April 20, 2004

REPORT IN BRIEF

Approval is requested for the amendment of an existing contract with Keyser Marston Associates, Inc., of San Francisco for Downtown development economic analysis services related to the Town Center Mall redevelopment and Budget Modification No. 37 to fund the successful completion of the project.

BACKGROUND

On October 21, 2003, Council authorized the amendment of an existing financial services contract with Keyser Marston Associates, Inc., and approved Budget Modification No. 13 to increase the contract not-to-exceed amount from $49,000 to $99,000 (RTC 03-365).  The scope of services for this contract includes analyzing the proformas of developers and devising financing strategies which will benefit the City.

DISCUSSION

Since July 2003, Keyser Marston has served as the Redevelopment Agency’s principal land economics advisor and active member of the Agency’s negotiating team for the redevelopment of Town Center Mall.  During this period, the firm prepared numerous independent proformas (separate and apart from those prepared by the developer) in response to the ever changing developer submittals, including the most recent information received on the business deals between Forum and Lehman, and between Forum and the selected housing developer.  Keyser Marston prepared multiple tax increment projection models under various scenarios set forth by the developer.  Jerry Keyser served on the selection committee for the Master Developer.  Over the past nine months, he and his staff have attended 19 meetings, including participation in (and preparation and follow-up for) eight day-long negotiation sessions with the developer.

The above-cited work has nearly exhausted the funds which Council authorized for this purpose.  Staff requires the continued support of Keyser Marston for expected intensive negotiations over the next two months leading to a Disposition and Development Agreement (DDA) for consideration by the Redevelopment Agency in June.  Keyser Marston estimates that up to $35, 000 will be necessary to complete this project under the existing contract.

FISCAL IMPACT

This Budget Modification would reduce the Non-recurring Events Reserve by $35,000 and appropriate this amount to project 824480 to complete the Downtown Development Economic Analysis project.

RECOMMENDATION 

It is recommended that Council take the following actions:

1.       Authorize the amendment of an existing contract with Keyser Marston Associates, Inc., in substantially the same form as the attached draft, and increase authorized expenditures by $35,000, making a total contract not-to-exceed amount of $134,000; and

2.       Approve Budget Modification No. 37

Prepared by:

Robert Paternoster

Director, Community Development

Reviewed by:

Mary J. Bradley

Director, Finance

Approved by:

Amy Chan

City Manager

ATTACHMENTS

A.  Existing Consultant Services Agreement
B.  Amendment to Consultant Services Agreement
C.  Draft Second Amendment to Consultant Services Agreement (pdf format)