development is to cause the construction of an active sports park no less than 23 acres, with adjacent development that financially supports the construction costs of the park and long-term maintenance and operations of the park. It was originally envisioned that the revenue, from the combined disposition of the land and the generation of new sales and/or property tax, would far exceed the costs to construct, maintain and operate the park, thereby creating a consistent additional revenue stream for the City. The feasibility analysis performed by Developers Research concluded that this overarching goal could be achieved. Following review of the Feasibility Analysis by Developers Research, the City Council selected two preferred development scenarios for the 32-acre non-park portion of the site. One alternative was for a commercial "big box" retailer with smaller retail pads. The second scenario was for a general retail center. Either scenario could include a hotel use. Very limited housing development could also be considered. In order to assist the City with achieving the policy and financial goals and objectives in the context of the preferred development scenarios, Council directed staff to draft and circulate a Request for Proposals for a Development Consultant. Eleven proposals were received. Four firms were interviewed by staff, and three were invited to make a formal presentation to the City Council. These presentations were made at a Special Council Meeting on May 11, A copy of the staff report is included as Attachment A. It is recommended that the City Council consider and discuss the candidate firm presentations and provide direction to staff regarding the selection and retention of a Development Consultant. Based on all of the available information, the initial interviews and the oral presentations made on May 11, 2016, staff is not making a recommendation with respect to any of the finalists or any of the 11 proposers for this project. While each of the firms brought unique expertise and experience, none fully demonstrated a comprehensive approach to or understanding of the City's needs. At the recent ICSC conference, an individual (Eric Paulsen) from candidate firm Starting Gate, stopped by the City's booth. Mr. Eric Paulsen was not present for the formal presentations to Council due to a family emergency; however, he provided greater insight and depth of understanding than his colleagues. An opportunity for Starting Gate to make a second presentation, with the services of Mr. Paulsen, may be of benefit to the Council's decision-making process. Nonetheless, Council options with respect to the hiring of a Development Consultant are as follows:
3 Discussion regarding the RFP for Development Consultant Services for Chiquita Ridge June 8, 2016 Page 3 Page 3 1. Request a second presentation by Starting Gate, particularly with Mr. Paulsen in attendance. 2. Select one or more of the finalists with which to negotiate a favorable scope of work and a professional services agreement. 3. Interview one or more of the remaining eight proposers. There was a significant gap between the top four firms and the remaining seven firms. Staff does not believe that the remaining seven firms adequately responded to the City's request for proposals. 4. Recirculate the Request for Proposals, either as is or with modifications. The current RFP is comprehensive and well-thought out and was sent to nearly 80 firms and individuals that have expressed interest. A recirculation with or without modifications may or may not produce different or better results. 5. Cancel the Request for Proposals and direct staff to identify other alternatives with respect to the potential development of Chiquita Ridge. Fiscal Impact The fiscal impact of selecting and hiring a Development Consultant and related work is estimated to cost up to $500,000 over the next two years. Attachments A. May 11, 2016 Staff Report (without attachments)
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5 Page 5 CITY OF RANCHO SANTA MAR GAR IT A STUDY SESSION STAFF REPORT DATE: TO: FROM: BY: SUBJECT: May 11, 2016 City Council of the City of Rancho Santa Margarita Jennifer M. Cervantez, City Manager~./ Cheryl Kuta, Development Services Dirij{t'or' Presentations by Consulting Firm Candidates in Response to the Request for Proposals for Development Consultant Services for the Potential Future Development of the 92 Acre Open Space Property Commonly Known as Chiquita Ridge, Located in the Southern Portion of the City Recommendation 1) Receive staff presentation and report. 2) Council questions of staff. 3) Receive presentations by consultants. 4) Council questions of consultants. 5) Council discussion. 6) Provide direction to staff, as appropriate. Background and Discussion Staff issued a Request for Proposals (RFP) for Development Consultant Services for potential development of the Chiquita Ridge open space property on January 29, Eleven proposals were received prior to the submittal deadline on March 21, A staff committee consisting of the City Manager, Public Works Director/City Engineer, and Development Services Director evaluated and scored all eleven proposals based on qualifications, comparable projects, project understanding and approach, schedule, and communication plan as demonstrated by the required elements of each proposal. Proposals were received from the following firms: Danielian Associates Developers Research, Inc. Development Advisors, LLC HR Green California, Inc. Lilley Planning Group, Inc. The Planning Associates Project Dimensions Rick Engineering I ATTACHMENT A
6 Consultant Presentations May 11, 2016 Page 2 Page 6 Starting Gate SPD, Inc. SWAGroup TRG Land, Inc. Proposal Evaluation The staff committee used a standard scoring sheet for evaluation of the proposals. The scoring criteria were based on the Proposal Response Requirements in Section II of the RFP, as follows: cover letter and proposal organization, company data, resumes and qualifications of personnel, organizational chart, references and comparable projects, project understanding and approach, schedule, communication plan, and compensation/payment schedule. The evaluation weighted certain components of the proposals based on their importance to this effort. Criteria with the highest weight were: project manager qualifications and relevant experience, relevant comparable projects, knowledge and understanding of the work required, schedule, and competitiveness of fee. Other criteria were weighted lower, including the cover letter, organization chart, and communication plan. Four firms ranked highest among all three evaluators. These firms were Danielian Associates, Developers Research, Project Dimensions and Starting Gate. Staff interviewed the top four firms because a significant difference in average scores was observed between the fourth and fifth ranked firms, providing a logical break by which to determine the finalists. Interviews with these four firms were conducted on April11 and 13, Based on the interviews, staff determined that three of the firms, Danielian Associates, Developers Research, and Starting Gate, provided the necessary combination of qualifications and experience to complete the project as described in the RFP. Project Dimensions was not asked to continue in the process because they did not offer unique expertise or capabilities that would not be provided by the other finalist firms. Although Project Dimension offered a wide variety of relevant comparable experience, they did not demonstrate as much retail development experience, or the same depth of project understanding as the other finalist firms. Presentations In order for Council to further evaluate the top three proposers, presentations before the City Council in a workshop format are recommended at this time. The workshop allots 40 minutes for each firm, to be utilized as follows: 10 minutes for the firm to present its proposal, 25 minutes for the City Council to ask questions of the firm, and five minutes for wrap up. The schedule is designed with five minute breaks between consultants. At the conclusion of the meeting, 30 minutes will be available for City Council discussion and direction to staff. The meeting is scheduled as follows: 4:00-4:40 Consultant A 4:45-5:25 Consultant B 5:30-6:10 Consultant C 6:15-6:45 Discussion and Direction to Staff
7 Consultant Presentations May11,2016 Page 3 Page 7 Procurement Code The City's Procurement Code, Chapter 3.07 of the Rancho Santa Margarita Municipal Code (RSMMC), sets forth the required procedures for the procurement of goods and services. The requirements for the procurement of professional services are described in RSMMC Section , which specifies that professional services contracts are exempt from competitive bidding. This section reads in relevant part as follows: "Selection by the City of professional services in areas of... development and planning... which involve the exercise of discretion and independent judgement together with an advanced or specialized knowledge, expertise, training, or unique skills gained by formal studies or experience, shall be on the basis of demonstrated competence and on the professional qualifications necessary for the satisfactory performance of the services required, and shall not be awarded solely on the basis of cost." "In accordance with State law, the City shall consider price after the City is satisfied that the would-be person, company, corporation, contractor, consultant, or firm has demonstrated the competence and professional qualifications necessary for the satisfactory performance of the services required. Price alone shall not be the determining factor, but shall be considered along with qualifications." (RSMMC Section (c).) Given the procurement regulations established by the City's Procurement Code and the municipal procurement requirements of State law, staff evaluated cost as only one of many factors in evaluating the proposals received and is not providing a detailed analysis of the cost proposals in the staff report at this time. While cost is an important budgetary consideration, the Procurement Code, as well as the requirements of State law, are clear that professional services contracts are exempt from competitive bidding. Evaluation and negotiation of costs are required to be undertaken after the most qualified consultant (or consultants) is determined. Accordingly, staff recommends that the City Council evaluate the demonstrated competence and experience, as well as the professional qualifications, of the consulting firm candidates, including the specialized expertise demonstrated in the approach to the project, hours devoted by each consultant, and the proposed project schedule provided by each of the finalist firms. The following sections of the report provide a summary of these components of each of the finalist proposals. Finalist Firms Within the proposal evaluation as described above, staff specifically evaluated expertise in several areas which are essential to accomplishing the requested scope of work: costing, scheduling, and outreach. Among the eleven proposals, the three finalist firms demonstrated the most appropriate expertise in these areas, as described below and in Attachment A. Attachment A is a proposal comparison which includes a quote from
8 Consultant Presentations May 11, 2016 Page4 Page 8 each proposal describing the firm's expertise and summary information regarding the finalist firms' proposed schedules, project manager's billing rate, and total hours proposed. In the review of the responses to the RFP, two generalized approaches were evident among the proposals. One approach consisted of firms with a small team consisting of a strong project manager and a small support staff. These firms provided qualifications for similar projects where they oversaw or coordinated the work of an interdisciplinary team consisting of various outside consultants often hired by a client city or developer. The second approach consisted of larger teams with a project manager supported by a larger staff from different disciplines. These firms provide in-house technical expertise to peer review as well as to provide assistance with drafting RFPs for various technical studies. Among the four top scoring firms there were two firms representing each approach. Danielian Associates and Developers Research proposed a smaller team with fewer in-house specialists, while Project Dimensions and Starting Gate provided larger multidisciplinary teams. The RFP was clear regarding the City's desire for a single project manager with experience in both municipal and commercial development to advise and assist the City to establish and implement a strategy for the evaluation and planning, disposition, and potential development of the Chiquita Ridge open space property. The RFP further stated that it was not necessary to assemble a large multidisciplinary team for this proposal because we do not expect the selected firm to perform technical studies during this assignment. However, based on the proposals and interviews, staff believes there is merit in evaluating the approaches offered by both smaller and larger teams. Accordingly, staff is presenting the top firms to the City Council for consideration and further direction. The following information summarizes the key aspects of each firm's proposal. Full copies of each proposal are included as Attachments B, C and D to this report. Danielian Associates Danielian Associates' stated area of expertise is in land planning, project coordination, entitlement and architecture. The firm's proposal demonstrated experience in those areas. The firm offers a strong project manager, John Leehey, with a small support staff. Mr. Leehey is a landscape architect with extensive experience in planning, urban design and landscape architecture. This firm scored highly among the reviewers due to their list of comparable projects and a well-developed project approach. During the interview, the firm demonstrated how their small team interacts to deliver on complex projects. Among the desired areas of expertise, this firm demonstrated a strong ability to be a "program manager" who coordinates all of the various areas of expertise, including additional specialty consultants hired by the City, to reach an implementation plan. Danielian's original proposal estimated a 6 month work effort, which was considered aggressive. However, through discussion during the interview, Danielian Associates has determined that a 12 month schedule would be more realistic and has provided a revised proposal which is attached to this staff report
9 Consultant Presentations May 11,2016 Page 5 Page 9 Developers Research The Developers Research proposal demonstrated expertise in project management services with a strong emphasis in cost estimating and financial analysis. The firm offers Barry Gross as project manager with a mid-sized support staff with primary expertise in cost analysis. The proposal also includes a subconsultant with specific expertise in public outreach. The firm's proposal scored highly among the review team due to their similar work on municipal projects and strong financial expertise. During the interview, the firm discussed their work on a similar project for the City of Tustin and described their approach to public outreach. Among the desired areas of expertise, the firm demonstrated strong capabilities in cost estimating, financial analysis, and public outreach. The Developers Research proposal does not commit to a schedule for completion of this work effort. If staff is directed to proceed with this firm as a finalist, a schedule for this process would need to be addressed immediately. T earning Proposal Staff believes, based on the information presented in the proposals and during interviews, that Danielian Associates and Developers Research could form a team that would complement one another's strengths. Danielian Associates provides strong project management, planning, and commercial expertise which would pair well with Developers Research's financial and public outreach expertise. Staff has discussed the potential for teaming with each of the firms and both are agreeable. Accordingly, the City Council has the option to direct staff to work with these two firms to develop a single scope of work, schedule, and cost estimate. Starting Gate The Starting Gate proposal demonstrated expertise in project management as well as in all of the technical areas touched upon in the RFP Scope of Work by providing a reasonably large and multi-disciplined team. Starting Gate is a relatively new firm which was created for the purpose of advising public agencies on "sensible project development" for public-private projects. The proposal offers Don Smith as project manager. Mr. Smith is the President of Starting Gate and has a diverse background spanning most aspects of the real estate industry as well as public agency consulting. The firm's proposal scored highly among the review team due to the deep experience offered by the team members as well as a detailed discussion of their approach to the project. During the interview, the firm discussed a variety of relevant project experience with other cities, as well as experience with commercial development, park planning, and public outreach. Starting Gate estimates an approximately 18 month work effort related to the proposed scope of work. Conclusion The three finalist firms offer varied expertise and experience in municipal and commercial projects, including a variety of public-private partnerships. All of the firms' proposals provide an approach to reach the desired outcome to establish and
10 Consultant Presentations May 11, 2016 Page6 Page 10 implement a strategy for the evaluation and planning, disposition, and potential future development of the Chiquita Ridge open space property. The hours, costs, and schedules among the proposers are also very comparable. Each of the firms understands that they would serve as a project manager and that the City would procure consultants for individual technical studies based on their advice and with their assistance. Staff has scheduled presentations by the three finalist firms to allow the opportunity for the City Council to review the proposals, receive presentations from the finalists, and ask questions of the finalists in order to provide input and direction to staff regarding the preferred approach. At the conclusion of the presentations, staff has scheduled 30 minutes for the City Council to provide input to staff regarding next steps. Alternatives 1. The City Council can direct staff to begin negotiations with one or more finalist firms and return to the City Council with a proposed professional services agreement. 2. The City Council can direct staff to provide additional information regarding any or all of the finalist firms. 3. The City Council can direct staff to cancel the RFP and reevaluate options for further assessment of development opportunities for the Chiquita Ridge open space 4. The City Council can provide other direction. Fiscal Impact There is no fiscal impact related to the recommended action. Staff will proceed with the consultant selection process pursuant to City Council direction and the City's Procurement Code. The fiscal impacts related to consultant selection will be evaluated at the time a contract is brought forward for City Council approval. Attachments A. Proposal Comparison. B. Danielian Associates Proposal. C. Developers Research Proposal. D. Starting Gate Proposal. E. RFP for Development Consultant Services for Potential Development of the Chiquita Ridge Open Space Property issued January 29, 2016, with addenda
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