Kosmont Companies Mailing Address: 1601 N. Sepulveda Blvd., #382 Manhattan Beach, CA 90266 (424) 297-1070 www.kosmont.com Physical Address: 2301 Rosecrans Ave, Ste. 4140 El Segundo, CA 90245 August 29, 2023 Mr. Philip Burum Deputy City Manager – Development Services City of Fontana 8353 Sierra Ave. Fontana, CA 92335 RE: Advisory Services Proposal – Sierra and Foothill Corridor Economic Development Analysis Dear Mr. Burum: Per our discussion, Kosmont & Associates, Inc. doing business as Kosmont Companies (“Consultant” or “Kosmont”) is pleased to present this proposal to the City of Fontana (“City” or “Client”) for advisory services related to an economic development analysis (“Analysis”) of the Sierra Ave. and Foothill Blvd. corridors in Fontana, CA. Kosmont is a real estate and economic development services firm offering a full range of financial advisory services and highest and best use feasibility analysis for both the public and private sectors. Kosmont was founded in 1986 by Larry J. Kosmont, CEO, and has assisted hundreds of agencies in their quest for successful economic development strategies and implementation. It is our in-depth understanding and experience in currently evolving land use and retail trends, industry and Innovating Commerce Serving Communities (formerly International Council of Shopping Centers) (ICSC) relationships, and proven strategic approach to project shaping and blended land use that sets Kosmont apart. As a firm focused on strategy and implementation, Kosmont is uniquely qualified to assist the City in its pursuit of achieving a relevant and engaging mix of uses and tenants for its primary commercial districts.. Kosmont staff includes ICSC Community Advancement Advisory Board Co-Chair, Mr. Ken K. Hira, and other active industry leaders, which enables the firm to assist the City in desired services. For more visit www.kosmont.com. This proposal serves as an Agreement when executed and returned to Kosmont. I. BACKGROUND AND OBJECTIVE City seeks to create a vibrant and diversified downtown/town center commercial district (“District”) along Sierra Ave. and Foothill Blvd. to serve as a significant economic engine for generations to come. Due to existing zoning that permits a wide variety of commercial service and other uses, the City has experienced substantial developer interest. In order to preserve key sites for these City of Fontana Economic Development Analysis August 29, 2023 Kosmont Companies 2 | Page (424) 297-1070 www.kosmont.com important local and regional thoroughfares, City has adopted an interim moratorium on permits for service based non-entertainment use and seeks to extend that moratorium until July 23, 2024. Because Client envisions the District to be a source of long-term fiscal revenue, Client has requested a proposal from Kosmont to prepare the Analysis to evaluate local real estate market trends and to propose amendments to the General Plan for the corridors. The objective is to incentivize projects that produce long term sustainable economic activity and attracts local residents and regional visitors. II. SCOPE OF SERVICES Approach to Tasks: The prospective assignment and consulting services that Kosmont will provide will be of a relatively limited scope and duration, and advisory in nature. Kosmont will be making recommendations only, which advise the Client and jurisdictions, including their elected officials, appointed officials, and staff, which they can accept or reject. None of Kosmont's staff will act in a capacity as an elected official, nor appointed official, nor as staff, nor as serving in a "designated" position. Task 1: Project Orientation Kosmont will participate in a kick-off meeting with Client to review the scope of work and schedule, and to establish communication protocols. Kosmont will review planning and zoning documents to understand recent development activity, what uses are permitted and the conditions put thereon. Kosmont will tour the District and City with focus on the impacted areas to understand existing conditions. Kosmont recommends City staff / Council member / business group meetings, ideally coordinated as part of or just following the kick-off meeting, to gain an overview of City goals, objectives, opportunities, and challenges. Task 2: Demographic, Economic and Real Estate Trends To better understand the local market, Kosmont will prepare an Economic and Demographic Profile for the City, illustrating social and economic characteristics, including population, household incomes, race/ethnicity, housing preferences, educational attainment, commute / foot traffic patterns, resident/employee concentrations and tourist population within specific geographic boundaries (e.g., City limits, trade areas) as deemed relevant by Consultant. Kosmont will also examine variables, such as retail sales growth by major category and geographic location, building inventory, vacancy and lease rates, absorption rates, and other relevant real estate data in the City. Kosmont will also gather 10-year absorption rates, rent, vacancy rates, new construction, and sales value market data for office, retail, and multifamily uses to quantify the growth achieved over time in the City. Kosmont will also outline the current national and regional land use trends and how they will likely impact the development of the District.
City of Fontana Economic Development Analysis August 29, 2023 Kosmont Companies 3 | Page (424) 297-1070 www.kosmont.com Task 3: Assessment of Service Based Uses The proposed moratorium will temporarily impact approximately 90 different tenant types as summarized by major category below: • Auto and truck services • Medical services • Personal care services • Equipment rental • Repair services • Motels/Bed & Breakfast (less than 50 rooms) • Animal care services • Educational City has requested Consultant examine the direct and indirect economic impacts of these service-based uses to help City Planning determine which uses should be considered (or not) to be permitted in the new Commercial District. Task 4: Development Analysis To assess impact of rezoning large commercial corridors, it is important to Inventory existing uses within the boundaries of the study area and examine land parcels acreage and assessed value to identify sites suitable for various types of development consistent with vision for the District. To assess development / redevelopment opportunities, Kosmont will work with City staff to assess the development potential for the key parcels and identify the strengths and weaknesses of each, as well as the opportunities and threats facing development (“SWOT”). To help the City create a community gathering place within the District, Kosmont can examine other downtown and civic plazas to see what types of amenities have been built in conjunction with private sector development. Demand Analysis Based on the regional real estate market and demographic analyses trends, preliminary market evaluation of opportunity sites and SWOT, Kosmont will project intermediate and long term demand for those land uses conducive to the City’s vision in the District. Task 5: Fiscal Analysis It is important to understand the fiscal health of the City, where growth has occurred and the revenues associated with it. To assist in planning for the District, Kosmont will analyze General Fund revenue sources, the associated tax rates and market value factors to prepare an Excel model that illustrates the annual General Fund revenues that can be expected from a wide range of land use alternatives on 1 to 5-acre prototypical sites.
City of Fontana Economic Development Analysis August 29, 2023 Kosmont Companies 4 | Page (424) 297-1070 www.kosmont.com Task 6: Community Outreach Findings from the Analysis will be presented to City staff using the Zoom teleconference platform in preparation for community outreach. Kosmont believes that outreach is critical to understanding the local community’s needs. With help of City staff, Kosmont will lead one in-person public workshop to present summary of existing conditions, gather community opinions to understand economic and regulatory challenges they may face. Kosmont can also conduct online survey(s) to solicit feedback from broad swath of community members. Task 7: Economic Development Tools Restricting zoning to limited number of higher density desired land uses will not necessarily attract the critical mass of development in a timely manner. With density and blended use, comes development cost challenges (parking structures, vertical premiums). Current financial market conditions also present challenges to large scale development. There may be need for land assembly and infrastructure financing to facilitate development, and Kosmont can provide insights on economic development tools accordingly. Task 8: Council Workshop Kosmont will prepare Analysis summary PowerPoint (PPT) and participate in a Council workshop following the completion of research and analysis to present preliminary findings and potential recommendations and solicit feedback. Task 9: Draft Report Kosmont will prepare a draft Analysis Report in PPT describing the key assumptions, findings and recommendations for review by Client. The draft Report will include relevant data sources and specific strategies for City staff review and comment. Kosmont will recommend a near-term and long-term action plan and establish metrics for City to measure success of the strategies. Task 10: Presentation to City Following revisions to draft Analysis Report, Kosmont will prepare an Analysis Report in PPT and presentation with executive summary including graphics and visuals as relevant, which Kosmont will use to present the findings at a Planning Commission or City Council Meeting. III. SCHEDULE AND REQUIRED DATA Consultant anticipates completing a draft Analysis Report within approximately 6 months after receipt of the executed Agreement. IV. COMPENSATION Compensation for Tasks 1-10 is estimated at $150,000 for Kosmont’s professional services (hourly) fees at Consultant’s hourly billing rates and expenses, as shown on Attachment A.
City of Fontana Economic Development Analysis August 29, 2023 Kosmont Companies 5 | Page (424) 297-1070 www.kosmont.com Consultant anticipates two consolidated rounds of Client comments and revisions on draft work product before Kosmont provides a final version of work product. If necessary, additional rounds of comments and revisions can be accommodated on an hourly basis. Consultant’s attendance or participation at any additional publicly noticed meeting, whether such participation is in person, digital, video and/or telephonic (e.g., City Council, Planning Commission, Public Agency Board, other), as requested by Client is in addition to the budget and will be billed at the professional services (hourly) fees as shown on Attachment A. Services will be invoiced monthly at Consultant’s standard billing rates, as shown on Attachment A. In addition to professional services (hourly) fees, invoices will include reimbursement for out-of-pocket expenses such as travel and mileage (provided that there shall be no overnight travel without the Client’s prior approval and that mileage shall be reimbursed at the current IRS mileage reimbursement rate), professional printing, conference calls, and delivery charges for messenger and overnight packages at actual cost. describing the risk/reward parameters of various options, key assumptions, and illustrative fiscal benefits Unless otherwise agreed to in advance, out-of-area travel, if any, requires advance funding of flights and hotel accommodations. Consultant will also include in each invoice an administrative services fee to cover in-house copy, fax, telephone and postage costs equal to four percent (4.0%) of Consultant’s monthly professional service fees incurred. Any unpaid invoices after 30 days shall accrue interest at the rate of 10% per annum. For the convenience of Kosmont’s clients, we offer a secure credit card payment service. The credit card payment link is: https://kosmont.paidyet.com and there are two ways to make a secure credit card payment: 1. Fill in the “Make a Payment” form when you go to the link (https://kosmont.paidyet.com), or 2. Call Kosmont Companies’ accounting desk (Ms. Reny Sultan; (424) 297-1072) to make a credit card payment Consultant is prepared to commence work upon receipt of executed Agreement. DISCLOSURE: Compensation for possible future transaction-based services or brokerage services. The following is being provided solely as an advance disclosure of possible real estate brokerage and finance services and potential compensation for such services. This disclosure is not intended to commit the Client. When assignments involve real estate/property brokerage services, such transaction-based services are typically provided by Kosmont Real Estate Services, Inc. dba Kosmont Realty (“KR”) is licensed by the State of California Department of Real Estate (License# 02058445). Compensation to KR is typically paid through commissions for property sale transactions, lease transactions and success/broker fees. KR also provides Broker Opinions of Value (“BOV”) services on a fixed fee basis.
City of Fontana Economic Development Analysis August 29, 2023 Kosmont Companies 6 | Page (424) 297-1070 www.kosmont.com When assignments involve public finance services on behalf of a public agency, such municipal advisory services are provided by Kosmont Transactions Services, Inc. (“KTS”). KTS is registered with the Securities and Exchange Commission (CIK# 0001769359) and the Municipal Securities Rulemaking Board as a Municipal Advisor (ID# K1256). SEC registration does not constitute an endorsement of the firm by the Commission or state securities regulators. V. OTHER PROVISIONS A. Termination. Client or Consultant shall have the right to terminate this Agreement at any time upon written notification to the other party. Payment for fees accrued through the date of termination shall be remitted in full. B. Arbitration. Any controversy or claim arising out of or in relation to this Agreement, or the making, performance, interpretation or breach thereof, shall be settled by arbitration at JAMS in Los Angeles, California. Each of the parties to such arbitration proceeding shall be entitled to take up to five depositions with document requests. The provisions of Section 1283.05 (except subdivision (e) thereof) of the California Code of Civil Procedure are incorporated by reference herein, except to the extent they conflict with this Agreement, in which case this Agreement is controlling. If the matter is heard by only one arbitrator, such arbitrator shall be a member of the State Bar of California or a retired judge. If the matter is heard by an arbitration panel, at least one member of such panel shall be a member of the State Bar of California or a retired judge. The arbitrator or arbitrators shall decide all questions of law, and all mixed questions of law and fact, in accordance with the substantive law of the State of California to the end that all rights and defenses which either party may have asserted in a court of competent jurisdiction shall be fully available to such party in the arbitration proceeding contemplated hereby. The arbitrator and arbitrators shall set forth and deliver their findings of fact and conclusions of law with the delivery of the arbitration award. Judgment upon the award rendered shall be final and non-appealable and may be entered in any court having jurisdiction. C. Attorneys' Fees. In the event of any legal action, arbitration, or proceeding arising out of an alleged breach of this Agreement, the party prevailing in such legal action, arbitration, or proceeding shall be entitled to recover reasonable attorneys' fees, expenses and costs, as well as all actual attorneys' fees, expenses and cost incurred in enforcing any judgment entered. D. Authority. Each of the parties executing this Agreement warrants that persons duly authorized to bind each such party to its terms execute this Agreement. E. Further Actions. The parties agree to execute such additional documents and take such further actions as may be necessary to carry out the provisions and intent of this Agreement. F. Assignment. Neither this Agreement nor any of the rights or obligations hereunder may be assigned by either party without the prior written consent of the other party.
City of Fontana Economic Development Analysis August 29, 2023 Kosmont Companies 7 | Page (424) 297-1070 www.kosmont.com G. Successors and Assigns. This Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns. H. Entire Agreement; Amendments and Waivers. This Agreement contains the entire agreement between the parties relating to the transactions contemplated hereby and any and all prior discussions, negotiations, commitments and understanding, whether written or oral, related hereto are superseded hereby. No addition or modification of any term or provision of this Agreement shall be effective unless set forth in writing signed by both parties. No waiver of any of the provisions of this Agreement shall be deemed to constitute a waiver of any other provision hereof (whether or not similar), nor shall such waiver constitute a continuing waiver of such provisions unless otherwise expressly provided. Each party to this Agreement has participated in its drafting and, therefore, ambiguities in this Agreement will not be construed against any party to this Agreement. I. Severability. If any term or provision of this Agreement shall be deemed invalid or unenforceable, the remainder of this Agreement shall not be affected thereby, and each remaining term and provision of this Agreement shall be valid and in force to the fullest extent permitted by law. J. Notices. All notices, requests, demands and other communications which may be required under this Agreement shall be in writing and shall be deemed to have been received when transmitted; if personally delivered, if transmitted by telecopier, electronic or digital transmission method, upon transmission; if sent by next day delivery to a domestic address by a recognized overnight delivery service (e.g., Federal Express), the day after it is sent; and if sent by certified or registered mail, return receipt requested, upon receipt. In each case, notice shall be sent to the principal place of business of the respective party. Either party may change its address by giving written notice thereof to the other in accordance with the provisions of this paragraph. K. Titles and Captions. Titles and captions contained in this Agreement are inserted only as a matter of convenience and for reference and in no way define, limit, extend or describe the scope of this Agreement or the intent of any provision herein. L. Governing Law. The statutory, administrative and judicial law of the State of California (without reference to choice of law provisions of California law) shall govern the execution and performance of this Agreement. M. Confidentiality. Each of the parties agrees not to disclose this Agreement or any information concerning this Agreement to any persons or entities, other than to their attorneys and accountants, or as otherwise may be required by law. N. Counterparts. This Agreement may be executed in one or more counterparts, each of which constitutes an original, and all of which together constitute one and the same instrument. The signature of any person on a telecopy of this Agreement, or any notice, action or consent taken pursuant to this Agreement shall have the same full force and effect as such person's original signature.
City of Fontana Economic Development Analysis August 29, 2023 Kosmont Companies 8 | Page (424) 297-1070 www.kosmont.com O. Disclaimer. Consultant’s financial analysis activities and work product, which may include but is not limited to pro forma analysis and tax projections, are projections only. Actual results may differ materially from those expressed in the analysis performed by Consultant due to the integrity of data received, market conditions, economic events and conditions, and a variety of factors that could materially affect the data and conclusions. Client’s reliance on Consultant’s analysis must consider the foregoing. Consultant services outlined and described herein are advisory services only. Any decisions or actions taken or not taken by Client and affiliates, are deemed to be based on Client’s understanding and by execution of this Agreement, acknowledgement that Consultant’s services are advisory only and as such, cannot be relied on as to the results, performance and conclusions of any investment or project that Client may or may not undertake as related to the services provided including any verbal or written communications by and between the Client and Consultant. Client acknowledges that Consultant's use of work product is limited to the purposes contemplated within this Agreement. Consultant makes no representation of the work product's application to, or suitability for use in, circumstances not contemplated by the scope of work under this Agreement. P. Limitation of Damages. In the event Consultant is found liable for any violation of duty, whether in tort or in contract, damages shall be limited to the amount Consultant has received from Client. Q. Force Majeure. Consultant shall not be liable for failure or delay in performance of its obligations under this Agreement arising out of or caused, directly or indirectly, by significant circumstances beyond its reasonable control, including, without limitation: epidemic; acts of God; earthquakes; fires; floods; wars; civil or military disturbances; acts of terrorism; sabotage; strikes; riots; wide-spread power failures and wide-spread internet failure. Contractual performance and deadline(s) shall be extended for a period equal to the time lost by reason of the delay. R. Expiration of Proposal for Services. If this Agreement is not fully executed by the parties within thirty (30) days from the date of this letter, this proposal shall expire. S. Not an agreement for Legal Services or Legal Advice. This Agreement does not constitute an agreement for the performance of legal services or the provision of legal advice, or legal opinion. Client should seek independent legal counsel on matters for which Client is seeking legal advice. (Continued on Next Page) City of Fontana Economic Development Analysis August 29, 2023 Kosmont Companies 9 | Page (424) 297-1070 www.kosmont.com VI. ACCEPTANCE AND AUTHORIZATION If this Agreement is acceptable to Client, please execute two copies of the Agreement and return both originals to Kosmont Companies. Upon receipt of both signed contracts, we will return one fully executed original for your files. Kosmont will commence work upon receipt of executed Agreement. Read, understood, and agreed to this ____ Day of _______________ 2023 City of Fontana Kosmont & Associates, Inc. doing business as “Kosmont Companies” By: _________________________ By: _________________________ (Signature) (Signature) Name: Name: Larry J. Kosmont (Print Name) Its: Its: President (Title) City of Fontana Economic Development Analysis August 29, 2023 Kosmont Companies 10 | Page (424) 297-1070 www.kosmont.com ATTACHMENT A Kosmont Companies 2023 Public Agency Fee Schedule Professional Services Chairman & CEO $445.00/hour President $385.00/hour Senior Vice President/Senior Advisor $350.00/hour Vice President $225.00/hour Senior Project Analyst $195.00/hour Project Analyst/Project Research $165.00/hour Assistant Project Analyst/Assistant Project Manager $125.00/hour Project Promotion/Graphics/GIS Mapping Services $ 95.00/hour Clerical Support $ 70.00/hour • Additional Expenses In addition to professional services (labor fees): 1) An administrative fee for in-house copy, fax, phone, postage costs, digital/technological support and related administrative expenses will be charged, which will be computed at four percent (4.0 %) of monthly Kosmont Companies professional service fees incurred; plus 2) Out-of-pocket expenditures, such as travel and mileage, professional printing, and delivery charges for messenger and overnight packages will be charged at cost. 3) Project/Market data sources for support of evaluation and analysis e.g., ESRI, Placer.ai, CoStar/STR, IMPLAN and other based on quoted project cost. 4) If Kosmont retains Third Party Vendor(s) for Client (with Client’s advance approval), fees and cost will be billed to Client at 1.1X (times) fees and costs. 5) Consultant’s attendance or participation at any public meeting, whether such participation is in person, digital, video and/or telephonic (e.g., City Council, Planning Commission, Public Agency Board, other) requested by Client and are beyond those specifically identified in the Scope of Work will be billed at the professional services (hourly) fees as shown on this Attachment A. • Charges for Court/Deposition/Expert Witness-Related Appearances Court-related (non-preparation) activities, such as court appearances, depositions, mediation, arbitration, dispute resolution and other expert witness activities, will be charged at a court rate of 1.5 times scheduled rates, with a 4-hour minimum. Rates shall remain in effect until June 30, 2024.