HomeMy WebLinkAboutCC AG PKT 2011-06-13 #J AGENDA STAFF REPORT
DATE: June 13, 2011
TO: Honorable Mayor and City Council
THRU: Jill R. Ingram, Acting City Manager
FROM: Mark Persico, AICP, Director of Development Services
SUBJECT: COMPLETE A PEER REVIEW OF THE FISCAL
ANAYLSIS OF THE HOTEL USE ON THE
DEPARTMENT OF WATER AND POWER (DWP)
SPECIFIC PLAN PROPERTY
SUMMARY OF REQUEST:
Adopt Resolution No. 6140 approving a contract with Kosmont Companies to
complete a peer review of the hotel fiscal analysis completed by Bay City
Partners for the DWP Specific Plan Amendment for a not to exceed amount of
$19,000.
BACKGROUND AND ANALYSIS:
On August 9, 2010, the City Council adopted Resolution No. 6041 thereby
approving a reimbursement agreement between the City and Bay City Partners
(BCP). The agreement required BCP to reimburse the City for the cost of the
Environmental Impact Report (EIR) and a fiscal analysis study of the hotel use.
BCP made an initial $150,000 deposit in 2010 to start the work.
RBF, the City's environmental consultant, recently started the data collection
phase of the EIR. In order for RBF to meet the overall project timeline, the
services of a fiscal /economics firm need to be engaged. This type of work is
highly specialized and requires a familiarity of the hotel market in southern
California. As a professional services contract, the bidding process is governed
by the Business and Professions Code, which does not require three bidders.
BCP is seeking to amend the DWP Specific Plan and eliminate the hotel use. In
order to show the current Specific Plan land use is infeasible, BCP was asked to
submit a hotel study. PKF Consulting was retained by BCP to complete the
analysis. Staff has reviewed the report and has significant questions about the
thoroughness of the study and its conclusion. Staff, however, acknowledges that
it does not have the resources to fully review and critique the study. Therefore,
Agenda Item J
Page 2
under the existing reimbursement agreement, staff circulated a letter request for
proposal to two firms with expertise in hotel analysis: Keyser Marston Associates
and Kosmont Companies. In brief, the scope calls for: a review of the PKF
Study, an independent hotel market analysis, and a financial feasibility study.
The Keyser Marston Associates bid was $22,500 and the Kosmont Companies
bid was $19,000.
Kosmont Companies is a nationally recognized real estate and economic
development advisory firm with 25 years of experience serving the economic
development and fiscal needs of cities and landowners across California. Among
their recent assignments was completion of a study for the City of Redondo
Beach on a proposed Shade Hotel. Mr. Kosmont served as Assistant City
Manager to the City in the late 1970's. I have done work directly with both firms,
as I was on a consulting team in the City of Carson with Keyser Marston in 2004
and 2005, and also worked as an independent contractor to Kosmont Companies
in 2008 and 2009; however, there is no on -going business relationship.
FISCAL IMPACT:
None to the City. The cost of the peer review will be fully borne by BCP.
Additionally, BCP will pay the agreed upon planning staff overhead charge of 8 %.
RECOMMENDATION:
That the City Council adopt Resolution No. 6140 and authorize the City Manager to
sign the contract with Kosmont Companies.
'SUBMITTED BY: NOTED AND APPROVED:
WA 1: '
Mark H. Persico, AICP Er R. Ingram,
Director of Development Services Acting City Manager
Attachment:
A. Resolution No. 6140
B. Kosmont Companies Proposal, May 16, 2011
C. Professional Services Agreement
ATTACHMENT "A"
RESOLUTION NO. 6140
RESOLUTION NUMBER 6140
A RESOLUTION OF THE SEAL BEACH CITY COUNCIL
APPROVING A PROFESSIONAL SERVICES AGREEMENT
BETWEEN THE CITY OF SEAL BEACH AND KOSMONT
COMPANIES FOR A PEER REVIEW OF THE BAY CITY
PARTNERS HOTEL STUDY ON THE DWP SPECIFIC PLAN SITE
THE SEAL BEACH CITY COUNCIL HEREBY RESOLVES AS FOLLOWS:
Section 1. The City Council hereby approves the Professional Services
Agreement between the City of Seal Beach and Kosmont Companies for a peer
review study of the Bay City Partners hotel study (not to exceed $19,000).
Section 2. The Council hereby directs the City Manager to execute the
Professional Services Agreement with Kosmont Companies.
PASSED, APPROVED and ADOPTED by the Seal Beach City Council at a
regular meeting held on the 13th day of June , 2011 by the following vote:
AYES: Council Members
NOES: Council Members
ABSENT: Council Members
ABSTAIN: Council Members
Mayor
ATTEST:
City Clerk
STATE OF CALIFORNIA }
COUNTY OF ORANGE } SS
CITY OF SEAL BEACH }
I, Linda Devine, City Clerk of the City of Seal Beach, do hereby certify that the
foregoing resolution is the original copy of Resolution Number 6140 on file in
the office of the City Clerk, passed, approved, and adopted by the Seal Beach
City Council at a regular meeting held on the 13th day of June , 2011.
City Clerk
ATTACHMENT "B"
KOSMONT COMPANIES PROPOSAL
DATED MAY 16, 2011
A 1- EXHIBIT A
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Real Estate * Entitlements * Development * Finance /Economics
May 16, 2011
Mark Persico
Director of Development Services
City of Seal Beach
211 8 Street
Seal Beach, CA 90740
Re: Proposal for Services for Summary Evaluation of Hotel Project Feasibility
Dear Mr. Persico:
Kosmont & Associates, Inc. doing business as Kosmont Companies ( "Consultant" or
"Kosmont ") is pleased to present this proposal for real estate advisory services to the
City of Seal Beach ( "Client" or "City ") in connection with the proposed hotel project
( "Project ") located at 1 Street and Marina Drive in Seal Beach, California ( "Site ").
I. BACKGROUND AND OBJECTIVE
The Project Site is a 48 lot subdivision of approximately 10.6 acres, bound by Marina
Drive to the north, the San Gabriel River Channel and Alamitos Bay Marina to the west,
public beach access and Pacific Ocean to the south, and 1st Street to the east. Land
use for the Site is governed the City of Seal Beach pursuant to an adopted Specific Plan,
which currently designates Visitor - Serving Land Uses for the northerly 30 percent
(approx.) of the parcel and Publicly -Owned Open -Space Land Uses for the remaining 70
percent (approx.). Bay Cities Partners, LLC ( "Developer"), the current owner of the Site,
has petitioned the City for a change in zoning as currently set forth in the Specific Plan in
order to develop the Project as a residential only development. In support of this
petition, Developer has presented to the City a site, market and financial viability study
for the hotel project as conducted by PKF Consulting, Inc. ( "PKF "), an external
consulting firm. The PKF Hotel Study concludes that the construction of the hotel as
currently set forth in the Specific Plan would not be feasible.
Client is seeking Consultant's assistance to review the PKF Hotel Study and provide a
third -party summary evaluation of the hotel project feasibility. Consultant has not been
asked by Client to provide a feasibility assessment of the residential only alternative.
II. SCOPE OF SERVICES
Task 1: Review PKF Hotel Study
Consultant will review the PKF hotel site, market and financial viability study prepared in
2009 in order to understand key assumptions utilized and results obtained.
865 South Figueroa Street 35 Floor Los Angeles CA 90017 ph 213.417.3300 fx 213.417.3311 www.kosmont.com
•
City of Seal Beach
Proposal for Services
May 16, 2011
Page 2 of 7
Task 2: Independent Market Analysis and Due Diligence
Consultant will perform an independent market analysis for a ground -up hotel
development, inclusive of relevant economic, demographic, design, and development
and construction considerations. Consultant's due diligence may incorporate the review
of other relevant ground -up developments in order to evaluate the subject Project's
viability while also factoring into account unique characteristics of the subject Property.
Consultant will utilize existing financing assumptions to develop a financial proforma for
the purpose of prospecting potential financing sources to determine the likely availability
of viable financing options. Market analysis and due diligence may include other tasks
as deemed appropriate by Consultant.
Task 3: Summary Memorandum / Project Meetings
Consultant will prepare and provide Client with a Memorandum summarizing its findings
from Tasks 1 and 2. The Memorandum will characterize Consultant's opinion of the
hotel project's viability with supporting arguments. Consultant will participate in a
maximum of two (2) meetings with Client, one of which may be telephonic, and if
requested by Client, one (1) meeting with Developer and City. It is anticipated that the
meetings with Client would occur at assignment initiation. If requested, Consultant will
be available for one (1) presentation to the City Council.
III. SCHEDULE AND REQUIRED DATA
Consultant is prepared to commence work as soon as authorized and upon receipt of a
professional services deposit. To the extent possible, Client will provide Consultant with
existing project data including project site plan, City Specific Plan, relevant staff reports
and analysis, and relevant Developer submittals and correspondence. Concurrent with
authorization to proceed, City will advise Developer and obtain, as necessary, consent
for Consultant to contact Developer and /or Developer's consultant(s). Meeting(s) with
Developer and /or Developer consultant(s) is /are not required for the assignment. It
should be noted that PKF is located at the same address as Consultant in downtown Los
Angeles, which is merely coincidental, as there is no affiliation between Consultant and
PKF.
It is anticipated that the Draft Memorandum will be completed in 5 weeks from receipt of
project data, with Final Memorandum completed within 7 days of last comments
received by Client.
IV. COMPENSATION
The compensation for Tasks 1 through 3 will be invoiced on a time and materials basis
not to exceed $19,000. Further increases, if necessary, will require approval by Client in
advance. Additional meetings pursuant to Task 3 can be scheduled at Client's request
and shall be invoiced on a time and materials basis pursuant to the attached fee
schedule (Exhibit B).
KOSMONT COMPANIES
865 South Figueroa Street 35"' Floor Los Angeles CA 90017 ph 213.417.3300 fx 213.417.3311 www.kosmont.com
City of Seal Beach
Proposal for Services
May 16, 2011
Page 3 of 7
Services for Tasks 1 through 3 will be invoiced monthly at Consultant's standard billing
rates, as shown on Exhibit B, plus reimbursement for out -of- pocket expenses such as
travel and mileage, professional printing, conference calls, and delivery charges for
messenger and overnight packages at actual cost. Consultant will also include in each
invoice an administrative services fee to cover in -house copy, fax, telephone and
postage costs equal to four percent (4.0 %) of Consultant's monthly professional service
fees incurred. Any unpaid invoices after 30 days shall accrue interest at the rate of 10%
per annum.
To begin this assignment, Consultant requires a professional services deposit of $9,500.
This deposit will be credited against the final invoice. Consultant is prepared to
commence work immediately upon receipt of authorization and the retainer.
V. OTHER PROVISIONS
A. Termination. Client or Consultant shall have the right to terminate this
Agreement at any time upon written notification to the other party. Payment for fees
accrued through the date of termination shall be remitted in full.
B. Arbitration. Any controversy or claim arising out of or in relation to this
Agreement, or the making, performance, interpretation or breach thereof, shall be settled
by arbitration at JAMS in Los Angeles, California. Each of the parties to such arbitration
proceeding shall be entitled to take up to five depositions with document requests. The
provisions of Section 1283.05 (except subdivision (e) thereof) of the California Code of
Civil Procedure are incorporated by reference herein, except to the extent they conflict
with this Agreement, in which case this Agreement is controlling. If the matter is heard
by only one arbitrator, such arbitrator shall be a member of the State Bar of Califomia or
a retired judge. If the matter is heard by an arbitration panel, at least one member of
such panel shall be a member of the State Bar of California or a retired judge. The
arbitrator or arbitrators shall decide all questions of law, and all mixed questions of law
and fact, in accordance with the substantive law of the State of California to the end that
all rights and defenses which either party may have asserted in a court of competent
jurisdiction shall be fully available to such party in the arbitration proceeding
contemplated hereby. The arbitrator and arbitrators shall set forth and deliver their
findings of fact and conclusions of law with the delivery of the arbitration award.
Judgment upon the award rendered shall be final and non - appealable and may be
entered in any court having jurisdiction.
C. Attorneys' Fees. In the event of any legal action, arbitration, or proceeding
arising out of an alleged breach of this Agreement, the party prevailing in such legal
action, arbitration, or proceeding shall be entitled to recover reasonable attorneys' fees,
expenses and costs, as well as all actual attorneys' fees, expenses and cost incurred in
enforcing any judgment entered.
D. Authority. Each of the parties executing this Agreement warrants that persons
duly authorized to bind each such party to its terms execute this Agreement.
KOSMONT COMPANIES
865 South Figueroa Street 35 Floor Los Angeles CA 90017 ph 213.417.3300 fx 213.417.3311 www.kosmontcom
City of Seal Beach
Proposal for Services
May 16, 2011
Page 4 of 7
E. Further Actions. The parties agree to execute such additional documents and
take such further actions as may be necessary to carry out the provisions and intent of
this Agreement.
F. Assignment. Neither this Agreement nor any of the rights or obligations
•
hereunder may be assigned by either party without the prior written consent of the other
party.
G. Successors and Assigns. This Agreement shall be binding upon and inure to
the benefit of the parties hereto and there respective successors and assigns.
H. Entire Agreement; Amendments and Waivers. This Agreement contains the
entire agreement between the parties relating to the transactions contemplated hereby
and any and all prior discussions, negotiations, commitments and understanding,
whether written or oral, related hereto are superseded hereby. No addition or
modification of any term or provision of this Agreement shall be effective unless set forth
in writing signed by both parties. No waiver of any of the provisions of this Agreement
shall be deemed to constitute a waiver of any other provision hereof (whether or not
similar), nor shall such waiver constitute a continuing waiver of such provisions unless
otherwise expressly provided. Each party to this Agreement has participated in its
drafting and, therefore, ambiguities in this Agreement will not be construed against any
party to this Agreement.
I. Severability. If any term or provision of this Agreement shall be deemed invalid
or unenforceable, the remainder of this Agreement shall not be affected thereby, and
each remaining term and provision of this Agreement shall be valid and in force to the
fullest extent permitted by law.
J. Notices. All notices, requests, demands and other communications which may
be required under this Agreement shall be in writing and shall be deemed to have been
received when transmitted; if personally delivered, if transmitted by telecopier, electronic
or digital transmission method, upon transmission; if sent by next day delivery to a
domestic address by a recognized overnight delivery service (e.g., Federal Express), the
day after it is sent; and if sent by certified or registered mail, return receipt requested,
upon receipt. In each case, notice shall be sent to the principal place of business of the
respective party. Either party may change its address by giving written notice thereof to
the other in accordance with the provisions of this paragraph.
K. Titles and Captions. Titles and captions contained in this Agreement are
inserted only as a matter of convenience and for reference and in no way define, limit,
extend or describe the scope of this Agreement or the intent of any provision herein.
L. Governing Law. The statutory, administrative and judicial law of the State of
California (without reference to choice of law provisions of California law) shall govern
the execution and performance of this Agreement.
KOSMONT COMPANIES
865 South Figueroa Street 35 Floor Los Angeles CA 90017 ph 213.417.3300 fx 213.417.3311 www.kosmont.com
City of Seal Beach
Proposal for Services
May 16, 2011
Page 5 of 7
M. Confidentiality. Each of the parties agrees not to disclose this Agreement or any
information concerning this Agreement to any persons or entities, other than to their
attorneys and accountants, or as otherwise may be required by law.
N. Counterparts. This Agreement may be executed in one or more counterparts,
each of which constitutes an original, and all of which together constitute one and the
same instrument. The signature of any person on a telecopy of this Agreement, or any
notice, action or consent taken pursuant to this Agreement shall have the same full force
and effect as such person's original signature.
0. Disclaimer. Consultant's financial analysis activities and work product, which
includes but is not limited to pro forma analysis and tax projections, are projections only.
Actual results may differ materially from those expressed in the analysis performed by
Consultant due to the integrity of data received, market conditions, economic events and
conditions, and a variety of factors that could materially affect the data and conclusions.
Client's reliance on Consultant's analysis must consider the foregoing.
Consultant services outlined and described herein are advisory services only. Any
decisions or actions taken or not taken by Client and affiliates, are deemed to be based
on Client's understanding and by execution of this Agreement, acknowledgement that
Consultant's services are advisory only and as such, cannot be relied on as to the
results, performance and conclusions of any investment or project that Client may or
may not undertake as related to the services provided including any verbal or written
communications by and between the Client and Consultant
Client acknowledges that Consultant's use of work product is limited to the purposes
contemplated within this Agreement. Consultant makes no representation of the work
product's application to, or suitability for use in, circumstances not contemplated by the
scope of work under this Agreement.
P. Limitation of Damages. In the event Consultant is found liable for any violation
of duty, whether in tort or in contract, damages shall be limited to the amount Consultant
has received from Client.
Q. Expiration of Proposal for Services. If this Agreement is not fully executed by
the parties within thirty (30) days from the date of this letter, this proposal shall expire.
R. Not an agreement for Legal Services or Legal Advice. This Agreement does
not constitute an agreement for the performance of legal services or the provision of
legal advice, or legal opinion. Client should seek independent legal counsel on matters
for which Client is seeking legal advice.
[ signature page follows ]
KOSMONT COMPANIES
865 South Figueroa Street 35 Floor Los Angeles CA 90017 ph 213.417.3300 fx 213.417.3311 www.kosmontcom
City of Seal Beach
Proposal for Services
May 16, 2011
Page 6 of 7
VI. ACCEPTANCE AND AUTHORIZATION
If this Agreement is acceptable to Client, please execute two copies of the Agreement
and return both originals to Kosmont Companies along with a $9,500 services deposit to
be credited toward final billing. Upon receipt of both signed contracts, we will return one
fully executed original for your files. Kosmont will commence work upon receipt of
executed Agreement and services deposit.
Read, understood, and agreed to this
Day of 2011
City of Seal Beach Kosmont & Associates, Inc.
doing business a`. o� o • mpanies"
By: By:
(Signature) /Signat,I
Name: Name: Larry J. Kosmont, CRE
(Print Name)
Its: Its: President & CEO
(Title)
KOSMONT COMPANIES
865 South Figueroa Street 35"' Floor Los Angeles CA 90017 ph 213.417.3300 fx 213.417.3311 www.kosmont.com
City of Seal Beach
Proposal for Services
May 16, 2011
Page 7 of 7
•
EXHIBIT B
Kosmont Companies
2011 Public Agency Fee Schedule
Professional Services
•
President & CEO $275.00 /hour
Partner /Senior Vice President/Senior Consultant $225.00 /hour
Vice President/Associate $185.00 /hour
Project Analyst $150.00 /hour
GIS Mapping /Graphics Service /Research $ 95.00 /hour
Clerical Support $ 60.00 /hour
• Reimbursables
An administrative fee for in -house copy, fax, phone and postage costs
will be computed at four percent (4.0 %) of monthly Kosmont Companies
professional service fees incurred.
Reimbursables shall be charged at cost for professional printing, and
delivery charges for messenger and overnight packages.
• Charges for Court/Deposition /Expert Witness - Related Appearances
Court- related (non - preparation) activities, such as court appearances,
depositions, and expert witness activities, will be charged at a court rate
of 1.5 times scheduled rates, with a 4 -hour minimum.
Rates shall remain in effect until December 31, 2011
KOSMONT COMPANIES
865 South Figueroa Street 35 Floor Los Angeles CA 90017 ph 213.417.3300 fx 213.417.3311 www.kosmont.com
' EXHIBIT C
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Real Estate * Entitlements * Development * Finance /Economics
May 16, 2011
Kosmont Sample Hotel Projects
1. Scotts Valley Hotel (Active Project)
•
Kosmont is currently working with the City to evaluate the development of a proposed
hotel, contemplated as an approximate 129 -room Holiday Inn Express. Kosmont is
reviewing market demand and site analyses, financial proformas, and capital stack and
equity source information to determine the magnitude of the funding gap between
estimated total required funding and previously secured (SBA) funding. Kosmont has
also been retained to assess viability of a public - private transaction structure and to
identify potential public sector and private market sources of funds that may be applied
to support the identified Project financial gap. Pursuant to the results of previous tasks,
Kosmont has also been retained to assist the City in transaction negotiations with the
Developer and to pursue funding sources for the proposed Project.
2. Redondo Beach — Freeway Hotel Site (Active Project)
Kosmont is working with the City and Developer to identify funding sources and
negotiate a lease- leaseback structure to fund the development of two (2) hotels (Hilton
Garden Inn and Marriott Courtyard) within the City. Kosmont is exploring alternative
financing structures for the 392 -room project.
3. HEI — "W" Hotel (Active Project)
Kosmont was retained by HEI Hotels to assist in the identification, evaluation, and
potential procurement of public subsidies and /or other financing assistance related to the
development of a mixed -use hotel, condominium, nightclub, and restaurant located in
Hollywood, California. Kosmont has identified a source of equity for the Hotel utilizing an
EB -5 investment program structure for certain sections of the Hotel facilities, for which
documentation is in process.
4. City of Redondo Beach — Shade Hotel Project and other Marina/Harbor Assets
(Active Project)
Kosmont is currently retained by the Harbor Division of the City of Redondo Beach to
develop and execute an Asset Management Plan, which included a series of policies for
the management and redevelopment of the leaseholds on the 150 acres that comprise
the Redondo Beach Pier and surrounding waterfront district. Kosmont recently
completed negotiations for the Shade Hotel (Zislis Group), which is a proposed luxury
boutique hospitality facility on land owned by the City pursuant to a ground lease.
Kosmont is currently retained to establish the highest and best use of the five properties
under City control which involve the negotiation of multiple leases, financial analysis,
coordination of the RFQ processes for undeveloped properties and general transactional
support as pertaining to hotel, retail, restaurant and visitor serving amenities.
865 South Figueroa Street 35 Floor Los Angeles CA 90017 ph 213.417.3300 fx 213.417.3311 www.kosmont.com
City of Seal Beach
Sample Hotel Projects
May 16, 2011
Page 2 of 5
5. Hotel for "Confidential" Casino Client in California (Active Project)
Kosmont is retained as the Casino's project and financial advisor for an expansion
program that will add a 100 to 150 -room hotel component adjacent to the existing
Casino facility. With Kosmont's assistance, the Casino is evaluating the expansion
program, which included renegotiation of the existing ground leases between the
Casino, the City, and the City Redevelopment Agency. Kosmont has now successfully
concluded the lease negotiations which allows for the hotel expansion. Kosmont is
responsible for providing general project management services, including the evaluation
of financing structures, availability of equity /debt and construction financing, potential
development costs, and entitlement and environmental approvals, and selection of hotel
operator.
6. City of Norco — Norco Hospitality Report (Active Project)
Kosmont is retained as the City's real estate and financial advisor on a variety of
economic development projects. Kosmont recently completed a hospitality demand
analysis for the City of Norco to assist the City in its process of establishing a hospitality
overlay zone within the City. The intention of creating the hospitality zone within the City
is to designate an area within the City where hotels, restaurants, and other tourist
serving amenities might be located. In order to properly market and attract these tourist
serving amenities to the hospitality zone, Kosmont assisted the City in evaluating the
potential demand for such amenities. Additionally, Kosmont assisted the City in
estimating the potential future retail demand should certain tourist attracting amenities
be developed within the City.
7. Kilroy — SDCC Analysis (Active Project)
Kosmont is retained by Kilroy Realty to perform a net fiscal and economic impact
analysis for an approximately 24 -acre mixed -use development in the City of San Diego.
Kilroy's Project is expected to be comprised of retail, restaurant, residential (both for -sale
and rental), hotel and a health club. The objective was to estimate the economic and
fiscal impacts of the Project to the City of San Diego and the surrounding San Diego
County, including estimates of sales tax, business license tax, hotel tax, and property tax
revenues that will be generated by the project. Project - generated fiscal expenditures
(police, fire, government) were also estimated and subtracted from expected Project -
generated fiscal revenues to arrive at a "net" impact for the City of San Diego.
8. Selma — Tutelian
Kosmont was retained by Tutelian & Company to conduct a fiscal analysis for a
proposed 992,000 square foot commercial retail power center with hotel building located
on 94 acres of land at the northeast comer of Dewolf Avenue and Floral Avenue in the
City of Selma. Kosmont's objective was to estimate the fiscal impacts of the project to
the City of Selma resulting from property tax, sales tax, business license tax and
transient occupancy tax.
KOSMONT COMPANIES
865 South Figueroa Street 35 Floor Los Angeles CA 90017 ph 213.417.3300 fx 213.417.3311 www.kosmont.com
City of Seal Beach
Sample Hotel Projects
May 16, 2011
Page 3 of 5
9. Sir Francis Drake Holdings, L.P. — Fiscal Impact and Economic Benefit Analysis
for the Proposed Glen at Valley Glen and Plaza at the Glen Project
Sir Francis Drake Holdings, LP retained Kosmont to perform fiscal and economic
impacts and permanent jobs creation analysis, in addition to economic advisory
services, in connection with the proposed two -phase mixed -use project titled "The Glen"
at Valley Glen and Plaza in Los Angeles, California. The project includes over 1.1
million square feet of commercial and retail, a 230 -room hotel, over 325,000 square feet
of residential space, and an integrated transit plaza connecting to the City's Orange
Line. The objective was to estimate the economic and fiscal impacts of the project to the
City of Los Angeles and surrounding Los Angeles County, including the estimates of
sales tax, business license tax, hotel tax, utility user tax, and property tax revenues that
will be generated by the project. The analyses and reports also include local economic
fiscal benefit analysis, the estimation of permanent on -site jobs, and the preparation of a
summary fiscal impact report.
10. City of Fresno — Hotel Virginia
The Hotel Virginia ( "Hotel ") is a historic building at the northern corner of Kern Street and
Van Ness Avenue in the City of Fresno. Kosmont Companies was retained to assist the
City to evaluate of whether or not to purchase the Hotel and redevelop it into one of
several potential uses. Possible alternative uses include retail, residential or a mixed -use
product. Kosmont assisted the City through a market analysis, design review and
financial feasibility analysis.
11. City of Fresno — Fresno Sports Town (River)
Kosmont was retained as the City's real estate and financial advisor on multiple
properties throughout the City, including a mixed -use project with a river /water amenity
plus parking, retail, residential and a variety of public amenities. Kosmont has evaluated
alternative strategies for the City including a review of similar river /water programs that
have been executed in other cities nationwide. In addition to the river /water project,
Kosmont has also completed various market studies and economic development
strategies for the City. Kosmont has also worked with City staff and City Council to
review and evaluate specific projects including a mixed -use downtown rehabilitation
project, comprised of converting a historical hotel into a residential and retail project.
12. Fresno — Hotel Feasibility Analysis .
Kosmont Partners (KP), in association with C. H. Johnson Consulting, Inc. (Johnson
Consulting) provided consulting services related to the development of a full- service,
convention hotel in Fresno. The City desired a study to determine whether there is
demand for additional hotel offerings in the City. Kosmont conducted market analysis,
needs assessment, feasibility and economic impact analysis for a convention center
hotel in the City.
13. ESA — Extended Stay Hotels
Client planned to open additional Extended Stay America hotels in California and other
Western states and retained Kosmont to provide assistance in negotiating with
municipalities for tax incentives, fee reductions or waivers, subsidies, grants, credits
toward developer obligations, and /or other mechanisms that would result in cost savings
KOSMONT COMPANIES
865 South Figueroa Street 35 Floor Los Angeles CA 90017 ph 213.417.3300 fx 213.417.3311 www.kosmont.com
City of Seal Beach
Sample Hotel Projects
May 16,2011
Page 4 of 5
to Client in connection with the development of these hotels. Kosmont also prepared
fiscal benefits analysis in anticipation of negotiations with selected municipalities for
economic incentives related to ESA's development of new hotel sites.
14. Monterey — Cannery Row Hotel
Kosmont evaluated and negotiated RDA / City subsidy for 200 -room resort hotel on
Cannery Row.
15. Koll Company — Catalina Development
Kosmont was retained by Client to provide analysis of public sector project funding
sources for a proposed golf course, hotel, and residential project ( "Project ") on Santa
Catalina Island.
16. Busan — East Busan Tourist Complex, South Korea
Kosmont was retained by the lead investment and development partner for the master
planning and design of a 1,400 acres world class destination resort and theme park in
Busan, South Korea. The estimated $1.4 billion East Busan Tourist Complex was
expected to be a "Health, Healing and Recreation" destination, combining the natural
beauty of the Busan coastal area with destination hotel resorts, private ownership of
resort real estate, and recreational amenities, including several golf courses, a theme
park, a water park, and a marine sports complex. Kosmont's Master Plan was a
collaborative effort with Busan City and Korea Land Development Corporation to achieve
a major synergistic effect by clustering key facilities within close proximity to each other
so that both day users and long -term visitors are attracted to the site. The hotel resort
and theme park Master Plan for Busan, South Korea was a detailed development
program which incorporated specific site development, architectural layouts, engineering
considerations for on -site infrastructure, as well as cost estimates and feasibility studies
for each use included within the Project.
17. Ryan Klein — Hollywood Hills Hotel
Kosmont conducted development due diligence regarding several sites in Hollywood and
West Hollywood areas for prospective development of a luxury hotel.
18. City of Reno — Reno Redevelopment Agency Benefit Analysis
Kosmont was retained by the City of Reno to prepare a comprehensive cost/benefit
analysis of the Downtown Reno Redevelopment Agency's activities since its foundation
in FY 1982/83.
The analysis looked at the historic cost of downtown Reno's property tax redistribution to
the Agency, compared to the increased economic activity and the resulting hotel, sales
and business license taxes generated from the incremental growth that has occurred in
the downtown core. The analysis also estimates the future costs and benefits through
the remainder of the Agency's original 35 -year term.
KOSMONT COMPANIES
865 South Figueroa Street 35 Floor Los Angeles CA 90017 ph 213.417.3300 fx 213.417.3311 www.kosmont.com
City of Seal Beach
Sample Hotel Projects
May 16, 2011
Page 5 of 5
19. Fairplex Crossroads — Economic and Fiscal Impact Analysis
Kosmont prepared a preliminary analysis of the fiscal and economic benefits to be
expected from the Fairplex Crossroads development in Pomona. The proposed project
was to be developed by Lewis Operating Corp. and Madison Marquette and was
planned for 550,000 square feet of retail /entertainment uses, In addition to a 6,500 -seat
special events center ( "Arena ") planned adjacent to the existing Sheraton hotel. Total
benefits and costs at full build out were considered with and without the 6,500 -seat
Arena for the purposes of estimating the net impact on the city, should the Fairplex
Crossroads development go forward.
20. Gateway to L.A., Inc. — Gateway to L.A. (Century Corridor) Management District
Service Plan & Property Business Improvement District (PBID) Formation
General Electric Capital Corporation and R &B Commercial Management Company, Inc.
retained Kosmont to evaluate the "Century Corridor", comprised primarily of hotel
properties along Century Boulevard, the gateway to Los Angeles International Airport.
Kosmont focused its efforts on ways to revitalize this area to maximize property values
and occupancy of the 13 hotels and numerous office buildings in the Corridor. Kosmont
formed the Property Business Improvement District (PBID), still in existence today.
KOSMONT COMPANIES
865 South Figueroa Street 35"' Floor Los Angeles CA 90017 ph 213.417.3300 fx 213.417.3311 www.kosmont.com
ATTACHMENT "C"
PROFESSIONAL SERVICES AGREEMENT
•
PROFESSIONAL SERVICES AGREEMENT
Between
pF S EAL � % N t
i *; *,
11 -•
City of Seal Beach
211 - 8th Street •
Seal Beach, CA 90740
&
Kosmont & Associates, Inc.
dba "Kosmont Companies"
865 S. Figueroa Street, Suite 3500
Los Angeles CA 90017
(213) 417 -3300
This Professional Service Agreement ( "the Agreement ") is made as of June 1, 2011 (the
"Effective Date "), by and between Kosmont & Associates, Inc.
dba "Kosmont Companies" ( "Consultant ") and the City of Seal Beach ( "City "), a
California charter city, (collectively, "the Parties ").
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RECITALS
A. City desires certain professional services.
B. Consultant represents that it is qualified and able to provide City
with such services.
NOW THEREFORE, in consideration of the Parties' performance of the
promises, covenants, and conditions stated herein, the Parties hereto agree as
follows.
AGREEMENT
1.0 Scope of Services
1.1. Consultant shall provide those services ( "Services ") set forth in the
attached Exhibit A, which is hereby incorporated by this reference. To the extent
that there is any conflict between Exhibit A and this Agreement, this Agreement
shall control.
1.2. Consultant shall perform all Services under this Agreement in
accordance with the standard of care generally exercised by like professionals
under similar circumstances and in a manner reasonably satisfactory to City.
1.3. In performing this Agreement, Consultant shall comply with all
applicable provisions of federal, state, and local law.
1.4. Consultant will not be compensated for any work performed not
specified in the Scope of Services unless the City authorizes such work in
advance and in writing. The City Manager may authorize payment for such work
up to a cumulative maximum of $19,000. Payment for additional work in excess
of $19,000 requires prior City Council authorization.
2.0 Term
This term of this Agreement shall commence as of the Effective Date and
shall continue for a term of four (4) months unless previously terminated as
provided by this Agreement.
3.0 Consultant's Compensation
City will pay Consultant in accordance with the hourly rates shown on the
fee schedule set forth in Exhibit B for Services but in no event will the City pay
more than $19,000. Any additional work authorized by the City pursuant to
Section 1.4 will be compensated in accordance with the fee schedule set forth in
Exhibit B.
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4.0 Method of Payment
4.1. Consultant shall submit to City monthly invoices for all services
rendered pursuant to this Agreement. Such invoices shall be submitted within 15
days of the end of the month during which the services were rendered and shall
describe in detail the services rendered during the period, the days worked,
number of hours worked, the hourly rates charged, and the services performed
for each day in the period. City will pay Consultant within 30 days of receiving
Consultant's invoice. City will not withhold any applicable federal or state payroll
and other required taxes, or other authorized deductions from payments made to
Consultant.
4.2. Upon 24 -hour notice from City, Consultant shall allow City or City's
agents or representatives to inspect at Consultant's offices during reasonable
business hours all records, invoices, time cards, cost control sheets and other
records maintained by Consultant in connection with this Agreement. City's
rights under this Section 4.2 shall survive for two years following the termination
of this Agreement.
5.0 Termination
5.1. This Agreement may be terminated by City, without cause, or by
Consultant based on reasonable cause, upon giving the other party written notice
thereof not less than 30 days prior to the date of termination.
5.2. This Agreement may be terminated by City upon 10 days' notice to
Consultant if Consultant fails to provide satisfactory evidence of renewal or
replacement of comprehensive general liability insurance as required by this
Agreement at least 20 days before the expiration date of the previous policy.
6.0 Party Representatives
6.1. The City Manager is the City's representative for purposes of this
Agreement.
6.2. Larry J. Kosmont is the Consultant's primary representative for
purposes of this Agreement.
7.0 Notices
7.1. All notices permitted or required under this Agreement shall be
deemed made when personally delivered or when mailed 48 hours after deposit
in the United States Mail, first class postage prepaid and addressed to the party
at the following addresses:
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To City: City of Seal Beach
211 -8th Street
Seal Beach, California 90740
Attn: City Manager
To Consultant: Kosmont Companies
865 S. Figueroa Street
Suite 3500
Los Angeles, CA 90017
Attn: Larry J. Kosmont
7.2. Actual notice shall be deemed adequate notice on the date actual
notice occurred, regardless of the method of service.
8.0 Independent Contractor
8.1. Consultant is an independent contractor and not an employee of
the City. All services provided pursuant to this Agreement shall be performed by
Consultant or under its supervision. Consultant will determine the means,
methods, and details of performing the services. Any additional personnel
performing services under this Agreement on behalf of Consultant shall also not
be employees of City and shall at all times be under Consultant's exclusive
direction and control. Consultant shall pay all wages, salaries, and other
amounts due such personnel in connection with their performance of services
under this Agreement and as required by law. Consultant shall be responsible
for all reports and obligations respecting such additional personnel, including, but
not limited to: social security taxes, income tax withholding, unemployment
insurance, disability insurance, and workers' compensation insurance.
' 8.2. Consultant shall indemnify and hold harmless City and its elected
officials, officers, employees, servants, designated volunteers, and agents
serving as independent contractors in the role of City officials, from any and all
liability, damages, claims, costs and expenses of any nature to the extent arising
from Consultant's personnel practices. City shall have the right to offset against
the amount of any fees due to Consultant under this Agreement any amount due
to City from Consultant as a result of Consultant's failure to promptly pay to City
any reimbursement or indemnification arising under this Section.
9.0 Subcontractors
No portion of this Agreement shall be subcontracted without the prior
written approval of the City. Consultant is fully responsible to City for the
performance of any and all subcontractors.
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•
10.0 Assignment
Consultant shall not assign or transfer any interest in this Agreement
whether by assignment or novation, without the prior written consent of City. Any
purported assignment without such consent shall be void and without effect.
11.0 Insurance
11.1. Consultant shall not commence work under this Agreement until it
has provided evidence satisfactory to the City that Consultant has secured all
insurance required under this Section. Consultant shall furnish City with original
certificates of insurance and endorsements effecting coverage required by this
Agreement on forms satisfactory to the City. The certificates and endorsements
for each insurance policy shall be signed by a person authorized by that insurer
to bind coverage on its behalf, and shall be on forms provided by the City if
requested. All certificates and endorsements shall be received and approved by
the City before work commences. The City reserves the right to require
complete, certified copies of all required insurance policies, at any time.
11.2. Consultant shall, at its expense, procure and maintain for the
duration of the Agreement, insurance against claims for injuries to persons or
damages to property that may arise from or in connection with the performance
of this Agreement. Insurance is to be placed with insurers with a current A.M.
Best's rating no Tess than A:VIII, licensed to do business in California, and
satisfactory to the City. Coverage shall be at least as broad as the latest version
of the following: (1) General Liability: Insurance Services Office Commercial
General Liability coverage (occurrence form CG 0001); (2) Automobile Liability:
Insurance Services Office Business Auto Coverage form number CA 0001, code
1 (any auto); and, if required by the City, (3) Professional Liability. Consultant
shall maintain limits no Tess than: (1) General Liability: $2,000,000 per
occurrence for bodily injury, personal injury and property damage and if
Commercial General Liability Insurance or other form with a general aggregate
limit is used, either the general aggregate limit shall apply separately to this
Agreement/location or the general aggregate limit shall be twice the required
occurrence limit; (2) Automobile Liability: $1,000,000 per accident for bodily injury
and property damage; and (3) Professional Liability: $1,000,000 per
claim /aggregate.
11.3. The insurance policies shall contain the following provisions, or
Consultant shall provide endorsements on forms supplied or approved by the
City to state: (1) coverage shall not be suspended, voided, reduced or canceled
except after 30 days prior written notice by certified mail, return receipt
requested, has been given to the City; (2) any failure to comply with reporting or
other provisions of the policies, including breaches of warranties, shall not affect
coverage provided to the City, its directors, officials, officers, (3) coverage shall
be primary insurance as respects the City, its directors, officials, officers,
employees, agents and volunteers, or if excess, shall stand in an unbroken chain
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of coverage excess of the Consultant's scheduled underlying coverage and that
any insurance or self - insurance maintained by the City, its directors, officials,
officers, employees, agents and volunteers shall be excess of the Consultant's
insurance and shall not be called upon to contribute with it; (4) for general liability
insurance, that the City, its directors, officials, officers, employees, agents and
volunteers shall be covered as additional insureds with respect to the services or
operations performed by or on behalf of the Consultant, including materials, parts
or equipment furnished in connection with such work; and (5) for automobile
liability, that the City, its directors, officials, officers, employees, agents and
volunteers shall be covered as additional insureds with respect to the ownership,
operation, maintenance, use, loading or unloading of any auto owned, leased,
hired or borrowed by the Consultant or for which the Consultant is responsible.
11.4. All insurance required by this Section shall contain standard
separation of insureds provisions and shall not contain any special limitations on
the scope of protection afforded to the City, its directors, officials, officers,
employees, agents, and volunteers.
11.5. Any deductibles or self - insured retentions shall be declared to and
approved by the City. Consultant guarantees that, at the option of the City,
either: (1) the insurer shall reduce or eliminate such deductibles or self - insured
retentions as respects the City, its directors, officials, officers, employees,
agents, and volunteers; or (2) the Consultant shall procure a bond guaranteeing
payment of losses and related investigation costs, claims and administrative and
defense expenses.
12.0 Indemnification, Hold Harmless, and Duty to Defend
Consultant shall defend, indemnify, and hold the City, its officials, officers,
employees, volunteers and agents serving as independent contractors in the role
of city officials (collectively "Indemnitees ") free and harmless from any and all
claims, demands, causes of action, costs, expenses, liability, loss, damage or
injury, in law or equity, to property or persons, including wrongful death, in any
manner arising out of or incident to any acts or omissions of Consultant, its
employees, or its agents in connection with the performance of this Agreement,
including without limitation the payment of all consequential damages and
attorneys' fees and other related costs and expenses, except for such loss or
damage arising from the sole negligence or willful misconduct of the City. With
respect to any and all such aforesaid suits, actions, or other legal proceedings of
every kind that may be brought or instituted against lndemnitees, Consultant
• shall defend lndemnitees, at Consultant's own cost, expense, and risk, and shall
pay and satisfy any judgment, award, or decree that may be rendered against
Indemnitees. Consultant shall reimburse City and its directors, officials, officers,
employees, agents and /or volunteers, for any and all legal expenses and costs
incurred by each of them in connection therewith or in enforcing the indemnity
herein provided. Consultant's obligation to indemnify shall not be restricted to
insurance proceeds, if any, received by Consultant, the City, its directors,
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officials, officers, employees, agents or volunteers. All duties of Consultant under
this Section shall survive termination of this Agreement for 3 years.
Notwithstanding the foregoing, Consultant has no duty to defend,
indemnify or hold Indemnitees harmless from claims, demands, causes of action,
costs, expenses, liability, loss, damage or injury (other than bodily injury or
physical damage) for any claims brought by or against any developer,
prospective developer, applicant, prospective applicant or any of their respective
affiliates related to the hotel project feasibility study assignment that Consultant
will perform.
13.0 Equal Opportunity
Consultant affirmatively represents that it is an equal opportunity
employer. Consultant shall not discriminate against any subcontractor,
employee, or applicant for employment because of race, religion, color, national
origin, handicap, ancestry, sex, sexual orientation, or age. Such non-
discrimination includes, but is not limited to, all activities related to initial
employment, upgrading, demotion, transfer, recruitment or recruitment
advertising, layoff, or termination.
14.0 Labor Certification
By its signature hereunder, Consultant certifies that it is aware of the
provisions of Section 3700 of the California Labor Code that require every
employer to be insured against liability for Workers' Compensation or to
undertake self - insurance in accordance with the provisions of that Code, and
agrees to comply with such provisions before commencing the performance of
the Services.
15.0 Entire Agreement
This Agreement contains the entire agreement of the parties with respect
to the subject matter hereof, and supersedes all prior negotiations,
understandings, or agreements. This Agreement may only be modified by a
writing signed by both parties.
16.0 Severability
The invalidity in whole or in part of any provisions of this Agreement shall
not void or affect the validity of the other provisions of this Agreement.
17.0 Governing Law
This Agreement shall be governed by and construed in accordance with
the laws of the State of California.
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•
18.0 No Third Party Rights
No third party shall be deemed to have any rights hereunder against either
party as a result of this Agreement.
19.0 Waiver
' No waiver of any default shall constitute a waiver of any other default or
breach, whether of the same or other covenant or condition. No waiver, benefit,
privilege, or service voluntarily given or performed by a party shall give the other
party any contractual rights by custom, estoppel, or otherwise.
20.0 Prohibited Interests; Conflict of Interest
20.1. Consultant covenants that it presently has no interest and shall not
acquire any interest, direct or indirect, which may be affected by the Services, or
which would conflict in any manner with the performance of the Services.
Consultant further covenants that, in performance of this Agreement, no person
having any such interest shall be employed by it. Furthermore, Consultant shall
avoid the appearance of having any interest, which would conflict in any manner
with the performance of the Services. Consultant shall not accept any
employment or representation during the term of this Agreement which is or may
likely make Consultant "financially interested" (as provided in California
Government Code § §1090 and 87100) in any decision made by City on any
matter in connection with which Consultant has been retained.
20.2. Consultant further warrants and maintains that it has not employed
or retained any person or entity, other than a bona fide employee working
exclusively for Consultant, to solicit or obtain this Agreement. Nor has
Consultant paid or agreed to pay any person or entity, other than a bona fide
employee working exclusively for Consultant, any fee, commission, gift,
percentage, or any other consideration contingent upon the execution of this
Agreement. Upon any breach or violation of this warranty, City shall have the
right, at its sole and absolute discretion, to terminate this Agreement without
further liability, or to deduct from any sums payable to Consultant hereunder the
full amount or value of any such fee, commission, percentage or gift.
20.3. Consultant warrants and maintains that it has no knowledge that
any officer or employee of City has any interest, whether contractual, non -
contractual, financial, proprietary, or otherwise, in this transaction or in the
business of Consultant, and that if any such interest comes to the knowledge of
Consultant at any time during the term of this Agreement, Consultant shall
immediately make a complete, written disclosure of such interest to City, even if
such interest would not be deemed • a prohibited "conflict of interest" under
applicable laws as described in this subsection.
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21.0 Attorneys' Fees
If either party commences an action against the other party, either legal,
administrative or otherwise, arising out of or in connection with this Agreement,
the prevailing party in such litigation shall be entitled to have and recover from
the losing party all of its attorneys' fees and other costs incurred in connection
therewith.
22.0 Exhibits
All exhibits referenced in this Agreement are hereby incorporated into the
Agreement as if set forth in full herein. In the event of any material discrepancy
between the terms of any exhibit so incorporated and the terms of this
Agreement, the terms of this Agreement shall control.
23.0 Corporate Authority
The person executing this Agreement on behalf of Consultant warrants
that he or she is duly authorized to execute this Agreement on behalf of said
Party and that by his or her execution, the Consultant is formally bound to the
provisions of this Agreement.
IN WITNESS WHEREOF, the Parties hereto, through their respective
authorized representatives have executed this Agreement as of the date and
year first above written.
CITY OF SEAL BEACH CONSULTANT
By: KOSMONT & ASSOCIATES, INC.,
Jill R. Ingram, City Manager dba "Kosmont Companies"
(Acting)
Attest: By: '.
Name: Larry J. Ko.,ont
By:
Linda Devine, City Clerk Its: President and CEO
Approved as to Form: By:
Name: Susan Perry
By:
Quinn Barrow, City Attorney Its: Corporate Secretary
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