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David Kahn, Agency Counsel and Robert Paternoster, Agency Secretary and Director of Redevelopment, presented the staff report.
Agency Chair Lee called for disclosures from Agency Members.
Agency Member Howe stated that City Council met with the developers in a study session about a month ago.
Agency Member Swegles stated that he met with Mr. Peter Pau of Sand Hill Property Company at one of his developments.
Agency Member Chu stated he had lunch with Mr. Peter Pau over a year and a half ago (when he was Mayor), prior to Mr. Pau being involved with this project.
Agency Member Chu stated he joined Agency Member Swegles and Mr. Pau at a Sand Hill development.
Agency Chair Lee stated he met Mr. Pau previously. He also recently spoke to
Jeff Warmoth, of Sand Hill Property Company, at a City of Los Altos meeting; however, they did not have a discussion about this project.
Agency Member Howe verified that the issue before the Agency this evening is the preliminary approval (including negotiations) of the transfer from Fourth Quarter Properties to RREEF and Sand Hill Properties. Agency Counsel Kahn stated the additional issues for this project regarding the site plan, the permits, and other issues required for the development, would be returning to the Agency at a later date.
Agency Member Howe stated the previous developer had plans approved by the Council and he asked Agency Secretary Paternoster to outline the public process (including the amount of public hearings) those plans were required to go through prior to being approved by Council. Agency Secretary Paternoster stated the original plan was prepared by a twenty-one member citizen advisory committee who presented it to City Council. The plan was later incorporated into the Downtown Specific Plan, which involved a number of public hearings. During the process of developing and approving the plan, Council asked the Planning Commission to undertake three community meetings. These meetings were very well attended and were held in order to receive input from the public as to what type of downtown the citizens wanted. Based on that input, the plan was adopted in the form of an amendment to the Downtown Specific Plan. The developer then submitted their plans (consistent with the adopted downtown plans) and actually achieved more of the goals than originally thought possible. The developer’s plans were reviewed through the normal process (including the Planning Commission hearings) and were finally adopted on August 17, 2004.
Agency Member Howe stated the Council approved $100,000 for the outreach efforts of this project. He stated this is the largest single outreach ever done for a project in Sunnyvale.
Public Hearing Opened 9:04 p.m.
Ron Pfohl, Managing Member for the Forum Development Group, spoke about the history of the project and requested that Council approves the preliminary transfer to RREEF/Sand Hill Properties. Mr. Pfohl stated his company is still prepared to do this project, but he believes Sand Hill is the right company to take over this project.
Peter Pau, Principal of Sand Hill Properties, stated they have been working on this project since July 2006 and feel confident that they will be able to complete this project in a timely manner. This is a joint venture partnership between Sand Hill Property Company and RREEF III.
David Wilbur, Director at RREEF, stated they have a large portfolio of investments in Sunnyvale. He stated RREEF shares the same vision as the City and they are committed to this project. They have a large resource team working on the complexities of this project.
Agency Member Swegles verified that there are 45 leases out with the previous developer, but they have not been signed.
Agency Member Howe verified that if this project is approved, Mr. Pau and his team will do everything possible to bring this project to fruition as approved. Mr. Pau stated he is committed to do whatever is needed in order to complete this project.
Theresa Stewart stated her concerns over Mr. Pau taking the downtown development project. She believes the project needs to have serious consideration of sustainable building and landscape.
Agency Member Moylan stated the current Disposition and Development and Owner Participation Agreement (DDOPA) contains several requirements for green building and landscaping. This agreement would be part of the transfer to the new developer if approved.
Julie Horne inquired if the due diligence report included any requirements for green building. Agency Secretary Paternoster stated sustainable building was not one of the ten points listed, rather the criteria was based on the capacity for the developer to deliver the project in a quality and timely manner. He stated the agreement encourages green building in the contract. It is an encouragement and not an agreement; however, it is fairly detailed and forces the developer to respond.
Ms. Horne asked if the developer fails to respond to those points, would that affect the Agency’s decision whether to engage in this agreement. Agency Secretary Paternoster stated they have discussed green building with the developer and they have indicated a desire and willingness to move ahead with the project.
Agency Member Chu asked staff to comment on the expertise of the architects involved related to green projects that they have done in the past. Agency Secretary Paternoster stated in staff’s discussions with them, staff noted they are aware of the techniques of green building and Leadership in Energy and Environmental Design (LEED) certification. He stated he is not able to give specifics, but the architects are available to comment further.
Julie Horne stated she wants the project done right and urged Council to consider more than money and time.
Dick Oliver commended Agency Member Hamilton for her leadership in advocating LEED certification for development of buildings that will be the central core of Sunnyvale.
Amy Chan, Executive Director, stated part of the due diligence is looking at the ability for a developer to complete the project. There are many requirements as part of the DDOPA. If the project is approved, the developer is required to meet all the requirements in the agreement. Should they fail, they will be in breach of their contract. The decision before the Agency this evening is whether or not the developer has the ability to complete this project. There will be an opportunity for the Agency and the public to comment on sustainability issues later on, assuming the transfer occurs.
Ursula Syrova, President Lakewood Village Neighborhood Association, requested that a representative from Sand Hill speak about their experience with green building.
Nicole Stachowicz stated she would like the developer to be supportive of small businesses and green building.
Josh Salans stated RREEF is owned by the largest bank in Europe. This bank is implicated in two major crimes. He stated he wanted to enter into the record that Sunnyvale is willing to fund their downtown with drug laundering and September 11 money.
Harriet Rowe stated her support of Peter Pau of Sand Hill Properties.
Arthur Schwartz stated his support of Sand Hill taking the project over, but mentioned a concern over the developer’s ability to deal with store owners. He cited the big box project on El Camino and mentioned a previous issue that Sand Hill had in their negotiations with the stores with respect to store design and the direction the stores face. He is concerned they will not be able to stand up to the larger retailers at the Town Center.
Public Hearing Closed 9:59 p.m.
Agency Chair Lee asked staff to comment on the allegations just made about RREEF. Agency Counsel Kahn referred to Denise Conley, Consultant from Conley Consulting Group. Ms. Conley stated they investigated the financial resources of both Sand Hill and RREEF. She stated the financial resources of both are quite substantial. RREEF is an international real estate investment trust (REIT). The investor in this project will be RREEF III, which is a specific fund organized by RREEF. The investment funds are primarily (80%) public and private pension funds. RREEF collects a fee and that fee belongs to RREEF and its ownership (which does include the bank in Europe). However, the investor funds for this project are public and private pension funds.
Mr. Pau stated the only comment he ever made about sustainability was that he does not know as much about it as he should. He is very concerned about the community and has set up a group regarding green issues. Mr. Pau invited one of the project architects, Ken Rodriguez, to speak about green building. Mr. Rodriguez stated the entire design team is versed in green and sustainable design. Both architect firms involved have certified LEED members.
Agency Member Hamilton verified with Mr. Pau that the leasing team has designated within the site plan that a certain portion of this project be for “locals” (local businesses).
Agency Member Hamilton asked Mr. Pau to comment on his relationship with Macy’s and Target. Mr. Pau stated Macy’s has been slow to respond, but attributes that to the fact they have already reviewed the plans. He met with Target and was encouraged to hear that they are looking at rebuilding their store at the site.
Agency Chair Lee inquired about this issue regarding Mr. Pau handling two developments at the same time (the redevelopment of Town and County and Town Center). Mr. Pau stated he does not see any negatives in managing both and from a planning standpoint; it is much easier to have both projects.
Agency Member Swegles asked Mr. Pau if he views the two projects almost as one with regard to the design and construction. Mr. Pau stated he will use two different design teams to keep the projects from being homogeneous. His vision is not to have the projects look the same, but to be compatible.
MOTION: Agency Vice Chair Spitaleri moved and Agency Member Howe seconded to approve Alternative No. 1: Council approves the request of Fourth Quarter Properties XLVIII, LLC, to transfer all of its rights and interest in, and all of its duties, liabilities and obligations under, the Disposition, Development and Owner Participation Agreement (DDOPA) dated February 24, 2005 and as subsequently amended to RREEF America, LLC, and Sand Hill Properties pursuant to Section 6.01 of the DDOPA contingent upon the following conditions:
- Agency approval of and RREEF America, LLC agreement to execution of amendments to the DDOPA implementing and Agency-approved changes to the Approved Plan.
- Agency approval of and RREEF America, LLC agreement to execution of amendments to the DDOPA implementing a new schedule for performance of Developer obligations under the DDOPA.
- Agency approval of and RREEF America, LLC agreement to execution of amendments to the DDOPA implementing a system of financial penalties designed to encourage Developer performance under the DDOPA and to compensate the Agency and City from revenue lost as a result of delay in performance.
- Conveyance by Fourth Quarter Properties LLC to RREEF America, LLC of all Town Center Project property owned by Fourth Quarter Properties LLC and development by joint venture comprised of RREEF/Sand Hill Properties.
- Assignment by Fourth Quarter Properties, LLC, in a form acceptable to the Agency, of its rights and obligations under the DDOPA and any other relevant agreement concerning the development and operation of the Town Center Project.
- The above conditions to be completed within 60 calendar days following Agency Board action in approving the transfer (unless such time is extended by mutual agreement of the Agency, Fourth Quarter Properties LLC and RREEF America, LLC).
VOTE: 7-0
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