CITY AND AGENCY RESOLUTIONS AUTHORIZING A DISPOSITION AND DEVELOPMENT AGREEMENT WITH ROTUNDA GARAGE, LP FOR THE DEVELOPMENT OF A PARKING GARAGE STRUCTURE

CITY OF OAKLAND

COUNCIL/ AGENCY AGENDA REPORT

 

TO:             Office of the City Manager/ Agency Administrator ATTN:                  Deborah Edgerly

FROM:         Community and Economic Development Agency DATE:                  June 8, 2004

 

RE: CITY AND AGENCY RESOLUTIONS AUTHORIZING A DISPOSITION AND DEVELOPMENT AGREEMENT WITH ROTUNDA GARAGE, LP FOR THE DEVELOPMENT OF A PARKING GARAGE STRUCTURE BETWEEN 16TH AND 17TH STREETS AND SAN PABLO AVENUE, OAKLAND; THAT INCLUDES SELLING THREE PARCELS OF LAND FOR $99 EACH AND LEASING A FOURTH PARCEL FOR $1.00 PER YEAR FOR 20 YEARS; AND ASSIGNING TO ROTUNDA GARAGE, LP, $4 MILLION PLUS INTEREST OF A $12 MILLION PROMISSORY NOTE PAYABLE TO THE REDEVELOPMENT AGENCY BY THE ROTUNDA BUILDING DEVELOPER, AND FURTHER REQUIRING AGENCY TO PAY THE NET PROPERTY TAX INCREMENT GENERATED BY THE NEW PARKING GARAGE FOR A PERIOD OF 10 YEARS TO ROTUNDA GARAGE, LP

 

 

 

                              

 

SUMMARY

Resolutions have been prepared authorizing the Redevelopment Agency to sell and lease to Rotunda Parking, LP (“Developer”) Agency-owned real property located on the block bounded by 16th Street, 17th Street and San Pablo Avenue, (Exhibit A) and authorizing the Agency Administrator to enter into a Disposition and Development Agreement (“DDA”) with Developer for the 17th Street Garage Project (see Exhibit B, Term Sheet for the full details of the material terms of the DDA).  The Agency resolution will also authorize the transfer of one third of the

$12 million Note from the Rotunda Building, and rebate of the net tax increment, after statutory pass throughs, ERAF payments to the state and housing set-a-sides are made, for ten years. The property will be sub-divided into four parcels and Developer will purchase three parcels for a purchase price of $99 each. Parcel 1 (23,445 square feet) would be used for the 320+ space parking garage. Parcel 2 (3,723 square feet) and Parcel 3 (2,775 square feet) would  be developed as retail or other commercial uses within 5 years or the Agency would have the right to take them back at the Developer’s cost for site demolition and preparation. The developer will be granted a permanent vehicular and pedestrian easement and a lease for up to 15 years for $1 per year on Parcel 4 (see Exhibit A, Parcel Map). The Agency will be allowed to sell Parcel 4 for a development in the future and the Developer will have the right to make a competing offer. Rotunda Parking, LP, is a new limited liability corporation to be set up for the development of the garage with Phil Tagami and Leonard Epstein as general partners and Rotunda Partners I as the limited partner. Messers Tagami and Epstein are principles in Rotunda Partners I; Rotunda Partners I is the general partner in the partnership that owns the Rotunda Building.

 

 

 

FISCAL IMPACTS

Approval of the DDA and sale of the 17th Street Garage site will cost the Agency $2.7 million in land write downs (the Agency paid approximately $1.8 million for the site, but the current fair market value is now $2.7 million), $4 million in principal and $600,000 in interest on the Rotunda Note and approximately $380,000 in tax increment rebates over ten years (the rebate for the first year, FY 2006-07, is estimated to be $35,000). When discounted by 4.85%, the federal long term cost of funds, the current value of the Rotunda Note, including interest, is $2.2 million and $270,000 for the tax increment rebates, for a total of $2.47 million. When discounted by 8.25%, the Developer’s required return, the current value of the note, interest, and rebate is

$1.513 million. This is approximately 25% of the developer’s estimated costs for the garage (the Project will cost approximately $6.0 million, including $5.0 million to construct the garage). Approval of the DDA will free up approximately $4 million which would otherwise have been needed to fund part of the Agency-owned garage. It is anticipated that $3.8 million of this will be reallocated to fund the proposed Uptown lease disposition and development agreement. This reallocation will eliminate the need for a parking revenue bond which would reduce the ability of the Public Works department to fund Traffic Engineering staff, and transfers this amount of Uptown funding to the Agency rather than the City.

The City will receive approximately 70% more in parking tax revenue from the garage than it now receives from the surface lot presently on the site. This is approximately $40,000 per year in additional General Fund revenue beginning in FY 2006-07. The City will also receive its share of property tax which is not rebated to the project, about $5000 per year to start.

Other options for building a public garage on the site have even greater fiscal impacts. For the Agency to develop a larger garage (525 spaces instead of 320), the Agency would have to put in the land, $2.7 million value, an additional $4.2 million in cash and $10.0 million in debt. The debt would require a guarantee from the City or Parking Authority, which could have fiscal impacts in the future if the garage cannot cover debt service. The Agency-owned garage would have major short-term costs to the Agency and long-term benefits, including free and clear ownership of the garage after 30 years.

 

BACKGROUND

 

History of Site

In June 1998 the Agency entered into a disposition and development agreement with Rotunda Partners I, the limited partner of the Developer, for the Rotunda Building. The Rotunda Building DDA included a $12 million loan, profit sharing with the Agency of 50% of all sales proceeds over $38 million and required that the City/Agency provide parking for the Rotunda Building tenants and customers. Accordingly, the City provides 50 monthly parking spaces plus short term visitor parking in the Daziel Building for the Rotunda Building tenants and customers, and the Agency leases the proposed development site to the Rotunda Building developer for its tenants’ parking. The Agency receives all net revenues from the surface parking lot. It was anticipated that the Agency would build or have another entity build a garage on the current development site primarily for use by Rotunda Building tenants and visitors. The Agency pledged 220 spaces in any new garage to the Rotunda Building. The Agency has pursued the development of this garage for several years.

 

 

 

The Agency issued Requests for Proposals for the garage twice, in 1998 and 1999, and negotiated with two developers, Allright Parking and Aegis Realty Partners. Both times staff could not negotiate a deal that was support by staff or the Agency Board. Instead the Agency Board authorized staff to pursue development of an Agency-owned garage. The Agency issued a Request for Proposals for a design project management team for the garage, hired a team made up of Aegis Realty Partners, Komorous-Towey Architects, and Watry Design Group and paid

$750,000 to complete the design. The Agency concurrently pursued a $10 million garage construction loan from the State Infrastructure Bank. It should be noted that in order for the garage revenue to cover debt service the loan would have needed to be amortized over 30 years, 14 years longer than the life of the Central District Plan Area. As a result, a loan guarantee from the City General Fund or Parking Authority would have been necessary, thereby potentially putting the general fund at risk of covering any debt service shortfalls.

 

Current Proposal

At about the time that Aegis completed the construction documents, Phil Tagami and Leonard Epstein submitted an unsolicited proposal to develop the garage. Messrs. Tagami and Epstein propose to form Rotunda Garage, LP (“Developer”) to construct a 320 space garage (the “Project”). Rather than bidding the project immediately and selecting a contractor, the Agency asked the Developer to refine its proposal to determine if it provided a viable alternative to a pledge of the General Fund. The Developer was always interested in owning the garage, which is tied to their office building and will enhance the buildings value even more if it is under control of the same owner, but pulled out of the 1998/1999 Requests for Proposals while they were concentrating on completion of the Rotunda Building. The Developer put in a proposal for the Request for Proposals for design and project management of the garage but lost out to Aegis for the contract. A comparison of the various proposals that the Agency has considered, along with the current proposal are included as Exhibit C, Comparison of Proposals.

After completing negotiations with the Developer, staff is bringing for approval a DDA with the following key terms (for the complete terms of the DDA, see Exhibit B, Term Sheet):

 

1)                  The Agency will divide the Site into four parcels as reflected on the attached Exhibit A, Parcel Map: Parcel 1- the garage site; Parcels 2 and 3- retail or commercial sites; and Parcel 4- a remainder site on 16th Street with garage access easements and reserved for future development by an Agency-selected developer.

2)                  The Developer will purchase Parcels 1, 2 and 3 for $99, and lease Parcel 4 for

$1/year until the parcel is ready for development by Developer or another developer in the future. All future development on Parcels 2, 3 and 4 would require separate Agency approval. (The Developer would retain an auto/pedestrian easement  for the garage over Parcel 4);

3)                  The Agency would assign to the Developer a $4 million (plus interest on this amount) of the $12 million promissory note, with a NPV of $2.2 million, due from repayment of a loan the Agency made to the developer of the Rotunda Building. [In 1999, when the Agency sold the Rotunda Building to Rotunda Partners II, LLC, of which the proposed garage Developer was the  general partner, the Agency loaned Rotunda Partners $12 million. Rotunda Partners executed a promissory note (secured by a second deed of trust on the building)

 

 

 

that requires it to pay the Agency accrued interest at 3% per annum starting in 2014 and repay the principle in 2019.]

4)                  The Agency would rebate to the Developer the net tax increment generated by the project (net of required pass-throughs for affordable housing, ERAF, etc.) for 10 years; and,

 

5)                  Developer will take all risk that the garage revenue will cover operating costs and debt service.

The Developer will build a garage with at least 320 parking spaces on Parcel 1. The Developer will have 18 months from execution of the DDA to complete the garage design, obtain approvals, and complete construction. The Developer’s initial schematic design is attached hereto as Exhibit D. The Agency will give the Developer five years to develop retail or commercial uses on Parcels 2 and 3. If the Developer does not develop Parcels 2 and 3 within five years, the Agency will have the option to reacquire the parcels by reimbursing the Developer for its reasonable demolition, landscape and hardscape costs. Until the Agency executes its option, the Developer will landscape and hardscape (e.g., treewells and scored concrete with the same specifications as Kahn’s Alley and Broadway for the Rotunda Building) and maintain the parcels. The Developer will grade, pave, stripe, secure, landscape, and maintain Parcel 4 until it is developed. The Agency can select a developer and proceed with development on Parcel 4 at any time after the garage is completed. Developer will have the option to make a comparable offer on the site when the Agency is ready for development. The Agency requested that the Developer provide a completion bond. The Developer hesitated at the cost and proposed that the budget include a 10% contingency at start of construction and the Developer provide a non- revocable line of credit to the Agency equal to 15% of the construction costs, approximately

$750,000.

 

KEY ISSUES AND IMPACTS

 

Staff believes that the proposed DDA substantially benefits the Agency. By permitting a private developer to construct the garage, the Agency would not have to commit $4.2 million in cash and borrow $10 million from the State Infrastructure Bank for the garage construction. The State loan would have to be backed by the City General Fund or City Parking Authority (from funds that presently go to the Multipurpose Reserve Fund) that would repay the loan from the parking

revenues from other garages should the 17th Street garage not produce enough revenue to cover its operating costs and the loan payments. Under the Agency-owned alternative, the City would be risking revenue that presently funds the Public Works Agency – Traffic Division, and that would need to be offset with allocations from the General Fund. Private development of the garage by the Developer would eliminate this risk.

 

The Agency has already invested a substantial sum in the garage project. Land acquisition costs have totaled $1.8 million. Design, planning and project management costs have totaled $1.2 million. If the Agency were to construct the garage, it would need to invest an additional $4.2 million in cash, along with a $10 million State loan to finance construction, for a total of $17.2 million. The Developer’s proposal relieves the Agency of investing any further cash at this time, and frees up Agency funding for other projects.

 

 

 

The Agency’s garage design is superior to, larger than, and more expensive than the garage the Developer proposes. However, staff believes that the revised schematic design will work if design modifications based on Planning’s suggestions are incorporated into the future plans.

 

Including the project property tax reimbursement as income, the garage project has been estimated to provide an annual return of $376,200 or 6.27%. A normal market-rate investment would have a $495,000 or 8.25% annual return. The difference between the lower return for the Garage proposal compared to a normal 8.25% return over the first 16 years, the term of the Rotunda loan, is $2,999,390. When the loss is compounded over 16 years at an 8.25% interest rate, the loss is $5,155,123. In addition, the appreciation on the Garage would be lower than a normal investment by approximately $3,277,105 at the end of this term. An equivalent investment at a normal market return of 8.25% would yield approximately $8.4 million more than the proposed garage investment. The Developer is gambling on the long-term return, and more importantly the synergy that will benefit their investment in the Rotunda Building. Given this analysis, the $4 million write down of the Rotunda loan seems like a reasonable subsidy for creating a privately-owned, public-access garage. This analysis reflects that required prevailing wages will be paid and Rotunda Garage, LP has further stated that they would commit to using union labor.

The reuse appraisal of the site, i.e. an appraisal of the site with the Redevelopment Agency’s requirements attached to property, will ?????? [add language per report from Keyser Marston]. Even with a substantially below market loan from the State Infrastructure Bank, the Agency’s development of the garage requires the land (about $1.8 million in cost to the Agency) and completed design and planning ($1.2 million), plus $4.1 million in additional Agency funds. The Agency would only receive a 3% return after stabilized occupancy. This is far below the margin for which any developer would invest in the project.

To put the previous paragraphs into concise terms, Rotunda Garage, LP needs the project to generate an additional $8.4 million in revenue and future sales value for the investment to meet normal developer return requirements; and Rotunda Garage, LP is asking for the Agency to subsidize the project with $5.1 million over 15 years to partially meet this need. Even with the Agency subsidy, the project does not meet normal developer return requirements. The only reason Rotunda Garage, LP is willing to develop the project under this scenario is so that they can control parking for the Rotunda Building and increase the long term value of their other investment. Since the Agency could share 50:50 with Rotunda Partners all sales proceeds in excess of $38 million from the Rotunda Building, the Agency will directly benefit from any increased value in the Rotunda Building.

 

Some additional advantages of the Developer’s proposal to the Agency are:

1)                  It satisfies the Agency’s contractual obligations under the parking agreements under the Rotunda Building DDA (its parking lease) and to the Rotunda Building tenants and customers.

2)                  The newly built garage will provide mitigation and parking for tenants in the adjacent Adcock Joiner residential building, the Fox theater, Ice Skating rink and the Uptown Project.

 

 

 

3)                  The reduced scale of the Developer’s proposed garage will lower the impact on views and natural light for the tenants at the adjacent Adcock Joiner Apartments, compared to the larger garage the Agency planned

4)                  The City/Redevelopment Agency/Parking Authority can also use the financial plans and the proposed State Infrastructure Bank loan to develop another downtown parking facility, once garage revenues are improved through the current RFP manager selection process.

5)                  Central District redevelopment plan terminates in 2009. By having the Developer construct the garage, the Agency can reallocate funds to Uptown and other important projects that need to be completed before the plan expires.

 

ALTERNATIVES

 

Three alternatives for the garage project are: (1) the City, Redevelopment Agency and Parking Authority can develop a publicly owned garage on the site as originally proposed; (2) the Agency Board can direct staff to issue a new Request for Proposals to developers for a privately developed garage on the site; or (3) the Agency can keep the existing parking leases with Rotunda Partners on the 16th Street surface lot and in the Dalziel Building and wait to build the garage until the effects of the Uptown project change the financial feasibility for parking. Rotunda Building DDA does not require the Agency to build a parking garage, but only to provide parking for the Rotunda Building in any garage actually built. Unless and until such a garage is built Agency must continue to provide the surface parking lot and parking spaces in the Dalziel Garage.

 

Alternative 1: Agency Developed Garage – If the City, Redevelopment Agency and Parking Authority develop the garage, the Agency will have to contribute the land and other expenditures already made (relocation, environmental impact report, design, etc.), about $3 million, plus $4.2 million in additional costs. The Parking Authority will also have to borrow $10 million from the State Infrastructure Bank by pledging revenue from City owned parking facilities. The City will be risking revenue that presently funds the Public Works Agency – Traffic Division, although initial estimates are that the garage would be able to service the $10 million loan and no City funds would be required, parking rates have been declining and this conclusion is uncertain. The long term benefits of this alternative are (1) surplus revenue from publicly owned facility; (2) increased parking tax for the City from 525 spaces (as the Agency originally planned) instead of 320 spaces proposed by the Developer; (3) ownership of a fully capitalized garage in 30 years;

(4) no requirement to assign to the Developer $4 million of Rotunda Building loan repayment proceeds. The disadvantage of this option is that if the Uptown project does not move forward, and approximately 1,250 public parking spaces remain in the immediate area, the demand for 525 new parking spaces may not exist and the financial assumptions would be too aggressive. This alternative costs the Agency $14 million more initially compared to the Developers proposal, and there is risk that the City will have to make up any State Bank loan payment deficiencies. In the long run the costs of the $10 million loan should be off-set by garage revenue.

 

Alternative 2: Issue a New Request for Proposals – Although issuing a new RFP may bring more offers to the Agency/City, there is no guarantee the City/Agency would receive any improved

 

 

 

offers, since the Developer has the greatest incentive to develop the site. Prior negotiations from proposed developers pursuant to RFPs for this project were not better, and in many cases, worse, than the Developer’s current proposal.. One of the most important points of the proposal by the Developer is that the subsidy in the project is a reduction in a future payment to the Agency ($120,000 in interest per year from 2014-2018 plus $4 million in 2019) that has a Net Present Value of $2,199,733. That is to say that the Agency’s subsidy is from future funds that the Agency will not receive for 10 to 15 years; and these future funds are worth $2.20 million to the Agency today. The one benefit of a new RFP, is that it could generate better proposals for the Agency and would allow other property owners in the area to develop/control parking required for their properties. The disadvantages of the option are that the project has already been delayed by continued changes in the development scenarios and two RFPs have been issued. In order to have the garage completed prior to demolition of the parking on the Uptown sites, it will be difficult to recruit a new developer for the project through a new RFP process. Previous RFPs have not produced a substantially better offer, and would require substantial time and staff work. In order to have the garage completed prior to demolition of the parking on the Uptown sites, it will be difficult to recruit a new developer for the project.

 

Alternative 3: Postpone the Garage Development and Maintain Existing Lot and Parking License for the Rotunda Building Tenants – By maintaining the existing parking arrangement for the lot at 17th Street and San Pablo, the Agency would continue to receive a small amount of revenue from the surface lot and will not have to make any significant capital expenditures. The benefits of this option are that the Agency will continue to receive a small amount of net revenue from the surface lot and the Agency will receive the benefit of any increase in parking rates that result from the removal of approximately 1,250 public parking spaces if the Uptown project proceeds, if the garage is developed after the Uptown project. Moreover, activities generated by the Uptown development will increase demand, and supply will decrease, which will result in higher prices for the remaining parking spaces. The disadvantages of this option are that by delaying the garage development, the Agency will not be supporting the Rotunda’s leasing e fforts – which could affect the Agency’s long term financial interest in the Rotunda, the surface lot will remain an underutilization of land, no off-setting parking mitigation for Uptown will be built, and the Ice Rink will not have nearby parking.

 

SUSTAINABLE OPPORTUNITIES

 

Economic

The project will generate additional parking tax revenue for the City’s General Fund beginning in FY 2006-07 and increase the Redevelopment Agency investment value for the Rotunda Building.

 

Environmental

The developer and design consultants will work with the Agency and the Mayor’s Sustainability Programs staff to investigate the feasibility of incorporating green building attributes into this development, including: (1) energy efficiency; (2) water efficiency; (3) recycled, local and less materials and resources; and (4) improved indoor environmental quality.

 

 

 

Social Equity

The project will create jobs for low-income Oakland residents that pay the City’s mandated “Living Wage,” and will provide free after hours parking to the very low-income residents of the neighboring Adcock-Joyner Building.

 

DISABILITY AND SENIOR CITIZEN ACCESS

 

The garage and all developments on the site are new construction and will be required to comply with state and federal accessibility requirements, including Federal ADA Accessibility Guidelines and the State of California’s Title 24 Accessibility regulations.

 

ACTION REQUESTED OF THE COUNCIL AND AGENCY MEMBERS

 

Staff recommends that the City and Agency approve the attached resolutions that authorize the Agency Administrator to negotiate and execute a disposition and development agreement with Rotunda Garage, LP for the development of a parking garage structure between 16th and 17th streets and San Pablo Avenue, Oakland; including selling three parcels of land for $99 each and leasing a fourth parcel for $1.00 per year for 20 years; and assigning to Rotunda Garage, LP, $4 million plus interest from the $12 million promissory note payable to the  Redevelopment Agency by the Rotunda Building developer, and further requiring Agency to pay to the net tax increment generated by the new parking garage for a period of 10 years to Rotunda Garage, LP.

 

 

 

Respectfully submitted,

 

 

 

 

      

Dan Vanderpriem, Director of Redevelopment,

Economic Development, and Housing and Community Development

 

Prepared by: Patrick Lane

Redevelopment Manager

 

 

APPROVED FOR FORWARDING TO THE COMMUNITY AND ECONOMIC DEVELOPMENT COMMITTEE

 

 

 

 

      

 

OFFICE OF THE CITY MANAGER/ AGENCY ADMINISTRATOR

 

EXHIBIT A PARCEL MAP

 

 

EXHIBIT B TERM SHEET

17th Street & San Pablo Avenue Garage

 

The following terms will be incorporated into a Disposition and Development Agreement for the 17th Street & San Pablo Garage (“DDA”) between the Redevelopment Agency of the City of Oakland and Rotunda Parking, LP, a new limited liability corporation to be set up for the development of the garage with Phil Tagami and Leonard Epstein as general partners and Rotunda Partners I as the limited partner. These terms will be first taken to the City Council/Redevelopment Agency Board in closed session to confirm that the negotiations and

terms are acceptable, and to get directions for any additional requirements. Once the Council/Board confirms the terms, the full DDA will be negotiated and then the DDA will be taken to the Council/Board for approval.

 

1.                  Scope

 

1.1.            The Agency will subdivide the site into four parcels as shown in Exhibit “A”. Rotunda Garage will purchase the garage/retail site (parcels 1,2,& 3) and have an, pedestrian and vehicular entry/exit easement on parcel 4.

 

1.2.            Rotunda Garage will lease parcel 4 for $1 per year, to be used as a surface parking lot until such time a development project is approved by the Agency.

 

1.3.            Parcel 2 will be hardscaped and landscaped to the same specification as Kahn’s Alley and Broadway for the Rotunda Building, and professionally maintained until such time as it is developed for retail uses. Rotunda Garage shall cooperate with the Agency to recruit retail use(s) for parcel 2. If at the end of a five year period, commencing from the date of completion of the parking garage, parcel 2 is not developed for retail or other agreed to use(s), then this portion of the site shall be transferred to the agency in exchange for reimbursement of all reasonable demolition on Parcel 2 of the building at 1630 San Pablo, and depreciated improvement costs incurred by Rotunda Partners.

 

1.4.            Parcel 3 will be at a minimum hardscaped and professionally maintained until such time as it is developed for retail or Public Works uses. In all cases this site will be secured to prevent public/transient access to the alley.

 

1.5.            Rotunda Garage , shall design, construct and operate the following improvements on parcel 1, 2,3& 4:

 

1.5.1.      Rotunda  Garage  will  receive  all  parcels  in  an  “as  is”  condition  and demolish the existing building at 1630 San Pablo.

 

1.5.2.      Rotunda Garage will build a 320 plus space parking garage on parcel 1.

 

 

 

1.5.3 .    Rotunda Garage will construct surface parking on parcel 4.

 

1.5.4. Rotunda Garage will cooperate with the Agency to develop retail/or other use on parcel 2 and shall at a minimum construct and maintain minimal hardscape and landscape improvements on this portion of the property prior to retail development. As an alternative, if financially feasible, the portion existing structure at 1630 San Pablo not on the garage parcel shall be renovated for retail use and permanent landscaping installed within one year of completion of the garage, .

 

Collectively, these improvements will be referred to as the 17th & San Pablo Garage Project.

 

2.                  Financial

 

2.1.            Agency will sell the land to Rotunda Partners for $99 for Parcels 1, 2, and 3.

 

2.2.            The tax increments generated by the project, net of all pass throughs to the County, ERAF, Housing, etc. will be rebated to Rotunda Garage for up to 10 years after the project receives a temporary certificate of occupancy.

 

2.3.            Agency will assign to Rotunda Garage a note for $4 million in principle plus interest from the $12 million loan made by the Agency to Rotunda Partners II on the Rotunda Building.

 

3.                  Design and Construction

 

3.1.            Within 18 months of execution of the DDA, Rotunda Garage will complete the design, obtain approvals, and initiate construction of a 320+ car garage, incorporating design comments made by Claudia Cappio consistent with the design attached as Exhibit D, Schematic Design.

 

3.2.            The surface lot on 16th Street will be graded, paved, striped, secured, landscaped, and made ready to accept parked autos at Rotunda Garage sole cost.

 

4.                  Garage Operation

 

4.1.            The garage will be operated as a public parking garage that is available to members of the public on a first come, first served basis.

 

4.2.            At least one hundred- (100) parking spaces are available at all times the garage is open for transient (hourly or daily) parkers.

 

4.3.            The garage will be open for transient parking from 8 a.m. to 6 p.m.

 

4.4.            Parking will be made available outside normal business hours for patrons and employees of the Oakland Ice Center.  Developer agrees to make best efforts to

 

 

 

investigate and use technology that would enable Oakland Ice Center patrons and employees to use electronic access card (sometimes known as “proximity cards”) to enable them to access the garage outside normal business hours.

 

4.5.            Parking will be made available outside normal business hours for members of the public on a basis that will permit Developer to recover its cost of making such parking available.

 

5.                  General Provisions

 

5.1.            The Agency will continue to provide parking spaces in the Dalziel building (50 monthly spaces) and on the surface lot until the start of construction on the garage. At the start of construction on the garage, the Agency will provide an additional 50 monthly spaces in the Dalziel building at the fair market price (100

spaces total), plus provide short term validated parking (2 hours maximum) for visitors to the Rotunda. At the completion of the 17th Street and San Pablo Garage, the Agency will have no parking obligation to the Rotunda Partners (I, II or III).

 

5.2.            Rotunda Garage will grant the Adcock Joiner tenants use of (10) spaces on the parcel 4 surface lot or parcel 1 garage between the hours of 6 pm and 8 am, if requested,

 

5.3.            Rotunda Garage will continue to operate the parking lot on the site under the existing Parking Lease (Surface Lot) until the DDA requirements prior to construction are met. These requirements will include: evidence of financing, land use entitlements, building permits, construction contract, etc. Once these requirements are met, the Agency will sell the land.

 

5.4.            If and only if the parking garage is offered for sale by the developer during the next 16 years the agency shall have a right to purchase it at an 8.25% cap rate.

 

5.5.            Once the 17th Street Garage is completed, the City and Agency will no longer be required to provide parking to the Rotunda Building.

 

 

EXHIBIT C COMPARISON OF PROPOSALS

 

 

Allright Parking   *

Aegis **

Agency Owned +

Rotunda Garage   ++

 

 

 

 

 

Parking Spaces

500

500

525 spaces

320 spaces

Retail

10,000 square feet

 

 

Differed (separate project)

 

 

 

 

 

Land Subsidy

$1.8 million

$1.8 million

$1.8 million

$1.8 million

Financial Assistance

$5.5 million capital investment

Rate guarantee for permanent loan, no more than 7.5% interest

$4.2 million cash from the Redevelopment   Agency

Assign $4 million Note plus future interest

 

 

Agency to lease 200 spaces for $265/month

$10.0 million loan from the State Infrastructure   Bank

Rebate the net tax increment   for 10 years

 

 

 

$1.2 million design, project management,   planning, and EIR costs   that are only marginally applicable to other project

 

 

*    Allright Parking’s proposal was for the Agency to own the garage and Allright to lease the garage.  Allright would prepay the lease for 20 years for $3,600,000, and make annual payments equal to 35% of the net revenue over $1,050,000. According to Allright’s operating proforma the Agency would not receive a payment from the net revenue until the tenth year and only receive

$685,000 in payments over the 20 year lease.  The Agency would pay for $5.5 million in capital costs not covered by the lease prepayment.  The Agency would own the garage free and clear after 20 years.

**  Lease of land at $1.00 per year plus additional rent equal to a 5% return on the Agency’s costs plus bonus rents of 67% of remaining revenue.  There would be no additional or bonus rents for several years according to Aegis’ proforma.  The Agency would lease of 200 parking spaces at the above market price of $265/month.  With current monthly rates at $140, this would require a subsidy of up to $125/month*12months*200 spaces or $300,000 per year.

+    The total Agency costs for the Agency-owned option would be $17.2 million, including $14.2 million in additional equity and debt needed to complete the project.  The Agency would own the garage free and clear after 30 years and would get net yearly revenue.

++ $2.2 million net present value for assigning 1/3 of $12 million Rotunda Note and interest, rebate approximately $380,000 in property taxes over 10 years, and sell three parcels for $297 and lease a fourth parcel for $1 per year.

Item: CED Committee June 8, 2004

 

EXHUIBIT D SCHEMATIC DESIGN

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Item:               CED Committee June 8, 2004

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