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2017-06-20 Agenda Packet
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RESOLUTIONOFTHECITYCOUNCILOFTHECITYOFCHULAVISTAAPPROVINGANON- BINDINGLETTEROFINTENT(LOI)BETWEENTHECITY,THESANDIEGOUNIFIEDPORT DISTRICT,ANDRIDACHULAVISTA,LLC,FORDEVELOPMENTOFAHOTELANDCONVENTION CENTER PROJECT WITHIN THE CHULA VISTA BAYFRONT RECOMMENDED ACTION Council adopt the resolution. SUMMARY OnMay14,2014,theSanDiegoUnifiedPortDistrict’sBoardofCommissionersselectedRIDA DevelopmentCorporationtoenternegotiationstodevelopalargescaledestinationresortand conventioncenteronparcelH-3oftheChulaVistaBayfront.OnFebruary10,2015,theBoardof PortCommissionersapprovedanExclusiveNegotiatingAgreement(ENA)withRIDA,establishinga timelineofdeliverablesduringthetermoftheagreement,includingprogrammingthetypeandsizeof hotelandconventioncenter.Sincethattime,PortandCitystaffhaveworkeddiligentlytonegotiate finaldealterms.Tonight’saction,approvinganon-bindingLetterofIntent,representsthenextstepin theprocessofdevelopingadestinationresorthotelandconventioncenterprojectontheChulaVista Bayfront. ENVIRONMENTAL REVIEW Environmental Notice TheProjectwasadequatelycoveredinpreviouslyadoptedEnvironmentalImpactReportUPD# 83356- EIR- 65B/ SCH# 20005081077. Environmental Determination TheDevelopmentServicesDirectorhasreviewedtheproposedactivityforcompliancewiththe CaliforniaEnvironmentalQualityAct(CEQA)andhasdeterminedthattheactivitywascoveredin previouslyadoptedEnvironmentalImpactReportUPD#83356-EIR-65B/SCH#2005081077.The DevelopmentServicesDirectorhasalsoreviewedtheproposedactivityforadditionalcompliance withCEQAandhasdeterminedthatthereisnopossibilitythattheactivitymayhaveasignificant effectontheenvironment;therefore,pursuanttoSection15061(b)(3)oftheStateCEQAGuidelines the activity is not subject to CEQA. Thus, no environmental review is required. BOARD/COMMISSION RECOMMENDATION Not Applicable. DISCUSSION Please see Port District staff report (attached). City of Chula VistaPage 1 of 2Printed on 6/19/2017 powered by Legistar™ ΑΏΐΖȃΏΕȃΑΏ !¦¤£ Packet0 ¦¤ 3 File#:17-0215, Item#: 1. DECISION-MAKER CONFLICT StaffhasreviewedthepropertyholdingsoftheCityCouncilmembersandhasfoundnoproperty holdingswithin500feetoftheboundariesofthepropertywhichisthesubjectofthisaction. Consequently,thisitemdoesnotpresentadisqualifyingrealproperty-relatedfinancialconflictof interestunderCaliforniaCodeofRegulationsTitle2,section18702.2(a)(11),forpurposesofthe Political Reform Act (Cal. Gov’t Code §87100,et seq.). Staffisnotindependentlyaware,andhasnotbeeninformedbyanyCityCouncilmember,ofany other fact that may constitute a basis for a decision maker conflict of interest in this matter. LINKS TO STRATEGIC GOALS TheCity’sStrategicPlanhasfivemajorgoals:OperationalExcellence,EconomicVitality,Healthy Community,StrongandSecureNeighborhoodsandaConnectedCommunity.Approvinganon- bindingLOIwiththePortDistrictandRIDAChulaVista,LLC,supportstheEconomicVitalityGoalby continuingimplementationoftheChulaVistaBayfrontMasterPlan,Initiative2.1.1oftheCity’s Strategic Plan. CURRENT YEAR FISCAL IMPACT Approvalofanon-bindingLOIwiththePortDistrictandRIDAChulaVista,LLC,resultsinnocurrent year fiscal impact. ONGOING FISCAL IMPACT SpecificcommitmentsofrevenuesandotherformsoffinancialsupportfortheCVBMPwillbe determinedinafuturePlanofFinance,yettobenegotiated.Theproposednon-bindingLOIreflects CityfinancialcommitmentsconsistentwiththeAmendedandRestatedFinancingAgreement, approvedbytheCouncilinNovember2016.BoththepreviouslyapprovedAmendedandRestated FinancingAgreementandtheproposedLOIarenon-bindingwithoutfurtheractionoftherespective legislative bodies. ATTACHMENTS 1.SanDiegoUnifiedPortDistrictFile#2017-0338,datedJune20,2017,includingAttachmentsA through K. Staff Contact: Tiffany Allen, Development Services Department City of Chula VistaPage 2 of 2Printed on 6/19/2017 powered by Legistar™ ΑΏΐΖȃΏΕȃΑΏ !¦¤£ Packet0 ¦¤ 4 3165 Pacific Hwy. San Diego Unified Port District San Diego, CA 92101 File #:2017-0338 DATE:June 20, 2017 SUBJECT: RESOLUTIONAUTHORIZINGANON-BINDINGLETTEROFINTENT(LOI)WITHRIDACHULA VISTA,LLCANDTHECITYOFCHULAVISTAFORARESORTHOTELANDCONVENTION CENTER WITHIN THE CHULA VISTA BAYFRONT EXECUTIVE SUMMARY: 1 TheChulaVistaBayfrontMasterPlan(CVBMP)(AttachmentsAandB)istheresultofadecade- longjointplanningeffortbytheSanDiegoUnifiedPortDistrict(District),theCityofChulaVista(City), PacificaCompaniesLLC(Pacifica),andabroadcoalitionofstakeholders.TheCVBMPwas collaborativelyplannedthroughanextensivepublicparticipationprogramthatincludedover100 communitymeetingsandresultedinacomprehensiveEnvironmentalImpactReport(EIR)andPort MasterPlanAmendment,whichwasapprovedbytheBoardofPortCommissioners(Board)inMay 2010andcertifiedbytheCaliforniaCoastalCommission(CCC)inAugust2012.Thefinancing 2 agreement(FinancingAgreement)fortheChulaVistaBayfront(CVB)wasapprovedbytheBoardin 2012andsetforththeframeworkforthefinancinganddevelopmentofthepublicimprovementsand infrastructurewithintheCVBbytheDistrictandCity,referredtocollectivelyherein,asthe“Public Entities”.TheAmendedandRestatedCVBMPFinancingAgreement(AmendedandRestated FinancingAgreement)wasadoptedbytheCityinNovember2016andwillbeconsideredbythe Board on June 20, 2017. AftertwoyearsofnegotiationswithRIDAChulaVista,LLC(RIDA),theDistrictandtheCitystaffs believethatanimportantinterimstepistoenterintoanonbindingLetterofIntent(LOI)for developmentoftheresorthotelandconventioncenter(RHCC),thecatalystprojectfordevelopment oftheCVB.AttachmentCincludesthecompleteLOIexecutedbyRIDA.Staffrecommendsthatthe BoardapprovetheLOIbecauseinRIDAandtheCity,theDistricthasfoundtherightpartnersthat arereadytomoveforwardwiththeimplementationoftheCVBMP;theprojecteconomicsrepresenta gooddealfortheDistrict,fortheCity,andforRIDA;andtimeisoftheessencetomemorializethe economicstoensurethattheredevelopmentoftheCVBproceedsassoonaspossible.TheLOIis animportantnextsteptowardcatalyzingotheradditionaldevelopmentwithintheCVB.Oncethe CVBMPisimplemented,theCVBwillbecomeaworld-classdestinationthatreflectsstrongplanning and design principles, economic feasibility, and community benefits. OnMay6,2014,theBoardadoptedaresolutionauthorizingtheissuanceofaRequestfor Qualifications(RFQ)forahotelandconventioncenterlocatedon36acres(Site)withintheCVB. TheRFQalsoallowedforpotentialadditionaldevelopmentopportunitiesontheH23parcel,directly adjacenttotheSite.Afterconsiderablelocal,regional,national,andinternationalmarketingefforts San Diego Unified Port DistrictPage 1 of 23Printed on 6/19/2017 powered by Legistar™ ΑΏΐΖȃΏΕȃΑΏ !¦¤£ Packet0 ¦¤ 5 File #:2017-0338 3 byDistrictstaff,Citystaff,andconsultants,RFQ14-24wasreleasedonJune30,2014.Ahighly- qualifiedresponsefromRIDADevelopmentCorporationwasreceived,andonOctober14,2014,the BoardselectedRIDADevelopmentCorporationasthesuccessfulrespondenttotheRFQand authorizedstafftonegotiateanExclusiveNegotiatingAgreement(asamendedfromtimetotime, ENA)withRIDADevelopmentCorporation.OnFebruary10,2015,theENAwasapprovedbythe BoardandtheDistrictenteredintotheENAwithRIDA.TheENAcurrentlyexpiresonFebruary16, 4 2018. Overthepasttwoyears,theDistrict,CityandRIDAhavebeenworkingtonegotiatethekeydeal termsfortheRHCCproject.Thisuniquepartnershiphasidentifiedtheeconomicsnecessaryto proceedwithdevelopmentoftheCVBwhileachievingmarketreturnsfortheDistrict,CityandRIDA factoringintheundevelopednatureofthisSiteandotherdevelopmentchallenges.Working cooperativelywiththeCityandRIDA,staffhasnegotiatedanon-bindingLOIwhichwillbeconsidered jointlybytheDistrictandtheCityonJune20,2017.ThisLOIwillbethefirstmajor,publicmilestone fortheRHCCsincetheENAandwillsetthestagebydefiningthekeyeconomictermswhichwillbe thebasisforaDispositionandDevelopmentAgreement(DefinitiveAgreement),whichwillbe presented to both Public Entities for consideration later this year. TheRHCCwillbethecatalystprojectfortheCVBandissuretobetheimpetusneededforadditional world-classdevelopmentwithintheCVB.PubliccontributionsfromboththeDistrictandtheCityare necessarytoenableRIDAtoachieveareasonablereturnontheirinvestmentintheRHCCproject andtoallowtheDistrictandCitytoconstructpublicinfrastructureandimprovements.These conceptsarethefoundationfortheeconomictermsincludedintheLOI.KeyserMarstonAssociates (KMA)preparedacomprehensivereportthatanalyzestheprojectfeasibility,proposedmethodof financingfortheproject,andpublicinvestment.ThefullreportisincludedasAttachmentD.The detailsoftheLOI,includingabriefoverviewoftheagreementsandpreviousactionstakenbythe BoardrelatedtotheredevelopmentoftheCVB,projectscopeandpubliccontribution,isdiscussed below. RECOMMENDATION: Resolutionauthorizinganon-bindingLOIwithRIDAChulaVista,LLCandtheCityforaresorthotel and convention center within the Chula Vista Bayfront FISCAL IMPACT: TherequestedBoardactionwillnotresultinanydirectfiscalimpacttotheDistrict,astheLOIisnon- bindingandanycontributionofrevenuesourcesbytheDistricttotheimplementationoftheCVBMP willbesubjecttoafutureplanoffinance,assetforthintheFinancingAgreement,whichmaybe amendedfromtimetotime.Further,theplanoffinancewillbepresentedtotheBoardatafuture dateandwillalsobesubjecttoBoardapproval.Basedonpreliminaryfinancialmodelingprojections fromvariousconsultants’reportsandinitialfinancialanalysis,thedevelopmentoftheRHCCcould potentially result in positive surplus revenues to the District in as early as Year 4 of hotel operations. COMPASS STRATEGIC GOALS: This agenda item supports the following Strategic Goal(s). San Diego Unified Port DistrictPage 2 of 23Printed on 6/19/2017 powered by Legistar™ ΑΏΐΖȃΏΕȃΑΏ !¦¤£ Packet0 ¦¤ 6 File #:2017-0338 A vibrant waterfront destination where residents and visitors converge. A Port with a healthy and sustainable bay and its environment. A Port with a comprehensive vision for Port land and water uses integrated to regional plans. A Port that is a safe place to visit, work and play. A financially sustainable Port that drives job creation and regional economic vitality. DISCUSSION: AftertwoyearsofnegotiationswithRIDA,DistrictandCitystaffbelievethatthenonbindingLOI shouldbeapprovedbytheBoardbecausetherightpartnersarereadytomoveforwardwiththeright planfortheCVB,theprojecteconomicsrepresentagooddealforthePublicEntitiesandforRIDA, andtimeisoftheessencetomemorializetheeconomicstoensurethattheredevelopmentofthe CVB proceeds as soon as possible. Afterextensiveduediligenceefforts,thepartieswishtoenterintotheLOItomemorializethebasic economictermsoftheproject,subjecttothetermsoftheENA.Theseeconomictermswillallowthe DistrictandCitytodelivernotonlytheRHCC,whichisakeypartoftheCVBvision,butalsoa majorityofthepublicamenitiesfortheCVBMPincludingparksandpublicaccessthatwere envisioned through the community planning effort. TheLOIissubjecttotheprovisionsoftheENAanddoesnotsupersedethetermsoftheENA.The intentoftheLOIistoguidethenegotiationspursuanttotheENAwiththeultimategoaltoenterintoa DefinitiveAgreement.ThetermsoftheENAwillremainineffectuntilsuchtimeastheENAeither terminates by its terms or a Definitive Agreement is approved and adopted by the Public Entities. ThisdiscussionprovidesadetailedoverviewoftheplanningeffortsassociatedwiththeCVB,the developmentpartnershipsnecessaryfortheRHCC,andanexplanationofthefinancialstructureof theproject.Forreference,aGlossaryofTermsandaTimelineOverviewareincludedas Attachments E and F, respectively. Below is a table of contents for the complete discussion section: I.Background: Assembling Land, Creating a Plan, and Forming the Partnership a.South Bay Memorandum of Understanding b.South Bay Power Plant Acquisition c.Rohr Relocation Agreement d.Chula Vista Bayfront Master Plan e.Early Efforts with Gaylord f.Obtaining the Port Master Plan Entitlements g.Pacifica Land Exchange h.Chula Vista Bayfront Settlement Agreement i.Port/City Partnership II.Request for Qualifications for the Resort Hotel and Convention Center a.Marketing the RFQ b.RFQ Selection: RIDA Development Corporation III.Project Economics: A Good Deal for RIDA and the Public Entities a.Due Diligence Process San Diego Unified Port DistrictPage 3 of 23Printed on 6/19/2017 powered by Legistar™ ΑΏΐΖȃΏΕȃΑΏ !¦¤£ Packet0 ¦¤ 7 File #:2017-0338 IV.Development Partnerships a.Private Development Program b.Public Development Program V.Financing Agreement VI.Key Economic Terms a.Overview of Proposed Method of Financing b.Proposed Financing Structure c.Proposed Public Contributions toward Infrastructure and Convention Center d.Required Private Investment e.Basic Ground Lease Terms f.Public Entities Participation in NOI g.Financial Returns to RIDA h.Proposed Cash Flow Distribution (“Waterfall”) i.Parking Space Funding TBD - Port Obligation j.Ancillary Development Rights VII. Next Steps a.Disposition and Development Agreement VIII.Recommendation I.BACKGROUND:ASSEMBLINGLAND,CREATINGAPLAN,ANDFORMINGTHE PARTNERSHIP InpartnershipwiththeCity,theDistricthasbeenworkingonredevelopingtheCVBformorethan20 years.Throughoutthepasttwodecades,manyactionshavebeentakenbytheBoardtoallowthe DistrictandtheCitytoimplementanewvisionfortheCVB.Theseactionsstartedwiththe consolidationoflandsontheCVBandtheeliminationofblightedindustrialusesthroughthe 5 (RelocationAgreement)withRohr,Inc.,aUnitedTechnologiesAerospace RelocationAgreement Company(Rohr)andtheacquisitionoftheSouthBayPowerPlant(SBPP).Eachsuccessiveaction hasbuiltupontheprevioustoestablishafoundationforthemasterplanningprocesswhichresulted intheCVBMPandtoallowforthefullimplementationofthevisionfortheCVB.Thefollowingare brief summaries of each of these actions. I.a. South Bay Memorandum of Understanding 6 In1996,theDistrictenteredintoaMemorandumofUnderstanding(MOU)witheachoftheSouth Baycities(NationalCity,ChulaVista,ImperialBeach,andCoronado)asaresultoftheDistrict’s contributiontothephasetwoexpansionoftheSanDiegoConventionCenter.TheseMOUsidentified specificprojectsthattheDistrictwouldfundineachcitywithintheDistrict’sjurisdiction.Manyofthe projectswereimplementedshortlyafterexecutionoftheMOUs.ChulaVistautilizedthefunds received from its MOU for projects that would lead to the long term redevelopment of the CVB. I.b.South Bay Power Plant Acquisition In1999,theDistrictacquiredtheSBPPinordertofacilitatethevisionofreinventingtheCVB.The DistrictenteredintoaleaseagreementwithDukeEnergySouthBay,LLC,andthereafter,consented totheassignmentoftheSBPPLeaseandassociatedagreementstoDynegySouthBay,LLC 7 (DynegySouthBay).InOctoberof2010,DynegySouthBayreceivedaletterfromtheCalifornia San Diego Unified Port DistrictPage 4 of 23Printed on 6/19/2017 powered by Legistar™ ΑΏΐΖȃΏΕȃΑΏ !¦¤£ Packet0 ¦¤ 8 File #:2017-0338 IndependentSystemsOperatorterminatingtheReliableMustRunstatusoftheSBPPandclearing thewayfordecommissioningandremovaloftheSBPPalongwithassociatedremediationofthesite. Sincethen,theDistrictandDynegySouthBayhavedemolishedtheSBPP,whichoccurredon February2,2013.TheremovaloftheSBPPinitiatedthedevelopmentoftheCVBMPbyproviding additionallandareaforpublicinfrastructure,improvementsandrevenuegeneratingdevelopment opportunities on the CVB and was a powerful signal to the community. I.c. Rohr Relocation Agreement In1999,theDistrictenteredintotheRelocationAgreementwithRohrandtheCityinorderto consolidateRohr’soperationstoitsnorthcampusandtofreeupadditionallandforfuture redevelopment.Specifically,theRelocationAgreementcontemplatedaseriesoflandexchange transactionsthatincludedthetransferoftheuplandsportionofRohr’sindustrialcampuslocated southofHStreet(referredtoastheSouthCampus)fromRohrtotheDistrict,inexchangeforRohr’s tidelands portion of its campus north of H Street. I.d. Chula Vista Bayfront Master Plan 8 In2002,theDistrictandCityenteredintoaJointPlanningAgreementandbeganacollaborative planningprocesstocreateamasterplanfortheCVBarea-comprisedofhistorictidelands,the acquiredSBPPsiteandrealignedRohrcampus.Thisprocessincludedanaward-winningpublic participationprogramwiththeCitizensAdvisoryCommittee(CAC).Theprogramestablishedthree primarygoalsforthemasterplan:todevelopaworld-classwaterfront;tocreateaplanthatis supportedbysoundplanningandeconomics;and,tocreateaplanthathasbroad-basedcommunity 9 support.InresponsetotheCAC’srequest,Pacificajoinedthisprocessin2003inordertointegrate its planning effort with the master plan being implemented for District properties. Themasterplanningeffortinvolvedextensivecommunityoutreachandpublicparticipation,andhas servedasahallmarkexampleofasuccessfuljointandcollaborativeplanningeffortbetweenthe PublicEntities.Theresultingplanisrepresentativeofthecollectivevisionandplanninggoalsofthe community,thebroaderregion,theDistrict,andtheCity.TheCVBMPpromotespublicaccessto andengagementwiththewater,whileenhancingthequalityandprotectionofkeyhabitatareas. Oncefulfilled,theCVBMPwillcreateaworld-classdestinationthatreflectsstrongplanningand design principles, economic feasibility, and community benefits. Forplanningpurposes,theCVBMPwasdividedintothreedistricts:theSweetwaterDistrict,which comprisesthenorthernportionoftheplanningarea,southoftheLivingCoastDiscoveryCenter;the HarborDistrict,whichincludesthecentralportionoftheplanningareawherethemarinasarelocated andtheRHCCisproposed;andtheOtayDistrictwhichencompassesthesouthernportionofthe planning area where the SBPP was previously located. Sweetwater District TheSweetwaterDistrict,locatedinthenorthernmostportionoftheCVBMParea,consistsof approximately130acres.DevelopmentintheSweetwaterDistrictfocusesonlowerscale, environmentallysensitive,andenvironmentallythemeduses.Approvedusesincludealarge ecologicalbuffer,a21-acresignaturepark,abikepathandpedestriantrailsandotheropenspace San Diego Unified Port DistrictPage 5 of 23Printed on 6/19/2017 powered by Legistar™ ΑΏΐΖȃΏΕȃΑΏ !¦¤£ Packet0 ¦¤ 9 File #:2017-0338 areas. Harbor District TheHarborDistrictismostdirectlyaccessibletodowntownChulaVistaandwillberedevelopedto provideasignificantlinkfromtheCitytotheCVB.Itconsistsofapproximately221acresoflandand 59acresofwater.Visitor-servingamenitiesandmixed-useswillbeclusteredintheHarborDistrictto reduceimpactonenvironmentallysensitiveareas.AcloseupoftheHarborDistrictparcelsis included as Attachment G. Otay District TheOtayDistrict,whichconsistsofapproximately125acresatthesouthernmostendoftheCVBMP area,isplannedtoincludeindustrialbusinessparkuses,lower-costvisitorservingrecreationaluses, apark,aswellasotheropenspaceareas,anecologicalbuffer,bikepath,pedestriantrails,andnew roadways and infrastructure. Surroundedbyuniqueandvaluablenaturalresourcelands,theCVBseekstobestprotectand enhanceenvironmentalresourceswhileaccommodatingreasonablecommercialdevelopmentfora vibrantandviablewaterfrontproject.Whencompleted,morethan53%oftheplan(286acres)will bededicatedtothepublicrealm,includingparks,openspace,habitatrestoration/preservation,and waterareas,aswellasroads,bikeways,andpromenades.Marinaimprovementswillcreatean active commercial harbor with retail shops, restaurants and public space at the water's edge. I.e. Early Efforts with Gaylord InJune2005,theDistrictreceivedanunsolicitedletterofinterestfromtheGaylordHotelsbrand (Gaylord)regardingdevelopmentofamajorresorthotelandconventioncenterontheCVB.Gaylord presenteditsqualifications,experienceandconcepttotheBoard,CityCouncil,andCACatanumber ofpublicmeetings.TheGaylordconceptwaswellreceivedandwasrecognizedasamore economicallyviablealternativetothestand-aloneeventcenterthathadbeenoriginallycontemplated as an element of the CVB. InAugust2005theBoardconcludedthattheGaylordproposalrepresentedanattractiveconceptand suitable“anchor”usefortheCVBMP,anddirectedDistrictstafftoconductacompetitiveRFQto determineiftherewereotherdevelopersthatwouldadvancepotentiallysuperiorproposals.The BoardreviewedtheresponsestotheRFQatitsOctober25,2005meeting,concludedthatthe Gaylordproposalwasthebestchoice,anddirectedstafftoenterintoanexclusivenegotiating agreement with Gaylord. TheDistrictenteredintoexclusivenegotiationswithGaylordandinJuly2007,theDistrict,theCity, theRedevelopmentAgencyoftheCityofChulaVista,andGaylordEntertainmentCompanyentered intoaletterofintent.Duetoseveralfactors,includingtheeconomicdownturn,Gaylordchosenotto move forward at that time and the letter of intent expired on December 31, 2008. I.f. Obtaining the Port Master Plan Entitlements San Diego Unified Port DistrictPage 6 of 23Printed on 6/19/2017 powered by Legistar™ ΑΏΐΖȃΏΕȃΑΏ !¦¤£ Packet0 ¦¤ 10 File #:2017-0338 TheenvironmentalreviewprocessfortheCVBMPwaslengthyandcomplex,subjecttomultiple changesindirection,andresultedinthepubliccirculationoftwoEIRs-intotaltakingmorethanfive years to complete. ThefirstdraftEIRwascirculatedtothepublicin2006andreceivedsubstantialpubliccomment.In ordertoaddresscommentsreceived,the2008RevisedDraftEIRincludedgreaterdetailandadded analysistoaddresstheprojectspecificcomponentsoftheplan.Oneoftheseprojectscontemplated inthe2008RevisedDraftEIRwastheGaylordproposal,whichwouldserveasthecatalystand economicdriverfortheredevelopmentoftheCVB.PreparationofthefinalEIRwasnearlycomplete whenGaylordwithdrewitsplanfordevelopingtheRHCC.TomovetheEIRforward,despite Gaylord’sexit,staffrevisedthedocumenttoremovespecificreferencestotheprojectproponent,but continuedtoadvancetheresorthotelandconventioncenterontheH3parcelinacknowledgementof that development component as the critical catalyst of the master plan. 10 InMay2010,theBoardcertifiedthefinalEIR.Atthishearing,theBoardunanimouslyapprovedthe amendmenttothePortMasterPlan,andtheCityCouncil,CityPlanningCommission,andCity RedevelopmentCorporationeachunanimouslyapprovedamendmentstotheCity’sLocalCoastal Program. Laterthatyear,inDecember2010,theCaliforniaStateLandsCommission(SLC)approvedtheland exchange between the District and Pacifica, as described below. OnAugust9,2012,theCCCunanimouslyapprovedtheCVBMPamendmentstothePortMaster 1 PlanandtheLocalCoastalProgram.TheadoptedPortMasterPlanAmendmentincludestext,a preciseplan,andaprojectlistspecifictotheCVBPlanningDistrict,aswellasaPublicAccess 1112 ProgramandDevelopmentPolicies.Thisapprovalfollowedmanymonthsofcollaborationwith CCCstaff,whichservedtostrengthenandenhancethemasterplan’sprovisionofcoastalaccess and protection of natural resources. I.g. Pacifica Land Exchange Itwasrecognizedthroughtheplanningprocessthatshiftinghighdensityresidentiallandusesfrom themoreenvironmentallysensitiveSweetwaterDistricttothecentrallylocatedHarborDistrictwould serveasaneconomiccatalystfortheoverallCVBandwouldalsocreateanenvironmentallysuperior landuseplan.SinceresidentialusesarenotpermittedonDistrictownedland,anexchangewas necessary.Toachievethis,PacificaagreedtogiveSLCitsapproximately97acreparcellocatedin theSweetwaterDistrictinexchangefortheDistrict’sapproximately35acreparcelwithintheHarbor District. TheBoardapprovedthelandexchangebetweentheDistrictandPacificaonFebruary2,2010,andit 13 wassubsequentlyapprovedbytheSLConDecember10,2010.TheexchangeclosedonFebruary 18, 2016. I.h. Chula Vista Bayfront Settlement Agreement DuringtheplanningstagesoftheCVBMP,theDistrictandtheCitysoughttoobtaintheBayfront Coalition’s(Coalition)supportforapprovaloftheCVBMP.Similarly,theCoalitionwishedtoobtain San Diego Unified Port DistrictPage 7 of 23Printed on 6/19/2017 powered by Legistar™ ΑΏΐΖȃΏΕȃΑΏ !¦¤£ Packet0 ¦¤ 11 File #:2017-0338 additionalmeasuresforprotectionoftheenvironmentaboveandbeyondthoserequiredbythe CaliforniaEnvironmentalQualityActandanyotherfederal,state,andlocallawsandregulations applicabletotheproject.Asaresult,aSettlementAgreementwasnegotiatedbetweentheCoalition, theDistrict,andtheCitydetailingthecommitmentsofthepartiesastheyrelatetotheapprovalsof 14 the master plan. TheCoalitioniscomprisedoftheEnvironmentalHealthCoalition,SanDiegoAudubonSociety,San DiegoCoastkeeper,CoastalEnvironmentalRightsFoundation,SouthwestWetlandsInterpretative Association, Surfrider Foundation (San Diego Chapter), and Empower San Diego. TheSettlementAgreementincludesspecificplanning,design,funding,andimplementationelements, 15 manyofwhichwereincorporatedintotheEIRandMitigationMonitoringandReportingProgram,as wellastheDevelopmentPoliciesincludedwiththePortMasterPlanAmendmentapprovedbythe CCC.TheSettlementAgreementalsorequiredtheformationoftheWildlifeAdvisoryGroupandthe Bayfront Cultural Design Committee. Wildlife Advisory Group (WAG) InrecognitionofthesensitivityofthenaturalresourcesintheCVBandtheimportanceofprotecting, restoring,andmanaging,thoseresources,theSettlementAgreementrequiredtheformationofthe SouthBayWildlifeAdvisoryGroup(WAG).OneoftheprimarydutiesoftheWAGistoadvisethe 16 DistrictinthepreparationofaNaturalResourcesManagementPlan(NRMP).TheNRMP,which wasadoptedbytheBoardonMay10,2016,achievesspecificmanagementobjectivesestablished bytheSettlementAgreementforareasdesignatedasWildlifeHabitatAreas.TheWAGactively meets quarterly to discuss progress on the CVB. Bayfront Cultural Design Committee (BCDC) TheSettlementAgreementalsorequiredtheformationofaBayfrontCulturalDesignCommittee (BCDC)toadvisetheDistrictintheestablishmentofdesignguidelinestoensurecohesive developmentandstreetscapedesignstandards,walkwaysandbikewaysdesigntopromotesafe walking and biking, standards for design of park areas, and cultural facilities throughout the CVB. TheBCDCisalsorequiredtoprovideinputonthedesignofmajordevelopmentprojectsontheCVB. Assuch,priortotheBoard’sconsiderationofadesignconceptfortheRHCC,DistrictandCitystaff will consult with the BCDC to ensure their feedback is incorporated into the design of this project. I.i. Port/City Partnership In2002,theDistrictandCitybeganacollaborativeplanningprocesstocreateamasterplanforthe CVB.Throughthecollaborativeprocess,thepartnershipworkedtogethertocertifytheEIRand amendedtheChulaVistaLocalCoastalPlan.Theseeffortscreatedthefoundationtothenidentify thekeyfinancingsourcesandmechanismsneededtoimplementtheCVBMP.ThePublicEntities enteredintotheFinancingAgreement,settingforththerevenuesourcesandfinancingalternatives necessarytoimplementthedevelopmentoftheCVBMP,whichFinancingAgreementisnowbeing updatedastheAmendedandRestatedFinancingAgreementtoincorporatenewsourcesofrevenue andwillbeconsideredbytheBoardonJune20,2017.TheDistrictandCityteamcontinuetowork San Diego Unified Port DistrictPage 8 of 23Printed on 6/19/2017 powered by Legistar™ ΑΏΐΖȃΏΕȃΑΏ !¦¤£ Packet0 ¦¤ 12 File #:2017-0338 diligentlytowardstheimplementationoftheCVBMP.WithintheCVBMPprogram,thereare numerousindividualprojectelementsthathavebeenidentified.Belowaresomeexamplesofthe functions the District and the City continue to collaborate on: Finance and Pre-Development Infrastructure - Planning, Development and Operations Environmental Compliance and Entitlements Real Estate - Leasing and Acquisitions Communications and Inter-Governmental Affairs TheteamincludesbothDistrictandCityrepresentationinordertocontinuethecollaborativespirit that helped to establish the success of the CVBMP. II.REQUESTFORQUALIFICATIONSFORTHERESORTHOTELANDCONVENTION CENTER ThecenterpieceandcatalystfordevelopmentontheCVBistheRHCCproject.Itismostcriticalto theimplementationoftheCVBbecauseitincludesorisexpectedtogeneratetherevenues necessarytofundthepublicinfrastructureandimprovementsandenvironmentalobligations associatedwiththeCVBMPandtheSettlementAgreementrequirementsforthisproject.Tobegin theprocessofidentifyingadeveloperqualifiedtoconstructtheprojectconsistentwiththevisionof theCVBMP,onMay6,2014,theBoardadoptedaresolutionauthorizingtheissuanceofaRFQfor developmentofPhase1oftheCVB,whichincludeddevelopinga1,400-to1,600-roomresorthotel andanapproximate400,000squarefootconventioncenter.TheRFQalsoallowedforpotential additionaldevelopmentopportunitiesonotherparcelsdirectlyadjacenttotheSite.Afteran extensive international marketing campaign, RIDA was selected as the developer of the RHCC. II.a. Marketing the RFQ TheCVBdevelopmentopportunitywasaddressedthroughamultidimensionalmarketingplanthat wasinternationalinscopeincludingamarketingplanfortheRFQthatspecificallyaddressedthe hotelconventioncenterindustry.TheeffortincludedaninternationalinvitationtorespondtotheRFQ placedinmajorpublicationsandtradejournalsanddirectedtoanextensivelydevelopedmailinglist andaprofessionallyproducedandbrandedRFQandpre-solicitationmarketingmaterialswere developed to include high quality graphics and images. TheRFQwasreleasedthroughwebandprintbasedformats.Additionally,theRFQwasmarketed directlytopotentiallyinterestedparties.Notwithstandingthismarketingeffort,duetotheextremely complexnatureofthisproject,1,400-1,600roomresorthotelandapproximately400,000squarefeet convention center, only one qualified response was received. II.b. RFQ Selection: RIDA Development Corporation TheRFQwasissuedonJune30,2014andresponsesweredueonSeptember8,2014.One responsetotheRFQwasreceivedfromRIDA.ARESManagement,L.P.(ARES),wasincludedas thefinancialpartner,WELBROasthegeneralcontractorandthreewellqualifiedarchitecturalfirms. San Diego Unified Port DistrictPage 9 of 23Printed on 6/19/2017 powered by Legistar™ ΑΏΐΖȃΏΕȃΑΏ !¦¤£ Packet0 ¦¤ 13 File #:2017-0338 AtwostageRFQ/RFPsolicitationprocessforthehotelandconventioncenterparcelwasoriginally envisioned,however,sincetherewerenotmultipleresponsestotheRFQ,andRIDADevelopment Corporationisoneofthemostwell-qualifiedfirmstocompleteaprojectofthismagnitude,theBoard selectedRIDADevelopmentCorporationasthesuccessfulrespondentonOctober14,2014and authorized staff to negotiate an ENA with RIDA Development Corporation. RIDADevelopmentCorporationistheidealpartnertomaketheRHCCprojectareality.RIDA DevelopmentCorporationisafullservicerealestateorganizationthathascreatedandinvestedin innovativeandeconomicallysuccessfuloffice,residential,industrial,hospitalityandretail developmentsformorethanfortyyears.RIDADevelopmentCorporation’scorporateheadquarters arelocatedinHouston,TXwithregionalofficesinOrlando,FLandWarsaw,Poland.These centralizedlocationsallowRIDADevelopmentCorporationtooverseeitsprojectsintheUS,aswell asEurope.AmongRIDADevelopmentCorporation'sstrategicrelationshipsisalongstanding partnershipwithARESwithwhomtheyhaveco-investedinover$4billionworthofinvestmentsand developmentonthreecontinents.RIDADevelopmentCorporationandAREShavepreviously partneredonatleastfiveprojectscomparableinsizeandscopetotheRHCCproject,includingthe recentlyopenedMarriottMarquisHoustonandthecurrentlyunderconstructionGaylordRockies Hotel (Aurora, CO). ThequalificationsandexperiencethatRIDAanditsprospectivesubcontractorsbringtotheproject are summarized below: Successfullydeveloped,orintheprocessofdeveloping,conventionstylefullservice hotels consisting of similar large scale resort hotels and convention centers o Hilton, Orlando (1,400 room, 175,000 square foot (sf) convention) o Omni Orlando at Champions Gate (720 room, 128,000 sf convention) o Marriott Marquis, Houston (1,000 room, 105,000 sf convention) o Gaylord Rockies Hotel, Aurora, CO (1,507 room, 485,000 sf convention) Teammembershaveledthearchitecturaldesignofsimilarlargescaleresorthotelsand convention centers o Marriott Marquis, Houston o Omni Orlando at Champions Gate o Hilton, Orlando o The Palazzo, Las Vegas Teammembershavesuccessfullysecuredequityanddebtfinancingforpre- construction,constructionandpermanentoperationsofsimilarlargescaleresorthotels and convention centers o Hilton, Orlando o Hyatt Regency, New Orleans Relevant experience as a team o Hilton, Orlando o Marriott Marquis, Houston o Omni Orlando at Champions Gate o Gaylord Rockies Hotel, Aurora, CO (Opening 2018) San Diego Unified Port DistrictPage 10 of 23Printed on 6/19/2017 powered by Legistar™ ΑΏΐΖȃΏΕȃΑΏ !¦¤£ Packet0 ¦¤ 14 File #:2017-0338 RIDAembracestheDistrict’sandtheCity’svisionandcommitmenttoenhance,butrespectthe environment.RIDA’sproposalsuccessfullycapturesthevisionandunderstandingoftheRHCC projectobjectivesandthoroughlydefinestheelementsnecessarytomaketheprojectwork.Their projectconceptiswell-positionedtoattractinternationalandnationalvisitors,residentsoftheSouth Bay Area and San Diego County in general. III.PROJECT ECONOMICS: A GOOD DEAL FOR RIDA AND THE PUBLIC ENTITIES ConcurrentwiththeBoard’sselectionofRIDADevelopmentCorporationasthesuccessful respondenttotheRFQ,theBoardalsoauthorizedstafftonegotiateanENAwithRIDA.AnENAwas negotiatedthroughacollaborativeeffortbetweenDistrictstaff,CitystaffandRIDA.TheENAsets forthatimelineforitemstobedeliveredtotheDistrictduringthetermoftheENA,includinga proposalfortheRHCC.TheENAcommencedonFebruary10,2015andwillterminateonFebruary 16, 2018. III.a. Due Diligence Process SincetheENAwasenteredinto,theDistrict,theCityandRIDAhaveconductedextensivedue diligencetounderstandthechallengesoftheproject,theneedsoftheCVBandpotentialeconomic impacts.Overthecourseofthepasttwoyears,RIDAhasprovidedstaffwithfinancialprojections, includingbothrevenueandcostestimates.Staffhasalsoworkedwithmultipleoutsideconsultantsto providespecific,specializedanalysistounderstandtheinformationprovidedbyRIDA,andcreatethe financialprojectionsthatwillultimatelybeusedassupportfortheeconomictermsoftheLOI,and ultimatelytheDefinitiveAgreement.Thefollowingarethemajorconsultantreportsusedinstaff’s analysis of the RHCC economic deal terms: Revenue Analysis: Report from CBRE Hotels Development Cost Analysis: Jones Lang LaSalle (JLL) Development Cost Review Feasibility and Financial Gap Analysis: KMA Report FortheRevenueAnalysis,staffengagedCBREHotels(formerlyPKF)toanalyzetheprojectedhotel revenuesproposedbyRIDA.AttachmentHisthemostrecentCBREreportthatanalyzesexpected hotelrevenuesfortheRHCC.ThisanalysisprovidedthebasisfortheDistrict’sandKMA’sfinancial projections, ultimately assisting with key negotiated deal terms. FortheDevelopmentCostAnalysis,JLLprovidedfeedbackonestimateddevelopmentcosts presentedbyRIDAfortheRHCC.Thisanalysiswasalsousedtohelpunderstandtheproposed contributionofeachofthepartiesandRIDA’soverallprojectcost.JLL’sanalysisdeterminedthat comparedtorecent,newhotelsinthemarket,thehigher-than-averagecostprojectionssubmittedby RIDAcouldbejustifiedbytheiruseofadditionalamenities,hoteltheming,andqualityofdesign. DevelopmentcostrefinementswillbefactoredintotheDefinitiveAgreementwiththerequirement thattheDistrictwillhavetherighttoreviewandconfirmcosts.JLL’sreportondevelopmentcostis included as Attachment I. UtilizingtheinformationfromRIDA,CBREandJLLaswellastheirindustryexpertise,KMAhas modeledpotentialfinancingscenariosandreturnswhicharefurtherdescribedintheKeyEconomic San Diego Unified Port DistrictPage 11 of 23Printed on 6/19/2017 powered by Legistar™ ΑΏΐΖȃΏΕȃΑΏ !¦¤£ Packet0 ¦¤ 15 File #:2017-0338 Terms section below. IV.DEVELOPMENT PARTNERSHIPS IV.a. Private Development Program TheRIDAproposalchosenin2014isconsistentwiththevisionoftheCVBandRHCCproject. Throughextensivedue-diligencereviewandconstanton-goingnegotiationswithRIDA,theproject scope for the RHCC has been identified. Project Scope ThefollowingliststhekeycomponentsoftheRHCCproject,withconceptdrawingsincludedas AttachmentJ.TherenderingshavenotbeenreviewedforconsistencywiththeCVBMP,EIR,or otheragreementsapplicabletotheCVB,andmaybepresentedwithsomemodificationsforapproval at a future date. Proposed BrandGaylord Hotels Hotel Rooms1,450 Convention & Meeting Space275,000 Usable Square Feet AmenitiesAssociated Retail and Resort-level Amenities ParkingApproximately 1,500 spaces RIDAisnegotiatingwithMarriotttooperateaGaylordhotelfortheproposedRHCC.Thisintroduction ofGaylordisexpectedtoreduceprojectedriskassociatedwiththeprojectandprovideforcertaintyin bookings.TheGaylordproducttypehasaproventrackrecordofinducingdemandinunproven markets and guarantees long-term bookings. Gaylord Hotels is the large convention hotel brand of Marriott International <https://en.wikipedia.org/wiki/Marriott_International>. The Gaylord properties are owned by Ryman Hospitality Properties, Inc. (Ryman). It owns four large hotels <https://en.wikipedia.org/wiki/Hotel>, each with an attached convention center <https://en.wikipedia.org/wiki/Convention_center> and overflow support hotel property. On May 31, 2012, Marriott International bought the rights to manage Gaylord's four hotels under the ownership of Ryman and managed under the Gaylord name. IV.b. Public Development Program IntheprocessofdeterminingthefinancialfeasibilityoftheRHCC,itwasdeterminedthatinorderfor theRHCCtomoveforwardandtobedeveloped,therewasaneedforapublicfinancialsubsidy.As describedinfurtherdetailintheattachedKMAreport,thepublicsubsidycontributioncontemplated, butsubjecttoaplanoffinancebetweentheDistrictandtheCity(PlanofFinance)tobedeveloped during the term of the Definitive Agreement, can be described as follows: 1.Phase 1A Infrastructure: $56.3 Million 2.Public Entities Contribution for Convention Center Project: $225 Million 3.District-developed and owned parking 4.City sewer improvements and fire services San Diego Unified Port DistrictPage 12 of 23Printed on 6/19/2017 powered by Legistar™ ΑΏΐΖȃΏΕȃΑΏ !¦¤£ Packet0 ¦¤ 16 File #:2017-0338 TheDistrictandCitywillprovideevidenceoftherevenuesourcesthroughafuturePlanofFinance thatwillcoverthepublicportionoftheconventioncenterandrequiredinfrastructureoftheRHCC;it isanticipatedthatbondfinancingwillberequiredtofinancethepubliccontribution.Subjecttothe termsofthePlanofFinance,thePublicEntitieswouldworkcollaborativelytoissuethedebtpriorto thecloseofescrowofthegroundleasefortheSite.AccordingtotheattachedAmendedand RestatedFinancingAgreement(AttachmentK),whichwasapprovedbytheCityinNovemberand willbeconsideredbytheBoardonJune20,2017,subjecttothePlanofFinance,thePublicEntities wouldcommitsourcesofrevenuesidentifiedintheAmendedandRestatedFinancingAgreement that could be used to pay down the infrastructure bonds and associated debt service. Asapartofthestrategytofinancethepublicinfrastructureandimprovements,aPhase1Apublic infrastructureprogramhasbeendevelopedtoidentifytheinfrastructureneededtosupportthe RHCC.ThisPhase1AprogramincludesprovidingroadwayaccessandutilityservicetotheH-3 parcel;improvingtheadjacentarea;andbuildingnewparks.Itiscurrentlycontemplatedthatthe PublicEntitieswillfundthePhase1Ainfrastructurethroughtheissuanceofdebttobefurtherdefined inaPlanofFinance.Similarly,theDistrictwilldelivertheSitetoRIDAupongroundleaseexecution. PriortodeliveryoftheSitetoRIDA,theDistrictwillcompletesuchportionsofthePhase1A infrastructuretobeagreedtobythepartiesintheDefinitiveAgreementandremove,orcausethe removal of, the existing recreational vehicle (RV) park. ToservetheproposedRHCC,newstreetsandutilitieswillbeconstructedaroundtheperimeterofH- 3asapartofthePhase1Apublicinfrastructure.HStreetwillbeextendedtotheexpandedBayside Park, and the new roadway will continue to the north and east to connect to existing Lagoon Drive. TheexistingBaysideParkwillbeexpandedintoa24-acreparkwithimprovementsthatmayinclude lawns,plaza,landscapingandparking.ApedestrianandClassIbicyclepathwillrunthroughthenew HarborParkandextendtothenorththroughtheSweetwaterSignatureParktoconnecttothe Bayshore Bikeway and City of Chula Vista pedestrian system at E Street and Bay Boulevard. TheDistrictalsoplanstoconstructparkingspacestoservenotonlytheRHCCbutultimatelythe CVBasawhole.RIDAhasrequestedtheuseofsomeoftheparkingspacesforhotelguestsand employees, with the remainder of the spaces for public use. V.FINANCING AGREEMENT TheFinancingAgreementfortheCVBwasapprovedbytheBoardin2012andsetforththe frameworkforthefinancinganddevelopmentofthepublicimprovementsandinfrastructurewithinthe CVBbytheDistrictandtheCity.Thedevelopmentofpublicimprovementsandinfrastructureis necessaryfortheimplementationoftheCVBMPinaccordancewiththecertifiedEIRandPortMaster PlanAmendment,andfortheRHCCtomoveforwardtogetherwithotherdevelopmentwithinthe CVBprojectarea.AscontemplatedintheFinancingAgreement,asubsequentplanoffinancewould furtherdefineandimplementthefinancingcontemplatedbytheFinancingAgreement.Sincethe FinancingAgreementwasenteredintoin2012,thepartieshavebeenworkingtoupdatethe approachtothefinancinganddevelopmentofthepublicimprovementsandinfrastructurewithinthe CVB.Specifically,newsourcesofrevenuefromboththeDistrictandtheCityhavebeenidentified. TheFinancingAgreementisnowbeingupdatedandonJune20,2017,theBoardwillconsiderthe San Diego Unified Port DistrictPage 13 of 23Printed on 6/19/2017 powered by Legistar™ ΑΏΐΖȃΏΕȃΑΏ !¦¤£ Packet0 ¦¤ 17 File #:2017-0338 AmendedandRestatedFinancingAgreement,whichidentifiesthesenewrevenuesourcesand differentiatesbetweentheRHCCrelatedpublicinfrastructureandimprovementsandthoserequired for future phases of the development on the CVB. Joint Powers Authority Formation In2014,theDistrictandtheCityformedtheChulaVistaBayfrontFacilitiesFinancingAuthority (CVBFFA)toundertakethefinancingoftheCVBprojectcontemplatedbytheFinancingAgreement. TheAmendedandRestatedFinancingAgreementlaysthefoundationfortheDistrictandtheCityto useeithertheCVBFFAorformanewjointpowersauthoritytoissuethefinancingofthepublic infrastructure and improvements related to the RHCC. VI.KEY ECONOMIC TERMS VI.a. Overview of Proposed Method of Financing District,theCity,andRIDAhaveworkedtogethertoidentifythekeyeconomictermsthatwillsupport theconstructionandoperationoftheRHCC,allwhileachievingfavorablemarketreturnstoboththe PublicEntitiesandRIDA.DuringearlierdiscussionswithGaylordandpriortotheselectionofRIDA, theDistrictandCityhadalreadyanticipatedthatearlyphasesofdevelopmentontheCVBwould require public financial contributions. TheFinancingAgreementidentifiedsourcesofrevenuesfromtheCityandDistricttodevelopthe publicimprovementsandinfrastructure,andtheAmendedandRestatedFinancingAgreementthat willbeconsideredbytheDistrictonJune20,2017,identifiesfurthersourcesofrevenuefromthe DistrictandCityinordertomaketheRHCCprojectfeasible.TheDistrictandCitywillprovide evidenceofthesourcesofrevenueandfinancingbasedonthePlanofFinanceinordertofundthe publicportionandrequiredinfrastructureoftheRHCC,anditisanticipatedthatbondfinancingwillbe used.ThePublicEntitieswillworkcollaborativelypursuanttothetermsofthePlanofFinanceand DefinitiveAgreementtoissuethedebtforthepubliccontributionpriortothecloseofescrowofthe ground lease for the Site. TheDistrictandCityproposedfinancialcontributionsidentifiedintheproposedLOIhavebeen analyzedbyKMA,andtheKMAfeasibilityandfinancialgapanalysisispresentedinAttachmentD. TheKMAreportincludesacomprehensivefinancinggapanalysisjustifyingtheneedfortheDistrict andCityproposedcontributionstowardconstructionofinfrastructure,parking,andtheconvention centerportionoftheRHCC.Additionally,theKMAreportpresentsafeasibilityanalysisofthe proposedmethodoffinancingfortheRHCC.TheKMAreportillustrateshowthepubliccontribution towardtheRHCCrelatedpublicinfrastructureandimprovementswillbesupportedprimarilythrough project-generatedrevenues,i.e.,mostoftheDistrictandCityfinancialcontributionamountsarein effect“performance-based”.Tothatend,KMAhasconcludedthattheRIDAprojectedreturnafter thepublicinvestmentandrentstructureisnotexcessive.ThisfindingindicatesthatthePublic EntitiescontributionandDistrictrentstructureiswarrantedandneededinorderfortheRHCCto moveforwardandtobedeveloped.UltimatelyRIDAwillneedtocontroldevelopmentcostsand/or improve operating performance in order to achieve a satisfactory long-term return. VI.b. Proposed Financing Structure San Diego Unified Port DistrictPage 14 of 23Printed on 6/19/2017 powered by Legistar™ ΑΏΐΖȃΏΕȃΑΏ !¦¤£ Packet0 ¦¤ 18 File #:2017-0338 AssetforthintheKMAreport,totalprojectcosts,includingbothpublicinfrastructureandprivate development,areestimatedtobe$969.3million.AsdeterminedintheKMAreport,ofthistotal, RIDAwillberesponsibleforaminimuminvestment,includingprivatedebtandequity,ofnolessthan $688million.Basedonthesefindings,itisanticipatedthatthePublicEntitieswillberesponsiblefor upto$225millioncontributiontowardtheconventioncenterportionoftheRHCC;thepublic infrastructure,estimatedat$56.3million;andaminimumof1,500parkingspaces.Forplanning purposes,theDistricthasassumedconstructionof1,500-spaceparkingspaces,whichestimated costistobedetermined.Thesecostestimates,andrespectiveresponsibilities,aresummarizedin the KMA report and set forth in the chart below from the KMA report. VI.c. Proposed Public Contribution toward Infrastructure and Convention Center Proposed Public Revenue Contributions to Support Bond Financing TheDistrictandCityproposetofinancethe$225millionconventioncentercontributionand estimated$56millioninfrastructurecostthroughacombinationofexistingandprojectedrevenue streamsfromtheCVB.(Approachestofinancingtheparking,whichwillbesolelyaDistrict responsibility, are discussed separately in Section VI.i below.) IftheBoardapprovestheAmendedandRestatedFinancingAgreement,theDistrictwillcontribute consistentwiththeDefinitiveAgreementandPlanofFinance:(1)existinganddesignatedfuture leaserevenuesfromtheCVB;and(2)groundrentfromtheRHCC.(Theproposedgroundrent structurefortheRHCCgroundleaseisdiscussedinSectionVI.ebelow.)Additionally,itis contemplatedthattheDistrictwillcontributetowardtheinfrastructurecostthepreviouslyreceived SDG&Econtributionof$1.7millionandthePacificacontributionof$3.0million.TheCityis contributingtowardtheconstructionofrequiredsewerandfireservices.TheDistrictwillalsobe responsibleforanannualcontributiontowardbonddebtservicetosupporttheconventioncenter contribution not to exceed the following schedule of amounts during Lease Years 4 through 37: San Diego Unified Port DistrictPage 15 of 23Printed on 6/19/2017 powered by Legistar™ ΑΏΐΖȃΏΕȃΑΏ !¦¤£ Packet0 ¦¤ 19 File #:2017-0338 TherevenuesourcesidentifiedarefromtheFinancingAgreementandtheproposedAmendedand RestatedFinancingAgreement.IftheBoardauthorizestheAmendedandRestatedFinancing AgreementonJune20,2017,newsourcesofrevenuewillbeconsidered.TableIV-6intheattached KMAreportprovidesanillustrativeexampleoftheDistrictandCityrevenuecontributionstowardthe proposedbondstofinancetheconventioncentercontributionandinfrastructurebasedonthe AmendedandRestatedFinancingAgreementatLeaseYear7,i.e.projectedstabilizedyearof RHCC operations. Furthermore,itiscontemplatedthattheDistrictwillleasethelandtoRIDAwithamodifiedrent structurethatwillallowtheRHCCprojecttoachievethenecessaryreturn.TheDistrict’scontribution ofthelandunderamodifiedrentstructureisessentialandrepresentsanadditionalcontributionnot represented in the table referenced. Preliminary Estimate of Supportable Bond Underwriting TheCityengagedJPMorganSecurities,LLC(JPMorgan)toprovideinvestmentbankingandbond underwritingservices.JPMorganpreparedestimatesofachievablebondfinancingbasedonthe revenuestreamstobepledgedbytheDistrictandCity.IntheKMAReport,KMAanalyzedJP Morgan’sestimates.Basedonthisanalysis,KMAdeterminedthattheJPMorganprojectionswere basedoncurrentlyavailablebondunderwritingterms,therelativecreditworthinessofthepledged revenuestreams,andJPMorgan’sprofessionaljudgementregardingdebtservicecoverage,interest rate,andcostsofissuanceandcapitalizedinterestduringconstruction.Moreover,KMAfoundthat theJPMorganbondrunsassumea37-yearterm,inclusiveoftheconstructionperiod,andeffective interestratesof5.48%fortaxablebondsand4.41%fortax-exemptbonds.Notably,KMAhasuseda 1.75debtservicecoverageratiorecommendedbyJPMorgan.KMAconcludedthatJPMorgan assumedascendingdebtserviceschedules,i.e.,annualdebtservicerisesoverthetermsubjectto the1.75debtservicecoveragelimit.Ineffect,KMAdeterminedthebondsizingisbasedon$1.00of debtserviceforevery$1.75ofprojectedrevenue.KMAconcludesinitsreportthatwhilethisisa conservativelyhighdebtservicecoverageassumption,i.e.,itreducestheachievablebondfinancing amounts,italsoresultsinsignificantprojectedsurpluscashflowafterdebtservice(seefurther discussion in Section VI.h below). ThefollowingtablesummarizestheKMAanalysisonthecurrentlyanticipatedunderwritingtermsfor theDistrict/Citybondfinancingfortheconventioncentercontributionandinfrastructure.KMA determinesthatbyusingthecurrentlyanticipatedunderwritingterms,thepledgedrevenuesare projectedtobesufficienttosupportthenetbondproceedsrequiredtofundtheDistrictandCity obligationsundertheLOI.KMAqualifieditsfindingwiththefactthatthebondswillbeissuedata futuredatetobedetermined,atwhichtimeeconomicconditionsmayvaryfromthefiguresusedin thispreliminaryfeasibilityanalysis.KMArecommendsthatRIDA,theDistrict,andtheCity continuallymonitorrealestatemarketfactorsandbondfinancingparameterstodetermineifany changes to these projections are warranted. San Diego Unified Port DistrictPage 16 of 23Printed on 6/19/2017 powered by Legistar™ ΑΏΐΖȃΏΕȃΑΏ !¦¤£ Packet0 ¦¤ 20 File #:2017-0338 VI. d. Required Private Investment KMA’sreportprovidesthatRIDAwillberesponsibleforaprivateinvestmentintheRHCCprojectof nolessthan$688million.Thisinvestmentisexpectedtotaketheformofacombinationofdebt (thirdpartyloans)andequity.ThechartbelowistakenfromtheKMAreportandsummarizesthe required private investment in the RHCC project. VI. e. Basic Ground Lease Terms UnderthetermsoftheLOI,RIDAwillpayafixedgroundrentschedulefortheprojectduringthe bondfinancingterm,estimatedtocoincidewithLeaseYears1-37.Thefixedgroundrentschedule for this period is as shown below. AsdetailedintheKMAreport,beginninginYear38,theproposedrentstructurefortheprojectwillbe inlinewithorhigherthantheDistrict’sstandardpercentagerentcategoriesforroom,food,and beverage.Thebanquetpercentagerentcategoryhasbeenbrokenoutfromtheroomrentcategory andisslightlylowerthanintypicalDistrictleases.Percentagerentratesfortheremainingcategories San Diego Unified Port DistrictPage 17 of 23Printed on 6/19/2017 powered by Legistar™ ΑΏΐΖȃΏΕȃΑΏ !¦¤£ Packet0 ¦¤ 21 File #:2017-0338 ofrevenuearetobeagreedtointheDefinitiveAgreement.However,sincetheproportionalsizeof theconventioncenterspaceislargerthanfoundinotherhotelpropertiesonDistricttidelands,the RHCCisprojectedtogeneratedisproportionatelyhigherbanquetrevenues.Onthisbasis,staff agreedthatalowerbanquetpercentagerateisjustified.Additionally,thebanquetrateincreasesto the District’s standard room rent rate in Lease Year 48. VI.f. Public Entities Participation in NOI TheKMAreportalsoexplainsthatinadditiontogroundrentpaidtotheDistrict,RIDAwillpaythe PublicEntitiesanannualparticipationpaymentbasedonsurplusNetOperatingIncome(NOI)from theRHCCproject.AssetforthintheKMAreport,thePublicEntitieswillreceive20%ofsurplusNOI abovean11%ROIthresholdforRIDAduringLeaseYears4-37.KMAhaspreparedapreliminary projectionofthispotentialfuturerevenuestream,whichissummarizedinthechartbelow.Section VI.hbelowprovidesadiscussionrelatedtotheproposeddistributionofthePublicEntities participation payments, as well as surplus cash flow after debt service, between the District and City. VI.g. Financial Returns to RIDA CalculationsofatargetReturnonInvestment(ROI)toRIDA,andtheshareofNOIbetweenRIDA andthePublicEntities,werebasedonananalysisoftargetreturnsforRIDA.Giventhelevelofrisk associatedwithundertakingsuchamajornewinvestmentontherelativelyundevelopedCVBina singlephase,Consultantsagreethattheupperendofthisrangeiswarrantedfortheproposed RHCC.TheproposedDistrictandCityfinancialcontributionsarestructuredtotargetanROItoRIDA of11%inthestabilizedyear,i.e.,thefourthyearofoperationsorLeaseYear7.TheKMAreport projectsthatRIDAwillachieveanROIinLeaseYear7of10%,lowerthanthetargetreturn threshold. KMAalsopreparedlong-termoperatingincomeandexpenseprojectionsforthedurationofthe proposed66-yeargroundlease.TheseprojectionsindicatethattheDistrictandCitycontributions arewarranted,thattheRIDAreturnisnotexcessive,andultimatelythatRIDAwillneedtocontrol developmentcostsand/orenhanceoperatingperformanceinordertoachieveasatisfactorylong- termreturn.Atthesametime,theproposedparticipationinRHCCNOIprovidesforthePublic Entities to participate in the success of the RHCC project as well. VI.h. Proposed Cash Flow Distribution (“Waterfall”) San Diego Unified Port DistrictPage 18 of 23Printed on 6/19/2017 powered by Legistar™ ΑΏΐΖȃΏΕȃΑΏ !¦¤£ Packet0 ¦¤ 22 File #:2017-0338 TheKMAreportsnotesthattheproposedbondfinancingstructurewillresultinsignificantsurplus cashflowafterdebtservice.Additionally,RIDAwillmakeNOIparticipationpaymentstothePublic Entities.DistrictandCitystaffhavediscussedindetailvariousapproachestodistributethesefunds. TheKMAreportoutlinesthecurrentconcepttoallocatethesefundsthrougha“waterfall”,withthe prioritysequenceshowninTableIV-11intheattachedKMAreport.Asanexample,theKMAchart th presentstheprojectedfiguresforLeaseYears7(stabilizedoperations)and13(10yearof operations). KMAconcludesthatoncetheRHCCprojecthasstabilized,theDistrictanticipatesthatitwillreceive areimbursementofitsannualcontributiontowarddebtservice.Moreover,KMAfindsthatboththe DistrictandCitywillbeabletoreimbursethemselvesfortheirrespectiveCVBinfrastructureoperating andmaintenance(O&M)expenditures.KMAforecastsaremainingpositivecashflowevenafterthe prioritydistributions,.KMArecommendsthatDistrictandCitystaffwillneedtonegotiatehowthese surplus funds are distributed. VI.i. Parking Space Funding TBD - Port Obligation TheKMAreportpointsoutthatitsanalysisrequiresthattheDistrictberesponsibleforfinancing, constructing,owning,andoperatingapproximately1,500parkingspacestoservetheRHCCproject. Districtstaffisevaluatingthepotentialtodevelop1,500-spaceparkingspacesonParcelH3.The Districtwouldassumealloperatingandmaintenanceexpendituresfortheparkingforthedurationof theRIDAgroundlease.Parkinggrossrevenueswouldbeallocated90%toRIDAand10%tothe District.TheDistrict’ssharewillincreaseto15%ofgrossrevenueifRIDAsells,onacumulative basis, 51% or more of the RHCC project. Thetotalcostfortheconstructionofthe1,500parkingspaceswillbeestimatedatafuturedate. Districtstaffisevaluatingavarietyofapproachestofinancetheparking.Thepreferredapproach would be determined by the Board at a later date. VI.j. Ancillary Development Rights InordertoimplementthemodeladoptedbyGaylordtoattractsufficientconventionbusiness, Gaylordrepresentsitneedsaccesstoadditionalroomswithincloseproximityofthemainhoteland conventioncenterinordertomaximizethebookingopportunities.Allowingforcontroloverbookings fivetosixyearsoutisintegraltoGaylordoperations,especiallysincestandardhotelsdonottypically bookthatfarinadvance.RIDArequestsaportionoftheH23parcelinordertofacilitatethe constructionof550additionalroomsnecessaryforthesuccessofRHCC.UndertheLOI,whenthe DefinitiveAgreementisexecuted,theDistrictwillexecuteaoneyearexclusiverighttonegotiate agreementwithRIDAconcerningadefinitiveagreementfortheleaseofupto10acresoftheH23 parcel that are closest to the H3 parcel to develop up to 550 hotel rooms. Inaddition,RIDAhasrequestedtherighttocommentonfuturedevelopmentprojectsontheH1, H1A,H8,H9andH23parcelsthatsurroundH3parcel.SeeAttachmentGforamapviewoftheH parcels.Thereasonthiswasrequestedwastoprovideguidanceontypesofoperations,toensure noduplicationsinoperations,andtoofferfeedbackonqualityofdesignonthoseparcels.Since RIDAisamajorpartnerinthedevelopmentoftheCVB,staffsupportsRIDA’sabilitytocommenton future development projects and welcomes feedback on future growth opportunities. San Diego Unified Port DistrictPage 19 of 23Printed on 6/19/2017 powered by Legistar™ ΑΏΐΖȃΏΕȃΑΏ !¦¤£ Packet0 ¦¤ 23 File #:2017-0338 VII.NEXT STEPS IftheBoardandtheCityCouncilapprovetheLOI,RIDAwillexpendadditionalfundstoadvancethe RHCCproject,specificallyonprojectdesign.Itisanticipatedthatthedesignprocesswilltake approximately18monthstocomplete.ConcurrentwithRIDAmakingadvancementsontheRHCC project,theDistrictwillcontinuetoadvanceothercomponentsontheCVB.TheDistrictisinthe processofacquiringapproximatelyfouracresofland,knownasthetriangleparcel,whichisan integralpartofthedevelopmentoftheCVBandtheRHCC.Also,theexistingRVparkleaseholdis locatedwithinaportionoftheCVB,onthefuturelocationoftheHarborDistrictParkandRHCC.The 17 leasefortheChulaVistaRVParkexpiresin2021.TheCVBMPrequiresall237RVstallsbe replacedpriortotheexistingRVparkclosing.OnOctober13,2016,theBoardauthorizedthe issuanceofaRFPforthedevelopmentandoperationofthenewRVpark.OnApril11,2017,the BoardselectedtheSunCommunities,Inc./NorthgateResortLLCteamtobuildandoperatethenew RVpark.Projectdesign,environmentalreviewandleasenegotiationsarecurrentlyunderway.Itis anticipatedthatconstructiononthenewlocationwillbeginin2018,pavingthewayforthe development of the RHCC. StaffwillalsocontinuetoworkwiththeCityindevelopingthepublicinfrastructuredesignand negotiating the Plan of Finance necessary to fund the public infrastructure and improvements. VII.a. Disposition and Development Agreement TheENAbetweentheDistrictandRIDAsetsforththeintenttoexclusivelynegotiateandpotentially enterintoabindingagreementthatspecifiestherightsandobligationsoftheDistrict,theCityand RIDAwithrespecttothelease,developmentandoperationoftheRHCC(DefinitiveAgreement). Basedonthecomplexityofthetransaction,andthevariousperformancemilestonesthatmustbe satisfiedbythepartiespriortotheexecutionofthegroundlease,thepartiesarecurrentlynegotiating theDefinitiveAgreementwhichisanticipatedtobebroughtbacktotheBoardforapprovalbytheend of 2017. TheDefinitiveAgreementiscontemplatedtobefora4yearterm,withthree,1yearoptionsto extend,andwillsetforththeobligationsofthepartiesandtheperformancemilestonesneededto completethepre-constructionphaseoftheRHCCbasedonanagreeduponscheduleof performance.Thisscheduleofperformancewillsetforththevariousstepsinvolvedinthepre- construction phase and the obligations of all parties to complete that phase. TheDefinitiveAgreementwillterminate(a)upontheexecutionofthegroundlease,whichwill happenconcurrentlywiththeclosingofthepublicandprivatefinancing,andcommencethe constructionphaseoftheRHCC,or(b)(i)anuncureddefaultor(ii)failuretosatisfyacondition precedent prior to the close or a milestone set forth in the schedule of performance. AteachoftheperformancemilestonestobeidentifiedintheDefinitiveAgreement,theCity,District andRIDAwillhavetheabilitytoevaluatetheirrespectiveprogressinmeetingtheirmilestones.In theeventanyoftheperformancemilestonesarenottimelycompletedbyanyoftheparties,theother partieswillhavecertainrightstopause,delayorterminatesuchperformancemilestoneunderthe DefinitiveAgreement.Onlyuponsatisfactionofalloftheconditionsprecedentandperformance San Diego Unified Port DistrictPage 20 of 23Printed on 6/19/2017 powered by Legistar™ ΑΏΐΖȃΏΕȃΑΏ !¦¤£ Packet0 ¦¤ 24 File #:2017-0338 milestonessetforthinthescheduleofperformance,willthenecessarypublicandprivatefinancing be issued and the District and RIDA enter into the ground lease for the future Site of the RHCC. VIII.RECOMMENDATION AftertwoyearsofnegotiationswithRIDA,DistrictandCitystaffsbelievethatthenonbindingLOI shouldbeapprovedbytheBoardandCityCouncilforthedevelopmentoftheRHCC,thecatalyst projectfordevelopmentoftheCVB.TheLOIshouldbeapprovedbecauseinRIDAandtheCity,the Districthasfoundtherightpartnersthatarereadytomoveforwardwiththeimplementationofthe CVBMP;theprojecteconomicsrepresentagooddealfortheDistrict,fortheCity,andforRIDA;and timeisoftheessencetomemorializetheeconomicstoensurethattheredevelopmentoftheCVB proceedsassoonaspossible.TheLOIisanimportantnextsteptowardcatalyzingotheradditional developmentwithintheCVB.Onceimplemented,theCVBMPwillcreateaworld-classdestination that reflects strong planning and design principles, economic feasibility and community benefits. General Counsel’s Comments: TheOfficeoftheGeneralCounselhasongoinginvolvementinthismatterandassistedinthe preparationofthisagendasheet.Assuch,theOfficeoftheGeneralCounselapprovesthisagenda sheet and the proposed non-binding Letter of Intent as presented to it as to form and legality. Environmental Review: TheproposedBoardactionstoauthorizeanon-bindingLetterofIntent(LOI)doesnotconstitutean “approval”ofaprojectundertheCaliforniaEnvironmentalQualityAct(CEQA)becausetheBoard’s authorizationdoesnotconstituteabindingcommitmenttoapprovetheproposedleaseoranyother associateddiscretionaryapprovals.AnynegotiatedleasewouldrequireBoardapproval.CEQA requiresthattheDistrictadequatelyassesstheenvironmentalimpactsofitsleasesandreasonably foreseeableactivitiesthatmayresultfromitsleasespriortotheapprovalofthesame.Accordingly,if negotiationsarecompleted,andbeforetheBoardconsidersapprovalofaproposedlease,the DistrictwillconductCEQAreviewofanypotentialenvironmentalimpactsfromtheproposedlease andanyreasonablyforeseeableactivitiesthatmayoccurasaresultoftheproposedlease.Such CEQAreviewmayresultintheDistrict,initssoleandabsolutediscretion,requiringimplementation ofmitigationmeasuresoradoptinganalternative,includingwithoutlimitation,a“noproject alternative.”ThecurrentBoardactioninnowaylimitstheexerciseofthisdiscretion.Nevertheless, developmentassociatedwiththeChulaVistaBayfrontMasterPlan,includingtheproposedhoteland conventioncentercontemplatedintheLOI,waspreviouslyanalyzedundertheChulaVistaBayfront MasterPlanandPortMasterPlanAmendmentFinalEnvironmentalImpactReport(UPD#83356-EIR -658,SCH#2005081077)whichwascertifiedbytheBoardonMay18,2010(ResolutionNo.2010- 78). At this time, no further action under CEQA is required. Inaddition,thepresentationanddirectiontostaffallowsfortheDistricttoadministrateitsobligations underthePortActand/orotherlaws.ThePortActwasenactedbytheCaliforniaLegislatureandis consistentwiththePublicTrustDoctrine.Consequently,theproposedpresentationisconsistentwith the Public Trust Doctrine. TheproposedBoardactionsdonotallowfor“development,”asdefinedinSection30106ofthe San Diego Unified Port DistrictPage 21 of 23Printed on 6/19/2017 powered by Legistar™ ΑΏΐΖȃΏΕȃΑΏ !¦¤£ Packet0 ¦¤ 25 File #:2017-0338 CaliforniaCoastalAct,or“newdevelopment,”pursuanttoSection1.a.oftheDistrict’sCoastal DevelopmentPermit(CDP)Regulations.Therefore,issuanceofaCoastalDevelopmentPermitor exclusionisnotrequiredfortheproposedBoardactions.However,theDistrict’sleasesandactivities thatmayarisefromthoseleasesrequireprocessingundertheDistrict’sCDPRegulations.Ifa proposedleaseisnegotiated,theBoardwillconsiderapprovalofaproposedleaseafterthe appropriatedeterminationunderDistrict’sCDPRegulationsismade,whichcouldincludeaCoastal DevelopmentPermit.ThecurrentBoardactioninnowaylimitstheexerciseoftheDistrict’sdiscretion under the District’s CDP Regulations. Equal Opportunity Program: ASmallBusinessEnterprise(SBE)ParticipationPlanincludingSBEgoalsfordesign/construction and leasing/operations is required. PREPARED BY: Adam Meyer, Department Manager, Redevelopment Lesley Nishihira Principal, Planning and Green Port Linda Scott Capital Projects Manager, Engineering-Construction Stephanie Shook Asset Manager, Real Estate Attachment(s): Attachment A: Historic Chula Vista Tidelands Map Attachment B: CVBMP Illustrative Graphic Attachment C: Non-Binding Letter of Intent Attachment D: KMA Feasibility Report Attachment E: Glossary of Terms Attachment F: Timeline Overview Attachment G: Harbor District Parcel Map Attachment H: October 4, 2016 Report from CBRE Hotels Attachment I: March 30, 2017 JLL RIDA Development Cost Review Attachment J: RIDA RHCC Project Renderings Attachment K: Amended and Restated Financing Agreement 1. SDUPD Clerk’s Office Document No. 59406 filed October 5, 2012, Port Master Plan Amendment 2. SDUPDClerk’sOfficeDocumentNo.59001filedMay30,2012,ChulaVistaBayfrontMasterPlanFinancingAgreementbetweenCityof Chula Vista and San Diego Unified Port District 3. SDUPDClerk’sOfficeDocumentNo.62033filedJuly3,2014,RequestforQualificationsforChulaVistaBayfrontDevelopmentOpportunity for Waterfront Convention Destination Resort Hotel 4. SDUPDClerk’sOfficeDocumentNo.62899filedFebruary11,2015,ExclusiveNegotiatingAgreement;SDUPDClerk’sOfficeDocumentNo. San Diego Unified Port DistrictPage 22 of 23Printed on 6/19/2017 powered by Legistar™ ΑΏΐΖȃΏΕȃΑΏ !¦¤£ Packet0 ¦¤ 26 File #:2017-0338 65707 filed October 13, 2016 (Amendment No. 1); SDUPD Clerk’s Office Document No. 66141 filed February 14, 2017 (Amendment No. 2) 5. SDUPDClerk’sOfficeDocumentNo.39466filedAugust5,1999,RelocationAgreementbyandamongCityofChulaVista,Redevelopment Agency of the City of Chula Vista, San Diego Unified Port District and Rohr, Inc.. 6. SDUPDClerk’sOfficeDocumentNo.33004,filedSeptember12,1996,MemorandumofUnderstandingbetweentheSanDiegoUnifiedPort District and the City of Chula Vista. 7. SDUPDClerk’sOfficeDocumentNo.38358,filedNovember29,1999,LeaseAgreementbetweenSanDiegoUnifiedPortDistrictandDuke Energy South Bay, LLC 8. SDUPDClerk’sOfficeDocumentNo.44952filedDecember18,2002,JointPlanningAgreementBetweenSanDiegoUnifiedPortDistrictand the City of Chula Vista 9. SDUPDClerk’sOfficeDocumentNo.47047filedJune03,2004,FirstAmendmenttoJointPlanningAgreementBetweenSanDiegoUnified Port District and the City of Chula Vista 10. FinalEnvironmentalImpactReportfortheChulaVistaBayfrontMasterPlanandPortMasterPlanAmendment(UPD#83356-EIR-658,SCH #2005081077), dated June 18, 2010, on file in the Office of the District Clerk bearing Document No. 56562 11. SDUPDClerk’sOfficeDocumentNo.59408filedOctober5,2012,ChulaVistaBayfrontMasterPlanPublicAccessProgramSanDiego Unified Port District and the City of Chula Vista 12. SDUPD Clerk’s Office Document No. 59407 filed October 5, 2012, Chula Vista Bayfront Development Policies 13. SDUPDClerk’sOfficeDocumentNo.56067filedFebruary19,2010,ExchangeAgreementbyandbetweenSanDiegoUnifiedPortDistrict and North C.V. Waterfront L.P. 14. SDUPDClerk’sOfficeDocumentNo.56523filedMay20,2010,ChulaVistaBayfrontMasterPlanSettlementAgreementbyandamongthe Bayfront Coalition, San Diego Unified Port District and City of Chula Vista, the Redevelopment Agency of the City of Chula Vista 15. SDUPDClerk’sOfficeDocumentNo.56555filedJune2,2010,MitigationMonitoringandReportingProgramfortheChulaVistaBayfront Master Plan 16. SDUPD Clerk’s Office Document No. 65065 filed June 6, 2016, Natural Resources Management Plan for the Chula Vista Bayfront 17. SDUPDClerk’sOfficeDocumentNo.14243filedNovember9,1981,LeasebetweenChulaVistaMarina/RVPark,Ltd.andSanDiegoUnified Port District, as amended from time to time. San Diego Unified Port DistrictPage 23 of 23Printed on 6/19/2017 powered by Legistar™ ΑΏΐΖȃΏΕȃΑΏ !¦¤£ Packet0 ¦¤ 27 28 0 ¦¤ South Bay South Bay Salt PondsSalt Ponds tteeeerrttSS LL Wildlife ReserveWildlife Reserve Marina WayMarina Way tteeeerrttSS JJ Marina PkwyMarina Pkwy tteeeerrttSS HH Sandpiper WaySandpiper Way San Diego BaySan Diego Bay Interstate 5Interstate 5 tteeeerrttSS FF Historic Chula Vista Tidelands tteeeerrttSS EE CenterCenter Chula Vista Nature Chula Vista Nature Packet N MarshMarsh Sweetwater Sweetwater !¦¤£ ΑΏΐΖȃΏΕȃΑΏ L STREET Park Park J STREET H STREET F STREET E STREET Attachment C to Agenda No. 2017-0338 ΑΏΐΖȃΏΕȃΑΏ !¦¤£ Packet0 ¦¤ 30 Attachment C to Agenda No. 2017-0338 ΑΏΐΖȃΏΕȃΑΏ !¦¤£ Packet0 ¦¤ 31 Attachment C to Agenda No. 2017-0338 ΑΏΐΖȃΏΕȃΑΏ !¦¤£ Packet0 ¦¤ 32 Attachment C to Agenda No. 2017-0338 ΑΏΐΖȃΏΕȃΑΏ !¦¤£ Packet0 ¦¤ 33 Attachment C to Agenda No. 2017-0338 ΑΏΐΖȃΏΕȃΑΏ !¦¤£ Packet0 ¦¤ 34 Attachment C to Agenda No. 2017-0338 ΑΏΐΖȃΏΕȃΑΏ !¦¤£ Packet0 ¦¤ 35 Attachment C to Agenda No. 2017-0338 ΑΏΐΖȃΏΕȃΑΏ !¦¤£ Packet0 ¦¤ 36 Attachment C to Agenda No. 2017-0338 ΑΏΐΖȃΏΕȃΑΏ !¦¤£ Packet0 ¦¤ 37 Attachment C to Agenda No. 2017-0338 ΑΏΐΖȃΏΕȃΑΏ !¦¤£ Packet0 ¦¤ 38 Attachment C to Agenda No. 2017-0338 ΑΏΐΖȃΏΕȃΑΏ !¦¤£ Packet0 ¦¤ 39 Attachment C to Agenda No. 2017-0338 ΑΏΐΖȃΏΕȃΑΏ !¦¤£ Packet0 ¦¤ 40 Attachment C to Agenda No. 2017-0338 ΑΏΐΖȃΏΕȃΑΏ !¦¤£ Packet0 ¦¤ 41 Attachment C to Agenda No. 2017-0338 ΑΏΐΖȃΏΕȃΑΏ !¦¤£ Packet0 ¦¤ 42 Attachment C to Agenda No. 2017-0338 ΑΏΐΖȃΏΕȃΑΏ !¦¤£ Packet0 ¦¤ 43 Attachment D to Agenda File No. 2017-0338 MEMORANDUM A DVISORS IN: EAL E STATE R A FFORDABLE H OUSING E CONOMIC D EVELOPMENT To: Adam Meyer, Department Manager, Real Estate Port of San Diego S AN F RANCISCO A. J ERRY K EYSER IMOTHY C. K ELLY T K ATE E ARLE F UNK From: KEYSER MARSTON ASSOCIATES, INC. D EBBIE M. K ERN EED T. K AWAHARA R D AVID D OEZEMA Date: June 16, 2017 L OS A NGELES K ATHLEEN H. H EAD Subject: Proposed Letter of Intent (LOI) with RIDA Chula Vista, LLC J AMES A. R ABE REGORY D.S OO-H OO G Chula Vista Bayfront Phase 1 Development K EVIN E. E NGSTROM J ULIE L. R OMEY S AN D IEGO I.INTRODUCTION P AUL C. M ARRA A.Objective In accordance with your request, Keyser Marston Associates, Inc. (KMA) has undertaken a review of the economic feasibility of the proposed Resort Hotel and Convention Center (RHCC) proposed by RIDA Chula Vista, LLC (RIDA). RIDA intends to develop a 1,450-room resort hotel and approximately 275,000 net square feet (SF) of convention and meeting space on a 36-acre site (Site) within the Chula Vista Bayfront (CVB). The RHCC will be served by 1,500 parking spaces, proposed to be developed and owned by the San Diego Unified Port District (District). The Site is currently owned by the District. As background, in May 2012 the District and the City of Chula Vista (City) entered into a Financing Agreement for the Chula Vista Bayfront Master Plan (CVBMP) which outlined the financial relationship between the District and the City. The Chula Vista City Council subsequently adopted an Amended and Restated Financing Agreement (Financing Agreement) in November 2016. The Financing Agreement identifies specific revenue sources that each entity agrees to contribute toward public infrastructure and other facilities required for initial phases of development on the Bayfront subject to a Plan of Finance. The Financing Agreement will be presented to the Board of Port Commissioners for consideration on June 20, 2017. 555 WEST BEECH ST., SUITE 460 SAN DIEGO, CALIFORNIA 92101 PHONE: 619 718 9500 FAX: 619 718 9508 WWW.KEYSERMARSTON.COM 17060ndh ΑΏΐΖȃΏΕȃΑΏ !¦¤£ Packet0 ¦¤ 44 19045.006.001 Attachment D to Agenda File No. 2017-0338 To: Adam Meyer, Department Manager, Real Estate, Port of San Diego June 16, 2017 Subject: Proposed Letter of Intent (LOI) with RIDA Chula Vista, LLC Page 2 Chula Vista Bayfront Phase 1 Development Additionally, the District, City, and RIDA propose to enter into a Letter of Intent (LOI) to identify the key economic terms to be included in a Disposition and Development Agreement (Definitive Agreement). The proposed LOI subject to the Financing Agreement, outlines the terms of the proposed ground lease between the District and RIDA, and further identifies additional contributions from the District and City (Public Entities) in order to make the RHCC project feasible. In response to your request, KMA has prepared an economic analysis of the District and City financial contributions identified in the proposed LOI. This KMA report provides: (1) a comprehensive financing gap analysis of the proposed District and City contributions toward construction of infrastructure, parking, and the convention center portion of the RHCC; (2) a feasibility analysis of the proposed method of financing for the RHCC; and (3) estimates of the economic benefits to the City and region as a result of development of the RHCC and build-out of the balance of the CVB. B.Methodology In completing this economic analysis, KMA performed the following key work tasks: Reviewed background documentation and historical data relevant to the CVB. Reviewed development cost estimates and cash flow projections provided by RIDA. Participated in meetings and teleconferences with the District, City, and RIDA to understand project parameters, anticipated market performance, and other financial factors. Prepared financial models to estimate developer returns from development of the RHCC. Prepared an analysis of the potential economic impact caused by development of the CVB. C.Report Organization This economic analysis has been organized as follows: Following this introduction, Section II presents an overview of the RHCC project and future phases of development within the CVB. Section III outlines the key business and economic deal terms contained in the proposed LOI. 17060ndh ΑΏΐΖȃΏΕȃΑΏ !¦¤£ Packet0 ¦¤ 45 19045.006.001 Attachment D to Agenda File No. 2017-0338 To: Adam Meyer, Department Manager, Real Estate, Port of San Diego June 16, 2017 Subject: Proposed Letter of Intent (LOI) with RIDA Chula Vista, LLC Page 3 Chula Vista Bayfront Phase 1 Development Section IV presents the KMA financing gap analysis of the RHCC. Section V presents the KMA economic impact assessment for development of the RHCC and the balance of the CVB. Limiting conditions pertaining to this economic analysis are presented in Section VI. II.PROJECT OVERVIEW A.Chula Vista Bayfront Development of the CVB is guided by the CVBMP. The CVBMP calls for the development of 556 acres of the CVB over the next 20 years to include parks, open space areas, a resort hotel, convention center, other hotels, mixed-use office/commercial, industrial business park, and public facilities, in three separate planning districts. Table II-1 presents a summary of the projected development planned within the CVB by anticipated Phase and Sub-Area: Table II-1: Chula Vista Bayfront Projected Development by Phase and Sub-Area Phase / District Parcel Land Use Description Subarea Phase 1 Harbor Parcel H-3 Resort Hotel 1,450 Rooms Harbor Parcel H-3 Convention Center 275,000 SF (1) Harbor Parcel H-3 Structured Parking 1,500 Spaces Phase 2 Harbor Parcel H-23 Limited Service Hotel 200 Rooms Harbor Parcel H-9/H-21 Retail 225,000 SF Phase 3 Harbor Parcel H-3 RIDA Hotel Expansion 150 Rooms Sub-Area A Harbor Parcel H-9/H-21 Retail 200,000 SF Harbor H-18 Mixed-Use Commercial 100,000 SF Harbor H-23 Cultural/Retail 200,000 SF 17060ndh ΑΏΐΖȃΏΕȃΑΏ !¦¤£ Packet0 ¦¤ 46 19045.006.001 Attachment D to Agenda File No. 2017-0338 To: Adam Meyer, Department Manager, Real Estate, Port of San Diego June 16, 2017 Subject: Proposed Letter of Intent (LOI) with RIDA Chula Vista, LLC Page 4 Chula Vista Bayfront Phase 1 Development Table II-1: Chula Vista Bayfront Projected Development by Phase and Sub-Area Phase / District Parcel Land Use Description Subarea Sub-Area B Harbor H-13/H-14 Residential 1,500 Units Harbor H-13/H-14 Retail 15,000 SF Harbor H-15 Limited Service Hotel 250 Rooms Harbor H-15 Office 420,000 SF Sub-Area C Harbor H-3/H-23 Limited Service Hotel 525 Rooms Harbor H-3/H-23 Full Service Hotel 525 Rooms Sub-Area D Sweetwater S-3 Mixed-Use Commercial 60,000 SF Sweetwater S-4 Office 60,000 SF Otay O-1/O-4 Industrial Business Park 274,500 SF Sub-Area E Sweetwater S-3 Mixed-Use Commercial 60,000 SF Sweetwater S-4 Office 60,000 SF Otay O-1/O-4 Industrial Business Park 274,500 SF (1)Reflect net usable area. B.Proposed Development The proposed RHCC is planned for development on Chula Vista Master Plan Parcel H-3. Parcel H-3 consists of 36 acres and is currently partially occupied by an existing recreational vehicle (RV) park. The RHCC will serve as the anchor project for the CVB consisting of a 20-story, 1,450-room resort hotel, branded by Gaylord Hotels; 275,000 SF of net usable convention and meeting space; associated retail and related development; and resort level amenities. The RHCC will be served by 1,500 parking spaces, proposed to be developed and owned by the District, adjacent to the RHCC. III.PROPOSED BUSINESS TERMS The following summarizes the salient aspects of the proposed LOI. The LOI will set forth the basic economic terms and conditions upon which the District, City, and RIDA will enter into a Definitive Agreement for the ground lease, use, occupancy, development, operation, and financing of the RHCC and public improvements located on the CVB. The following provides a summary of the key responsibilities of RIDA, the District, and City: 17060ndh ΑΏΐΖȃΏΕȃΑΏ !¦¤£ Packet0 ¦¤ 47 19045.006.001 Attachment D to Agenda File No. 2017-0338 To: Adam Meyer, Department Manager, Real Estate, Port of San Diego June 16, 2017 Subject: Proposed Letter of Intent (LOI) with RIDA Chula Vista, LLC Page 5 Chula Vista Bayfront Phase 1 Development A.Developer Responsibilities RIDA will enter into a ground lease agreement with the District and City for the Site for a period of 66 years. RIDA will construct a 1,450-room resort hotel branded as a Gaylord Hotels and 275,000 net useable SF of convention and meeting space. RIDA’S contribution toward the development is currently estimated at $688 million. RIDA will be responsible for all operating and maintenance costs incurred with respect to the RHCC and associated retail and related development on the Site. Operating costs will include industry standard operator and franchise fees; replacement reserves; insurance; property taxes; ground rent actually paid by RIDA; and fees to include (i) asset management fees (not to exceed 1% of gross revenues), (ii) gross tax receipts; and (iii) incentive management fees (limited to 20% of the portion of NOI that exceeds $75.68 million). B.District and City Responsibilities The Public Entities will contribute $56.3 million toward infrastructure costs including streets, parks, building pads, and utilities. The Public Entities will be responsible for all operating and maintenance costs incurred with respect to off-site infrastructure. The Public Entities will contribute $225 million toward development of the convention center improvements, anticipated to be funded through a bond issue. The District will provide an annual contribution toward bond debt service to support its portion of the Convention Center Contribution. As presented in Table III-1, the District contribution will not exceed the following schedule of amounts during Lease Years 4 through 37. 17060ndh ΑΏΐΖȃΏΕȃΑΏ !¦¤£ Packet0 ¦¤ 48 19045.006.001 Attachment D to Agenda File No. 2017-0338 To: Adam Meyer, Department Manager, Real Estate, Port of San Diego June 16, 2017 Subject: Proposed Letter of Intent (LOI) with RIDA Chula Vista, LLC Page 6 Chula Vista Bayfront Phase 1 Development Table III-1: District Annual Contribution to Debt Service Annual Bond Debt Lease Year Service Contribution Years 1-3 $0 Years 4-13 $5.0 M Years 14-18 $6.0 M Years 19-23 $3.0 M Years 24-37 $3.5 M The District will provide 1,500 parking spaces on Parcel H-3. The District will be responsible for all parking operating and maintenance costs. The City will provide for the construction of the required sewer and fire services to enable development of the RHCC. The Definitive Agreement will have a term of up to four (4) years with up to three (3) one year extensions. The District will provide, on a temporary basis, up to 15 acres of land on Parcel H-23 to house construction trailers, construction materials, equipment staging, and parking during construction of the RHCC. When the Definitive Agreement is executed, the District will exclusively negotiate with RIDA for one (1) year a definitive agreement to lease of up to 10 acres of Parcel H-23 (closest to Parcel H-3) for the development of up to 550 hotel rooms. C.Proposed Ground Lease The District and RIDA will enter into a 66-year ground lease agreement. RIDA will pay ground lease payments to the District during Lease Years 1-37 as shown in Table III-2: 17060ndh ΑΏΐΖȃΏΕȃΑΏ !¦¤£ Packet0 ¦¤ 49 19045.006.001 Attachment D to Agenda File No. 2017-0338 To: Adam Meyer, Department Manager, Real Estate, Port of San Diego June 16, 2017 Subject: Proposed Letter of Intent (LOI) with RIDA Chula Vista, LLC Page 7 Chula Vista Bayfront Phase 1 Development Table III-2: RIDA Annual Ground Lease Payments – Years 1-37 Lease Year Annual Ground Lease Payment Years 1-18 $0 Years 19-23$3.0 M Years 24-37$3.5 M Beginning in Year 38, the proposed rent structure for the project will be in line with the District’s standard Port percentage rent categories, as shown in Table III-3 below: Table III-3: RIDA Annual Ground Lease Payments – Years 38-66 Years 38-66 Room Banquet Food Beverage Percentage Rent Revenue Revenue Revenue Revenue Rates Years 38-478% 6%4% 6% Years 48-669% 7%5% 7% Percentage rent rates for the remaining categories of revenue will be determined during the negotiation of the Definitive Agreements. Annual Net Operating Income (NOI) in excess of 11.0% of the RIDA Contribution ($75.68 million) will be split between RIDA and the Public Entities as follows: Table III-4: Allocation of NOI after RIDA Target Return of 11.0% Lease Year Years 1-37 80% to RIDA / 20% to Public Entities Years 38-66 100% to RIDA RIDA will pay the District 10% of all parking revenue from the RHCC throughout the term of the ground lease. In the event of a sale of the RHCC resulting in a cumulative change of ownership of 51% or greater, the District’s share of parking revenue will increase to 15%. IV.FINANCING GAP A.Financing Gap Analysis KMA prepared a financing gap analysis for the proposed RHCC to determine the economic return to RIDA subject to the business terms in the proposed LOI. Specifically, KMA estimated the project’s 17060ndh ΑΏΐΖȃΏΕȃΑΏ !¦¤£ Packet0 ¦¤ 50 19045.006.001 Attachment D to Agenda File No. 2017-0338 To: Adam Meyer, Department Manager, Real Estate, Port of San Diego June 16, 2017 Subject: Proposed Letter of Intent (LOI) with RIDA Chula Vista, LLC Page 8 Chula Vista Bayfront Phase 1 Development financing gap and RIDA’s return. The KMA analysis also considered the revenue analysis report prepared by CBRE Hotel (formerly PKF) and the development cost review prepared by Jones Lang LaSalle (JLL). KMA has analyzed RIDA’s return both in terms of stabilized Return on Investment (ROI) and Leveraged Internal Rate of Return (IRR). This section discusses RIDA’s return in terms of ROI outcomes. Section IV-C presents a detailed evaluation of RIDA’s Leveraged IRR based on a 66-year cash flow projection. Total project costs, including both public infrastructure and private development, are estimated to be $969.3 million. Of this total, RIDA will be responsible for a minimum investment, including private debt and equity, of $688.0 million. The Public Entities will be responsible for a contribution of up to $225.0 million toward the convention center portion of the RHCC and an estimated $56.3 million for public infrastructure. Costs for the 1,500 parking spaces provided by the District are to be determined. These cost estimates, and respective responsibilities, are summarized in Table IV-1 below. Table IV-1: Sources and Uses of Funds RIDA Public Entities Total A. Hotel/Convention Center $688.0 M $225.0 M $913.0 M B.Infrastructure ---- $56.3 M $56.3M C. Parking ---- TBD TBD D. Total $688.0 M $281.3 M $969.3M Table IV-2 presents illustrative figures for the stabilized year (Lease Year 7, or operating year 4). As shown, the project is projected to generate $267.0 million in Effective Gross Income (EGI) in Lease Year 7. This EGI estimate includes both room revenues and other income including food and beverage revenues, banquet sales, gift shop and spa revenues, and parking. Table IV-2: Effective Gross Income (Lease Year 7) A. Number of Hotel Rooms 1,450 Rooms B.Average Daily Rate (ADR) $275 C. Occupancy77% D. Total Room Revenue $112.0 M E. Total Other Income $155.0M F. Total Effective Gross Income$267.0 M 17060ndh ΑΏΐΖȃΏΕȃΑΏ !¦¤£ Packet0 ¦¤ 51 19045.006.001 Attachment D to Agenda File No. 2017-0338 To: Adam Meyer, Department Manager, Real Estate, Port of San Diego June 16, 2017 Subject: Proposed Letter of Intent (LOI) with RIDA Chula Vista, LLC Page 9 Chula Vista Bayfront Phase 1 Development As presented in Table IV-3, the project’s Effective Gross Income, less operating expenses and other fees, is projected to generate Net Operating Income (NOI) of $69.0 million during Lease Year 7. Other fees include asset management fees, incentive management fees, and State of California gross receipts tax. Table IV-3: Net Operating Income (Lease Year 7) A. Total Effective Gross Income $267.0 M B. (Less) Operating Expenses ($195.0) M C. Net Operating Income (NOI) $72.0 M D. (Less) Fees (1) ($3.0) M E. Net Operating Income after Fees $69.0 M (1)Includes asset management fees, incentive management fees, and gross receipts tax. RIDA’s ROI is estimated as stabilized year NOI ($69.0 million) divided by RIDA’s total capital investment. Absent the proposed Convention Center Contribution from the Public Entities, RIDA would be responsible for the total development costs of the RHCC, i.e., a total capital investment of $913.0 million. As shown in Table IV-4, this No Public Investment scenario is estimated to generate a ROI to RIDA of 7.6%. Table IV-4: Developer Return on Investment – No Public Investment in RHCC A. Total Development Costs – RHCC $913.0 M B.Net Operating Income after Fees $69.0 M C. Developer Return on Investment (ROI) 7.6% The proposed LOI identifies the Public Entities contribution toward the convention center portion of the RHCC in the amount of $225.0 million. As shown in Table IV-5, the proposed Convention Center Contribution results in a reduced capital investment from RIDA of $688.0 million. At this level of capital investment, RIDA is projected to achieve a stabilized year ROI of 10.0%. 17060ndh ΑΏΐΖȃΏΕȃΑΏ !¦¤£ Packet0 ¦¤ 52 19045.006.001 Attachment D to Agenda File No. 2017-0338 To: Adam Meyer, Department Manager, Real Estate, Port of San Diego June 16, 2017 Subject: Proposed Letter of Intent (LOI) with RIDA Chula Vista, LLC Page 10 Chula Vista Bayfront Phase 1 Development Table IV-5: Developer Return on Investment – With Public Investment in RHCC A. Total Development Costs – RHCC $913.0 M (Less) Convention Center Contribution ($225.0) M RIDA Total Capital Investment $688.0 M B. Net Operating Income after Fees $69.0 M Developer Return on Investment (ROI) 10.0% C. Industry standard ROI targets for developers of large-scale, new resort hotel/convention centers are estimated to range between 10.0% and 11.0% (unleveraged Return on Investment in stabilized year of operations). Given the level of risk associated with undertaking such a major new investment on the relatively undeveloped Chula Vista Bayfront in a single phase, KMA finds that the upper end of this range is warranted for the proposed RHCC. The proposed Public Entities financial contributions to the RHCC project are intended to support a ROI to RIDA of 11% in the stabilized year or soon thereafter. The KMA financial analysis projects that RIDA will achieve a ROI in the “With Public Investment” scenario of just 10.0% in Lease Year 7, lower than the target return threshold. Even with the proposed public investment, RIDA is not projected to achieve a 11.0% ROI until Lease Year 12. To that end, the RIDA projected return after the Public investment and rent structure is not excessive. This finding indicates that the Public Entities contribution is warranted and needed in order for the RHCC to move forward and to be developed. Ultimately RIDA will need to control development costs and/or improve operating performance in order to achieve a satisfactory long- term return. B.Proposed Method of Financing Required Public Investment – Infrastructure and Convention Center Contribution As indicated above, the Public Entities will contribute $56.3 million toward infrastructure and $225.0 million toward the Convention Center. The Public Entities anticipate using one or more bond financings to fund these contributions concurrently or immediately prior to the close of escrow of the ground lease for the Site. Bond debt service will be paid through a combination of existing and projected revenue streams from the Bayfront. The District will contribute: (1) existing lease revenues from the Chula Vista Bayfront, including the Chula Vista RV Park ground rent and (2) ground rent from the RHCC and new RV Park. Additionally, the District will make one-time contributions toward the infrastructure costs using the previously received SDG&E Relocation Fee of $1.7 million and the Pacifica Land Exchange Payment of $3.0 17060ndh ΑΏΐΖȃΏΕȃΑΏ !¦¤£ Packet0 ¦¤ 53 19045.006.001 Attachment D to Agenda File No. 2017-0338 To: Adam Meyer, Department Manager, Real Estate, Port of San Diego June 16, 2017 Subject: Proposed Letter of Intent (LOI) with RIDA Chula Vista, LLC Page 11 Chula Vista Bayfront Phase 1 Development million. The District will also be responsible for an annual contribution toward bond debt service to support the Convention Center Contribution not to exceed the schedule of amounts during Lease Years 4 through 37 as presented in Section III, Table III-1. The City will contribute: (1) existing Transient Occupancy Tax (TOT) revenues from the Chula Vista RV Park; (2) existing Municipal Services Agreement (MSA) reimbursements that it receives from the District; and (3) RHCC-generated revenues, to include: (a) TOT; (b) Additional Occupancy Based Revenues generated from a proposed TOT Augment; (c) property tax increment; and (d) sales tax revenues. In effect, most of the Public Entities financial contributions will be funded through project-generated revenues. Furthermore, in addition to the contributions shown above, the District is providing the land with a “soft” ground rent structure that allows RIDA to begin making rent payments, at a reduced level, in Lease Year 19. This ground rent structure is an essential part of the financial package, combined with the District and City contributions, that are necessary to make the RHCC project feasible. Table IV-6 on the following page, summarizes the District and City annual revenue contributions toward the proposed bonds to finance the Convention Center Contribution and infrastructure. As an illustrative example, the figures shown in the table reflect Lease Year 7, i.e., the projected stabilized year of RHCC operations. 17060ndh ΑΏΐΖȃΏΕȃΑΏ !¦¤£ Packet0 ¦¤ 54 19045.006.001 Attachment D to Agenda File No. 2017-0338 To: Adam Meyer, Department Manager, Real Estate, Port of San Diego June 16, 2017 Subject: Proposed Letter of Intent (LOI) with RIDA Chula Vista, LLC Page 12 Chula Vista Bayfront Phase 1 Development Table IV-6: District and City Annual Contribution at Stabilization (Lease Year 7) San Diego Unified Port District City of Chula Vista A. Existing Revenues A. Existing Revenues Existing Lease Revenues (1) $2.7 M RV Park TOT $0.8 M MSA Reimbursements$1.2 M Subtotal Existing Revenues $2.0 M B. Project-Generated Revenues B. Project-Generated Revenues Project Lease Revenues$0.0 M Project TOT Revenues $10.7 M Additional Occupancy Based Revenues $5.4 M Project Tax Increment (2) $3.7 M Project Sales Tax Revenues $1.1 M Subtotal Project Generated Revenues$20.9 M C. Annual Contribution C. Annual Contribution Annual Contribution $5.0 M Annual Contribution $0.0 M D. Total District Annual Contributions $7.7 M D. Total City Annual Contributions $22.9 M (1)Includes projected increase from development of new RV park. (2)Includes both City’s and County’s share of Project-generated tax increment and incremental property tax in lieu of Vehicle License Fee (VLF). The City engaged JP Morgan Securities, LLC (JP Morgan) to provide investment banking and bond underwriting services. JP Morgan prepared estimates of achievable bond financing based on the revenue streams to be pledged by the Public Entities. The JP Morgan projections were based on currently available bond underwriting terms, the relative creditworthiness of the pledged revenue streams, and JP Morgan’s professional judgement regarding debt service coverage, interest rate, and costs of issuance and capitalized interest during construction. The JP Morgan bond runs assume a 37-year term, inclusive of the construction period, and effective interest rates of 5.48% for taxable bonds and 4.41% for tax-exempt bonds. Notably, the KMA financial analysis uses the 1.75 debt service coverage ratio recommended by JP Morgan. JP Morgan assumed ascending debt service schedules, i.e., annual debt service rises over the term, subject to the 1.75 debt service coverage limit. In effect, the bond sizing is based on $1.00 of debt service for every $1.75 of projected revenue. While this is a conservatively high debt service coverage assumption, i.e., it reduces the achievable bond financing amounts, it also results in significant projected surplus cash flow after debt service. KMA estimates total bond debt service paid by the Public Entities during the 37- year bond term to total $861.4 million (nominal dollars). 17060ndh ΑΏΐΖȃΏΕȃΑΏ !¦¤£ Packet0 ¦¤ 55 19045.006.001 Attachment D to Agenda File No. 2017-0338 To: Adam Meyer, Department Manager, Real Estate, Port of San Diego June 16, 2017 Subject: Proposed Letter of Intent (LOI) with RIDA Chula Vista, LLC Page 13 Chula Vista Bayfront Phase 1 Development Table IV-7 summarizes the currently anticipated underwriting terms for the Public Entities bond financing for the Convention Center Contribution and infrastructure. It is important to note that these preliminary bond underwriting terms are based on current market and financial data. These terms are considered reasonable for planning purposes, but actual results may vary depending on bond conditions, underwriting factors and future decisions regarding timing and structure for the issuance of debt by the Public Entities. Using the currently anticipated underwriting terms, the pledged revenues are projected to be sufficient to support the net bond proceeds required to fund the Public Entities obligations under the LOI. Of course, the bonds will be issued at a future date to be determined, at which time economic conditions may vary from the figures used in this preliminary feasibility analysis. RIDA and the Public Entities will need to continually monitor real estate market factors and bond financing parameters to determine if any changes to these projections are warranted. Table IV-7: Preliminary Underwriting Terms for Proposed Bond Financing A. Revenues Pledged, Lease Year 7 Estimates District$7.7 M City $22.9 M Total Revenues $30.6 M B. Debt Service Coverage (DSC) Factor 1.75 DSC 5.48% taxable C. Interest Rate 4.41% tax-exempt 37 years D. Bond Term Including construction period $861.4 M E. Total Debt Service Years 1-37 (nominal dollars) $225 M Convention Center Contribution F. Approximate Net Bond Proceeds $56 M infrastructure Required Public Investment - Parking The District will also be responsible for financing, constructing, owning, and operating at least 1,500 parking spaces to serve the RHCC project. District staff is evaluating the potential to construct 1,500 parking spaces on Parcel H-3. The District will assume all operating and maintenance expenses for the spaces for the duration of the RIDA ground lease. Parking gross revenues from the RHCC will be allocated 90% to RIDA and 10% to the District. The District’s share will increase to 15% of gross revenue if RIDA sells, on a cumulative basis, 51% or more of the RHCC project. 17060ndh ΑΏΐΖȃΏΕȃΑΏ !¦¤£ Packet0 ¦¤ 56 19045.006.001 Attachment D to Agenda File No. 2017-0338 To: Adam Meyer, Department Manager, Real Estate, Port of San Diego June 16, 2017 Subject: Proposed Letter of Intent (LOI) with RIDA Chula Vista, LLC Page 14 Chula Vista Bayfront Phase 1 Development Required Private Investment As noted above, RIDA will be responsible for a minimum private investment in the RHCC project of $688 million. This investment is expected to take the form of a combination of debt (third party loans) and equity. The KMA analysis assumes a maximum Loan-to-Value (LTV) of 65%, resulting in a maximum loan of $447.0 million. The balance of the investment, a minimum of $241.0 million, will comprise equity investment by RIDA. Table IV-8 summarizes the private investment in the RHCC project. Table IV-8: Required Private Investment Factor Amount (Loan to Value) A. Maximum Debt 65% LTV $447.0 M B. Minimum Equity 35% LTV $241.0 M C.Total Private Investment $688.0 M Under the terms of the LOI, RIDA will pay a fixed ground rent schedule for the project during the bond financing term, estimated to coincide with Lease Years 1-37. The fixed ground rent schedule for this period is itemized in Section III, Table III-2. The District will contribute these ground lease revenues toward the bond debt service. District/City Participation in NOI In addition to ground rent paid to the District, RIDA will pay the Public Entities an annual participation payment based on surplus Net Operating Income (NOI) from the RHCC project. Specifically, the Public Entities will receive 20% of surplus NOI above an 11% ROI threshold for RIDA during Lease Years 4-37. KMA has prepared a preliminary projection of this potential future revenue stream, which is summarized in Table IV-9. Table IV-9: Projected Annual NOI Participation Payments to Public Entities Estimated Annual NOI Lease Year Participation Payment to Public Entities Years 1-3 - Construction N/A Years 4-11 $0 Year 12 $0.025 M 17060ndh ΑΏΐΖȃΏΕȃΑΏ !¦¤£ Packet0 ¦¤ 57 19045.006.001 Attachment D to Agenda File No. 2017-0338 To: Adam Meyer, Department Manager, Real Estate, Port of San Diego June 16, 2017 Subject: Proposed Letter of Intent (LOI) with RIDA Chula Vista, LLC Page 15 Chula Vista Bayfront Phase 1 Development Table IV-9: Projected Annual NOI Participation Payments to Public Entities Estimated Annual NOI Lease Year Participation Payment to Public Entities Year 20 $2.7 M Year 30 $7.8 M Year 37 $12.6 M C.Leveraged IRR to RIDA with Public Investment KMA prepared projections of NOI and cash flow for the RHCC project for the duration of the proposed 66-year ground lease. The KMA projections are summarized in Table IV-10 on the following page. As shown, the KMA projections estimate that RIDA will achieve a Leveraged IRR of approximately 13.5%. A Leveraged IRR is used as a metric to determine the annualized effective compounded return rate to RIDA, after taking into consideration all of RIDA’s financial obligations including debt service. KMA finds that the appropriate industry standard target for Leveraged IRR for a resort hotel convention center of this type is in the range of 16% to 17%. In other words, under current projections, inclusive of the Public Entities financial contribution, RIDA does not achieve an industry standard return on a long-term basis. This finding indicates that the Public Entities contributions and rent structure are warranted, that the RIDA return is not excessive, and ultimately that RIDA will need to control development costs and/or improve operating performance in order to achieve a satisfactory long-term return. At the same time, the proposed participation in NOI provides for the Public Entities to participate in the success of the RHCC project as well. 17060ndh ΑΏΐΖȃΏΕȃΑΏ !¦¤£ Packet0 ¦¤ 58 19045.006.001 Attachment D to Agenda File No. 2017-0338 To: Adam Meyer, Department Manager, Real Estate, Port of San Diego June 16, 2017 Subject: Proposed Letter of Intent (LOI) with RIDA Chula Vista, LLC Page 16 Chula Vista Bayfront Phase 1 Development Table IV-10: RIDA Leveraged Internal Rate of Return –Lease Years 1-66 ($ Millions) Net Ground(Less) Lease Developer NOI Before (Less) Annual Operating Lease Public Entities Year Equity Debt Service Debt Service Cash Flow Income Payment Participation 1 ($189.0) $0 $0 $0 $0 $0($189.0) 2 ($51.8) $0 $0 $0 $0 $0 ($51.8) 3 $0 $0 $0 $0 $0 $0$0 4 $0 $42.0 $0 $0 $42.0 ($35.7) $6.3 5 $0 $54.9 $0 $0 $54.9 ($35.7)$19.2 6 $0 $65.2 $0 $0 $65.2 ($35.7) $29.5 7 $0 $71.7 $0 $0 $71.7 ($35.7)$36.0 8 $0 $76.3 $0 $0 $76.3 ($35.7) $40.6 9 $0 $74.8 $0 $0 $74.8 ($35.7)$39.1 10 $0 $76.5 $0 $0 $76.5 ($35.7) $40.8 11 $0 $78.2 $0 $0 $78.2 ($35.7)$42.5 12 $0 $79.8 $0 $0 $79.8 ($35.7) $44.1 13 $0 $81.5 $0 ($0.3) $81.2 ($35.7)$45.5 14 $0 $83.9 $0 ($0.7) $83.3 ($35.7) $47.6 15 $0 $86.4 $0 ($1.0) $85.4 ($35.7)$49.7 16 $0 $89.0 $0 ($1.4) $87.6 ($35.7) $51.9 17 $0 $91.7 $0 ($1.8) $89.9 ($35.7)$54.2 18 $0 $94.5 $0 ($2.3) $92.2 ($35.7) $56.5 19 $0 $97.3 ($3) ($2.2) $92.1 ($35.7)$56.4 20 $0 $100.2 ($3) ($2.7) $94.6 ($35.7) $58.9 21 $0 $103.2 ($3) ($3.1) $97.1 ($35.7)$61.4 22 $0 $106.3 ($3) ($3.6) $99.7 ($35.7) $64.0 23 $0 $109.5 ($3) ($4.1) $102.5 ($35.7)$66.7 24 $0 $112.8 ($3.5) ($4.5) $104.8 ($35.7) $69.1 25 $0 $116.2 ($3.5) ($5.0) $107.7 ($35.7)$72.0 26 $0 $119.7 ($3.5) ($5.5) $110.6 ($35.7) $74.9 27 $0 $123.3 ($3.5) ($6.1) $113.7 ($35.7)$78.0 28 $0 $127.0 ($3.5) ($6.7) $116.8 ($35.7) $81.1 29 $0 $130.8 ($3.5) ($7.2) $120.1 ($35.7)$84.3 30 $0 $134.7 ($3.5) ($7.8) $123.4 ($35.7) $87.7 31 $0 $138.8 ($3.5) ($8.4) $126.8 ($35.7)$91.1 32 $0 $142.9 ($3.5) ($9.1) $130.4 ($35.7) $94.7 17060ndh ΑΏΐΖȃΏΕȃΑΏ !¦¤£ Packet0 ¦¤ 59 19045.006.001 Attachment D to Agenda File No. 2017-0338 To: Adam Meyer, Department Manager, Real Estate, Port of San Diego June 16, 2017 Subject: Proposed Letter of Intent (LOI) with RIDA Chula Vista, LLC Page 17 Chula Vista Bayfront Phase 1 Development Table IV-10: RIDA Leveraged Internal Rate of Return –Lease Years 1-66 ($ Millions) Net Ground(Less) Lease Developer NOI Before (Less) Annual Operating Lease Public Entities Year Equity Debt Service Debt Service Cash Flow Income Payment Participation 33 $0 $147.2 ($3.5) ($9.7) $134.0 ($35.7)$98.3 34 $0 $151.6 ($3.5) ($10.4) $137.7 $0 $137.7 35 $0 $156.2 ($3.5) ($11.1) $141.6 $0$141.6 36 $0 $160.9 ($3.5) ($11.8) $145.6 $0 $145.6 37 $0 $165.7 ($3.5) ($12.6) $149.7 $0$149.7 38-47 (1) $0 $1,957.3 ($523.9) $0 $1,433.4 $0$1,433.4 48-57 (1) $0 $2.631.7 ($803.3) $0 $1,828.3 $0$1,828.3 58-66 (1) $0 $3,135.8 ($968.4) $0 $2,167.4 $0$2,167.4 Developer Leveraged Internal Rate of Return (IRR) 13.48% (1) Reflects 10-year total for each time period. D.Proposed Cash Flow Distribution (“Waterfall”) As noted above, the currently contemplated bond financing structure will result in significant surplus cash flow after debt service. Additionally, RIDA will make NOI participation payments to the Public Entities. District and City staff have discussed in detail various approaches to distribute these surplus funds. The current concept is to allocate these funds through a “waterfall”, with the priority sequence shown in Table IV-11 below. As an example, the chart presents the projected th year of operations). figures for Lease Years 7 (stabilized operations) and 13 (10 Table IV-11: Proposed Distribution of Surplus Cash Flow Lease Year 7 Lease Year 13 thth (4 year of operations) (10 year of operations) Surplus Cash Flow after Bond Debt $13.1 M $15.2 M Service Priority #1 – Repayment to District of ($5.0 M) ($5.0 M) its Annual Contribution Priority #2 – Set-aside for Additional ($0.0 M) ($0.0 M) Bond Debt Service Reserve (anticipated to be fully funded prior to Lease Year 7) 17060ndh ΑΏΐΖȃΏΕȃΑΏ !¦¤£ Packet0 ¦¤ 60 19045.006.001 Attachment D to Agenda File No. 2017-0338 To: Adam Meyer, Department Manager, Real Estate, Port of San Diego June 16, 2017 Subject: Proposed Letter of Intent (LOI) with RIDA Chula Vista, LLC Page 18 Chula Vista Bayfront Phase 1 Development Table IV-11: Proposed Distribution of Surplus Cash Flow Lease Year 7 Lease Year 13 thth (4 year of operations) (10 year of operations) Priority #3 – Reimbursement to District and City of their Bayfront ($3.2 M) ($3.8 M) Infrastructure Operating and Maintenance Expenditures Remaining Cash Flow Available for $4.9 M $6.4 M Distribution As illustrated above, once the RHCC project has stabilized, the District anticipates that it will receive a reimbursement of its annual contribution toward debt service. Moreover, the cash flow projections indicate that both the District and City will be able to reimburse themselves for their respective Bayfront infrastructure operating and maintenance expenditures. Even after the priority distributions, KMA forecasts a remaining positive cash flow. District and City staff will need to negotiate how these remaining surplus funds are distributed. V.ECONOMIC BENEFITS TO CITY AND REGION This section provides an evaluation of the economic benefits from the build-out of the CVB to the County of San Diego and the City of Chula Vista during construction and on an annual on-going basis. KMA prepared a detailed economic impact analysis (EIA) to estimate the total economic output, payroll, and employment generated by development of the RHCC project and the balance of the CVB, during construction and on a permanent basis. The EIA estimates the portion of economic output that is paid out in wages, the average wage by type of employment, and the resulting total construction employment and permanent employment (expressed in person-years). In undertaking this analysis, KMA estimated development costs, valuation, and phasing for each Phase and Sub-Area of the CVB. The KMA EIA relied extensively on IMPLAN (IMpact analysis for PLANning) data multipliers for the County of San Diego and the City of Chula Vista to determine indirect and induced impacts. The IMPLAN model is a commercially available model developed in 1979 and refined over time to quantify the impacts of changes in a local economy. RHCC Project (Phase 1) Construction Economic Impact - As noted in Section III, Phase 1 of the CVB will consist of development of the RHCC project and 1,500 parking spaces. The construction of the RHCC and associated indirect spending, are projected to generate a construction economic output of $1.2 billion to the County and $65.8 million to the City. 17060ndh ΑΏΐΖȃΏΕȃΑΏ !¦¤£ Packet0 ¦¤ 61 19045.006.001 Attachment D to Agenda File No. 2017-0338 To: Adam Meyer, Department Manager, Real Estate, Port of San Diego June 16, 2017 Subject: Proposed Letter of Intent (LOI) with RIDA Chula Vista, LLC Page 19 Chula Vista Bayfront Phase 1 Development KMA estimates that the payroll portion of this total construction economic output comprises approximately $428.8 million for the County and $23.5 million for the City. Based on average wages for construction and professional services, KMA translates this total payroll expense to generate 3,140 full-time equivalent workers per year during a 30-month construction period in the County and 170 construction workers in the City. Ongoing Economic Annual Impact - Phase 1 is projected to generate an annual economic impact (inclusive of indirect and induced impact) of $391.2 million to the County and $268.6 million to the City. Of this total economic output, payroll income reflects $137.0 million of the County’s economic output and $93.4 million of the City’s economic output; and annual employment of 3,690 employees in the County and 2,700 employees in the City. Balance of CVB (Phases 2-3 and Subareas A-E) Construction Economic Impact - The buildout of the reminder of the CVB (Phases 2, 3, and Sub- Areas A-E) is projected to generate an economic output, including associated indirect and induced impact, of $1.6 billion in the County and $382.8 million to the City during construction. KMA estimates that the payroll portion of this total construction economic output comprises approximately $556.8 million for the County and $133.9 million for the City. Based on average wages for construction and professional services, KMA estimates that the development of Phases 2 and 3 and Subareas A-E will result in the employment of an average of 6,610 full-time equivalent workers in the County and 1,590 full-time equivalent workers in the City per year during the construction period. Ongoing Economic Annual Impact - The remaining buildout of the CVB is projected to generate an annual economic impact (inclusive of indirect and induced impacts) of $1.7 billion to the County and $1.3 billion to the City; payroll income of $855.4 million to the County and $659.6 million to the City; and annual employment of 16,530 employees in the County and 12,460 employees in the City. Tables V-1 and V-2 on the following page present a summary of the construction and ongoing economic benefits to the County and City. 17060ndh ΑΏΐΖȃΏΕȃΑΏ !¦¤£ Packet0 ¦¤ 62 19045.006.001 Attachment D to Agenda File No. 2017-0338 To: Adam Meyer, Department Manager, Real Estate, Port of San Diego June 16, 2017 Subject: Proposed Letter of Intent (LOI) with RIDA Chula Vista, LLC Page 20 Chula Vista Bayfront Phase 1 Development Table V-1: Economic Benefits to County of San Diego (1) Phases 2 and 3 Phase 1Total and Sub-Areas A-E I.Construction Economic Impact (2) A.Economic Output $1.2 B $1.6 B $2.8 B B. Personal Income $428.8 M $556.8 M $985.6 M C.Employment (3) 3,140 Employees 6,610 Employees 9,750 Employees II.Ongoing Economic Annual Impact (2)(4) A.Economic Output $391.2 M $1.7 B $2.1 B B. Personal Income $137.0 M $855.4 M $992.4 M C.Employment3,690 Employees 16,530 Employees 20,220 Employees (1)All figures reflect 2017 dollars without escalation. (2)Reflects direct, indirect, and induced impact. (3)Reflects an average annual employment over a 30-month construction period for Phase 1; 18-month construction period for Phase 3 and Sub-Areas A, B, D, and E; and a 24-month construction period for Phase 2 and Sub-Area C. (4)Reflects recurring ongoing economic impact from annual operations. Table V-2: Economic Benefits to City of Chula Vista (1)(2) Phases 2 and 3 Phase 1 Total and Sub-Areas A-E I.Construction Economic Impact (3) A.Economic Output $65.8 M $382.8 M $448.6 M B. Personal Income $23.5 M $133.9 M $157.4 M C.Employment (4) 170 Employees 1,590 Employees 1,760 Employees Ongoing Economic Annual Impact (3)(5) II. A.Economic Output $268.6 M $1.3 B $1.6 M B. Personal Income $93.4 M $659.6 M $753.0 M C.Employment 2,700 Employees 12,460 Employees 15,160 Employees (1)City figures are included within County figures. (2)All figures reflect 2017 dollars without escalation. (3)Reflects direct, indirect, and induced impact. (4)Reflects an average annual employment over a 30-month construction period for Phase 1; 18-month construction period for Phase 3 and Sub-Areas A, B, D, and E; and a 24-month construction period for Phase 2 and Sub-Area C. (5)Reflects recurring ongoing economic impact from annual operations. VI.LIMITING CONDITIONS 1.The KMA analysis is based, in part, on data provided by secondary sources such as state and local governments, planning agencies, real estate brokers, and other third parties. While KMA believes that these sources are reliable, we cannot guarantee their accuracy. 17060ndh ΑΏΐΖȃΏΕȃΑΏ !¦¤£ Packet0 ¦¤ 63 19045.006.001 Attachment D to Agenda File No. 2017-0338 To: Adam Meyer, Department Manager, Real Estate, Port of San Diego June 16, 2017 Subject: Proposed Letter of Intent (LOI) with RIDA Chula Vista, LLC Page 21 Chula Vista Bayfront Phase 1 Development 2.The accompanying projections and analyses are based on estimates and assumptions which were developed using currently available economic data, project-specific data and other relevant information. It is the nature of forecasting, however, that some assumptions may not materialize and unanticipated events and circumstances may occur. Such changes are likely to be material to the projections and conclusions herein and, if they occur, require review or revision of this document. 3.Any estimates of revenue or cost projections are based on the best project-specific and fiscal data available at this time as well as experience with comparable projects. They are not intended to be projections of actual future performance of any specific project. Any changes to costs, development program, or project performance may render the conclusions contained herein invalid. 4.KMA assumes that all applicable laws and governmental regulations in place as of the date of this document will remain unchanged throughout the projection period of our analysis. In the event that this does not hold true, i.e., if any tax rates change, the analysis would need to be revised. 5.The KMA analysis assumes that any necessary entitlements for the proposed development can be obtained in a reasonable time frame. 6.The KMA analysis assumes that property titles are good and marketable; no title search has been made, nor has KMA attempted to determine property ownership. 7.A projection of economic impacts is inherently based on judgment. The projections contained herein are based on the best information available at the time that this document was prepared. However, the actual impacts may vary. 8.Property tax projections reflect KMA's understanding of the assessment and tax apportionment procedures employed by the County. The County procedures are subject to change as a reflection of policy revisions or legislative mandate. While we believe our estimates to be reasonable, taxable values resulting from actual appraisals may vary from the amounts assumed in the projections. 9.No assurances are provided by KMA as to the certainty of the projected tax revenues shown in this document. Actual revenues may be higher or lower than what has been projected and are subject to valuation changes. 17060ndh ΑΏΐΖȃΏΕȃΑΏ !¦¤£ Packet0 ¦¤ 64 19045.006.001 Page 1 of 2 E AttachmentEtoAgendaNo.20170338 GlossaryofTerms: CVBMPΑChulaVistaBayfrontMasterPlan DistrictSanDiegoUnifiedPortDistrict CityΑCityofChulaVista PacificaΑPacificaCompanies,LLC EIRΑEnvironmentalImpactReport BoardΑBoardofPortCommissioners CCCΑCaliforniaCoastalCommission CVBΑChulaVistaBayfront PublicEntitiesΑDistrictandCity LOIΑLetterofIntent RFQΑRequestforQualifications SiteΑ36acresontheH3parcelwithintheCVB RIDAΑRIDAChulaVista,LLC ENAΑExclusiveNegotiatingAgreement RHCCΑResortHotelandConventionCenter KMAΑKeyserMarstonAssociates SBPPΑSouthBayPowerPlant RohrΑRohr,Inc,aUnitedTechnologiesAerospaceCompany MOUΑMemorandumofUnderstanding DynegySouthBayΑDynegySouthBay,LLC CACΑCitizensAdvisoryCommittee GaylordΑGaylordHotelsbrand SLCΑStateLandsCommission CoalitionΑChulaVistaBayfrontCoalition WAGΑWildlifeAdvisoryGroup ΑΏΐΖȃΏΕȃΑΏ !¦¤£ Packet0 ¦¤ 65 Page 2 of 2 E AttachmentEtoAgendaNo.20170338 NRMPΑNaturalResourcesManagementPlan BCDCΑBayfrontCulturalDesignCommittee ARESΑAresManagement,LP CBREHotelsΑColdwellBankerRichardEllisHotelsGroup(FormerlyPKF) JLLΑJonesLangLaSalle RVParkΑRecreationalVehiclePark CVBFFAΑChulaVistaBayfrontFacilitiesFinancingAuthority TOTΑTransientOccupancyTax MSAΑMunicipalServicesAgreement JPMorganΑJPMorganSecurities,LLC NOIΑNetOperatingIncome ROIΑReturnonInvestment O&MΑOperationsandMaintenance ΑΏΐΖȃΏΕȃΑΏ !¦¤£ Packet0 ¦¤ 66 67 0 ¦¤ Timeline Historic Bayfront Attachment F to Agenda No. 2017-0338 Vista Chula Packet !¦¤£ ΑΏΐΖȃΏΕȃΑΏ 68 0 ¦¤ Packet !¦¤£ ΑΏΐΖȃΏΕȃΑΏ Attachment H to Agenda No. 2017-0338 COMMERCIAL REAL ESTATE SERVICES CBRE, Inc. Bruce Baltin th 400 South Hope Street, 25 Floor Managing Director Los Angeles, CA 90071 CBRE Hotels, Consulting +1 213 613 3370 Office Bruce.Baltin@cbre.com www.cbrehotels.com Sent via email to: ameyer@portofsandiego.com No hard copy to follow October 4, 2016 Mr. Adam Meyer Real Estate Development Port of San Diego 3165 Pacific Coast Highway San Diego, California 92101 Dear Mr. Meyer: Pursuant to your request, we have drafted this brief letter summarizing our consultation with you to date in your negotiations with RIDA Development Corporation (RIDA) relative to their proposed Chula Vista Bayfront Resort Hotel and Convention Center. As directed by you, we have completed a review of RIDA’s most recent September 2016 proforma. Our review and analysis was focused on the reasonability of RIDA’s revenue per available room (RevPAR) projections considering their current development program which assumes an increase to 1,450 available guest rooms from a previous count of 1,000 rooms. On a stabilized basis, RIDA has projected that the proposed larger hotel would stabilize at an occupancy of 77 percent and at a rate of $215, stated in current 2016 dollars. It should be noted that we were not provided with a new detailed facilities program but have assumed that the proposed public facilities (meeting space, food and beverage outlets, etc.) have increased proportionally with the rooms expansion. If this proves to be untrue we reserve the right to amend our findings. The following paragraphs set forth our analysis relative to reasonableness of RIDA’s RevPAR projections based on the three points of comparison: historical and forecasted performance of the San Diego hotel market as a whole, historical performance of the larger group and convention oriented hotels in the City of San Diego, and the recent performance of a collection of many of the largest hotels in the United States (excluding Las Vegas, Nevada). San Diego County Hotel Market ® The following discussion is taken from CBRE Hotels, Americas Research’s Hotel Horizons, September – November 2016 Edition for all hotels in the San Diego market. The historical data (2011 through 2015) is provided by Smith Travel Research, while the projections were developed by CBRE Hotels, Americas Research. ΑΏΐΖȃΏΕȃΑΏ !¦¤£ Packet0 ¦¤ 69 Attachment H to Agenda No. 2017-0338 October 4, 2016 Port of San Diego Chula Vista Bayfront Development Opportunities Page 2 In 2015, San Diego Hotels finished the year with a RevPAR gain of 8.6 percent. This was the result of an increase in occupancy of 2.4 percent and a 6.1 percent gain in average daily room rates (ADR). The 8.6 percent boost in San Diego RevPAR was better than the national average of 6.2 percent. San Diego’s lower-priced properties finished 2015 ahead of its upper-priced properties in terms of RevPAR growth. The properties in this category achieved a 6.6 percent gain in ADR and saw a 3.4 percent increase in occupancy. Upper-priced hotels experienced an ADR growth rate of 6.4 percent along with a 1.7 percent gain in occupancy. By year-end 2016, San Diego hotels are forecast to see a RevPAR increase of 2.2 percent. This is the result of an estimated minor decline in occupancy of 0.1 percent and a 2.2 percent gain in ADR. The 2.2 percent advance in San Diego RevPAR is less than the national projection of a 3.6 percent increase. Leading the way in 2016 RevPAR growth is the lower-priced segment of San Diego. The properties in this category are forecast to attain a 4.6 percent gain in ADR and see a 0.7 percent increase in occupancy, resulting in a 5.3 percent RevPAR increase. Upper-priced hotels are projected to experience an ADR growth rate of 1.0 percent, along with a 0.8 percent loss in occupancy, resulting in a 0.2 percent RevPAR increase. Looking towards 2017, San Diego RevPAR is expected to grow 5.9 percent. This is better than the rate of growth in 2016. Unlike 2016, prospects for RevPAR growth in the upper-priced segment (positive 6.0 percent) are better than in the lower-priced segment (positive 5.0 percent). San Diego market occupancy levels are expected to range from 75.8 percent to 76.8 percent during the five-year forecast period. Chula Vista, California ΑΏΐΖȃΏΕȃΑΏ !¦¤£ Packet0 ¦¤ 70 Attachment H to Agenda No. 2017-0338 October 4, 2016 Port of San Diego Chula Vista Bayfront Development Opportunities Page 3 City of San Diego Convention Hotels While the above discussion presents a good overall picture of the health of the local market we also explored the recent historical performance of a collection of larger convention and meeting oriented hotels, including the following four hotels: Sheraton San Diego Hotel & Marina -1,053 rooms Hilton San Diego Bayfront - 1,190 rooms Marriott San Diego Marina - 1,360 rooms Manchester Grand Hyatt San Diego - 1,628 rooms The aggregate average annual available and occupied rooms, resulting occupancy levels, average daily rate (ADR), and revenue per available room (RevPAR) for this sample set between 2011 and 2015 and year-to-date (YTD) through August 2015 and 2016 are presented in the following table. Historical Market Performance of the Competitive Supply AnnualPercentOccupied PercentMarket Average Percent Percent YearSupply Change Rooms Change OccupancyDaily Rate Change REVPAR Change 20111,909,315 N/A 1,442,977 N/A 75.6%$177.31 N/A$134.00 N/A 20121,909,315 0.0% 1,494,495 3.6% 78.3%182.45 2.9% 142.81 6.6% 20131,909,315 0.0% 1,521,033 1.8% 79.7%188.96 3.6% 150.53 5.4% 20141,909,315 0.0% 1,552,380 2.1% 81.3%199.32 5.5% 162.06 7.7% 20151,909,315 0.0% 1,573,445 1.4% 82.4%211.58 6.1% 174.36 7.6% CAAG 0.0% 2.2% 4.5% 6.8% 8/15 ytd 1,909,315 N/A 1,629,313 N/A 85.3%$216.80 N/A$185.00 N/A 8/16 ytd 1,909,315 0.0% 1,638,976 0.6% 85.8%221.45 2.1% 190.10 2.8% Source: CBRE Hotels Supply for the identified competitive market remained consistent over the course of the historical period with the most recent hotel opening being the Hilton San Diego Bayfront, in December 2008. Demand as measured by occupied room nights for the competitive market has increased at a compound annual growth rate (“CAGR”) of 2.2 percent over the past five years. The competitive market experienced demand growth over each year of the historical period. Similarly, ADR has shown increases in each year of the historical period. Over the five-year historical period ADR has increased at an annual average rate of 4.5 percent and increased at its strongest level in 2015, increasing by 6.1 percent from year-end 2014. Thus over the historical period RevPAR increased at a CAGR of 6.8 percent. As of YTD August 2016 occupancy is up slightly as compared with YTD August 2015, and the market has likely been operating at its peak level in terms of accommodated demand. ADR increased by 2.1 percent during the YTD period surveyed, leading to a RevPAR increase of 2.8 percent. Large U.S. Meeting and Convention Hotels Lastly as a check of reasonableness we also researched the recent occupancy and average daily rate levels of large hotels throughout the United States to further determine if the room count of a hotel was potentially a detriment to achievable occupancy and rate levels. As shown in the previous City of San Diego specific analysis this did not prove to be the case, but nonetheless we were interested in how large hotels performed. To do so we were able to survey 75 individual hotels on a national basis with 1,000 or more guestrooms for calendar year 2015. As noted in the introduction our survey sample excluded large hotels located in Las Vegas, for which there is not data available. The hotels Chula Vista, California ΑΏΐΖȃΏΕȃΑΏ !¦¤£ Packet0 ¦¤ 71 Attachment H to Agenda No. 2017-0338 October 4, 2016 Port of San Diego Chula Vista Bayfront Development Opportunities Page 4 ranged in size from exactly 1,000 rooms to a high of 2,882 rooms for an average of 1,367 available rooms. Occupancy levels for this collection of large hotels ranged from the mid-60’s to the mid-90’s, with an average of 78.1 percent. Given the wide geographical sample it is not surprising that average daily rates also exhibited a wide range, from lows of approximately $120 to a peak of roughly $300, for an average of $193.74. Conclusion Based on the analysis presented herein, we are of the opinion that RIDA’s estimates of occupancy and average daily rate in a stabilized year are reasonable given the data surveyed. All three methodologies utilized point to occupancy levels in the mid-70’s to low 80’s. Further the number of guestrooms does not appear to be a hindrance to achieving occupancy levels well above the national average based on our review of comparable data for the City of San Diego and the larger nation as a whole. Lastly the projected average daily rate falls within the admittedly wide range of the national comparables, but also more importantly the much tighter range of the four local San Diego hotels. It is a pleasure to continue to work with you and all parties involved on this most interesting assignment. If we can be of any further assistance in the interpretation of our findings, please feel free to contact us. Sincerely, CBRE Hotels, Consulting Bruce Baltin Managing Director Chula Vista, California ΑΏΐΖȃΏΕȃΑΏ !¦¤£ Packet0 ¦¤ 72 Attachment H to Agenda No. 2017-0338 TERMS AND CONDITIONS 1.The Terms and Conditions herein are part of an agreement for consulting services (the “Agreement” ) between CBRE, Inc. (the “Appraiser”) and the client signing this Agreement, and for whom the consulting services will be performed (the “Client”), and shall be deemed a part of such Agreement as though set forth in full therein. The Agreement shall be governed by the laws of the state where the consulting office is located for the Appraiser executing this Agreement. 2.Client shall be responsible for the payment of all fees stipulated in the Agreement. Payment of the consulting fee and preparation of an consulting report (the “Appraisal Report, or the “report”) are not contingent upon any predetermined value or on an action or event resulting from the analyses, opinions, conclusions, or use of the Appraisal Report. Final payment is due as provided in the Proposal Specifications Section of this Agreement. If a draft report is requested, the fee is considered earned upon delivery of the draft report. It is understood that the Client may cancel this assignment in writing at any time prior to delivery of the completed report. In such event, the Client is obligated only for the prorated share of the fee based upon the work completed and expenses incurred (including travel expenses to and from the job site), with a minimum charge of $500. Additional copies of the Appraisal Reports are available at a cost of $250 per original color copy and $100 per photocopy (black and white), plus shipping fees of $30 per report. 3.If Appraiser is subpoenaed or ordered to give testimony, produce documents or information, or otherwise required or requested by Client or a third party to participate in meetings, phone calls, conferences, litigation or other legal proceedings (including preparation for such proceedings) because of, connected with or in any way pertaining to this engagement, the Appraisal Report, the Appraiser’s expertise, or the Property, Client shall pay Appraiser’s additional costs and expenses, including but not limited to Appraiser’s attorneys’ fees, and additional time incurred by Appraiser based on Appraiser’s then-prevailing hourly rates and related fees. Such charges include and pertain to, but are not limited to, time spent in preparing for and providing court room testimony, depositions, travel time, mileage and related travel expenses, waiting time, document review and production, and preparation time (excluding preparation of the Appraisal Report), meeting participation, and Appraiser’s other related commitment of time and expertise. Hourly charges and other fees for such participation will be provided upon request. In the event Client requests additional consulting services beyond the scope and purpose stated in the Agreement, Client agrees to pay additional fees for such services and to reimburse related expenses, whether or not the completed report has been delivered to Client at the time of such request. 4.Appraiser shall have the right to terminate this Agreement at any time for cause effective immediately upon written notice to Client on the occurrence of fraud or the willful misconduct of Client, its employees or agents, or without cause upon 30 days written notice. 5.In the event Client fails to make payments when due then, from the date due until paid, the amount due and payable shall bear interest at the maximum rate permitted in the state where the office is located for the Appraiser executing the Agreement. In the event either party institutes legal action against the other to enforce its rights under this Agreement, the prevailing party shall be entitled to recover its reasonable attorney’s fees and expenses. Each party waives the right to a trial by jury in any action arising under this Agreement. 6.Appraiser assumes there are no major or significant items or issues affecting the Property that would require the expertise of a professional building contractor, engineer, or environmental consultant for Appraiser to prepare a valid report. Client acknowledges that such additional expertise is not covered in the Appraisal fee and agrees that, if such additional expertise is required, it shall be provided by others at the discretion and direction of the Client, and solely at Client’s additional cost and expense. 7.In the event of any dispute between Client and Appraiser relating to this Agreement, or Appraiser's or Client's performance hereunder, Appraiser and Client agree that such dispute shall be resolved by means of binding arbitration in accordance with the commercial arbitration rules of the American Arbitration Association, and judgment upon the award rendered by an arbitrator may be entered in any court of competent jurisdiction. Depositions may be taken and other discovery obtained during such arbitration proceedings to the same extent as authorized in civil judicial proceedings in the state where the office of the Appraiser executing this Agreement is located. The arbitrator shall be limited to awarding compensatory damages and shall have no authority to award punitive, exemplary or similar damages. The prevailing party in the arbitration proceeding shall be entitled to recover its expenses from the losing party, including costs of the arbitration proceeding, and reasonable attorney's fees. Client acknowledges that Appraiser is being retained hereunder as an independent contractor to perform the services described herein and nothing in this Agreement shall be deemed to create any other relationship between Client and Appraiser. This engagement shall be deemed concluded and the services hereunder completed upon delivery to Client of the Appraisal Report discussed herein. 8.All statements of fact in the report which are used as the basis of the Appraiser's analyses, opinions, and conclusions will be true and correct to Appraiser's actual knowledge and belief. Appraiser does not make any representation or warranty, express or implied, as to the accuracy or completeness of the information or the condition of the Property furnished to Appraiser by Client or others. TO THE FULLEST EXTENT PERMITTED BY LAW, APPRAISER DISCLAIMS ANY GUARANTEE OR WARRANTY AS TO THE OPINIONS AND CONCLUSIONS PRESENTED ORALLY OR IN ANY APPRAISAL REPORT, INCLUDING WITHOUT LIMITATION ANY WARRANTY OF FITNESS FOR ANY PARTICULAR PURPOSE EVEN IF KNOWN TO APPRAISER. Furthermore, the conclusions and any permitted reliance on and use of the Appraisal Report shall be subject to the assumptions, limitations, and qualifying statements contained in the report. ΑΏΐΖȃΏΕȃΑΏ !¦¤£ Packet0 ¦¤ 73 Attachment H to Agenda No. 2017-0338 TERMS AND LIMITING CONDITIONS (continued) 9.Appraiser shall have no responsibility for legal matters, including zoning, or questions of survey or title, soil or subsoil conditions, engineering, or other similar technical matters. The report will not constitute a survey of the Property analyzed. 10.Client shall provide Appraiser with such materials with respect to the assignment as are requested by Appraiser and in the possession or under the control of Client. Client shall provide Appraiser with sufficient access to the Property to be analyzed, and hereby grants permission for entry unless discussed in advance to the contrary. 11.The data gathered in the course of the assignment (except data furnished by Client) and the report prepared pursuant to the Agreement are, and will remain, the property of Appraiser. With respect to data provided by Client, Appraiser shall not violate the confidential nature of the Appraiser-Client relationship by improperly disclosing any proprietary information furnished to Appraiser. Notwithstanding the foregoing, Appraiser is authorized by Client to disclose all or any portion of the report and related data as may be required by statute, government regulation, legal process, or judicial decree, including to appropriate representatives of the Appraisal Institute if such disclosure is required to enable Appraiser to comply with the Bylaws and Regulations of such Institute as now or hereafter in effect. 12.Unless specifically noted, in preparing the Appraisal Report the Appraiser will not be considering the possible existence of asbestos, PCB transformers, or other toxic, hazardous, or contaminated substances and/or underground storage tanks (collectively, “Hazardous Material) on or affecting the Property, or the cost of encapsulation or removal thereof. Further, Client represents that there is no major or significant deferred maintenance of the Property that would require the expertise of a professional cost estimator or contractor. If such repairs are needed, the estimates are to be prepared by others, at Client’s discretion and direction, and are not covered as part of the Appraisal fee. 13.In the event Client intends to use the Appraisal Report in connection with a tax matter, Client acknowledges that Appraiser provides no warranty, representation or prediction as to the outcome of such tax matter. Client understands and acknowledges that any relevant taxing authority (whether the Internal Revenue Service or any other federal, state or local taxing authority) may disagree with or reject the Appraisal Report or otherwise disagree with Client’s tax position, and further understands and acknowledges that the taxing authority may seek to collect additional taxes, interest, penalties or fees from Client beyond what may be suggested by the Appraisal Report. Client agrees that Appraiser shall have no responsibility or liability to Client or any other party for any such taxes, interest, penalties or fees and that Client will not seek damages or other compensation from Appraiser relating to any such taxes, interest, penalties or fees imposed on Client, or for any attorneys’ fees, costs or other expenses relating to Client’s tax matters. 14.Appraiser shall have no liability with respect to any loss, damage, claim or expense incurred by or asserted against Client arising out of, based upon or resulting from Client’s failure to provide accurate or complete information or documentation pertaining to an assignment ordered under or in connection with this Agreement, including Client’s failure, or the failure of any of Client’s agents, to provide a complete copy of the Appraisal Report to any third party. 15.LIMITATION OF LIABILITY. EXCEPT TO THE EXTENT ARISING FROM SECTION 16 BELOW, OR SECTION 17 IF APPLICABLE, IN NO EVENT SHALL EITHER PARTY OR ANY OF ITS AFFILIATE, OFFICERS, DIRECTORS, EMPLOYEES, AGENTS, OR CONTRACTORS BE LIABLE TO THE OTHER, WHETHER BASED IN CONTRACT, WARRANTY, INDEMNITY, NEGLIGENCE, STRICT LIABILITY OR OTHER TORT OR OTHERWISE, FOR ANY SPECIAL, CONSEQUENTIAL, PUNITIVE, INCIDENTAL OR INDIRECT DAMAGES, AND AGGREGATE DAMAGES IN CONNECTION WITH THIS AGREEMENT FOR EITHER PARTY (EXCLUDING THE OBLIGATION TO PAY THE FEES REQUIRED HEREUNDER) SHALL NOT EXCEED THE GREATER OF THE TOTAL FEES PAYABLE TO APPRAISER UNDER THIS AGREEMENT OR TEN THOUSAND DOLLARS ($10,000). THIS LIABILITY LIMITATION SHALL NOT APPLY IN THE EVENT OF A FINAL FINDING BY AN ARBITRATOR OR A COURT OF COMPETENT JURISDICTION THAT SUCH LIABILITY IS THE RESULT OF A PARTY’S FRAUD OR WILLFUL MISCONDUCT. 16.Client shall not disseminate, distribute, make available or otherwise provide any Appraisal Report prepared hereunder to any third party (including without limitation, incorporating or referencing the Appraisal Report , in whole or in part, in any offering or other material intended for review by other parties) except to (i) any third party expressly acknowledged in a signed writing by Appraiser as an “Intended User” of the Appraisal Report provided that either Appraiser has received an acceptable release from such third party with respect to such Appraisal Report or Client provides acceptable indemnity protections to Appraiser against any claims resulting from the distribution of the Appraisal Report to such third party, (ii) any third party service provider (including rating agencies and auditors) using the Appraisal Report in the course of providing services for the sole benefit of an Intended User, or (iii) as required by statute, government regulation, legal process, or judicial decree. In the event Appraiser consents, in writing, to Client incorporating or referencing the Appraisal Report in any offering or other materials intended for review by other parties, Client shall not distribute, file, or otherwise make such materials available to any such parties unless and until Client has provided Appraiser with complete copies of such materials and Appraiser has approved all such materials in writing. Client shall not modify any such materials once approved by Appraiser. In the absence of satisfying the conditions of this paragraph with respect to a party who is not designated as an Intended User, in no event shall the receipt of an Appraisal Report by such party extend any right to the party to use and rely on such report, and Appraiser shall have no liability for such unauthorized use and reliance on any Appraisal Report. In the event Client breaches the provisions of this paragraph, Client shall indemnify, defend and hold Appraiser, and its affiliates and their officers, directors, employees, contractors, agents and other representatives (Appraiser and each of the foregoing an “Indemnified Party” ΑΏΐΖȃΏΕȃΑΏ !¦¤£ Packet0 ¦¤ 74 Attachment H to Agenda No. 2017-0338 TERMS AND LIMITING CONDITIONS (continued) and collectively the “Indemnified Parties”), fully harmless from and against all losses, liabilities, damages and expenses (collectively, “Damages”) claimed against, sustained or incurred by any Indemnified Party arising out of or in connection with such breach, regardless of any negligence on the part of any Indemnified Party in preparing the Appraisal Report. 17.In the event an Intended User incorporates or references the Appraisal Report, in whole or in part, in any offering or other material intended for review by other parties, Client shall indemnify, defend and hold each of the Indemnified Parties harmless from and against any Damages in connection with (i) any transaction contemplated by this Agreement or in connection with the consulting or the engagement of or performance of services by any Indemnified Party hereunder, (ii) any actual or alleged untrue statement of a material fact, or the actual or alleged failure to state a material fact necessary to make a statement not misleading in light of the circumstances under which it was made with respect to all information furnished to any Indemnified Party or made available to a prospective party to a transaction, or (iii) an actual or alleged violation of applicable law by an Intended User (including, without limitation, securities laws) or the negligent or intentional acts or omissions of an Intended User (including the failure to perform any duty imposed by law); and will reimburse each Indemnified Party for all reasonable fees and expenses (including fees and expenses of counsel) (collectively, “Expenses”) as incurred in connection with investigating, preparing, pursuing or defending any threatened or pending claim, action, proceeding or investigation (collectively, “Proceedings”) arising therefrom, and regardless of whether such Indemnified Party is a formal party to such Proceeding. Client agrees not to enter into any waiver, release or settlement of any Proceeding (whether or not any Indemnified Party is a formal party to such Proceeding) without the prior written consent of Appraiser (which consent will not be unreasonably withheld or delayed) unless such waiver, release or settlement includes an unconditional release of each Indemnified Party from all liability arising out of such Proceeding. 18.Time Period for Legal Action. Unless the time period is shorter under applicable law, except in connection with paragraphs 16 and 17 above, Appraiser and Client agree that any legal action or lawsuit by one party against the other party or its affiliates, officers, directors, employees, contractors, agents, or other representatives, whether based in contract, warranty, indemnity, negligence, strict liability or other tort or otherwise, relating to (a) this Agreement or the Appraisal Report, (b) any services or consulting under this Agreement or (c) any acts or conduct relating to such services or consulting, shall be filed within two (2) years from the date of delivery to Client of the Appraisal Report to which the claims or causes of action in the legal action or lawsuit relate. The time period stated in this section shall not be extended by any incapacity of a party or any delay in the discovery or accrual of the underlying claims, causes of action or damages. ΑΏΐΖȃΏΕȃΑΏ !¦¤£ Packet0 ¦¤ 75 PROPOSED CHULA VISTA RESORT HOTEL AND CONVENTION CENTER DEVELOPMENT RIDA Development CostReview for San Diego Unified Port District March 30, 2017 ΑΏΐΖȃΏΕȃΑΏ !¦¤£ Packet0 ¦¤ 76 2 COPYRIGHT © JONES LANG LASALLE IP, INC. 2011. All Rights Reserved ΑΏΐΖȃΏΕȃΑΏ !¦¤£ Packet0 ¦¤ 77 March 30, 2017 Adam Meyer San Diego Unified Port District 3165 Pacific Highway San Diego, California 92101 Re:RIDA Development CostReview and Commentary Dear Adam: JLL was engaged by the Port of San Diego (“Port”) to review the latest Development Budget, submitted by RIDA, for the Chula Vista Bayfront Hotel and Conference Center. RIDA provided the Port limited information related to the Development Budget. RIDA provided the Port with an overall development budget that totalled $727 million. The development budget included the following costs: Cost Summary ItemCosts Site Costs$80M Parking$71.6M Conference Center$227.3M Hotel$347.7M With regards to development costs, we would like to highlight the following comparable hotels built over past several years at a development costs range of $312,000 to $697,000 per guestroom. Particularly, most recent developments such as Marriott Marquis in Washington DC, the Fairmont Austin and the JW Marriott Austin were costs were kept at or below $517 Million. 3 COPYRIGHT © JONES LANG LASALLE IP, INC. 2012. All Rights Reserved ΑΏΐΖȃΏΕȃΑΏ !¦¤£ Packet0 ¦¤ 78 JLL engaged AECOM to review themost recent construction budget and project scopewhichhas increased significantly over prior estimates asshown below. The costs and program areconceptual estimates per developer. Scope & Cost Changes 15-Feb15-Jul16-Apr17-Jan SF (000's)1,2571,2071,0972,248 Dev Cost ($M)$288$358$358$727 The key reasons for the increase to the development budget are summarized below. Cost DriversNotes New development scope presented by RIDA is 1Gross Floor Area substantially larger than April 2016 $850K per month for General Conditions and 2Project duration$470K per month for General Requirements needs cost breakdown. 3Millwork Allowance$11M allowance for millwork needs further review $25M allowance with no back-up or design needs 4Finishes Allowance further study. $20M for theming allowance with no back-up or 5Theming Allowance design needs further study The larger development with more rooms which alsoincreased the height of the tower and load 6Structure capacity for foundation. As design develops, it would require further review April 2016 estimate parking was not included in 7Parking Structureoverall cost and in this version a budget of $71M was included driving costs In addition, AECOM performed an order of magnitude review to compare RIDA’s cost with that of a standard hotel based on RS Means and historical data. As shown below, RIDA’s costs are 42% or $213M higher. Order of Magnitute Costs AECOMRIDADelta Hotel & Conference Costs$411,033,000$575,014,000$163,981,000 Total Parking & Site Costs$102,527,000$151,706,000$49,179,000 Total Construction Costs$513,560,000$726,720,000$213,160,000 42% 4 COPYRIGHT © JONES LANG LASALLE IP, INC. 2012. All Rights Reserved ΑΏΐΖȃΏΕȃΑΏ !¦¤£ Packet0 ¦¤ 79 The program and scope has changed significantlysince last submission.Anorder of magnitude test was preparedby AECOMfor a standard hotel where this may not apply due to the updated scope and program. Although there is a large delta of approximately $213M between RIDA and AECOM,RIDA's costs werebased on conceptualdesigns and preliminary at this stage.During this early stage of programming and cost estimates, the large costs delta is not unusual given the cost drivers shown above and the higher than normal theming and finishes proposed by developer.Given the preliminary nature of the design, there wasn’t enough detailedinformation to validate the cost assumptions and therefore the order of magnitude prepared by AECOM relied on standard hotel benchmarks to prepare their estimates. Per the unique program themesand other cost drivers, it is not unusualfor thereto be a large cost delta againsta more traditional hotel benchmark.Additional cost reviews and checks will ensure better cost refinements as the development program evolves along with better cost benchmarks. Though, these two projects and designs are different, by carrying out this comparison it gives a greater insight into where the key changes have occurred and need further analysis.Key areas the Port will want to have further discussions with RIDA are: 1.Millwork - Further clarification will need to be sought on this item. RIDA has included $11m for millwork. It is a significant cost however there is no detail to determine whether or not it is excessive. 2.Finishes - An allowance of $25m has been included in the overallcosts pertaining tointernal finishes. There is $80m in measure finishes with the additional included. This is a large sum of money to be included with no detail / scope of work. RIDA have suggested this allowance is for building out of theming areas. This allowance may potentially reduce as the design develops. 3.Theming - A further allowance of $15m has been included in the overall costs for 'Theming' of areas. This cost is additional to the $80m included for measured finishes and the $25m allowance included. Therefore a RIDA have included an overall budget of $120m for finishes and theming alone. 4.Program - There has been a 33 month program included for the construction works and this forms the basis of the General Conditions and Requirements however AECOM have not received this breakdown to review. Respectfully submitted, Bob Hunt Managing Director Public Institutions J ONES L ANG L A S ALLE A MERICAS,I NC. cc:Conceptual Development Budget Report & Order of Magnitude February 28, 2017 5 COPYRIGHT © JONES LANG LASALLE IP, INC. 2012. All Rights Reserved ΑΏΐΖȃΏΕȃΑΏ !¦¤£ Packet0 ¦¤ 80 1.1Assumptions and Limiting Conditions The report wascompleted with the following general assumptions and limiting conditions: 1.As in all studies of this type, the estimated results are based upon competent and efficient management and presume no significant changes in the economic environment from that as set forth in this report. Since our forecasts are based on estimates and assumptions which are subject to uncertainty and variation, we do not represent them as results which will actually be achieved. 2.Responsible ownership and competent property management are assumed. 3.The information furnished by others is believed to be reliable, but no warranty is given for its accuracy. 4. It is assumed that there are no hidden or unapparent conditions of the property, subsoil or structures. 5.It is assumed that the property will be in full compliance with all applicable federal, state, and local environmental regulations and laws unless the lack of compliance is stated, described, and considered in the report. 6.It is assumed that the property will conform to all applicable zoning and use regulations and restrictions. 8.Possession of this report, or a copy thereof, does not carry with it the right of publication. 9.The consultant, by reason of this report, is not required to give further consultation or testimony or to be in attendance in court with reference to the property in question unless arrangements have been previously made. 10.Neither all nor any part of the contents of this report (especially any conclusions as to value, the identity of the consultant, or the firm with which the consultant is connected) shall be disseminated to the public through advertising, public relations, news, sales, or other media without the prior written consent and approval of the consultant. 6 COPYRIGHT © JONES LANG LASALLE IP, INC. 2012. All Rights Reserved ΑΏΐΖȃΏΕȃΑΏ !¦¤£ Packet0 ¦¤ 81 Bob Hunt Managing Director Public Institutions +1 206 607 1754 Bob.Hunt@am.jll.com Greg Hartmann,MAI, MRICS, CHA Executive Vice President Hotels & Hospitality +1 303 390 5249 greg.hartmann@am.jll.com Andrea Grigg Senior Vice President Hotels & Hospitality +1 415 395 4977 andrea.grigg@am.jll.com Andrew Phillips Vice President Public Institutions +1 858.410.6390 andy.phillips@am.jll.com COPYRIGHT © JONES LANG LASALLE IP, INC. 2017. This publication is the sole property of Jones Lang LaSalle IP, Inc. and must not be copied, reproduced or transmitted in any form or by any means, either in whole or in part, without the prior written consent of Jones Lang LaSalle IP, Inc. The information contained in this publication has been obtained from sources generally regarded to be reliable. However, no representation is made, or warranty given, in respect of the accuracy of this information. We would like to be informed of any inaccuracies so that we may correct them. Jones Lang LaSalle does not accept any liability in negligence or otherwise for any loss or damage suffered by any party resulting from reliance on this publication. 7 COPYRIGHT © JONES LANG LASALLE IP, INC. 2012. All Rights Reserved ΑΏΐΖȃΏΕȃΑΏ !¦¤£ Packet0 ¦¤ 82 For CĻĬƩǒğƩǤ ЋБͲ ЋЉЊА ΑΏΐΖȃΏΕȃΑΏ !¦¤£ Packet0 ¦¤ 83 AECOMConceptual Development Budget Report & Order of Magnitude February 28, 2017 Chula Vista Hotel & Convention Center Development Budget Report Prepared for: Jones Lang LaSalle 4747 Executive Drive Suite 400 San Diego CA 92121 Prepared by: AECOM 300 California Street Suite 400 San Francisco CA 94104 (415) 796-8100 ΑΏΐΖȃΏΕȃΑΏ !¦¤£ Packet0 ¦¤ 84 AECOMConceptual Development Budget Report & Order of Magnitude February 28, 2017 Chula Vista Hotel & Convention Center Development Budget Report Contents Section 1 1 Executive Summary 2 Overall Summary 3 Cost Tracking Summary 4 Cost Drivers 5 Detailed Cost Summary 6 Hotel Budget Estimate Summary 7 Conference Center Budget Estimate Summary 8 Site Development Budget Estimate 9 Parking Garage Budget Summary Section 2 11 Executive Summary 12 Guestroom Component 13 Food & Beverage Component 14 Conference Facilities component 15 Recreational Component 16 Food Service Component 17 Lobby & Retail Component 18 Front Desk Reception/Office Component 19 Back of the House Component 20 Administration Office Component 21 Circulation 22 Receiving & Storage Component 23 Engineering Component 24 Parking Garage 25 Site Development Section 3 Appendix ΑΏΐΖȃΏΕȃΑΏ !¦¤£ Packet0 ¦¤ 85 AECOMConceptual Development Budget Report & Order of Magnitude February 28, 2017 1 Chula Vista Hotel & Convention Center Development Budget Report Executive Summary Project and Cost Overview The following report was undertaken by AECOM in order to review the construction budget estimates prepared for the proposed Chula Vista Hotel & Conference Center project by RIDA Development Corporation and Balfour Beatty respectively. Cost and Gross Floor Area Commentary AECOM have undertaken an analysis of the estimate prepared by Cost Status$/SFTotal x $1,000 RIDA which was presented in January 2017. April 16 Estimate295.30323,872 The key cost drivers as identified by AECOM are highlighted on page December 16 323.34726,720 4 of this report and relate to costs for additional Gross Floor Area, Estimate Program, Allowances including Millwork, Finishes and Theming, Delta from previous28.04402,848 Structure and the added costs of a Parking Structure The gross floor area is in the amount of 2,247,521 SF with a Site area of 1,161,634 SF. Key Focus Areas 12% 1. Millwork - Further clarification will need to be sought on this item. 27% 6% RIDA have included c. $11m for millwork. It is a significant cost however there is no detail to determine whether or not it is excessive. 2. Finishes - An allowance of $25m has been included in the overall costs pertaining to internal finishes. There is c. $80m in measure 23% finishes with the additional included. This is a large sum of money to be included with no detail / scope of work. RIDA have suggested this 19% allowance is for building out of theming areas. This allownace may potentially reduce as the design develops. 13% 3. Theming - A further allowance of $15m has been included in the Shell $183m overall costs for 'Theming' of areas. This cost is additional to the $80m included for measured finishes and the $25m allowance Interiors $129m incuded. Therefore a RIDA have included an over all budget of c. $120m for finishes and theming alone. Equipment & Transportation $92m Mechanical & Electrical $162m 4. Program - There has been a 33 month program included for the construction works and this forms the basis of the General Site Construction $43m Conditions and Requirements however AECOM have not recieved this breakdown to review. General Requirements $82m Report Summary The structure of the report is as follows: The overall cost summary is followed by a breakdown of the overall cost budgets presented by RIDA and Balfour Beatty. It details where the key cost drivers are and highlights areas of concern regarding allowances / costs drivers and also identifies the key areas in the budget which will need to be investigated further. Further to this a narrative has been provided on the key areas that have been identified as the main force in driving the cost. Elemental Comparisons The Estimate prepared by RIDA in January 2017 was provided in a $/SF and Trade Breakdown format and as such we have readjusting in order to make a detailed comparison between this and the April 2016 estimate. It should be noted that these two designs are different however by carrying out this comparison it gives a greater insight into where the key changes have occured. This being the case, the elemental breakdowns provided in this report should not be relied upon as a true reflection of the apportionment of costs between elements. ΑΏΐΖȃΏΕȃΑΏ !¦¤£ Packet0 ¦¤ 86 AECOMConceptual Development Budget Report & Order of Magnitude February 28, 2017 2 Chula Vista Hotel & Convention Center Development Budget Report Overall Summary SF$/SFTOTAL B1Hotel Tower Budget 1,005,352345.86347,716 B5Conference Center Budget 637,774356.39227,299 B6Parking Garage Budget 604,395118.4971,612 TOTAL BUILDING CONSTRUCTION2,247,521287.71646,627 B2Site Development Budget 1,161,36468.9680,093 TOTAL SITEWORK1,161,36468.9680,093 TOTAL BUILDING AND SITEWORK726,720 CONSTRUCTION BUDGET TOTAL726,720 ΑΏΐΖȃΏΕȃΑΏ !¦¤£ Packet0 ¦¤ 87 AECOMConceptual Development Budget Report & Order of Magnitude February 28, 2017 4 Chula Vista Hotel & Convention Center Development Budget Report Cost Drivers The following items have been identified as the main drivers for the increased cost of this project: COST DRIVERS & CONSTRUCTION COSTS 1 Gross Floor Area - The scheme presented by RIDA is a much larger project than those previously presented in April 2016. It appears the current design and scheme is double the size of the previous. This is the main contributor to the construction costs being much higher than those previously presented. The new development incorporates an additional 450 hotel rooms and a large outdoor amenity and pool areas with associated Conference Center. 2 Project Duration - RIDA have presented a total project duration of circa 33 months with General Conditions at $850k per month and General Requirements at $470k per month. These costs are associated with RIDA/Balfour Beatty site offices, head office overheads and running costs etc. for the duration of the project. AECOM would require the full breakdown for this to determine where the major cost allocations are and to determine value. 3 Allowances - Within the breakdown of costs provided by RIDA there is a number of allowances included such as an $11m allowance for millwork. As the design is still at concept stage it is difficult to determine whether this allowance is excessive or not. As the design develops it would be prudent to test this allowance to ensure is not over and above. 4 Allowances - Within the breakdown of costs RIDA have included a $25m allowance for finishes. This is an extra over allowance included for unknowns. RIDA have quantified finishes in the amount of circa $80m and have included the additional $25m with no back-up or design. AECOM feel that this allowance is excessive as there is no design to determine this figure. 5 Allowances - RIDA have also included a further $20m allowance for 'Theming'. This is an extra over allowance included for additional finishes and aesthetics between the indoor and outdoor spaces. Again this is an additional allowance with no back-up or design. AECOM feel that this allowance presents a significant increase in cost where there is no design to determine this figure. 6 Structure - The development presented by RIDA appears to be a larger development with increased number of hotel rooms etc. As a result, this has driven increases in costs pertaining to both the foundation and vertical structure. As the hotel contains an additional 450 rooms this has increased the height of the tower and therefore the load capacity of the foundation. However, there is no structural design and these costs are based on square foot rates and assumptions made by RIDA. As the design develops it would be prudent to test these costs to ensure they are in line with current market conditions. 7 Parking Structure - In the April 2016 estimate the parking Structure was not included in the overall cost and as such a reduction was shown in the budget. The budget presented in January 2017 includes this element in the amount of circa $71m, which is another cost driver and should be noted in the over all budget. ΑΏΐΖȃΏΕȃΑΏ !¦¤£ Packet0 ¦¤ 89 AECOMConceptual Development Budget Report & Order of Magnitude February 28, 2017 6 Chula Vista Hotel & Convention Center Development Budget Report Hotel Tower Budget Summary %$/SFTOTAL Gross Area:1,005,352 SF 1Hoist Equipment 2%7.227,254 2Indirect Expenses0%1.341,352 3Preconstruction Services0%0.98983 4Existing Conditions0%0.000 5Concrete11%39.4739,683 6Masonry0%0.000 7Metals1%3.883,903 8Wood & Plastics3%10.2210,273 9Thermal and Moisture Protection1%2.062,070 10Openings12%41.9942,213 11Finishes16%54.2754,563 12Specialities1%2.382,390 13Equipment0%0.38379 14Furnishings0%0.12123 15Special Construction4%15.3215,400 16Conveying Equipment 6%20.9821,089 17Fire Supresseion1%4.044,064 18Plumbing10%33.4233,595 19HVAC 8%26.0426,182 20Electrical 6%22.0322,147 21Earthwork2%5.575,599 22Exterior Improvements 0%0.18181 23Utilities0%0.000 BUILDING CONSTRUCTION84%291.88293,443 24General Conditions4%13.5813,656 25General Requirements2%7.547,580 26Insurance, Bond, Taxes1%3.773,789 27Contingencies5%15.9516,035 28Contractor's Fee, Overhead & Profit4%13.1413,213 CONSTRUCTION BUDGET TOTALS 100%345.86347,716 ΑΏΐΖȃΏΕȃΑΏ !¦¤£ Packet0 ¦¤ 91 AECOMConceptual Development Budget Report & Order of Magnitude February 28, 2017 7 Chula Vista Hotel & Convention Center Development Budget Report Conference Center Budget Summary %$/SFTOTAL Gross Area:637,774 SF 1Hoist Equipment 0%1.05671 2Indirect Expenses0%0.63403 3Preconstruction Services0%1.01646 4Existing Conditions0%0.000 5Concrete12%41.5326,487 6Masonry0%0.000 7Metals10%34.7122,140 8Wood & Plastics2%6.103,893 9Thermal and Moisture Protection4%15.189,683 10Openings5%16.9710,825 11Finishes15%54.8234,961 12Specialities3%9.806,253 13Equipment0%0.015 14Furnishings0%0.000 15Special Construction0%0.40254 16Conveying Equipment 5%16.3710,438 17Fire Supresseion1%3.282,094 18Plumbing2%5.963,803 19HVAC 14%48.2330,757 20Electrical 11%39.2325,020 21Earthwork1%4.242,705 22Exterior Improvements 0%1.02651 23Utilities0%0.000 BUILDING CONSTRUCTION84%300.56191,690 24General Conditions4%14.078,971 25General Requirements2%7.814,979 26Insurance, Bond, Taxes1%3.902,489 27Contingencies5%16.5210,533 28Contractor's Fee, Overhead & Profit4%13.548,637 CONSTRUCTION BUDGET TOTALS 100%356.39227,299 ΑΏΐΖȃΏΕȃΑΏ !¦¤£ Packet0 ¦¤ 92 AECOMConceptual Development Budget Report & Order of Magnitude February 28, 2017 8 Chula Vista Hotel & Convention Center Development Budget Report Site Development Budget Summary %$/SFTOTAL Gross Area:1,161,364 SF 1Hoist Equipment 0%0.000 2Indirect Expenses1%0.40465 3Preconstruction Services0%0.18213 4Existing Conditions0%0.000 5Concrete0%0.005 6Masonry0%0.000 7Metals1%0.73851 8Wood & Plastics0%0.000 9Thermal and Moisture Protection2%1.091,264 10Openings1%0.39458 11Finishes1%0.75871 12Specialities0%0.0115 13Equipment0%0.000 14Furnishings0%0.33381 15Special Construction39%27.2031,594 16Conveying Equipment 0%0.000 17Fire Supresseion0%0.000 18Plumbing0%0.0564 19HVAC 0%0.000 20Electrical 3%2.182,532 21Earthwork7%4.945,733 22Exterior Improvements 25%17.2320,010 23Utilities5%3.193,709 BUILDING CONSTRUCTION85%58.6968,164 24General Conditions4%2.542,955 25General Requirements2%1.411,640 26Insurance, Bond, Taxes1%0.71820 27Contingencies4%2.993,470 28Contractor's Fee, Overhead & Profit4%2.623,043 CONSTRUCTION BUDGET TOTALS 100%68.9680,093 ΑΏΐΖȃΏΕȃΑΏ !¦¤£ Packet0 ¦¤ 93 AECOMConceptual Development Budget Report & Order of Magnitude February 28, 2017 9 Chula Vista Hotel & Convention Center Development Budget Report Parking Garage Budget Summary %$/SFTOTAL Gross Area:604,395 SF 1Hoist Equipment 0%0.000 2Indirect Expenses0%0.37225 3Preconstruction Services0%0.29177 4Existing Conditions0%0.000 5Concrete32%38.3523,179 6Masonry0%0.49296 7Metals0%0.30184 8Wood & Plastics1%0.88530 9Thermal and Moisture Protection3%3.912,366 10Openings0%0.32192 11Finishes20%23.5914,260 12Specialities0%0.0316 13Equipment1%1.08650 14Furnishings0%0.0638 15Special Construction0%0.40241 16Conveying Equipment 4%4.542,746 17Fire Supresseion1%1.23742 18Plumbing1%1.28774 19HVAC 11%12.927,807 20Electrical 4%4.422,670 21Earthwork6%6.774,092 22Exterior Improvements 0%0.54328 23Utilities0%0.000 BUILDING CONSTRUCTION86%101.7761,511 24General Conditions3%4.062,454 25General Requirements2%2.251,362 26Insurance, Bond, Taxes1%1.13681 27Contingencies4%4.772,882 28Contractor's Fee, Overhead & Profit4%4.502,721 CONSTRUCTION BUDGET TOTALS 100%118.4971,612 ΑΏΐΖȃΏΕȃΑΏ !¦¤£ Packet0 ¦¤ 94 Section 2 ORDER OF MAGNITUDE COSTS ΑΏΐΖȃΏΕȃΑΏ !¦¤£ Packet0 ¦¤ 95 AECOM11 Conceptual Development Budget Report & Order of Magnitude February 28, 2017 Chula Vista Hotel & Convention Center Development Budget Report Executive Summary AECOM GFA AECOM RIDA UNIT DELTA AECOM TOTALRIDA TOTAL (SF)UNIT COSTCOST(RIDA-AECOM) Guestroom Component 645,840 $275$177,329,400 $350 $226,012,758 $48,683,358 Food and Beverage Component 39,562 $322$12,725,680 $350 $13,844,786 $1,119,106 Conference Facilities Component 299,195 $284$85,100,650 $350 $104,703,776 $19,603,126 Recreational Component 13,968 $496$6,924,900 $683 $9,545,743 $2,620,843 Food Service Component 60,208 $195$11,744,900 $350 $21,069,887 $9,324,987 Lobby & Retail Component 74,841 $332$24,879,190 $350 $26,190,730 $1,311,540 Front Desk Reception/Office Component 10,336 $203$2,096,010$350 $3,617,100 $1,521,090 Back of the House Component 26,285 $175$4,594,470$350 $9,198,478 $4,604,008 Administration Office Component 4,184 $200$834,960$350 $1,464,198 $629,238 Circulation 329,939 $206$68,040,590$350 $115,462,689 $47,422,099 Receiving & Storage Component 44,212 $140$6,195,040$350 $15,472,061 $9,277,021 Engineering Component 81,247 $130$10,567,110$350 $28,432,408 $17,865,298 Total: Hotel & Conference 1,629,817 $252$411,032,900$353 575,014,615$163,981,715 Parking Garage 604,395 $120$72,527,400$118 $71,612,226($915,174) Site Development 1,161,364 $26$30,000,000$69 $80,093,359$50,093,359 Total: Parking & Site 1,765,759 $58 102,527,400$86$151,705,585$49,178,185 Total Development Construction Cost: 3,395,576 $151$513,560,300$214$726,720,200$213,159,900 Inclusions and Exclusions: Construction start date is mid 2017 with a 24 month duration All soft costs which include design fees, permits, CA fees, owners construction contingency, etc. are excluded Environmental surveys and 3rd party quality assurance agency costs are excluded Supply or install of loose furniture (FF&E) and all operating supplies and equipment (OS&E) are excluded Construction markups (General conditions, bonds, insurance, overhead and profit, escalation and design contingency) are included Restaurant units are priced based on shell and core only based on the assumption that future tenants will complete the interior fit outs Site development includes fine grading, sit structures, paving and site utilities Analysis: The analysis above considers the construction of a new hotel in Southern California, the rates used have been extracted from a combination of resource which include RS Means and historical cost data Note that an allowance for infrastructure has been included under the Engineering component in the AECOM analysis, but from the information provided, the scope cannot be defined for this component. Conclusion: The analysis shows that the RIDA budget of $726.7 Million is approximately $213 Million over what AECOM would consider a median budget for a project of this size and scope. However, it is prudent to note that although there is a large delta between RIDA and AECOM, at this time RIDA's costs are based in a conceptual desgin and are preliminary at this stage. In preparing the conceptual design and estimate, RIDA have allowed for and included where possible allowances for a number of extraordinary items. These items include but are not limited to unique design features, theming, additional millwork, special features/metalwork to lobby areas etc. These additional allowances contribute to the delta shown between RIDA and AECOM's Development Constuction Costs presented above. In order to understand the elevated budget, a further study would be required with access to unit rates, quantities and specifications used in the RIDA budget. ΑΏΐΖȃΏΕȃΑΏ !¦¤£ Packet0 ¦¤ 96 AECOMConceptual Development Budget Report & Order of Magnitude February 28, 2017 12 Chula Vista Hotel & Convention Center Development Budget Report Guest Room Component Guest Room Component Construction Costs Single Module \[1,342 keys\] 523,380 SF$270.00$141,312,600 1.5 Module \[24 keys\] 19,080 SF$270.00$5,151,600 Double/Double \[72 keys\] 65,952 SF$270.00$17,807,040 Triple/Luxury Suite \[12 keys\] 15,804SF$320.00$5,057,280 Quad/Presidential Suite \[12 keys\] 21,624SF$370.00$8,000,880 Circulation SF$210.00 M.E. Total Construction Cost 645,840 SF$274.57 $177,329,400 The above $ include the following markups General Conditions 10.00% Contractor's Bonds 1.00% General Liability Insurance 1.00% Contractor's OH&P 4.50% Design Contingency 10.00% Escalation - 3% per year 3.00% ΑΏΐΖȃΏΕȃΑΏ !¦¤£ Packet0 ¦¤ 97 AECOMConceptual Development Budget Report & Order of Magnitude February 28, 2017 13 Chula Vista Hotel & Convention Center Development Budget Report Food & Beverage Component Food & Beverage Component Construction Costs Primary Restaurant-Dual Theme 10,769 SF$320.00$3,446,080 Specialty Restaurant 5,886 SF$320.00$1,883,520 Pool Bar & Grill 5,577SF$340.00$1,896,180 Sports Bar 10,705SF$320.00$3,425,600 Lobby Bar 5,711SF$320.00$1,827,520 Men's Restroom 501SF$270.00$135,270 Women's Restroom 413SF$270.00$111,510 Circulation SF$210.00 M.E. Total Construction Cost 39,562 SF$321.66 $12,725,680 The above $ include the following markups General Conditions 10.00% Contractor's Bonds 1.00% General Liability Insurance 1.00% Contractor's OH&P 4.50% Design Contingency 10.00% Escalation - 3% per year 3.00% ΑΏΐΖȃΏΕȃΑΏ !¦¤£ Packet0 ¦¤ 98 AECOMConceptual Development Budget Report & Order of Magnitude February 28, 2017 14 Chula Vista Hotel & Convention Center Development Budget Report Conference Facilities Conference Facilities Component Construction Costs Exhibit Hall 145,294 SF$290.00$42,135,260 Exhibit Hall Foyer - SF$290.00 INCL Exhibit Hall Storage 6,972SF$130.00$906,360 Junior Ballroom No. 1 29,336SF$290.00$8,507,440 Junior Ballroom Foyer SF$290.00 INCL Junior Ballroom Storage SF$130.00 INCL Junior Ballroom No. 2 29,336SF$290.00$8,507,440 Junior Ballroom Foyer SF$290.00 INCL Junior Ballroom Storage SF$130.00 INCL Social Ballroom 9,972SF$290.00$2,891,880 Social Ballroom Foyer SF$290.00 INCL Social Ballroom Storage SF$130.00 INCL Function Rooms 4k 11,817SF$290.00$3,426,930 Function Rooms 2k 41,964SF$290.00$12,169,560 Function Room 5,910SF$290.00$1,713,900 Board Rooms \[small\] 5,382SF$290.00$1,560,780 Board Rooms \[large\] 1,843SF$290.00$534,470 Function Room Storage SF$130.00 INCL Function Room Foyer SF$130.00 INCL Business Center SF$190.00 INCL Coat Room SF$130.00 INCL Sound Room/AV Storage SF$160.00 INCL Convention Registration 3,775SF$250.00$943,750 Convention Coordinator Office 492SF$200.00$98,400 Men's Toilet Rooms 3,520SF$240.00$844,800 Women's Toilet Rooms 3,582SF$240.00$859,680 Circulation SF$250.00 M.E. Total Construction Cost 299,195 SF$284.43 $85,100,650 The above $ include the following markups General Conditions 10.00% Contractor's Bonds 1.00% General Liability Insurance 1.00% Contractor's OH&P 4.50% Design Contingency 10.00% Escalation - 3% per year 3.00% ΑΏΐΖȃΏΕȃΑΏ !¦¤£ Packet0 ¦¤ 99 AECOMConceptual Development Budget Report & Order of Magnitude February 28, 2017 15 Chula Vista Hotel & Convention Center Development Budget Report Recreational Recreational Component Construction Costs Swimming Pool and Deck 1 LS$2,100,000.00$2,100,000 Fitness Center and Spa 13,463 SF$290.00$3,904,270 Wading Pool 1LS$433,130.00$433,130 Tennis Courts 1LS$78,750.00$78,750 Children's Area 1LS$131,250.00$131,250 Game Room 1LS$157,500.00$157,500 Women's Pool Toilets and Lockers 250SF$240.00$60,000 Men's Pool Toilets and Lockers 250SF$240.00$60,000 Circulation SF$200.00 M.E. Total Construction Cost 13,968 SF$495.77 $6,924,900 The above $ include the following markups General Conditions 10.00% Contractor's Bonds 1.00% General Liability Insurance 1.00% Contractor's OH&P 4.50% Design Contingency 10.00% Escalation - 3% per year 3.00% ΑΏΐΖȃΏΕȃΑΏ !¦¤£ Packet0 ¦¤ 100 AECOMConceptual Development Budget Report & Order of Magnitude February 28, 2017 16 Chula Vista Hotel & Convention Center Development Budget Report Food Service Food Service Component Construction Costs Primary Restaurant Kitchen 10,391 SF$210.00$2,182,110 Specialty Restaurant Kitchen 3,690 SF$210.00$774,900 Sports Bar Restaurant Kitchen 6,741SF$210.00$1,415,610 Banquet Kitchen Area 28,930SF$190.00$5,496,700 Pool Bar Kitchen 1,500SF$190.00$285,000 Pastry/Bake Shop SF$240.00 INCL Coffee Market 5,254SF$190.00$998,260 Function Room Pantry 3,702SF$160.00$592,320 Associate Cafeteria SF$240.00$0 Circulation SF$190.00 M.E. Total Construction Cost 60,208 SF$195.07 $11,744,900 The above $ include the following markups General Conditions 10.00% Contractor's Bonds 1.00% General Liability Insurance 1.00% Contractor's OH&P 4.50% Design Contingency 10.00% Escalation - 3% per year 3.00% ΑΏΐΖȃΏΕȃΑΏ !¦¤£ Packet0 ¦¤ 101 AECOMConceptual Development Budget Report & Order of Magnitude February 28, 2017 17 Chula Vista Hotel & Convention Center Development Budget Report Lobby & Retail Lobby and Retail Component Construction Costs Main Lobby + Great Living Room 33,625 SF$350.00$11,768,750 Lobby Seating Area 28,405 SF$350.00$9,941,750 Gift Shop and Retail 10,190SF$240.00$2,445,600 Coffee and Sundry Shop 1,881SF$290.00$545,490 Lobby Restrooms 740SF$240.00$177,600 Circulation SF$250.00 M.E. Total Construction Cost 74,841 SF$332.43 $24,879,190 The above $ include the following markups General Conditions 10.00% Contractor's Bonds 1.00% General Liability Insurance 1.00% Contractor's OH&P 4.50% Design Contingency 10.00% Escalation - 3% per year 3.00% ΑΏΐΖȃΏΕȃΑΏ !¦¤£ Packet0 ¦¤ 102 AECOMConceptual Development Budget Report & Order of Magnitude February 28, 2017 18 Chula Vista Hotel & Convention Center Development Budget Report Front Desk Reception/Office Front Desk Reception/Office Component Construction Costs Front Desk Reception 1,347 SF$240.00$323,280 VIP Check-In 2,177 SF$240.00$522,480 Concierge/valet 543 SF$240.00$130,320 Safety Deposit Box Viewing 735SF$200.00$147,000 Administration Office Component 4,761SF$180.00$856,980 Front Office Manager Office SF$180.00 INCL Reservations Manager Office SF$170.00 INCL Reservations Office SF$170.00 INCL Switchboard/Tel Operators SF$150.00 INCL General Cashiers Room 125SF$150.00$18,750 Counting Room SF$150.00 INCL Copy/Coffee/File Room SF$150.00 INCL Luggage Storage Room 648SF$150.00$97,200 Circulation SF$160.00 M.E. Total Construction Cost 10,336 SF$202.79 $2,096,010 The above $ include the following markups General Conditions 10.00% Contractor's Bonds 1.00% General Liability Insurance 1.00% Contractor's OH&P 4.50% Design Contingency 10.00% Escalation - 3% per year 3.00% ΑΏΐΖȃΏΕȃΑΏ !¦¤£ Packet0 ¦¤ 103 AECOMConceptual Development Budget Report & Order of Magnitude February 28, 2017 19 Chula Vista Hotel & Convention Center Development Budget Report Back of House Back of House Component Construction Costs House Laundry 3,880 SF$190.00$737,200 Uniform Issue and Storage 1,820 SF$140.00$254,800 Executive Housekeepers Office 150SF$180.00$27,000 Assistant Housekeepers Office 150SF$180.00$27,000 Head Houseman's storage 1,782SF$180.00$320,760 Active Linen Storage Room 4,535SF$130.00$589,550 Soiled Linen Room 2,860SF$130.00$371,800 Lost and Found 150SF$140.00$21,000 Female Associate Locker and Toilet Room 3,256SF$240.00$781,440 Male Associate Locker and Toilet Room 4,006SF$240.00$961,440 Security/Timekeeper Office 125SF$150.00$18,750 Director of Personnel Office 175SF$150.00$26,250 Interview Office 125SF$150.00$18,750 Reception/Application Area 150SF$150.00$22,500 Assistant Personnel Office 125SF$150.00$18,750 Computer Room 150SF$150.00$22,500 In-Room Movie Equipment Room 100SF$150.00$15,000 Telephone Equipment Room 150SF$150.00$22,500 Baggage/package Room 150SF$130.00$19,500 China, Glass and Silver Storage 2,446SF$130.00$317,980 Circulation SF$130.00 M.E. Total Construction Cost 26,285 SF$174.79 $4,594,470 The above $ include the following markups General Conditions 10.00% Contractor's Bonds 1.00% General Liability Insurance 1.00% Contractor's OH&P 4.50% Design Contingency 10.00% Escalation - 3% per year 3.00% ΑΏΐΖȃΏΕȃΑΏ !¦¤£ Packet0 ¦¤ 104 AECOMConceptual Development Budget Report & Order of Magnitude February 28, 2017 20 Chula Vista Hotel & Convention Center Development Budget Report Administration Office Administration Component Construction Costs Executive Reception Area 150 SF$240.00$36,000 General Managers Office 150 SF$240.00$36,000 Operations Director Office 125SF$240.00$30,000 Sales Director Office 1,217SF$190.00$231,230 Sales Rep Office 750SF$190.00$142,500 Convention Services 125SF$190.00$23,750 Banquet Manager's Office 125SF$190.00$23,750 Food and Beverage Manager's Office 150SF$190.00$28,500 Controller's Office 125SF$190.00$23,750 Assistant Controller's Office 492SF$190.00$93,480 General Accounting Office 125SF$190.00$23,750 Men's Toilet Room 125SF$240.00$30,000 Women's Toilet Room 400SF$240.00$96,000 Storage 125SF$130.00$16,250 Circulation SF$150.00 M.E. Total Construction Cost 4,184 SF$199.56 $834,960 The above $ include the following markups General Conditions 10.00% Contractor's Bonds 1.00% General Liability Insurance 1.00% Contractor's OH&P 4.50% Design Contingency 10.00% Escalation - 3% per year 3.00% ΑΏΐΖȃΏΕȃΑΏ !¦¤£ Packet0 ¦¤ 105 AECOMConceptual Development Budget Report & Order of Magnitude February 28, 2017 21 Chula Vista Hotel & Convention Center Development Budget Report Circulation Engineering Component Construction Costs Pre-Function: Exhibit Hall \[Level 01\] 69,506SF$250.00$17,376,500 Arrival Floor \[Level 02\] 25,590SF$140.00$3,582,600 Ballroom Level 2 \[Level 03\] 25,516SF$250.00$6,379,000 Service Corridor: Exhibit Hall \[Level 01\] 31,932SF$180.00$5,747,760 Arrival Floor \[Level 02\] 22,061SF$180.00$3,970,980 Ballroom Level 2 \[Level 03\] 17,101SF$180.00$3,078,180 Basement \[Level B1\] 14,042SF$130.00$1,825,460 Corridor: Spa Level - Hotel 01 \[Level 04\] 7,792SF$210.00$1,636,320 Hotel - 02 \[Level 05\] 6,847SF$210.00$1,437,870 Hotel - 03 \[Level 06\] 6,847SF$210.00$1,437,870 Hotel - 04 \[Level 07\] 6,847SF$210.00$1,437,870 Hotel - 05 \[Level 08\] 6,847SF$210.00$1,437,870 Hotel - 06 \[Level 07\] 6,847SF$210.00$1,437,870 Hotel - 07 \[Level 08\] 6,847SF$210.00$1,437,870 Hotel - 08 \[Level 09\] 6,847SF$210.00$1,437,870 Hotel - 09 \[Level 10\] 6,847SF$210.00$1,437,870 Hotel - 10 \[Level 11\] 6,847SF$210.00$1,437,870 Hotel - 11 \[Level 12\] 6,847SF$210.00$1,437,870 Hotel - 12 \[Level 13\] 6,847SF$210.00$1,437,870 Hotel - 13 \[Level 14\] 6,847SF$210.00$1,437,870 Hotel - 14 \[Level 15\] 6,847SF$210.00$1,437,870 Hotel - 15 \[Level 16\] 6,847SF$210.00$1,437,870 Hotel- 16 \[Level 17\] 6,847SF$210.00$1,437,870 Hotel - 17 \[Level 18\] 6,847SF$210.00$1,437,870 Hotel - 18 \[Level 19 PENTHOUSE\] 6,847SF$210.00$1,437,870 Total Construction Cost 329,939 SF$206.22 $68,040,590 The above $ include the following markups General Conditions 10.00% Contractor's Bonds 1.00% General Liability Insurance 1.00% Contractor's OH&P 4.50% Design Contingency 10.00% Escalation - 3% per year 3.00% ΑΏΐΖȃΏΕȃΑΏ !¦¤£ Packet0 ¦¤ 106 AECOMConceptual Development Budget Report & Order of Magnitude February 28, 2017 22 Chula Vista Hotel & Convention Center Development Budget Report Receiving & Storage Receiving & Storage Component Construction Costs Loading Dock 12,560 SF$130.00$1,632,800 Receiving Areas 2,238 SF$130.00$290,940 Receiving Office/Storage Room 493SF$150.00$73,950 HR Office 1,771SF$150.00$265,650 Food & Beverage Office 492SF$150.00$73,800 General & Bulk Storage 4,416SF$130.00$574,080 Dry Food Storage 3,882SF$130.00$504,660 Refrigerated Food Storage 3,964SF$170.00$673,880 Refrigerated Beverage Storage 3,596SF$170.00$611,320 Active Linen Storage 4,498SF$150.00$674,700 House Laundry 3,675SF$130.00$477,750 House Keeping 2,055SF$130.00$267,150 Trash Room 572SF$130.00$74,360 Circulation SF$130.00 M.E. Total Construction Cost 44,212 SF$140.12 $6,195,040 The above $ include the following markups General Conditions 10.00% Contractor's Bonds 1.00% General Liability Insurance 1.00% Contractor's OH&P 4.50% Design Contingency 10.00% Escalation - 3% per year 3.00% ΑΏΐΖȃΏΕȃΑΏ !¦¤£ Packet0 ¦¤ 107 AECOMConceptual Development Budget Report & Order of Magnitude February 28, 2017 23 Chula Vista Hotel & Convention Center Development Budget Report Engineering Engineering Component Construction Costs Boiler Room 7,760 SF$130.00$1,008,800 Mechanical Equipment 10,846 SF$130.00$1,409,980 Switchgear Room 1,552SF$130.00$201,760 Air Handling 4,656SF$130.00$605,280 Penthouse Equipment 3,129SF$130.00$406,770 Transformer Room 750SF$130.00$97,500 Pool Equipment 250SF$130.00$32,500 Director of Engineering Office 150SF$150.00$22,500 Assistant Engineer's Office 100SF$150.00$15,000 General Maintenance Shop 3,104SF$130.00$403,520 Paint Shop 200SF$130.00$26,000 Carpentry Shop 250SF$130.00$32,500 Electrical and Plumbing Shop 250SF$130.00$32,500 TV Repair Shop 250SF$130.00$32,500 Circulation SF$130.00 M.E. Infrastructure (allowance) 48,000SF$130.00$6,240,000 Total Construction Cost 81,247 SF$130.06 $10,567,110 The above $ include the following markups General Conditions 10.00% Contractor's Bonds 1.00% General Liability Insurance 1.00% Contractor's OH&P 4.50% Design Contingency 10.00% Escalation - 3% per year 3.00% ΑΏΐΖȃΏΕȃΑΏ !¦¤£ Packet0 ¦¤ 108 AECOMConceptual Development Budget Report & Order of Magnitude February 28, 2017 24 Chula Vista Hotel & Convention Center Development Budget Report Parking Garage Parking Garage Component Construction Costs Parking Spaces 604,395 SF$120.00$72,527,400 Total Construction Cost 604,395 SF$120.00 $72,527,400 The above $ include the following markups General Conditions 10.00% Contractor's Bonds 1.00% General Liability Insurance 1.00% Contractor's OH&P 4.50% Design Contingency 10.00% Escalation - 4% per year 4.00% ΑΏΐΖȃΏΕȃΑΏ !¦¤£ Packet0 ¦¤ 109 AECOMConceptual Development Budget Report & Order of Magnitude February 28, 2017 25 Chula Vista Hotel & Convention Center Development Budget Report Site Development Site Development Component Construction Costs Site Development 1 LS$30,000,000.00$30,000,000 Total Construction Cost 1 SF$30,000,000.00 $30,000,000 The above $ include the following markups General Conditions 10.00% Contractor's Bonds 1.00% General Liability Insurance 1.00% Contractor's OH&P 4.50% Design Contingency 10.00% Escalation - 3% per year 3.00% ΑΏΐΖȃΏΕȃΑΏ !¦¤£ Packet0 ¦¤ 110 Section 3 Appendix ΑΏΐΖȃΏΕȃΑΏ !¦¤£ Packet0 ¦¤ 111 ΑΏΐΖȃΏΕȃΑΏ !¦¤£ Packet0 ¦¤ 125 ΑΏΐΖȃΏΕȃΑΏ !¦¤£ Packet0 ¦¤ 128 ΑΏΐΖȃΏΕȃΑΏ !¦¤£ Packet0 ¦¤ 129 ΑΏΐΖȃΏΕȃΑΏ !¦¤£ Packet0 ¦¤ 130 ΑΏΐΖȃΏΕȃΑΏ !¦¤£ Packet0 ¦¤ 131 ΑΏΐΖȃΏΕȃΑΏ !¦¤£ Packet0 ¦¤ 132 ΑΏΐΖȃΏΕȃΑΏ !¦¤£ Packet0 ¦¤ 133 ΑΏΐΖȃΏΕȃΑΏ !¦¤£ Packet0 ¦¤ 134 ΑΏΐΖȃΏΕȃΑΏ !¦¤£ Packet0 ¦¤ 135 ΑΏΐΖȃΏΕȃΑΏ !¦¤£ Packet0 ¦¤ 136 ΑΏΐΖȃΏΕȃΑΏ !¦¤£ Packet0 ¦¤ 137 ΑΏΐΖȃΏΕȃΑΏ !¦¤£ Packet0 ¦¤ 138 ΑΏΐΖȃΏΕȃΑΏ !¦¤£ Packet0 ¦¤ 139 ΑΏΐΖȃΏΕȃΑΏ !¦¤£ Packet0 ¦¤ 140 ΑΏΐΖȃΏΕȃΑΏ !¦¤£ Packet0 ¦¤ 141 ΑΏΐΖȃΏΕȃΑΏ !¦¤£ Packet0 ¦¤ 142 ΑΏΐΖȃΏΕȃΑΏ !¦¤£ Packet0 ¦¤ 143 ΑΏΐΖȃΏΕȃΑΏ !¦¤£ Packet0 ¦¤ 144 ΑΏΐΖȃΏΕȃΑΏ !¦¤£ Packet0 ¦¤ 145 ΑΏΐΖȃΏΕȃΑΏ !¦¤£ Packet0 ¦¤ 146 ΑΏΐΖȃΏΕȃΑΏ !¦¤£ Packet0 ¦¤ 147 ΑΏΐΖȃΏΕȃΑΏ !¦¤£ Packet0 ¦¤ 148 ΑΏΐΖȃΏΕȃΑΏ !¦¤£ Packet0 ¦¤ 149 ΑΏΐΖȃΏΕȃΑΏ !¦¤£ Packet0 ¦¤ 150 ΑΏΐΖȃΏΕȃΑΏ !¦¤£ Packet0 ¦¤ 151 ΑΏΐΖȃΏΕȃΑΏ !¦¤£ Packet0 ¦¤ 152 ΑΏΐΖȃΏΕȃΑΏ !¦¤£ Packet0 ¦¤ 153 ΑΏΐΖȃΏΕȃΑΏ !¦¤£ Packet0 ¦¤ 154 ΑΏΐΖȃΏΕȃΑΏ !¦¤£ Packet0 ¦¤ 155 ΑΏΐΖȃΏΕȃΑΏ !¦¤£ Packet0 ¦¤ 156 ΑΏΐΖȃΏΕȃΑΏ !¦¤£ Packet0 ¦¤ 157 ΑΏΐΖȃΏΕȃΑΏ !¦¤£ Packet0 ¦¤ 158 ΑΏΐΖȃΏΕȃΑΏ !¦¤£ Packet0 ¦¤ 159 ΑΏΐΖȃΏΕȃΑΏ !¦¤£ Packet0 ¦¤ 160 ΑΏΐΖȃΏΕȃΑΏ !¦¤£ Packet0 ¦¤ 161 ΑΏΐΖȃΏΕȃΑΏ !¦¤£ Packet0 ¦¤ 162 ΑΏΐΖȃΏΕȃΑΏ !¦¤£ Packet0 ¦¤ 163 ΑΏΐΖȃΏΕȃΑΏ !¦¤£ Packet0 ¦¤ 164 ΑΏΐΖȃΏΕȃΑΏ !¦¤£ Packet0 ¦¤ 165 ΑΏΐΖȃΏΕȃΑΏ !¦¤£ Packet0 ¦¤ 166 ΑΏΐΖȃΏΕȃΑΏ !¦¤£ Packet0 ¦¤ 167 RESOLUTION NO. __________ RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CHULA VISTA APPROVING A NON-BINDING LETTER OF INTENT (LOI) BETWEEN THE CITY, THE SAN DIEGO UNIFIED PORT DISTRICT, AND RIDACHULA VISTA,LLC, FOR DEVELOPMENT OF A HOTEL AND CONVENTION CENTER PROJECT WITHIN THE CHULA VISTA BAYFRONT WHEREAS, the City of Chula Vista (City) and the San Diego Unified Port District (District), began a collaborative planning process with the community to develop a comprehensive Chula Vista Bayfront Master Plan (CVBMP) in 2002; and WHEREAS, on May 18, 2010 the District and the City unanimously approved the Final Environmental Impact Report (UPOD#83356-EIR-658; SCH No. 2005081077) for the CVBMP; and WHEREAS, the first step in implementing the CVBMP was the adoption of the Chula Vista Bayfront Master Plan Financing Agreement, which was approved by the City Council via Resolution 2012-078; and WHEREAS, an Amended and Restated Chula Vista Bayfront Financing Agreement, reflecting updated contributions and commitments was approved by the City Council via Resolution 2016-241; and WHEREAS, the District’s Board of Commissioners approved an Exclusive Negotiating Agreement (ENA) with RIDAfor the construction of a hotel and convention center project (the “Project”) on CVBMP Parcel H-3 on February 10, 2015; and WHEREAS, approval of a non-binding LOI is recommended at this time in order to facilitate the negotiation of a future Disposition and Development Agreement (DDA) for the Project. NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Chula Vista, that it approves theNon-Binding Letter of Intent (LOI) for Development of a Hotel and Convention Center Project within the Chula Vista Bayfrontbetween the City, the San Diego Unified Port Districtand RIDA Chula Vista, LLC, inthe form presented, with such minor modifications as may be required or approved by the City Attorney, a copy of which shall be kepton file in the Office of the CityClerk,and authorizesand directsthe Mayorto execute same. C:\\Users\\GRANIC~1\\AppData\\Local\\Temp\\BCL Technologies\\easyPDF 7\\@BCL@480578FD\\@BCL@480578FD.docx ΑΏΐΖȃΏΕȃΑΏ !¦¤£ Packet0 ¦¤ 168 Resolution No. Page 2 Presented byApproved as to form by Gary HalbertGlen R. Googins City ManagerCity Attorney ΑΏΐΖȃΏΕȃΑΏ !¦¤£ Packet0 ¦¤ 169