re:envisionbergamot:station re:envisionbergamot:station

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1 TITL E re:envisionbergamot:station re:envisionbergamot:station A

2 DE V E LO PM E N T T E A M J ame s Bu r n e t t, FASL A, P res id en t OF F IC E OF JA M ES BU R N E TT L an d s cap e A rch i te ct F red er ic k F is h er A I A, P r in ci p a l F R E D E R I C K F I S H E R A N D PART NERS B erg a m o t St at io n A rc h itec t J o e Co r iat y A I A, P r in c ip a l F R E D E R I C K F I S H E R A N D PA RTN E R S B erg a m o t St at io n A rc h itec t A ra s h A z ar b arz i n, P re s i d e n t SB E HOT EL G R OUP Hote l Con s u l t an t Way ne Blank SHOSHA N A WAYN E G A L L ERY Founder, Berg am ot St at i on H owa rd Rob i nson, Rea l Estate Consul ta nt Jef f Worthe, Presi d ent WO RT HE REAL ESTAT E GRO UP Rea l Estate D evel op er J o h n C la r k, P r in c ip a l LO O K I N G G ra p h ic Des ig n Co n s u lt a n t M i ch ae l He r n a n d ez WORT HE R EA L E STATE G R O U P M att Lav i n WO RT HE REAL ESTAT E GRO UP Rea l Estate D evel op er J o el Zen o F R E DE R I C K F I S H E R AND PART NERS

3 DEVELOPMENT TEAM re:envisionbergamot:station Wayne Blank Bergamot Station REAL ESTATE DEVELOPMENT FOUNDER ARCHITECT LANDSCAPE ARCHITECTURE M. David Paul Managing Member Jeff Worthe President 100 Wilshire Boulevard Suite 1600 Santa Monica, CA p f e jeff@worthe.com Wayne Blank Founder 2525 Michigan Avenue B1 Santa Monica, CA p f e wayneblank@verizon.net Frederick Fisher, Joe Coriaty Principals Santa Monica Boulevard Los Angeles, CA p f e joec@fisherpartners.com James Burnett President 550 Lomas Santa Fe Suite A Solano Beach, CA p f e jburnett@ojb.com HOTEL GROUP HOTEL AND HOSPITALITY ARTS PROGRAMMING BRAND AND IDENTITY DESIGN CONSULTANCY Sam Nazarian Founder, Chairman, CEO Arash Azarbarzin President, SBE Hotel Group 8000 Beverly Boulevard Los Angeles, CA p f e arash@sbe.com Aaron Paley President, Co-founder 3780 Wilshire Boulevard Los Angeles, CA p f e aaron@carsla.com John Clark Principal 145 Standard Street El Segundo, CA p f e johnclark@lookingla.com 1

4 PARKING 1. Do you have any additional information you would like to provide on how your team would reduce or eliminate the City s obligation to finance the structure and/or its cost for City employees to use the structure? The Bergamot Station Arts Center RFP stated that the development must selfpark (or meet the parking requirements of LUCE and the now adopted Bergamot Area Plan), either on-site or nearby. The City Yards shared parking structure was presented as an option to help meet the proposed project s parking needs. We would propose a few possible strategies to lower and possibly eliminate the cost for the City of Santa Monica to park the City Yards employees in the new proposed parking structure. They are as follows: We could enter into a revenue sharing arrangement with the City to offset their cost of using the garage. The City could commit to rent 350 stalls at $125.00/month for a 30 year period. This would provide the ability to finance the garage in a cost efficient manner. The cost to the city would be offset by the additional revenue received on the remaining 210 stalls and use of the City s 350 stalls in the evening and on the weekends. The sources of revenue would consist of the following: Day Time: The remaining 210 cars will be used by employees and visitors of Bergamot Station. We would propose a nominal charge of $2.00/car/day. If only half of those 210 spaces are used at $2.00/day for 51 weeks a year, this would generate $74,970 annually. Day time: For neighboring tenants, the costs of monthly parking would be $ The utilization of 75 spaces would generate $135,000 annually. Night Time: Events four times per month that would make use of all 560 spaces at 2.00/car will generate $53,760 annually. Night Time: Evening Expo riders and gallery visitors paying $2.00/car, assuming only half the stalls are utilized six nights per week (event night above excluded), would generate $171,360 annually. These revenue streams are not only conservative in rate, but also in utilization, almost eliminating any parking cost for the City. We look forward to discussing in detail the various assumptions that were used above. These ideas, and others, even those originated by other respondents, should be part of the post-ena discussions between City and selected developer. 2

5 re:envisionbergamot:station 2. If the City Yards shared parking structure cannot be developed, how would your proposal be modified? Our modifications would come in the form of an on-site underground parking structure. This parking structure would require the demolition of Building A (4,600 SF gallery space that was initially set to be preserved). This garage would include roughly 250 stalls. There are some problems with this option that are as follows: The construction of the parking structure would not accommodate any City Yards employee parking. The size of this underground garage would require the use of off-site parking to accommodate larger cultural and community events. Vehicle traffic would not be eliminated on the Bergamot Station site. This is a goal of ours so as to enhance the bicycle and pedestrian experiences. 3

6 FINANCIALS The Bergamot Station Arts Center RFP stated that the development must produce annual ground lease payments for the City based on fair market values. 1. Please reconfirm what the proposed total annual ground rent for the City will be for the duration of the lease, net of any charges for City employee parking (if your proposal is tied to shared parking at City Yards), or other credits or deductions that you are projecting. The starting ground rent for the City commencing in 2018 will be $700,000/yr increasing annually by 1%, compounded every 5 years. If the retail space located at the project generates an amount in excess of our projections, we would share 50% of those net revenues with the City. The total ground rent for the City over the term would be a minimum of $49,986,934. We are open to discussing additional suggestions to increase revenue to all the parties. 2. Please provide a concise list of the proposed project s public benefits to the City, including the monetary value of each benefit. Please identify any assumptions used in your calculations. Our proposed project provides the following public benefits: Arts New permanent home for Museum - SMMoA Below market rents for the gallery spaces assisting them to be successful and for us to be able to attract a diverse base of outstanding gallery operators, not just those that can pay the highest rents Arts Management of Outdoor Spaces for Cultural and Community Events Unique, arts-centric connection to light-rail. Opportunity to encourage traffic-reducing rail transit to arts venues, special events, and hotel/restaurant amenities. Community Meeting Room 4

7 re:envisionbergamot:station 2. Continued Alternate Transportation Bike Center Bike Share Bike Path Town Square and Public Courtyard (133,164 SF) - Creation of a true town square for community use both organically and organized Public Areas with Restrooms Site Porosity (Connections to the Neighborhood and City) New union hotel located away from beach and downtown areas Employment opportunities for Santa Monica residents Potential arts management, hotel management and restaurant management programs for Santa Monica High School and Santa Monica College students Improved pedestrian-oriented design frontage along 26th Street and Olympic Boulevard and welcoming design connection to Expo stop Activate Michigan Avenue and encourage pedestrian-oriented uses (particularly if utilizing a parking structure at City Yards) Shared-Use parking options Control ground water runoff from existing large impervious site Provide new development without displacing local businesses Economic benefits to City (see below) 5

8 FINANCIALS (continued) The Bergamot Station Arts Center RFP stated that the development must produce annual ground lease payments for the City based on fair market values. 3. Please provide additional detail regarding the projected economic benefits to the City, including the fiscal benefits produced by the proposed project on an annual basis after project stabilization (i.e. Sales Tax, Property Taxes, Transient Occupancy Taxes and any other ongoing City revenues). Please identify any assumptions used in your calculations. Bergamot Station Tax Revenues Upon Stabilization Bergamot Station Project Rooms Revenue $9,506,767 TOT Rate 14.0% TOT Generated (rounded) $1,330,950 $40,000,000 + $3,000,000 Sales Tax Revenue (Art Galleries, Restaurants, Non- Food Retail, Other) $43,000,000 Tax Rate 1.5% Sales Tax Generated (rounded) $645,000 Real Estate Tax $909,527 Percent to City of Santa Monica local agencies 17.10% Property Taxes Generated to the City $155,529 Hotel Gross Revenue $14,730,767 Business Tax Rate 1 $1.25 Business Tax Generated to the City $18,519 $159,433 + $393,000 Stabilized Utility Expense - Bergamot Station Tenants + Hotel $552,433 Utility Tax (10%) $55,243 Stabilized Parking Revenue $435,090 Parking Tax (10%) $43,509 TOTAL MEASURABLE TAX REVENUES to City of Santa Monica local agencies (rounded) $2,248,760 1 Tax equates to $ for the first $60,000 in Gross Revenues plus $1.25 per additional $1,000 of gross revenues over $60,000. 6

9 ARTS CENTER MANAGEMENT re:envisionbergamot:station As part of the Exclusive Negotiating Agreement, staff will recommend to Council that the selected developer be required to submit an annual Performance-Based Art Center Management Plan to the City s Cultural Affairs Department. 1. State your understanding and willingness to commit to producing this annual plan for the duration of the ground lease. What performance measures would you recommend be included in the Arts Center Management Plan? We are prepared and willing to submit an annual Arts Center Management Plan to the City s Cultural Affairs Department. We would be open to discussing various performance hurdles but would imagine they could include: number of events held, amount of visitors to the site, and SMUSD participation in events at the property. 2. The RFP also states the goal of retaining existing arts center tenants and the requirement of providing core and shell space for the SMMoA. Can you clarify your team s intent to meet or exceed these requirements? Our goal and expectation is to retain all existing galleries and all existing tenants at Bergamot Station. As the founder of Bergamot Station, Wayne Blank has attracted every current tenant since he started his partnership with the City of Santa Monica. With his knowledge base and his role as an integral part of our team, it makes us uniquely qualified to handle the transition. We feel that Bergamot Station is an arts and cultural destination that is committed to preserving this DNA and community fabric by all means necessary. Our team feels Santa Monica Museum of Art is the gateway into Bergamot Station. We are committed to providing Santa Monica Museum of Art with a core and shell of a signature building. 7

10 ARTS CENTER MANAGEMENT (continued) As part of the Exclusive Negotiating Agreement, staff will recommend to Council that the selected developer be required to submit an annual Performance-Based Art Center Management Plan to the City s Cultural Affairs Department. 3. Please elaborate on the transition from an interim arts center management and marketing strategy with the existing operators, Bergamot Station LTD and its subtenants, to your team s long-term arts center management strategy, including details on staffing. We are uniquely positioned to create a smooth transition at the property as principals of Bergamot Station LTD are members of our team. This is critical as existing tenants would need to extend their leases as they come due over the next four years of their existing lease term. We would be in a position to begin implementation of our Arts Center Management program prior to the transition date. We have attached an organization chart for the Arts Center Management Team and we would be prepared to bring that team on as soon as we are selected. Please see Staffing and Organizational Chart 8

11 re:envisionbergamot:station BERGAMOT STATION STAFFING AND ORGANIZATIONAL CHART Bergamot Sta+on Development Team Design, Development, and Construc+on General Manager, Overall Site Opera+ons General Contractor: Krismar Construc+on Architect: Frederick Fisher & Partners Landscape Architect: OJB Hotel Partner: SBE Site Management Staff Arts Management Staff Property Manager Galleries & Art Related Uses Arts and Cultural Event Programming Property Administrator Site Engineer Property Accountant Parking and Security Arts Curator Gallery Administrator Program Director Events Coordinator Implementing marketing strategies Recruitment and retention of galleries Cultivating the relationships and addressing the unique needs of the galleries Preparation of the annual Arts Center Management Plan to the city Coordination with the city and other arts/cultural organizations including SMMoA Collaboration with CARS Coordination of logistics for all events at Bergamot Station 9

12 CREATING A VIBRANT, ICONIC DEVELOPMENT The RFP provides the opportunity to create a unique and iconic transitadjacent, urban infill gateway development that will further elevate the role and status of the Site in supporting the arts in the region. 1. Confirm the buildings on Site that your team will be preserving in place, including the total square footage preserved, and the amount of proposed investment (on a per square foot basis) to improve the existing buildings. We will preserve four existing buildings: A, B, E, and F. They total 41,700 SF. (As referenced on page 80 of our RFP). We plan on spending $770,935 on the core and shell improvements of these existing buildings, along with $1,595,985 for site work and landscaping around these preserved buildings. This equates to $57 per square foot. Please see Site Diagram 10

13 re:envisionbergamot:station EXISTING VS. NEW BUILDINGS H - HOTEL/MIXED USE 83,000 SF M - MUSEUM 21,100 SF E/F - EXISTING GALLERY 13,100 SF D - BIKE CENTER/RETAIL 7,600 SF B - EXISTING GALLERY 24,000 SF A - EXISTING GALLERY 4,600 SF C - CREATIVE OFFICE 67,000 SF EXISTING BUILDINGS / 41,700 SF NEW BUILDINGS / 178,700 SF 11

14 TITL E Worthe Real Estate Group L Krismar Construction Wayne Blank, Bergamot Founder