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HomeMy WebLinkAbout51-Community Development (2) CITY OF SAN BERl .~RDINO - REQUEST .. QR COUNCIL ACTION From: Kenneth J. Henderson, Director Subject: SELECl'ION OF DEVEIDPER FOR PHASE II OF O~D ESTATES PROJECT Dept: Conununity Development Date: September 20, 1989 Synopsis of Previous Council action: on March 20, 1989, the Mayor and Common Council authorized staff to issue the Orangewood Estates Request for Proposals (RFP) for development of seventy-six (76) single family homes. ri3 ;::;:) (',) (':"'1 1;.1,) (""> f'~,~ r:-;J "1:,1 r-...' ! '11'''- r,,;i '.~ .,J.;, .:'d'~ Recommended motion: Li.;-:' C,J .'I'j f,.I1 ",) .I~..J THAT JMC DEVEI.OFMENT COMPANY, INC., BE SElECTED AS THE DEVEI.OPER FDR THE SEOJND PHASE OF ORANGEWOOD ESTATES. FURl'HER, '!HAT STAFF BE AUlliORIZED TO ENTER IN'IO NEGOI'IATIONS WITH JMC DEVEI.OIMENT CX>>1PANY, INC., FDR THE RJRR)SE OF DEVEIOPING A JOINT DEVEI.OFMENT AGREEMENT FDR '!HE a::MPIEI'ION OF THIS PROJECI'. .(t ~L~ V. ~~~ Signature Contact person: Ken Henderson/Edward Flores Phone: 5065 Supporting data attached:, Staff Report Ward: 6 FUNDING REQUIREMENTS: Amount: N/A Source: (Acct, No.) N/A (Acct. Description) _N/A Finance: Council Notes: 75-0262 Agenda Item No. 5/ CITY OF SAN BER..~ARDINO - REQUEST rOR COUNCIL ACTION STAFF REPORT SUnInary statement '!he review and scoring of proposals for development of moderate income housing in Orangewood Estates has been completed. '!he recommendation of the review panel is for the City to commence negotiations with JMC Development Corrpany, Inc., for development of the proj ect. Backcrrounc:1 On March 21, 1989, the Community Development Department issued a Request for Proposals (RFP) for development of the Orangewood Estates. '!he RFP outlined basic guidelines, including the provision that twenty (20) of the new homes be made affordable to families that earn less than eighty percent (80%) of the median income. '!he RFP specified that a total of seventy-six (76) moderately priced homes must be built. A key consideration in the RFP requirements was that respondents address the issue of relieving the City of its current financial burden relative to the project. '!his would mean that the City must receive immediate payments totalling $346,300.00 in order to cover costs associated with the purchase of the property, and to service bond holders as a result of default on the part of the previous developer's inability to complete the project. In addition, respondents were required to address various ways in which to retire the residual debt service related to the assessment bond issued on behalf of this project. '!his project has experienced serious setbacks in the past due to the financial difficulties of the original developer. '!he RFP and ensuing review process was primarily designed to detennine unequivo- cably the financial stability and wherewithal of any entity or person choos- ing to complete this project. l\pProach In order to ensure the integrity of the process and to obtain the best possible "deal" for the City, it was decided the procurement of development services should be clearly delineated in the RFP document and the subsequent review be accomplished on an independent basis. '!he review instrument was created to determine, in an obj ecti ve manner, the responsiveness of each proposal and additionally ,in both an objective and subjective manner, actual qualifications, financial feasibility, and overall sensitivity of the prospective developer in meeting the City's overall obj ecti ves. Primary consideration was given to meeting the objectives of (i) twenty (20) new homes for moderate income individuals; (ii) prior experience in developing homes in a similar envirornnent, and; (iii) financial strength of the developer. '!he actual review process would be conducted independent 1 y to culminate in a panel interview for a finalist. 09/20/89 75-0264 O~D ESTATES. ~ Staff Report Continued... Page -2- Evaluation Mechanism and Process 'The actual evaluation instrument was divided into two (2) parts, as follows: 1. Part one was entitled "Technical Review Questionnaire" (Attachment "1"). The Questionnaire was designed. to detennine whether the proposers addressed each of the salient items of the REP. '!hose that were found to have negative responses, or lacked any response to a particular item, were provided written communication infonning that particular proposer of the situation, while allowing time for follow up responses for the purpose of clarifying a given item. 2. The secorrl part of the instrument (Attachment "2") was designed to test three (3) areas that would profile a proposer's ability to complete the project in a satisfactory manner. '!his section would be rated on a point basis for purposes of ranking the proposers am obtaining a list of finalists. The above referenced instruments were develOPed by Mr. John Trauth, Housing arrl Community Development Consultant, with review am input provided by the firm of Kotin, Regan am Mouchly, Inc., (KRM), a real estate consulting firm. KRM specializes in providing specialized financial planning am am analytic services for developers, investors, lerrlers, local governments arrl other public agencies. The review of the proposals submitted using the above referenced documents were conducted by Mr. Trauth, Mr. Val Mahabir, Economic Development Consultant, am Mr. Edward L. Flores, Canununity Development Specialist. The results were compiled am scored, as follows: Proposer Total Points 1. Gateway Housing Group 2. Dlkes-Dlkes am Associates 3. Mainline Financial 4. JMC Development Company 5. WID/Joint Venture 6. Neighborhood Housing Services 7. Hawkeye Development 8. Management Trend 269 263 192 181 142 138 137 68 It was the joint recorrnnendation of the three (3) reviewers to invite the top four (4) proposers for a final interview. Final Interviews and Recarmendation Final interviews were scheduled for August 25, 1989 for the four (4) finalists, as follows: 1. Gateway Housing 2. Dukes-Dlkes am Associates I 3. Mainline Financial 4. JMC Development Inc. 09/20/89 O~D ESTATES RFP Staff Report COntinued... Page -3- In order to ensure the city would obtain the sel:Vices of the most qualified developer I the scores earned by each proposer in the previous phase waS not to be considered in the final inteJ:view. '!his would allow the panelists the opportunity to listen to each proposer's presentation and address the areas that were most relevant and intrinsic to the success of the proj ect. Prior to the interview I the finalists were provided a surrnnary of areas of concern with their respective proposals. It was the intent of the panel to have each proposer focus their attention on these areas as well as (i) provide in-depth discussion on the proposal's financial feasibility; (ii) ability of the proposer to meet the requirement for twenty (20) of the homes within the range appropriate for mcxierate income individuals, and; (iii) overall sensitivity to the project area's socio-econornic condition. The panel consisted of the three (3 ) individuals VJho conducted the initial review, plus Mr. Craig Graves, city Treasurer. The addition of Mr. Graves was primarily for the purpose of obtaining input and guidance from the individual most inclined and able to assess and safeguard the City'S interest with respect to its finances. Each of the panelists were allowed to ask questions based u:pon review of all documents and the finalists' actual oral presentations. Actual interviews were conducted with three (3) of the four (4) finalists. (The fourth finalist, Gateway Housing, initially accepted the invitation and, subsequently, declined to be inteJ:viewed because of the low/mcderate income requirement.) '!he panel unanirrDusly decided the proposer most able to develop the project would be JMC Development, Inc. '!his developer was chosen on the basis of it being the only finn VJhich had the requisite financial resources in place to undertake the project in a timely manner. JMC Development also offered the highest purchase price under the most favorable conditions to the City. It is clear JMC Development's financial resources and net offer will allow the City to settle the residual debt service on the assessment bom in the most timely fashion at no further expense, or at most, minbna1 expense to the City. JMC Development's track record in developing proj ects of a similar nature and scope led the panel members to conclude that this developer would be able to expedite the completion of the subdivision and the successful sale of the remaining seventy-six (76) mcxierately priced homes on these improved lots. In surrnnary, JMC Development's proposal was the only pro:posal VJhich satisfied the City's major objectives as stated in the RFP. One concern VJhich the panel had identified with JMC Development's proposal was that JMC had not addressed the City's requirement that at least twenty (20) of the new homes in this subdivision be affordable to families earning no more than eighty percent (80%) of current median income. JMC Development agreed to meet this criteria, but requested assistance from the City in identifying alternative resources in VJhich to do so. (Each of the other finalists had also requested such assistance in varying fonns.) '!he panel believes that JMC Development has a realistic idea of feasible sales prices in Orangewood Estates. 09/20/89 O~D ESTATES ~~ Staff Report COntinued... Page -4- The panel reconunends that the City enter into negotiations with JMC Development, Inc. Negotiations should focus on satisfactory resolution of the following issues: 1. satisfactory resolution of the assistance necessary to meet the afford- ability requirement of the twenty (20) units. It is suggested that the city develop a proposed plan for such resolution prior to fo:r1TtCl1 negotiations with JMC Development. 2. Satisfactory agreement relative to specific development fees, if any, which have already been paid through the assessrrent district proceeds, and which fees will be paid by the develOPer. 3. Satisfactory resolution relative to the size of the hares to be constructed by JMC Development, and the level and type of landscaping. 4. Satisfactory resolution that JMC Development will be successful in procuring the necessary financing to urrlertake this project (including land acquisition, construction and ~ent financing). 5. Satisfactory agreement on a proposed payment schedule, development schedule, and priority processing arrangernents by the City. Given the discussions the panel members had with representatives from JMC Development, the panel believes that it is likely the above issues can be resOlved to the City's satisfaction in the near future. Notice to prepay the bondholders must cx:::cur by October 30, 1989, in order to avoid further interest accruals beyorrl January 1, 1990. since JMC Development proposes full payment of its purchase price of $1,520,000 to the City within ninty (90) days of offer acceptance, the negotiations with JMC Development must be concluded by the above date, at the latest, to avoid additional interest payments beyond January 1, 1990. I reconunend adoption of the form I1'K>tion. elopment KJH/lab/3435 attachments 09/20/89 CITY OP SAN BERNARDINO COMMUNITY DEVELOPMENT DEPARTMENT TECHNICAL REVIEW QUESTIONNAIRE ORANGEWOOD ESTATES RFP PrODoser: Rated By: Date: Yes I!Q 1. Is proposer properly identified by name, address and telephone number? 2. Did proposer describe the nature of his/her business and length of operation? 3. Did proposer specify the legal structure of his/her business including DBA's? 4. Did proposer properly identify principals of the business? 5. Does proposal indicate contact person? 6. Does proposal specify its equity participants and percentage of equity? (If applicable) 7. Does proposal clearly specify the guarantee relationship that will exist between the pro- poser and its sponsors or participants, par- ticularly in the case of a joint venture? 8. Does proposal include statements of net worth for guarantors prepared or reviewed by an independent CPA firm? 9. If statement of net worth includes real estate, does proposal indicate market value and mechanism for establishing such value? 10. Does proposer indicate his/her current banking relationships? 11. Does proposer indicate available credit line? 12. Does proposal include identities of four (4) credit references? 09/20/89 ATTACHMENT "1" TECHNICAL REVIE. AOESTIONNAIRB Orangewood Estates RFP Page -2- Yes No 13. If proposal makes references to any litiga- tion or disputes that would adversely affect project performance, were they resolved satis- factorily,? 14. If proposal indicates that any of the company's principals are or were involved in bankruptcy proceedings, have they been resolved satisfactorily, or has sufficient time elapsed since its occurence? 15. If proposal indicates any of the company's principals were ever served with a Notice of Default, have such debts or other litigation been cleared? 16. Does proposal include resumes of the princi- pals specifying length of tenure with firm, present responsibilities and past experiences? 17. Did proposer include experience in developing and operating similar projects? 18. Comments: VM/JRT/lab/3209 May, 1989 CITY OF SAN BERNARDINO ~OMHUNITY DEVELOPMENT DEPARTMENT RFP RATING SHEET -- ORANGEWOOD ESTATES Proposer: Rated by: Date: 1. Financial Attractiveness of the Proposal to the City (maximum of forty (40) points). a) Ability of the City to recover all advanced funds as quickly as possible (ten (10) points): b) Ability of the City to be released from finan- cial responsibility for the residual debt ser- vice on the assessment bond as soon as possible (ten (10) points): c) Ability of the City to accomplish (a) and (b) with minimum concessions and/or incentives or bond refunding (ten (10) points): d) Evidence of proposed financial security pledged to support the proposal (ten (10) points) : 2. Developmental Attractiveness of the Proposal (maximum of thirty (30) points possible, a) Ability of the developer to complete the sub- division build-out in the most expeditious manner, consistent with design and development standards as specified (fifteen (15) points): b) Ability of the developer to meet the low and moderate income pricing limitations as specified (fifteen (15) points): 3. strenqth of Developer Oualifications (thirty (30) points.) a) Overall financial strength of the developer/ development entities, as evidenced by capitaliza- tion, net worth, strength of financial statements, credit line, references, etc. (fifteen (15) points): b) Experience in developing/operating similar. projects, including projects with local juris- dictions, with emphasis on compliance with low and moderate price limitations (fifteen (15) points): TOTAL SCORE 09/20/89 A'ITACHMENT "2"