Accept the report on the status of the development of the proposed citywide Softball facility.

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1 COUNCIL AGENDA: 6/21/16 ITEM: CITY OF SANjOSE CAPITAL OF SILICON VALLEY TO: HONORABLE MAYOR AND CITY COUNCIL SUBJECT: BOND-FUNDED SOFTBALL PROJECT UPDATE Approved ' rvr\s~ L_ Memorandum FROM: Angel Rios, Jr. DATE: Date chile COUNCIL DISTRICT: 8 RECOMMENDATION Accept the report on the status of the development of the proposed citywide Softball facility. OUTCOME Acceptance of the report will allow staff to continue moving forward with the construction and operations of a new bond-funded softball facility. The project will provide opportunities for youth baseball; and softball opportunities for youth, adult and senior players, as well as tournament, league, and permitted play. EXECUTIVE SUMMARY The City will be acquiring acres from the Arcadia Development Company near Quimby Road and Capitol Expressway for the purpose of building a four-field softball facility by the end of June A business plan has been prepared for the operations and maintenance of the facility and construction drawings are also currently being prepared. The estimated project cost, excluding land acquisition is $16,220,000 and the project construction is scheduled to be completed by the end of 2017 with the opening of the facility for full reservations expected to occur by March BACKGROUND In November 2000, San Jose voters approved a $228,000,000 bond (Measure P) that provided funding for "constructing new recreational sports facilities."

2 Page 2 On February 4, 2014, the Mayor and City Council accepted a report that provided an update on the Measure P Bond-funded softball facility site selection process, and directed staff to proceed with negotiations with the owners of the Arcadia site for the development of a softball facility at that site, with a minimum of three adult-sized, lighted softball fields. On August 4, 2014, the City issued a Request for Proposal (RFP) seeking proposals from qualified firms interested in entering into a Qualified Management Agreement in compliance with Internal Revenue Service (IRS) Procedure for management, operation and maintenance of the proposed softball facility. Only one vendor submitted a proposal. Sportsplex USA was deemed the responsive bidder in late 2014 and the City began the negotiation process. On December 9, 2014, the Mayor and City Council authorized the City Manager to negotiate and execute a Purchase and Sale Agreement (PSA) and all other documents necessary to complete the land acquisition with Arcadia Development Company in the amount not-to-exceed $500,000 for the purchase of Approximately gross acres of land bordered by Quimby Road on the north, Capitol Expressway on the east and Chopin Avenue on the west, for the development of the softball facility with four adult-sized softball fields, night lighting, parking, restroom facilities with utility service, and a building to provide concession and storage. ANALYSIS Project Scope Staff is working on the design of this facility. The team is focusing not only on a "basic" four field softball facility, but also on making this a destination location within the City of San Jose. The facility will contain four natural turf lighted fields, a concession building with restrooms offices and storage, and approximately 245 parking spaces. All of the support elements needed for a fully functional facility are included in the design such as covered dugouts, bullpens, scoreboards, foul poles, netting and fencing, warm up area, site furnishings and an on-site maintenance facility. Several elements of the design align with the City's place-making focus and also makes the facility visually unique and different from other softball facilities in the surrounding communities. The main distinguishing element is that concession building and spectator areas will be elevated above the fields and netting backstops will be used instead of chain link which enhances the spectator experience. The large pole supports used for the netting backstops will also be used to support overhead shade and foul ball protection as well as creating a distinct architectural element to the facility. Other unique features include armchair stadium style seating behind the backstops, protective fabric shade over spectator, concession, picnic, and play areas. The aesthetics and theme building elements of the facility include three enhanced entry plazas leading into the site, trees and landscaping as well as a themed play area that will serve the facility and the neighborhood. With the proximity to current retail (Eastridge Mall) and future adjacent retail, this location will be a destination for baseball and softball tournaments. Additionally, with 12 other city fields within a 6 mile radius, the City will also have the ability to run larger tournaments, with the Arcadia being the "hub" facility. The design is still in progress

3 Page 3 and will be completed over the next few months. A concept map of the planned facility is included as Attachment A: Costs for these improvements including project delivery and construction are estimated to be approximately $16,220,000. Anticipated upgrades that can be bid as potential alternates include additional shade canopies, bullpens, chair-back seating on 2 fields, and a permanent maintenance facility. These features may be added if additional funding becomes available or the construction bids come in lower than the engineer's cost estimate. Site Management and Operations The proposed model for site management and operations is to have PRNS staff operate, maintain and manage the facility. Operating the softball complex in-house is advantageous for many reasons, including: 1. Staff Expertise and Experience - PRNS/Citywide Sports staff have coordinated Adult Sports Leagues (softball, basketball, volleyball and soccer) and Youth Sports Tournaments (Mayor's Youth Girls and Boys Basketball, Youth Track and Field, Punt Pass and Kick) since In addition, PRNS manages over $1,000,000 in reservations for all City sports facilities and has long established connections to the community via our relationships with adult and youth sports leagues and coaches citywide. 2. Community Access - having City staff operate the facility will ensure that all members of the San Jose sports community will have access and opportunity to use the fields. 3. Interdepartmental Resources - In-house management will facilitate bringing resources from other City departments and from within PRNS to support facility operations. 4. Synergy With Other Sports Fields - with access to reservations at the many other ball fields in the City, PRNS staff will be able to coordinate multi-field use and be able to host larger tournaments beyond the four field capacity of the softball complex. This facility will serve adults (Men's, Women's and coed softball) as well as youth (boys' baseball and girls' softball). The City will work diligently to provide a balanced use of the facility by adults for softball and youth baseball and softball with priority given to San Jose residents. The following section offers some background on how the decision to recommend this staffing model was reached. In August 2014, the City completed a Request for Proposals (RFP), Operation and Maintenance of the Proposed Citywide Softball Facility to source an outside operator for the new softball facility. Twenty one in-state operation vendors were contacted to solicit interest. However, only one vendor submitted a proposal. Sportsplex USA was deemed the responsive bidder in late 2014 and the City began negotiations with the vendor. It is required that the selected vendor enter into a Qualification Management Agreement (QMA) in compliance with IRS Procedure to manage, promote, operate and maintain the proposed softball facility. The IRS

4 June 8,2016 Page 4 regulation is intended to prohibit revenue sharing agreements for public bond-funded projects as a way to prevent public funding being used to support corporate interests. Because of this constraint, the proposal from the vendor was much higher than staff had anticipated, so the staff developed their own pro-forma to operate the site as a comparison. ' A comparison between Sportsplex and the in-house Citywide Sports proposal to operate and maintain natural grass fields identified that Citywide Sports would be the more cost effective operator for the facility. Sportsplex projected its net loss in year 1 to be $855,000 with an increase to $993,000 in year five. Citywide Sports projected its net loss in year 1 to be $621,788 (facility opens in March 2018 and operates only for four months) and the loss increases to $758,248 once the facility is opened for a full year and eventually the loss is reduced to $724,488 in year five under similar operating assumptions. Both operating models assume on-site sale of alcohol. It should be noted that Sportsplex indicated that they could operate the facility at a much lower cost if the City agrees to wave the QMA requirements previously required. After extensive discussions it was determined that it was not possible to wave the QMA requirements. The General Fund Forecast assumed an annual operating and maintenance impact of approximately $738,000 when the facility opens. The costs assumed in the Forecast are based on slightly lower costs for non-personal/equipment. The costs to operate and maintain the softball facility and the associated revenues are still being refined and will be finalized as part of the Fiscal Year budget process. The City has hired its on-call consultant PROS Consulting, Inc. (Consultant) to provide an initial feasibility assessment of the City's management and operation plan provided by Citywide Sports. The Consultant will provide additional assistance developing an overarching business, operational and marketing plan prior to the opening date of the facility in order to ensure that the City is operating at the best possible cost recovery model. Providing synthetic turf instead of natural grass would add about $3,000,000 to the project construction costs. Anticipated revenue increases from synthetic turf could reduce the projected net loss to $552,775 in year one to $141,415 in year five. The downside is that the synthetic turf will need to be replaced every 10 to 12 years at a cost of about $3,000,000 for all four fields, meaning the City would need to set aside $250,000 to $300,000 each year into a sinking fund for turf replacement. Additionally, the City does not have the initial $3,000,000 available to invest in the upfront construction. EVALUATION AND FOLLOW-UP If accepted, the City will continue to develop the business plan for management, operation and maintenance of the proposed citywide softball facility and other actions necessary to develop the bond-funded softball facility. Staff will report back to Council for the award of the construction contract which is expected to occur in the fall of 2016.

5 Page 5 PUBLIC OUTREACH A community meeting was held on February 18, 2015 with sports players and advocates and staff received input on preferred design options, field materials (natural turf field vs. synthetic turf field), programs, related amenities and the operational model. The feedback received was that players preferred natural turf, and would pay an admission fee but did not want to pay for parking. This memorandum will be posted on the City's Council Agenda website for the June 14, 2016 Council Meeting, and a similar memo addressed to the Parks and Recreation Commission (PRC) was also posted on the PRC Agenda website for the April 6, 2016 meeting. COORDINATION This memorandum has been coordinated with the City Attorney's Office, Department of Public Works, Department of Planning, Building and Code Enforcement, Office of Economic Development - Real Estate, and the City Manager's Budget Office. COMMISSION RECOMMENDATION A report on the Arcadia softball facility was delivered at the April 6, 2016 Parks and Recreation Commission (PRC) meeting. The commission had a substantial discussion about the project's development process, the design elements, potential users, the project schedule, and the operations and maintenance plan. The commission accepted the report. FISCAL/POLICY ALIGNMENT The project is consistent with the Council's approved Budget Strategy for Economic Recovery in that it would spur construction spending in our local economy. The proposed project aligns with the adoption of the Greenprint 2009 Update by City Council, the City's General Plan and the Measure P Bond program. COST SUMMARY/IMPLICATIONS 1. Source of Funding: The current project cost estimate for the Arcadia Softball Complex is $16,220,000 and the current project budget is $9,758,000, leaving a funding gap of $6,462,000. Pending the design of the facility, the completion of the business and marketing plan, and available funding sources, a recommendation will be brought forward for City Council approval to fully fund this project with a combination of

6 Page 6 funding from the Parks and Recreation Bond Projects Fund and Parks Construction and Conveyance Tax Funds. 2. Fiscal Impact: The costs to operate and maintain the softball facility and the associated revenues are still being refined and will be finalized as part of a future budget process. The General Fund Forecast assumed annual operating and maintenance impact of approximately $738,000 when the facility opens. CEOA Evergreen East Hills Vision Strategy and Supplemental Environmental Impact Reports, Resolution Number 74742, adopted December 16, 2008, and addendum by File Number PP The addendum is available on the City's website at: http ://www. sani oseca. gov/index. aspx?nid=2434. Is/ ANGEL RIOS, JR. Director of Parks, Recreation and Neighborhood Services For questions please contact Marybeth Harasz, Interim Deputy Director, at (408)

7 PARKING LOT STALLS SPORTS FIELD LIGHTING, TYP. TRASH AND UTILITY ENCLOSURE MAINTENANCE YARD 15" X 1 2' MATERIAL STORAGE 8' X 1 0' MATERIAL STORAGE WARM UP AREA DROP OFF AREA THEME ENTRY PLAZA BULLPEN, TYP. 1 8" RAISED PLAZA RAISED PICNIC AREA PICNIC AREA 25' TALL PROTECTIVE NETTING FUTURE BULLPEN LOCATION, TYP. - BID ALT. MINIMUM 75' X 300' EMERGENCY LANDING OPEN SPACE DUGOUT, TYP. 2 ROW CHAIR BACK SEATING, TYP. - BID ALT. RESTROOM/CONCESSION BUILDING 3 ROW CHAIR BACK SEATING, TYP. - BID ALT. \ * SCOREBOARD, TYP. THEME ENTRY PLAZA PARKING LOT STALLS WARM UP AREA THEME PLAY AREA THEME ENTRY PLAZA Conceptual Site Plan Arcadia Softball Complex City of San Jose San Jose, CA VEKDF. DESIGN LANDSCAPE ARCHITECTURE CIVIL ENGINEERING SPORT PLANNING & DESIGN 2455 The Alameda, Sto. 200 Sanfa Clara, CA tel: f~408.98s