City Council Memorandum
TO: HONORABLE MAYOR AND CITY COUNCIL DATE: JULY 19, 2022 FROM: FINANCE DEPARTMENT WARDS: ALL
COMMUNITY AND ECONOMIC DEVELOPMENT
SUBJECT: SECOND AMENDMENT TO PROFESSIONAL CONSULTANT SERVICES AGREEMENT WITH HR&A ADVISORS, INC., FOR ADVISORY SERVICES FOR THE CITY TO EVALUATE AND EXECUTE A PUBLIC-PRIVATE PARTNERSHIP AND EXTENDING THE TERM TO JUNE 30, 2023 – INTERDEPARTMENTAL TRANSFER ISSUE:
Approval of the Second Amendment to Professional Consultant Services Agreement with HR&A Advisors, Inc., to extend the term to June 30, 2023, and amend Exhibit B, Compensation, whereby increasing the agreement compensation by $200,000 for a total agreement amount of $335,000.
RECOMMENDATIONS:
That the City Council:
Approve the Second Amendment to Professional Consultant Services Agreement with HR&A Advisors, Inc. extending the term of the agreement to June 30, 2023 and increasing compensation by $200,000 for a total agreement amount of $335,000; With at least five affirmative votes, authorize the Chief Financial Officer, or designee, to record an interdepartmental transfer of FY 2022/23 funding from the General Fund, Non-Departmental City Manager Fiscal Management account to the General Fund, Community and Economic Development Department, Riverside Alive project in the amount of $200,000; and Authorize the City Manager, or designee, to execute the Second Amendment to Professional Consultant Services Agreement with HR&A Advisors, Inc., including making minor and non-substantive changes.
BACKGROUND:
On April 27, 2021, the City Council approved a Professional Consultant Services Agreement (Agreement) with HR&A Advisors using Purchasing Resolution No. 23256, Section 702(k), which states “Competitive Procurement through the Informal Procurement and Formal Procurement process shall not be required in any of the following circumstances:…(k) When the Awarding Entity waives bidding requirements under and according to the circumstances set forth in Section 1109 of the City Charter, or when it is determined by the Manager to be in the best interest of the City to do so.” This bid award was crucial to the financial success of the project while ensuring the City mitigates potential risk and adheres to numerous time constraints.
On April 19, 2022, the first amendment was issued to the agreement as the result of two significant changes to the proposed development. The private development proposed reducing its total development, including a reduction in the number of hotel keys, number of parking stalls, and size of the creative office tower. Additionally, the developer has proposed adjusting the phasing of the project to further delay some of the multifamily development.
DISCUSSION:
As the City continues to advance the Riverside Alive project, the enormity and the complexity of the project requires additional analysis and most importantly, project management oversight and expertise in real estate transactions.
Since the initial contract agreement and amendment, impactful changes to the overall project structure have transpired. Recent staff changes to the lead negotiating team have resulted in a significant loss of institutional knowledge related to the Riverside Alive project. Additionally, the ability to refine the overall structure and reach an agreement on deal points to the private development have been challenging. Having an expertise in real estate transaction services, HR&A will be tasked with the overall project management and facilitation of the deal points structure and development agreements to ensure that the City mitigates its risk and exposure in the project to a minimum. The loss of key personnel requires the City team to pivot and look for experienced consultants to help bring this project to completion. Since HR&A has been involved in the analysis and discussions on the project for well over a year and given their background in real estate transactions and development, they are best suited to provide the City additional support and expertise to help bring closure to this project.
STRATEGIC PLAN ALIGNMENT:
This item contributes to Strategic Priority 5 – High Performing Government and Goal 5.3 – Enhance communication and collaboration with community members, to improve transparency, build public trust, and encourage shared decision-making.
This item aligns with each of the five Cross-Cutting Threads as follows:
Community Trust – Ensuring that public private partnership agreements are completed in the best interest of the City provides for transparency and makes decisions based on sound policy, and timely and reliable information serving the public interest.
Equity – The Riverside Alive project will be accessible to all members of the community.
Fiscal Responsibility – Utilizing a special P3 consultant helps to ensure that the City does not extend itself financial and invests in project with positive returns to the community.
Innovation – The Riverside Alive project is an innovative way to plan and offset the cost to support new development with the City.
Sustainability & Resiliency – The public private partnership project will meet certain needs for housing as well as increased business opportunities.
FISCAL IMPACT:
The fiscal impact of this action is $200,000 in FY 2022/23. Upon Council approval, funds in the amount of $200,000 will be transferred from the General Fund, Non-Departmental/City Manager, Fiscal Management expenditure account no. 7211200-450247 to the General Fund, Community & Economic Development Department, Riverside Alive project, Professional Services expenditure account no. 9918900-421000.
Prepared by: Kristie Thomas, Assistant Chief Financial Officer Certified as to
availability of funds: Edward Enriquez, Interim Assistant City Manager/Chief Financial Officer/City Treasurer
Approved by: Edward Enriquez, Interim Assistant City Manager/Chief Financial Officer/City Treasurer
Approved as to form: Phaedra A. Norton, City Attorney
Attachment: Second Amendment
Second Amendment – HR&A Advisors ● Page 3