HomeMy WebLinkAbout2013-11-05; City Council; 21414; Authorization Ground Lease West View Lot 9CARLSBAD PUBUC FINANCING AUTHORITY, CITY OF
CARLSBAD, AND CARLSBAD MUNICIPAL WATER DISTRICT
AGENDA BILL
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AB# 21.414 AUTHORIZATION FOR THE CARLSBAD PUBUC FINANCING
AUTHORITY TO ENTER INTO EXCLUSIVE NEGOTIATIONS
FOR THE GROUND LEASE OF THE PROPERTY KNOWN AS
THE CROSSINGS AT CARLSBAD WEST VIEW LOT 9
DEPT. DIREaOR ^h^l
MTG. 11/5/13
AUTHORIZATION FOR THE CARLSBAD PUBUC FINANCING
AUTHORITY TO ENTER INTO EXCLUSIVE NEGOTIATIONS
FOR THE GROUND LEASE OF THE PROPERTY KNOWN AS
THE CROSSINGS AT CARLSBAD WEST VIEW LOT 9
CITY ATTORNEY fflf'^
DEPT. CED
AUTHORIZATION FOR THE CARLSBAD PUBUC FINANCING
AUTHORITY TO ENTER INTO EXCLUSIVE NEGOTIATIONS
FOR THE GROUND LEASE OF THE PROPERTY KNOWN AS
THE CROSSINGS AT CARLSBAD WEST VIEW LOT 9
CITY MANAGER (flJ
RECOMMENDED ACTION:
1. Adoption of Resolution No. 65 by the Carlsbad Public Financing Authority (CPFA)
recommending that its two member agencies authorize the CPFA to enter into exclusive negotiations
with LEGOLAND for the ground lease of the property known as the Crossings at Carlsbad West View
Lot 9 and authorizing the City of Carlsbad to negotiate with LEGOLAND for the ground lease of the
property in its capacity as lease manager for the CPFA.
2. Adoption of Resolution No. 2013-258 by the City Council of the City of Carlsbad authorizing
the CPFA to enter into exclusive negotiations with LEGOLAND for the ground lease of the property
known as the Crossings at Carlsbad West View Lot 9 and to act on behalf of the City of Carlsbad in all
future decisions and actions related to the ground lease ofthe property.
3. Adoption of Resolution No. 1483 by the Carlsbad Municipal Water District authorizing
the CPFA to enter into exclusive negotiations with LEGOLAND for the ground lease of the property
known as the Crossings at Carlsbad West View Lot 9 and to act on behalf ofthe Carlsbad Municipal
Water District in all future decisions and actions related to the ground lease ofthe property.
ITEM EXPLANATION:
On May 7, 2013, the Carlsbad Public Financing Authority (CPFA) was authorized by its two member
agencies, the City of Carlsbad and Carlsbad Municipal Water District (CMWD), to solicit proposals for a
long term ground lease on the property known as the Crossings at Carlsbad West View Lot 9. The Lot 9
property is comprised of two parcels, one owned by the city and the other owned by CMWD. The
Authority was additionally authorized to evaluate and make recommendations to the governing boards
ofthe city and CMWD regarding proposals submitted for Lot 9.
On May 13, 2013, city staff released the RFP soliciting proposals and provided potential respondents a
two month time period in which to prepare and submit proposals. The RFP was provided to 120
brokers, advertised online, published in several papers and trade publications and sent directly to
numerous interested parties. On the submittal deadline date, staff received two proposals, one from
LEGOLAND and the other from Grand Pacific Resorts.
DEPARTMENT CONTACT: Kathy Dodson 760-602-2744 kathv.dodson(5)carlsbadca.gov
FOf? CITY CLERKS USE ONLY.
COUNCIL ACTION: APPROVED CONTINUED TO DATE SPECIFIC •
DENIED CONTINUED TO DATE UNKNOWN •
CONTINUED • RETURNED TO STAFF
WITHDRAWN OTHER-SEE MINUTES X AMENDED
Poge 2
Upon opening the proposals, staff proceeded to review and evaluate them based upon the following
criteria as presented in the RFP document:
• Vision and plan for the property,
• Financial benefits to the city and CMWD,
• Respondent's experience and ability to perform, and
• Litigation history.
A multi-departmental selection committee, comprised of representatives from Finance, Parks and
Recreation, Community and Economic Development, and Public Works, conducted a review and analysis
of both proposals. The selection committee was assisted in its review and analysis by representatives
from the Irving Group, a real estate consulting firm with expertise in commercial land development
leases and from Procopio, Cory, Hargreaves and Savitch LLP, a law firm that represents government and
private entities in real estate transactions.
The two respondent entities each have an existing presence in the community and each one has a
successful development track record within the city. Both respondents operate existing facilities either
adjacent to or in close proximity to Lot 9. Both respondents are proposing resort lodging developments
to be operational by 2017. A brief description ofthe two proposals is as follows:
Grand Pacific Resorts Proposal
Grand Pacific Resorts (GPR) proposes to construct 71 hotel units and 50 timeshare units on Lot 9.
The proposal would integrate 71 new hotel rooms on Lot 9 into GPR's adjacent property by
rebranding the existing Sheraton's lobby/restaurant/conference facility and one building of existing
hotel rooms. The hotel is expected to be rebranded as a Westin. The 50 timeshare units on Lot 9
would be developed as an expansion of the MarBrisa timeshare development, also located on the
adjacent GPR property. This project will be conventionally financed with a minimum 65 year term.
LEGOLAND Proposal
LEGOLAND proposes to create a 90 unit hotel development on Lot 9. A total of 50 themed rooms
would be constructed in a main building located on the west end ofthe Lot 9 site with the additional
40 units constructed as free standing, highly themed LEGOLAND units. This project would be
internally financed, meeting the term proposed in the RFP of 30 years with two 10 year extensions.
The analysis was restricted to the benefits derived exclusively from Lot 9, as both parties have the
ability to continue to develop their existing properties. Both companies have significant development
experience in Carlsbad and under the selection criteria, both companies were deemed able to perform.
Neither company has a litigation history that was of concern to the selection committee.
Upon final review ofthe two project proposals, the selection committee judged the LEGOLAND proposal
as the one best fulfilling the selection criteria described in the RFP. LEGOLAND's proposal for Lot 9
provided more financial benefits to the City of Carlsbad and CMWD than the GPR proposal. In addition,
the LEGOLAND proposal was deemed to be less risky because the development of Lot 9 is proposed as a
stand-alone facility, is self-financed and has a brand that is fully controlled by the respondent.
The selection committee is therefore recommending that the City of Carlsbad and CMWD authorize the
CPFA to enter into exclusive negotiations with LEGOLAND on the terms ofthe proposed ground lease of
the Lot 9 property.
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If approved, the City of Carlsbad, as the previously authorized lease manager, will move forward
expeditiously to complete the negotiations and return to seek approval of proposed lease terms. The
CPFA is also authorized to make decisions and take any further future actions related to the ground
lease ofthe property on behalf of its member agencies, which would include entering into negotiations
with the other respondent if negotiations with LEGOLAND are not successfully completed, and taking
any actions related to the lease itself.
FISCAL IMPACT:
The development of Lot 9 will result in a positive fiscal impact to the City of Carlsbad and the Carlsbad
Municipal Water District. Until negotiations are complete, the benefit to each agency is difficult to fully
quantify; however, based upon the proposals submitted, revenues are anticipated to be generated from
the property lease and from transient occupancy taxes and sales taxes collected from room stays and
on-site sales. Potential lease revenue generated from use of Lot 9 will be apportioned between the
CMWD and the City of Carlsbad based upon a per square foot ownership basis and leasehold interest,
with any applicable taxes or fees associated with the development of the site distributed to the
appropriate taxing authority.
ENVIRONMENTAL IMPACTS:
The recommended action does not qualify as a "project" underthe California Environmental Quality Act
(CEQA) per Public Resources Code Section 21065 and State CEQA Guidelines Section 15378 in that it has
no potential to cause either a direct physical change in the environment or a reasonably foreseeable
indirect physical change in the environment and therefore does not require environmental review.
Proposed future development project of Lot 9 will require CEQA review and will be required to comply
with all appropriate CEQA requirements.
EXHIBITS;
1. Carlsbad Public Financing Authority Resolution No. 65 recommending that its two
member agencies authorize the CPFA to enter into exclusive negotiations with LEGOLAND for the
ground lease ofthe property known as the Crossings at Carlsbad West View Lot 9 and authorizing the
City of Carlsbad to negotiate with LEGOLAND for the ground lease of the property in its capacity as
lease manager for the CPFA.
2. City Council Resolution No. 2013-258 authorizing the Carlsbad Public Financing Authority to
enter into exclusive negotiations with LEGOLAND for the ground lease ofthe property known as the
Crossings at Carlsbad West View Lot 9 and to act on behalf of the City of Carlsbad in all future
decisions and actions related to the ground lease ofthe property.
3. Carlsbad Municipal Water District Resolution No. 1483 authorizing the Carlsbad Public
Finance Authority to enter into exclusive negotiations with LEGOLAND for the ground lease of the
property known as the Crossings at Carlsbad West View Lot 9 and to act on behalf of the Carlsbad
Municipal Water District in all future decisions and actions related to the ground lease of the
property.
4. The Crossings at Carlsbad West View Lot 9 Location Map.
5. The Crossings at Carlsbad West View Lot 9 Site Map. 3
EXHIBIT 1
1 RESOLUTION NO. 65
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2 A RESOLUTION OF THE BOARD OF DIRECTORS OF THE CARLSBAD
PUBLIC FINANCING AUTHORITY RECOMMENDING THAT ITS TWO
MEMBER AGENCIES AUTHORIZE THE CARLSBAD PUBLIC
4 FINANCING AUTHORITY TO ENTER INTO EXCLUSIVE
NEGOTIATIONS WITH GRAND PACIFIC RESORTS FOR THE GROUND
5 LEASE OF THE PROPERTY KNOWN AS THE CROSSINGS AT
CARLSBAD WEST VIEW LOT 9 AND AUTHORIZING THE CITY OF
CARLSBAD TO NEGOTIATE WITH GRAND PACIFIC RESORT FOR THE
7 GROUND LEASE OF THE PROPERTY IN ITS CAPACITY AS LEASE
MANAGER FOR THE CARLSBAD PUBLIC FINANCING AUTHORITY
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WHEREAS, in August 2012, staff presented to a joint meeting of the City of
Carlsbad City Council and the Carlsbad Municipal Water District Board of Directors, a group of
underutilized properties for their consideration and direction; and
12 WHEREAS, included in these properties was a parcel referred to as the Crossings
13 at Carlsbad West View Lot 9 (Lot 9); and
WHEREAS, Lot 9 is a combination of two adjacent parcels: Parcel A, one 2.7 acre
lot owned by the City of Carlsbad and Parcel B, a second 0.45 acre lot owned by the Carlsbad
Municipal Water District; and
WHEREAS, the City of Carlsbad and the Carlsbad Municipal Water District are
19 member agencies of the Carlsbad Public Financing Authority (CPFA), which was created on April
18, 2000 to provide for the financing of public capital improvements for the member agencies
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and for other purposes as permitted under the Joint Powers Law as agreed to by the parties;
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and
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WHEREAS, CPFA issued proposals to solicit responses from parties interested in
25 developing Lot 9 under a long term ground lease; and
26 WHEREAS, CPFA has evaluated the responses to the request for proposals and
recommends to both member agencies that CPFA enter into exclusive negotiations with Grand
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Pacific Resorts for the ground lease of The Crossings at Carlsbad West View Lot 9; and
WHEREAS, the potential revenues generated from development on the
combined Lot will be apportioned between the City of Carlsbad and the Carlsbad Municipal
Water District, based upon a per square foot ownership basis and leasehold interest, with any
1 WHEREAS, the City of Carlsbad will conduct the negotiations for, and manage the
^ ground lease in its capacity as lease manager for CPFA; and
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7 applicable taxes or fees associated with the development of the site distributed to the
8 appropriate taxing authority.
^ NOW, THEREFORE, BE IT RESOLVED by the Board of Directors of the Carlsbad
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Public Financing Authority, as follows:
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1. The above recitations are true and correct.
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13 2. CPFA recommends that its two member agencies authorize CPFA to enter into
14 exclusive negotiations with Grand Pacific Resorts for the ground lease of the property known as
^^ The Crossings at Carlsbad West View Lot 9.
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3. CPFA has previously designated the City of Carlsbad as the member which will be
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the lease manager for the ground lease of Lot 9. As lease manager, the City of Carlsbad will
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19 negotiate and make recommendations to CPFA regarding ground lease terms and conditions for
20 the Crossings at Carlsbad West View Lot 9.
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4. The City of Carlsbad is authorized to administer and manage the ground lease,
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and distribute any revenues generated from the long-term lease of Lot 9 on a per square foot
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ownership ratio basis, with any applicable taxes or fees associated with the development ofthe
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25 site distributed to the appropriate taxing authority.
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PASSED, APPROVED AND ADOPTED at a Special Meeting of the Carlsbad Public
Financing Authority Board, City of Carlsbad City Council and Carlsbad Municipal Water District
Board of Directors held on the 5th day of November 2013, by the following vote to wit:
AYES:
NOES:
Board Members Packard, Wood, Blackburn.
Board Member Hall.
ABSENT: Board Member Douglas.
ATTEST:
BARBARA ENGLESON, Secreta
(SEAL)
EXHIBIT 2
1 RESOLUTION NO. 2013-258
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2 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CARLSBAD
AUTHORIZING THE CARLSBAD PUBLIC FINANCING AUTHORITY TO
ENTER INTO EXCLUSIVE NEGOTIATIONS WITH GRAND PACIFIC
4 RESORTS FOR THE GROUND LEASE OF THE PROPERTY KNOWN AS
THE CROSSINGS AT CARLSBAD WEST VIEW LOT 9 AND TO ACT ON
5 BEHALF OF THE CITY OF CARLSBAD IN ALL FUTURE DECISIONS
AND ACTIONS RELATED TO THE GROUND LEASE OF THE
PROPERTY.
WHEREAS, in August 2012, staff presented to a joint meeting of the City of
Carlsbad City Council and the Carlsbad Municipal Water District Board of Directors, a group of
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IQ underutilized properties for their consideration and direction; and
11 WHEREAS, included in these properties was a parcel referred to as the Crossings
12 at Carlsbad West View Lot 9 (Lot 9); and
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WHEREAS, Lot 9 is a combination of two adjacent parcels: Parcel A, one 2.7 acre
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lot owned by the City of Carlsbad and Parcel B, a second 0.45 acre lot owned by the Carlsbad
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Municipal Water District; and
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j7 WHEREAS, the City of Carlsbad and the Carlsbad Municipal Water District are
18 member agencies of the Carlsbad Public Financing Authority (CPFA), which was created on April
18, 2000 to provide for the financing of public capital improvements for the member agencies
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and for other purposes as permitted under the Joint Powers Law as agreed to by the parties;
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and
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WHEREAS, CPFA issued proposals to solicit responses from parties interested in
24 developing Lot 9 under a long-term ground lease; and
25 WHEREAS, CPFA has evaluated the responses to the request for proposals and
2^ recommends to both member agencies that CPFA be authorized to enter into exclusive
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1 negotiations with Grand Pacific Resorts for the ground lease of The Crossings at Carlsbad West
^ View Lot 9; and
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WHEREAS, the City of Carlsbad will conduct the negotiations for, and manage the
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ground lease in its capacity as lease manager for CPFA; and
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WHEREAS, the potential revenues generated from development on the
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7 combined Lot will be apportioned between the City of Carlsbad and the Carlsbad Municipal
8 Water District based upon a per square foot ownership basis and leasehold interest, with any
^ applicable taxes or fees associated with the development of the site distributed to the
appropriate taxing authority.
NOW, THEREFORE, BE IT RESOLVED by the City Council ofthe City of Carlsbad,
California, as follows:
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14 1. The above recitations are true and correct.
2. The City of Carlsbad hereby authorizes the CPFA to enter into exclusive
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negotiations with Grand Pacific Resorts for the ground lease of The Crossings at Carlsbad West
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View Lot 9 and to act on behalf of the City of Carlsbad in all future decisions and actions related
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to the ground lease ofthe property.
20 3. As lease manager for the CPFA, the City of Carlsbad will negotiate the ground
21 lease and make recommendations to the CPFA regarding ground lease terms and conditions.
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25 square foot ownership ratio basis, with any applicable taxes or fees associated with the
26 development of the site collected and used by the appropriate taxing authority.
27 ///
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4. As lease manager, the City of Carlsbad will also administer and manage the lease
of Lot 9, and distribute any revenues generated from the long-term lease of Lot 9 on a per
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PASSED, APPROVED AND ADOPTED at a Special Meeting of the Carlsbad City
Council, Public Financing Authority Board and Carlsbad Municipal Water District Board of
Directors held on the 5^"^ day of November 2013, by the following vote to wit:
AYES:
NOES:
Council Members Packard, Wood, Blackburn.
Council Member Hall.
ABSENT: Council Member Douglas.
MATT HALL, Mayor
ATTEST:
BARBARA ENGLESON, City
EXHIBIT 3
1 RESOLUTION NO. 1483
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2 A RESOLUTION OF THE BOARD OF DIRECTORS OF THE CARLSBAD
MUNICIPAL WATER DISTRICT AUTHORIZING THE CARLSBAD
PUBLIC FINANCING AUTHORITY TO ENTER INTO EXCLUSIVE
4 NEGOTIATIONS WITH GRAND PACIFIC RESORTS FOR THE GROUND
LEASE OF THE PROPERTY KNOWN AS THE CROSSINGS AT
5 CARLSBAD WEST VIEW LOT 9 AND TO ACT ON BEHALF OF THE
CARLSBAD MUNICIPAL WATER DISTRICT IN ALL FUTURE
DECISIONS AND ACTIONS RELATED TO THE GROUND LEASE OF
THE PROPERTY.
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8 WHEREAS, in August 2012, staff presented to a joint meeting of the City of
^ Carlsbad City Council and the Carlsbad Municipal Water District Board of Directors, a group of
underutilized properties for their consideration and direction; and
11
WHEREAS, included in these properties was a parcel referred to as the Crossings
12
at Carlsbad West View Lot 9 (Lot 9); and
14 WHEREAS, Lot 9 is a combination of two adjacent parcels: Parcel A, one 2.7 acre
15 lot owned by the City of Carlsbad and Parcel B, a second 0.45 acre lot owned by the Carlsbad
Municipal Water District; and
WHEREAS, the City of Carlsbad and the Carlsbad Municipal Water District are
member agencies ofthe Carlsbad Public Financing Authority (CPFA), which was created on April
2Q 18, 2000 to provide for the financing of public capital improvements for the member agencies;
21 and
22 WHEREAS, CPFA issued proposals to solicit responses from parties interested in
developing Lot 9 under a long term ground lease; and
WHEREAS, CPFA has evaluated the responses to the request for proposals and
recommends to both member agencies that CPFA be authorized to enter into exclusive
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27 negotiations with Grand Pacific Resorts for the ground lease of The Crossings At Carlsbad West
28 View Lot 9; and
1 WHEREAS, the City of Carlsbad will conduct the negotiations in its capacity as
2 lease manager for CPFA; and
3
WHEREAS, the potential revenues generated from development on the
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combined Lot will be apportioned between the City of Carlsbad and the Carlsbad Municipal
5
Water District based upon a per square foot ownership basis and leasehold interest, with any
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7 applicable taxes or fees associated with the development of the site distributed to the
8 appropriate taxing authority.
^ NOW, THEREFORE, BE IT RESOLVED by the Board of Directors of the Carlsbad
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lunicipal Water District, California, as follows:
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1. The above recitations are true and correct.
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13 2. The Carlsbad Municipal Water District hereby authorizes the CPFA to enter into
14 exclusive negotiations with Grand Pacific Resorts for the ground lease of The Crossings at
Carlsbad West View Lot 9 and to act on behalf of the Carlsbad Municipal Water District in all
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future decisions and actions related to the ground lease ofthe property.
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3. As lease manager for the CPFA, the City of Carlsbad will negotiate the ground
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19 lease and make recommendations to the CPFA regarding ground lease terms and conditions.
20 4, As lease manager, the City of Carlsbad will also administer and manage the lease
of Lot 9, and distribute any revenues generated from the long-term lease of Lot 9 on a per
square foot ownership ratio basis, with any applicable taxes or fees associated with the
development of the site collected and used by the appropriate taxing authority.
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PASSED, APPROVED AND ADOPTED at a Special Meeting of the Carlsbad
Municipal Water District Board of Directors, City of Carlsbad City Council and Carlsbad Public
Financing Board held on the 5th day of November 2013, by the following vote to wit:
AYES:
NOES:
Board Members Packard, Wood, Blackburn.
Board Member Hall.
ABSENT: Board Member Douglas.
MATT HALL, President
ATTEST:
BARBARA ENGLESON, Secrej;frry
(SEAL)
-3-
LOCATION MAP
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4pAY AV
The Crossings at
Carlsbad West View
Lot 9
VICINITY
•uH": MAP
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PROJECT NAME
The Crossings at Carlsbad West View Lot 9
EXHIBIT
J:\Req uests2010P! us\PropEn viron\M uni Prop\5148207_13
13
SITE MAP
PROJECT NAME
Ttie Crossings at Carlsbad West View Lot 9
EXHIBIT
J:\Requests2010Plus\PropEnviron\MuniProp\5148207_13
September 18,2013
Tim Stripe
Grand Pacific Resorts
5900 Pasteur Court, Suite 200
Carisbad CA 92008
Dear Tim:
It has come to my attention that you have made a proposal to the City of Carlsbad to develop
the city-owned parcel adjacent to the Grand Pacific Resorts/Sheraton Hotel with an expansion
of your existing hotel development. I am writing this letter to let you know that if the city is
considering allowing the parcel to be developed privately, I would strongly support your
proposal to develop the parcel with an expansion of your hotel uses.
During my tenure as the Planning Director for the city, I had the opportunity to review and make
recommendations on several of your projects including the Sheraton Hotel project. I was always
impressed with your professionalism. Integrity and commitment to balance your business goals
with the goals and Interest of the city for the highest quality of development. I believe that your
projects represent that level of quality and that the Grand Pacific Resort/Sheraton Hotel project
Is one of the premier projects that I had the opportunity to work on. From both a land use and
economic standpoint, I think an expansion of the project on the adjoining city-owned parcel
especially given its proximity to the municipal golf course Is a proposal worthy of favorable
consideration.
Good Luck and Best Regards,
Michael J. Holzmiller
c: Mayor Matt Hall, City of Carisbad
NATIONAL BANCORP
COMMERCIAL ASSKT MANAGEMENT* CONSULTING SERVICES
November 4, 2013
Mr. Tim Stripe
5900 Pasteur Court
Carlsbad, CA 92008
RE: Potential LEGOLAND Expansion
Hi Tim,
I wanted to respond In writing to the prospect of the future expansion of the LEGOLAND
Hotel In Carlsbad. As a resident of Carlsbad, this potential expansion concerns me. It's not
LEGOLAND Itself, (which I think has been good for Carlsbad to date); but It's their
ownership structure that concerns me.
It is my understanding that the majority Interest of LEGO's parent. Merlin Entertainment, is
owned by Blackstone, out of New York, and CVS Capital, out of London. I believe both
these private equity/hedge funds have a business model that by design buys existing
assets, hopefully adds value, then resells those assets over a relatively short period of time.
It's when they sfiU their assets that they earn their money, so there Is always a motivation
to sell. Case in point:
o Blackstone purchased Hilton in 2007 and Is now cashing out (via an IPO) next
month.
o Blackstone purchased La Quinta Hotels In 2006 and is now cashing out.
o Blackstone purchased Extended Stay America Hotel Group in 2004, then
cashed out.
o Blackstone purchased Extended Stay America Hotel Group again in 2010 out
of bankruptcy, and Is now cashing out again.
Unlike companies like Grand Pacific, who are local, who develop, operate, and make a living
from running an ongoing concern.
Whenever owners (Investors) don't live where they invest, their motivations can sometimes
just be profit. And whenever businesses are sold for short term profit, it doesn't usually
work out for the benefit of the locals. Hopefully this will not be the case in Carlsbad.
Good luck in your quest to expand your current operation Into a Westin/Sheraton brand. It
would be a great feather In your cap, and great for the City of Carlsbad!
Steve Halterman
'NATIONALRESOURCES WITH INDIVWUAUZEDSERVICE'
STEVKIV HAI.TKRMAN | PRESIDENT j NATIONAL BAXCOHP
7766 EXCHANGE PLACK | LA JOI.U,CA 92037
760.828.4265 Ol-TMIE I S/tl .482.227lCra.L
UNITED STATES MARINE CORPS
MARINE MEDIUM HELICOPTER SQUADRON 268
MARINE AIRCRAFT GROUP 16
P.O. BOX 452043
SAN DIEGO, CA 92145-2043
IN REPLY REFER TO:
1000
CO
23 Feb 13
Sheraton Carisbad Resort & Spa
5480 Grand Pacific Drive
Carisbad, CA 92008
Dear Management and Staff of the Sheraton Carisbad Resort & Spa:
On behalf of HMM-268,1 would like to thank you for the complimentary meeting
spaces, delicious breakfast, and reduced room rates you provided in support of our
HMM-268 "Art of Marriage" Retreat on February 10-11, 2013. The free night stay that
Mr. and Mrs. Stripe provided as a door prize to our youngest couple was an unexpected
and welcome surprise!
Our unit recently returned from a five-week exercise in Twenty-nine Palms, CA.
This event was a welcome reunion for the spouses. The hardships of a military
marriage during time of war are well publicized. As leaders, we strive to provide support
to the families in any way we can, but our resources are limited. As such, we truly
appreciate your generous support in endeavors such as this. Thank you and God
bless!
Sincerely,
B. R. PETERSON
Lieutenant Colonel
United States Marine Corps
Commanding Officer, HMM-268
ICAUFORNIA ASSCXIATION OF UTlNq
Oct. 31,2013
Chris Draper
Sheraton Carisbad Resort and Spa
5480 Grand Pacific Drive
Carisbad, CA 92008
Dear Chris,
In following up to another successful July 2013 program the board is presendy meeting
on die placement of our 2015 program at the Sheraton Carisbad Resort and Spa.
Regarding our conversation, the Califomia Association of Latino Superintendents and
Administrators would fmd the additional guestrooms and the introduction of the Westin
brand at your property beneficial. We presently enjoy our partnership and with the
expansion plans you have outiined we view it to be advantageous to grow that partnership
with the potential of an increased number of programs.
We look forward to learning more as the project progresses.
Sincerely,
Dr. David Gomez
Executive Director
1029 J street, Suite 500 •Sacramento, CA95814 Btel 916.444.3216 • fax 916,444,3739 • web v\ww.calsa.org
Audrey Van-Alyea
ACS Planning
Global Account Manager
Dear Julie,
It was exciting to discuss the possibility of an addition of a Westin Hotel with additional
meeting space In Carisbad, CA.
In woridng with various Carisbad companies and I would find the additionai guestrooms
and the introduction of the Westin brand at your property beneficial. We presently
enjoy the mutual partnership with Sheraton Carisbad and have found on more than one
occasion that we could fill additional meeting space and guest rooms as there are limited
number of full service hotels that offer meeting space.
Best wishes to you on the progression of this project!
All the best,
Audrey Van Alyea
ACS Planning
Long Term Lease Proposal
The Crossings at Carlsbad
West View Lot 9
Background: •August 21, 2012 – Joint Council and CMWD Board
Workshop
–Approved list of underutilized properties
–Authorized staff to investigate sale/lease proposals
•May 7, 2013 – Joint City, CMWD and CPFA board meeting
–Approved and authorized issuance of Lot 9 RFP
–Authorized CPFA to evaluate proposals and make
recommendation
–Authorized CPFA to administer and manage
City/CMWD lease
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Background: •May 13, 2013 - Staff released Lot 9 Request for
Proposals
•July 8, 2013 – Proposals Submitted
•July/September 2013 – Interviews with
developers and response to questions
•November 2013 – Staff selection committee
recommendation
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Team Intro
This is a complex and important project and we put together a team of specialists to ensure a thorough and valid analysis
•Consultants supplemented the city evaluation team:
–Casey Kinslow – Chief Financial Officer, The Irving Group
–Michael Lyon – Partner, Procopio Law
•City team members:
–Kathy Dodson - Community & Economic Development director
–Chuck McBride – Administrative Services director
–Colette Wengenroth – finance manager
–Chris Hazeltine – Parks & Recreation director
–Skip Hammann, Jr. – Public Works director
–David Hauser – Property & Environmental Management director
–Joe Garuba – municipal property manager
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Proposal Evaluation Criteria: The Request for Proposal was approved by City
Council with the following evaluation criteria:
•Respondent experience and ability to perform
•Litigation history
•Vision and plan for the property
•Financial Benefits to the Authority, City and
CMWD
5
Analyzing Financial Benefits
•Term – a shorter term lease increases control and reuse of the property by the owner and allows for faster property revaluation
•Reversion – considers the ease of returning the property to public use
•Brand Control – provides certainty of brand to be used on property and decreases the number of parties involved in negotiations
•Revenue/economic benefit – considers direct monetary gain from the lease as well as related economic benefits such as tax revenue enhancement
•Financing – independent financing eliminates the need to obtain construction and permanent financing from a third party, increasing the likelihood of development and reducing the project timeline
6
Lot 9
7
•Total acreage 3.15 acres
–Golf Course Lot 9 – 2.70 acres
–Water Tank Lot - 0.45 acres
•Site located at northwest corner of The
Crossings Drive
•Surrounding commercial uses are Commercial
Tourist Zone and Open Space
Proposal
The City of Carlsbad was fortunate to receive two excellent responses to our Request for Proposals. The respondents were:
•Grand Pacific Resorts
•LEGOLAND California
The analysis was restricted to the benefits derived exclusively from Lot 9, as both parties have the ability to continue to develop their existing properties.
9
Grand Pacific Resorts (GPR) Proposal:
•Within Lot 9 footprint
–Construct 71 units of higher end hotel (proposed
Westin)
–Construct 50 units of timeshare (MarBrisa)
•Required conversion of additional property
–Westin lobby, conference center and additional
rooms would be on Grand Pacific Resort property
(currently Sheraton)
10
CITY OF CARLSBAD 11
Existing
Sheraton
Hotel
Building
50 Proposed Timeshare
Units (MarBrisa)
71 Proposed Hotel Units (Westin)
Lot 9 Boundary
Grand Pacific Resorts Proposal
Lot 9 Site Plan
11
Proposed Westin Hotel
LEGOLAND Proposal Scenario A
•90 hotel units
–50 hotel units in main structure
–40 stand-alone hotel units
•Development is self-contained with a lobby, shop
and restaurant included in the 50 room hotel
Scenario B
•175 unit hotel
13
LEGOLAND Proposal
Lot 9 Boundary
Plan View
50 Room Hotel
40 Units
Themed as
Tree Houses
and Hobbit
Lodges
14
LEGOLAND Proposal
Perspective View
15
Selection Criteria
16
•Experience and ability to perform
–We are very fortunate that both GPR and
LEGOLAND have extensive and long term
experience in Carlsbad and have shown an ability
to complete and operate projects in our city.
•Litigation History
–Neither respondent had a litigation history that
concerned the selection committee
Selection Criteria - Vision
17
•Grand Pacific Resorts
–Proposes adding the Westin brand to our market and
adding additional time share units on Lot 9. This type of
product would be attractive to Carlsbad’s existing visitors
with the Westin brand focused on business travelers.
•LEGOLAND California
–Proposes adding 50 units of themed hotel rooms and an
additional 40 units of separate lodges. This type of
product is unique to the LEGOLAND brand and would build
on their national and international visitor market.
Criteria: Financial Benefits
•Term
•Dollars
–Direct benefit
–Indirect benefit
•Financing
•Reversion
•Brand Control
18
Financial Model Assumptions
19
Lego Sheraton
Initial Occupancy 71% 66%
Stabilized Occupancy 75% 78%
ADR $315 $250
Avg Spend per Room $95 $126
Summary
20
*Note: Indirect benefit is net present value discounted over 30 years
Lego GPR
Term 30 Year (2 Ten-Year Ext) 65 Year
Financial Benefit:
Direct (First Year) $157,000 $133,000
Direct (30 Year) $5.5 million $2.6 million
Indirect (30 Year)* $16.7 million $13.6 million
Financing Internal External
Recommendation
•Adopt Resolution Nos. 2013-258, 1483 and 65
of the City Council and Carlsbad Municipal
Water District (CMWD) approving the
successful proposal for the ground lease of the
property known as the Crossings at Carlsbad
West View Lot 9 and authorizing the Carlsbad
Public Financing Authority (CFPA) to negotiate
with LEGOLAND for the ground lease of the
property
21
Tim Stripe
Co-President
G RAND P ACIFIC R ESORTS
GRAND PACIFIC RESORTS
COMPANY HISTORY
Founded in 1983 by Current Principals
Tim Stripe & David Brown
Carlsbad Based Company with
over 1,000 Employees
Capital/Debt Financing Since
Inception of over $800 Million
Fifteen (15) Hospitality Properties
with Five (5) in Carlsbad
G RAND P ACIFIC R ESORTS CITY OF CARLSBAD 2
LOT 9 – EVENT SPACE
Legend:
Westin Carlsbad Resort & Spa
Hilton MarBrisa Carlsbad Resort
G RAND P ACIFIC R ESORTS
SLIDE FROM BRIAN
Speaker List
Tim Shinkle
Grand Pacific Resorts
Rick Manur
Azul Hospitality Group
Randi Coopersmith
Latitude 33 Planning & Engineering
Bruce Baltin
PKF Business Advisors
Suzanne Mellon
Hotel Valuation Services
Tim Shinkle
Chief Financial Officer
G RAND P ACIFIC R ESORTS
Grand Pacific Resorts
Total Annual Tax
Revenues
Paid/Projected to be
Paid to the City
G RAND P ACIFIC R ESORTS
Rick Mansur
President/CEO
WESTIN HOTELS
192 Hotels and Resorts
Personal and Instinctive
World-Class Hotels
and Golf Resorts
Compelling Group
Destination Properties
SHERATON HOTELS
436 Hotels and Resorts
Approachable and Affordable
Strong Family Product
Value-Driven Corporate Stays
WESTIN HOTELS &
GOLF RESORTS
High-end Resort Presence in Great
US Locations
Strong Complementary Product
to Sheraton
Brand is Extremely Strong in Attracting
High-End Destination Groups
Allows Carlsbad to Attract SPG Customers
from Other Westin Golf Resorts
Arizona
The Westin Kierland Resort & Spa
The Westin La Paloma Resort & Spa
California
The Westin Desert Willow Villas, Palm Desert
The Westin Mission Hills Golf Resort & Spa
Colorado
The Westin Riverfront Mountain Villas, Beaver Creek Mountain
Florida
The Westin Diplomat Resort & Spa, Hollywood Florida
Walt Disney World Swan
Georgia
The Westin Savannah Harbor Golf Resort & Spa
Hawaii
The Westin Princeville Ocean Resort Villas
The Westin Ka’anapali Ocean Resort Villas
The Westin Maui Resort & Spa, La’anapali
South Carolina
The Westin Hilton Head Island Resort & Spa
Texas
The Westin Stonebriar
The Westin La Cantera Hill Country Resort
Randi Coopersmith
Principal
Bruce Baltin
Senior Vice President
Suzanne Mellen
Senior Managing Director
of Consulting & Valuation
PROJECT FEASIBILITY REVIEW
LEGOLAND Adventure Lodge Hotel
Prepared by:
PINNACLE ADVISORY GROUP WEST, INC.
567 San Nicolas, Suite 370
Newport Beach, CA 92660
www.pinnacle-advisory.com
September 2013
BOSTON NEW YORK ORANGE COUNTY SOUTH FLORIDA
LEGOLAND California Tracking to Our Original Forecasts
LEGOLAND hotel will generate slightly
more than $1.7 million in incremental
TOT tax annually
Key Indicator 2013 (±272 days) Pinnacle Yr 1 Variance
Occupancy 76.9% 69.0% 11.4%
ADR $246 $228 7.9%
RevPAR $189 $157 20.2%
Ancillary Spend POR $107 $98 9.1%
Gross Sales POR $352 $326 8.2%
TOT (annualized) $1,725,090 $1,435,167 20.2%
More Brand Magic for Adventure Lodge
•Forecasting similar occupancy to LEGOLAND Hotel
•ADR forecast 30% - 35% higher due to unique units
•Not enough Suites at LEGOLAND Hotel •39% of units are stand alone •Normally a 2x multiplier for stand-alone units •Pinnacle within 5% of LEGOLAND’s forecasts •$800,000 in incremental TOT likely •Merlin Entertainments can fund internally
RevPAR:April May June July Aug Sept
LEGOLAND CA Resort $130.69 $184.26 $277.71 $321.39 $309.89 $132.90
Resort STR Set $141.60 $127.26 $162.93 $224.00 $210.60 $125.55
Commercial STR Set $99.71 $98.51 $125.58 $162.24 $141.60 $89.84
Combined $125.81 $116.43 $148.85 $200.69 $184.56 $112.07
Change over LY:
Resort Hotels 8% 13%7% 17% 12% 8%
Commercial Hotels -7% 2% -7% 8% 3% 3%
Combined 4% 10%2% 14% 9% 6%
Source: LEGOLAND CA Resort Mgmt; Smith Travel Research
LEGOLAND California Hotel is Net New Tourism Spend
No cannibalization of area hotels’ demand
36%
47%
11%
2% 2%
2%
INTERNATIONAL NATIONAL OTHER US
NORCAL SOCAL SAN DIEGO
$0
$500,000
$1,000,000
$1,500,000
$2,000,000
$2,500,000
$3,000,000
$3,500,000
BROADCAST PRINT ONLINE
MEDIA VALUE BY OUTLET
BROADCAST | PRINT | ONLINE
CIRCULATION: 2,419,325,869
MEDIA VALUE: $4,513,086
Educational Cash Donations
Educational In Kind Donations
$590,148
$32,148
$24,300
$20,000 $78,933
Carlsbad Unified School
District
Encinitas Union Schools
Carlsbad Chamber / Partners
in Ed Foundation
Children's Discovery Museum
of North County in Carlsbad
Carillo Elementary PTO
Kids College
San Diego Science Alliance
Reach Out 'N Read
San Pasqual School Foundation
Cash Donation Breakdown
$749,279
$680,597
Total Commitment: $1,429,876