City Council Memorandum
TO: HONORABLE MAYOR AND CITY COUNCIL DATE: JULY 19, 2022 FROM: FINANCE DEPARTMENT WARDS: ALL
CITY ATTORNEY’S OFFICE
SUBJECT: APPROVE a LEGAL BUDGET FOR THE LAW FIRM OF STRADLING Yocca Carlson & Rauth in an amounT NOT to exceed $218,350 FOR specialized legal assistance to support the city team negotiating the RIVERSIDE ALIVE PROJECT – SUPPLEMENTAL APPROPRIATION ISSUE:
Approval a legal budget for the law firm of Stradling Yocca Carlson & Rauth in an amount not to exceed $218,350 for specialized legal assistance to support the City team negotiating the development agreements for the Riverside Alive Project.
RECOMMENDATION:
That the City Council:
Approve a legal budget for the law firm of Stradling Yocca Carlson & Rauth in an amount not to exceed $218,350 for specialized legal assistance to support the City team negotiating the development agreements for the Riverside Alive Project; and With at least five affirmative votes, authorize the Chief Financial Officer, or designee, to record a General Fund supplemental appropriation in the amount of $218,350 in the General Fund, City Attorney, Riverside Alive project.
BACKGROUND:
On September 18, 2018, the Community & Economic Development Department issued a Request for Proposals seeking a mixed-use hotel and Convention Center expansion project.
In January 2019, staff received separate development proposals from the Greens Group and GriffinlSwinerton (jointly) and Sonnenblick Development.
In May 2019, the City Council: 1) selected the joint development proposal from the Greens Group and GriffinlSwinerton to construct a mixed-use hotel, residential, commercial, office, convention center expansion, public amphitheater, and new public parking garage project; 2) directed staff to negotiate a Purchase and Sale Agreement with the Greens Group for the private portion of the Property; and 3) directed staff to negotiate a Lease and Leaseback Agreement with GriffinlSwinerton for expansion of the Convention Center and construction of a public amphitheater and new public parking garage.
In September 2019, the City Council approved separate Exclusive Negotiation Agreements (ENA) with the Greens Group and GriffinlSwinnerton with a term of 24 months (to September 17, 2021) with one 6-month option to extend (to March 17, 2022), at the City Manager's discretion.
In April 2021, the City Council awarded a contract to HR&A Advisors, Inc. to assist staff with strategic planning, project vetting, financial analysis, and other matters related to the formulation and execution of the City's first ever potential Public Private Partnership (P3) project. Specifically, the HR&A scope of services provided that HR&A would assist the City in its understanding of the P3 transactional structure, provide ongoing negotiation support to determine agreement terms with respect to deal structure, financing terms, and coordinated project phasing and schedule; advise the City in negotiation of terms and business points, summarize those terms and business points into project matrices, participate in meetings and validate, as needed, the construction costs related to the P3.
On October 12, 2021, the City Council directed staff to return to City Council on October 26, 2021, to provide an update on Development Option 4 for the Riverside Alive project and a closed session discussion on November 9, 2021, on price and terms pertaining to the original Riverside Alive project proposed at Public Parking Lot 33, the landscape plaza fronting the Riverside Convention Center, and the former Utilities Plaza Building. In that report, the City Council was presented with HR&A’s conclusions regarding the financing of the Riverside Alive project.
On November 2, 2021, the City Council received an open session presentation on November 2, 2021, of the original Riverside Alive project proposed at Public Parking Lot 33, the landscape plaza fronting the Riverside Convention Center, and the former Utilities Plaza Building.
On April 19, 2022, the City Council approved an extension to the term of the contract with HR&A Advisors, Inc., to December 31, 2022, to review the development agreements provided by GriffinlSwinerton and the Greens Group and the proposed procurement method for the Riverside Alive project.
On April 21, 2022, staff and Griffin|Swinerton made a presentation to the Economic Development, Placemaking, and Branding/Marketing Committee City Council Committee on a Public-Private Partnership (P3) primer for the public development portion of the Riverside Alive project.
DISCUSSION:
City Charter section 702, “Eligibility, powers and duties of City Attorney,” provides, in part, that “the City Council shall have control of all legal business and proceedings and may employ other attorneys to take charge of any litigation or matter or to assist the City Attorney therein.” The City Attorney has put together a legal team to provide legal support to the City Manager’s team for the negotiation of the Riverside Alive Project with the Greens Group and GriffinlSwinnerton. That team consists of City Attorney Phaedra Norton, Assistant City Attorney Susan Wilson and Senior Deputy City Attorney Anthony Beaumon. The City Attorney recommends that this legal team be supplemented with attorneys Vanessa Legbandt and Brian Forbath from the law firm of Stradling Yocca Carlson & Rauth, who have specialized knowledge and experience with the negotiation and drafting of legal agreements for Public Private Partnership (P3) projects. The City Attorney’s Office identified this need in January of 2022 and provided potential law firms. The City Attorney’s Office has been working cooperatively with the City Manager’s Office, the Finance Department and HR&A as terms and business points have been developed. The City team has concurred that Stradling is uniquely suited to provide outside, specialized legal assistance.
The City Council has previously approved the retention of this law firm and this law firm has executed an Attorney Services Agreement with the City of Riverside for the provision of legal services. A budget has been provided, divided into four phases of the project, with a projected range of expenses for each phase:
1. Initial Phase.
The Initial Phase of the Riverside Alive Project negotiations would include issues and activities such as research and analysis of gateway legal issues (issues that must be resolved to determine Project feasibility, structure, and schedule), review and comment upon of any draft term sheets from counterparties, internal meetings with the Riverside Alive team, and meetings with counterparties to discuss proposed terms and legal issues.
Estimated Hours: 53 - 118 hours.
Total estimates (range): $30,475 to $67,850
2. Drafting Phase.
The Drafting Phase of the Riverside Alive Project would include issues and activities such as preparation, drafting, and negotiation of the agreements for the public and private portions of the Riverside Alive Project.
Estimated Hours: 95 - 180 hours.
Total estimates (range): $53,675 to $95,475
3. Pre-Development Phase.
The Pre-Development Phase of the Riverside Alive Project would include issues and activities such as review of documents related to counterparty financing of the Riverside Alive project, review and interpretation of the project agreements prepared and executed during the Drafting Phase, negotiating or reviewing amendments to the project agreements, telephone conferences regarding project status, schedule, and pre-closing questions, etc.
Estimated Hours: 5 - 40 hours.
Total Estimate (Range): $2,375 to $19,400
4. Closing Phase.
The Closing Phase of the Riverside Alive Project would include issues and activities such as further preparation, drafting, and negotiation of project agreements to effectuate closing of the transaction.
Estimated Hours: 50 - 75 hours.
Total Estimate (Range): $23,750 to $35,625
Total (all Four Phases):
Estimated Hours: 203 - 413 hours.
Total Estimate (Range): $ 110,275 to 218,350
STRATEGIC PLAN ALIGNMENT:
This item contributes to Strategic Priority 3 – Economic Opportunity and Goal 3.3: Cultivate a business climate that welcomes innovation, entrepreneurship, and investment.
Community Trust – Approving the revised Riverside Alive project demonstrates that the City is a good steward of real property assets.
Equity – Approving the revised Riverside Alive project demonstrates that Riverside is equitable in distribution of services, which ensures that every member of the community has equal access to share the benefits of community progress.
Fiscal Responsibility – Approving the revised Riverside Alive project demonstrates that Riverside is a prudent steward of public funds and ensures responsible management of the City's financial and property resources.
Innovation – Approving the revised Riverside Alive project demonstrates that Riverside is innovative in meeting the community's changing needs and prepares for future collaborative partnerships and developments.
Sustainability & Resiliency – Approving the revised Riverside Alive project ensures present and future reliability and resiliency for these City-owned properties.
FISCAL IMPACT:
The fiscal impact of this action is $218,350. With at least five affirmative votes of the City Council approving of the budget for the law firm of Stradling Yocca Carlson & Rauth in an amount not to exceed $218,350 for specialized legal assistance to support the team negotiating the development agreements for the Riverside Alive Project, a supplemental appropriation in this amount will be recorded in the General Fund, City Attorney, Riverside Alive project, Professional Services expenditure account no. 9918910-421000.
Prepared by: Phaedra Norton, City Attorney
Edward Enriquez, Interim Assistant City Manager/Chief Financial Officer/City Treasurer
Concurs with: Chris Christopolous, Interim Community and Economic Development Director Certified as to
availability of funds: Edward Enriquez, Interim Assistant City Manager/Chief Financial Officer/City Treasurer
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