SR-11-27-2012-3HCity Council Meeting: November 27, 2012
Agenda Item: 30
To: Mayor and City Council
From: Andy Agle, Director of Housing and Economic Development
Subject: Request for Proposals for Bergamot Station Arts Center Development
Recommended Action
Staff recommends that the City Council adopt the project objectives listed in this report
and authorize staff to issue a Request for Proposals (RFP) to development teams led by
Bergamot Station Ltd./Worthe Real Estate Group, Lionstone Group /Industry Ltd. and
REthink Development /Kor Group for development of the City -owned property located at
2525 Michigan Avenue, home to the Bergamot Station Arts Center.
Executive Summary
An evaluation panel has completed a review of qualifications submitted by five
prospective development teams who responded to the Request for Qualifications for the
opportunity to develop the 5.6 -acre, City -owned site located at 2525 Michigan Avenue
( "Site'). The evaluation panel recommends that three teams be invited to respond to a
RFP. The recommended short- listed teams are led by Bergamot Station Ltd./Worthe
Real Estate Group, Lionstone Group /Industry Ltd., and REthink Development /Kor
Group.
Background
On March 20 2012, the City Council endorsed the Bergamot Station Arts Center
Preferred Concept and authorized the issuance of a Request for Qualifications (RFQ)
for the purpose of soliciting development team qualifications for the City- owned,
5.6 acre site located at 2525 Michigan Avenue, known as the "Bergamot Station Arts
Center." The Site was purchased by the City with transit funds in 1989 with the goal of
serving future transit needs in Santa Monica and providing a source of revenue for the
Big Blue Bus. The Expo Light Rail Line Phase II extension is currently under
construction and will include a stop at Bergamot Station, due to open in 2016.
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The City currently leases the Site to Bergamot Station LLC for $603,797 a year. The
lease expires on December 31, 2015. The Site contains five buildings totaling 76,020
square feet and is occupied by approximately 30 small creative businesses including art
galleries, product designers, a non - profit theatre company and a cafe. The lessee owns
land adjacent to the City -owned property. This privately owned portion of Bergamot
Station Arts Center is not included in the RFQ nor will it be included in the RFP. The
Expo Light Rail Line will bring significant changes to the Site and overall area.
The Bergamot Station Arts Center Preferred Concept is an overarching vision for the
Site that was developed in accordance with the principles, policies and
recommendations set forth in the LUCE and the City's Creative Capital strategy. The
Preferred Concept balances the City's three primary goals for the Site: 1.) to support
the arts, 2.) to deliver a transit - oriented development, and 3.) to maximize revenue for
the Big Blue Bus operations. The concept emphasizes retaining the concentration of art
galleries and other art uses, providing space for a museum, creating revenue - producing
and visitor - serving uses, including a hotel and restaurants /bars, and delivering
infrastructure improvements to compliment the arts center and new Expo station. The
Preferred Concept was the result of eight months of community consultation that was
started in July 2011 in order to create consensus for a community vision for the future of
the Site within the larger context of the Bergamot Area Plan, which is currently in
development.
Discussion
The RFQ was issued on May 21, 2012, with submittals due to staff on July 11, 2012.
Five development teams submitted Statements of Qualifications (SOQ's). An evaluation
panel comprised of a City- retained real estate financial advisor and staff from the
Community and Cultural Services, Planning and Community Development, Big Blue
Bus, Public Works and Housing and Economic Development departments reviewed the
SOQ's. The RFQ evaluation criteria required that development teams have professional
experience in successfully developing and managing high - quality, mixed -use projects
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that include a variety of uses, including hotels, as well as experience in managing and
promoting cultural arts centers. Development teams were expected to demonstrate
experience in deploying innovative strategies involving adaptive reuse of older
buildings, the creation of transit - oriented urban infill developments, and the creation of
vibrant, sustainable, cultural activity centers.
The evaluation criteria also rated development teams' successful experience with
community involvement and similar public - private partnerships, as well as the ability to
secure financing for complex, mixed -use developments. After reviewing the SOQs of
the five teams, the evaluation panel selected four teams to present their experience and
qualifications in person. The evaluation panel has completed its review and
recommends that three teams be invited to respond to an RFP. The teams, as noted
below, will be required to keep the lead, core development partners through the RFP
process. Sub - consultants may be added or changed.
Teams Recommended to Receive RFP
A. The first recommended team includes Bergamot Station Ltd., Worthe Real Estate
Group, Frederick Fisher and Partners, and Howard Robinson & Associates.
® Bergamot Station Ltd.'s founder Wayne Blank is an experienced art center
developer /operator and an entrepreneurial arts advocate and dealer. Mr. Blank
is the original developer of Bergamot Station and owns Shoshana Wayne
Gallery. Along with Howard Robinson, Mr. Blank also developed CRAFTED at
the Port of Los Angeles, an arts and crafts marketplace located in San Pedro.
® Jeffrey M. Worthe is a Principal of M. David Paul Ventures and President of
Worthe Real Estate Group, headquartered in Santa Monica. The firm's main
focus is the acquisition and development of office, mixed -use, sound stage and
warehouse projects in California. Currently, the firm owns over of five million
square feet of properties. Mixed -use projects that are complete or under
construction include the redevelopment of a former USPS sorting center
warehouse into Warner Brothers studio broadcasting, creative office space, a
health club and two -acre park, and The Pointe in Burbank, a ground -up building
housing KCET Studios, creative office, park and underground parking structure
with 1,400 spaces. Plans for a new hotel development in Santa Monica are
underway.
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• Frederick Fisher & Partners has over 29 years of experience in architecture and
project management, leading the development of many large -scale institutional
projects, including the Annenberg Center for Information Science and
Technology at Caltech, PS1 Contemporary Arts Center, the Broad Art
Foundation and Bergamot Station.
• Howard Robinson & Associates, LLC is a land -use consulting firm representing
property and business owners, assisting clients through the planning entitlement
process. Mr. Robinson has worked with Mr. Blank for many years and is a
partner with Mr. Blank in CRAFTED.
B. The second recommended team includes The Lionstone Group, Industry Ltd,
Boulevard Partners, Lew Wolff, Marc Pally and Rios Clementi Hale Studios
• The Lionstone Group, founded in 2001, is a privately owned real estate
investment firm that currently owns approximately $2 billion of real estate
investments across the U.S. Lionstone is an active participant in the Santa
Monica office submarket with nearly one million square feet of creative
office /mixed -use space in downtown and the Bergamot Transit Village Mixed Use
Creative District. Lionstone has also completed 14 development projects of
approximately 10 million square feet, including ground -up apartment projects.
• Industry Ltd, headquartered in Santa Monica, is a real estate development and
construction management firm specializing in creative office and commercial
space, adaptive reuse and historic renovation. Industry Ltd.'s subsidiary,
Industry Partners, provides real estate sales, leasing and market research
services and has a leasing portfolio in excess of three million square feet,
including the Lantana Campus and 1630 Stewart/Penn Station in Santa Monica.
Jim Jacobsen, founder of Industry Ltd. and founding partner of Industry Partners,
has built a 20 -year career specializing in creative and lifestyle workspace on the
Westside of Los Angeles. He has maintained long -term relationships with The
Lionstone Group and a number of Santa Monica companies including Jerry
Bruckheimer and POP Sound /Post.
• Boulevard Partners is an investment and development firm committed to urban
infill and sustainable projects. Scott Ginsburg, Managing Partner at Boulevard,
managed the redevelopment of the award - winning Lincoln and Rose Shopping
Center in Venice, anchored by Whole Foods Market, a project with many
sustainable initiatives and extensive community outreach.
• Lew Wolff, CEO of Wolff Urban Management Inc., a real estate acquisition,
investment, development and management firm and also serves as Co- Chairman
of Maritz, Wolff & Co, a privately held hotel investments group that manages top-
tier luxury hotels. Mr. Wolff entered the hotel business in the 1980s, with projects
including the San Jose Holiday Inn and Burbank Airport Hilton. Recent hotel
activities include the development and management of the Hyatt Place -Mesa AZ
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(154 rooms) and the acquisition, renovation and management of the Westin Saint
Claire- Downtown San Jose (171 rooms).
® Marc Pally is a public art consultant with extensive experience in public art and
cultural planning for civic, institution and private sector clients. He drafted and
administered the Art in Public Places Policy for the CRAIA in 1985 and has
worked on large- scale, multi - phased public art projects including planning, artist
selection, concept and development, installation and operations with recent
clients including Macerich Company (for Santa Monica Place), Sony Pictures
Entertainment in Culver City, and the City of San Francisco. Since 2006, he has
been the Artistic Director of Glow in Santa Monica.
® Rios Celementi Hale Studios is a multi - disciplinary design firm that has
collaborated extensively with Lionstone Development. Projects include W Hotel
Metro Plaza in Hollywood, Paramount Studios Master Plan + Technicolor building
renovations, Metro Lankershim Pedestrian Bridge, Activision Headquarters in
Santa Monica, and Euclid Park, Douglas, Joslyn, Clover, Marine and Ozone Park
Playgrounds in Santa Monica.
C. The third recommended team includes REthink Development, Kor Group, David
Hertz, FAIA- Studio of Environmental Architecture, Hornberger + Worstell, Lord
Cultural Resources and Merry Norris Contemporary Art.
® REthink Development is headquartered in Santa Monica and specializes in
sustainable, LEED - certified mixed -use infill development and adaptive reuse
projects including Lofts at Cherokee Studios in Hollywood, a 22,000- square foot,.
mixed -use building with home recording studios, which was awarded the national
AIA Top 10 Green Building Award. Principal and Co- Founder Greg Reitz is an
expert on green building activities and sustainability programs.
® Kor Group is a fully integrated real estate investment, development and
management firm based in Los Angeles. Since its inception in 1999, Kor has
acquired and developed hospitality, residential and office assets valued in excess
of $2 billion, including the Viceroy Hotel in Santa Monica, a 162 -room hotel that
Kor acquired and transitioned from a budget hotel to a contemporary boutique
hotel, selected as "Top 100 Hotels in the US and Canada" by Travel + Leisure in
2009. Prior to joining Kor, Brian De Lowe, Principal and lead partner on the
team, was the Vice President of Business Development for Viceroy Hotel Group
where he oversaw all aspects of the company's acquisition and business
development activities in North America and South America. While with Viceroy
and Kor, he also served as Development Director, leading the acquisition,
development and redevelopment of adaptive reuse and hotel projects in the U.S.
and Latin America.
® David Hertz, FAIA Architects is headquartered in Santa Monica and specializes
in sustainable design. The firm has been involved in several local adaptive reuse
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projects including the conversion of the historic Parkhurst Building on Main Street
and Pier Avenue into a retail store, and the reuse of a restaurant and market on
20th and Olympic into one of the highest rated LEED Platinum buildings in the
country. The firm also designed the Abbot Kinney Hotel, an 82 room boutique
hotel with 5 restaurants over a subterranean robotic 250 space parking garage,
working with Rethink Development.
® Mark Hornberger of Hornberger + Worstell directs the firm's master planning and
design efforts with recently completed projects including the SFMOMA Parking
Structure with rooftop sculpture terrace and event space and various projects
involving hotels and adaptive reuse of older buildings.
® Lord Cultural Resources provides specialized planning services to the museum,
cultural and heritage sectors, and has worked with over 1,900 cultural institutions
in 50 countries.
® Merry Norris is an arts advocate, consultant and public art champion in Los
Angeles, providing curatorial services to private collectors, public institutions,
developers and boutique hotels since 1978. Ms. Norris assisted in the
establishment of MOCA and serves as trustee for SCI -Arc, and Pasadena
Museum of CA Art. She is a member of the City of LA's Mayor Advisory Design
Panel.
RFP Proiect Objectives
Staff requests authorization to issue a Request for Proposals (RFP) for the Site to the
three recommended development teams. The RFP would request comprehensive and
thorough development proposals to implement the City's vision for the Site. To ensure
that the RFP clearly states the City's vision, goals, and objectives for the Site, staff
recommends that Council adopt project objectives for inclusion in the RFP. The
recommended objectives for development of the Site are:
® The development must include at least 75,000 square feet of arts- related space
that is affordable to non - profit and arts organizations, with emphasis on retaining
existing Bergamot Station Arts Center tenants and providing space for the Santa
Monica Museum of Art.
® The development shall include open space, infrastructure and other amenities to
support public access to the light rail station as well as improving the
environment and functionality of the Site.
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• The development shall maximize the preservation of existing buildings, where
feasible.
• The development should incorporate additional uses which support the Site as a
cultural destination, including evening and weekend activation and uses that help
generate revenue for the Site. These uses should include a hotel, restaurant and
bar and could also include other creative office and cultural uses that will
maximize the market feasibility of the project.
• Parking for the development should consider LUCE parking approaches and
shared parking considerations. Parking that is exclusively reserved for the future
tenants should be minimized, while shared parking should be maximized for
public availability.
• The development should maximize the amount of ground lease revenue to the
City in order to support the operations of the Big Blue Bus. The development, at
a minimum, must provide at least $610,000 per year in ground rent to the City.
• The development must exemplify exceptional architecture and sustainable
design and construction as well as have a focused transit - oriented development
approach.
• The development must exemplify the concepts identified in the Bergamot Transit
Village and Mixed Use Creative District Area Plan process. Conceptualization
and design of the Site must be coordinated with the specific planning process to
ensure that each process informs the other.
Financial issues
• Conveyance of the Site would be structured as a long -term ground lease.
• The development team would be required to submit an analysis that
demonstrates the project's financial feasibility.
• Within the context of the other guiding principles, maximization of the ground
lease income and public revenue sources will be considered in the evaluation
process.
Next Steps
At the conclusion of the Request for Proposal process, staff would recommend that
Council authorize an Exclusive Negotiating Agreement with a recommended
development team during which time the development would be further refined,
entitlements would be considered and business terms negotiated.
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Environmental Analysis
Issuance of a Request for Proposal is not subject to the California Environmental
Quality Act. Any proposed development would be subject ultimately to review pursuant
to the California Environmental Quality Act.
Public Outreach
Public participation in the two community workshops, multiple focus groups with local
gallery owners and regional cultural arts organizations and entrepreneurs, individual
meetings with over 25 local stakeholders and feedback received from the Arts
Commission, Planning Commission and City Council from July 2011 to March 2012
provide the basis for the project objectives recommended to be included in the RFP and
would provide a basis for reviewing the RFP.
Financial Impacts & Budget Actions
There is no immediate financial impact or budget action necessary as a result of the
recommended action.
Prepared by: Jason Harris, Economic Development Manager
Approved: Forwarded to Council:
Andy Agle, Di
Housing and
Development
E
Rod Gould
City Manager