AVAILABILITY OF PUBLIC RECORDS:
All public record to an open session item on this agenda, which are not exempt from disclosure pursuant to the California Public Records Act, that are distributed to a majority of the legislative body will be available for public inspection at the City Clerk’s Office, City Hall located at 333 90 th Street, Daly City, CA during normal business hours, at the same time that the public records are distributed or made available to the legislative body.
CITY OF DALY CITY
SPECIAL MEETING – STUDY SESSION
______
MONDAY, JULY 18, 2022
5:30 P.M. – 7:30 P.M.
at https://bit.ly/dalycityjuly18livestream
COVID-19 ANNOUNCEMENT - PUBLIC MEETINGS
Pursuant to Government Code section 54953(e) et seq., members of the Daly City Council and staff will participate in this meeting via a teleconference. Members of the public are encouraged to watch the meeting via Livestream (City Council Meeting Livestream) at https://bit.ly/dalycityjuly18livestream or on local Channel 27 (Comcast).
AGENDA
1. Developer Interviews for the City-Owned Property at 1837 Junipero Serra Boulevard STAFF: Tatum Mothershead
RECOMMENDATION: Information Only
A Study Session is a public meeting at which the City Council receives information and presentations. No decisions can be made at this meeting other than to request additional information or to move a matter to a Regular City Council Meeting. The public is encouraged to attend these meetings and receive the presentations as well. ----------------------------
City Council Study Session ReportItem # _____
Meeting Date: July 18, 2022
Subject: Developer Interviews for the City-Owned Property at 1837 Junipero Serra Boulevard Background
On February 15, 2022, the City Council received presentations from and interviewed four developer teams that are interested in developing the City’s property at 1837 Junipero Serra Boulevard. A fifth development team was interviewed on March 14, 2022. The City Council selected three of the development teams to submit a refined term sheet and to progress to a second round of interviews that will occur at tonight’s study session. The selected teams were JM McLennan Development, L.F. George Properties Corporation, and Phase 3 Real Estate Partners, Inc.
The refined term sheet was to include the following details:
1. Buyer (type of entity)
2. Purchase price (at fair market value or necessary subsidy, with corresponding project proforma / evidence of financial feasibility)
3. Deposit (associated with City reimbursement for processing/negotiation expenses vis-à-vis a Disposition and Development Agreement, including when non-refundable)
4. Source(s) of funds (equity and debt)
5. Due diligence period
6. Due diligence and closing contingencies
7. Closing timing
8. Expected obligations of City (if applicable)
9. Proposed project description and schedule
10. Qualitative and quantitative overview of economic and community benefits from project (e.g., tax revenues)
11. Other relevant terms (assumption regarding expected use of union labor for construction and/or operation, covenants, buy back provisions, etc.)
The term sheets have been attached for Council review. One developer, L.F. George, was asked to provide renderings of their proposal, which was included with their term sheet. Kosmont, the city’s consultant assisting in the process, has prepared a matrix that compares the three submittals for quick reference.
Summary of Development Proposals
The JM McLennan Development submittal reflects a mixed-use hotel/residential concept, including 180 hotel rooms, 40 studios for flexible use (short-term rentals, extended stay, or apartments), ten top floor condominium units, a 30,000 square foot conference center, and a 30,000 square foot athletic club.
The L.F. George Properties Corporation submittal reflects a300-unit residential building with 25 affordable units for Daly City employees and an additional 20 affordable units. An 8,000 square foot community center and 10 ground floor commercial tenant spaces are also proposed.
City Council Study Session Report
Developer Interviews – Next Steps July 18, 2022
The Phase 3 Real Estate Partners, Inc. submittal reflects a research and development (R&D) office concept, including an approximately 211,000 square foot building, with 186,000 square feet of research and development, a 25,000 square foot event center, a 9,100 square foot rooftop terrace, and a fitness center and café that is open to the public.
Process and Next Steps
Each development team will have 10 to 15 minutes to give a brief presentation and then the City Council will have an opportunity to ask their own questions of each team. The selection of the development team will occur at a regular City Council meeting. Staff anticipates this item will be placed on the July 25 agenda.
At the regular meeting, the City Council can discuss the proposals, take public comment, and select the team.
Once the preferred developer is selected, the Council can pursue negotiations with said developer with the goal of entering into an Exclusive Negotiation Agreement (ENA).
Respectfully submitted,
Tatum Mothershead
Director, Economic and Community Development
Attachments
JM McLennan Term Sheet
L.F. George Properties Corporation Term Sheet
Phase 3 Term Sheet
Comparative Matrix
Term Sheet
City of Daly City
1837 Junipero Serra Blvd Project
To: Ken Hira
[email protected]
1. Buyer (type of entity)
The entity will either be an LLC or a C-Corp depending on current tax laws. Robert McLennan will have a controlling interest in the entity
2. Purchase price (at fair market value or necessary subsidy, with corresponding project proforma /evidence of financial feasibility)
Based on our valuation estimate, the offering price will be between $2.5 million to $5 million. See attached funding proposal from LBP, Corp.
3. Deposit (associated with City reimbursement for processing/negotiation expenses vis-à-vis a Disposition and Development Agreement, including when non-refundable) We have offered a $250,000 deposit at the issuance of the ERN, for a 10-month period. For an additional $50,000, a 90-day extension will be provided. At the end of this period, the deposit will become non-refundable, or we will withdraw from the project
4. Source(s) of funds (equity and debt)
Robert McLennan and the McLennan Family Trust will fund all the pre-approval necessities. See attached funding proposal from LBP, Corp
5. Due diligence period
A 10-month due diligence period with a 90-day extension if needed
6. Due diligence and closing contingencies
Our Due diligence will include, but limited to, an in-depth hotel and residential market study, as well as building design and construction feasibility studies. Closing contingencies include issuance of a building permit by the City.
7. Closing timing After the due diligence period has been completed, we will close escrow within 60 days after the City building permits have been issued. As noted, all pre-approval fees and costs will be funded by Robert McLennan or the McLennan Family Trust
8. Expected obligations of City (if applicable)
We will expect the City of Daly City to have a detailed agreement with the parking structure ownership group to provide the project with the necessary dedicated parking spaces allocated to the project per the existing agreement
9. Proposed Project Description:
The proposed mixed-use project will feature three major components including:
• a hybrid lodging and residential property,
• a multipurpose event center for meetings, banquets, social events and art and music events.
• an integrated athletic club.
Lodging and Residential
Most of the new structure will be devoted to developing approximately 230 total rooms and suites, of which approximately 180 will be devoted to a guest hotel use and will operated under a national brand likely Hilton or Marriott. Approximately 40 studios on the upper floors will be available for short term or extended-stay and apartment rental. 10 of the top floor units will be for sale condominiums. All 230 units of the development will be fully furnished and uniformly designed. The residential users will have access to hotel services including optional housekeeping and the athletic club.
Multipurpose Event Center
Approximately 30,000 sq. feet will be devoted to a multi-functional event center. This center will accommodate groups up to 1,500 people for Musical/Art events, meetings, conventions, social gatherings, banquets, and trade shows. The space will be flexible and can be configured to accommodate many group needs. Our center, at 30,000 sq ft is compared to:
1. Fox Theater 20,000 sq ft
2. Filmore Center 30,000 sq ft
3. Masonic Center 31,000 sq ft
4. Bill Graham Auditorium 31,000 sq ft
5. Orpheum Theatre 24,000 sq ft
This exciting event space will provide the City with a venue on the Bart line that is unmatched in the Bay Area for its accessibility and location. This will create a downtown feel for all of Daly City.
Athletic Club / Physical Therapy
A health/wellness and physical therapy center will occupy approximately 30,000 sq. ft. It will be used by Daly City residences as well as hotel and residential guests. Both businesses have been in business under the same ownership at the same location since 1979. The
Athletic club will offer to their members and guests a typical array of weights and equipment as well as, lockers, showers, and mental health programs.
The physical therapy division has over 150 local referring doctors from Seton Medical Center as well as all local North County and San Francisco hospitals.
9.a Schedule:
Scheduling the development, construction, and opening of the proposed project is estimated as follows:
Activity Scheduled (weeks)
OPENING 2025/2026
PROCESS RUNNING
CONCURRENTLY IN
WEEKS
EXECUTE TERM SHEET 1
ERN 9
MARKET STUDY 8-10
COSTS STUDY 6-8
FEASIBILITY STUDY 15
DDA & Land Sale 16
HOTEL BRAND
SELECTION
8-10
CONSTRUCTION
DRAWINGS
30 FINANCING PROCESS 40
PERMITTING/APPROVALS 20-24
CONSTRUCTION 104
10. Qualitative and quantitative overview of economic and community benefits from project (e.g., tax
revenues)
Direct Economic and Fiscal Benefits: Direct impact includes all projected revenues that will be generated from guests at the new hotel. This will include all rooms revenues, food and beverage revenues from restaurants and banqueting, as well as other potential revenue sources such as event tickets and trade show revenue. Direct impact also includes total payroll paid out to employees hired at the hotel as well as all payrolls paid out to construction workers who will build the hotel. The following estimates are the annual direct benefits:
1. Transient Occupancy Taxes (T.O.T.) 180 rooms at 75% occupancy and $200 Average Daily Rate represents approximately $10M in Hotel Room Sales. 13% TOT is $1.3M annually.
2. Fee in Lieu: for 40 apartment rentals, short term, mid term and long term. Assuming a Northern California vacancy rate of 4% and an in-lieu fee of 2.5%, the city would receive $24,000 annually off the residential rentals.
3. Event center/retail taxes: All food & beverage and sundry sales will generate tax revenue.
Assuming $3M in F&B sales, retail tax at 9.750% represents a net to the City of approximately $50,000.00 annually (a 1.5% stake in 3 Million in total tax)
4. Event center ticket sales and room rentals will have a negotiated in lieu fee paid to the City of Daly City. We are proposing a $.50 for each ticket sold and a 5% room fee for room rentals. Estimated revenue to the city: $75,000.00 annually
5. Business License taxes: hotel, event center and athletic club gross revenues of $19 million dollars at a rate of .0011 would generate $209,000 annually in business license tax to the city.
Total Direct Annual Fiscal Impact: $1,658,000.00 Paid to the City of Daly City State fees to the City of Daly City
Because of the State’s complexity in distributing real estate and payroll taxes, we have provided the gross fee’s to be paid. It will be up to the City’s Staff and consultants to determine the net fees to the City of Daly City.
Real Estate Taxes: Based on costs and assessment, project will be $84M+. 1.1714% Tax rate yields $983,976 annually
Payroll Taxes: Based on Payroll of $5M, 1.5% payroll tax is $75,000 annually
11. Other relevant terms (assumption regarding expected use of union labor for construction and/or operation, covenants, buy back provisions, etc.) Indirect Community Impact:
Our project will be built with 100% Union Labor
In addition to local governments and hotel owners/employees, contractors and suppliers to a newly developed hotel will also benefit. Indirect impact includes all jobs and income generated by businesses that supply goods and services to the hotel. Examples of businesses that will indirectly benefit from the development of a hotel include suppliers of rooms related goods (housekeeping supplies, room amenities, etc.), telecommunication vendors (internet, cable, etc.), utility companies, food and beverage suppliers, and other hotel related vendors. Other indirect local community impacts include:
1. Local housing provided along with local employment
2. Induced impact refers to economic effects generated when employees (full-time and temporary) and suppliers re-spend their wages on local consumer purchases. For example, an employee may purchase gas for their car or groceries on their way home from work.
3. Event center will supply needed venue for community events and attracting regional visitors who will spend money locally. Hotel and conference visitors will likely frequent local restaurants and shopping centers generating additional sales tax for Daly City.
4. McLennan and Planet Fitness: has supported & continues to support numerous local organizations such as:
a. DCPLA
b. North County Food Pantry and Dining Center
c. Doelger Senior Center
d. Jefferson & Westmoor High Schools
e. Holy Angels
f. St. Augustine
g. DCPOA
h. Life Moves Renovation Project
i. Special Olympics Program ( Hiring Special needs individuals) j. Service League
k. Second Harvest Food Bank
Attached is the lending criteria from our foreign lender/investor. This is typical for foreign investors/lenders at this stage of the development. They have visited the site and have reviewed the Heller and Manus plans and have come up with the attached proforma. This letter is from Lee Roposa, of Liaoning Investment Benefit, Inc., who we have a great relationship with. Until we have a more refined project the contingencies will remain in place for our financing.
Liaoning Benefit Petroleum (US) Corp
Address: 42840 Christy St, #209 Fremont, CA 94538 Phone: 510.624.9927 Fax: 510.624.9938 April 14, 2022
Bob McLennan
2945 Junipero Serra Blvd.
Daly City, CA 94014
RE: Commercial Property Purchase and Development 1837 Junipero Serra Blvd. Daly City, CA 94015.
Dear Mr. McLennan:
LBP USA, Inc. and Liaoning Benefit Investment, Inc. (hereafter LBP) is pleased to present the following proposal.
This proposal is for discussion purposes only and should not be construed as an investment commitment on the part of LBP. A commitment can only be made after completion of the investment institutions underwriting process, management approval, and completion of documentation acceptable to counsel.
INVESTMENT
PARTNERS:
Bob McLennan, LBP USA, Inc. Entities to be determined.
TOTAL INVESTMENT
AMOUNT:
$86,708,500.
TERMS OF
OWNERSHIP:
To be determined based on investment mix, cash flows and management.
PURPOSE: To finance the acquisition of Commercial Land for the purposes of Construction. Development costs of the proposed structure, soft costs, fees and inspections.
Liaoning Benefit Petroleum (US) Corp
Address: 42840 Christy St, #209 Fremont, CA 94538 Phone: 510.624.9927 Fax: 510.624.9938 Sources and Uses of funds:
Sources: Uses:
Investment LBP USA, Inc $81,708,500 Commercial Land. $ 5,000,000 Shared Bob McLennan $5,000,000 $ 68,500,000 Hard Costs Soft Costs
Construction
FF&E
Construction Contingency
Broker Fees
$ 2,000,000
$ 3,500,000
$ 6,800,500
$ 858,500
Total Sources $86,708,500 Total Uses $ 86,708,500
COLLATERAL: 1) Real estate collateral to be a 1st Trust Dead on the subject property located at.1837 Junipero Serra Blvd. Daly City, CA 94015. Secondary collateral to be determined, First UCC on all Furniture Fixtures and Equipment.
GUARANTOR(S): Entity holding company if applicable and personal guarantee of all proposed owners.
REQUIRED EQUITY
INJECTION:
Full cash equity injection of $10,000,000 fully funded in part by Bob McLennan and partially funded by LBP USA, Inc.
APPRAISAL: The property’s as completed value must be supported by an independent land appraisal obtained and reviewed in accordance with USPAP’s standards.
Liaoning Benefit Petroleum (US) Corp
Address: 42840 Christy St, #209 Fremont, CA 94538 Phone: 510.624.9927 Fax: 510.624.9938 INSURANCE: Hazard insurance on the collateral being pledged to secure the loan will be required.
LBP is to be listed as the Loss Payee.
FEES AND COSTS: Owners to pay all estimated transaction fees and out of pocket expenses associated with the project, including but not limited to:
➢ Broker Fee: $858,500.
➢ Packaging Fee: Estimated at $2,500.
➢ Commercial Real Estate Appraisals’: $20,000
➢ Real Estate Title: Estimated at $20,000.
➢ Construction Contingency:10% Tennant Improvements.
➢ All out-of-pocket expenses/costs not noted above.
ADDITIONAL
CONDITIONS:
Other Conditions:
1) See need list from LBP to be determined and based on files received from proposed developer.
DOCUMENTATION AND
OTHER
REQUIREMENTS:
All documents, which are drafted in connection with the proposed financing will be prepared by LBP’s legal counsel.
Additionally, the following information is required to proceed with your loan request:
1) To Be Determined subject to review all cash flow models, as completed and completed appraisals, feasibility studies, environmental studies, city approved plans and permits, approval of the General Contractor and acceptable bids for development.
Liaoning Benefit Petroleum (US) Corp
Address: 42840 Christy St, #209 Fremont, CA 94538 Phone: 510.624.9927 Fax: 510.624.9938 DEPOSIT: As a consideration for the LBP making this proposal, a deposit of $15,000.00 must be received. If the financing is not approved, the deposit is non-refundable as the deposit will be used by GSR Financial as the financing consultant to cover costs incurred to date to service this request.
This proposal is for discussion purposes only and is subject to review and approval. LPB is not to be legally obligated to make any transfer of funds except upon the terms and subject to any final documents actually signed and delivered by the all parties. This letter is not intended to be all-inclusive but serves as a basis for working towards a mutually acceptable agreement.
Please countersign and return the enclosed copy of this letter along with the good faith deposit to indicate your interest in further pursuing the transaction outlined above. Unless extended in writing by LBP, this proposal shall expire and be of no further force and effect unless it is accepted by you as described in the previous sentence within 30 days of the date of this letter.
Please review the information provided and call me at 707-364-0388 if you have any questions or require additional information. We appreciate the opportunity to present this proposal to you and look forward to assisting you with your financial needs.
Sincerely,
Lee Reposa
SVP LBP USA, Inc. Liaoning Investment Benefit, Inc.
PO Box 927729, San Diego, CA 92192 • P: (858) 546-0888 • F: (858) 546-0999
April 15, 2022
Daly City
C/O Ken Hira
Kosmont Companies
1230 Rosecrans Ave, Ste 630 | Manhattan Beach, CA 90266
RE: Term Sheet – 1837 Junipero Serra Blvd., Daly City, CA
Dear Ken,
Phase 3 Real Estate Partners, Inc. (“Phase 3”) is pleased to present the attached Term Sheet for the 1837 Junipero Serra development. We are proposing a 211,100 square foot R&D building with a 25,000 square foot event center, 9,100 square foot rooftop terrace, 186,100 square feet of R&D space, and a fitness center and café that are available for public use.
This is a compelling offer that provides more jobs, better quality jobs, more up front value to Daly City, and more annual revenue to Daly City (property and TOT equivalent tax) than the alternative proposals. Our proposal will be a catalyst for future R&D development in Daly City, which has significantly fewer high-paying STEM jobs relative to surrounding cities.
We believe R&D is the highest and best use of the site and that our proposed plan creates the most value for Daly City and the surrounding community. Further, the Phase 3 and Bain Capital team has an impeccable track record, rock-solid financial backing, and a proven business plan.
We enjoy working with Daly City on our 2001 Junipero Serra R&D project and hope to expand on our partnership through the 1837 Junipero Serra project and future projects.
Sincerely,
W. Neil Fox, III
Chief Executive Officer
Term Sheet
1. Buyer: Atlantic P3 Life Sciences Holding VI LLC (“Developer”), an entity controlled by the Phase 3 Real Estate Partners and Bain Capital Real Estate joint venture.
2. Purchase Price: The purchase price shall be the greater of:
1. Fair market value for a 250-key hotel, as determined by a third-party appraiser.
2. $85 dollars per R&D gross square foot (approximately $15.8 million based on the proposed design).
[Developer Note: We value as a hotel given the original mandate. This is consistent with our inclusion of a Transient Occupancy Tax (“TOT”) replacement revenue stream into our proposal.]
3. Deposit: A $500,000 refundable deposit shall be due within five business days from RFP award. An additional $1,500,000 deposit shall be due within three business days of the expiration of the Due Diligence Period, at which point all deposits become non-refundable.
4. Sources of Funds: The target capital stack is 65% debt and 35% equity. The equity will be sourced from Bain Capital Real Estate’s $785 million Life Sciences Fund, which is set aside for exclusive use by Phase 3 Real Estate Partners for opportunities such as the Project.
[Developer Note: Please see Exhibit B for a Letter of Reference from JLL Capital Markets (debt brokerage). The Project has received pre-approval from Bain’s Investment Committee. Developer has real-time cost information via its 560,536 square foot ground development in Brisbane. Further, its ~400,000 square foot R&D conversion at 2001 Junipero Serra allows it to accurately forecast leasing demand.]
5. Due Diligence Period: 60 days from Disposition and Development Agreement (“DDA”) execution.
6. Due Diligence and Closing Contingencies: Parties to agree on design and financial parameters that must be achieved through the entitlement process (e.g., no less than 100,000 square feet). Deposits shall be refundable if these parameters are not met.
7. Closing Timing: Closing shall occur 60 days after the end of any public appeal period following entitlement approvals.
8. Expected Obligations of City: N/A
9. Proposed Project Description and Schedule:
1. Description: ~211,100 square foot, 7-story (126’), R&D/office building containing a 25,000 square foot event center, a 9,100 square foot rooftop terrace, and 186,100 square feet of R&D space. Parking to be provided via the two garages in the greater development complex.
[Developer Note: The Developer is the Declarant of the Association that governs the parking garages and has the ability to allocate spots accordingly. See Exhibit A for Project specifications and renderings.]
2. Estimated Schedule:
1. ENA/DDA: 1-5 months
2. Entitlement: 9-15 months for Conditional Use Approval. May run concurrently with DDA process.
3. Design: 8 months
4. Construction: 24 months
[Developer Note: The Project will be built on a speculative basis beginning as soon as approvals are granted. See Exhibit C for details on the entitlement process from Reuben, Junius & Rose, LLP.]
10. Economic and Community Benefits:
TOT Revenue: In lieu of TOT, Developer intends to pay $1,000,000 per year to Daly City. Payment to begin upon Certificate of Occupancy and to escalate every five years at CPI, capped at 2% per year. Should the final approved design be less than 186,100 square feet of R&D, the amount shall be reduced by $5.37 per R&D square foot ($1.0M / 186.1K SF).
[Developer Note: $1.0 million is roughly 1.5x what 250-key hotel would garner in today’s environment and could be as much as 2.0-4.0x the amount offered by competing developers featuring a mix of hotel and residential units, after factoring in expecting occupancy and ADRs.]
Tax Revenue: An analysis performed by Economic and Planning Systems (“EPS”) found that R&D buildings are assessed 2-5x higher than a comparable hotel (on a per square foot basis).
High-Quality Job Creation: Per EPS, our proposal will provide 4.5x the number of jobs as a comparable hotel with an average wage of $143,807.
Local Economy Spending: R&D employees are a source of significant local spending (42% greater local spend compared to a hotel of comparable size).
Additional Development Opportunities: As a result of winning this RFP, Developer would look for additional expansion opportunities within Daly City. Developer is currently in negotiation on a nearby parcel with comparable development potential as the Project.
Community Benefits: A 25,000 square foot event center, 9,100 square foot rooftop terrace, fitness center, and café will be provided for use by the public. Developer intends to work with the city to determine other relevant community benefits.
Market Need: Developer firmly believes that R&D is the highest and best use of the site. Daly City is significantly underrepresented in STEM jobs relative to surrounding cities. As evidence by early leasing activity at the Developer’s 2001 Junipero Serra project, there is strong demand for R&D space in Daly City.
o Comparison to Hotel: Hotel occupancy rates sit near all-time lows. There are 11,250 rooms within 20 minutes of the site and a 142 room Home2Suites hotel in Daly City is currently pending permit issuance.
o Comparison to Residential: This area should be preserved for commercial uses as limited zoning for such uses currently exist within the city. As of 1/1/2022, there were 2,737 housing units under review, approved, or under construction in Daly City.
o Comparison to Retail: The property is adjacent to a 100,000 square foot retail center and minutes away from the areas large shopping centers. A fitness center and café available for public use will be provided on site.
11. Other Relevant Terms
Union Labor: Developer has predominately used union labor on its projects and intends to do so on the Project. Developer is also committed to adhering to prevailing wages.
EXHIBITS
A. Project Renderings
B. Letter of Reference, JLL Capital Markets
C. Entitlement Memorandum, Reuben Junius & Rose
D. Hotel vs R&D Analysis, Economic Planning and Sytems
Exhibit A - Project Renderings
1837 JUNIPERO SERRA RFP
SKIDMORE, OWINGS & MERRILL
Program Overview
7 Office/Lab: 167,600 gsf
Event Space: 25,000 gsf
Lobby /Support: 18,500 gsf
Total GFA: 211,100 gsf
Lobby
Terrace
Office/Lab
Service/Support
Event
1837 JUNIPERO SERRA RFP
SKIDMORE, OWINGS & MERRILL 12
BART Parking Lot
1837 JUNIPERO SERRA RFP
SKIDMORE, OWINGS & MERRILL
View from NW
13
1837 JUNIPERO SERRA RFP
SKIDMORE, OWINGS & MERRILL 14
View from North
1837 JUNIPERO SERRA RFP
SKIDMORE, OWINGS & MERRILL
15 Junipero Serra Blvd - NB
1837 JUNIPERO SERRA RFP
SKIDMORE, OWINGS & MERRILL
Building Entry
16
1837 JUNIPERO SERRA RFP
SKIDMORE, OWINGS & MERRILL 17
Junipero Serra Blvd - SB
1837 JUNIPERO SERRA RFP
SKIDMORE, OWINGS & MERRILL 21
View from Northwest
1837 JUNIPERO SERRA RFP
SKIDMORE, OWINGS & MERRILL 22
View from Southeast
1837 JUNIPERO SERRA RFP
SKIDMORE, OWINGS & MERRILL
6 Service / Fire Truck Routes
Exhibit B - Letter from JLL Capital Markets
Jones Lang LaSalle Americas, LLC
Capital Markets
April 15, 2022
R
e: 1837 Junipero Serra Blvd, Daly City – RFP – Phase 3/Bain To whom it may concern:
I am writing on behalf of Phase 3/Bain as a candidate for the above referenced development opportunity.
I am a Senior Managing Director of JLL in the Capital Markets group. Since 1997, I have been with our organization, which is ranked the #1 debt and equity placement firm globally in terms of volume. I have personally known the principals of Phase 3 for over 25 years and Bain for over 15 years. Since the mid 1990’s, I have personally been involved in the capitalization of Life Science properties with the principals of Phase 3 and their predecessor firms. JLL is the leader is Life Science financing, sales, and leasing.
Since our initial association with the principals of Phase 3/Bain, we have been responsible for arranging several billion dollars in equity and debt in addition to introducing the Bain and Phase 3 entities to each other in the formation of a programmatic venture over 7 years ago. Phase 3 is a highly sought -after operator in what has become a burgeoning property sector, internationally. Phase 3 has developed a deep and loyal following from numerous institutional capital providers including Barings, USAA, Quadreal, Nuveen, Principal Global and a host of other lenders that have provided or sought to provide capital to the company’s many successful projects on both coasts.
Recently, we arranged $450MM in development financing for the 570,000 s.f. campus at 3000 Marina Blvd in Brisbane. This was a highly competitive process that was pursued by both domestic banks and internationally based pension advisors. Phase 3/Bain continues to enjoy a very positive reception from the capital markets and has a reputation as one of the elite developer/operators in the United States. As such, we have high confidence in the ability of the project to secure financing and garner compelling terms from the debt markets.
Our team at JLL is honored to be a part of the Phase 3/Bain business, and we remain very active in ongoing pursuits with the Venture. Please do not hesitate to contact me or any of my colleagues at our firm if you would like additional detail or insights Phase3/Bain and their reputation in the capital markets.
Sincerely,
T
im Wright
Senior Managing Director
T +1 858 812 2340
[email protected]
Todd Sugimoto
Managing Director
T +1 310 407 2111
[email protected]
Daniel Pinkus
Associate
T +1 858 812 2362
[email protected]
Exhibit C - Entitlement Memorandum, Reuben Junius & Rose
MEMORANDUM
DATE: March 29, 2022 (Updated April 12, 2022) TO: Alex Sobrado, Atlantic P3 Life Sciences Holdings III, LLC FROM: Mark Loper, Reuben, Junius & Rose LLP REGARDING: 1837 Junipero Serra Boulevard, Daly City – RFP Questions OUR FILE NO.: 11687.15 A. Site Description in Request for Qualifications and Proposals This section summarizes the description of the development site at 1837 Junipero Serra Boulevard in Daly City, California (the “Property”) in a Request for Developer Qualifications and Proposals for the Property issued by the City of Daly City in July 2021 (the “RFQ/P”).1 The Property is approximately 1.26 acres of vacant land immediately adjacent to the Daly City BART station and the 280 freeway. It is comprised of one parcel: Assessor’s Parcel Number 002-292-310. It is bounded by an existing parking lot and BART railway tracks to the north, Junipero Serra Boulevard to the west, single family homes to the east that front Niantic Avenue, and an existing parking structure to the south. From the RFQ/P:
B. Applicable Land Use Controls 1. Land Uses The Property’s General Plan land use designation is Commercial – Retail and Office.2 This designation consists of retail and office uses both regional and citywide in scope. Floor-area ratio limits range from 2.5 to 5.0, except in two specific plan areas not relevant to the Property. While residential use was historically permitted in this General Plan use designation, it no longer is.3 The Property’s zoning is PD-54A, which was recently amended in June 2020 to accommodate a mixed-use project at 500 Westlake Avenue, several parcels to the south of the Property.4 PD-54A has three phases. It appears the Property is in Phase II: it is the only of the three Phases in the PD to allow a hotel use, which is the City’s suggested land use in the RFQ/P. The following uses are principally permitted at the site: 1. Movie and performing art theaters; 2. Hotels; 3. Restaurants, coffee shops, bakeries and similar establishments; 4. Retail and entertainment establishments; 5. Personal and business services (i.e. salons, dry cleaning, photo studios, and the like); 6. Parking structures; 7. Accessory uses; and 8. Other uses similar to the above. With a Conditional Use permit, the following uses are allowed: drive-through uses; new or used car sales; and any retail, office, or entertainment use that is not deemed similar to the permitted uses listed above.5 Daly City considers research and development to be a separate and distinct use from office.6 As a result, we expect it is not considered a use that can be permitted with a Conditional Use permit and instead will require an amendment to PD-54A. 2. PD-54A Development Controls Table7 The following controls apply to the “hotel” parcel in Phase II of the PD-54A zone. Subject Control Minimum Lot Size 42,000 square feet Lot Frontage 150 feet Height 110 feet in height Development size 210,000 gsf hotel; 25,000 gsf meeting and banquet space Parking 1 space per hotel room Buffering 20 feet rear buffer (from residential uses along Niantic)
C. Entitlement Process for Life Science Project We understand the development proposal for the Property is a research and development or life science use (the “Project”). The Project would involve an amendment to the current PD-54A zoning, a Conditional Use approval, or both from the City Council to allow the use and modify any other development controls, and undergo environmental review. 1. City Council Approval Will Be Required Daly City has three different procedures for deviations from the PD-54A zoning. Minor adjustments to the PD-54A zoning can be made administratively by the Director of Economic and Community Development. More significant modifications require review and approval by the Design Review Committee. Finally, any modifications to the limitations established in the PD-54A zoning district are subject to review by the Planning Commission and ultimately approval by the City Council.8 This final process—review by Planning Commission and decision by City Council—is the same procedure the project at 500 Westlake undertook to add two new uses into Phase III of the PD-54A zoning district, accommodating a development plan that was not allowed under the original PD-54 zoning. Because the Project would introduce a non-permitted land use and potentially involve modifications to other development controls applicable to the “hotel” parcel, City Council approval of an amendment to PD-54A zoning could be required. We are aware that in 2020 the City’s Director of Economic and Community Development and the Chief Building Official wrote a letter expressing their support for a change of use of a floor of 2001 Junipero Serra Boulevard from office to life science. The letter concludes that “life science uses are compatible with the allowed uses within PD-54 (Planned Development 54) zoning district.” It is attached as Exhibit B. This letter creates a potential opportunity to argue that the Project can be approved through a Conditional Use process only, on the basis that the City views life science uses as a use similar enough to office that it can be approved using the catchall Conditional Use section of PD-54 that allows approval via a Conditional Use permit of any “retail, office, or entertainment use” that is not deemed by the Director of Economic and Community Development to be similar to or included in the list of permitted uses. That being said, Conditional Use permits undergo a similar entitlement pathway as an amendment of the PD-54 zoning: Planning Commission hearing and recommendation followed by a City Council hearing.9 So the Project will require City Council approval. Also, the support letter is just for a single floor change of use in an existing building from office, and not for a major ground-up construction for a land use—life science—that is fairly different from the proposed hotel use.
The 500 Westlake project’s amendment made one of the two proposed new uses—new and used car sales—a Conditional Use instead of a principally permitted use. This meant the City Council also had to approve a Conditional Use Permit and make certain findings regarding neighborhood compatibility. It is possible the City could require the Project to request a Conditional Use permit in addition to the rezoning, considering the potential negative impacts a life science facility could have on adjacent businesses and residents. 2. Environmental Review In addition to a City Council hearing to amend the PD-54A zoning—and potentially approve a use permit if the zoning makes R&D and life science a conditionally-permitted use—the Project will require review under the California Environmental Quality Act (“CEQA”). CEQA requires all projects that need discretionary approval to be reviewed to determine if they will cause a significant adverse effect upon the environment. The purpose of CEQA is to inform government decision-makers and the public about the potential significant environmental effects of a proposed project.10 Projects may not be approved until environmental review is completed. There are three basic forms of environmental review, which generally correspond with the anticipated impacts of a project. An environmental impact report (“EIR”) is the most time-consuming and expensive form of environmental review. An EIR is required where a project is expected to have significant and unavoidable impacts that have not been previously evaluated in an earlier EIR. A Negative Declaration or Mitigated Negative Declaration (collectively, “Negative Declaration”) is prepared where a project’s impacts can be reduced to a less-than-significant level with mitigation. Finally, an exemption is prepared in certain circumstances. CEQA also allows projects to “tier” off of previously-prepared area- or city-wide EIRs with a document called an “Addendum.” If a site-specific project is consistent with an EIR or multiple EIRs, evidence demonstrates that no new or substantially greater environmental effects could occur, and no new project-specific mitigation measures would be required, an Addendum can be prepared.11 In addition, an Addendum to a previously certified EIR is allowable if some changes or additions are necessary, but none of the conditions described above exist.12 If an Addendum cannot be prepared because new or more significant impacts would occur, a project-specific EIR or Supplemental EIR would be required. Daly City used an Addendum for the 500 Westlake project (the “Addendum”). Specifically, its addendum tiered off the Peninsula Gateway Supplemental Environmental Impact Report (the “SEIR”) and the General Plan Final Environmental Impact Report (the “FEIR”).13 As part of preparing the Addendum, background technical studies relating to air quality and greenhouse gasses, noise and vibration, transportation, historic preservation, hydraulics, and sanitary sewer capacity were all prepared. The 500 Westlake project was approved by the City Council 14 months after its entitlement applications were filed. We think this is a reasonable timeline for the Project. However, with firm
staff commitment and positive results from background technical studies, the Project could be approved within 6-9 months. We recommend asking the City if certain technical studies can be scoped and consultants released to prepare drafts before a formal entitlement application is submitted. Here, the Project’s CEQA review process will begin with the preparation of an Initial Study, evaluating whether the Project’s potential impacts are adequately addressed in the SEIR and the FEIR, and whether it can borrow mitigation measures, even if some changes or additions are necessary. Background technical studies will need to be completed, particularly relating to transportation, noise and vibration, air quality, hazardous materials, and sewer capacity. If the Project qualifies for the Addendum, we expect an entitlement period roughly equal to the 500 Westlake project, i.e. slightly over a year, although as detailed above with staff support and background studies that do not prove problematic the timeline could be reduced to 6-9 months. If a Project-specific or Supplemental EIR are required, the timeline could increase by 6 months. D. Disclaimer This memorandum has been prepared based on (a) the online version of the Daly City Municipal Code maintained by the American Legal Publishing Corp., which includes ordinances effective as of June 23, 2021; and (b) the draft PD-54A zoning regulations from the 500 Westlake project’s City Council hearing. Reuben, Junius & Rose, LLP, shall have no liability for errors in the source documents consulted. Land use law in California is fluid and is subject to frequent changes. Therefore, the information herein could change from time to time, and Reuben, Junius & Rose, LLP shall have no duty to update this memorandum. Land use related legislation is introduced frequently. We are under no obligation to track all possible potential or proposed legislation or ballot measures that could affect the Property unless the firm has expressly agreed in writing to review such proposed or potential legislation or ballot measures. Please keep in mind that the entitlement process remains inherently uncertain. Code interpretations very and can change over time, and are also subject to different interpretations within the City. Nothing in this memorandum, and nothing in our statements to you or your representatives, may be construed as a promise or guarantee about the outcome of the entitlement, approval or permit process related to the Property, or the ultimate cost of any impact fees or exactions imposed. We make no such promises or guarantees. Our comments about the entitlement process and fee illustrations are expressions of opinions only. This memorandum has been prepared for the exclusive use of Atlantic P3 Life Sciences Holdings III, LLC. No third parties are authorized to rely upon or quote the information contained in this memorandum without the prior written consent of Reuben, Junius & Rose, LLP. However, Atlantic P3 Life Sciences Holdings III, LLC may share this memorandum with third parties in its discretion in order for these parties to consult with Atlantic P3 Life Sciences Holdings III, LLC,
but Reuben, Junius & Rose, LLP shall not have any obligation or duty to such third parties with respect to the information contained in this memorandum. 1 City of Daly City, California, Request for Developer Qualifications and Proposals, Development Opportunity Site, 1837 Junipero Serra Boulevard, issued July 16, 2021. Available at: https://www.dalycity.org/1059/Development-Opportunity---Hotel-RFQP 2 Daly City 2030 General Plan, Figure LUE-3, Future Land Use. 3 Daly City 2030 General Plan, Land Use Element, pg. 15. 4 City of Daly City City Council Meeting Minutes, June 22, 2020. 5 Planned Development Permit 54A, Draft Zoning Standards, attached as Exhibit A. Per minutes, the City Council approved the Draft Zoning Standards without making any amendments. 6 See, e.g., § 17.17.010(A), Bart Office Commercial District. 7 Planned Development Permit 54A, Draft Zoning Standards, attached as Exhibit A. Per minutes, the City Council approved the Draft Zoning Standards without making any amendments. 8 Planned Development Permit 54A, Draft Zoning Standards, attached as Exhibit A. Per minutes, the City Council approved the Draft Zoning Standards without making any amendments. 9 Daly City Municipal Code, § 17.44.080. 10 CEQA Guidelines Section 15002(a)(1). 11 CEQA Guidelines, Section 15162. 12 CEQA Guidelines, Section 15164(a). 13 City of Daly City, Initial Study/Addendum, Duggan’s Serra Mortuary/Carvana Project, May 2020.
Exhibit D - Hotel vs R&D Analysis, Economic Planning and Sytems
Economic & Planning Systems, Inc.
T h e E c o n o m i c s o f L a n d U s e
1330 Broadway, Suite 450 n Oakland, California 94612
510 841 9190 n www.epsys.com
DALY CITY HOTEL
ANALYSIS
January 19, 2022
Economic & Planning Systems Daly City Hotel Analysis | 1
PROJECT SITE ON PERIPHERY OF SFO HOTEL SUBMARKET
About 11,250 rooms
exist within 20 minutes
drive of project site
(excluding San Francisco
rooms)
Submarket hotel rooms
clustered:
▪ Along Hwy. 101
Corridor
▪ Near to SFO
▪ Proximate to
employment nodes
Hotels within 20-
minute drive of site
Site
Economic & Planning Systems Daly City Hotel Analysis | 2 DALY CITY SERVES AS “SPILLOVER” HOTEL MARKET
Daly City accounts for only
3% of SFO Submarket
(≈ 300 rooms)
▪ Mainly smaller,
independent hotels
(e.g., less than 40 rooms)
▪ One branded franchise
(Hampton with 86 rooms)
▪ 2 planned project elsewhere
in City would increase
supply by over 50%
▪ City already over-
represented in “upper
midscale” segment
Daily City
3%
South SF
29%
Foster City
2%
San Bruno
6%
Millbrae
11%
Burlingame
33%
San Mateo
16%
Hotel Room Distribution by City
Economic & Planning Systems Daly City Hotel Analysis | 3
HOTEL SUBMARKET RECOVERY FROM PANDEMIC IS WEAK
SFO HOTEL SUBMARKET PERFORMANCE TRENDS
84.5% 85.4% 86.5%
50.1% 51.9%
0.0%
10.0%
20.0%
30.0%
40.0%
50.0%
60.0%
70.0%
80.0%
90.0%
100.0%
$0.00
$20.00
$40.00
$60.00
$80.00
$100.00
$120.00
$140.00
$160.00
$180.00
$200.00
2017 2018 2019 2020 2021
ADR RevPAR Occupancy
Sources: CoStar; Smith Travel Research; EPS
Economic & Planning Systems Daly City Hotel Analysis | 4
BUT EVEN PRE-PANDEMIC, SUPPLY GROWTH WAS SLOW
▪ Submarket grew roughly 6% over
last decade (≈ 600 new rooms)
▪ Minimal deliveries reflect
competitive market dynamics
HOTEL INVENTORY
Sources: CoStar; Smith Travel Research; EPS
0 500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
Daly City South San Francisco Foster City
San Bruno Millbrae Burlingame
San Mateo
SFO Hotel Submarket Hotel Growth
City
Daly City 0
South SF 389
Foster City 122
San Bruno 0
Millbae 232
Burlingame 12
San Mateo (152)
Sub-Market Total 603
CAGR 0.6%
New Room Deliveries
(2012-22 YTD)
Economic & Planning Systems Daly City Hotel Analysis | 6
AND HOTEL PROPERTY TAX LIKELY FAR BELOW R&D
ASSESSED VALUE / SQUARE FOOT: HOTEL VS R&D IN SSF
Sources: CoStar; San Mateo County Assessor’s Office; EPS $191.23
$525.51
$368.93
$868.25
$807.23 $773.20
$0
$100
$200
$300
$400
$500
$600
$700
$800
$900
$1,000
Home2 Suites by
Hilton (2019)
AC Hotels -
Marriott (2017)
aloft (2018) Genentech - 330
DNA Way (2006)
Merck - 213 E
Grand (2019)
279 E Grand
(2019)
AV of Daly City Hampton Inn = $277/SF
Economic & Planning Systems Daly City Hotel Analysis | 7
HOSPITALITY WAGES / SALARIES ALSO FAR BELOW R&D
PERCENTAGE OF JOBS BY WAGE
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
<$50,000 $50,001-$75,000 $75,001-$100,000 $100,001-$150,000 $150,001-$200,000 $200,001+ Hotel
R&D
Sources: Bureau of Labor Statistics; EPS
Economic & Planning Systems Daly City Hotel Analysis | 8
HYPOTHETICAL JOBS AND INCOME COMPARISON
210K Sq. Ft. Hotel 210K Sq. Ft. Office / R&D
Average Sq. Ft. per Employee [1] 1,500 300
Total Projected Onsite Employment[2] 140 630
Average Wage per Employee [3] $46,807 $143,807
Total Annual Compensation $6,552,980 $90,598,410
[1] The hospitality employee density is sourced from Sacramento Area Council of Governments. [2] Assumes 90% occupancy for Office / R&D.
[3] The average wage based on the industry is sourced from the Bureau of Labor Statistics.
Sources: SACOG; BLS; EPS
Economic & Planning Systems Daly City Hotel Analysis | 9
HYPOTHETICAL LOCAL SPENDING COMPARISON
DAILY SPENDING BY HOTEL GUESTS VS. BIOTECH EMPLOYEES FOR A 210,000 SQ. FT. DEVELOPMENT
Sources: International Council of Shopping Centers; Motus; Smith Travel Research; CoStar; EPS Use Avg.
Occupancy Rooms Guests /
Employees1
Daily Spend
per Person2
Gross
Spending
Capture
Rate3
Spending in
Daly City
per Day
Hotel 75% 300 248 $93 $23,018 40% $9,200
R&D 90% - 630 $35 $21,874 60% $13,100
[1] Hotel calculation based on 1.1 persons per room x 300 rooms x 75% occupancy. R&D calculation based on 300 per sq. ft. per emp loyee x 90% occupancy. [2] Hotel guest daily spending based on Motus’ Travel Trends Highlights, and biotech employee spending is based on International Council of Shopping Centers’ Office Worker Spending Study.
[3] Daly City unlikely to have high capture rate for business travel spending due to low office inventory and high probability of offsite meetings, events, etc.
Economic & Planning Systems Daly City Hotel Analysis | 10 DALY CITY UNDER-REPRESENTED IN PROF. / TECH. JOBS
Sources: US Census LEHD Survey; EPS
447 8,269 10,820 7,155
18,988
59,510
50,310
11,381
0 10,000
20,000
30,000
40,000
50,000
60,000
70,000
80,000
Daly City South San Francisco San Mateo Foster City
Professional, Scientific and Technical Workers Total Employment
Economic & Planning Systems Daly City Hotel Analysis | 11 AND HAS SEEN MINIMAL PROF. / TECH. JOB GROWTH
Sources: LEHD; EPS
[1] LEHD-defined category containing professional, scientific, and technical occupations. Includes biotech workers. 19 4,229
-1,567 416
826
16,639
2,424
-1,947
-5,000
0 5,000
10,000
15,000
20,000
25,000
Daly City South San
Francisco
San Mateo Foster City
Technical Job Growth vs. Total Job Growth
2015-19
Professional, Scientific and Technical Workers Total Employment 428 447
4,040
8,269
12,387
10,820
6,739 7,155
0 2,000
4,000
6,000
8,000
10,000
12,000
14,000
2015 2016 2017 2018 2019
Technical1 Jobs Growth 2015-19
Daly City South San Francisco San Mateo Foster City
Economic & Planning Systems Daly City Hotel Analysis | 12
DALY CITY OFFICE / R&D SECTOR ALSO UNDERPERFORMS
▪ Daly City has seen negligible new office
/R&D development
▪ Meanwhile several neighboring cities have
grown rapidly, with R&D leading the way
OFFICE / R&D INVENTORY GROWTH
Sources: CoStar; EPS
City Amount % Amount %
Daly City 1,979,382 5% 0 0%
South SF 13,128,760 36% 3,042,977 23%
Foster City 4,440,851 12% 307,335 7%
San Mateo 10,333,984 28% 1,448,040 14%
San Bruno 1,904,152 5% 96,391 5%
Burlingame 4,386,453 12% 915,018 21%
Millbrae 331,796 1% 0 0%
Total 36,505,378 100% 4,798,352 13%
Office / R&D Square
Feet
(2022 YTD) 2015 - 22 YTD Growth
0 2,000,000
4,000,000
6,000,000
8,000,000
10,000,000
12,000,000
14,000,000
2015 2016 2017 2018 2019 2020 2021 2022
Daly City South San Francisco
San Mateo Foster City
San Bruno Burlingame
Millbrae
Economic & Planning Systems Daly City Hotel Analysis | 13
R&D JOBS COULD REDUCE WORKER OUT-FLOW
▪ Only about 5% of Daly
City’s employed residents
work locally
▪ Most of City’s existing
jobs don’t pay enough to
support housing costs
▪ A successful R&D campus
would:
– Mitigate out-commutes
– Increase daytime
population
– Provide high-paying
local jobs
DALY CITY COMMUTE TRENDS
Sources: LEHD; EPS
City of Daly City – Pacific Plaza Development Opportunity Site (1837 Juniperro Serra Blvd.) Round 2 Term Sheet Summary
July 12, 2022
1601 N. Sepulveda Blvd. #382, Manhattan Beach, CA 90266 I ph 424.297.1070 I www.kosmont.com L.F. George Properties Corporation McLennan Development Phase 3 Real Estate Partners
and Bain Capital
(“Atlantic P3 Life Sciences Holding VI LLC”)
1) Purchase Price
and Timing
$4,000,000
Transferrable within 7 business days of
entitlement approval
Between $2,500,000 and $5,000,000 – TBD
based on appraisal
Closing within 60 days of building permit
issuance
Greater of:
Fair market value for 250-key hotel (based on
appraisal – in recognition of original land use
intent); or
$85 per R&D gross SF (approx. $15.8 million
based on proposal)
Contingent on “agreement on design and
financial parameters through entitlement
process – e.g., no less than 100,000 SF)
Closing 60 days after end of any public appeal
period following entitlement approvals
2) Deposit $500,000
within 3 days of term sheet execution
non-refundable upon entitlement approval
$250,000
upon issuance of Exclusive Right to Negotiation
(ERN) for 10 months
Additional $50,000 for additional 90 days if
needed
$500,000
Within 5 business days of RFP award
Additional $1,500,000 within 3 business days of
expiration of Due Diligence Period, at which
point all deposits become non-refundable
Deposits refundable “if design and financial
parameters are not met”
3) Project
Description
300-unit residential, 10-story building
25 affordable units for Daly City employees and
family members
20 additional affordable units
8,000 SF community / event center
180 hotel rooms
40 studios for short-term or extended stay or
apartment rental
10 top-floor condominium (for-sale)
30,000 SF event center for groups up to 1,500
211,100 SF total, 7-story building
186,100 SF R&D
25,000 SF event center
9,100 SF rooftop terrace (in addition to building
SF noted above)
City of Daly City – Pacific Plaza Development Opportunity Site (1837 Juniperro Serra Blvd.) Round 2 Term Sheet Summary
July 12, 2022
1601 N. Sepulveda Blvd. #382, Manhattan Beach, CA 90266 I ph 424.297.1070 I www.kosmont.com L.F. George Properties Corporation McLennan Development Phase 3 Real Estate Partners
and Bain Capital
(“Atlantic P3 Life Sciences Holding VI LLC”)
10 ground floor “commercials” (tenant spaces) 30,000 SF athletic club / physical therapy (relocation of existing facility in City)
Fitness center and café open to public
Parking to be provided via the two garages in
the larger development complex (Developer
notes its ability to allocate spaces accordingly)
4) Obligations of City Soil report, EIR, “all related documentation” “Detailed agreement with parking structure ownership to provide necessary dedicated
parking spaces for the project per existing
agreement”
None identified
5) Community and
Economic
Benefits
Affordable housing component, community
center, garden, solar system
Indirect jobs and taxable spending from
residents
Property tax (estimated by Kosmont at
$270,000 annually)
Other revenues not identified
Event center
Hotel tax (TOT) estimated at $1.3M annually
Proposed “Apartment in lieu Fee” of 2.5% of
monthly rental income (estimated at $24,000
annually)
Event center sales taxes (estimated at $50,000
annually)
Proposed Event Center ticket tax/fee of $0.50 per
ticket (estimated at $54,000 annually)
Proposed Event Center room rental fee of 5% of
gross rental revenues (estimated at $19,200
annually)
Event center, rooftop terrace
Hotel tax (TOT) in-lieu at $1 million annually,
escalating at CPI, no more than 2% annually) –
into perpetuity
If less than 186,100 SF of R&D approved,
amount shall be reduced on PSF basis ($5.37
per R&D SF)
High-quality / high-wage employment (630 jobs
estimated at $143K salary)
Indirect spending from employees
Property tax (estimated by Kosmont at $317,000
annually)
Business license tax / other revenues not
identified
City of Daly City – Pacific Plaza Development Opportunity Site (1837 Juniperro Serra Blvd.) Round 2 Term Sheet Summary
July 12, 2022
1601 N. Sepulveda Blvd. #382, Manhattan Beach, CA 90266 I ph 424.297.1070 I www.kosmont.com L.F. George Properties Corporation McLennan Development Phase 3 Real Estate Partners
and Bain Capital
(“Atlantic P3 Life Sciences Holding VI LLC”)
Business license taxes on gross receipts
(estimated at $209,000 annually – portion is
relocated from existing fitness center in town)
Property tax (estimate adjusted by Kosmont at
$168,000 annually)
Hotel employment (135 hotel jobs estimated by
Kosmont)
6) Sources of Equity
and Debt
$5M equity / $85M debt
(Proof of funds for $4.4 million)
Robert McLennan and McLennan Family Trust
for pre-development
Liaoning Benefit Petroleum (US) Corp
partnership for development
Approx. 6% McLennan / 94% LBP
65% debt (via JLL Capital Markets brokerage)
35% equity (from Bain Capital Real Estate Life
Sciences Fund)
7) Due Diligence
Period
“ASAP” 10 months with additional 90-day option (ENA
period)
60 days from Disposition and Development
Agreement (DDA) execution
8) Development
Schedule
Construction complete within 3 years Opening 2025 / 2026 ENA/DDA 1-5 months Entitlement 9-15 months for CUP
Design 8 months
Construction 24 months
(2024/2025 completion)
9) Union Labor Construction and operation utilizing prevailing wages
100% union labor for construction
Operations not addressed
Intention to use union labor and prevailing wage
(assuming for construction)