September 21, 2004
SUBJECT: Amendment of Existing Contract with Keyser Marston Associates for Downtown Development Economic Analysis
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 to increase the authorized contract amount by $25,000.
BACKGROUND
In August 2003, the City entered into a contract with Keyser Marston Associates, Inc., for Downtown development economic development analysis. This original contract fell within the City Manager’s award authority, and the scope of services included analyzing developer proformas and devising financing strategies for the redevelopment of the City's Downtown area.
On October 21, 2003, Council increased the authorized amount of this contract from $49,000 to $99,000 (RTC 03-365). On April 20, 2004, Council authorized a second expenditure increase from $99,000 to $134,000 (RTC 04-135).
DISCUSSION
During the past several months, Keyser Marston has worked extensively with staff on the analysis of the proformas of the Forum Development Group and has assisted in preparing and conducting lengthy negotiations with Lehman/Forum. Jerry Keyser has also participated in most of the Closed Sessions and Public Hearings of the Redevelopment Agency.
Both the consultant and staff believed that the last amendment to the contract provided sufficient funds to complete the negotiation process and present the resultant Disposition and Development and Owner Participation Agreement to the Redevelopment Agency. However, a flurry of unanticipated reruns of tax increment projections in the two weeks preceeding the August 17 hearing, and the unexpected length of the hearing itself, resulted in the consultant exceeding the contract amount by approximately $10,500 in the month of August, which has not yet been billed to the City. In accordance with the Exclusive Negotiating Rights Agreement with Fourth Quarter Properties XLVIII, LLC, the developer’s deposit of $80,000 will be used to reimburse the City for all consultant expenses from April 27, 2004, until the DDOPA is signed.
Staff anticipates that the assistance of Keyser Marston will also be required in the coming months as questions arise regarding the business deal, and to finalize the State-mandated Section 33433 Report, which documents that the Agency will enjoy public benefits from the development which equal or exceed the Agency’s financial contribution to the project. Staff believes that an increase of the contract amount by $25,000 will cover all of the work described above.
FISCAL IMPACT
The adopted budget for FY 2004/2005 appropriates $75,000 to Project Number 824450, Downtown Development Economic Analysis – Keyser Marston Associates. The proposed contract amendment of $25,000 is within the amount appropriated. In addition, the City will be reimbursed by the developer for all expenses of the consultant from April 27, 2004, until the DDOPA is signed.
ReCOMMENDATION
It is recommended that Council authorize the amendment of an existing contract with Keyser Marston Associates, Inc., in substantially the same form as the attached draft, and increase the authorized contract amount by $25,000, making a total contract not-to-exceed amount of $159,000.
Prepared by:
Robert Paternoster
Director, Community Development
Reviewed by:
Mary J. Bradley
Director, Finance
Approved by:
Amy Chan
City Manager
Attachments
A. Draft Third Amendment to Consultant Services Agreement
B. Second Amendment to Consultant Services Agreement
C. Amendment to Consultant Services Agreement
D. Consultant Services Agreement