City Council
Report
City Council Meeting: April 8, 2025
Agenda Item: 4.G
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To: Mayor and City Council
From: Arminé Chaparyan, Director, Administration
Subject: Award As-Needed Agreement to CBRE Brokerage Services to Sell CityOwned Properties at 1632-40 5th Street and 1654 19th Street Recommended Action
Staff recommends that the City Council:
1. Adopt a finding of no significant effect pursuant to Section 15061(b)(3) (Common Sense Exemption) of the California Environmental Quality Act (CEQA) guidelines; and
2. Award RFP# 434 to CBRE for real estate brokerage services for the Community Development Department; and
3. Authorize the City Manager to negotiate and execute a multi-year agreement with CBRE for disposition of real property services, for a total fee amount not to exceed $2 million, based on a sliding commission fee schedule determined by the final price of each transaction with future year funding contingent on Council budget approval.
Summary
After a successful RFP process, including interviews and evaluations, staff is recommending awarding RFP No. 434 to CBRE. Staff seek authorization from the City Council to enter into a Professional Service Agreement (Agreement) with CBRE for asneeded real estate brokerage services for Properties I and II for an initial term of three years, with two one-year options, allowing for a total contract duration of up to five years and total compensation not to exceed $2,000,000.
The City has completed the mandatory state process under the Surplus Land Act (SLA) for obtaining approval to sell two City-owned properties. The City initiated the SLA process for Property I and Property II in 2022 and 2023, respectively, and obtained certification from the State’s Housing and Community Development Department (HCD) 2 of 7
confirming compliance with the SLA. With HCD certification, these properties are now eligible for disposition on the open market.
Discussion
Between March 2021 and October 2024, the City Council adopted resolutions to surplus the seven parcels that make up Property I. In April 2023, City Council adopted a resolution to surplus Property II. These resolutions, supported by at least five affirmative votes, declared the properties surplus and no longer needed for the City’s use. These declarations were adopted pursuant to requirements outlined in the Santa Monica Municipal Code Section 2.24.230 and the SLA, which involve notifying affordable housing developers and other governmental agencies about the availability of these properties.
In accordance with the City and SLA requirements, City staff provided notices of availability to affordable housing developers and various state, county, and local entities, inviting proposals for the disposition of Properties I and II, and negotiated in good faith but ultimately determined that the bids received were not financially viable.
HCD provided certification of the City’s compliance with the SLA on November 4, 2024, for Property I, and August 7, 2024, for Property II. Therefore, Properties I and II are now available for sale through a real estate broker at fair market value for other development opportunities, including affordable housing.
The two City-owned properties that are ready to be sold for highest and best use are comprised of: Property I, which has approximately 16,000 square feet of improvements on approximately 71,000 square feet of land; and Property II which has approximately 4,700 square feet of improvements on approximately 8,000 square feet of land. Both properties have obtained certification from the HCD to comply with the state-mandated process under the SLA that provides first right of refusal to affordable housing developers prior to considering development opportunities such as commercial, mixeduse commercial with or without a residential component. • Property I consists of seven adjacent parcels at 1632-40 5th Street (APNs 4290- 011-903, 4290-011-904, 4290-011-905, 4290-011-906) and Expo Kiss & Ride Lot (APN 4290-011-909, 4290-011-902 and 4290-011-901). Council declared these properties surplus at its meeting on October 11, 2022.
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• Property II is the former TV studio for City broadcast at 1654 19th Street (APN 4275-026-900) which was previously declared surplus by the Council on April 25, 2023.
In preparation for selling these properties through an open, competitive process, the City’s Economic Development Division worked closely with Finance’s Procurement Team to issue a request for proposals for brokerage services. In accordance with the City’s procurement guidelines, staff initiated a process to identify qualified real estate brokerage firms. These firms were shortlisted through a Request for Qualifications (RFQ) process in 2023. The shortlisted firms were then invited to submit proposals and proposed fees in response to Request for Proposal (RFP) No. 434. RFP No. 434 was issued on December 4, 2024, resulting in one qualifying proposal on December 20, 2024. The Evaluation Committee evaluated the proposal and made a recommendation.
The City’s goal is to expeditiously retain the best qualified brokerage firm to market one or both properties and negotiate on the City’s behalf. Property I will be contingent on whether staffs’ negotiation with existing developer/interested party is successful. CBRE will not commence marketing or negotiation for Property I unless a written direction to proceed is issued by the City’s Economic Development Manager. No negotiations have commenced for Property II; accordingly, staff will work with CBRE to commence marketing efforts immediately and negotiate on the City’s behalf with interested parties.
CBRE had previously been pre-qualified on the City’s list of real estate brokerage services that the City issued in 2023.
Bidder Recommendation
Best Qualified Firm CBRE
Evaluation Criteria Value Add / Breadth of Service
Ability to Meet Work Plan / Timelines
Experience / Technical Competence
Stability / References
Cost
Municipal Code SMMC 2.24.190
RFPs Received
CBRE
RFP Data
Date Posted Posted On Vendors
Downloaded
Dates Publicly
Opened
12/04/2024 OpenGov.com 2 12/04/2024
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Justification to Award
The proposal was evaluated by an Evaluation Committee comprised of subject matter experts from Economic Development, Public Works, and an external expert from BXP, real estate firm. Based on the above criteria, the Evaluation Committee unanimously selected CBRE, and staff recommend CBRE as the best qualified firm to provide real estate brokerage services for disposition of real estate property for the City.
CBRE proposes the fee structure below on a sliding percentage commission rate based on the sale of the property, due at closing, which remains subject to further negotiation for their real estate brokerages services:
As the sales price cannot be determined until commencing negotiations with an interested buyer and because proposed broker fees are subject to further negotiations, staff created a mock chart of potential pricing for illustrative purposes only. 5 of 7
Estimated Price Range Sales Price
Property I
Low $49 MM 1.5% $735,000 3.0% $1,470,000
Medium $54 MM 1.0% $540,000 2.0% $1,080,000
High $60 MM 1.0% $600,000 2.0% $1,200,000
Property II
Low $2.0 MM 3.0% $60,000 6.0% $120,000
Medium $2.5 MM 3.0% $75,000 6.0% $150,000
High $3.0 MM 3.0% $90,000 6.0% $180,000
Solo Commission Dual Commission
Staff has had previous discussions with several potential buyers prior to selecting CBRE for this contract. If a deal is completed with any of these pre-existing buyers, a reduced commission structure, which remains to be negotiated, will apply. Staff also confirmed that these commission rates are standard in the industry.
With Council authorization, staff would: (1) work with CBRE to create a listing, advertise and market for Property II and, if needed, Property I consistent with City requirements; (2) continue negotiating with existing developers/interested parties that staff has been in discussions with prior to this solicitation selection process for Property I; and (3) potentially negotiate a reduced broker fee schedule for limited services in the event City staff does not require all of their broker services, which may be in a form of flat fee or lower commission rate, for transactions involving any pre-existing interested parties identified by City staff for Property I.
Past Council Actions
Meeting Date Description
10/08/2024 Adoption of Resolution 11622
Declaring Surplus Property I
(APNs 4290-011-901 and 4290-011-902, 4290-011-903,
4290-011-904, 4290-011-0905, APN 4290-011-906, 4290-
011-909)
4/25/2023 Adoption of Resolution 11522
Declaring Surplus Property II
(APN 4275-026-900)
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10/11/2022 Adoption of Resolution 11470
Declaring a portion of Surplus Property I
(APNs 4290-011-903, 4290-011-904, 4290-011-0905, 4290-
011-909)
03/23/2021 Adoption of a Resolution 11327
Declaring a portion of Surplus Property I
(APN 4290-011-906)
Environmental Review
The Agreement is exempt from CEQA pursuant to Section 150961(b)(3) (Common Sense Exemption) of the California Environmental Quality Act (CEQA) guidelines, which states that CEQA does not apply to “where it can be seen with certainty that there is no possibility that the activity in question may have significant effect on the environment.” The Agreement would provide property management services and would not result in adverse physical impacts on the environment, and such, is exempt from CEQA.
Financial Impacts and Budget Actions
There is no immediate financial impact or budget action necessary because of the recommended action. The Performance Service Agreement will state payment to the broker is contingent upon (i) Council authorization of the sale of each property and (ii) broker payment is paid from escrow when the sales proceeds are paid into escrow.
Effectively, no appropriation from the City budget is required since the broker will be paid from the sales proceeds at time of escrow.
Prepared By: Wendy Siao, Senior Development Analyst
Approved Forwarded to Council
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Attachments:
A. Resolution Declaring Surplus Property II (Web Link)
B. Resolution Declaring Surplus Property I (Web Link)
C. Resolution Declaring a surplus property for APN 4290-011-906 (Web Link) D. Resolution Declaring a surplus property for APN 4290-011-903, -904, -905, -909 (Web Link)
E. Levine Act Disclosure Form
F. Oaks Initiative Form