COMMUNITY REDEVELOPMENT AGENCY OF THE CITY OF LOS ANGELES, CA M E M O R A N D U M ROBERT R. OVROM, CHIEF EXECUTIVE OFFICER

Transcription

1 COMMUNITY REDEVELOPMENT AGENCY OF THE CITY OF LOS ANGELES, CA M E M O R A N D U M 10 DATE: DECEMBER 16, 2004 CN3320 TO: FROM: RESPONSIBLE PARITES: SUBJECT: AGENCY COMMISSIONERS ROBERT R. OVROM, CHIEF EXECUTIVE OFFICER CURT HOLGUIN, DEPUTY CITY ATTORNEY STEVE ANDREWS, CHIEF-STRATEGIC PLANNING INCREASE OF PURCHASE ORDER (PO ) AMOUNT FOR THE LAW FIRM OF BROWN, WINFIELD AND CANZONERI BY $55,000 (FROM $121,000 TO $176,000) FOR LEGAL SERVICES RELATED TO REDEVELOPMENT OF THE CROWN COACH INDUSTRIAL SITE CENTRAL INDUSTRIAL REDEVELOPMENT PROJECT AREA CD 14 RECOMMENDATION That the Agency, subject to City Council review and approval, authorize the Chief Executive Officer or designee, to increase the purchase order amount for the law firm of Brown, Winfield and Canzoneri by $ 55,000 (from $121,000 to $176,000) for additional transactional legal services and costs related to redevelopment of the Crown Coach Brownfields Demonstration Site. SUMMARY The Project The proposed Crown Coach Industrial Center site is located on approximately 26 acres at or around 2425 East Washington Boulevard, northeast of the intersection with Santa Fe Avenue ( Site ) in the Central Industrial Redevelopment Project Area. A Site diagram is on Attachment A hereto. The Crown Coach Industrial Center is planned as a produce distribution and business park of approximately 1.27 million sq. ft. including 1.02 million sq. ft. of produce-related and industrial uses, and the remaining 250,000 sq. ft. of telecommunications uses ( Project ). The Site was used for several decades for heavy industrial uses including railroad yard and maintenance. Therefore, the Site contains contaminated soils and perched groundwater which must be remediated as part of its redevelopment.

2 Authorization To Increase Purchase Order Amount, Brown, Winfield and Canzoneri 2 During September September 2000, the Agency, acting as agent for the City of Los Angeles ( City ) took several initial steps aimed at preparing the Site for redevelopment. These included: (i) execution of an option to purchase the Site ( Option ) from the State of California ( State ); (ii) execution of a Voluntary Cleanup Agreement for the Site ( VCA ) with the State Department of Toxic Substances Control ( DTSC ); and (iii) an RFP process which selected Alameda Produce Market Inc. ( Developer ) to develop the Site. The City Attorney s Office assisted Agency staff in these initial steps which set up several additional transactions and negotiations requiring the assistance of outside counsel. The Initial Budget In September 2000, the Agency retained the law firm of Brown, Winfield and Canzoneri ( Brown Winfield ) to assist in these additional transactions and negotiations. The initial Brown Winfield budget to handle these matters was $51,000 covering legal research, assessment, negotiations, and document drafting for several components of the Site s redevelopment. These components included negotiation with the State of the purchase terms of the Site, negotiation with DTSC of the remediation procedures for the Site, negotiation with the Developer of the terms of an ENA (and then DDA), and substantial work in determining the rights and duties of landowners adjacent to the Site (e.g., Amtrak s duties to remediate migrating contamination) and easement holders in the Site (e.g., Alameda Corridor Transportation Authority s ACTA s rights of way). The First Budget Increase On April 18, 2002, the Agency Board approved a $54,000 budget increase (from $71,000 to $125,000) for Brown Winfield to handle several new and unforeseen requests. These were: (i) implement City requests for State conveyance of the Site prior to finalizing the DDA and the environmental remediation procedures; (ii) modify the conveyance from a purchase agreement with grant deed to a long term ground lease; (iii) formulate environmental insurance strategies to reduce Agency and City liability upon completion of Site remediation; (iv) formulate cost recovery and sharing strategies to deal with Amtrak s migrating contamination; (v) resolve ACTA s title and easement issues; (vi) negotiate and document relationship agreements between the State and Developer regarding cost sharing and financial assurances needed to complete Site remediation; and (viii) extend and modify the Option Agreement. A copy of the First Revised Budget is on Attachment B hereto. The Second (Current) Budget Increase Recently, several additional and unforeseen requests were made to Brown Winfield which require a $55,000 budget increase (from $121,000 to $176,000). These are requests to: (i) develop a new environmental remediation plan (at DTSC s request) aimed at achieving substantial cost savings for the parties; (ii) develop an interim access agreement for the Site for multiple users including ACTA and the Developer; (iii) negotiate and document multiple easement agreements with the State, City and Developer; (iv) continue discussions among the Agency, DTSC and Amtrak aimed at developing a joint cost sharing approach to environmental contamination which straddles the Site and Amtrak property; (v) prepare various additional legal documents between the City and the State to effectuate the transfer of the Site to the Agency and Developer; and (vi) complete a Disposition and Development Agreement (DDA) between the Agency and the Developer to reflect final conditions concerning legal and fiscal responsibility for completing the cleanup of the Site over time. A copy of the Second Revised

3 Authorization To Increase Purchase Order Amount, Brown, Winfield and Canzoneri 3 Budget is on Attachment C hereto. The Second Revised Budget has been transmitted to the City Attorney s Outside Counsel Review Committee for review and approval. The Uncertainties In Current Budget Increase The Crown Coach Brownfields Demonstration Site is nearing the completion of the environmental investigation and cleanup planning stage, which will allow the Agency and the State to complete the transfer of the Site to the Agency, and permit the Agency and the Developer to complete the DDA and construct the Project. As with any Brownfields site, but particularly with this Site, because of the involvement of multiple parties in interest, substantial uncertainties exist which make any outside counsel budget subject to change. These uncertainties include the pending results of pilot test studies for proposed remediation technologies, decisions of regulators in allowing implementation of defined remediation plans, evaluations by the prospective purchaser, the State Department of General Services and environmental insurance companies of the proposed remediation plan, results of negotiations with all of the above parties on agreements to implement the remediation plan and allocate residual risks among the parties and other potentially responsible parties ( PRPs ), including Amtrak, and negotiations with multiple easement holders. In addition, other factors beyond the control of the Agency may impact the timing, cost and ultimate feasibility of the Project, including staffing and budgetary constraints of the State and Amtrak. RE November 15, Agency approval of authorization to execute contracts with 25 law firms to serve as Agency outside legal counsel for a three year period. January 29, City Council approval of authorization to execute contracts with 25 law firms to serve as Agency outside legal counsel for a three year period. April 18, Agency approval of $54,000 increase in the work order amount for Brown, Winfield and Canzoneri (from $71,000 to $125,000) for the Crown Coach Brownfields Demonstration Site. May 22, City Council approval of $54,000 increase in the work order amount for Brown, Winfield and Canzoneri (from $71,000 to $125,000) for the Crown Coach Brownfields Demonstration Site. SOURCE OF FUNDS Funds for this action will be provided by the Brownfields Revitalization Program. PROGRAM AND BUDGET IMPACT Approval of this action will allow the Project to continue its work program, leading to a major new industrial project in the Central Industrial Redevelopment Project Area. The funds required are provided from the Brownfields Revitalization Program, and are budgeted in the FY05 Agency Budget. (CN 3320 Crown Coach Brownfields Demonstration Site). A significant

4 Authorization To Increase Purchase Order Amount, Brown, Winfield and Canzoneri 4 ENVIRONMENTAL REVIEW The proposed action does not constitute a project as defined by the California Environmental Quality Act ( CEQA ). BACKGROUND Preliminary Actions at the Site In May 1998, the Agency, as directed by the City Council action of September 11, 1997, executed the Option Agreement with the State to purchase the Site and to act as development manager for its environmental characterization, cleanup, and future redevelopment. This management role is under the policy direction of the City Brownfields Executive Team (see below). In November 1999, after completing the initial phase of site investigation and cleanup, the Agency, with the Brownfields Executive Team, issued an RFP for development of the Site. In January 2000, ten proposals were received. City Council Actions of July 12, 2000 On July 12, 2000, the City Council, upon the recommendation of the City s Brownfields Executive Team, authorized the Agency Administrator to negotiate and execute an ENA with the Developer for redevelopment of the Site. The ENA expired in October, 2001 but the Agency and the Developer are continuing to negotiate the terms of a DDA that will come before the Agency Board and City Council for approval. Site History The Site was purchased by the State Department of Corrections. Over the next four years, the State conducted a series of environmental investigations and demolition activities in preparation for constructing a prison thereon. However, due to strong and vocal community opposition, the prison proposal was dropped. In 1995, the State deemed the Site as surplus property. In early 1997, the City s Brownfields Executive Team commenced its consideration of the Site as a Brownfields Demonstration Site test case. As a test case, City government: (i) assists would-be developers in overcoming the deterrents to development posed by contaminated land; and (ii) trains City departments in the processes and procedures needed to overcome such deterrents. To create a test case at the Site, the City Council designated the Agency as the City s agent for specified real estate actions aimed at obtaining access to study the contamination, formulating a plan to remediate it, and committing a developer to develop a suitable project on the remediated land. On September 11, 1997, the City Council approved the City Brownfields Executive Team s recommendation to designate the Site as a City Brownfields Demonstration Site. This designation resulted in the Brownfields Team negotiating the Option Agreement and VCA. Since the establishment of the Site as a City Brownfields Demonstration Site, the Brownfields Team has worked to apply a number of brownfields program strategies to address the environmental impediments to redeveloping the Site, including conducting detailed environmental investigations and cleaning up all surface contamination. Also, the City has

5 Authorization To Increase Purchase Order Amount, Brown, Winfield and Canzoneri 5 worked in close cooperation with ACTA which needed part of the Site for roadways to support its Alameda Corridor project. During the environmental investigations, the Brownfields Team completed a remedial investigation and feasibility study (RI/FS) that resulted in a DTSC-approved site wide assessment. Based on these results, the Team developed a remedial action plan (RAP) to clean up the limited surface soil contamination that remained on the Site. A series of community meetings were conducted to review the results of the environmental investigations and the proposed remedies for remaining cleanup activities. After all investigations were complete and the remaining surface contamination cleanup completed, DTSC issued a closure letter for the upper 30 feet of the Site which will allow redevelopment to occur while the longerterm deep soil gas cleanup is being implemented. City of Los Angeles Brownfields Revitalization Program Over the past eight years, the City has developed a multi-faceted Brownfields Revitalization Program to develop City policies, strategies, and programs designed to help overcome the barriers associated with the redevelopment of Brownfields in the City. The City s Brownfields Program provides professional expertise and funding to generate economic development and encourage private sector investments in vacant and under-utilized areas of the City. On March 17, 1998 the City of Los Angeles was selected as one of sixteen national Brownfields Showcase Communities. Under this designation, the City has established active working relationships with federal agencies participating in the Brownfields National Partnership Action Agenda, mutually seeking policy and programmatic initiatives to enhance the redevelopment of brownfields sites. The City supports its Brownfields Revitalization Program with CDBG funds and has received grants and Section 108 Guaranteed Loan Funds under the U.S. Department of Housing and urban Development Brownfields Economic Development Initiative Program (BEDI). An interagency Brownfields Executive Team consisting of the Agency Administrator, the General Manager of the Environmental Affairs Department, the General Manager of the Community Development Department, and the Deputy Mayor for Economic Development directs the Brownfields Program. A Brownfields Resource Team consisting of senior policy staff members from each entity and a representative of the U.S. EPA assigned to the City under an Intergovernmental Personnel Act Agreement support and staff the Executive Team. The U.S. Army Corps of Engineers has previously supplied a full-time environmental engineer, funded by a grant from U.S. EPA, to support the program. Staff members from various other City

6 Authorization To Increase Purchase Order Amount, Brown, Winfield and Canzoneri 6 departments and agencies also contribute to the overall support of the City s Brownfields Program. Robert R. Ovrom Chief Executive Officer By: Richard L. Benbow Chief Operating Officer There is no conflict of interest known to me, which exists with regard to any Agency officer or employee concerning this action. Attachment A Site diagram showing the Crown Coach industrial site Attachment B First Revised Budget of Brown Winfield Attachment C Second Revised Budget of Brown Winfield