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HomeMy WebLinkAbout2016-03-22; City Council; 22244; Authorizing issuance of a request for proposal for the lease of property located at 2833 State Street, commonly known as the Village GrilleCITY OF CARLSBAD-AGENDA BILL 6 AB# 22,244 AUTHORIZE THE ISSUANCE OF A REQUEST FOR DEPT. DIRECTOR (jflf;. DATE. 3/22/16 PROPOSAL FOR THE LEASE OF PROPERTY LOCATED AT CITYATIY. t-Is 2833 STATE STREET DEPT. City Manager CITY MGR. \l-~ RECOMMENDED ACTION: Adopt a Resolution authorizing city staff to issue a Request for Proposal for the lease of property located at 2833 State Street, commonly known as the Village Grille. ITEM EXPLANATION: 2833 State Street ("Subject Property") is approximately 5,000 square feet in area and is developed with a single-story 1,850 square foot structure formerly occupied by the Village Grille. The city acquired the Subject Property on October 20, 1977, and it has been used as a restaurant by various tenants since that time. In March 2011, the city adopted Resolution Number 2011-42 approving the transfer of real property, including the Subject Property, from the Carlsbad Redevelopment Agency to the City of Carlsbad. The city then entered into a lease agreement in November 2011 with Rosa Hernandez, DBA the Village Grille, for lease of the Subject Property. That lease expired in November 2014. Subsequently, the city issued a Request for Proposal ("RFP") on October 29, 2014, seeking proposals for a restaurant use that would enhance the vitality of the Village. The city entered into exclusive lease negotiations with URBN Restaurant, Inc. {"URBN") in February 2015. As a result of those negotiations, on July 28, 2015, staff presented the proposed mutually agreed upon terms to City Council, upon which City Council voted to accept said terms and directed staff to begin preparing a lease agreement. On September 24, 2015, staff presented a final proposed lease to URBN for execution; however, URBN was non-responsive to City staff and did not execute the lease. On December 10, 2015, staff sent notice to URBN that negotiations were terminated. Staff requests that the City Council authorize the issuance of a new RFP for the lease of the Subject Property. Staff is recommending the issuance of a new RFP, rather than working with another proposer from the October 2014 RFP, as market conditions have significantly improved and staff has received a significant number of inquiries regarding the availability of the Subject Property. To provide additional support services during this new RFP effort, staff will be entering into a professional services agreement with a commercial broker, Location Matters, Inc. DEPARTMENT CONTACT: Curtis M. Jackson 760-434-2836 curtis.jackson@carlsbadca.gov FOR CLERK USE. ~ COUNCIL ACTION: APPROVED CONTINUED TO DATE SPECIFIC D DENIED D CONTINUED TO DATE UNKNOWN D CONTINUED D RETURNED TO STAFF D WITHDRAWN D OTHER-SEE MINUTES D AMENDED D REPORT RECEIVED D Location Matters has extensive negotiation and leasing experience specific to restaurant and specialty retail tenants and will assist the City through the RFP and negotiation process in both the marketing of the Subject Property to a wider audience, and negotiation of a competitive fair market rent. Once proposals are received, staff will return to City Council with a recommended party with whom the City should exclusively negotiate terms of a new lease agreement. FISCAL IMPACT: Once an agreement is approved the lease will generate monthly revenue at a competitive fair market rate for the City which will be disclosed at the time of lease approval. In addition to the lease revenue, the new use will generate additional sales tax revenue for the City. Pursuant to the proposed professional services agreement, Location Matter's broker commission on the transaction will be 6% of the lease rate annually for the first five-years, and 3.5% for years six through ten, not to exceed $37,607.00. Additionally, the City will compensate Location Matters an additional $5,000 for costs associated with marketing and leasing the Subject Property. ENVIRONMENTAL IMPACT: This action is categorically exempt from the California Environmental Quality Act pursuant to CEQA Guidelines section 15301 (leasing of existing public structures or facilities). EXHIBITS: 1. Resolution authorizing city staff to issue a Request for Proposals for the lease of property located at 2833 State Street, commonly known as the Village Grille with the Draft Request for Proposals (Attachment A) 2. Aerial site map of 2833 State Street. 2 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 RESOLUTION NO. 2016-052 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CARLSBAD, CALIFORNIA AUTHORIZING THE ISSUANCE OF A REQUEST FOR PROPOSAL FOR THE LEASE OF PROPERTY LOCATED AT 2833 STATE STREET, COMMONLY KNOWN AS THE VILLAGE GRILLE WHEREAS, the City of Carlsbad ("City") issued a Request for Proposal on October 29, 2014 seeking proposals to lease 2833 State Street; and WHEREAS, the City selected and entered into lease negotiations with URBN Restaurants Inc. ("URBN") pursuant to the RFP process in February 2015; and WHEREAS, the City presented a final proposed lease agreement to URBN for their execution on September 24, 2015, which URBN did not execute; and WHEREAS, the City sent notice to URBN that negotiations were terminated on December 10, 2015 due to URBN's failure to continue negotiations or execute the lease agreement. NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Carlsbad, California, as follows that: 1. The above recitations are true and correct. 2. City staff is hereby authorized to issue a new Request for Proposal ("RFP"), attached hereto as Attachment A, for the lease of the property located at 2833 State Street, commonly known as the Village Grille ("Subject Property"). 3. Staff is directed to return to City Council for authorization to exclusively negotiate a lease agreement with the selected respondent to the RFP, as recommended by staff. II II II 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 PASSED, APPROVED AND ADOPTED at a Regular Meeting of the City of Carlsbad on the 22nd day of March 2016, by the following vote, to wit: AYES: Council Members Hall, Wood, Schumacher, Blackburn, Packard. NOES: None. ABSENT: None. MATT HALL, MAYOR ATTEST: --~~-~~- BARBARA ENGLESO , CITY CLERK (SEAL) ATTACHMENT "A" City of Carlsbad, California REQUEST FOR PROPOSAL For 2833 State Street Building Lease PROPOSALS DUE PRIOR TO: May 5 , 2016 SEND TO: City of Carlsbad 120 0 Carlsbad Village Drive Carlsbad, CA 92008 Attn: Curtis M. J ackson, Real Estate Manager The City of Carlsbad encourages the p ar ticipation of m inority and women- owned businesses Table of Contents Section Page I. INTRODUCTION 1 II. BACKGROUND AND PROPERTY DESCRIPTION 1 Background 1 The Subject Property 1 Site Map 1 Adjacent Uses 1 Zoning & Development Requirements 2 III. SELECTION PROCESS 3 Selection Process 3 Submittal Requirements 3 Procedure/Schedule 4 Questions 5 Site Tours 5 Selection Criteria 5 Offer to Exclusively Negotiate 5 IV. SPECIAL CONDITIONS 6 Reservations 6 Public Record 6 Right to Cancel 6 Additional Information 6 Conflict of Interest 6 Change of Ownership 6 Scope Changes 6 Proprietary Information 7 Responsive Materials Ownership 7 Best Value Selection 7 Lease Award 7 v. COMPLIANCE WITH PREVAILING WAGE LAWS 7 VI. CONCLUSION 8 Conclusion 8 I. INTRODUCTION The City of Carlsbad ("City") issues this Request for Proposals ("RFP") for the purpose of leasing all [or a portion] of City-owned building space at 2833 State Street in the City of Carlsbad, County of San Diego, State of California ("Subject Property") for a restaurant or commercial retail use at market rent and other commercially reasonable terms. The purpose of this RFP is to explain the requirements and procedures for the submission of formal proposals from parties interested in the lease of the Subject Property. II. BACKGROUND AND PROPERTY DESCRIPTION Background The City is in the middle of a focused effort aimed at promoting the vitality of the downtown village area ("Village"). To achieve this, the City is nearing completion of a new master plan for the Village, in which the Subject Property is located. Through the master plan and other efforts, the City will capitalize on the Village's potential as a destination for people to live, work, and play, which will help I revitalize the Village as it emerges as a unique and memorable location in San Diego County. The Subject Property The Subject Property is located at 2833 State Street, Carlsbad, California with a lot size of 5,000 square feet. The Subject Property includes a commercial building that is divided into two (2) spaces (front and rear). The front space, approximately 950 SF, previously has been utilized as a restaurant. The rear space, approximately 900 SF, is connected to the front space via a restroom, and has previously been utilized as a garage and storage. Additionally, the Subject Property includes an approximately 2,000 SF outdoor area. All measurements are approximations and must be field verified by Respondents. The Subject Property will be leased in an "as is" "where is" condition; provided, however, the City is willing to negotiate a rent credit for the Respondent(s) to offset the cost to bring the Subject Property to a "plain vanilla" shell condition. Rent credits under these circumstances may trigger prevailing wage requirements under California Labor Code 1720 et seq. (Please refer to Section V below.) Prospective Respondent(s) will be required to undertake their own independent inspection and investigation of the Subject Property. Any improvements to the Subject Property will be in accordance with all applicable Federal, State and City building requirements. The proposed lease will not include any equipment? Site Map For an aerial view of the parcel, please see the attached Site map. 1 ATTACHMENT "A" Adjacent Uses The Subject Property is located in the heart of downtown Carlsbad, also known as the Village. The Village is known for its small town feel and is home to a weekly farmer's market as well as various other community events throughout the year. The Village is lined with spacious sidewalks and a wide variety of restaurants, cafes, pubs, salons, theaters, art galleries, boutique and antique stores, plus more. South of the Subject Property is a City parking lot, west of the Subject Property is the NCTD train station, north and east of the Subject Property are commercial retail buildings and uses. This lease opportunity is unique and exciting for many reasons: 1) The Subject Property is located within easy access to Interstate 5, Carlsbad Boulevard (Highway 101), and Highway 78. 2) The Subject Property is located immediately adjacent to the Village Coaster Station, providing commuter rail access to coastal San Diego and Los Angeles regions. 3) Carlsbad has a close proximity to the major markets of San Diego (35 miles south), Orange County (18 miles north) and Los Angeles (83 miles north). 4) A large, quality work force, and nearby universities and colleges; 5) Some of the finest weather and recreational amenities in the country, including miles of beautiful beaches, a variety of parks and golf courses and cultural and historical facilities. Zoning & Planning Below is an outline of land use information applicable to the Subject Property. This outline provides general information and does not contain all applicable information. For more information, please reference the existing & proposed Village Master Plan Design Manual Oinks below) or contact the Planning Division at (760) 602-4610. General Plan Designation: "V" (Village) Zoning Designation: V-R" (Village Review) For more information regarding the Village Master Plan please visit: (Existing Village Master Plan): http://www.carlsbadca.gov/civicax/filebank/blobdload.aspx?BlobiD=24148 (Proposed Village Master Plan): http: //www.carlsbadca.gov /services/ depts/planning/villagebarrio/ default. asp Coastal Zone Information: The Subject Property is outside the coastal zone. The coastal zone boundary is located along the western property line. 2 ATTACHMENT "A" Development Impact Fees Remodeling or expansion of the Subject Property may be subject to impact fees. For more information, please contact the Development Services Manager Mike Peterson at (760) 602-2721. (Carlsbad Municipal Code) http://www.qcode.us/codes/carlsbad/. (Carlsbad Master Fee Schedule) http: //www.carlsbadca.gov /services/ depts/finance/fees/schedule.asp III. SELECTION PROCESS Respondent selection is anticipated to occur through the process outlined herein, the described selection criteria, and submittal requirements. Selection Process The City is seeking proposals, including qualifications, from individuals and/ or entities with restaurant or commercial retail experience and the financial capacity to lease, improve, and operate a restaurant and/ or a commercial retail use at the Subject Property. The City will entertain proposals that maximize the City's property asset, which include, but are not limited to: the type of use proposed which compliments the other uses in the Village area to enhance the overall vitality; the design and configuration of the Subject Property to be leased; the type of improvements to be made to the Subject Property; the amount of rent to be paid; and the term of the lease. Submittal Requirements The City appoints Location Matters, Inc. ("Broker") as City's sole and exclusive real estate agent and grants Broker the exclusive right to assist City in identifying and prospective tenants and negotiating a lease for the Subject Property. Respondents shall provide the City with five (5) sets of the information requested below, with the exception of the Financial Capacity materials, of which two (2) copies are to be submitted under separate cover on a confidential basis. 1) A statement that the signatory is authorized to submit the proposal on behalf of each listed member of Respondent's team; 2) A statement that the proposal will remain in effect for a minimum of 180 days from the date of submittal and may be extended at the mutual agreement of both the City and Respondent; 3 ATTACHMENT "A" 3) Leasing Team Entity and Qualifications: A description of the type of entity that will develop the Subject Property (e.g. corporation, LLC, joint venture, etc.) and a list of other owners of interest that may provide equity to the ownership entity and the estimated percentage of ownership of each. a. Legal name and principal officers of each member of the Respondent's team. b. Description of each principals previous relevant experience in leasing similar property and operating a similar use, and obtaining financing commitments, detailing financing source, amounts committed, etc.; 4) Project Description: Describe the use and tenant improvements proposed for the Subject Property. If improvements are proposed, indicate the estimated tenant improvement budget. 5) Schedule: Respondents will provide a development schedule, from authorization to negotiate through certificate of occupancy. If alternate financial structures are proposed, please include schedule(s) specific to the alternate type(s) of financing being proposed. Proposals must also include an estimated certificate of occupancy. 6) Financial Capacity: provided on a confidential basis, to the extent allowed by law. 7) Proposed rental rate. If rent credits or a below-market rental rate are proposed to offset the cost of tenant improvements in whole or in part, prevailing wage requirements under California Labor Code section 1720 et seq. may apply. (Please refer to Section V below.) Procedure/Schedule The procedure for selection is as follows: 1) Proposals shall be submitted to the City no later than 4:oop.m. on May 5, 2016. Proposals and/or modifications received subsequent to the hour and date specified will not be considered; 2) Following timely receipt, submissions will be reviewed by staff within 3D- days of the submittal date; 3) The most desirable and qualified Respondent(s) may be invited for an interview and presentation of their proposal; and 4) Following review and analysis of the proposal(s), staff will recommend selection of a tenant to negotiate a property lease agreement with the City, and a negotiable non-refundable deposit of $5,000 will be required for the right to negotiate exclusively with the City. 4 /0 ATTACHMENT "A" Questions Any questions you may have pertaining to this RFP shall be addressed to the City's Real Estate Manager, Curtis M. Jackson, at Curtis.jackson@carlsbadca.gov. Answers to questions will be distributed simultaneously to all known proposers who have received the RFP. All questions must be in writing and no other officer, agent, or employee of the City is authorized to provide official answers. Site Tours Site Tours are not mandatory; however, interested Respondents should contact Curtis M. Jackson, Real Estate Manager, at curtis.jackson@carlsbadca.gov or 760-434-2836. Selection Criteria The focus of the selection process will be on the following issues: 1) Respondent's vision and plan for the Subject Property. 2) Financial benefit to the City. 3) Financial ability of the Respondent to lease the Subject Property as evidenced by on-going relationships with financing sources and/ or financial status. 4) Experience of the Respondent in the successful improvement and operation of a similar space and use. s) Rental rate, description of tenant improvements and other applicable terms and conditions of a lease. 6) If applicable, demonstrated understanding of a similar use and experience in the operation thereof. 7) Litigation history. Offer to Exclusively Negotiate Upon selection of a Respondent, the City will negotiate a property lease agreement exclusively with the selected Respondent for a period of up to 6o days. By submitting a proposal and qualifications to the City, the prospective tenant is also agreeing that the City retains the right to modify or suspend all aspects of the selection and exclusive negotiating process and to waive any defects as to form or content of the offering or any responses that are received. Further, City shall have the right to reject any and all proposals. 5 l { ATTACHMENT "A" IV. SPECIAL CONDITIONS Reservations This RFP does not commit the City to award a lease, to defray any costs incurred in the preparation of a proposal pursuant to this RFP, or to procure or contract for work. Public Record All proposals submitted in response to this RFP become the property of the City and are public records and, as such, may be subject to public review. Financial capacity statements, however, are provided on a confidential basis to the extent allowed by law. Right to Cancel The City reserves the right to revise or cancel, for any reason, in part or in its entirety, this RFP, including but not limited to: selection schedule, submittal date, and submittal requirements. If the City cancels or revises this RFP, all Respondents will be notified in writing by the City. Additional Information The City reserves the right to request additional information and/ or clarification from any or all Respondents to this RFP. Conflict of Interest The Respondent, if selected, shall be required to file a Conflict of Interest Statement with the City Clerk in accordance with the requirements of the City of Carlsbad Conflict of Interest Code. Change of Ownership For the term of the lease proposed, Respondent is precluded from a change of ownership of more than twenty-five percent (25%) without the City's express written consent. The City reserves the right to withhold consent for any reason. Assignment, sublease, encumbrance or other transfers of the leasehold interest in the Subject Property is expressly prohibited without prior written authorization from the City. Scope Changes All changes in proposal documents shall be through written addendum. Verbal information obtained otherwise will not be considered in the award process. 6 1/r ATTACHMENT "A'' Proposal submittals must acknowledge all addenda. Proposals failing to do so may be considered as non-responsive by the City and eliminated from further consideration. Proprietary Information Any restrictions on the use of data contained within a proposal must be clearly stated in the proposal itself. Proprietary ipformation submitted in response to this RFP will be handled in accordance with applicable city procurement regulations and the California Public Records Act. If you have proprietary information, products or services, please identify them in your proposal. Responsive Materials Ownership All materials submitted regarding this RFP become the property of the City. Responses may be reviewed by any person after final selection has been made. The City has the right to use any or all system ideas presented in reply to this request, subject to the limitations outlined in proprietary information above. Disqualification of a Respondent does not eliminate this right. Best Value Selection The Respondent selected will be based on the best value option for the City. The City is under no obligation to award this project to the Respondent offering the most advantageous financial position. Evaluation criteria expressed in the RFP shall be used in the proposal evaluation process. In evaluating proposals, the City may consider the qualifications of the Respondent and whether the proposals comply with the prescribed requirements. Lease Award The award of the lease will be in accordance with, but not limited to, the results of the City's evaluation. Final approval of selected Respondent and award of lease lies with the City of Carlsbad City Council. V. COMPLIANCE WITH PREVAILING WAGE lAWS The Lease will require the Respondent to acknowledge and agree that: (a) any construction, alteration, demolition, installation or repair work performed under the Lease constitutes "public work" under California Prevailing Wage Law, including Labor Code sections 1720 through 1815, et seq. (the "PWL"), and will obligate Respondent to cause such work to be performed as a "public work," including, but not limited to, the payment of applicable prevailing wages to the all persons or entities subject to the PWL; (b) Respondent shall cause all persons and/ or entities performing "public work" under the Lease to comply with all applicable provisions of the PWL; (c) City is not responsible for Respondent's failure to comply with any applicable provisions of the PWL; (d) Respondent's alleged or actual violations of the PWL shall constitute an event of default under the Lease; and (e) Respondent 7 Jrt ,J ATTACHMENT "A" shall defend and indemnify City and its officers, employees, council members and agents from and against any and all claims, assessments, back-wages, penalties, change orders, suits, liability, judgments, damages, proceedings, orders, directives, costs, including reasonable attorneys' fees, arising from or relating to any actual or alleged violations of the PWL, or other application of laws, ordinances or regulations, by any person or entity, including but not limited to Lessee, performing construction, alterat!on, demolition, installation, repair and/ or any other type of work contemplated under the Lease. VI. CONCLUSION Conclusion We appreciate your interest in the City of Carlsbad and look forward to your proposal and qualifications for a lease of the Subject Property for a restaurant and/ or commercial retail use. Submittal packages should be addressed to: City of Carlsbad 1200 Carlsbad Village Drive Carlsbad, CA 92008 Attn: Curtis M. Jackson, Real Estate Manager Please return your response no later than 4:00p.m., May 5, 2016. 8 Aerial Site Map Subject Property