1 STAFF REPORT
DATE: September 13, 2022
TO: Justin Hess, City Manager
FROM: Elizabeth Goldman, Library Services Director
SUBJECT: Review of Civic Center Project Plans and Establishment of a Reserve Account for the Project
RECOMMENDATION
1. Review conceptual plans for the development of the Burbank Civic Center Project using a public-private partnership (P3) delivery model and provide input to staff; and
2. Direct staff to establish a reserve account and transfer $10 million from the Fund 534 fund balance for matching funds for project-related grants.
BACKGROUND
Burbank’s Civic Center includes Ci ty Hall, the Community Services Building (CSB), the Administrative Services Building (ASB), the Police and Fire Headquarters (Police), the Central Library (Library), and parking. In 2003, City Council approved a Planned Development (PD) for the Civic Center to include CSB, ASB replacement, Library replacement, and open space. The only element that was completed was CSB, and the PD expired in 2018.
The Burbank Central Library was built in 1963, and the City first identified the need to renovate or replace it in 1989. Its only significant updates came in 1992, with new carpet and paint, along with some systems upgrades over the years. In 2003, Measure L was approved by m ore than two -thirds of Burbank voters to fund Library renovations contingent on securing State matching funds, which were never successfully obtained.
2 ASB houses the Financial Services Department and Management Services Department in a former bank originally constructed in 1966. The building was seismically upgraded with interior improvements in 2014.
In 2018, Burbank voters passed Measure P, a local Transactions and Use Tax (TUT), along with an advisory measure that dedicates 50 percent of the TUT revenues to the Municipal Infrastructure Fund (Fund 534) for general City (non -utility) i nfrastructure improvement and maintenance programs.
In 2020, the City engaged consultants in an updated study of options for the Library, including public input on priorities for use of space in a future building. In 2021, the City Council accepted the study, “A Vision for the New Burbank Central Library” (Library Vision Study), and directed staff to pursue explorations of a plan to finance construction of a replacement Library.
Also in 2020, the City initiated work on the Downtown Transit -Oriented Develo pment Specific Plan (Downtown TOD Specific Plan), which covers 662 acres encompassing two existing adopted planning areas (the Burbank Center Plan and the North San Fernando Master Plan), as well as downtown Burbank and the downtown Metrolink station. The Downtown TOD Specific Plan process analyzes land use, infrastructure, transportation, pedestrian and bicycle amenities, and opportunities for new housing and other infill development. Evaluation of redevelopment opportunities within the Burbank Civic Center project area is included in the Downtown TOD Specific Plan analysis.
During this time, the City has also been working to complete the 2021-2029 update to the Housing Element of the Burbank2035 General Plan (Housing Element). The Housing Element update includes an analysis of needs, constraints and resources in developing a housing plan for the 8-year period.
DISCUSSION
The proposed Burbank Civic Center Project represents a transformative opportunity to meet City Council goals and community needs while building a thriving downtown neighborhood in a sustainable and fiscally responsible way.
An interdepartmental staff team has been working in conjunction with consultants to analyze potential project options since spring 2021. The result of this work to -date is a proposal for a redeveloped Civic Center including a replacement Central Library, replacement ASB office space, new open space, parking, and new affordable and workforce housing. Based on analysis and understanding of similar projects carried out in other municipalities, staff proposes use of the public -private partnership (P3) delivery model to carry out the Civic Center Project.
3 Currently, staff is presenting a feasible path forward for the Civic Center project to update City Council and the community and solicit input on conceptual plans. In addition, staff is requesting that City Council establish a reserve account for funds toward grant matches that will improve Burbank’s ability to obtain outside funding for the project.
The Civic Center Project remains at a conceptual stage. Activities like identification of a development partner and specific design of p roject elements will take place later in the process after additional City Council and community input. Research and analysis will continue this fall and winter, with a focus on areas of known interest , including sustainability and impact on historical str uctures. Work is aligned with the long -term planning effort currently underway with the Downtown TOD Specific Plan
Project Need and Alignment with City Council Goals
Burbank has long struggled to update its public assets and faces needs for additional affordable and workforce housing and open space, particularly in the downtown area.
While the original plan for the Civic Center area included many of the same elements proposed today, the piecemeal approach to construction meant that only one building was ever built. In the meantime, the current Central Library and ASB have failed to meet public and staff needs, while demand for outdoor space and housing have grown. With the passage of Measure P, voters stated their desire for improvements to public assets.
Building on the Library Vision Study and work conducted to develop the forthcoming Downtown TOD Specific Plan , staff engaged with a team of consultants over the past year to identify a practical plan to meet City Council goals. The proposed Civic Center Project directly responds to most Council goals:
• City services: The Civic Center Project enhances the City services that draw people to live in Burbank, including excellent libraries, public meeting space, parks, and public programs. A larger, more modern Central Library will provide expanded support for students, families, job seekers, basic and advanced technology learners, and any other individual looking to explore or learn. • Quality of life: The Civic Center Project improves the quality of life for Bu rbank residents by improving amenities and housing opportunities within the Civic Center area that are complementary to the existing downtown neighborhood. These amenities will support current and future residents, as well as visitors seeking access to cul ture, outdoor space, and opportunity. It will align with the principles underlying the Downtown TOD Specific Plan.
• Infrastructure: The Civic Center Project represents a significant step forward for Burbank not only to update its core public assets but also to provide a path to ensure the new infrastructure’s future maintenance needs are funded and 4 implemented in a timely fashion , keeping assets in a state of good repair . It responds to community priorities expressed through the passage of Measure P. • Economic recovery and development: The Civic Center Project will support economic development in several ways. First, projects of this scope have been shown to spur substantial additional private deve lopment in surrounding neighborhoods. Second, improved public amenities and additional housing in the downtown area will support businesses and restaurants on San Fernando Boulevard and surrounding areas. Third, the improved Library will be able to support expanded services through Job Connect and Spark! Digital Media Lab, providing workforce opportunities for all.
• Housing/homelessness: The Civic Center Project proposes housing at a ratio of 80 percent market -rate to 20 percent affordable. This helps make i nroads into Burbank’s 3-to-1 jobs-to-housing imbalance and meet State requirements for new housing production while ensuring some of that housing is accessible to lower income residents. The improved Library will be able to offer additional support for people at risk of homelessness or experiencing homelessness and can serve as part of the City’s homelessness prevention strategy.
• Sustainability: The Civic Center Project will incorporate sustainability elements such as solar panels, electric vehicle chargers, recycled water, stormwater capture, and native plantings, all of which support the City’s Greenhouse Gas Reduction Plan. It will meet sustainability performanc e targets as measured through certification programs like Leadership in Energy and Environmental Design (LEED) . In addition, integrating the project into the larger downtown neighborhood supports a car -free lifestyle, and the Civic Center will be on transi t routes for easy access.
Importantly, the option to use the P3 structure enables the project to achieve these goals in a fiscally responsible way. It creates a new long -term unrestricted revenue stream through ground leases that can be used to pay for ca pital, operations, and maintenance costs, and it will result in a building maintenance program that ensures proper upkeep over the life of the asset.
The elements of the proposed project combine to create an achievable vision of a future downtown Burbank with energized public spaces and live/play/work options. The Civic Center Project would serve as an exemplar for how to build great cities and great neighborhoods.
Civic Center Project Overview
The elements of the proposed project include:
• Public assets
5 o A replacement Central Library of approximately 65,000 square feet o Open space of approximately 52,000 square feet
o Replacement office space for ASB of approximately 20,000 square feet o Approximately 237 parking spaces to support public and staff parking needs in the downtown area in conjunction with existing structures o Associated infrastructure improvements supporting the public assets • Private development
o Development of opportunity sites (identified in the Downtown TOD Specific Plan and 2021-29 Housing Element update) with approximately 47 5 units of new housing, of which 20 percent are proposed to be affordable to lower income households
o Approximately 15,000 square feet of commercial space
o Approximately 564 parking spaces associated with the residential and commercial uses
o Associated infrastructure improvements supporting the private assets
See Attachment 1 for the conceptual layout of elements used in analysis.
The public assets included in the plan are informed by the approved Library Vision Study and the Downtown TOD Specific Plan, which is currently in progress and is scheduled to come before City Council in summer 2023. Both plans have included extensive public input regarding features and priorities that are addressed in the Civic Center Project.
Additional public input on specific space programming and sustainability will be forthcoming in late 2022, and the community will have the op portunity to advise on the project’s ongoing design evolution in later phases should the project move forward.
Staff investigated project delivery methods and propose using a P3 structure to implement the Civic Center Project. The project size – with more than $100 million in public assets – is suitable for a P3.
Analysis of Options
The proposed project represents Burbank’s best opportunity to meet multiple goals. It incorporates many needed elements into a unified space where each supports the others.
For example, families can live adjacent to a library that will support learning nee ds throughout the lifespan. The adjacency of the library and other City buildings near the open space will keep that space filled with active uses throughout the day and week. Both the housing and public assets will support the vibrancy of downtown neighborhood businesses and restaurants.
6 As a method of accomplishing these goals, the P3 model provides the following benefits to the City , described in greater detail in a presentation at the August 9 City Council meeting:
• Transfers risk from the City. This includes construction-related risks, risks related to the long-term condition of the asset, and financial risks. • Optimizes costs by coordinating across the lifecycle of the assets from the earliest project stages.
• Creates incentives to build and maintain the assets on schedule and to established standards, ensuring assets remain in good condition over many decades. • Leverages public investment to initiate significant private development , with revenue from the private development offsetting public infras tructure costs, and spurs additional private investment in the area.
The proposed plan provides Burbank with a financially feasible and practical way to complete long -delayed needs for modern facilities while transforming the downtown neighborhood and creating a new revenue stream in later years. The anticipated cost of constructing the public assets is $116.7 million in 2022 dollars, with financing obtained by the developer and with both capital expenditures and ongoing operations, maintenance and replacement (OM&R) costs being paid by the City over a 30-year period. The City’s capital and OM&R payments would not begin until construction is complete. These annual payments would be partially offset by a new revenue stream from ground rent paid by the developer for access to the public land on which housing is built.
For the remainder of the annual payments, staff proposes use of approximately 25 percent of annual Fund 534 revenues over this period. The project is consistent with the City’s intended use of Fund 534 to improve the condition of Burbank’s public buildings like libraries while preserving a healthy portion of Fund 534 for other maintenance and infrastructure needs.
Project Feasibility
To test the feasibility of the proposed project , staff made a num ber of reasonable and informed assumptions to:
• Develop a conceptual site plan
• Develop project cost estimates
• Identify the appropriate P3 structure and financing
• Identify sources of City funding to pay for the project
7 Conceptual Plan
A conceptual site plan was created to:
• Evaluate site capacity and a test fit on the block currently occupied by CSB, ASB, the old Wells Fargo building, and surface parking.
• Evaluate site capacity and a test fit of the opportunity sites for private development. • Identify possible synergies between the public and private elements and opportunities for good urban form and function.
• Consider existing infrastructure adjacencies and identify needs for additional analysis of associated opportunities or constraints (for example, electrical, water, and sewer).
• Visualize the project to ensure it made sense as a mixed-use project in downtown today and into the future as an exemplary project for the City consistent with the City’s General Plan Housing Element and the Downtown TOD Specific Plan.
It is important to note this plan is a concept created to allow evaluation of options by the project team . At a later stage, potential development partners will respond to a City request for proposals (RFP) with their ideas for how to accomplish City needs and project goals.
Public Assets
The conceptual Library and ASB replacements will be a combined three -story building, with the Library comprising 65,000 square feet on two floor s and ASB adding 20,000 square feet of office space on a third floor. The Library will include space for the collection; areas for public programs; individual and group study space plus meeting rooms of various sizes; public computers and an expanded Spark! Digital Media Lab; and reading areas.
The open space will include a variety of spaces to support Library and recreation programs; events like outdoor movies, concerts, festivals, and markets; shaded sitting and eating areas; and native and/or drought-tolerant plants. The open space is intended to be multi-functional and support activities before, during, and after working hours.
Sustainability features may include solar panels, EV chargers, stormwater capture, native plants, and recycled water. The City may choose to seek certifications such as LEED and WELL. LEED is a green building certification program, while WELL looks at equity, human health, and wellbeing. The Library will support efforts to educate the community about sustainable elements and dr ought-tolerant landscaping through site features. More specific sustainability goals will be developed in fall 2022 with public input.
8 The conceptual site plan also considers urban planning concepts in the Downtown TOD Specific Plan like breaking up the l arge city blocks, creating mid -block pedestrian passages and street crossings, and building strong connections to transit and downtown.
Existing City staff and public parking would be replaced by a new underground garage.
The conceptual plan assumes incr eased utilization of existing City -owned parking garages within a two -block radius, which have been underutilized for years. This would reduce total parking spaces while retaining sufficient parking based on current analysis of use. The concept also considers alignment with the City’s ongoing effort to establish downtown and citywide parking management. Putting parking underground creates opportunities for more open space and housing on the civic block.
Private Development
Proposed private development includes three seven -story buildings on three separate opportunity sites with a combined total of 47 5 units. The opportunity sites are consistent with the forthcoming Downtown TOD Specific Plan and Housing Element update , occurring at the existing Central Library site, the existing Wells Fargo Building site, and the existing City Hall parking structure site. The Wells Fargo site would be redeveloped at the same time as the public assets, creating a mixed -use development. The existing Library site and City Hall parking structure sites would be redeveloped in succession after the public assets have been completed. Staff are currently conducting studies to ensure this development respects the historic nature of City Hall while exploring whether any features of the current Central Library are historically significant.
Staff evaluated the amount of affordable and workforce housing that could be built while also ensuring the housing resulted in some amount of new revenues for the City to use to pay for the public assets, reaching the conclusion that a mix of 80 percent market rate and 20 percent affordable housing yielded moderate residual land value that developers could use to pay for ground rent while delivering 95 affordable housing units. Notably, this type of development would enable use of Federal tax subsidies , which require payment of prevailing construction wages, and allow for a 50 percent density bonus (State AB 2345) above the 87 dwelling units per acre baseline assumed in the Downtown TOD Specific Plan and Housing Element.
Recently passed amendments to the Surplus Land Act will require the City undertake a specific process when making these publicly owned opportunity sites available for private development. The purpose of the amendments is to promote the development of affordable housing on public sites. However, municipalities retain the ability to use public land to achieve other goals, such as creating a revenue stream to help pay for public facilities. The municipality must still undertake the pr escribed process but can make 9 acceptance of an offer contingent on meeting larger project goals, such as development of the public assets.
Estimated Project Costs
Estimated project costs are as follows:
1) Capital costs for design, construction, furnishing, and equipment of the public assets: $116.7 million in 2022 dollars
2) Operations, maintenance, and lifecycle replacement costs (OM&R) for public assets over a 30-year period: $2.5 million annually at the initiation of payments in approximately 2027, increasing over time with the Consumer Price Index (CPI)
In addition, the City will incur costs for technical and legal advising through the procurement and construction process. City Council has approved approximately $1.5 million in the Fiscal Year (FY) 21-22 and FY22-23 Capital Improvement Program (CIP) budgets toward the initial portion of these expenses.
Site infrastructure costs may increase based on the results of upcoming studies that will provide a more detailed analysis of electrical, water, and sewer needs.
Table 1: Public Asset Estimated Capital Costs
Project Component
Estimated Cost in
2022 Dollars
Demolition $2,100,000
Open space $17,700,000
Library $58,000,000
ASB replacement offices $12,600,000
Parking (underground) $20,800,000
EV-ready stalls $700,000
Site infrastructure $2,500,000
Utilities $2,300,000
Total $116,700,000
P3 Structure and Financing
Municipalities are increasingly using P3 models as a tool to help them deliver and maintain assets, to manage risk and cashflows, and/or to leverage the private sector experience.
In the case of Burbank’s Civic Center Project, the specific type of P3 that is most relevant to understand is a model known as Design -Build-Finance-Operate-Maintain (DBFOM). 10 Central to the partnership is a contract between the public entity that owns the public assets, including land, and the developer. The model proposed by staff is a “hybrid P3” where, through a consortium it creates with partners, the developer design, builds, finances, operates, and maintains the public infrastructure for the City, and also builds, owns, and manages the private de velopment (housing and commercial space) . Ground leases enable the private use of City -owned land and generate income for the City that can be used to offset the cost of the public assets. The City begins making payments once the project is built, with payments covering capital cost repayment, ongoing OM&R costs, and equity performance payments. This model was used successfully for the Long Beach Civic Center.
Financing for the project is most likely to be secured by the development partner, although in advance of any final decisions, the Financial Services Department will assess whether there is any benefit to the City securing the financing itself. Fluctuations in interest rates and other areas may impact this decision.
Payments would be made as a combination of a single milestone payment of approximately $34 million at completion of construction of the public assets, plus annual payments over the following 30 years. The estimated annual payments will be approximately $7.8 million annually , including both debt and equity payments, and OM&R. This will be partially offset by the ground rent on the public property on which the private residential units are built. N ot all ground rent will be realized in the first year, as not all of the housing can be built simultaneously. For example, the new library must be completed before the existing library lot becomes available for development. Once all housing is complete, ground rents are anticipated to total $2 million annually.
Both ground rents and OM&R portion of the annual payment will escalate with CPI, estimated to be 2.5 percent per year. Throughout, conservative estimates have been used to minimize risk to the City.
Proposed Funding Sources
Milestone Payment
The City has multiple funds to draw from for the approximately $34 million milestone payment, including the remainder of the Library Capital Holding account set up by City Council many years ago; Fund 370 (General City Capital Projects Fund ) balance; Fund 534 balance; and Development Impact Fees. Staff will continue to seek other sources of project funding to offset requirements for City resources. A grant application for $10 million from the California State Library ”Building Forward” Library Infrastructure Program is currently under consideration; this grant requires a one-to-one match from the City.
11 Annual Payments
The difference between the annual payment obligations and the ground rent must be covered by other sources. Staff proposes use of Fund 534 at an annual amount of approximately $5.8 million once all ground rent has been realized.
Fund 534 makes consideration of the Civic Center Project possible by creating a n ongoing income stream for payments, regardless of the project model. Annual revenue to Fund 534 comes from the TUT, as well as a City Council appropriation from the General Fund of $4.7 million annually and interest earned on the fund balance. Total Fund 534 revenue from all sources in FY22-23 is estimated to be $19.8 million and is conservatively projected to increase by 2 percent each year.
Ongoing commitments from Fund 534 include the annual street, sidewalk and alley paving program, maintenance of Cit y facilities, and projects proposed by staff and recommended by IOB to City Council as part of the yearly CIP. These projects may be renovations or new construction. In FY22 -23, the approved Fund 534 appropriation is $18.3 million. Fund 534 currently carries an unappropriated balance of $15 million.
Use of an estimated $5.8 million from Fund 534 represents approximately 25 percent of Fund 534 revenue initially and a decreasing percent as time goes on and revenues grow.
Staff has carefully considered the ma ny competing needs for Fund 534 and developed this plan to allow the Civic Center Project and its many community benefits to move forward while leaving funding for other necessary improvements to Burbank infrastructure and assets.
In the initial 5-6 years of the payment obligation – between when the public assets open and when the final housing project is completed – Fund 534 will have a larger obligation.
This will not be needed until FY27-28. To balance that need over time, staff will propose as part of future budgets that City Council allocate $2.1 million annually between FY23- 24 and FY26-27 for this use. Starting FY27-28, the Fund 534 obligation will be $5.8 million annually.
Long-term Financial Benefits
The Fund 534 commitment stretches through the first 30 years of operation, but the lease the developer holds on the public land covers a 65 -year period. After 30 years of payments, the City has paid off the capital costs and covered annual OM&R costs on the facility. At this time, the developer hands back the public assets to the City for continuing operation in a state of good repair equal to 80 percent or better of replacement value , ensuring the City can continue to operate its facilities for many decades.
12 Besides the benefit of knowing the asset will still be in excellent condition several decades after opening, the City gains a new unrestricted revenue source for the remaining 35 -40 years of the ground leases. This revenue source will amount to millions of dollars annually and roughly $200 million or more in the 35-40 years after the project is paid off.
Alignment with Other Planning Efforts and Additional Studies The Civic Center project is being developed in alignment with the Downtown TOD Specific Plan with the following goals:
1) The Downtown TOD Specific Plan establishes changes to zoning and land use entitlements necessary for the Civic Center plan to move forward. 2) The Civic Center elements are included in the Downtown TOD Specific Plan Environmental Impact Report (EIR), thus eliminating or minimizing additio nal environmental review required for the project under the California Environmental Quality Act (CEQA).
3) The Civic Center planning area is included in the Housing Element update inventory of housing opportunity sites. This will help the City meet its State- mandated housing production goals.
The Downtown TOD Specific Plan is currently in a draft stage and is anticipated to be presented to City Council in 2023.
As work on Civic Center Project planning has progressed, staff has identified several additional areas for research and public input. A series of technical studies and activities in fall 2022 will provide a robust basis for the eventual RFP, which needs to provide enough detail about City requirements for developers to make a reasonable proposal.
Upcoming work will focus on the following areas:
• Development of a project sustainability strategy, with public input; • Development of more detailed programming requirements for the Library and open space, with public and staff input, and for ASB replacement offices, with staff input; • Assessment of potential project impacts to historic and potentially historic buildings, including City Hall and the current Central Library; • Evaluation of sewer , water, and electrical infrastructure impacts to identify utility requirements and associated costs;
• Evaluation of a strategy for compliance with the Surplus Land Act.
Timeline
Following completion of studies, staff will return to City Council in 2023 with updates and a request to initiate a Request for Qualifications (RFQ) process, which will result in the creation of a shortlist of potential development partners who will respond to the full 13 Request for Proposals (RFP). As part of preparatory work for the RFQ and RFP process, a market sounding will be conducted to ensure market conditions and the project scope are right to attract qualified bidders. During a market sounding, consultants conduct outreach designed to understand whether there is an appetite for a project of this nature among potential developers and therefore whether the City is likely to get quality responses to its RFQ.
Under the proposed procurement process, a shortlist of teams identified through an RFQ will be able to provide responses to the RFP describing how they would organize the site plan, conceptually design assets following the City’s requirements, price the delivery of the public assets, generate revenue from ground leases, and manage the overall project from construction through the end of the operating period. Once a developer is selected, the City and this development partner will enter exclusive negotiations to complete design of the project, negotiate the P3 contract, and secure entitlements and other conditions of approval for the project.
The timeline below is based on reasonable time periods required for upcoming activities and also considering:
1) Timing of the Downtown TOD Specific Plan’s approval by City Council 2) Securing and expending the $10 million grant from the State of California, which is required to be spent by March 2026
A potential timeline through construction is as follows, with all dates subject to change:
1. 2022-23: Continue research, analysis and preparation
2. 2023: Pre-qualify developer teams and prepare RFP
3. 2023-25: Issue RFP, select a preferred partner, and negotiate
4. 2025-27: Carry out financing, design, and construction
FISCAL IMPACT
The establishment of the Civic Center reserve account demonstrates the City Council’s commitment to providing matching funds, should the C ity be successful in securing the California State Library Grant. There is no immediate fiscal impact of reserving the $10 million dollars, as staff would need to return to the City Council for an appropriation to an expenditure account prior to expending the funds. Additionally, the C ity Council may choose to release funds from the reserve at any time for any purpose that falls within the approved uses of Fund 534. At this time, staff is requesting that the City Council approve a transfer of $10 million from 534.ND000.30011.0000 (Municipal Infrastructure Fund Balance) to account 534.ND000.30015.1056 (Civic Center Reserve) for the purpose of 14 reserving funds for the Burbank Civic Center Project. The total 2021-22 fiscal year ending Municipal Infrastructure Fund balance is estimated at $15 million.
CONCLUSION
The proposed Civic Center Project presents the most practical path for Burbank and its City Council to accomplish goals for a modern Central Library and other public assets to support a thriving community with ample housing, open space, and a strong local economy. The project elemen ts in the context of the P3 model allow the City to move long-delayed and much -needed improvements forward while preserving the availability of funding for other infrastructure needs. The housing not only supports housing goals and creates a revenue stream but adds to the energy of the downtown area, providing residents with desirable amenities and supporting local businesses through increased demand for services. In addition to supporting practical needs of users, the public assets will feature numerous sustainable elements.
The Civic Center project broadly supports City Council goals and represents a once-in-a- generation opportunity to transform Burbank.
Staff recommends Council:
1. Review conceptual plans for the development of the Burbank Civic Center Project using a public-private partnership (P3) delivery model and provide input to staff; and
2. Direct staff to establish a reserve account and transfer $10 million from the Fund 534 fund balance for matching funds for project-related grants.
ATTACHMENTS
Attachment 1: Civic Center Project conceptual site plan showing project elements