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SR 10-25-2022 5K City Council Report City Council Meeting: October 25, 2022 Agenda Item: 5.K 1 of 4 To: Mayor and City Council From: David Martin, Director, Administration Subject: Approval of Fifth Modification to Allan D. Kotin & Associates Professional Services Agreement for Real Estate Advisory Services Recommended Action Staff recommends that the City Council authorize the City Manager to negotiate and execute a fifth modification to Professional Services Agreement (PSA) #9543 (CCS) with Allan D. Kotin & Associates for continuation of real estate advisory services related to the Santa Monica Pier and other City projects. This modification will extend the term by one year. This will result in a 12-year amended agreement with no increase to the current authorized amount of $340,000, with future year funding contingent on Council budget approval. Summary The City has an extensive real estate portfolio with prominent assets such as the Santa Monica Pier, Civic Auditorium and Bergamot Station Arts Center, as well as other commercial properties at the beach and in the downtown area. As a best practice, the City retains advisory services specializing in economic and real estate analysis to inform and assist the City with valuations and negotiations. Allan D. Kotin & Associates is a consultant used by the City for such services. The City uses the firm’s consulting services to evaluate the feasibility and business terms associated with leases and licenses of several City-owned properties such as Pacific Park, the Civic Auditorium, beach concessions and other public-private partnerships. To ensure continuity, staff recommends modifying the existing professional services agreement with Allan D. Kotin & Associates (Kotin & Associates), who are supporting the City in current negotiations. In some instances, requiring outside consultant services, the City has been able to be reimbursed for its consultant fees. Recently, the City has been in lease negotiations with 5.K Packet Pg. 556 2 of 4 the operators of Pacific Park and is being reimbursed for Kotin & Associates’ consultant fees through the reimbursement agreement with SM Park Holdings, LLC d/b/a Pacific Park. Discussion For complex projects, the City, through its Economic Development Division, engages highly specialized real estate advisory services. One of the consultants that the City currently contracts with, Kotin & Associates, was selected following a Request for Qualifications (RFQ) process in 2011 and Council approved on January 24, 2012 (Attachment A). Due to the complexity and duration of significant real estate transactions which can take many years to evaluate and negotiate, Kotin & Associates’ contract has been modified to extend the original term and increase the original budget as summarized in the Past Council Actions table below. Lease negotiations between the Santa Monica Pier tenant, Pacific Park, and the City have been ongoing; the complex lease negotiations have been conducted with the support of Kotin & Associates. To ensure continuity, staff recommends extending the term by one-year. The costs associated with the Pacific Park lease negotiations are being reimbursed through a cost reimbursement agreement with the subtenant operators of Pacific Park, the amusement park on the Santa Monica Pier. The Economic Development Division is in the process of finalizing a RFQ and expects to have a list of qualified consultants within Fiscal Year 2022-23. Vendor/Consultant Selection The services of Kotin & Associates were procured through a RFQ process in 2011. This firm was selected based on its qualifications and extensive financial and development advisory experience consulting for public agencies throughout the state. The City will be issuing a new RFQ for professional services in Fiscal Year 2022-23 to help identify additional professional service providers to assist the City with real estate needs. However, due to potential ongoing requirements associated with Pacific Park, staff wanted to ensure Kotin was still under contract to provide continuity with this project. Due to the COVID-19 pandemic, the shutdown of the Pier, and staff workload, the 5.K Packet Pg. 557 3 of 4 negotiations with Pacific Park and the solicitation for additional consultants were delayed. Past Council Actions Meeting Date Description 01/24/12 (attachment A) Original award of PSA # 9543 (CCS) authorizing Allan D. Kotin & Associates to provide real estate economic and financial advisory services in an amount not to exceed $70,000. A first modification was executed on June 26, 2014 to extend the term to June 30, 2016. At its June 23, 2015 meeting, Council authorized a second modification to the extend the term through December 31, 2019 and increase the contract by $130,000 for a total amount not-to- exceed $200,000. 06/27/17 (attachment B) Council authorized a third modification to increase contract authority by $100,000 for a total amount not to exceed $300,000 11/12/19 (attachment C) Council authorized a fourth modification to increase contract authority by $40,000 for a total amount not to exceed $340,000 and to extend the term by three one-year options. Financial Impacts and Budget Actions There is no immediate financial impact or budget action necessary as a result of the recommended action. Staff will return to Council if specific budget actions are required in the future. Funding for the agreement has been budgeted for the 2022-23 fiscal year and the City is reimbursed for the consultant costs associated with the Pacific Park lease negotiations by SM Park Holdings, LLC. The remaining contract authority is $60,330 and is sufficient to complete the project. Prepared By: Erika Cavicante, Senior Development Analyst Approved Forwarded to Council Attachments: A. 2012. 01.24 Kotin Council Report 5.K Packet Pg. 558 4 of 4 B. 2017. 06.27 Kotin Council Report C. 2019. 11-12 Kotin Council Report D. Kotin OAKS INITIATIVE 2021-2022 5.K Packet Pg. 559 5.K.a Packet Pg. 560 Attachment: 2012. 01.24 Kotin Council Report (5389 : Amend and Extend the Professional Services Agreement Real Estate & Financial 5.K.a Packet Pg. 561 Attachment: 2012. 01.24 Kotin Council Report (5389 : Amend and Extend the Professional Services Agreement Real Estate & Financial 5.K.a Packet Pg. 562 Attachment: 2012. 01.24 Kotin Council Report (5389 : Amend and Extend the Professional Services Agreement Real Estate & Financial City Council Report City Council Meeting: June 27, 2017 Agenda Item: 3.F 1 of 3 To: Mayor and City Council From: Andy Agle, Director, Housing and Economic Development, Economic Development Division Subject: Modification to Professional Services Agreement for Real Estate and Economic Development Consultant Recommended Action Staff recommends that Council authorize the City Manager to negotiate and execute a third modification to Professional Services Agreement Number 9543 in the amount of $100,000 with Allan D. Kotin & Associates, a California-based company, for economic consulting and financial analysis. The proposed modification would result in a five-year amended agreement with a new total amount not to exceed $300,000, with future-year funding contingent on Council budget approval. Executive Summary Allan D. Kotin & Associates has been the real estate and economic development consultant to the City on a variety of projects including the Civic Center Sports Field and Fourth Street Cinema. Staff recommends modifying the professional services agreement with Allan D. Kotin & Associates to increase its contract authority by $100,000, for a total amount not to exceed $300,000, in order to continue to provide analytical support for City projects and endeavors. Background The City of Santa Monica Housing and Economic Development Department’s Economic Development Division periodically requires specialized real estate and financial consulting services to advise staff and Council on complex property transactions involving leasing, development, and the formulation of public/private development partnerships. Examples include the Civic Center sports field, Downtown cinema development, and Civic Auditorium renovation. In December 2011, staff issued a Request for Qualifications (RFQ) from economic and financial consulting teams that could advise staff on complex real estate transactions such as redevelopment of the Fourth Street at Arizona Avenue site, revitalization of 5.K.b Packet Pg. 563 Attachment: 2017. 06.27 Kotin Council Report (5389 : Amend and Extend the Professional Services Agreement Real Estate & Financial 2 of 3 Bergamot Station Arts Center, and renovation of the Civic Auditorium. The real estate and economic consulting firm of Allan D. Kotin & Associates was recommended because of its extensive experience with providing economic and financial solutions to both the public and private sectors. On January 24, 2012 (Attachment A), Council authorized staff to execute professional services agreement number 9543 with Allan D. Kotin & Associates in the amount of $70,000. A first modification was executed on June 26, 2014 to extend the term to June 30, 2016. At its June 23, 2015 meeting (Attachment B), Council authorized a second modification to the existing professional services agreement number 9543 to extend the term to December 31, 2019, and increase its contract authority by $130,000 for a total amount not to exceed $200,000. Discussion Allan D. Kotin & Associates has provided real estate financial analysis and economic development advice to the City on a variety of complex property transactions and development proposals including the Civic Center Sports Field and Fourth Street Cinema. A third modification to the existing professional services agreement number 9543 is proposed to enable the firm to continue its economic and financial advisory services to the City in order to assist in the review of the upcoming solicitation of proposals for the renovation of the Civic Auditorium and other real estate analysis as required. Staff seeks authorization to modify the professional services agreement to increase the contract amount by $100,000 for a total budget authority not to exceed $300,000. Vendor/Consultant Selection The firm, Allan D. Kotin & Associates, was chosen through an RFQ process in 2011. The firm was selected based on its extensive economic development experience consulting for both the public and private sectors. The firm’s advice and analysis have been extremely helpful in assisting the City in structuring business terms that protect the City’s interests while yielding the greatest economic benefit. 5.K.b Packet Pg. 564 Attachment: 2017. 06.27 Kotin Council Report (5389 : Amend and Extend the Professional Services Agreement Real Estate & Financial 3 of 3 Financial Impacts and Budget Actions The contract modification to be awarded to Allan D. Kotin & Associates is $100,000, for an amended contract total not to exceed $300,000. Funds are included in the FY 2017-18 Proposed Budget in the Housing and Economic Development Department. The contract will be charged to account 012681.555060. Future-year funding is contingent on Council budget approval. Prepared By: Erika Cavicante, Senior Development Analyst Approved Forwarded to Council Attachments: A. Council Report 1/24/2012 B. Council Report 6/23/2015 C. Oaks Initiative Allan D. Kotin & Assoc. 5.K.b Packet Pg. 565 Attachment: 2017. 06.27 Kotin Council Report (5389 : Amend and Extend the Professional Services Agreement Real Estate & Financial City Council Report City Council Meeting: November 12, 2019 Agenda Item: 3.H 1 of 5 To: Mayor and City Council From: Andy Agle, Director, Housing and Economic Development, Economic Development Division Subject: Modifications to Professional Services Agreements for Real Estate and Economic Advisory Services Recommended Action Staff recommends that the City Council authorize the City Manager to negotiate and execute: 1. A third modification to Professional Services Agreement # 9539 (CCS) with Keyser Marston Associates to increase the compensation by $200,000 and to extend the term by five additional one-year options for services related to the Fourth Street and Arizona project, Bergamot Station Arts Center project, and affordable housing projects. The proposed modification would result in a 14-year amended agreement with a new total not to exceed $480,000, with future-year funding contingent on Council budget approval; and, 2. A fourth modification to Professional Services Agreement # 9543 (CCS) with Allan D. Kotin & Associates to increase compensation by $40,000 and to extend the term by three additional one-year options for services related to the Santa Monica Pier, Beach, and Civic Auditorium. The proposed modification would result in an 11-year amended agreement with a new total not to exceed $340,000, with future-year funding contingent on Council budget approval; and, 3. A reimbursement agreement with SM Park Holdings, LLC, doing business as Pacific Park, or designee, related to the City’s expenses in evaluating proposed changes to the subtenant’s interest on the Pier. Summary The City has an extensive real estate portfolio with prominent assets such as the Santa Monica Pier, Civic Auditorium, and Bergamot Station Arts Center, as well as other commercial properties at the beach and downtown. As a best practice, the City retains advisory services specializing in economic and real estate analysis to inform and assist the City with valuations and negotiations. Keyser Marston Associates, Inc. is currently assisting the City with analysis and negotiations of the business terms associated with the proposed public/private partnerships at Fourth Street and Arizona and Bergamot Station Arts Center, as well as numerous affordable housing projects. Allan D. Kotin & 5.K.c Packet Pg. 566 Attachment: 2019. 11-12 Kotin Council Report (5389 : Amend and Extend the Professional Services Agreement Real Estate & Financial 2 of 5 Associates is currently evaluating the feasibility and business terms associated with leases and licenses of several City-owned properties including the Civic Auditorium, beach concessions, and Pacific Park. In order to support continuity for existing negotiations, staff recommends modifying the existing professional service agreements with Keyser Marston Associates, Inc. and Allan D. Kotin & Associates. In cases requiring outside consultant services, the City seeks reimbursement for its consultant fees. As the operators of Pacific Park have recently proposed potential modifications to their existing lease, staff seeks authorization to enter into a reimbursement agreement with SM Park Holdings, LLC, d/b/a Pacific Park Discussion For complex development projects, the City, through its Housing and Economic Development Department, engages highly specialized real estate advisory services. The City currently contracts with two consultants to perform such services, Keyser Marston Associates, Inc. (KMA) and Allan D. Kotin & Associates (Kotin & Associates). Both consultants were selected following a Request for Qualifications (RFQ) process in 2011 and Council approval on January 24, 2012 (Attachment A). Due to the complexity and duration of significant real estate transactions that can take many years to evaluate and negotiate, the consultant contracts have been modified to extend the original term and increase the original budget as summarized in the Past Council Actions table below. As negotiations on several complex public/private partnership development projects are ongoing (Fourth Street and Arizona project, Bergamot Station Arts Center, the Civic Auditorium) and the Santa Monica Pier tenant operating Pacific Park has requested to modify their lease agreement, further modifications of the consultant agreements are recommended. KMA currently provides real estate financial analysis and economic development consulting services for the Fourth Street and Arizona and Bergamot Station Arts Center projects, including assisting the City with negotiating business terms associated with proposed disposition and development agreements and long-term ground leases for the projects, as well as conducting economic modeling of alternative development scenarios and assisting in analyzing affordable housing projects. The fees charged by 5.K.c Packet Pg. 567 Attachment: 2019. 11-12 Kotin Council Report (5389 : Amend and Extend the Professional Services Agreement Real Estate & Financial 3 of 5 KMA are reimbursed by the respective development proponents through two separate cost-recovery agreements. To ensure that the economic analysis and negotiations are completed for the two projects, staff recommends modifying PSA # 9539 (CCS) with KMA to increase the compensation by $200,000 and to include five additional one-year options to extend the term, resulting in a total contract amount of $480,000 and a fourteen-year term. Kotin & Associates is currently working on a variety of complex real estate transactions providing financial analysis and economic considerations for beach concessions, reuse of the Civic Auditorium, and lease negotiations for Pacific Park. To ensure consistency in the financial analysis and negotiations, staff recommends modifying PSA # 9543 (CCS) with Kotin & Associates to increase the compensation by $40,000 and to include three additional one-year options to extend the term, resulting in a total contract amount of $340,000 and an eleven-year term. The costs associated with the Pacific Park lease negotiations are proposed to be reimbursed through a cost reimbursement agreement with the subtenant operators of Pacific Park, the amusement park on Santa Monica Pier. Vendor/Consultant Selection The services of KMA and Kotin & Associates were procured through an RFQ process in 2011. Both firms were selected based on their qualifications and extensive financial and development advisory experience consulting for public agencies throughout the state. Past Council Actions Meeting Date Description January 24, 2012 (Attachment A) KMA. Original award of PSA # 9539 (CCS) authorizing KMA to provide professional real estate and economic development consultant services in an amount not to exceed $80,000. A first modification was executed on June 25, 2014 that extended the term through June 30, 2015. Kotin. Original award of PSA # 9543 (CCS) authorizing Allan D. Kotin and Associates to provide real estate economic and financial advisory services in amount not to exceed $70,000. A 5.K.c Packet Pg. 568 Attachment: 2019. 11-12 Kotin Council Report (5389 : Amend and Extend the Professional Services Agreement Real Estate & Financial 4 of 5 first modification was executed on June 26, 2014 to extend the term to June 30, 2016. At its June 23, 2015 meeting, Council authorized a second modification to the PSA 9543 to extend the term through December 31, 2019 and increase contract by $130,000 for a total amount not-to-exceed $200,000. May 12, 2015 (Attachment B) KMA. Council authorized a second modification to KMA’s PSA # 9539 (CCS) to extend the term to June 30, 2018, with three, one- year options to extend and increase its contract authority by $200,000 for a total amount not to exceed $280,000. June 27, 2017 (Attachment C) Kotin. Council authorized a third modification to Kotin & Associates PSA to increase of contract authority by $100,000 for a total amount not to exceed $300,000. Financial Impacts and Budget Actions Staff seeks authority to approve funding from the General Fund to increase the amount of the agreements with Keyser Marston Associates, Inc. and Allan D. Kotin & Associates to continue to provide real estate consulting services. The City will be reimbursed for consultant costs by the development teams for the Fourth Street and Arizona and Bergamot Station Arts Center projects, and from SM Park Holdings, LLC for Pacific Park lease negotiations. Agreement Modification Request Agreement # Current Authorized Amount FY 2019-20 Request Future Year Requests Account Number Total Revised Contract Amount 9543 (CCS) $ 300,000 $ 20,000 $ 20,000 01160004.552010 $ 340,000 9539 (CCS) $ 280,000 $ 20,000 $ 130,000 01160004.552010 $ 430,000 $ 0 $ 50,000 $ 0 01160002.552010 $ 50,000 Total $ 480,000 Future-year funding is contingent on Council budget approval. 5.K.c Packet Pg. 569 Attachment: 2019. 11-12 Kotin Council Report (5389 : Amend and Extend the Professional Services Agreement Real Estate & Financial 5 of 5 Prepared By: Ramandeep Kaur, Management Fellow Approved Forwarded to Council Attachments: A. Attachment A - Council Report January 24, 2012 B. Attachment B - Council Report May 12, 2015 C. Attachment C - Council Report June 27, 2017 D. Attachment D - Oaks Initiative Form Kayser Marston Associates Inc. E. Attachment E - Oaks Initiative Form Allan D. Kotin & Associates 5.K.c Packet Pg. 570 Attachment: 2019. 11-12 Kotin Council Report (5389 : Amend and Extend the Professional Services Agreement Real Estate & Financial CITY OF SANTA MONICA OAKS INITIATIVE DISCLOSURE FORM In order to facilitate compliance with the requirements of the Oaks Initiative, the City compiles and maintains certain information. That information includes the name of any person or persons who is seeking a “public benefit.” If the “public benefit” is sought by an entity, rather than an individual person, the information includes the name of every person who is: (a) trustee, (b) director, (c) partner, (d) officer, or has (e) more than a ten percent interest in the entity. Public benefits include: 1. Personal services contracts in excess of $25,000 over any 12-month period; 2. Sale of material, equipment or supplies to the City in excess of $25,000 over a 12- month period; 3. Purchase, sale or lease of real property to or from the City in excess of $25,000 over a 12- month period; 4. Non-competitive franchise awards with gross revenue of $50,000 or more in any 12-month period; 5. Land use variance, special use permit, or other exception to an established land use plan, where the decision has a value in excess of $25,000; 6. Tax “abatement, exception, or benefit” of a value in excess of $5,000 in any 12- month period; or 7. Payment of “cash or specie” of a net value to the recipient of $10,000 in any 12- month period. Name(s) of persons or entities receiving public benefit: Allan D. Kotin & Associates Name(s) of trustees, directors, partners, and officers: Allan D. Kotin Name(s) of persons with more than a 10% equity, participation, or revenue interest: Allan D. Kotin Prepared by: ____________________________Title: __________________________ Signature: ______________________________________ Date: ________________ Email: ____________________________________ Phone: ____________________ FOR CITY USE ONLY: Bid/PO/Contract # ____________________________ Permit # ___________________________ Jenn Miller Business Manager 12/1/2021 jmiller@spscpa.com (310) 873-5248 5.K.d Packet Pg. 571 Attachment: Kotin OAKS INITIATIVE 2021-2022 (5389 : Amend and Extend the Professional Services Agreement Real Estate & Financial