AGENDA STAFF REPORT

Agenda Item AGENDA STAFF REPORT ASR Control 16-000247
MEETING DATE:	03/15/16
legal entity taking action:	Board of Supervisors
board of supervisors district(s):	4
SUBMITTING Agency/Department:	County Executive Office (Approved)
Department contact person(s):	Scott Mayer (714) 834-3046
	James Campbell (714) 834-3767

Subject: Selection of Developer to Lease Placentia 2.34 Acre Site

ceo CONCUR

County Counsel Review

Clerk of the Board

Concur

No Legal Objection

Discussion

3 Votes Board Majority

Budgeted: N/A

Current Year Cost: N/A

Annual Cost: N/A

Staffing Impact:

# of Positions:

Sole Source: N/A

Current Fiscal Year Revenue: N/A

Funding Source: N/A	County Audit in last 3 years: N/A

Prior Board Action: N/A

RECOMMENDED ACTION(S):

Find that the subject activity is not a project within the meaning of CEQA Guidelines Section 15378 and is therefore not subject to review under CEQA.

Select Mercy Housing as the primary and GKH Partners as the alternate for lease and development of Orange County Flood Control District owned property located adjacent to the Atwood Channel in Placentia.

Authorize the Chief Real Estate Officer or designee to negotiate an Option and Lease Agreement with Mercy Housing or GKH Partners and return to the Board for approval.

SUMMARY:

Selection of Mercy Housing to assist the County with the development of the Orange County Flood Control District owned parcel in Placentia will create an opportunity to potentially house and provide services to 49 homeless and/or disabled United States Veterans while concurrently generating revenue for the Orange County Flood Control District.

BACKGROUND INFORMATION:

The Orange County Flood Control District (District) owns a 2.34-acre unimproved vacant parcel in the City of Placentia (Property). The Property is located within a cul-de-sac on Goodman Street, a newly constructed street which provides access to the Property. The Property is located near the intersection of east Orangethorpe Avenue and Lakeview Avenue north of the Atwood Flood Control Channel.

The District has received multiple requests from the public to purchase or lease the Property for development. The Property was purchased in 1963 to support future flood control improvements. Since then, the improvements have been completed and District supports the interim use of the Property.

On November 20, 2015, CEO/Real Estate, on behalf of the District, released a Request for Proposals (RFP) seeking a qualified respondent to enter into a long-term ground lease for the use and development of the Property, while keeping the use of the Property consistent with, and achieving, flood control purposes. On January 28, 2016, CEO/Real Estate received two proposals in response to this RFP. A three member evaluation committee comprised of public and private sector subject matter experts reviewed the proposals. The panelists reviewed and compared the proposed projects to determine the project most compatible with the District's goals for this solicitation:

•

A partnership with a qualified Respondent with sufficient experience, financial resources, and personnel to fully develop and realize the maximum value of the Property.

•

A workable plan and reasonable timetable to secure all necessary zoning changes (if necessary), entitlements, permits, and equity/debt financing as well as an achievable marketing and leasing program.

•

A fair financial return to the District based on the value of the site today and increased valuation in the future with appropriate entitlements obtained.

Both Respondents were invited to participate in an oral interview to answer questions regarding their proposal. The evaluation committee carefully considered the information provided by each Respondent and based upon the evaluation and selection criteria set forth in the RFP, Mercy Housing offered the highest financial rent and scored the highest with a total score of 547 points out of 600.

Respondents

Proposed Option Payment

Proposed Rent Payment

Mercy Housing

· Initial 6 months - $0

· Month 7-30 - $2,000/month

· $3,000,000 paid at start of construction

GKH Partners

· Initial 3 months - $0

· Month 4-12 - $1,927/month

· $92,500/ year +

15% increase a year

· Net Present Value over 75 years $1,806,544

Respondents	Total Score (Out of 600 Points)	Rank
Mercy Housing	547	1
GKH Partners	478	2

Mercy Housing is one of the largest affordable housing developers in the State of California and has successfully completed development of 8,972 affordable rental housing units. Mercy Housing proposes to develop the ‘Placentia Veterans Village,’ high quality, service enriched, affordable apartment homes for United States Veterans who are homeless and/or disabled. The development will include 50 furnished apartment homes, 49 for veterans and one for on-site management unit, courtyard, community garden, recreation room and resident services offices. Mercy Housing plans to form a partnership with New Direction for Veterans to provide veterans with onsite services such as job training, job placement, VA benefits assistance and health and wellness.

GKH Partners (GKH) is a privately held investment company with 20 years of experience in acquiring, developing and managing residential, commercial and industrial real estate projects. GKH has operated and managed multiple self-storage facilities and has proposed a development project with two self-storage facilities that are two levels with 76,550 square feet of gross building space and 62,295 square foot of rentable space.

Mercy Housing is recommended as the primary and GKH Partners as the alternate for lease and development of the Property. Upon completion of negotiations, staff will submit the option and lease agreement to your Board for approval.

Compliance with CEQA: The subject activity is not a project within the meaning of CEQA Guidelines Section 15378 and is, therefore, not subject to review under CEQA as there is no probability of impacts to the environment. Any use of the property by either respondents will undergo an environmental review.

FINANCIAL IMPACT:

Mercy Housing is proposing an option payment of $2,000/month for 18-24 months and a onetime payment of $3,000,000 at the start of construction.

STAFFING IMPACT:

N/A

ATTACHMENT(S):

Attachment A - Property Map
Attachment B - Memorandum of Recommendation