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HomeMy WebLinkAboutSPRA Minutes 1997-03-18SRRA (Spec. Pub. Hearing) MINUTES 3/18/97 1 IN THE COUNCIL CHAMBER, CITY HALL OF SAN RAFAEL, TUESDAY, MARCH 18, 1997, AT 7:40 PM Special Public Hearing: San Rafael Redevelopment Agency: Cyr Miller, Member Present: Albert J. Boro, Chairman Paul M. Cohen, Member Barbara Heller, Member Gary Phillips, Member Absent: None 1.PUBLIC HEARING - TO SELECT A DEVELOPER FOR REDEVELOPMENT OF OLD MACY'S SITE AT FOURTH AND COURT STREETS IN SAN RAFAEL, CA (RA) - File R-380 x R-373 Chairman Boro explained the process to be followed during the meeting, stating there would initially be a staff presentation, then James Schafer, of Samuelson Schafer, would have thirty minutes to address the Agency, followed by questions from the Agency Members. Robert Lalanne, of Lalanne/Volckmann, would then have thirty minutes to address the Agency, and the Agency Members would ask questions after his presentation. Chairman Boro stated once the developers had made their presentations to the Agency, members of the public would then be invited to comment. After the public comment, Mr. Lalanne would be given five minutes for rebuttal, followed by five minutes for Mr. Schafer's rebuttal. After each developer had completed his rebuttal, the Agency would then take the matter for discussion. Chairman Boro declared the Public Hearing opened, and asked for a staff report. Executive Director Rod Gould stated he wished to clear-up some misconceptions that had cropped up after the March 5th Public Review Panel meeting. He noted both developers had submitted Letters of Interest from retailers and financial institutions as part of their proposals. Mr. Gould reported staff checked with the retailers listed in both proposals, and noted one of the Planning Commissioners, who was also a member of the Review Panel, did so as well, on his own. Mr. Gould stated what staff heard was a lower level of interest from the Lalanne/Volckmann retailers than from the Samuelson Schafer retailers, noting the Samuelson Schafer retailers' letters were also stronger. Mr. Gould stated staff reported these conversations to the Review Group after the developers had given their presentations and left the meeting, and the Planning Commissioner reported similar findings. Mr. Gould reported Mr. Lalanne has strenuously objected, contending this caused members of the Review Panel to question his ability to finance the project, and to attract top quality retailers. Mr. Gould reported he has spoken and corresponded repeatedly with Mr. Lalanne during the past week and a half, and in order to clear-up this matter, Mr. Gould asked Mr. Lalanne to produce clarifying Letters of Interest from the prospective retailers and financiers, to dispel any doubt. Mr. Gould stated Lalanne/Volckmann has a very strong record of Retail and Mixed Use development, noting staff holds Mr. Lalanne and his firm in the very highest regard, and both the Agency and Mr. Lalanne wanted to set the record straight. Mr. Gould reported to date the Agency had received four clarifying letters, one from Ron Silva, a principal of Lowe Enterprises, who showed sincere interest in investing in the Lalanne/Volckmann project; the second was a letter from Mr. John Maxim, Vice -President of McMorgan & Company, which also showed strong interest in financing this project. Mr. Gould reported there was also a follow-up letter from Michael Ortega, Leasing Representative for The Gap, which stated The Gap was "luke warm until more information was available, but desires to explore either a Gap, a Gap Kids, a Baby Gap, Banana Republic, or Old Navy for this site in San Rafael". Mr. Gould noted the letter then went on to praise the firm of Lalanne/Volckmann. Mr. Gould stated the final letter was from Arthur Tropp, Vice -President of Real Estate for Williams -Sonoma, Inc., in which Mr. Tropp stated that although Williams -Sonoma had a store in a nearby city, a development of this type had sparked an interest with his company, confirming the statements made in an earlier letter to Lalanne/Volckmann from Williams -Sonoma, Inc. CEO Howard Lester. Mr. Gould stated he had concluded the supplemental financial letters were direct and to the point, and very strong, while the retail interest was not quite as clear; however, in the final analysis, Mr. Gould stated he did not believe either should be a factor in the Agency's decision this evening. Mr. Gould stated both developers could get conventional financing to fund their projects, noting that although staff had some questions about the ability to obtain tax-exempt financing to increase the number of affordable units, they had no doubt that both developers could get the financing for this project. SRRA (Spec. Pub. Hearing) MINUTES 3/18/97 1 SRRA (Spec. Pub. Hearing) MINUTES 3/18/97 2 Mr. Gould stated staff believed both developers could attract top quality retailers to this site. He reported that in a letter of March 12th, Mr. Lalanne had offered the City the right to approve all tenants of his project, noting this pledge now matched the one made by Mr. Schafer in his proposal before the Review Panel. Mr. Gould stated he firmly believed that when the Agency confers Exclusive Right to Negotiate to either one of these developers, there will be substantial retail interest in this project, and there will be new retailers whom we have not heard from to date, who will suddenly crop up. Based on their track records, financial backings, and their pledges regarding final say of the retailers, Mr. Gould stated both developers could deliver. Mr. Gould stated the Agency respects Lalanne/ Volckmann, and staff would be very happy to work with this firm if the Agency should choose it tonight. However, staff is still of the opinion that the Samuelson Schafer proposal is preferable, for reasons detailed in the staff report. Mr. Gould stated this would be a give-and-take process with whoever the Agency selects, noting the Agency could not go wrong here, as either one of these projects would be a tremendous boost to the Downtown. Mr. Gould stated he wanted to clear-up any misconceptions as to Lalanne/Volckmann's ability to attract top quality retailers, or finance their project, noting those issues should be utterly discounted. Mr. Gould then asked Director of Economic Development Jake Ours to present the staff report. Mr. Ours reported Macy's closed their Downtown store in April, 1996, the Redevelopment Agency bought the property September 31, 1996, and now six and a half months later we are selecting a developer for the site. Mr. Ours reported sixty Request For Proposals (RFPPIs) were sent out, six were selected for further review, and then through the Review Group the final two developers were chosen, Samuelson Schafer and Lalanne/Volckmann. Mr. Ours reported that for the next review the two developers had been requested to adjust their proposals to address the issues raised by the Review Group, and to answer five additional questions. Mr. Ours noted the Agency removed the question of design from consideration by the Review Group, and asked them to focus on the merits of the project and the developer. Mr. Ours pointed out the design issue would be discussed at a special joint workshop of the Redevelopment Agency, Planning Commission, Design Review Board, and the selected developer. Mr. Ours stated staff had no doubt both of these architects are of such high quality that it will be a very successful meeting. He noted that would be the proper time to discuss the design, when they can go one on one with the proposed architect. Mr. Ours reported each of the developers had submitted a packet of information addressing the four questions, and all information given to the Review Group had been included in the staff report as Attachment #1. He stated both developers had submitted additional material for distribution at the meeting, which was shown as Attachment #2, and noted Lalanne/Volckmann had also submitted a letter dated March 12th, which offers additional items. Mr. Ours stated that at the March 5th meeting the Review Group evaluated the proposals, and at the end of the meeting sixteen Group members and six members of the public submitted completed evaluation forms. Mr. Ours stated the evaluation forms contained written comments, and were shown as Attachment #8 of the staff report. Mr. Ours reported the Review Group's preference for Samuelson Schafer was evidenced by a tabulation of the responses, noting the Review Group's tabulation was 55 for Lalanne Volckmann and 108 for Samuelson Schafer, and when the public' s responses were added to the totals, they became 88 for Lalanne/Volckmann, and 133 for Samuelson Schafer. Mr. Ours reported that, overall, Samuelson Schafer received more "Yes" responses, stating it should be noted the Review Group received the developers' information packets prior to the meeting, while the public did not have the opportunity to evaluate the developers' materials, and saw only the developers' presentations. Mr. Ours stated the evaluation form contained questions which further explored areas the developers were asked to address. Mr. Ours stated the developers were requested to submit evidence of retail commitment, which would be verified by staff, and reported the first question was, "Is there a strong retail component as stated in Our Vision?" Mr. Ours stated Lalanne/Volckmann initially proposed 15,480 square feet of retail in three separate spaces, the largest of which was 12,300 square feet on Fourth Street, with the remainder off Court Street. He stated Samuelson Schafer proposed 31,400 square feet of retail, with 1,400 square feet on Court Street, and 30,000 on the ground floor and basement on Fourth Street. Mr. Ours noted that in their March 12th letter, Lalanne/Volckmann indicated they would use their best effort to maximize the SRRA (Spec. Pub. Hearing) MINUTES 3/18/97 2 SRRA (Spec. Pub. Hearing) MINUTES 3/18/97 3 retail space and footage, and locate high quality tenants. Mr. Ours stated the retail components of both projects now seem to be very similar, in that the total retail area in the Lalanne/Volckmann proposal has changed, and would now be approximately 30,000 square feet. The second question was, "Will there be a positive and strong addition to Downtown, and is there a high probability that the retailer and the retail concept will be delivered?" Mr. Ours reported Lalanne/Volckmann submitted Letters of Interest from Michael Ortega, representing The Gap/Old Navy/Banana Republic, and also from Howard Lester, Chief Executive Officer of Williams -Sonoma, Inc. Mr. Ours stated Mr. Ortega indicated the site had potential for a 15,000 square foot Old Navy store, and the letter from Williams -Sonoma, Inc. stated the idea of Mixed Use Retail development of the site was exciting, and of interest to them, stating that if Lalanne/Volckmann were selected, they would be interested in pursuing that interest. Mr. Ours reported Samuelson Schafer had submitted Letters of Interest from Linens IN Things, and also Sur la Table, which is a cookware shop with a cooking school. Mr. Ours stated both letters indicated strong interest, noting staff had contacted Linens IN Things and confirmed their interest. Mr. Ours noted that at the Review Group meeting, Samuelson Schafer had stronger tenant letters; however, both developers had indicated their ability to attract interest from major retailers. Mr. Ours stated the critical issue is City control, and the third question was, "Does the City have final control of the retail mix?" Mr. Ours noted one of the most important components of the proposal is the assurance that the retail tenants shown in the proposals will be delivered, and that the City has some control over tenant selection. He noted that at the Review Meeting Lalanne Volckmann stated they would work with the City in selecting retailers from a pool of interested businesses, and would welcome the Redevelopment Agency's participation. He noted Samuelson Schafer stated the Council (Agency) would have final approval of the retailers. However, in their March 12th letter Lalanne/Volckmann stated they would grant the City the right to approve all retail tenants of the project; therefore, the level of assurances is now the same for each developer, and they both state they will give final tenant approval to the City. The fourth question was, "Is the project viable and responsive to the market; will it work?" Mr. Ours stated Lalanne/Volckmann I s proposed residential rents were compatible with rents for other recently constructed projects in the City with extensive amenities, noting their proposal also included thirty large units, which the developer classified as live/work units. Mr. Ours stated there were functional issues which should be addressed where live/work spaces are mixed with residential spaces, such as noise, customer visits, and other impacts. Mr. Ours reported Mr. Lalanne also indicated a central plaza area of the residential portion of the project would be open to the public as a gathering area, and this was referred to as a public/private piazza. Mr. Ours stated staff felt there might be security concerns with this proposal, noting there was no public view into the courtyard, and no observation from the street. Mr. Ours reported the residential units proposed by Samuelson Schafer were similar in size and rent to existing units in Downtown, which have been accepted by the market. He noted a podium level recreation area is provided, and parking is proposed consistent with City standards, and provides adequate residential separation and security design. Mr. Ours stated there were no Ordinance or operational issues identified with this proposal. The fifth question was, "Can the project, as proposed, be funded without Agency or City contributions?" Mr. Ours stated both developers have excellent credit and financial backing. He noted that at the Review Meeting Samuelson Schafer had a letter from Bank of America indicating the availability of financing for the project, and he stated this was a slightly stronger position than Lalanne/Volckmann's. Mr. Ours reported Lalanne/Volkmann had subsequently submitted letters from Lowe Enterprises Investment Management, and from McMorgan & Company, indicating their interest in the project. Mr. Ours noted copies of these letters were included to the staff report as Attachment #6. Mr. Ours stated both developers had shown the ability to finance the project. He reported that at the Review Meeting Lalanne/Volckmann proposed the use of Tax -Exempt Bond Financing for the low and moderate housing portion of the project, and conventional financing for the remainder. Mr. Ours stated the concern was raised that the developer might not be able to finance the project with bonds, as proposed, in which case the alternative would be to change the affordable mix to accommodate conventional financing. Mr. Ours reported that SRRA (Spec. Pub. Hearing) MINUTES 3/18/97 3 SRRA (Spec. Pub. Hearing) MINUTES 3/18/97 4 in their letter of March 12th, Lalanne/Volckmann offered two additional alternatives, since Tax Revenue Bond allocation demands may exceed availability in 1997; one was to finance the project with conventional debt, and the other was to increase the number of affordable units to make the bond financing package more competitive. Mr. Ours referred to the Affordable Unit comparison shown on the Chart at the top of Page 8 in the report. Mr. Ours reported the revised submittal was evaluated by the Agency's Housing Consultant, Dick Bornholdt, whose letter is included as Attachment #7 to the staff report. Mr. Bornholdt's opinion was that the Lalanne/Volckmann bond financing proposals do not conform with the highest rating criteria, and would experience difficulty in obtaining financing in 1997. Mr. Ours stated this would leave only the conventional financing option, noting both developers have the financial capabilities to secure conventional funds. Referring to the question, "Can the project be built and operated as proposed?", Mr. Ours stated detailed proformas were required with the intent to allow staff to evaluate the financial assumptions made, and to ensure the projects, as proposed, could be built. Mr. Ours reported the material was evaluated by Tim Kelly of Keyser Marsten Associates, who indicated both proposals conformed with standard practices. In response to the question, "Can the project be started in 1997?11, Mr. Ours stated there was no assurance of bond financing for either project, due to the competitive nature of the Bond proceeds, and the limited time available. Mr. Ours noted both projects could start in 1997 if conventional financing was used. Mr. Ours stated that in many respects the two developers were quite similar, noting both are well established, with long track records of successful development; both have the ability to attract quality retailers; both have given the City final approval over tenant selection; and both have financial resources to fund the project. Mr. Ours reported Samuelson Schafer had displayed originality in concept and execution, and consistency with the City's Vision, noting they set the standard for project components, which Lalanne/Volckmann has subsequently amended their project to include. Mr. Ours stated Lalanne/Volckmann has been in the position of following the direction and initiative of Samuelson Schafer, noting Samuelson Schafer originally offered final tenant approval by the City, and Lalanne/Volckmann followed with the same offer. He pointed out Samuelson Schafer started with an Office component, and Lalanne/Volckmann followed with an Office component of the same size, and with the same prospective tenant in their second submittal. Samuelson Schafer also proposed 30,000 square feet of retail, and Lalanne/Volckmann followed with an increase in their retail area. Samuelson Schafer explored including a theater, and Lalanne/Volckmann followed with an offer to consider theaters. Samuelson Schafer identified funding difficulties with bond financing and proposed conventional financing, and Lalanne/Volckmann subsequently offered conventional financing. Mr. Ours stated Samuelson Schafer has the more well thought out and consistent proposal, with fewer changes and alterations after the Review Meeting, and no identified Ordinance or operational issues that need to be addressed. He noted the Lalanne/Volckmann proposal has operational issues in the live/work component, the provision of adequate parking, and the public/private piazza, and while each of these issues can be addressed, they show a less developed concept. Mr. Ours stated that on this basis, staff recommends the selection of Samuelson Schafer. Jim Schafer, Developer with the firm Samuelson Schafer, introduced other members of his team who had worked on this project; Architect Rodney Friedman with Fisher Friedman Associates, and Matt Brown with Meridian Commercial, who has handled the marketing. Mr. Schafer noted if Samuelson Schafer were selected as the developer to continue the negotiations and the process with the City, they would add a fourth member of the team, the City of San Rafael. Mr. Schafer stated the City' s role would be to work with Samuelson Schafer in approving and selecting the tenant mix, and the final exterior design of the project. Mr Mr. Schafer explained his presentation would be divided into two parts, the business side and the design side, pointing out that in each of these portions, the proposal was their vision, and stating that through the participation of the City and Samuelson Schafer, they hoped, ultimately, to create the best package for San Rafael. Schafer noted Samuelson Schafer was a general partnership, founded approximately fifty years ago from a construction and development partnership named Samuelson Properties. He reported Jack and Bob Samuelson began building houses after World War II , and from there they have gone into Office and Commercial buildings, apartments, and a full spectrum of development. Mr. Schafer reported the firm has developed a little over three million square feet of Industrial space, SRRA (Spec. Pub. Hearing) MINUTES 3/18/97 4 Mr SRRA (Spec. Pub. Hearing) MINUTES 3/18/97 5 800,000 square feet of Retail Centers, 850,000 square feet of Office Complexes, three Industrial Office parks, and four Residential complexes, including the complex at One "H" Street. Schafer stated their philosophy was simple, they demand quality in their developments and in their operations, and fundamentally, if they do not believe they can be proud of a project when it is finished, they do not ever start it. He noted that today they were active in four states, California, Arizona, Oregon, and Colorado, with a few miscellaneous holdings in other states. He stated it was their goal, in all cases, to deliver a high level of commitment to their developments, and to the communities they serve with their properties. Mr. Schafer reported they invest their own capital and own their own properties, which gives them control of the process, and allows them to share that control with the City of San Rafael. Posing the question of why Samuelson Schafer wants to develop the Macy's site, Mr. Schafer acknowledged there was a profit to be made, but more importantly, there was an opportunity to participate in the enhancement and improvement of the business climate in the Downtown, a Downtown Samuelson Schafer believes in, and a Downtown they have invested in. Mr. Schafer stated this site, in their opinion, was a cornerstone in the growth of Downtown vitality. He noted they had studied this property for approximately eighteen months, and that effort had given them the ability to put together a complete Mixed Use proposal for the Agency's review. Mr. Schafer stated the goal, or theme, of their proposal has been to create increased shopping traffic, to build a full-time Downtown community, and to create excitement and interest in the Downtown. Mr. Schafer noted the way to do this was with the right combination of uses, with proper planning, and with architecture that can accommodate and meet the demands of the user market today. Mr Schafer stated originally they had put together a program involving Retail, Office, Entertainment and Residential, noting the goal of each of these uses was to create excitement and interest in the Downtown. He noted from a retail perspective, their proposal is to include tenants who are not included in the other regional shopping centers that surround San Rafael, to include retailers who create a unique draw, so people will want to come to San Rafael to shop because they cannot get certain items at any other place; and to build office space to increase the traffic Downtown and bring more users who can support more businesses. He stated entertainment at night was originally included to further this activity, and to extend it on into the evening hours, while residential was included because they believe a good community Downtown is a good thing, pointing out it is the growth of a constant population that will continue to use services that are created. Mr. Schafer stated that through this process, their goal was to create and draw users of services and shoppers to Downtown; through the uses, to create interest and activity; and through the design, to augment this and to create excitement. He noted it was a simple fact, quality projects will always attract quality users. In response to concerns after their first submittal, Mr. Schafer stated they removed the theater element, and adjusted their development to increase the retail, increase the parking, and not run counter to the concerns of the community with regard to the Rafael Theater. He stated their design was modular, from a use perspective, and could be adjusted to meet community desires and market demands, and still be successful. Addressing how Samuelson Schafer got to where they are tonight, Mr. Schafer stated they competed against a set of guidelines that were established by the City, and now the City has to make the final decision as to which direction to go. However, looking at the questions asked at the March 5th Public Review process, he felt a review of some of those issues might help in that process. Regarding the question, "Do we have a strong retail component?", Mr. Schafer stated they did, noting their project had 30,000 square feet of retail space. Addressing whether they have tenants who are interested, Mr. Schafer reported they had received Letters of Interest from Sur la Table and from Linens IN Things, and have had discussions with Anna's Linens, Just Desserts, Java Juice, and Laura Ashley. He stated a lot of tenants are interested in San Rafael, reporting REI had recently toured San Rafael. He noted there was tremendous retail interest because the market space is limited. Referring to the question, "Can this be a positive addition?", Mr. Schafer stated their project could be a positive addition if it is successful, and noted that to be successful they would have to have quality uses, a quality design, and have the financial capability to produce that design. Addressing "Cooperation", Mr. Schafer stated cooperation was essential in this process, noting this was only the beginning, and the City, in addition to having the final say in the tenant mix, would have a very large part in the selection of SRRA (Spec. Pub. Hearing) MINUTES 3/18/97 5 SRRA (Spec. Pub. Hearing) MINUTES 3/18/97 6 the exterior skin on the building. Mr. Schafer stated we could work together to get the best for San Rafael. Addressing "Project Viability", Mr. Schafer stated a project is viable if there is a need and a demand. He reported there was significant Retail demand, as well as Office interest, noting they had already received a letter from the Marin Community Foundation. He pointed out Residential was in short supply everywhere, noting there was market demand and shortage of supply. Mr. Schafer stated there was also another very important element, the City owns it, and that is the best location in Marin County. He recalled a very old saying in Real Estate which states there are three things that are important: location, location, location, and noted the Macy's building certainly has location. Regarding the issue of funding, Mr. Schafer stated they would not be asking for any City money, stating they planned to finance the project conventionally, with the Bank of America and their own equity. He reported the loan proposal from Bank of America was guaranteed by Samuelson Schafer personally, which meant this was their money. He pointed out that if they mess it up, it is their problem, noting they do not intend to do that. Mr. Schafer stated they had a lot of confidence in their proposal and its assumptions, noting since they own it and have backed the project with their own personal guarantee, they know how it will be operated, which is the same way all their projects are operated, in a quality fashion. He noted since the City will work with them in the decision to select which tenants should go there, and in the design of the project, the City will know exactly what the project is going to look like, and who is going to be there. Mr. Schafer stated they had done this before in San Rafael, and they can do it again. He pointed out they had done it at One "H" Street, noting they brought the City a project during the most difficult financial times that existed in the Real Estate industry, and when lenders showed a reluctance to invest, they simply used their own money and built it. Addressing the question of whether they can start in 1997, Mr. Schafer stated they can, noting that with cooperation from the City process, and conventional funding, together we could make this happen. M_ introduced Rodney Friedman, to describe how the architecture with the use of Schafer can work. Rodney Friedman, Architect with the firm Fisher Friedman, stated that when Mr. Schafer approached his firm they were very excited, because Mr. Schafer had a vision for San Rafael, a vision of San Rafael as the crown jewel of Marin County, and how exciting San Rafael could be. Mr. Friedman noted it was through Mr. Schafer's vision that his firm became involved in this full-scale, Mixed Use project. Mr. Mr Mr Friedman gave a slide presentation, which began with a slide of the Auditorium Building in Chicago. He stated Mixed Use projects were not new, noting they started a century ago, pointing out one of the most interesting ones was the Auditorium Building in Chicago, which was designed by Louis Sullivan, Frank Lloyd Wright's mentor. Using slides as illustrations, Mr. Friedman reported his firm had been a competitor in the St. Vincent's Boys' School competition, an international competition in which they won first place, and also reported they were the Master Planners and Architects on KatellaIs for Mission Bay, the largest proposal ever put together in San Francisco. He showed a slide which represented the Mixed Use Golden Gateway project in San Francisco, which is three city blocks and contains 1200 units of housing, 300,000 square feet of retail and offices, and entertainment. He stated this project had been completed in 1976, and was the first Mixed Use project in North America since the Auditorium Center was done by Louis Sullivan the previous century. Mr. Friedman pointed out the arcade area, noting it was similar to the Macy' s project with the courtyard facing Fifth Avenue. Friedman stated the building being proposed for the Macy's site would be four stories, going to five stories in the middle, with concrete and steel construction, parking in the center, retail around the outside, recreation and retailing on the ground floor, offices on the upper floor, and residential on top. Mr. Friedman pointed out this project would be similar to the Golden Gateway Project, and noted the resale prices of the condominiums in the Golden Gateway project were approaching $500 per square foot. Friedman showed slides of the South Beach project in San Francisco, stating his firm had worked with the Redevelopment Agency in the planning of that project. He pointed out several other projects his firm had undertaken in San Francisco, Mountain View, and the Manzanita dormitories at Sanford University. He showed a slide of the City of Pleasant Hill, who hired Fisher Friedman to guide them in designing their City Hall, noting 120 citizens were involved, and the process was shown live on their public access television. He showed a slide of the One "H" Street project, which he noted was the threshold SRRA (Spec. Pub. Hearing) MINUTES 3/18/97 6 Mr SRRA (Spec. Pub. Hearing) MINUTES 3/18/97 7 of development for Fisher Friedman and Samuelson Schafer in San Rafael. He reported this had been the old A. T. & T. building, with 55,000 square feet, which has become a lovely residential enclave, with a bicycle shop and coffee shop on the lower levels. He noted they had updated the existing neo-classic architecture, included an atrium, and created live/work and loft units. Friedman showed slides of the Macy's site, pointing out the retail and office component at Fourth and Court Streets. He noted his project called for a different type of activity other than retail at this intersection, pointing out the best interface and show to make on Fourth Street has always been either retail, entertainment, or office, as opposed to residential. He stated as they use the intersection of Court and Fifth streets, the residential component comes in, with a nice courtyard and swimming pool. Showing a cross-section of the proposed building, Mr. Friedman pointed out three levels of parking and four levels of offices, which comprise approximately 40,000 square feet, and noted there would also be approximately 30,000 square feet of retail space. He stated that when they eliminated the theaters from their plan, they found they could add another level of parking, noting they knew as they added more retail there would be a demand for more parking. Mr. Friedman reported the project was actually 15,000 square feet larger than when they started, but the volume is the same. He stated that when they restructured the garage they created two entrances, so there could be an exclusive retail entrance for customers who go in and out, and the assigned parking for the residents could be reached by a second entrance. Mr. Friedman also pointed out the flexibility of the plan, noting the areas of retail space could expand and contract vertically or horizontally to fit the needs of the retailers, by interchanging areas of parking and retail space. He noted the building would be constructed of steel and concrete, they had all the circulation accounted for, and they could make all of the divisions and fire separations, so they had a number of different options. Mr. Friedman stated his firm would be drawing various proposals for the exterior of the building, noting this was the way they wanted to include the community in the final design of the project. Mr. Schafer noted they had presented design ideas, discussed financing, tenants, and their firm's track record, and stated that if given the opportunity, they felt they could produce exactly what San Rafael wants. Regarding the Retail component, Member Cohen noted Mr. Schafer had referred to 30,000 square feet, which had initially included approximately 18,000 square feet for the theater and 12,000 square feet in Retail along Fourth Street. He noted now that the theater was no longer a component, they were still talking about 30,000 square feet, with approximately 15,000 square feet at ground level on Fourth Street and 15,000 square feet in the basement. Mr. Cohen asked if Mr. Schafer felt this could work with separate retailers, or if this meant we would have to get one retailer to take 30,000 square feet? Mr. Schafer stated the ground floor retail space had an approximate 18 foot clear height from grade to the underside of the slab above; therefore, the kind of retail they were suggesting was a split-level retail, where the customer would enter from the street, go up a few feet to a retail plane, or go down a few feet to a retail plane, pointing out the customer would not enter at street level and go into the basement. As an example, he noted if Sur la Table were to become a tenant, they could put their cooking appliances on one level, and their cooking classes on another level. Mr. Schafer acknowledged that a purely second -level basis would be a difficult sell, but noted this proposal was for split-level, and was not sunk all the way in the basement; therefore, Mr. Schafer felt this concept would work very well. Mr. Cohen asked if there would be any ground level retail at Fourth Street? Mr. Schafer stated there would be some retail activity at Fourth Street, pointing out the transition to split-level would not occur until approximately twenty feet into the building. Member Cohen noted one of the Letters of Interest Samuelson Schafer had provided was from the retailer Linens IN Things, and asked Mr. Schafer to describe that business. Mr. Schafer reported Linens IN Things would be a 30,000 square foot supplier of housewares, noting its original theme was based on sheets, pillow cases, and other software that serve the house. He noted they have since expanded those lines to include kitchenware and small appliances, including microwaves, blenders, and toasters. He reported they are a publicly traded company, and have approximately sixty stores nationally. Member Cohen noted the projected building costs stated Prevailing Wages were incorporated into the building costs, and asked if they used State Prevailing Wage Standards for their calculations? Mr. Schafer stated this was correct. Member Cohen asked if they were necessarily proposing to build the entire project under Prevailing Wage requirements, or to have a reasonable number for construction? Mr. Schafer stated they were of the understanding that this had SRRA (Spec. Pub. Hearing) MINUTES 3/18/97 7 SRRA (Spec. Pub. Hearing) MINUTES 3/18/97 8 to be a Prevailing Wage project, and it was their intention to build it as a Prevailing Wage project, not just to price it as that. Member Cohen asked how they priced the project, and if they had a General Contractor who helped them in arriving at these figures, or were they working with calculations provided by the Architect on square footage? Mr. Schafer stated a General Contractor had reviewed the concept design and applied unit pricing to it, and those unit prices were then compared with Mr. FriedmanIsexperiences and what he has seen in the marketplace. Mr. Schafer noted an estimator on their staff in Los Angeles had also reviewed this. Member Heller asked for details on the amenities of the housing units, if they plan to include a swimming pool or exercise room, and what type of parking and storage facilities would be available? Mr. Schafer stated the basic apartment units would have one parking stall per unit, all units would be designed under 900 square feet to comply with the Downtown Parking Code, there would be a pool in the center courtyard, and there will be an exercise room with weights and workout facilities. Mr. Schafer noted he had not yet looked at the issue of storage, stating that would be addressed in the later designs. Member Heller asked if the insides of the apartment units would be handicapped accessible, and Mr. Schafer responded they would, pointing out that since all the apartments are single -level units, all of the units will be ADA (Americans With Disabilities Act) adaptable. Member Phillips noted the Agency was not making a final decision on the design at this time; however, he pointed out the design issue was on many people's minds, stating he had been struck by the process of including many members of the community. Mr. Phillips asked if Samuelson Schafer was suggesting the process of community involvement was one they would continue to follow on this project? Mr. Schafer stated not only were they suggesting it, they intended to follow it. Member Cohen noted the community had been doing a lot of talking about what type of project this should be, what type of retail development we want here, and what type of use was really going to do what we want this project to do for Downtown San Rafael. Mr. Cohen pointed out Samuelson Schafer seemed to be leaning toward retailers with a "Housewares" theme, and asked why they felt this would be a good direction to go, and how they saw this fitting in with the Downtown? Mr. Schafer stated the development of the retail theme leaning toward housewares seemed to be an area of the market that was not adequately covered. He noted that going to the "Fashion" end of the market, there were many fashion retailers in the malls surrounding San Rafael. He noted their concept was that they wanted to select a retail classification that would be different and unique, and in looking at the market, this appeared to be one segment of the market that was underserved. Mr. Schafer pointed out Macy's had been a successful home store at this location for years, but based on comments with shoppers, it has not turned out to be a successful home store in its present location in the Northgate Mall. Mr. Schafer felt there was a void in the market, and in looking for something different and unique, Housewares seemed to be one of those areas where there was opportunity. He stated they also felt selected retailers for Downtown had to be Regional or National chains, because they bring a marketing expertise and advertisement dollars, and they extend recognition beyond just the local area. He noted that getting an entity that has a reputation outside of the local area creates more interest to the local area, and brings more people Downtown. He stated if the City desires to create activity and attract shoppers, then we want to be with chains that reach out beyond our geographic area, so there is name recognition and attraction to bring shoppers Downtown, he felt there should be classifications of merchandise that are not necessarily easily obtainable at other locations. Mr. Schafer noted that was the basic philosophy which led them to lean toward Housewares; however, he stated they were not locked into Housewares, and were ready to listen to anybody who had a theme or a concept. Chairman Boro noted one of the things they had talked about in the Vision was finding "niches" in the Downtown that would draw people, and would provide either services or components they could not find elsewhere. Referring to Affordable Housing, Chairman Boro noted Samuelson Schafer showed three price structures on their Market Rate units, eighteen 500 square foot studio units at $870 per month, fifty-nine 700 square foot one -bedroom units at $975 per month, and twenty-nine 898 square foot two-bedroom units at $1,300 per month. Chairman Boro pointed out these were considerably lower priced than those proposed by Lalanne/Volckmann, and asked if these figures were correct, and if they were confident they would be able to deliver? Mr. Schafer stated this was what they believed the market was today, noting the figures were based on their experience in the market, including One "H" Street. He stated Samuelson Schafer believed this was what these spaces could be rented for, and that these were the only numbers that were real. Chairman Boro asked if these figures would allow Samuelson Schafer to recover their cost and make a profit? Mr. SRRA (Spec. Pub. Hearing) MINUTES 3/18/97 8 SRRA (Spec. Pub. Hearing) MINUTES 3/18/97 9 Schafer stated they would. Member Phillips stated he was concerned about the timeline, and asked when Samuelson Schafer anticipated beginning construction, and being ready for occupancy? Mr. Schafer stated they would like to begin the project this year, with the demolition phase in December, if possible. He noted it would take approximately 18 months to complete the building, and approximately mid -1999 would be a realistic occupancy date. Jay Paxton, Attorney representing Lalanne/Volckmann, stated this was one of the most important decisions San Rafael has made in a long time, and is a decision that will guide the Downtown. He noted there were two things the Agency needed to decide upon: first, who can carry this project off; and secondly, who was going to produce the best project. Regarding the decision of who can carry off this project, Mr. Paxton noted they very much appreciated Mr. Gould's earlier remarks in clarifying the record, as there had been some erroneous information printed in the newspaper with regard to the expression of interest by some of the tenants. Mr. Paxton stated Lalanne/Volckmann views the retail component as an extremely critical portion of this project, as the entire project was about revitalizing the Downtown, because how good the retail is really determines the future of retail in Downtown San Rafael. Mr. Paxton stated the firm of Lalanne/Volckmann had done a lot of retail projects, reporting they had leased 335,000 square feet of retail in the last eighteen months, and closed $90 million in Real Estate loans during that same period of time. Mr. Paxton stated Lalanne/Volckmann was bringing some very high quality tenants, noting there were Letters of Interest from Howard Lester, the CEO of Williams -Sonoma, Inc., and from The Gap. Mr. Paxton stated it was important the Agency focus on the kinds of retail tenants that are being brought to San Rafael, noting these were first quality tenants. He stated they believed the Vision of Downtown San Rafael was to have first quality retailers that draw in other first quality retailers, and support the locally owned stores, who look to the national retailers of this high quality as anchors for the Downtown. Mr. Paxton stated it was clear Lalanne/Volckmann had the ability to bring these kinds of retailers to the table, noting inquiries were made by Samuelson Schafer of the Williams -Sonoma group, and they sent back a letter of no interest; however, because of the relationship between Lalanne/Volckmann and Williams -Sonoma, and the relationship between Lalanne/Volckmann and The Gap, they believed they could bring those kinds of retailers to Downtown San Rafael. Regarding the retail component of the Samuelson Schafer project, Mr. Paxton stated Linens IN Things was an off-price retailer, not the Nordstrom's or Macy's of linens, but a Target -style retailer. He asked the Agency to think about whether that was their vision for Downtown San Rafael, noting he had heard them say, in relation to other sites, that it was not, and that they had a different vision for the future of retail in San Rafael. Mr. Paxton stated they believed Lalanne/VolckmannIs ability to bring the kind of tenants the Agency is looking for was very important. Mr. Paxton stated another issue they believed was very important was design, and while acknowledging that design was not a criteria for the Agency's decision tonight, he felt one thing worth considering was the sensitivity of the design initially brought to the Agency, as to the expectations and feelings of the people in the City of San Rafael about this site and about their community. He stated they believed that in this regard, the design Lalanne/Volckmann brought was a superior design, noting this was reflected in the response of the community, which has been well publicized. Mr. Paxton noted another important element of the Lalanne/Volckmann project is the workspace. Regarding questions that have been raised about how this would fit in with a Mixed Use project, he stated Lalanne/Volckmann had a great deal of experience with live/work space, having very successfully completed approximately 150 live/work units, including two recent projects in San Francisco which have been very successful. He stated Lalanne/Volckmann believes they could make this work. Addressing the question of how Mixed Use development works, Mr. Paxton noted Mixed Use development is not an easy thing to do, and it takes experience. He stated Lalanne/Volckmann has a lot of experience in the Bay Area, where they have been very successful with complex Mixed Used projects. Mr. Paxton introduced Robert Lalanne, President of the firm Lalanne/Volckmann. Robert Lalanne, President of Lalanne/Volckmann, thanked City Manager Gould for his SRRA (Spec. Pub. Hearing) MINUTES 3/18/97 9 SRRA (Spec. Pub. Hearing) MINUTES 3/18/97 10 opening statements, noting they truly appreciated the effort and the gesture the City made to clear the record. He stated nothing meant more to a person than his character and integrity, and they appreciated what had been said at the beginning of the session. Mr. Lalanne introduced Tom Fleischli and John Volckmann, partners in the firm of Lalanne/Volckmann, and reported Lalanne/Volckmann had originally negotiated for this property when Macy's was still open, and had gone into escrow, but because of legal problems between Macy' s and the property owner, they were unable to close escrow. He reported they had been working on this project for well over a year, and when they first came to San Rafael, staff gave them a copy of the Vision. He stated Lalanne/Volckmann really took the Vision to heart, and they felt their project clearly followed the Vision put forth by the City and the community. Mr. Mr. Lalanne stated Lalanne/Volckmann was excited about working for the City, pointing out they have had other redevelopment projects and worked with other cities, such as Mountain View, Pacifica, Cupertino, Campbell, and San Francisco, where they are headquartered. He noted they were very comfortable working with city agencies and the community, and they believe in building consensus and support for their projects, both for the uses as well as the design. Mr. Lalanne stated consensus building was one of the skills a developer needs to be able to count on, in being able to get a project through the process. He believed that process had already begun, and felt as though the community was already in great support behind the design and concept they have put forth. He noted they had probably gotten a head start on the process because they had shown good judgment in coming up with a design they felt was pleasing to the community, both architecturally and in its uses, the vitality it was going to bring to the Downtown, and most importantly, how it hit the Vision on the head. Mr. Lalanne stated the consensus building meetings Mr. Friedman had referred to were clearly what Lalanne/Volckmann did on a daily basis. As an example, he reported they most recently were awarded a 100 unit project by the San Francisco Redevelopment Agency, noting it was a project near Alamo Square, on the cusp of the historic Victorian buildings of the city and the Western Addition. Mr. Lalanne stated he spent countless hours in meetings with community groups, not only from the Western Addition, but also with the Alamo Square District, an area of very expensive Victorian homes. He noted that in record time, and with great support from the Redevelopment Agency in San Francisco, they were able to get the project through the process in a matter of three months. Mr. Lalanne reported they had also established a job placement program for that project, which provided jobs for people in the community, noting his firm proposed to do the same thing on this project in San Rafael. He stated community involvement included involvement not only in the design, but also in use, construction, development, on-going management, and leasing, as far as job placements, noting that was what community development was all about, and was what Lalanne/Volckmann was very excited about doing here in San Rafael. Lalanne stated his team would explain their concept for the project so that it would be very clear, and then show some of the projects they had done more recently with the Architectural firm of Backen, Arrigoni & Ross over the past twenty-four to thirty-six months. Mr. Lalanne presented a rendering of their project design, pointing out the areas of retail, office, live/work, residential, and parking. Mr. Lalanne reported their Construction Contract and Soils Investigation showed that in developing only a four or five story building, they could not afford to go down under the ground, because the construction costs become uneconomical upon developing this parking, noting they have had that experience on some of their projects in San Francisco. Mr. Lalanne explained they envisioned the live/work areas to be effectively flex space, noting this could be work or live space, or a combination of the two, and could, in fact, become more retail space. He stated their 15,000 square feet of ground floor retail could also be increased by developing ground floor retail in the work/live units around the perimeter. During his slide presentation, Mr. Lalanne showed a project undertaken by his firm in Walnut Creek, which included a piazza with live/work/retail, similar to what they are proposing for San Rafael's project. He noted this type of design provides the opportunity and flexibility to expand the retail to meet the Vision, with high quality, dynamic small boutique retailers for Downtown San Rafael. Mr. Lalanne stated this project, in the final analysis, with all the live/work units going in a retail direction, could potentially have twenty retail tenants in the project, noting people would want to come here, have lunch, sit outside and enjoy the nice weather, enjoy San Rafael, and shop. Mr. Lalanne introduced David Israel, Senior Vice -President of Backen, Arrigoni & Ross. David Israel, Senior Vice -President of Backen, Arrigoni & Ross, stated the principals of his firm were all long time residents of Marin County, noting the firm was uniquely qualified to be sensitive to the issues which address the community. SRRA (Spec. Pub. Hearing) MINUTES 3/18/97 10 SRRA (Spec. Pub. Hearing) MINUTES 3/18/97 11 Mr. Israel showed slides illustrating other projects undertaken by his firm, in which they helped other cities and organizations achieve the visions for their communities. He highlighted a project done with the Redevelopment Agency in San Jose; on the way to San Anselmo, the Gateway Project, where Second and Third Streets merge together; Delancy Street at the Embarcadero in San Francisco; a low income project near Delancy Street; a second Redevelopment Agency project with the City of San Jose; and a condominium project on the Peninsula. Mr. Israel pointed out his firm did a good project and a good job, and had a lot of repeat clients because of their success. He noted they had a very good reputation within the County, and with the City of San Rafael, as well as San Francisco and San Jose. Referring to the style of the current project, Mr. Israel stated they did not really know what the style of the building would be at this time; however, their understanding of San Rafael's Vision was that the Mission style would be appropriate, and the design they have developed to this point reflects their understanding of the Vision. He stated they expected to work with the City and the community to further develop the style. Mr. Lalanne stated one of the reasons Lalanne/Volckmann had chosen Backen, Arrigoni & Ross was their extensive experience with major retailers, particularly high quality retailers. Referring to a slide of an earlier project being shown by Mr. Israel, Mr. Lalanne indicated they were considering the inclusion of a high quality restaurant, possibly off the piazza, in the current project. He reported another possible tenant for the current project was The Pottery Barn, noting Backen, Arrigoni & Ross were the Architects used by the Pottery Barn. Mr. Lalanne noted The Gap was interested in the project for a Gap, Baby Gap, Kids' Gap, Banana Republic, or Old Navy retail store, pointing out another of Lalanne/Volckmann's team was MGH Architects, who were Architects for the Gap. Mr. Lalanne stated that to be able to have the personal contacts within the Real Estate departments and with the higher-ups of these major retailers really gave Lalanne/Volckmann a head start. Mr. Lalanne highlighted a special project his firm had undertaken in San Francisco, showing slides of the a former alley in which homeless people had once congregated. Mr. Lalanne stated their experience has shown that if vitality is created, and a place where people want to be, the so-called "undesirables" do not want to be where the activity is. He reported they petitioned the City of San Francisco to close the alley from 10:00 AM until 3:00 PM, and again in the evening, and they transformed the alley and created Claude Lane, which now includes several unique, up -scale shops and boutiques, and Cafe Claude, which is open from 8:00 AM until midnight, and at 5:00 PM they begin nighttime entertainment. Mr. Lalanne stated Cafe Claude was a 1,200 square foot cafe which included outdoor seating; however, the owner does not pay rent to the City for the area used for outdoor seating, which amount to half of his dining area. He pointed out this was a possibility to be considered for the piazza area of the current project, noting an outside dining area would allow people to enjoy the outdoors, and enjoy San Rafael. Mr. Lalanne stated they took San Francisco's Vision to heart and created Claude Lane, noting this was also the type of project San Rafael's Vision calls for, and they would love to do this for us in San Rafael. Regarding Lalanne/VolckmannIs project experience, Mr. Lalanne recalled that in 1990 the industry was very slow, and the unofficial saying had been, "Stay alive until 1995". He noted that in 1995 Lalanne/Volckmann was very busy, very successful, and very active. Mr. Lalanne referred to their $45 million Potrero Center project, a 225,000 square foot retail center in San Francisco, which includes Office Depot and a Safeway Store, stating he was trying to point out that Lalanne/Volckmann has relationships with various retail tenants, not just the big nationals and regionals, but also the kinds of tenants who come to Claude Lane. He stated that "from soup to nuts", they have done it, and they want to bring that expertise and experience to the City of San Rafael. He noted the Potrero Center project was a $28 million Bank One construction loan, with $13 million equity. Referring to a slide of their Harbor Lofts project, consisting of 46 live/work condominiums, Mr. Lalanne reported this had been a $13 million project, with $7 million debt financing from San Francisco Federal, and $2 million equity. He noted this was an historic rehabilitation project, and was a very sensitive issue to the community and the San Francisco Historic Planning group. He stated Lalanne/Volckmann worked to build consensus among the community and City agencies, and upon completion in July, 1996 they sold and closed 45 of the 46 units by December, 1996. He showed details of the interior of the live/work areas, reporting that in San Francisco there have been over 1,500 live/work units built in the last eight years, representing a half billion dollars worth of live/work product built and sold successfully. Mr. Lalanne challenged the staff of the Redevelopment Agency to explore more live/work, because Lalanne/Volckmann respectfully disagreed that live/work SRRA (Spec. Pub. Hearing) MINUTES 3/18/97 11 SRRA (Spec. Pub. Hearing) MINUTES 3/18/97 12 units on one level, and residential units on a level above them, would not work. He stated it had been proven in San Francisco, and his firm had done a market survey in San Rafael which showed the product was in great demand. He stated McMorgan and Company had written a Letter of Interest to finance the San Rafael project, noting John Maxim, Senior Vice -President of McMorgan and Company and a resident of San Rafael, had called Mr. Lalanne when he saw the newspaper article reporting Lalanne/ Volckmann was interested in the project, and informed Mr. Lalanne that McMorgan and Company wanted to be a part of the project. Mr Tom Mr. Mr Lalanne showed slides of the their waterfront Portside project near Maritime Museum at Aquatic Park, and noted resales had gone up 20% since the project was completed in 1994. He stated this had become a landmark building and a place where people wanted to be, which is what Lalanne/Volckmann envisioned for Downtown San Rafael. Fleischli, partner in Lalanne/Volckmann, showed slides of their Park Place project in Mountain View, which he stated was very similar to what is happening in Downtown San Rafael in the sense that the City had focused on vitalization of their Downtown, they had identified a site that was the key component to that revitalization, and they had a concept in mind, which was to work with a developer who could deliver a product consisting of a variety of uses that would integrate with the community. Mr. Fleischli stated Lalanne/Volckmann went to the architects and told them they wanted to build office, retail, and residential, and that they wanted to build three-story wood frame because they could not get Type 1 to pencil. He noted the rents at the Park Place project substantially exceed what they proforma for the project in San Rafael, and their experience suggests that rents are not where they need to be to justify Type 1 construction. Mr. Fleischli pointed out that open area in the center of the project was open to the community, noting they have free access to it, and it had not been the cause of any vandalism, theft or vagrancy at all. He stated there were three other courtyards which are secured, but there are no recreational or open spaces within the interior of those three, as they are sided with buildings rather than a garden or piazza. Fleischli stated the theme of the Mountain View project was, "Discover Downtown", which was what that project had been all about. He pointed out this was also what San Rafael was all about, noting Lalanne/Volckmann had a passion for this site. He reported they have studied, understand, and believe the Vision, and stated they believe they can make happen in San Rafael what they made happen, with great success, at the site in Mountain View. Lalanne showed a slide with renderings of another loft project they will be doing in San Francisco, Bluxome Street Lofts, as an example of being able to get something done quickly in order to respond to the City's requirement of getting San Rafael's Fourth Street done quickly. He stated Bluxome Street Lofts had 102 live/work units, and was a $22 million project, with $10 million debt financing from Union Labor Life, and $4 million equity placement. He reported they had put the land in contract in September of last year, completed the permits and closing in December of last year, obtained a financing commitment from Union Labor Life of 8.2% Fixed Rate twelve year money, and they will be starting construction in two weeks. Mr. Lalanne stated the building was expected to be occupied by Christmas of this year, pointing out that within one year they will have done a 102 unit, $22 million project. A schedule of Lalanne/Volckmann's properties showed almost one and a half million square feet under management, over $200 million of building value in the Bay Area, and a list of their national and regional retail clients. Member Miller stated that, conceptually, he had thought the idea had been to bring in the larger firms in order to draw people to the Downtown, and asked if that was correct? Mr. Lalanne stated that was not correct, stating their feeling on retail at the site was "bigger is not better". He stated they felt a Linens IN Things, and tenants of that sort, were more the "big box" retailers who do not deserve to be at "ground zero" in San Rafael. He stated bringing in high quality, medium sized Pottery Barn and Gap stores, peppered with florists and those types of retailers, was what would keep people's interest and create vitality. Mr. Miller asked if the purpose of having the Pottery Barn, a large type of retailer in terms of being a chain or national business, was in order to create the draw? Mr. Lalanne stated that was correct. Member Miller asked if, when additional retail space is added through the live/work areas, will the larger "draw" retailer also have to support, in addition to itself, all of the other smaller retailers? Mr. Lalanne stated the exact opposite would occur, noting the "draw" would create the opportunity for the other retailers to follow. He pointed out that in the letter from Howard Lester of Williams -Sonoma, Inc., Mr. Lester mentioned co -tenancy, as had The Gap. SRRA (Spec. Pub. Hearing) MINUTES 3/18/97 12 Mr. SRRA (Spec. Pub. Hearing) MINUTES 3/18/97 13 Citing Downtown Burlingame as an example, Mr. Lalanne noted that when stores such as the Pottery Barn or The Gap are brought in, others want to follow, and as they start getting in line, Lalanne/Volckmann will start peeling off the live/work units. Mr. Lalanne stated they envision having incredible vitality, beginning with the Pottery Barn, with retail going around the corner, up Court Street and down Fifth Avenue, as well as having that vitality up in the piazza. Lalanne noted they did not feel there was a market for basement retail space, especially at $24 triple net rent, which had been quoted by the Samuelson Schafer firm for the basement on Fourth Street. He stated they did not believe The Gap or Williams -Sonoma, Inc., or any retailer of that type, would ever want retail space in the basement, noting they had tested that market in San Rafael when Lalanne/Volckmann originally had the property in escrow a year ago. Mr. Miller asked if the big draw store would be supporting the entire City? Mr. Lalanne stated that would not be the case. Using Claude Lane as an example, he explained Diane Slavin' s dress shop was a very expensive high-end dress shop, and noted she brought with her other high-end clothing companies. He stated Lalanne/Volckmann believed retailers of the caliber of the Potter Barn or The Gap are going to want other high caliber retailers to be next to them, as they already are in the other downtowns. He stated that when there is a quality anchor, other retailers of the same quality want to follow. Member Cohen asked Mr. Lalanne to discuss the retail market, and to respond to Mr. Schafer's point that the tenants identified by Lalanne/Volckmann already exist in the malls within Marin County, and the question of whether or not they would move or open additional stores for this kind of saturation market. Mr. Lalanne stated if a tenant did not get into The Village or The Towne Center, you would not automatically assume they would come to Downtown San Rafael because this project is the next space available, because high quality retail does not work that way. He explained by recalling Mr. Lester's reference to co -tenancy, stating no one wants to be an island, and the retailers want to make sure that the people who are going to be around them are going to be of the same quality and caliber. Therefore, to say that a large retailer who did not get into The Village would be excited to come to this site would not be an assumption he would make too quickly. Mr. Cohen referred to a letter from Mr. Ortega, Real Estate Representative for The Gap, which made reference to a 15,000 square foot store. Mr. Cohen noted Lalanne/Volckmann's proposal listed approximately 15,000 square feet for retail, and asked how they would get the co -tenancy component which has been described as a necessary part of the project? Mr. Lalanne explained there would be two ways to do this; the first way would be to "cheat" the rear wall of the retail space back towards the parking to create more space, although their experience with retail leasing has been that once you get past a certain depth, you lose the retailer because they will not pay for the space. Mr. Lalanne stated the second option could be to continue to wrap around Court Street, although there is an elevation problem where storefront would be lost because there is a hill. However, Mr. Lalanne felt the best option would be for Lalanne/Volckmann to sit down with Rick Rubini, and bring the Rubini family their anchor tenant. He stated there was a real opportunity, since they were now vacant, to help lease their building for them. Member Cohen referred to concerns staff raised about some of the difference between Lalanne/Volckmann's proposal and Samuelson Schafer's, and asked Mr. Lalanne to discuss the parking concept, in terms of the amount of parking provided and the lack of designated parking for residents, which staff had noted as one of their concerns. Mr. Lalanne stated Lalanne/Volckmann had been told their proposal met the parking requirements, with one parking space per residential unit, parking for the offices, and parking for the retail areas. Mr. Lalanne noted at the last meeting they had discussed a concept being done in San Francisco, where in order to create more parking and add an additional convenience service to the tenants, they would park the aisles with additional cars during the day, when the residents leave and their stalls are vacant. He noted this had been done in two major Mixed Use Retail/Office/ Residential environments in Downtown San Francisco, and it has worked very successfully. Tom Fleischli stated the staff report had suggested Lalanne/Volckmann was going to valet office and residential parking, and noted that was not what they proposed. He stated they would have 99 self -park spaces for the residential units, valet parking for the offices, and after hours achieve an even higher count by taking advantage of the off-peak usage of the garage. Regarding the piazza, Mr. Fleischli stated there were a number of examples where a courtyard can be a very viable public space, noting their experience with the Mountain View project is that the piazza has been a very dynamic part of that project, and instead of closing the community out, it has embraced the community, inviting them in. He pointed out that when the second office building is built, the SRRA (Spec. Pub. Hearing) MINUTES 3/18/97 13 SRRA (Spec. Pub. Hearing) MINUTES 3/18/97 14 concept is that there will be another courtyard with a fountain, which can be used for various events. The pointed out Rockefeller Center and the Embarcadero Center as examples of projects being very compatible with public access. Mr. Fleischli noted they would expect to monitor this space, and provide a secure passageway for the residents, stating this would be a very viable approach, and would be a win-win situation. Mr. Fleischli stated they had expressed to the Review Committee that when the City has functions Downtown, such as the Art and Wine Festival, the Italian Sidewalk Painting Festival, or the Farmer's Market, this would be an opportunity to have a satellite location to show the art and to have functions, and to embrace the community. Mr. Fleischli reiterated their desire for the community to have the opportunity to experience this, and not to shut them out. He stated he was confident this could be handled properly, and that the residents would feel very positive about it. Mr. Fleischli noted Lalanne/Volckmann would own the project, and it would not be owned by individual homeowners who might want to lock it out. He stated Lalanne/Volckmann would control it, and they would let their residents know how this would be handled, noting their experience has suggested there would be no problem with the residents. He pointed out he was getting $300 per unit more, per month, in Mountain View than his proforma for San Rafael, noting this concept has not been a deterrent at all. Member Heller asked what Type 1 construction was, and if it was the same as the other Architect was discussing? Mr. Lalanne reported it was a different type of construction, stating Lalanne/Volckmann has proposed four-story wood frame housing over a concrete podium. He reported their experience has shown, in the four hundred units they have built during the past three years, that if you go from four -stories, wood frame, to five -stories, concrete, you really need to go to eight or ten stories of concrete to get the economies of scale, because wood frame construction is approximately $80 per square foot to build a residential unit, and Type 1 construction is approximately $115 per square foot; therefore, not only is the fifth floor costing $115 per square foot, but the entire first four floors are also now costing $115 per square foot instead of $80 per square foot. Mr. Lalanne stated there had not been a successful concrete apartment built as a rental project in San Francisco. He noted there was one that was bond financed on the Embarcadero, and it was actually a major bond problem, because the basis is so high in the construction cost with concrete, you cannot get enough in apartment rents for the project to make economic sense. He stated this was why they looked at the residential portion of the project as four-story wood frame, and did not add the fifth floor, because it would trigger unbelievable construction costs that made the project uneconomical. Member Heller pointed out the Samuelson Schafer project was looking more toward "niche" marketing, while Lalanne/Volckmann was looking toward larger retail, and noted she was not certain we could guarantee that one of the larger retailers would want to be part of this project, as they are already within the community, just a few blocks away. She also had concerns as to whether 235,000 people in the County could support a couple of different stores like that. She noted we were a very small community, pointing out San Francisco has four or five times the number of people that Marin has, and stating this was a real concern for her, as she did not see much saturation marketing in this community, and sees a lot of over -retailed sites within the community. Mr. Lalanne stated if Lalanne/Volckmann were selected as the developer, they envisioned what they called an "engagement" period, and during that period they would pull on the horsepower they have shown the City with their retail contacts and all the experience they have, and then literally unfold before the City a list of retailers. He noted at that point the City would have its veto, and the City would decide what direction it wanted to go. Mr. Lalanne stated Lalanne/Volckmann was not locked into a Pottery Barn, housewares, or softwares, noting they are going to bring everyone they possibly can, in every vertical market segment, to allow the City to choose. Ms. Heller stated she was not questioning Lalanne/Volckmann's choices in the types of retailers they have suggested, she was concerned as to whether there would actually be a market out there for these retailers. Mr. Lalanne cited one sentence from a letter written by Arthur Tropp, Vice -President of Williams -Sonoma, Inc., which read, "In recent years we have made it a point to consider similar locations in revitalized downtown areas because of the proximity to our customers, ease of shopping, and general ambience available in these types of environments, and a development of this type has sparked an interest here". Mr. Lalanne stated Williams -Sonoma, Inc. has clearly seen what has happened in Burlingame, Palo Alto, Chestnut Street in San Francisco, and Menlo Park, and they see San Rafael as being next, and they want to be in on the ground floor, noting that when they were shown the design, they became very excited. Member Heller asked for a description of the amenities to be included in the apartments, and if all ADA requirements would be met? Tom Fleischli stated they would meet the Code on all ADA requirements, noting he had been involved in the development of approximately 8,000 apartments over the years, and had SRRA (Spec. Pub. Hearing) MINUTES 3/18/97 14 SRRA (Spec. Pub. Hearing) MINUTES 3/18/97 15 learned a mix of unit type, sizes, and amenities, both within the units and the common areas, are critical to keeping the project leased and viable. He stated specifically what they had in mind was washers/dryers in all the units, and fireplaces in the top floor units. He noted they had recently spoken about how running an apartment building today is almost like running a hotel, as it is very service oriented, with concierge and house cleaning services. He stated this project would also include a fitness center, and they were looking at the possibility of a business center, which would have a FAX machine, copy machines, and a conference room, noting many people are telecommuting, and want the opportunity, in a rental community, to be able to conduct business and hold conferences in a center, not in their apartments. Mr. Fleischli pointed out it was not inexpensive to run a project like that, and they have found over the years that expenses have climbed as the level of service increases. He noted they had spent over $4,100 a year, per unit, in operating their Mountain View project last year, and that is what they have shown in their proforma for this project. Mr. Fleischli suggested the Agency look very carefully at the Expense side of the equation, as that will be critical in being able to attract the tenant mix the City is looking for, noting this is a high-end market, attracting professional people. He pointed out Fair, Isaac, a major employer, is coming to town, and they are going to be looking for opportunities for their employees. He stated those employees are going to demand services, and Lalanne/Volckmann will be prepared to respond to that demand. Ms. Heller asked if they would include a swimming pool and recreation area? Mr. Fleischli stated there would not be a swimming pool, but there would be a fitness center, a management center, and a community center which would have the office opportunity, as well. Member Phillips asked for Lalanne/Volckmann's proposed timeline for this project, and clarification of their funding source. Mr. Lalanne stated Lalanne/Volckmann had a dilemma regarding the financing, because from their view, there appeared to be competing priorities. He noted the priority stated in the General Plan and the Vision was that affordable housing had a high priority, and they initially tried to respond to that priority by coming in with an opportunity to exceed the minimum standards; however, he pointed out the downside to that was that it could very well extend the start of construction. Mr. Lalanne stated they did not differ with what staff is advising the Agency in terms of how competitive it is this year, and potentially down the road, for State bond allocation; however, if the higher priority of the City is to begin the project, then Lalanne/Volckmann will conventionally finance the project. He stated they had reviewed a number of financings they had done of late, and noted they had just financed their Potrero Center project, and had sixteen offers from lenders, all in excess of $32 million. Mr. Lalanne stated Lalanne/Volckmann had access to conventional capital for this project, and if it is the City's preference to begin the project, they will at least meet the minimum standards of affordability, and start the project this year. Mr. Phillips asked when they could complete the project? Mr. Lalanne stated if they were to have the entitlements by the end of this year, after working through the process with the City, and were able to close their financing by the end of this year, which they clearly feel they could do, then if they began construction in January, 1998, they believed they could have people living in the units by Fall of next year. Mr. Lalanne noted something they had looked at, which would have to be discussed with the City, was potentially recreating the lot split behind the existing Macy's building, so they could effectively get separate financing for the apartment portion of the project, which is what they have done in San Francisco, and would allow them to get that portion of the project going immediately. Member Phillips asked what Lalanne/Volckmann's approach or attitude would be with regard to public input in the design process. Mr. Lalanne stated Lalanne/Volckmann could not wait to sit down with the City and staff to go through the Design Review process, noting they felt they were out of the blocks and ahead of the game. He pointed out that clearly the community likes what they have done with the project, although they would be more than happy to change it, noting Lalanne/Volckmann wants to do what the community wants to do, and what the Vision wants to do. Mr. Lalanne stated the feeling they have been getting from the community overwhelmingly is that they like what Lalanne/Volckmann is doing, and at this point it is a question of sitting down with staff and the Agency, making sure they like what Lalanne/Volckmann is doing, building consensus, and getting this project across the finish line, noting they design their projects as a team effort. Member Phillips asked about the Sales Tax that would be generated by this project, noting the Samuelson Schafer proposal shows approximately 31,000 square feet of retail, while Lalanne/Volckmann's proposal shows 15,000 square feet, plus live/work. He asked what Lalanne/Volckmann's experience has been regarding the type of tenant the live/work units would attract, and asked if it would be retail, generating Sales Tax, or more of a service oriented business which SRRA (Spec. Pub. Hearing) MINUTES 3/18/97 15 SRRA (Spec. Pub. Hearing) MINUTES 3/18/97 16 does not result in Sales Tax the City can derive? Mr. Lalanne stated if they did, in fact, end up with the ground floor live/work as more of a service oriented retailer, then the City would probably be looking more at a Gross Receipts Tax and a Business License, clearly not the traditional Sales Tax the City would get from a traditional retailer. However, Lalanne/Volckmann felt the ground floor live/work would, in the final analysis, be retail all the way up Court and around Fifth Avenue. He stated parking had already been allocated for those units as residential, and they would have to add some parking if it were converted to retail; however, based on the parking layout and the way the plans are situated, they could easily create the few extra parking spaces they would need, and end up more in the neighborhood of 40,000 to 50,000 square feet of retail on the ground floor, ringing the project, if they are able to build what they have shown in their proposal. Mr. Lalanne understood that Mr. Phillips was comparing Samuelson Schafer's 30,000 square feet with Lalanne/Volckmann's 15 , 000 square feet, but noted there was no Sales Tax generated on 15, 000 square feet of basement if you cannot get it leased, and it was Lalanne/Volckmann's honest opinion, based on their experience, that they did not believe there was a great chance for success in getting the ground floor leased. He noted some retailers will live with the mezzanine, and they could create more space by putting mezzanines in. He noted the highest value Lalanne/Volckmann could create for itself as a profit in this project is to maximize the retail; therefore, they have the same goals as the City does, which is maximum retail. Chairman Boro asked, assuming the basement was incompatible and just would not work, and assuming both developers were to build 15,000 square feet, what sense would it make to replicate a use that is already here just five miles away, and why would someone from Tiburon bypass The Towne Center in Corte Madera to come to a Pottery Barn in Downtown San Rafael if they could stop in Corte Madera? Chairman Boro stated he was trying to understand why they would replicate what was already here, versus bringing in new, high quality attractions that we do not have in this County? Mr. Lalanne stated the experience that a family or an elderly person experiences at The Village or The Towne Center is totally different than the experience one feels when walking up and down Fourth Street in Downtown San Rafael. He pointed out that in San Francisco there are Williams -Sonoma and Pottery Barns in the major shopping centers, and they are also in the neighborhoods. He stated Lalanne/Volckmann feels, as the Vision has stated, that if you bring some of the high quality retailers to the Downtown, shoppers would much rather be able to walk and interact with people in Downtown San Rafael than walk through a five acre parking lot at The Village, and go over to more traditional, bulky retailers. He stated it was a totally different shopping experience, and believed Downtown San Rafael was clearly earmarked for that kind of shopping experience. Mr. Fleischli pointed out their view was also that this was not the end of a process for Downtown San Rafael, it was the start of the beginning. He stated if people are going to come and live Downtown, they will patronize these shops and the shops will blossom, and more shops will want to come Downtown. He hoped there would be other opportunities for housing in this area, to bring people Downtown to live, to work, and to patronize the shops. He agreed that while he could easily shop at the mall close to his home, he would rather go to the store where the owner knows his name, stating it is a personal experience, and people are becoming tired of the impersonal mall shopping experience, and want to go Downtown and be part of what is going on. Chairman Boro noted Mr. Lalanne had stated it was their intention to maximize retail at this site, yet Lalanne/Volckmann's rents for the Market Rate units are substantially higher than those projected by Samuelson Schafer, citing comparisons of $1200 vs. $975 for a 700 square foot unit, and $1600 for 980 square feet vs. $1300 for 898 square feet. Chairman Boro stated it seemed the project was predicated on making the money on the housing, and he was trying to understand the differences in pricing. Chairman Boro noted he had asked Mr. Schafer if he could support his numbers, and if they would come in when the project was built, noting Mr. Schafer had said his figures were correct. Chairman Boro asked why Lalanne/Volckmann's housing was, in some cases, 30% and 40% higher than Samuelson Schafer Is? Mr. Lalanne stated their housing was different, noting it was larger and had more amenities, and pointing out they would have washer/dryers in all of their units. He stated they would also have fireplaces and vaulted ceilings in the top floor units. Mr. Lalanne stated Lalanne/Volckmann had faced this same dilemma in Downtown Mountain View, and was able to prove that tenants will pay a premium to have convenient access to services, entertainment opportunities, theater, and restaurants, noting they had also done a market survey showing that these events are being achieved elsewhere in San Rafael. He stated this demonstrated what they believe to be the reality, that people will pay at least that same rent to live in Downtown San Rafael; however, you have to build the right product, with the right mix of amenities, and give them the services they are looking for. Regarding the affordable housing, Mr. Fleischli stated the staff report also points out Samuelson Schafer's proposal has 106 units, while Lalanne/Volckmann has 99 SRRA (Spec. Pub. Hearing) MINUTES 3/18/97 16 SRRA (Spec. Pub. Hearing) MINUTES 3/18/97 17 units. Mr. Fleischli stated their experience in developing housing, especially affordable housing and particularly in a Redevelopment area, is that you do not look at the unit count, you look at the occupant count. He stated Lalanne/Volckmann has a much higher, substantial number of two bedroom apartments for families, and when you count the occupant, or PED count, Lalanne/ Volckmann has 150 spaces for homes, as compared to Samuelson Schafer's 135, because even though Lalanne/Volckmann has a few less units, they are building more larger units and, therefore, creating more housing for more people. Chairman Boro referred to the comparison between the projects in San Rafael and Mountain View, particularly with regard to the piazza, stating that as he read the staff report, it appeared there were two common areas in the Mountain View project, one for the public, and one exclusive for the apartment dwellers. Mayor Boro noted he was raising this question because although everyone likes the idea of a piazza, as long as "the right kind of people are there", pointing out there is nothing we get calls on more in this City than people standing in front of a bank, or sitting on the planter boxes Downtown. He stated one property owner had even asked the City to come in and put spikes up on the planter boxes so people would not stay there. Chairman Boro stated the concept of the piazza is really great, but the reality is that it is very difficult to police, and to "have the right atmosphere". He noted the Mountain View project was not the same as that being proposed for our project, because in Mountain View they have two courtyards, one that is definitely public and one that is secured; however, the proposal for San Rafael is one piazza that will serve both the residents and the public. He asked how this would work, and what Mr. Lalanne might know that perhaps we could use elsewhere in the City to make some of our other gathering places more friendly for the entire population? Mr. Lalanne stated they had also witnessed the people hanging out at the Bank of America Plaza, and as mentioned in their presentation earlier, in creating vitality along the street frontage, by having the stoops and the interaction between the pedestrians and the retail storefronts, it creates that excitement . He noted that typically they have found that in San Francisco and other cities where this vitality is created, the vagrants and the homeless who are just hanging out tend to move on. He noted he had made a comment to someone in the City that he thought it would be a good idea to talk to the owners of the Bank of America building, and pointed out that there is not much of a problem around the flower stand because there is activity. He further suggested tearing out the fountain and putting in a little "Tavern on the Green" to create some outdoor vitality and excitement along the street there, noting he believed we would find those people would go somewhere else. Tom Fleischli referred to a copy of the Public Access Easement for Mountain View, noting he had highlighted exactly where the easements are and what they look like, so the Agency can envision what their function is. Mr. Fleischli pointed out the main piazza in the center of the project, and the area where the second piazza would be located when the second building is constructed. He stated the difference between proposals was that the Mountain View project consisted of three separate buildings, and rather than having an interior built courtyard, there is another building there, so there is no interior public space or gathering space, there is circulation space that leads to the plaza. He stated the public has access to it, and it has not been a problem at all. Member Heller referred to the cost difference, noting Lalanne/Volckmann had a $19.7 million investment, while Samuelson Schafer shows $22.8 million. She asked why Lalanne/ VolckmannI s figure was less, and if it was due to their anticipated cost of construction being less? Mr. Lalanne stated the difference was in the construction costs, noting Lalanne/Volckmann would be using wood frame. Chairman Boro announced there would be a brief recess. Chairman Boro reconvened the Special Public Hearing, and announced the procedures to be followed during the public comment portion of this Public Hearing. He announced that those wishing to address the Agency were to limit their remarks to three minutes; if a speaker became repetitive, Chairman Boro would remind them they had already stated the same thing; and he instructed the audience to attempt to govern themselves, and to please not go into lengthy discussion on something that has already been stated, but rather to just state that they agree. Member Heller asked that it be pointed out that the Agency was not discussing the design of the building. Chairman Boro stated the Agency would not be making any decision on the design at this time, noting the Agency acknowledges the SRRA (Spec. Pub. Hearing) MINUTES 3/18/97 17 SRRA (Spec. Pub. Hearing) MINUTES 3/18/97 18 concerns the public has had about the design, and that was why the Agency held a special meeting and announced that once the developer was chosen, there would be a special open workshop meeting with the Agency, the Planning Commission, the Design Review Board and the developer to talk about design concepts. He pointed out this would be a public meeting, and everyone would have an opportunity to participate in the workshop, and the design issue would be discussed and decided at that point. He stated at this time the Agency was more interested in the content of what these developers bring to the table, and how successful the Agency feels their projects would be for San Rafael. Robert Jillian, 41 Via San Fernando in Tiburon, stated he, his wife, and three children often come to restaurants in Downtown San Rafael, and to the Farmer's Market on Thursday evenings. He stated his family does not like to go out to the town centers (malls), noting that does not appeal to them, and they would rather come to our Downtown. Mr. Jillian stated he practiced bankruptcy law, and has seen a lot of projects such as the one now before the Agency, noting many of them end up in bankruptcy, and he has seen many of the reasons they end up there. Mr Jillian stated the Agency was going to end up with a lot of problems, which he would hope the Agency will be able to solve on the spur of the moment. He stated that earlier this evening he had heard a lot about Mr. Lalanne's experience, noting he had once worked on a project with Mr. Lalanne after the original developer went into bankruptcy, and Mr. Lalanne pulled the project out of bankruptcy and made it a very successful project. Mr. Jillian stated he also heard about the architect for Samuelson Schafer, who has a great reputation, but noted he did not hear much about what the individual developer, Mr. Schafer, had brought to the table. He stated that as a person who has often litigated these things, he could state that when it comes right down to it, you need good professionals, and a good business person, because when you have to make up your mind, on a day to day basis, about something that comes up that you have not even thought about, you need to have someone who has the touch and the vision. He stated one can tell from Mr. Lalanne when he speaks that he knows it, he has tasted it, he has felt it, and he has an answer for it, because he has been there. Mr. Jillian pointed out all the projects Mr. Lalanne has done, stating Mr. Lalanne is the one who has done it, not his architect. Mr. Jillian stated that you really need both, noting that when he tries a case, unless he has a good client, he cannot win. Mr. Jillian stated there were good architects on both sides here, but in Mr. Lalanne, the Agency also has someone who is very well experienced. As far as reading the community, Mr. Jillian stated he felt Mr. Lalanne had read the community so far. Upon having read the staff report, Mr. Jillian stated the Agency had made a couple of mistakes, acknowledging that once a decision is made, it is hard to go back on it. However, mistakes were made about points on the tenancy, integrity, and other issues. He stated the Agency mentioned one of the reasons they chose the Samuelson Schafer firm was because that firm came up with the idea of including a theater in the project, but now no one finds a theater very persuasive, so he did not see how that could be a very persuasive point. Mr. Jillian also stated he had read in the newspaper that one of the members of the Review Committee had made the comment that Samuelson Schafer had $22 million "cash on the barrel head". Mr. Jillian stated he had looked at the letter from Bank of America, which is not a Letter of Commitment, nor is it a promise of $22 million, noting it actually states, 11$22 million or the lesser of", followed by two paragraphs containing requirements dependent upon net operating income. Mr. Jillian stated you could not assign net operating income on a project like this until you get way down the road. He stated Bank of America gives letters such as this one as a matter of course, much like showing a rough sketch of a house before the Design Review Board, prior to the actual plans submitted to the Planning Commission. He stated the letter from Bank of America is no more than the same kind of sketch, and is not a firm offer of $22 million. Mr. Jillian stated he had no doubt both developers could come up with the financing needed for this project, but the point is, one has the premier experience. Don Magdanz, 80 Forbes Avenue, stated he also owns a software company a block and a half from the Macy's building, and had been a member of the Downtown Vision Committee, which has been disbanded. Mr. Magdanz thanked Director of Economic Development Jake Ours for including the former committee members on the Selection Committee, noting he had attended the presentation on March 5th. Mr. Magdanz stated these were two great developers, pointing out that some of the comments made concerning the viability of the Lalanne proposal at the meeting of March 5th had been rectified this evening, as they should have been. He noted that while he could not speak for anyone else on the Selection Committee, he felt there might have been some different results from the Committee if some of those comments had been clarified at that time. Mr. Magdanz stated, in his opinion, the Lalanne proposal was clearly superior. SRRA (Spec. Pub. Hearing) MINUTES 3/18/97 18 SRRA (Spec. Pub. Hearing) MINUTES 3/18/97 19 He agreed basement retail was not a good idea. He stated he was convinced the loft live/work area was a very exciting concept, and believed the piazza was a wonderful idea to open up that space to the public, noting he thought it would be securable . He pointed out the swimming pool in the Samuelson Schafer proposal would put that space into a private area, and would never be open to the public. Mr. Magdanz noted as far as the retailers were concerned, he believed Bob Lalanne' s synergetic approach to getting retailers in there, to essentially be a spark plug for Downtown, was important to what we are all looking for with the Macy' s building. He stated once this got started it was going to spread, noting we were looking at 3% of the Downtown retail space in the former Macy's complex, noting there was approximately 500,000 square feet of retail space Downtown. Mr. Magdanz felt the approach from Samuelson Schafer seemed to be more "big box", and that was not what people wanted for Downtown. He stated that with the Lalanne/Volckmann proposal, we were looking at a project with life, because the public can get involved with it; however, with the Schafer building, we are just looking at a Downtown apartment building. Mr. Magdanz stated he believed Bob Lalanne had been very visionary in this process, noting if the Agency decided to choose Samuelson Schafer, he hoped they would incorporate most of Bob Lalanne's ideas into the project. Ray Taylor, 126 Palm Avenue, noted a recent newspaper article had stated the Lalanne/ Volckmann project had received overwhelming support by the people who had written to the newspaper, yet the Committee approved the Schafer project because it was better funded. Mr. Taylor stated if the Agency invites feedback it should be adhered to, and he did not believe we should use the fact that if someone can afford to build something we are obligated to approve it and build it. Referring to the idea of including theaters in the project, Mr. Taylor stated he was not clear as to whether the theaters were going to be included in either of these projects or not, but he wished to argue against theaters being included. He felt the Rafael Theater, which the City has been supporting for a couple of years, is doing a wonderful job, and will not only revitalize the Downtown, but bring a quality of viewing to Marin County that they do not currently have access to. He pointed out that with over twenty screens in San Rafael already, we do not need additional screens Downtown in San Rafael, and it would be unfair to the Rafael Theater project to have competition that close to them Downtown. He urged that the theaters be excluded from either proposal. Chairman Boro stated neither proposal included theaters at this point. Susan Page, 35 Hacienda Court, thanked City Manager Gould for his opening comments, but stated she still did not understand why questions were raised concerning Lalanne/Volckmann's financing and prospective anchor tenant. Ms. Page noted she had attended the special meeting on March 5th, and at that time she heard a representative of Lalanne/Volckmann state that his firm had closed over $100 million in loans in the past two years, noting that financial fact spoke for itself. Regarding tenant interest, Ms. Page pointed out the Project Summary specifically listed Williams -Sonoma, Inc. and the Pottery Barn as prospective tenants, having previously submitted Letters of Intent. She stated that if the Agency chose the Samuelson Schafer proposal, she would like to feel confident that the decision resulted from a fair and impartial review process. She objected that the integrity of one of the firms was questioned, noting the credentials of both firms was impeccable. She stated the question was not which developer could deliver the goods, but which plan is better for San Rafael, and she believed the majority had spoken in favor of the Lalanne/Volckmann project. Ms. Page noted she favored the traditional architectural design of the proposal, as well as the more interesting mix of potential retailers. She stated Samuelson Schafer presented a contemporary shell, with possibly 30,000 square feet for linens and housewares, and she did not believe this retail mix would draw people to shop in Downtown San Rafael, pointing out Macy's had been filled with housewares, and they moved out. Ms. Page stated it had been her understanding the March 5th meeting was a special meeting held for the public to provide input, noting she was present at that meeting, and the majority of those who spoke supported the Lalanne/Volckmann project, and hoped that would be considered in the Agency's vote. She urged the Agency not to open its doors to the public, to hear their opinions, and then ignore them, noting that was exactly what frustrated people with local government. Howard Creighton, 8 Aqua Vista Drive, stated he has been a volunteer in community activities over the past several years, and is a Commercial Mortgage Banker with experience in Real Estate financing of projects of this type. He stated that before this meeting he had never seen either of the developers, and had not worked with them in the past on any other projects; however, he did know some of the firms they have received financing from, particularly some of the firms Lalanne/Volckmann has worked with, and he respected them, noting he would be pleased to provide additional references in more detail to anyone who might SRRA (Spec. Pub. Hearing) MINUTES 3/18/97 19 SRRA (Spec. Pub. Hearing) MINUTES 3/18/97 20 be interested. Regarding his concern over the Macy's site, Mr. Creighton stated that as a believer in Downtown San Rafael, and a believer in Marin County and California, he was tired of local jurisdictions granting development rights, and then finding out later that the developer cannot perform, noting this had happened at Hamilton Air Force Base, and is a situation that may be faced at other sites in Central San Rafael. He stated he was not hearing any real analysis of the economic realities of these two proposals, noting Kaiser Marsten had supposedly done an economic study, but he did not believe this had yet been disclosed. Mr. Creighton stated from what he had been able to glean from attempting to piece through the two sets of numbers, he believed the Lalanne/Volckmann proposal was much more realistic. For example, he referred to the subject of retail space, noting Samuelson Schafer projected $24 triple net rents on 30,000 square feet of space, half of which is in the basement. He stated if Samuelson Schafer can rent space in the basement, they will be lucky to get between $8 to $12 per square foot for that kind of space. Mr. Creighton pointed out Lalanne/Volckmann proposed $18 triple net rents, on the 15,000 square foot ground floor space, which is good retail space. He stated this was a realistic rent, while the $24 triple net rate was probably aggressive, even for the ground floor space, particularly since their projection is for a large retail user, and the larger the tenant, the lower they pay per square foot. He pointed out the Lalanne/Volckmann proposal is for smaller tenants, and they pay more per square foot. Regarding Office rent, Mr. Creighton pointed out Samuelson Schafer projects $30 per square foot gross, and estimates $6 in expenses, netting them $24 per square foot, while Lalanne/ Volckmann proposes $24.87 gross, $8.11 in expenses, netting them a profit per square foot of $16.76. Mr. Creighton reported a study on the Office market stated the Central Marin market for office rents was $2.09 per month gross, or $25.08 per year gross; therefore, he felt Lalanne/Volckmann was much more realistic in their economic projects. Referring to the apartments, Mr. Creighton stated there was a difference in what appeared to be the apartment income and per unit rents projected by the two developers; however, if you adjust the sizes, as Mr. Lalanne mentioned, the Samuelson Schafer rents are $1.45 per square foot per month, and the Lalanne/Volckmann rents are $1.52 per square foot per month, which he stated were much closer to each other than the variations in the rents for the other types of spaces. Mr. Creighton stated that within the Samuelson Schafer proposal he found their operating expense projections were quite unrealistic, noting they projected operating the apartment portion of the building for $2,933 per year, while the Lalanne/ Volckmann proposal showed $4,432 per year. He noted the management fee Samuelson Schafer is proposing is 3% of Effective Gross, and reported that was at the bottom end of what a normal lender would use to underwrite a project, stating they would normally use 4% or 5% for a management fee, particularly for a property with this type of quality amenities, as they would want to provide good service to the tenants. Mr. Creighton stated Samuelson Schafer's property tax projections are $71,000 for the apartments, noting that if you use a 1% tax rate, that means they say the apartments are only worth $7.1 million; however, they project a $1 million net income, stating the valuation should be an 8% or 9% cap rate, which means they are saying the apartments are really worth $11 million to $12 million. Mr. Creighton pointed out that if they are worth $11 million or $12 million, then the taxes should have been projected at approximately $110,000 to $115,000, not the $71,000 that they used. Mr. Creighton stated the bottom line was that somebody needed to look at the numbers realistically, noting that while the design is important, and the tenant mix and space usage mix are important to San Rafael, the worst thing that could happen is to give development rights to a firm and then find that their numbers were way off and they cannot perform. Charles Brousse, 8 Balboa, noted this was an interesting division of opinion between City staff, who have recommended Samuelson Schafer, and the people, who seem to be favoring the other developer. He noted members of the public speaking before the Agency had addressed the issues of taxes, financing, and those types of issues; however, he felt that behind the overwhelming public support for the Lalanne/Volckmann plan there was a gut feeling that there is a sharp difference between the two proposals; on one hand, the Samuelson Schafer plan has called for a major tenant dealing in linens, on the low end of it, and an apartment complex with a private swimming pool, but nothing has been said about the citizens, or the people from outside the area coming and using the property for other than the quick trip in to buy some towels or sheets. He asked, "Where is the place to linger, where is the place to refresh yourself, where is the place to find something interesting to do there?" He noted none of that was SRRA (Spec. Pub. Hearing) MINUTES 3/18/97 20 SRRA (Spec. Pub. Hearing) MINUTES 3/18/97 21 detailed in the Samuelson Schafer plan. Mr. Brousse believed the people who were addressing the Agency and eloquently expressing their favoritism for Lalanne/Volckmann were responding to the staff and Agency's own words about wanting to have a unique, exciting centerplace for Downtown, someplace that would draw attention to the center of San Rafael as a destination point for all the County. Mr. Brousse asked the Agency to imagine the piazza on a hot summer day in San Rafael, as a place to be refreshed, a place to sit by a fountain, a place to shop at the live/work units, a place to have something to drink, perhaps at a cafe such as Cafe Claude, perhaps to listen to musicians, noting then they would get the idea of the community center and community use that this building ought to have, as well as some place just being a retail outlet. Kevin Warner, 3 Grand Court, stated he was representing the Citizens Advisory Committee on Redevelopment (CAC), of which he is Chairman. Mr. Warner noted the Agency had a letter from the Citizens Advisory Committee encouraging them to award the site to Samuelson Schafer, stating he wished to paraphrase some of the reasons the CAC has come out in support of Samuelson Schafer. Mr. Warner reported the CAC was a citizens group, and they have had some very lengthy deliberations about the proposals now before the Agency, pointing out there was a group of citizens within the City that did not necessarily support the Lalanne/Volckmann proposal. Mr. Warner stated both developers were extremely qualified, and noted we should be very thankful to have both of them here tonight to present their ideas and visions for this project. He stated both architects were extremely talented, reporting he has had the opportunity to work with both architectural firms. Mr. Warner stated he encouraged either developer, and both developers, to pursue future projects in the City of San Rafael because the City would be fortunate to have their presence here. However, the reason the CAC has come out in support of Samuelson Schafer for this particular project really comes down to one thing, and that is that they "have peeled back the layers of the onion" on both of these proposals, and found several inconsistencies with Lalanne Volckmann's proposal that trouble them, and they did not find those same inconsistencies on the Samuelson Schafer proposal. He stated the problems they have with Lalanne/Volckmann are the following: 1) It seems their financing plan, and some other elements of their project, are a bit of a moving target; every time they come before the Agency, some element of their proposal has changed the way they are going to finance the deal. He noted he had heard some changes again tonight, stating that was troubling. He pointed out Samuelson Schafer came before the Agency at the very beginning and presented a plan that was pretty much intact, acknowledging they had said they would not include the theaters, based on public opinion, but their financing plan was still pretty much in place, the square footages have not really changed, and the overall scope of the development has been consistent throughout. Referring to a specific comment made earlier by the Lalanne/Volckmann representatives, and which he felt was troubling, Mr. Warner stated that when the CAC hears comments such as, "perhaps we can do a site split to promote separate financing or different elements of the project", it usually means the developer is unsure of his financial plan. Mr. Warner acknowledged he did not know what Lalanne/Volckmann's intentions were, but noted it was troubling, and he encouraged the Agency to deliberate that, and to think about it in making their decision. Mr. Warner stated another inconsistency that came about was Mr. FleischliIs response to Member Heller's questions about the target marketing for the residential units, when he stated they were looking to build amenities that would attract young professionals, people who would be working at places like the new office development for Fair, Isaac, and yet several minutes later stated they wanted to have large family units. Mr. Warner stated the CAC did not feel this was being consistent, and they questioned what was really going on with their marketing. In closing, Mr. Warner stated both proposals are fabulous, very visionary, and incorporate many of the elements the community has expressed a desire for. In addition, he noted both architects are very talented, and the CAC was convinced that either developer will deliver a fine project. However, the CAC firmly believed Samuelson Schafer had proposed a much more consistent, financable project, and that is why they recommended the Agency award the site to Samuelson Schafer. Harry Winters, resident of San Rafael for the past forty-five years, stated that in reading the Redevelopment Agency's report for this meeting, he found Director of Economic Development Jake Ours defends the single retail tenant concept, SRRA (Spec. Pub. Hearing) MINUTES 3/18/97 21 Mr. Mr Mr. SRRA (Spec. Pub. Hearing) MINUTES 3/18/97 22 which Samuelson Schafer was in favor of, by citing the former Macy's operation as a highly successful, single tenant operation. Mr. Winters stated his wife had worked for Macy' s for twenty -years, reporting he knew a lot about the Macy' s operation, and basically, it may have technically been one single owner, but it was like ten different high class retail stores. He noted they had electronics, television, hi-fi's, shavers, and cameras in one department, they had excellent mens and women's clothing departments, a fine china and glassware department, a kitchen department, and a home furnishings department. He stated it was like ten different high class stores, and he did not think Mr. Schafer had taken that into account. Mr. Winters felt Macy's, as a retailer, was all things to all people, noting the former Downtown Macy' s had the highest revenue per square foot of any Macy's store in the Country. Winters noted another comment in the report favored the larger project because it would generate more property taxes, but Mr. Winters asked if that possibly offset a greater Sales Tax revenue from multi -faceted, high class retail operation versus a single big retailer? He felt that might be a trade-off, although he had long wondered whether the Redevelopment Agency might always favor a larger project over a smaller one, just because it was larger. Winters reported that at the March 5th meeting Samuelson Schafer had seemed to be open to the question of whether or not there was going to be a theater there. He noted the question had been asked if this idea was dead or not, and noted he would like to raise the issue of safety in having a multi, six -screen theater in the basement. Mr. Winters stated if there were an emergency and people had to exit, with climbing the stairs, this would be a real problem. He noted the answer was that it would comply with all the codes; however, Mr. Winters pointed out that California's elevated freeways and overpasses were constructed following the latest earthquake safety requirements, but every time there is a substantial earthquake some, even the newest, collapse. He stated an underground theater complex might meet the Code standard, but certainly did not meet the common sense standard. Winters noted that while it had been stated that the architecture of the building was not a subject for discussion at this time, he felt the architects were, pointing out there had been a great deal of presentation, with slides and concepts by the architects representing each of the developers. Therefore, he felt it was a fair subject for discussion at this time. Mr. Winters reported he had heard the Samuelson Schafer architect discuss his favorable impression of several other architects, but noted he did not believe he had a real appreciation for the "small town" atmosphere the San Rafael citizens identified as a prime concern in their original Vision document. He pointed out the architect had even spoken of architecture as "the skin of the building, and we could put anything we want on it". Mr. Winters stated that was an absurd concept to real architecture. Barbara Markowitz, a resident of Terra Linda, stated she was familiar with both architectural firms and felt they were exemplary; however, she stated she was very disappointed in the Samuelson Schafer architectural scheme, noting she did not feel it was very well thought out. Ms. Markowitz recalled the highlight of her life was the year she spent in Italy, noting everyone there spends their life window shopping, eating, and seeing people. She stated this is one of the greatest pleasures, but she did not believe we really had this in Marin. She noted that when she wanted to do this, she usually goes to Fourth Street in Berkeley, Palo Alto, Burlingame, or Stanford Shopping Center, and she does not spend much time here because it does not feel right. Ms. Markowitz believed Lalanne/Volckmann addressed this issue of a lifestyle, and there is a vision in what they have addressed, noting it was not just architecture and design, it was definitely revitalizing the community and making people feel more connected to each other, and interested in their lives and the future of the community. Ms. Markowitz stated she was very excited by the work in Lalanne/Volckmann's presentation, and she did not think there was any comparison. She urged the Agency to select the firm of Lalanne/Volckmann, stating she felt very strongly about it. John Reynolds, resident of Larkspur Street in the Canal area, stated he was very impressed with the vitality of the Lalanne/Volckmann proposal, noting he would like to be a part of that. He stated the reason he goes Downtown is to find those shops, the neat little discovery places, noting they are great, and he would appreciate the possibility of more of that. However, he would like to see this kind of sharing of the vitality in the Downtown be available to people who live in Marin and make $20, 000 to $30, 000 per year, and he hoped that somewhere in the proposal there might be a studio apartment a person could rent for $600 per month, or at least to have included somewhere in the City's Vision that SRRA (Spec. Pub. Hearing) MINUTES 3/18/97 22 SRRA (Spec. Pub. Hearing) MINUTES 3/18/97 23 there be more affordable and low income units where people could live and maintain this vitality amongst the upper mobile professionals. Mr. Reynolds stated he supported the upper mobile professionals, noting we need more of them; however, we also need people making lower wages, who have a lot to contribute to Marin County, as well. Margie Titus, resident of Sonoma, stated her business is a Real Estate advisory and consulting service, noting she had done some major projects in Marin County, and had followed this particular project with interest. Based on her past experience, Ms. Titus referred to the costs of the different types of construction, noting she agreed with what Mr. Lalanne suggested was the incremental cost for the Type 5 construction of approximately $30 per square foot, as opposed to the other type of construction. She stated she was bringing this to the Agency's attention because she had recently consulted on a project in San Francisco with the Redevelopment Agency, and the developer had been looking at the higher Type I construction of masonry and steel. She reported that as the result of some height limitations, the developer was in the position of having to increase the density to make the project, and as a result, had to push his retail down approximately a split level below the level of the ground floor retail. She stated the result was great difficulty in attracting tenants to a sub -grade location, and the project has languished, noting they are still in the process of a Disposition and Development Agreement, and the time has been extended by approximately 12 to 13 months. Ms. Titus noted she was bringing this to the Agency's attention to point out the timing impacts that different cost assumptions can have on projects. Regarding the operating expenses, Ms. Titus, having looked at a number of apartment portfolios, stated the operating expenses indicated by Lalanne/Volckmann more accurately reflect what the actual cost is going to be. Ms. Titus stated she had been to Claude Lane, and found it to be an amazing place, noting it is very vital, and felt as though she had been transported to Paris. She reported she had also been to the Harbor Lofts and Park Place projects, and noted when she saw the banners at Park Place, she could see that there would be the potential for "Discover San Rafael", and felt the excitement of Mr. Fleischli's words. Similarly, when Mr. Lalanne discussed creating vitality in the Downtown, she really sensed his understanding of the dynamics and the energy. Sharon Fox, 127 Humboldt Street, addressed Kevin Warner's earlier remarks concerning the CAC. She noted he had referred to the financing plan as being a moving target, but she did not see it that way, stating that at the meeting of March 5th Lalanne/Volckmann, with their tax bond situation, was virtually offering a gift, although she felt that had not been very well recognized. Ms. Fox stated Mr. Lalanne had reported in his opening remarks to the Downtown Vision Committee, that if they did not get the tax bond, they would go through the conventional financing route. She noted that if they had gone with the tax bond, it would have meant more affordable housing and lower rents, and they were really addressing some of the major concerns in the City's Downtown Vision and RFP, and from the Council and many aspects of the community; therefore, she did not see that as a moving target. Ms. Fox noted one of the earlier speakers stated he had seen Mr. Lalanne in action on numerous projects, and that he was quick and really dealt with a lot of situations. She stated Mr. Lalanne's ability to move quickly and Lalanne/Volckmann's flexibility were impressive, noting she believed the reason they are this way is because they have the background. Ms. Fox stated she had been researching this issue for quite a while, and pointed out there had been a lot of discussion about the scope of the project being consistent. She reported a lot of people who responded to the Marin Independent Journal, and to her surveys, were concerned about the size of the building, and about four stories versus five stories. Ms. Fox noted Lalanne/Volckmann I s statement that perhaps they could do a site split had led to an earlier comment that they were unsure; however, she did not view it that way, noting she saw an incredible track record, flexibility, and an ability to work with the community, and work with all the different circumstances that arise. Referring to building amenities and the questions regarding large family units, Ms. Fox reported Mr. Lalanne had pointed out at the March 5th meeting that one of the things that really created consistency and less transient activity in a residential area would be to have units with more than just one bedroom or a studio, and to create community. Ms. Fox believed this would address two issues; lack of turnover, and creating a more cohesive community, noting this was really very important. Ms. Fox pointed out the collective objective of the RFP and the Downtown Vision called for a Mixed Use project that consists of affordable housing units, retail, and offices, which will create an exciting and financially vital concept, and the Vision stated, "The City is hoping this corner will be a highly dynamic destination center, pulling in locals, and people throughout the region. The SRRA (Spec. Pub. Hearing) MINUTES 3/18/97 23 SRRA (Spec. Pub. Hearing) MINUTES 3/18/97 24 Downtown Vision encourages projects that maintain a hometown feel, offer a diversity of activities and a variety of unique one -of -a -kind shops. Live and work conditions are also greatly encouraged". Ms. Fox pointed out the Vision was encouraging high vitality, high revenue, high creativity, and high community spirit. Ms. Fox noted the Review Committee had been asked not to consider the results of the Marin Independent Journal survey results, noting she had spent several hours going through every newspaper article, evaluating all the responses by content, not by architectural style. She reported her research showed there were six crossovers, in which people suggested components which exist in both Lalanne/Volckmann's and Samuelson Schafer's projects; five suggested Jim Schafer's proposal; and twenty-two suggested Lalanne/Volckmann's. Again, she noted these responses referred to content, and did not have anything to do with architectural style. Ms. Fox offered her notes on this survey to anyone who might be interested in them, and urged them to read the newspaper articles so they could come to their own conclusions, noting she believed she had been very fair in her research. Ms. Fox stated as soon as she heard that Macy' s was going to be moving out of the building, she surveyed over 150 people in the community. Chairman Boro noted Ms. Fox had more than exceeded her allotted time. Ms. Fox stated she had a concern, which she had also heard in her research, that of all the slides shown by Mr. Schafer, there was only one project he was personally responsible for, the One "H" Street project. She pointed out all the other projects were done by the architect, and the architect's body of work, not Mr. Schafer Is; however, she reported she was led to believe at the meeting of March 5th that those were Mr. Schafer's projects. She stated she was also concerned that her research showed only three buildings which he was responsible for, One "H" Street, a refurbished warehouse in San Francisco, and the 27,000 square foot building on DuBois Street, which laid vacant for many months. Ms. Fox stated this concerned her, noting the Agency wanted to move fast, and the financial component is being looked at very carefully, and she felt these were things that also needed to be looked at very strongly. Chairman Boro introduced Tim Kelly, consultant with Kaiser Marsten, noting the Agency had hired him to review both of these projects, and asked for his analysis of the financials. Tim Kelly, consultant with Kaiser Marsten, stated what the Agency was seeing was the strength of San Rafael, a very unique project, and two very strong developers. He noted it was a conceptual process at this point, with their best efforts being presented by both developers, based upon their experience, to tell the Agency how they see this project working. Mr. Kelly stated no one would pretend to say that there were any guarantees about precisely what is going to be at this location, and these proposals were the developers' judgments based on a lot of experience, but whatever is ultimately done is going to be a public/private process with the Agency, staff and the retailers. He felt there were a lot of issues to be worked out with the retailers, noting that while both developers had stated they would give the Agency control over the retailers, he did not believe anyone really knew who the retailers would be at this point, although they did have some exciting ideas. Regarding the financing, Mr. Kelly stated he did not think the Agency should view this as something with tax exempt financing, because he did not see this as being the Agency's priority, noting that while tax exempt financing might provide more affordable units, it puts us into a much more complex situation of having to go to competition. He noted there was a time issue, and the Agency wanted to move forward, so unless affordability was a big issue, he suggested tax exempt financing not be an issue. Mr. Kelly stated he believed this was a strong site, and retailers would seek this site, noting it was all in how the site is presented and marketed. In closing, Mr. Kelly stated the Agency was involved in a process that probably was not what the public sector would do on its own, noting this will truly be a partnership, and the Agency will provide some issues with the developer that they might not do on their own, such as pre -leasing. He stated the developer may not want to go as far as the Agency wants to go because there are economic penalties for some of the developers when they have to pre -lease because they have to give special consideration to tenants who sign-up early, which puts the tenant in the driver's seat, and could impact the rent. Referring to retail in the basement, Mr. Kelly acknowledged the basement was tough space to lease, and would require a tenant who could take two levels, noting there are not many of those out there. He pointed out that if that did not work, the basement space would have to be reconfigured. Mr. Kelly stated the projects were very similar in a lot of ways, that he believed the costs were actually very similar between the two proposals, and the rents SRRA (Spec. Pub. Hearing) MINUTES 3/18/97 24 SRRA (Spec. Pub. Hearing) MINUTES 3/18/97 25 would also be similar. Mr. Kelly stated the real issue was the vision that the developers have, their ability to meet the objectives, their ability to work with staff and get this project through, and to move forward, reiterating this was not going to be a straight market deal, it would be a partnership. Chairman Boro pointed out there had been allegations made about some of the numbers contained in the Samuelson Schafer proposal not being realistic. He acknowledged the numbers in the two proposals were different, noting Mr. Kelly had analyzed those numbers, and asked for his opinion. Mr. Kelly stated on the Residential side, he agreed with Mr. Lalanne, and felt Samuelson Schafer's rents were low. He acknowledged people in town are interested in affordability, but notwithstanding that, it still costs approximately $120,000 to build one of these units, noting these were not cheap units to build, and they were going to have to get top dollar rents for this to make sense. Mr. Kelly also believed Mr. Schafer's Operating Expenses were too low. Regarding the $24 per square foot for retail, Mr. Kelly stated that was driven strictly by getting a tenant who could take both spaces and merchandize it effectively, noting that was a thin market, and the Agency needed to recognize that the basement level may not work. Mr. Kelly believed Samuelson Schafer was attempting to meet the Agency's objective of trying to maximize the impact of getting a larger retail space at the site; however they would not build it if they could not lease it. Mr. Kelly stated the space would have to be pre -leased or it would never be built like that, because Mr. Schafer would not take the business risk to build it and not lease it, nor would the Agency be willing to let him do that. Mr. Kelly believed this had been the best effort on Samuelson Schafer's part to maximize the amount of space, noting it was very aggressive, but if it did not work out, then they would go back to being more at the street level, as Lalanne/Volckmann has. Mr. Kelly stated he did not believe Mr. Schafer would build a project he did not feel made sense, noting Mr. Schafer's letter from Bank of America included pre -leasing requirements, and 50% of the retail had to be leased. Mr. Kelly stated no one wanted a project that was going to fail. He pointed out a lot of this was conceptual at this point, and people were trying to meet the Agency' s needs by presenting ideas. He noted once the Agency chose a developer, that was when they would really put pencil to paper and figure out how to make this work, and at that time the Agency would get the retail tenants to come and work with the Agency's objectives, and make this project work. Member Cohen asked Mr. Kelly to comment regarding the net on the Office space, noting comments had also been made about the difference in the developers' assumptions on this type of space. Mr. Kelly stated as he read the proforma, Mr. Schafer had a $24 net rent, and Lalanne/Volckmann had $25 to $26 fully serviced net, noting this actually represented a $6 to $8 difference. Mr. Kelly stated both of the Office spaces would cost approximately the same to build, which would be approximately $150 per square foot, including the pro ration of land and parking. He stated Samuelson Schafer's $24 net was an aggressive rent, noting that currently the market was going up fast on Office rents, but if a survey were taken, it would show rents closer to $25, fully serviced. Mr. Kelly noted the cost factor against which Mr. Schafer is working allows him to change some of his rents to make the numbers work. Member Cohen stated his understanding of the process was that each of the development teams would have a chance to wrap-up their presentation, which would give them a chance to comment on this issue, as well. However, Mr. Cohen stated his understanding of Mr. Kelly's role was that he would do some of this economic analysis for the Agency, on an independent basis, because each of the developers was going to argue that their numbers made the most sense, and that they could deliver the project as promised. Mr. Cohen noted one of the concerns the Agency was now faced with in making their decision, was who was actually going to be able to deliver what they had promised the Agency they could deliver. He stated questions had been raised about the retail and financing, and noted Mr. Kelly had just stated Mr. Schafer is aggressive, his rents are too low, his operating costs are equally too low on the residential side, his assumptions of costs for Office are also aggressive, and his retail assumptions only work if he gets a tenant who takes both floors, a market Mr. Kelly had described as "thin". Mr. Cohen stated there were outstanding architectural firms on both sides of the aisle, outstanding developers with great track records and very similar proposals, which have become more and more similar. He stated the only significant difference that remains is five stories, concrete construction over three stories below grade parking, versus four stories, wood frame construction. Mr. Cohen stated those were significantly different construction costs. Mr. Kelly agreed, noting he understood Samuelson Schafer was doing concrete construction, and suggested Mr. Cohen ask Mr. Schafer this question. Mr. Kelly noted he and staff had gone through a series of questions regarding the costs, stating both developers had approximately $85 per square foot for Residential, SRRA (Spec. Pub. Hearing) MINUTES 3/18/97 25 SRRA (Spec. Pub. Hearing) MINUTES 3/18/97 26 one with a wood frame, and the other with a light weight steel construction. Mr. Kelly reported, based upon Fisher Friedman's experience in San Francisco, they are stating they can do the light weight steel at $85 per square foot, noting he knows from his own experience that Residential can be built for $85 per square foot, certainly in wood frame. He stated he deferred to Fisher Friedman, because he was not a construction person, pointing out staff had checked with the Building Department regarding their figure. However, if that number does not work, they could still build it with wood frame for $85 per square foot, which is the cost they have included in their proposal. Mr. Kelly stated on this particular issue, we were getting into a very technical area concerning construction types and the latest technology, and he deferred to staff and the construction people as to what those numbers are, although he did agree that the $85 per square foot figure works. Chairman Boro stated Mr. Kelly's role was to evaluate the proformas, and asked if Mr. Kelly felt there was an advantage to one proposal over the other, and if they could both perform? Mr. Kelly stated he believed both developers could perform. Chairman Boro announced Mr. Lalanne would have five minutes to address the Council, followed by Mr. Schafer. Mr Lalanne stated a number of issues had been raised to which he would like to respond. Regarding the construction type, he reported Lalanne/Volckmann had done over $100 million worth of construction with Webcor Builders, a half billion dollar a year general contractor. He stated that when Lalanne/Volckmann first got this project they looked at five stories, noting they had priced Samuelson Schafer' s plan, and the figure they received from WebCor was $3. 5 million higher than Mr. Schafer has in his proposal. He stated those estimates were based on over $100 million worth of development during the past year, and that is why Lalanne/Volckmann went to wood frame for this project. Mr. Lalanne stated he took exception to Mr. Kelly's comment that Samuelson Schafer could build steel and light weight concrete for $85 per square foot, noting he did not believe that had been done in thirty years. Mr. Lalanne also pointed out that when you go from wood frame to light gauge steel studs, and metal deck and concrete, the foundation costs start going up, and when you excavate a whole other level for parking, the construction costs go up. He stated it was Lalanne/Volckmann's opinion that these numbers have not been scrutinized, noting his firm had only received the full packet with Mr. Schafer's numbers on Friday night at 5:00 PM, as part of the staff report. Mr. Lalanne stated his firm had been under the impression that the developers were to present their proforma, and then had to be able to live by it, yet comments had been made that Samuelson Schafer could change their rents, change their costs, and change their building. Mr. Lalanne stated his firm thought they had to stand on what they presented, and be able to rely on the proposal and be able to build it. Referring to financing, Mr. Lalanne stated their financing had not been "wishy washy", noting Lalanne/Volckmann had tried honestly and from the heart to take the Agency's Vision to heart, pointing out the Vision states the highest priority is affordable housing, which is why Lalanne/Volckmann originally proposed bond financing, even though they had always said they would conventionally finance the project. Mr. Lalanne stated Lalanne/ Volckmann was not being inconsistent, or constantly changing their priorities, as the gentleman from the CAC had alluded earlier, noting it was the City that seemed to have somewhat competing priorities, noting the City wants to get this project built quickly, but also wants affordable housing. Mr. Lalanne stated Lalanne/Volckmann had shown they would go either way, once they have received the Agency' s priority, which would be part of working with the Agency during the entire process. Addressing the issue of family units, Mr. Lalanne stated his firm believed there were young executives working for Fair, Isaac who may someday wish to have a child, and may want to be able to stay in their apartment, which is why Lalanne/Volckmann built two bedroom apartments. He noted they were not building a day care facility, and when he mentioned the word "family", he was referring to younger couples who are having children, and wish to continue to live in their apartment. Mr. Lalanne reported he had been appointed by the Mayor of San Francisco to sit on the South Beach Citizens Advisory Committee as part of the Redevelopment Agency, and has been one of twelve members on the Ballpark Committee for the new Giants Stadium. Mr. Lalanne stated it had been his experience with CAC groups that when a project is going on in your neighborhood, each developer is invited in to make a presentation, and a question and answer period is provided. Therefore, for the CAC group to present a letter to the Agency at this hearing, when Lalanne/Volckmann had never been invited to a meeting, and did not even know who they were meeting, and for the CAC group to come to conclusions without ever talking with Lalanne/ Volckmann, based on the meeting SRRA (Spec. Pub. Hearing) MINUTES 3/18/97 26 SRRA (Spec. Pub. Hearing) MINUTES 3/18/97 27 of March 5th, before having heard what was said in this hearing, was a bit premature. Mr. Lalanne stated he would have enjoyed having the ability to respond to some of the issues prior to them writing their recommendation. For example, Mr. Lalanne stated their whole reason for wanting to split the residential financing was to get the project done quicker. He noted Lalanne/Volckmann had just secured the interest rate on their takeout mortgage for their $35 million Potrero project. He reported interest rates were rising, and Lalanne/Volckmann felt that if the project can be cut off, financing only the residential portion, it could be built quicker because there are a lot of lenders who like just apartments. He also noted that with Residential there is no pre -leasing requirement, and it can be built more quickly, which is why they recommended splitting the property. Mr Lalanne stated that what has happened tonight, and over the past month, has been extraordinary, and he believed Lalanne/Volckmann had clearly shown a passion for this project, for their concept, and for the Vision, which they believe they have addressed in their proposal. Mr. Lalanne stated their passion has been infectious, noting it has been remarkable the number of phone calls, letters, and support he has gotten from people within the City. He stated the people of San Rafael were wonderful people, and it has blown him away the way they have come out to support what Lalanne/Volckmann has presented to the Agency, and the way they have stated they believed his firm had really "hit the nail on the head" with the Vision of the City of San Rafael. Mr. Lalanne reported the evaluation forms had been filled out on March 5th, at a time immediately after comments were made which left a sour taste in people's mouths about Lalanne/Volckmann, not only on their credibility, but on their ability to get the retail tenants and financing. He noted there were many doubts cast moments before the forms were filled out. He pointed out that in looking through the forms, Lalanne/Volckmann really got bad grades on the issues which were floated just before they were voted on. Mr. Lalanne stated he wished to answer some of the questions which came from that meeting: "Can the developer produce a project that has a strong retail component?", Mr. Lalanne pointed out that of the seven developers who submitted proposals, no other developer to date has obtained Letters of Interest from the quality of retail tenants such as Williams -Sonoma, Pottery Barn, and The Gap. He stated Lalanne/Volckmann has clearly demonstrated that they are a very strong retail developer. "Will this be a positive and strong addition to the Downtown?" Mr. Lalanne pointed out the citizens who have attended this meeting and the one held on March 5th, who have written, who have spoken, have all clearly demonstrated that what Lalanne/Volckmann proposes in their vision is going to be positive and strong for the Downtown. "Is there a high probability that the retailer and the retail concept proposed will be delivered?" Mr. Lalanne believed they had shown tonight that in the past three years they had done many retail projects which were highly successful, and highly diverse, from national tenants to the Cafe Claude's of the world. "Does the City have final approval of the tenants and the retail mix?" Mr. Lalanne stated they did when he and Mr. Fleischli met with staff two months ago, and they do today. He noted Lalanne/Volckmann wanted the Agency to have the right to veto, and to be a part of helping them make this retail project complete. "Is the project viable and responsive to the market? Will it work?" Mr. Lalanne stated he could only speak to what the Agency had seen and heard in the community, and that is very strong support for what Lalanne/Volckmann has proposed. "Can the project, as proposed, be funded without Agency or City contributions?" Mr. Lalanne responded, "Absolutely", noting he had shown they have closed over $100 million in financing over the past three years, and this should not be a question anymore. "Can the project be built and operated as proposed?" Mr. Lalanne stated he did not believe the Agency could find a finer apartment person than Tom Fleischli, noting he had worked with Mr. Fleischli for a number of years, and he does not believe there is anyone who knows apartments, how to build them, how to operate them, how to keep the tenants happy, and how to get the rents up, more than Mr. Fleischli. He pointed out they had shown in their other projects, and in the successes that they have been, that they clearly understand and have a passion for real estate, and they have a passion for this site. David Israel, Architect for Lalanne/Volckmann, stated two extraordinary things had happened during this meeting which he felt were very important. First, he had never heard the community come together and speak with such a virtually unanimous voice on behalf of such a hard choice before the Council or Agency. Second, Mr. Israel stated he found it extraordinary, and a surprise to Lalanne/Volckmann, when Howard Creighton ran down the numbers, noting it was an amazing display of knowledge about real estate. Mr. Israel stated Mr. Creighton's analysis was absolutely dead on, noting that when the Agency's consultant tells them the numbers need not be nitpicked, he suggests that is not correct. He stated what was important was who was going to pull this off, and the best criteria SRRA (Spec. Pub. Hearing) MINUTES 3/18/97 27 SRRA (Spec. Pub. Hearing) MINUTES 3/18/97 28 for that was who was giving the Agency the best numbers, not who ultimately moves their numbers around, but who comes to the Agency with the most real proposal, and with the most real numbers. Mr. Israel stated that before the Agency makes that decision, the decision of whom they are going to choose, he suggested they look very hard at those numbers. Chairman Boro announced Mr. Schafer would now have the opportunity to address the Agency. Jim Schafer stated he wished to clarify some of the issues. He noted their projects had been built by a number of other people and leased by a number of other people, but in reality, he was the one who paid the bills and signed the loans, and he was the one who was responsible. Mr. Schafer stated that from the very beginning Samuelson Schafer had proposed a fairly consistent and direct development in a Mixed Use program, including 30,000 square feet of retail, which has some split-level features to it, and has a $24 net rate. He noted that when they marketed it, that was how they got their Letters of Intent, by sitting down for hours calling retailers all across the United States. He reported they shipped these retailers copies of their plan, and told them what the rent was, noting Laura Ashley did not have a problem with a two-story or split-level retail, nor did Sur de Table. He stated thatpresentation was made very clearly to them, and they did not have a problem with it. Mr. Schafer stated they have offered a number of retail combinations, pointing out Linens IN Things was a large retailer, but noting what has been overlooked is the Sur de Table approach, smaller retailers of 7,000 to 8,000 square feet, yet filling a niche in San Rafael, retailers who are not in other locations, and who will cause people to come here. Mr. Schafer stated that was very important, if you understand the Vision that was written by the citizens. Mr. Schafer referred to their apartment component, stating Samuelson Schafer had firsthand market knowledge, noting they operate units in the Downtown. He pointed out Downtown units are different than suburban units, attracting different kinds of tenants, with different kinds of expectations and lifestyles. Mr. Schafer stated they were comfortable with their rents, noting they do not overprice their rents because they do not have to; He stated their expenses are exactly what they are at One "H" Street, pointing out they know what it costs to run that building, and they know what it costs to run this complex. Mr. Schafer stated they feel the market rents they have proposed have been supported by market interest from tenants. He acknowledged $24 per square foot for office space was aggressive; however, he reported the Buck Fund wanted to be in Downtown San Rafael, noting their agent had issued a Letter of Interest. He stated they know the numbers, pointing out Samuelson Schafer had not been marketing in a vacuum, they have been out there marketing with their proforma. Referring to their construction technique, Mr. Schafer stated construction technique and costing was very interesting, noting they take bids regularly, and bids can come in for the same line item from three different sub -contractors, and be $100,000, $200,000, and $300,000. He stated if the sub -contractor, the team put together by the developer to build the building, is the right group and can solve the construction problem in the right way, you can achieve your price. Mr. Schafer stated their construction methodology is lightweight steel, not reinforced concrete, noting they have a concrete garage structure, but a lightweight steel element above. Mr. Schafer noted lightweight steel was required for five stories, and it was their intention to build five stories. He stated Samuelson Schafer believes their pricing is real, because they have had contractors evaluate it. He reported he had not taken the opportunity to evaluate Lalanne/Volckmann I s project, nor did he care to, noting he only cares about what Samuelson Schafer can do, and they can deliver exactly what they stated they had in their proforma. Mr Mr Schafer reported Bank of America, as an independent part of this evaluation, has taken this project through their Appraisal Department in advance, because they do not issue those types of letters lightly, noting this was a serious commitment from a large lender. Mr. Schafer stated it had been their approach from the beginning to do it conventionally, and Bank of America accorded Samuelson Schafer the luxury of having them look at their proposal from an appraisal point of view. Answering the question of whether their proposal would work, Mr. Schafer stated Bank of America thought it would work, noting they issued the commitment letter. Schafer noted Samuelson Schafer had proposed two kinds of mixes Downtown for retail, a large scheme, and a group of smaller tenants. He stated they had also offered the City the opportunity to participate in making that final selection, noting Samuelson Schafer, like everyone else, know this is a great retail location, and as a great retail location, it needs to be maximized. He stated we should not try to squeeze it into a small box because we are afraid to push the envelope a little bit, rather we should push the envelope a little SRRA (Spec. Pub. Hearing) MINUTES 3/18/97 28 Mr. SRRA (Spec. Pub. Hearing) MINUTES 3/18/97 29 bit, and create a larger space and a larger demand, and then fill it with tenants who are interested in coming here. Schafer stated, most importantly, the real offer here was to work together, noting Samuelson Schafer was prepared, as they have been in the past and as they have demonstrated in numerous projects in San Rafael, to sit down and work through the difficult financing issues, the difficult tenant issues, the difficult design issues, and come out with a project that everyone can be proud of. Mr. Schafer stated he was not certain how far to go in discussing their proforma. He reported Rodney Friedman was currently designing this kind of space for Katellas Corporation's 3,000 unit project in San Francisco, noting the pricing and design concept tied to this type of space was not new, it was being tested there. Mr. Schafer stated they have every confidence that what they propose is real, and they offer a number of different alternatives. Most importantly, their position has remained constant throughout the entire course of selection, noting they have had a strong Retail component; a strong Office component; a strong Residential component; and a strong Parking component, with 250 stalls, a separate entrance, secured access for the tenants, available parking for the office space, and parking to service some of the retail demand. Mr. Schafer stated they have come before the Agency with a proposal, and their proposal has remained consistent. He stated it was their hope that when the Agency evaluates it, they will take into account this consistency, and Samuelson Schafer's personal statement that they do have $22 million, $23 million, or $24 million on the barrel head, because they really do. He noted that when you sign your personal guarantee on a loan, the lender expects you to pay it back. Rodney Friedman, Architect for Samuelson Schafer, noted there were a lot of talented architects, designers, and citizens in the audience, and stated he wanted them to help form this project and make it happen. He noted the Agency had two wonderful developers, and was in a very advantageous position. Mr. Friedman stated he wished to clear-up one misconception, noting they were not proposing a Type 1 building, but rather a Type 2, "One Hour" building, which is light steel frame over structured concrete, and permits them to go to sixty-five feet. He stated if the project was thought of as a pizza, it could be a large size pizza instead of a medium size pizza, and the larger it is the more pieces they can cut it into, with more people being able to participate, and more people being able to enjoy it. Mr. Friedman referred to the question of whether their costs were reasonable, and stated the costs were the same as they have been developing for the last year and a half with Pancock Construction and Webcor in the Mission Bay project. Mr. Friedman reported the projects his firm has done in the past with Lalanne/Volckmann have been successful, as have the projects they have done with Samuelson Schafer. He stated the thing that is important about the presentations is their development. He noted the first presentation was in response to the RFQ, and was a five -story building with offices, cinema, retail, and residential. He pointed out Lalanne/Volckmann I s proposal was residential, with a little bit of retail. When the second proposals were made, both projects included offices, parking, and retail. Now, with public sentiment against the cinema, this has been dropped from both proposals, the replacement has been a multi-level retail operation. He noted the question had been asked at the meeting of March 5th if they could create a little mall with multiple shops at different levels inside the project. Mr. Friedman stated this could be done, and could be vital and lively. Chairman Boro stated he truly believed in the integrity of Lalanne/Volckmann, and their ability to deliver was not an issue before the Agency this evening. He noted that currently both Lalanne/Volckmann and Samuelson Schafer were individually working on another project within the City, and he was happy to have both of them here. Member Phillips noted he had served on the Committee with Chairman Boro, which went through the various meetings discussed tonight. He agreed the Agency was very lucky to have two high quality firms vying for this project, and was in an enviable position; however, he noted that as the two positions have come closer together, it was now more difficult to draw a conclusion with regard to preference, because of that merging. Mr. Phillips stated his preference, and his vote, would go to Mr. Schafer and his project, noting he was struck by the fact that he read the Vision, he proposed from the out -set something that stands today, and has the elements the Agency was looking for, including a considerable amount of retail, which Mr. Phillips believed would draw to the Downtown. He stated he was impressed with Mr. Schafer's ability to obtain funding, and begin construction according to the timeline discussed, with completion in eighteen months. Mr. Phillips stated he was confident Mr. Schafer and his architect would be able to present something to the Agency which they can collectively critique, noting he suspected the SRRA (Spec. Pub. Hearing) MINUTES 3/18/97 29 SRRA (Spec. Pub. Hearing) MINUTES 3/18/97 30 public would be invited to participate in that process. Mr. Phillips stated it was his understanding that if the consensus is that we need to move closer to the other design, we will end up there, noting he was comfortable in the fact that we will be able to move substantially toward a different design if we so decide. Mr. Phillips stated he was also impressed with the parking, noting it is an important element in the Downtown, and the perception is that there is never enough. He stated he was more favorably disposed of Mr. Schafer's design to provide more parking, noting the valet parking proposed in the Lalanne/Volckmann project was something he did not feel would work particularly well. Member Phillips stated he hoped the costs Mr. Schafer had outlined in his proposal for the living units were going to be a reality, and if that is the case, they were going to be more affordable than those listed in Lalanne/Volckmann's project. He noted he was also impressed by, and had taken into consideration as part of his conclusion, the recommendations of various groups whom he felt the Agency, as a decision making body, should listen to. Specifically, he believed staff had been very complete in their review, and precise in their recommendation; and he held the members of the Citizens Advisory Committee on Redevelopment in high regard, noting they had reviewed the proposal and independently came to the conclusion which supports the selection of the Samuelson Schafer project. Mr. Phillips stated he had also been impacted by the meeting held on March 5th, which consisted of a great number of community members, including members of the BID (Business Improvement District), Chamber of Commerce, and Planning Commission, noting there had been a pretty diverse group who heard the presentations. He noted one of the things Samuelson Schafer had at that meeting, which may influence those who are in favor of the Lalanne/Volckmann proposal, is a considerable amount of written material on the project, which one could study, discuss, and take into consideration, and he pointed out the members of the audience had likely not had the opportunity to do that. Mr. Phillips felt that if they had, they might also have reached the same conclusion as the members of the Citizens Advisory Committee, staff, and the Review Committee who met March 5th, which was a little more objective and less emotional. Member Heller stated she had watched the presentation on Cable Access Television on Saturday, and found it very illuminating and helpful, noting it was often difficult to get information from just the printed word, and sometimes a visual presentation also helps. She stated she had been interested and fascinated by the two different approaches, noting she had followed along and filled -out her questionnaire during tonight's meeting, and had two questions regarding the retail area of the proposals. Ms. Heller stated she could not be swayed by Letters of Interest, as they were not Letters of Intent, and she believed Letters of Interest from retailers were very easy to come by, because retailers were interested in everything in every location until they sit down with the money and the lease in front of them. Ms. Heller stated she was swayed because she liked Mr. Schafer's architect, noting she was familiar with his work in San Francisco and in San Rafael. She pointed out his Mixed Use project at Golden Gateway in San Franciso was something that was very familiar to her, noting she had been in and out of the building many times, stating it works and is comfortable. Member Heller stated she believed people who were going to live within the building needed their own privacy, and did not think there would be enough room in the project to open it up to the public, pointing out it was not really a very large space when you looked at it. Ms. Heller stated she was hoping the other building would be folded into this project, noting both of the developers were attempting to work with the family, and she believed this might relieve a little of the pressure. Ms. Heller stated issues swaying her decision included the parking component; lower rents, which she hoped would help younger people within the community; and the fact that Mr. Schafer did not waiver in his presentation. Member Heller stated the Agency had received two marvelous projects, and she did not know that there would really be much actual difference between them. She stated she was voting for Mr. Schafer and his project, as she felt more comfortable with it. Member Cohen noted there had been a lot of comments made about the Agency listening to the community, and he asked that people keep in mind that the Agency members were also part of the community. He stated what happens in the Downtown is very important to him, and Downtown San Rafael is why he lives in San Rafael, noting that when he and his wife moved a couple of years ago, they chose to move only in that area within walking distance of the Downtown, because they like it so much. Member Cohen stated this was a very tough decision, and he had spent a long time trying to get a sense of it, and to be prepared for this meeting. He stated SRRA (Spec. Pub. Hearing) MINUTES 3/18/97 30 SRRA (Spec. Pub. Hearing) MINUTES 3/18/97 31 he was not as sure as Members Phillips and Heller were, acknowledging he recognized the reasons they stated, and the fact that Mr. Schafer has been very consistent in his proposal. However, he stated one thing he felt which deserved a comment and some thought before making the final decision was that there are differences in the proposals, and while in many ways they have moved closer together, one of the differences is in terms of the approach of the public space within the building, and the live/work loft approach. Mr. Cohen pointed out these were not particularly approaches we have seen in other projects in Downtown San Rafael, and he felt they deserved some consideration, although he could see the public space becoming a place people are uncomfortable to go, a place where the residents of the project say they want to put up gates because they do not feel safe and secure. On the other hand, he could see it having the potential to become a really neat place to go, another piece of Downtown that could have a real nice atmosphere. Member Cohen stated what he was afraid of with Mr. Schafer's proposal was that we would take most of the block and make it just that, a block. He noted is was going to be a large, solid building, with most of it being internal and closed off to the public. Mr. Cohen pointed out that both of these projects were going to be significantly larger in scale than what is there now, noting this half of the block was currently a parking lot, but now we were talking about taking that whole block and filling it up with building, and he felt the idea of opening up the middle of it merits some consideration. Member Cohen stated he had heard enough on both sides that he was satisfied with both firms' ability to deliver as promised, although he might like a little more economic analysis, which he hoped would be provided as the project progresses. Mr. Cohen stated he would really be disappointed in the process if the Agency were to get further down the road, with either developer, and find they could not do what they said they would do, and then have to revise the project. Mr. Cohen stated he hoped the Agency would not put itself in a situation where we are working with someone who cannot deliver. Member Cohen stated at this point he tends to think Lalanne/Volckmann's proposal is a little more creative, and for that, merits serious consideration. Mr. Miller stated this had been a wonderful exercise in democracy and community participation, and seeing what is the very best of community, which has been exhibited throughout this meeting. Mr. Miller noted he was approaching this as making a business decision, pointing out the decision was to whom the Agency should sell the site, and if the purchaser will continue, with the City as a partner, in delivering a product that will maximize the social and economic capital of the Downtown community, as seen in the Downtown Vision. Mr. Miller stated both applicants really excel, and he thanked them for all the work, effort, thought, and commitment they have put into this. Mr. Miller stated he could actually go with either developer, because they are both great. However, since he does have to choose between them, part of his judgment was going to be subjective, because it was a business judgment. Mr. Miller stated he would choose to go with Mr. Schafer's project, because he knows he is committed to the Vision, understands the Vision, and has been consistent with his project from the day he presented it. Mr. Miller stated the second reason he would choose Mr. Schafer' s plan was because Mr. Schafer was committed to a community based process, which Mr. Miller believed would tailor the Vision so that it becomes adequate to the changes that will come about and reach into our tomorrow. He stated he was also basing his decision upon the past relationship the City has had with Mr. Schafer, noting that in his own business, when he has an excellent business relationship with an excellent person, he continues that relationship, and he saw it as a dominant role for the Agency that they would want to continue that excellent relationship which has been developed with Mr. Schafer. Chairman Boro stated his vote was also for Mr. Schafer, noting he had lived with this project for many months and watched the developers interact, and he felt Mr. Schafer had come in with a definite proposal. He recalled that when he first submitted his proposal with the theater, the theater had been brought in because staff had included the theater as part of the RFP, and it was not something Mr. Schafer came up with to cause controversy. He noted that when the controversy over the theater arose, the issue was dropped. Chairman Boro stated Mr. Schafer's proposal was consistent from the very beginning. Chairman Boro stated when he first saw the Lalanne/Volckmann proposal, his first reaction was that they were building an apartment house Downtown with token retail. He noted their proposal had gone a long way from where it started; however, he still had concern about Lalanne/VolckmannIs commitment to retail, what they plan, and how they plan to do it. Chairman Boro stated it did not SRRA (Spec. Pub. Hearing) MINUTES 3/18/97 31 SRRA (Spec. Pub. Hearing) MINUTES 3/18/97 32 make sense to him to replicate what is already out there in the Marin community, and while he acknowledged he was not familiar with all of the retailers Mr. Schafer had mentioned, he knew there were some he had mentioned who were new and different. He pointed out Lalanne/Volckmann continued to discuss Crate IN Barrel, and another retailer who is currently in Corte Madera, and stated he was looking for something different, something that would be a spark in the Downtown. He noted the Agency is going to get 15,000 to 30,000 square feet that is going to impact 600,000 square feet, so he was looking for something that was truly going to be different. Chairman Boro stated he felt the Agency has had a track record with Mr. Schafer, noting the City had worked with him very closely on the Telephone Company building, noting it had been a very difficult building to deliver, and Mr. Schafer was very tenacious in making that happen, keeping his costs in line and delivering it. Chairman Boro stated he believed either developer could deliver on this project, but pointed out that in past experience Mr. Schafer has cooperated with staff, and he understands where we are going. He stated Lalanne/ Volckmann had changed each step of the way, including tonight, noting they had not stated on March 5th that they agreed to a veto, what they actually stated was that they would work in partnership with the City. Chairman Boro stated there had been a constant change in Lalanne/Volckmann Is approach as to how they were going to deal with the Agency, noting that was something he had seen on a day to day basis. Chairman Boro stated he had seen this all unfold, he had listened and watched, and while he believes they are both great developers and have great architects, he believed the City would be best served by Mr. Schafer Is proposal. He stated the issue now before the Agency was a motion to direct staff to negotiate an exclusive right to negotiate with the firm. Member Phillips moved and Member Heller seconded, to direct staff to negotiate an Exclusive Right to Negotiate with Samuelson Schafer. Member Cohen, stated the vote had not yet been taken, and previous comments had been merely a part of the Agency's discussion, to ascertain the direction in which they were leaning. He noted this had been a difficult decision, and not one where it was possible to make a wrong decision. Mr. Cohen stated he did not want to send the wrong signal, noting he had indicated he had been leaning toward the Lalanne/Volckmann proposal, but in the interest of continuing an excellent working relationship with Samuelson Schafer, he could not bring himself to vote against Mr. Schafer's proposal, and since the majority was clear, and he believes it is important that the City speak with one voice as they now go out and define exactly what we want as part of this exclusive agreement with Samuelson Schafer, he wanted to vote in support of this motion, and work with Samuelson Schafer to get the best project the Agency can get for San Rafael, based on this agreement. AYES: MEMBERS: Cohen, Heller, Miller, Phillips & Chairman Boro NOES: MEMBERS: None ABSENT: MEMBERS: None There being no further business, the meeting was adjourned at 12:10 AM. JEANNE M. LEONCINI, Agency Secretary SRRA (Spec. Pub. Hearing) MINUTES 3/18/97 32