CONSENT CALENDAR
CITY OF SHAFTER
CITY COUNCIL REPORT
MEETING DATE: August 15, 2023
FROM: Gabriel A. Gonzalez, City Manager
PREPARED BY: Carol Chavolla, HR Manager
SUBJECT: AUTHORIZATION TO APPOINT A NEUTRAL HEARING OFFICER
RECOMMENDATION
Council find the requested action is not defined as a "project" per Section 15378(b)(5) of the CEQA Guidelines; waive further reading and adopt Resolution 2937, a Resolution of the City Council of the City of Shafter Electing to Refer an Appeal of an Employee Personnel Matter to a Neutral Hearing Officer Whose Decision Shall be Subject to Review and Ratification by the City Council in Accordance with Section
11.12 of the City of Shafter Personnel Rules.
BACKGROUND
From time to time, the City Council acts as a decision-maker in employee personnel matters. That authority is described in the City of Shafter’s Personnel Rule section
11.12 provides:
All regular employees shall have the right to appeal termination, demotion, suspension without pay in excess of five (5) days or reduction in pay equivalent to the suspension without pay in excess of five (5) days, to an administrative hearing before the City Council or it’s designee by filing a written request with the City Council within five (5) days of the imposition of such discipline. The City Council in its sole discretion may delegate the hearing of an appeal on an advisory or binding basis. Probationary employees shall have no right of appeal but may file a written response to the facts in question within five (5) working days of imposition of the termination.
ANALYSIS
An employee has timely appealed an adverse personnel decision. The purpose of the proposed Resolution is to confirm that the City Council will be delegating the employee’s appeal to a neutral hearing officer on an advisory basis.
FISCAL IMPACT
The City will incur the cost of hiring a neutral hearing officer.
AUTHORIZATION TO APPOINT A NEUTRAL HEARING OFFICER
- 2 -
CEQA ANALYSIS
The requested action is not defined as a "project" per Section 15378(b)(5) of the CEQA Guidelines and the action will not result in direct or indirect physical changes to the environment and not subject to CEQA.
APPROVED BY THE CITY ATTORNEY
Yes
ALTERNATIVES
An alternative to appointing a neutral hearing officer is for an administrative hearing to be held before the City Council.
NEXT STEPS
The attached Resolution would:
1. Delegate the employee’s appeal to a neutral hearing officer; and
2. Authorize the City Manager, in consultation with the City Attorney, to appoint a qualified neutral hearing officer to hold the evidentiary hearing for the appeal and issue a written advisory decision that will be referred back to the City Council, which will then issue a final determination.
The City Council will make the final determination, at its sole discretion, and without further appeal or input, to either accept, reject or modify the hearing officer’s decision and issue a final determination.
ATTACHMENTS
1. Resolution 2937 Appointment of a Hearing Officer Authorization
RESOLUTION NO. 2937
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF
SHAFTER ELECTING TO REFER AN APPEAL OF AN EMPLOYEE PERSONNEL
MATTER TO A NEUTRAL HEARING OFFICER WHOSE DECISION SHALL BE
SUBJECT TO REVIEW AND RATIFICATION BY THE CITY COUNCIL IN ACCORDANCE WITH SECTION 11.12 OF THE CITY OF SHAFTER PERSONNEL RULES
WHEREAS, the City of Shafter Personnel Rules section 11.12, provides that, “all regular employees shall have the right to appeal termination, demotion, suspension without pay in excess of five (5) days or reduction in pay equivalent to the suspension without pay in excess of five (5) days, to an administrative hearing before the City Council or its designee by filing a written request with the City Council within five (5) days of the imposition of such discipline”; and WHEREAS, section 11.12 continues, “the City Council in its sole discretion may delegate the hearing of an appeal on an advisory or binding basis,” and WHEREAS, an employee has timely appealed an adverse employment decision; and WHEREAS, the City Council shall delegate the appeal to a neutral hearing officer on an non-binding basis; and,
WHEREAS, the appointed hearing officer shall hold an evidentiary hearing and issue a written decision that will be referred back to the City Council, which will then, in its sole discretion, and without further appeal, either accept, reject or modify the hearing officer’s decision and issue a final determination; and
WHEREAS, the City Council may, and desires to, delegate administrative authority to the City Manager to appoint a hearing officer with the consultation of the City Attorney.
NOW THEREFORE BE IT RESOLVED, by the City Council of the City of Shafter, does hereby, delegate administrative authority to the City Manager, to appoint a neutral hearing officer to hear an appeal of an employee personnel matter and provide a written decision for review and ratification by the City Council, as follows:
SECTION 1. Recitals. The City Council hereby incorporates by reference the recitals of this Resolution.
SECTION 2. Appointment Authority. The City Manager is hereby authorized, in consultation with the City Attorney, to appoint a qualified neutral hearing officer to hold an evidentiary hearing of the employee’s appeal and issue a written decision that will be referred back to the City Council for review and final determination.
SECTION 3. Effective Date. This Resolution shall take effect and be in full force and effect upon its adoption.
Shafter City Council Resolution 2937
August 15, 2023
PASSED AND ADOPTED THIS 15TH DAY OF AUGUST, 2023.
Chad Givens, Mayor
ATTEST:
Yazmina Pallares, City Clerk
MANAGEMENT REPORT
CITY OF SHAFTER
CITY COUNCIL REPORT
MEETING DATE: August 15, 2023
FROM: Gabriel A. Gonzalez, City Manager
PREPARED BY: Bob Meadows, Business Development Coordinator SUBJECT: PRESENTATION OF SHAFTER HOTEL MARKET DEMAND
ANALYSIS
RECOMMENDATION
Council find the action is not defined as a “project” per Section 15378(b)(5) of the CEQA Guidelines; accept presentation of Shafter Hotel Market Demand Analysis as completed by Kosmont Company.
BACKGROUND
The Economic Development Ad Hoc Committee learned from hotel representatives and brokers at the ICSC Convention in Las Vegas in May 2023 that Shafter has unrealized potential for future hotel locations. Each one inquired about a feasibility study to verify market demand in Shafter. On the advice of the Ad Hoc Committee and with the approval of the Council, the City engaged Kosmont Company to conduct such a study, which they completed and provided to the City in July 2023. The Shafter Hotel Market Demand Analysis does show a need for additional hotels over the next decade in an area that includes the City of Shafter.
ANALYSIS
This professional study was a basic requirement of every hotel representative contacted at ICSC Las Vegas in May 2023. Not only can it be provided to those previous contacts, it is now available for future discussions the City has with hotel representatives, developers, and brokers, including those planned at ICSC San Diego in October 2023.
FISCAL IMPACT
None since the fee paid to Kosmont Company for the hotel study was funded in the 2022-2023 Fiscal Year.
CEQA ANALYSIS
The action is not defined as a “project” per Section 15378(b)(5) of the CEQA Guidelines because the action is presentation of a study and therefore, it is organizational and administrative activity that will not result in direct or indirect physical changes to the environment and not subject to CEQA.
APPROVED BY THE CITY ATTORNEY
PRESENTATION OF SHAFTER HOTEL MARKET DEMAND ANALYSIS
- 2 -
Yes
ALTERNATIVES
None.
NEXT STEPS
Kosmont Company will begin distributing hotel study as a follow up with all representatives previously met with in Las Vegas. City and Kosmont can provide the study to other hotel reps, brokers, and developers.
ATTACHMENTS
1. Kosmont - Shafter Hotel Market Demand Analysis - July 2023 FINAL
2301 Rosecrans Ave., Suite 4140
El Segundo, CA 90245
TEL: 424-297-1070 | URL: www.kosmont.com
CITY OF SHAFTER
HOTEL MARKET DEMAND ANALYSIS
July 2023
KOSMONT COMPANIES | 2
KOSMONT COMPANIES
Kosmont Companies, a nationally-recognized real estate & economics advisory firm serving hundreds of cities and local governments for over 36 years has been retained by the City of Shafter to do a Hotel Market Analysis ("Analysis").
Kosmont has prepared the Analysis to assist the City in evaluating the potential for new hotel development in the City. ▪ Kosmont's expertise covers a full range of economics & real estate advisory services including:
➢ Market and Feasibility Analyses
➢ Fiscal Impact & Economic Benefit Studies
➢ Economic Development Strategies & Implementation
➢ Business/Retailer & Developer Recruitment
➢ Identification of Funding Sources & Financing Strategies ➢ Public-Private Transaction Structuring & Negotiation
▪ Winning track record of initiating and implementing projects for municipalities ➢ In-house team includes economists, registered municipal advisors, financial analysts, lawyers, real estate professionals, former city managers & economic development department heads
➢ Extensive network of brokers, investors and market data for real-time information, and industry leadership Disclaimer: The analyses, projections, assumptions, rates of return, and any examples presented herein are for illustrative purposes and are not a guarantee of actual and/or future results. Actual results may differ from those expressed in this analysis, as results are difficult to predict as a function of market conditions, natural disasters, pandemics, significant economic impacts, legislation and administrative actions.
KOSMONT COMPANIES | 3
EXECUTIVE SUMMARY
City of Shafter is located in the Bakersfield Hospitality Submarket (“Submarket”) as defined by CoStar / STR. For this Analysis, the Shafter Trade Area ("Trade Area") is defined as the 15-mile radius from the intersection of CA-43 & E Lerdo Highway. To analyze hotel supply and demand metrics and opportunities in the City, a Competitive Set was defined that includes Midscale & Upper Midscale hotels in the Trade Area plus two hotels in Delano to account for their compatibility with Shafter. For comparative purposes, this Analysis also provides a high-level overview of the Greater Shafter Trade Area represented by a 25-mile radius, an area which includes most of Bakersfield, Delano, and other surrounding communities. The Trade Area has seen demand growth for midscale and upper midscale rooms, resulting in almost 364 new rooms in these classes being added to supply since 2015. Room demand, despite a drop due to Covid impacts, has seen 36.6% overall increase in the same time frame – resulting in 67.3% average occupancy for past 12 months. Room rates have increased almost 34% since 2015 – to an average of approximately $125 per night. The results of this Analysis shows that average occupancy has declined in recent years (-4.5% Jun 2015 - May 2023) while average daily rate (ADR) has increased by 33.7% during the same period. When combined, occupancy and ADR result in revenue per available room (RevPAR), which has increased by 27% and generated increased Transient Occupancy Tax (TOT).
Given growth in the Submarket, the Analysis also estimates supportable supply of new hotel rooms (assuming a target occupancy of 72% and annual room demand growth of 3%). The Analysis estimates demand of ~310 additional hotel rooms over the next decade, which is a potential supply opportunity that can be filled by Shafter and other communities within the Submarket. There are several hotels in the planning stages in the surrounding area, demonstrating continued interest in hotel development in the market.
Shafter has seen significant population and employment growth over the past decade, and is poised to see further growth into the future. Demand drivers for the hospitality market include the agricultural industry and industrial business development, residential and commercial growth, nearby transportation hubs, and attractions in Kern County.
The City has three potential nodes where hotels could be developed: Along the CA-99 freeway, the Downtown Shafter commercial district (CA-43 & Lerdo Highway), and the Gossamer Grove Specific Plan Area (southeastern edge of the City near CA-99). Based on initial outreach to hotel brands, there is positive feedback and interest for bringing a select service hotel to the City.
KOSMONT COMPANIES |
4 SHAFTER
OVERVIEW Downtown
Shafter
CA-99
Area
Gossamer
Grove
Area
Shafter does not currently have any hotels within the City limits, but the area is seeing rapid residential and industrial distribution development– driving
population growth and job creation.
Recognizing the significant financial contribution hotel guests bring to City businesses and to the City’s
General Fund, Kosmont assessed demand for new
hotel development in the City.
For this Analysis, Kosmont examined the CoStar
Bakersfield Hospitality Submarket and Shafter Trade
Area hotel data and evaluated the variety of hotel
classifications and determined that there is likely
market demand fora new hotel in the Midscale and
Upper Midscale class (as defined by Smith Travel
Research (“STR”).
The City has three potential nodes where hotels could be developed: Along the CA-99 freeway, the
Downtown Shafter commercial district (CA-43&
Lerdo Highway), and the Gossamer Grove Specific
Plan Area (southeastern edge of the City near CA-99).
Current financing market conditions make
development challenging, thus the Analysis illustrates
more normal conditions. City Boundary 10,000 ADT
Wonderful Industrial Park
10m SF / 8,000 Jobs Current
+5m SF / +8,400 Jobs in 5 years
KOSMONT COMPANIES | 5
POPULATION & INCOME OVERVIEW
2023 Est. Shafter
City
Shafter
Trade Area
CA-43 & Lerdo Hwy
15 Mile Radius
Greater Shafter
Trade Area
CA-43 & Lerdo Hwy
25 Mile Radius
Kern
County
Population 21,700 237,700 727,100 927,200
Households 5,800 73,900 218,700 288,600
Average HH Size 3.6 3.1 3.2 3.1
Median Age 29.4 33.7 31.7 32.6
Bachelor's Degree or
Higher % 15.2% 27.0% 19.5% 19.5%
Hispanic Population % 78.5% 46.4% 60.2% 56.5%
Median HH Income $56,600 $83,300 $61,900 $60,400
Average HH Income $80,600 $117,900 $92,100 $90,100
Median Home Value $314,900 $358,900 $311,100 $307,000
Source: ESRI Business Analyst Online
The City started as a farming
community, and today has evolved
into a diverse economic engine –
major developers are building
residential neighborhoods and
industrial distribution facilities, driving
future household / employment
growth and new demand for
commercial and retail development.
One of the fastest growing California
cities over the past ten years,
Shafter is located adjacent to and east
of the CA-99 corridor and west of
CA-43 in Kern County.
KOSMONT COMPANIES | 6
LOCAL VISITOR ATTRACTORS / DEMAND DRIVERS
The Submarket and Trade Area sees a number of demand drivers for hotel development:
Agriculture / Industry: Kern County is well known for its strong agricultural industry, with agricultural businesses, events, fairs, conventions, and other industry-related travel creating demand for hotel rooms.
Business Development: The Shafter area is also well known for its industrial development, with significant warehousing and logistics operations – such as the Wonderful Industrial Park – also creating demand for business travelers needing hotel accommodations. Residential Growth: Shafter is one of the fastest growing cities in California over the past ten years, and is expected to add another 7,000 people over the next 5 years. The surrounding Bakersfield area is also seeing significant population growth. This new residential growth, as well as commercial development and employment growth, is driving demand for hotel rooms. Transportation Hub: The area is a transportation hub at the junction of many highways, and is a natural stopping point for travelers – including long-haul truckers, business travelers, and vacationers. As one of the main Central Valley highways, the CA-99 corridor sees ~77,000 ADT in the Shafter area; the I-5 freeway is ~13 miles west of Shafter and sees ~44,000 ADT. The Meadows Field Airport is located ~1.5 miles southeast of the Shafter City boundary. Tourism / Events: Kern County is also home to outdoor attractions (Sequoia National Forest and the Kern River), educational institutions (California State University, Bakersfield), a vibrant music scene, and other events that may drive demand for hotels in the area.
KOSMONT COMPANIES | 7
COSTAR BAKERSFIELD HOSPITALITY SUBMARKET
MAP & SUBMARKET OVERVIEW
Source: CoStar, STR
Bakersfield
Hospitality
Submarket
All Hotels
Occupancy (12-mo avg) 59.8%
Avg Daily Rate (12-mo avg) $105
RevPAR (12-mo avg) $63
Inventory (Rooms) 10,917
Inventory (Buildings) 159
Avg Rooms Per Building 69
Midscale & Upper Midscale
Occupancy (12-mo) 61.9%
Avg Daily Rate (12-mo) $119
RevPAR (12-mo) $74
Inventory (Rooms) 4,209
Inventory (Buildings) 54
Avg Rooms Per Building 78
KOSMONT COMPANIES | 8
COSTAR MARKET DATA
BAKERSFIELD HOSPITALITY SUBMARKET
Source: CoStar, STR
0%
10%
20%
30%
40%
50%
60%
70%
12mo Occupancy
$0
$20
$40
$60
$80
$100
$120
May 2018
Nov 2018
May 2019
Nov 2019
May 2020
Nov 2020
May 2021
Nov 2021
May 2022
Nov 2022
May 2023
12mo ADR
$0
$10
$20
$30
$40
$50
$60
$70
12mo RevPAR
KOSMONT COMPANIES | 9
0%
10%
20%
30%
40%
50%
60%
70%
80%
Occupancy
$0
$20
$40
$60
$80
$100
$120
May 2018
Nov 2018
May 2019
Nov 2019
May 2020
Nov 2020
May 2021
Nov 2021
May 2022
Nov 2022
May 2023
ADR
$0
$10
$20
$30
$40
$50
$60
$70
$80
RevPAR
COSTAR MARKET DATA
BAKERSFIELD HOSPITALITY SUBMARKET
Source: CoStar, STR
KOSMONT COMPANIES | 10
HOSPITALITY CLASSES
To better understand the hospitality classes, below is a summary of different levels of service type hotels:
➢ A limited-service hotel is a budget-friendly hotel offering low-cost accommodations, minimal amenities, and typically do not offer a full-service restaurant. These hotels typically fall under economy, midscale, or upper midscale classes according to STR
➢ A select-service hotel offers more amenities than a limited-service hotel, such as small meeting spaces and a casual restaurant, but fewer features than a fullservice hotel. Select-service hotels are a blend of full- and limited-service hotels and are the fastest growing type of hotels being developed. These hotels typically are upper midscale or upscale class hotels
➢ A full-service hotel offers more services than a select- or limited-service hotel.
Such services could include larger banquet/conference space, restaurants/bars, shuttle services, laundry service, room service, expanded fitness centers, and spas.
Full-service can refer to different hotel types including boutique hotels and resorts and generally fall under upscale, upper upscale, and luxury class hotels It is important to understand that economy hotels are patronized primarily through drive-by visitors, while large hotel chains have Rewards Programs with millions of loyal customers who will search for those properties on the internet, thus increasing demand Examples of various hotels by class are highlighted in the table to the right. Note: STR hotel classes are typically grouped according to actual average room rates Class Hotels
Economy Motel 6, Studio 6, Red Roof Inn, Days Inn, Super 8 Midscale Best Western, Quality Inn, Extended Stay America Upper Midscale Hampton Inn & Suites, La Quinta Inn & Suites, Fairfield Inn & Suites, Holiday Inn
Upscale DoubleTree, Courtyard, Hyatt House, Homewood
Suites, Residence Inn, SpringHill Suites
Upper Upscale Sheraton, Hilton, Marriott, Le Meridien, Embassy Suites, Westin, Wyndham Grand
Luxury JW Marriott, Ritz-Carlton, W Hotel, Shangri-La,
Langham, Four Seasons, Fairmont
KOSMONT COMPANIES | 11
TRADE AREA
HOTELS (15-MILE
RADIUS)
Source: ESRI Business Analyst Online; CoStar; STR (Accessed June 2023) Notes: Currently-operating hotels of all classes shown. 15 Mile Radius from CA-43 & E. Lerdo Hwy. 15-Mile
Radius
Hotel Property
Class # of Hotels Rooms % Rooms
Luxury 0 0 0%
Upper Upscale 0 0 0%
Upscale 7 1,012 31%
Upper Midscale 11 1,003 31%
Midscale 2 93 3%
Economy 15 1,126 35%
TOTAL 35 3,234
There are over 3,234 hotel rooms within 15
miles of Downtown Shafter, but there are no
hotels within City limits. Approximately 35%
of rooms are in Economy properties, and ~34%
are in Midscale or Upper Midscale properties.
KOSMONT COMPANIES | 12
Sources: CoStar, Smith Travel Research (Accessed June 2023); Notes: 15 Mile Radius from CA-43 & E. Lerdo Hwy. Excludes Economy hotels.
Property Name City Rooms Hotel Class Year Built Dist
Best Western Plus Wasco Inn & Suites Wasco 59 Upper Midscale 2009 8.2 Best Western Heritage Inn Bakersfield 47 Midscale 1996 10.7 Holiday Inn Express & Suites Bakersfield Airport Bakersfield 104 Upper Midscale 2016 11.3 La Quinta Inns & Suites Bakersfield North Bakersfield 65 Upper Midscale 2006 11.7 Hampton by Hilton Inn & Suites Bakersfield North-Airport Bakersfield 94 Upper Midscale 2008 11.7 Fairfield Inn & Suites Bakersfield North/Airport Bakersfield 85 Upper Midscale 2017 11.7 Residence Inn Bakersfield West Bakersfield 122 Upscale 2020 12.5 TownePlace Suites Bakersfield West Bakersfield 95 Upper Midscale 2016 12.6 Sleep Inn & Suites Bakersfield North Bakersfield 46 Midscale 2006 13.2 Home2 Suites by Hilton Bakersfield Bakersfield 113 Upper Midscale 2019 13.5 Hyatt Place Bakersfield Bakersfield 120 Upscale 2020 14.1 Homewood Suites by Hilton Bakersfield Bakersfield 123 Upscale 2004 14.6 Holiday Inn & Suites Bakersfield North Bakersfield 120 Upper Midscale 2008 14.9 Fairfield Inn & Suites Bakersfield Central Bakersfield 122 Upper Midscale 1988 14.9 Holiday Inn Express & Suites Bakersfield Central Bakersfield 90 Upper Midscale 2006 14.9 SpringHill Suites Bakersfield Bakersfield 119 Upscale 2007 14.9 Comfort Suites Bakersfield Bakersfield 56 Upper Midscale 2002 15.0 Hilton Garden Inn Bakersfield Bakersfield 120 Upscale 2004 15.0 DoubleTree by Hilton Hotel Bakersfield Bakersfield 262 Upscale 1982 15.0 Courtyard Bakersfield Bakersfield 146 Upscale 1988 15.0
TRADE AREA HOTELS
KOSMONT COMPANIES | 13
GREATER
SHAFTER TRADE
AREA HOTELS
(25-MILE RADIUS)
Source: ESRI Business Analyst Online; CoStar; STR
(Accessed June 2023)
Notes: Currently-operating hotels of all classes shown. 25 Mile Radius from CA-43 & E. Lerdo Hwy.
25-Mile
Radius
Hotel Property
Class # of Hotels Rooms % Rooms
Luxury1 112 1%
Upper Upscale1 259 3%
Upscale 11 1,543 18%
Upper Midscale 18 1,649 20%
Midscale9 765 9%
Economy 65 4,096 49%
Total 105 8,424
There are over 8,400 hotel rooms within 25
miles of Downtown Shafter – an area that
includes Bakersfield and Delano as well as
other surrounding communities.
Hotel clusters include the Meadows Field
Airport area, CA-99 & CA-58 junction, CA-99
& California Ave junction, the Union Ave
Corridor, and downtown Bakersfield.
KOSMONT COMPANIES | 14
Property Name City Rooms Hotel Class Year Built Dist
Hourglass Hotel, Ascend Hotel Collection Bakersfield 175 Upscale 1972 15.1 Duniya Hotel Bakersfield 199 Midscale 1958 15.1
La Quinta Inns & Suites Bakersfield South Bakersfield 128 Upper Midscale 1986 15.2 Four Points by Sheraton Bakersfield Bakersfield 142 Upscale 1983 15.4 Residence Inn Bakersfield Bakersfield 114 Upscale 1990 15.5 Extended Stay America Bakersfield - Chester Lane Bakersfield 80 Midscale 2005 15.7 Extended Stay America Bakersfield - California Avenue Bakersfield 120 Midscale 1996 15.7 Ramada Limited Bakersfield North Bakersfield 80 Midscale 1993 15.8 Hampton Inn Bakersfield Central Bakersfield 93 Upper Midscale 1997 15.9 The Padre Hotel Bakersfield 112 Luxury 1928 16.4
Hyatt Place Delano Delano 100 Upscale 2018 16.9
Marriott Bakersfield at The Convention Center Bakersfield 259 Upper Upscale 1995 17.0 Best Western Plus Hill House Bakersfield 97 Upper Midscale 1960 17.1 Country Inn & Suites Bakersfield Bakersfield 66 Upper Midscale 1989 17.4 Plaza Motel Bakersfield 54 Midscale 1939 17.7
Quality Inn & Suites Near Downtown Bakersfield Bakersfield 88 Midscale 1955 18.0 Holiday Inn Express Bakersfield Bakersfield 105 Upper Midscale 1994 18.6 Holiday Inn Express Delano Highway 99 Delano 63 Upper Midscale 2006 19.9 Best Western Liberty Inn Delano 51 Midscale 2001 20.2
Hampton by Hilton Inn & Suites Bakersfield/Hwy 58 Bakersfield 94 Upper Midscale 2009 22.4
GREATER SHAFTER TRADE AREA HOTELS
Sources: CoStar, Smith Travel Research (Accessed June 2023); Notes: 25 Mile Radius from CA-43 & E. Lerdo Hwy. Excludes Economy hotels.
KOSMONT COMPANIES | 15
UPCOMING
HOTELS
Source: CoStar, Smith Travel Research
Hotel
Property
Class
# of
Hotels Rooms % Rooms
Upscale
5 530 52%
Upper Midscale
2 280 27%
Midscale
1 98 10%
Economy
0 120 12%
Grand Total 8 1,028
Within ~15 miles of Shafter, there is one
hotel currently under construction, with
an additional 7 hotels in the proposed /
planning stages, with most of the activity
occurring in current hotel clusters along
the 99 corridor. While the status of these
hotels and their future construction is not
certain, it demonstrates continued interest
in hotel development in the market.
15 Mile Radius A B C
D
E
FH
G
KOSMONT COMPANIES | 16
HOTELS PROPOSED AND UNDER CONSTRUCTION
(WITHIN ~15 MILES)
# on
Map Hotel Name City # of Rooms Class Scale Status Expected Open Date Dist from DT
Shafter
A Staybridge Suites Bakersfield North - Airport Bakersfield 100 Upscale Final Planning 1 / 2025 11.5 B Courtyard By Marriott Bakersfield North Bakersfield 98 Upscale Final Planning 2 / 2025 11.6 C Home2 Suites by Hilton Bakersfield Airport Bakersfield 91 Upper Midscale Proposed 1 / 2030 12.9 D Staybridge Suites Bakersfield West Bakersfield 104 Upscale Proposed 11 / 2025 13.5 E Tru by Hilton Bakersfield Bakersfield 98 Midscale Final Planning 7 / 2025 14.8 F Homewood Suites by Hilton Bakersfield Central Bakersfield 117 Upscale Final Planning 11 / 2025 14.9 G Element Bakersfield Southwest Bakersfield 111 Upscale Proposed 5 / 2026 15.3 H
Hampton Inn & Suites by Hilton Bakersfield
Central Bakersfield 110 Upper Midscale Under Construction 1/ 2024 15.6 Sources: ESRI; CoStar, Smith Travel Research (Accessed June 2023);
KOSMONT COMPANIES | 17
COMPETITIVE SET
Source: ESRI Business Analyst Online; CoStar; STR (Accessed June 2023) Notes: Competitive Set used for Analysis, 15 Mile Radius from CA-43 & E. Lerdo Hwy. and two hotels in Delano area 15-Mile
Radius
The Competitive Set for the Analysis
uses Midscale and Upper Midscale hotels
within 15 miles of Downtown Shafter, as
well as two hotels in the City of Delano.
The Competitive Set of 15 hotels
includes 3 Midscale hotels (144 rooms)
and 12 Upper Midscale hotels (1,066
rooms), totaling 1,210 hotel rooms.
14 15
2 1
9 7
3 4
5 6
8 10
11 12
13
KOSMONT COMPANIES | 18
COMPETITIVE SET
OVERVIEW
Major hotel properties in the Trade Area surveyed by STR and included in the Competitive Set include:
➢ Best Western Plus Wasco Inn & Suites (59 rooms, upper midscale) ➢ Best Western Heritage Inn (47 rooms, midscale)
➢ Holiday Inn Express & Suites Bakersfield Airport (104 rooms, upper midscale)
➢ La Quinta Inn & Suites Bakersfield North (65 rooms, upper midscale) ➢ Hampton by Hilton Inn & Suites Bakersfield North-Airport (94 rooms, upper midscale)
Over the past year, average ADR ranges from $118 per night in December 2022 to $135 per night in February 2023, averaging ~$125 over that time frame.
Over the past year, average occupancy ranges from 56% in January 2023 to 74% in March 2023, averaging ~67% over that time frame.
Sources: ESRI; Smith Travel Research (Accessed June 2023); Note: Search parameters include hotels within 15 miles of Downtown Shafter (as well as hotels in Delano) Hotels are of Midscale or Upper Midscale class.
Hotels provide data on a monthly and weekly basis to STR.
Top Left: Best Western Plus Wasco Inn & Suites
Top Right: Best Western Heritage Inn
Middle Left: Holiday Inn Express & Suites Bakersfield
Airport
Middle Right: La Quite Inn & Suites Bakersfield
North
Left: Hampton by Hilton Inn & Suites Bakersfield
North-Airport
KOSMONT COMPANIES | 19
COMPETITIVE SET
HOTEL PROPERTIES
# on
Map Hotel Name City # of Rooms Parcel Size(AC) Class Scale Year Built Dist. from
Downtown
Shafter
1 Best Western Plus Wasco Inn & Suites Wasco 59 Upper Midscale 2009 8.2 2 Best Western Heritage Inn Bakersfield 47 Midscale 1996 10.7 3 Holiday Inn Express & Suites Bakersfield Airport Bakersfield 104 Upper Midscale 2016 11.3 4 La Quinta Inns & Suites Bakersfield North Bakersfield 65 Upper Midscale 2006 11.7 5 Hampton by Hilton Inn & Suites Bakersfield North-Airport Bakersfield 94 Upper Midscale 2008 11.7 6 Fairfield Inn & Suites Bakersfield North/Airport Bakersfield 85 Upper Midscale 2017 11.7 7 TownePlace Suites Bakersfield West Bakersfield 95 Upper Midscale 2016 12.6 8 Sleep Inn & Suites Bakersfield North Bakersfield 46 Midscale 2006 13.2 9 Home2 Suites by Hilton Bakersfield Bakersfield 113 Upper Midscale 2019 13.5 10 Holiday Inn & Suites Bakersfield North Bakersfield 120 Upper Midscale 2008 14.9 11 Fairfield Inn & Suites Bakersfield Central Bakersfield 122 Upper Midscale 1988 14.9 12 Holiday Inn Express & Suites Bakersfield Central Bakersfield 90 Upper Midscale 2006 14.9 13 Comfort Suites Bakersfield Bakersfield 56 Upper Midscale 2002 15.0 14 Holiday Inn Express Delano Highway 99 Delano 63 Upper Midscale 2006 19.9 15 Best Western Liberty Inn Delano 51 Midscale 2001 20.2 Sources: ESRI; Smith Travel Research (Accessed June 2023); Note: Search parameters include hotels within 15 miles of Downtown Shafter (as well as hotels in Delano) Hotels are of Midscale or Upper Midscale class. Hotels provide data on a monthly and weekly basis to STR.
KOSMONT COMPANIES | 20
COMPETITIVE SET
MARKET PERFORMANCE SUMMARY
Source: Smith Travel Research (Accessed June 2023);
Note: The data used in this Analysis is reflective of the hotels that report monthly to STR.
Year Avg.
Occupancy
Average Daily
Rate (ADR)
Annual Supply
of Room Nights
Annual
Demand for
Room Nights
Change in
Occupied
Room Nights
Revenue per
Available Room
(RevPAR)
Change in
RevPAR
Jun 2015 - May 2016 70.5% $93.20 308,884 217,615 $66.05 Jun 2016 - May 2017 68.3% $96.26 369,380 252,125 15.9% $65.94 -0.2% Jun 2017 - May 2018 71.2% $100.09 381,361 271,343 7.6% $71.65 8.7% Jun 2018 - May 2019 71.6% $106.85 363,317 260,243 -4.1% $76.73 7.1% Jun 2019 - May 2020 62.9% $107.18 420,971 264,731 1.7% $68.68 -10.5% Jun 2020 - May 2021 60.3% $105.58 441,650 266,315 0.6% $63.91 -6.9% Jun 2021 - May 2022 71.7% $121.48 441,650 316,810 19.0% $87.20 36.4% Jun 2022 - May 2023 67.3% $124.57 441,650 297,157 -6.2% $84.04 -3.6% Total Growth (%) -4.5% 33.7% 43.0% 36.6% 27.2%
KOSMONT COMPANIES | 21
COMPETITIVE SET
PERFORMANCE BY MONTH AND DAY OF THE WEEK
Source: Smith Travel Research (Accessed June 2023);
Note: The data used in this Analysis is reflective of the hotels that report monthly to STR.
Performance by Month
Month Avg.
Occupancy ADR RevPAR
Jun 22 70.0% $123.35 $86.36
Jul 22 65.5% $122.72 $80.42
Aug 22 68.0% $122.45 $83.24
Sep 22 67.0% $121.94 $81.73
Oct 22 72.2% $127.57 $92.06
Nov 22 64.4% $122.59 $78.96
Dec 22 57.1% $118.30 $67.55
Jan 23 55.7% $120.82 $67.24
Feb 23 71.5% $135.18 $96.60
Mar 23 73.6% $129.48 $95.27
Apr 23 71.5% $124.62 $89.05
May 23 71.6% $125.78 $90.02
Average 67.3% $124.57 $84.04
Day Avg.
Occupancy ADR RevPAR
Sunday 49.4% $118.30 $58.40
Monday 66.5% $122.68 $81.60
Tuesday 72.6% $124.56 $90.41
Wednesday 74.8% $125.11 $93.64
Thursday 70.1% $124.01 $86.87
Friday 66.8% $126.87 $84.77
Saturday 70.7% $129.76 $91.69
Average 67.3% $124.75 $83.94
Performance by Day of Week
▪ Seasonality does not appear to have too strong of an impact in this market, with some drop off in Occupancy and RevPAR in December / January. ▪ In the last year, occupancy was typically between 64% and 74%, apart from lower occupancy in December / January (~56%). Hotels in the Shafter Area tend to do slightly better in the spring and fall months, with occupancy peaking in October and ADR / RevPAR peaking in February.
▪ Strong demand throughout the week, with occupancy and RevPAR peaking on Wednesday, and ADR peaking on Saturday.
KOSMONT COMPANIES | 22
Hotels were chosen based on STR defined class (Midscale and Upper Midscale) within 15 miles of downtown Shafter, as well as two hotels in Delano.
The data from the 15 Midscale and Upper Midscale hotels reporting data to STR provide a strong representation of the Shafter Area market.
There are 1,210 rooms across the 15 hotels in the Competitive Set within the Trade Area, leading to an existing supply of annual room nights of 441,650.
Average annual occupancy in the competitive set was 67.3% for the past 12 months. New hotel development typically occurs when the market area achieves 70% occupancy rates.
Kosmont forecasted demand growth yielding support for ~310 new rooms in Submarket over the next 10 years, using a 3% growth rate.
There are several hotel projects proposed / in the planning stages / under construction within ~15 miles of Downtown Shafter.
These projects could bring close to 300 rooms in the Midscale / Upper Midscale categories, as well as over 500 rooms in the Upscale category, that can serve as competition in the Trade Area. This includes two upscale hotels (totaling 198 rooms) near the Bakersfield airport that are in the final planning stage of development, an Upper Midscale class hotel (91 rooms) in the proposed stage of development near the airport, an Upper Midscale hotel that is currently under construction ~15.6 miles from downtown Shafter expected to open in 2024, and several other potential hotel projects.
COMPETITIVE SET
PROJECTION OF SUPPORTABLE NEW ROOMS
KOSMONT COMPANIES | 23
COMPETITIVE SET
PROJECTION OF SUPPORTABLE NEW ROOMS
Year Projected
Demand
Existing Supply
of Room
Nights
Imputed
Occupancy
Demand for
Room Nights
Supportable #
of Rooms
Projected
Supply of
Rooms
Cumulative
Difference
2023* 297,157 441,650 67% 412,718 0 -
0 2028 344,486 441,650 78% 478,453 101 -
101
2033 399,354 441,650 90% 554,659 310 -
310
Sources: Smith Travel Research, Kosmont Companies (Accessed June 2023); Notes: Target occupancy of 72%; based on 3% annual increase in room demand; *2023 represents the period between June 2022 to May 2023. The data used in this Analysis is reflective of the hotels that report monthly to STR. Projections subject to ongoing COVID-19 pandemic recovery in hospitality sector.
The cumulative difference reflects the number of supportable rooms after accounting for hotels that are under construction—this Analysis does not assume any additional hotels in the Midscale and Upper Midscale classes are built in the Trade Area. While there are no hotels within 15 miles of Downtown Shafter in the Midscale and Upper Midscale class that are currently under construction, it should be noted that there are several hotel pipeline projects in the area that may serve as competition. This includes two upscale hotels (totaling 198 rooms) near the Meadows Field Airport that are in the final planning stage of development, an Upper Midscale class hotel (91 rooms) in the proposed stage of development near the Airport, an Upper Midscale hotel that is currently under construction ~15.6 miles from downtown Shafter expected to open in 2024, and several other potential hotel projects; see page 16 of this report for more information.
Projection of Supportable New Midscale & Upper Midscale Rooms
KOSMONT COMPANIES | 24
HOTEL AMENITIES
HOTELS LOCATED IN TRADE AREA
Hotel Name City Amenities
Fairfield Inn & Suites Bakersfield Central Bakersfield
• 735 SF Meeting Space
• Business Center
• Fitness Center
• Pool
• Breakfast Buffet / Dining Area
Holiday Inn & Suites Bakersfield North Bakersfield
• 1,600 SF Meeting Space
• Business Center
• Fitness Center
• Pool
• Restaurant / On-Site Bar (Joe’s Restaurant)
Home2 Suites by Hilton Bakersfield Bakersfield • Business Center • Fitness Center
• Pool
• Restaurant
Holiday Inn Express & Suites Bakersfield Airport Bakersfield • 450 SF Meeting Space • Business Center
• Fitness Center
• Pool
TownePlace Suites Bakersfield West Bakersfield • 1,215 SF Meeting Space • Fitness Center
• Pool
• Breakfast Buffet / Dining Area
Hampton by Hilton Inn & Suites Bakersfield NorthAirport Bakersfield • 783 SF Meeting Space • Business Center
• Fitness Center
• Pool
Holiday Inn Express & Suites Bakersfield Central Bakersfield • 1,000 SF Meeting Space
• Business Center
• Fitness Center
• Pool
• Breakfast Buffet / Dining Area
Sources: CoStar, hotel websites, (Accessed June 2023)
Kosmont observed the amenities available in the seven largest hotels by number of rooms in the Competitive Set; a summary of the amenities for these hotels is provided in the table below:
KOSMONT COMPANIES | 25
DISCLAIMER
The analyses, projections, assumptions, rates of return, and any examples presented herein are for illustrative purposes and are not a guarantee of actual and/or future results. Actual results may differ from those expressed in this analysis, as results are difficult to predict as a function of market conditions, natural disasters, pandemics, significant economic impacts, legislation and administrative actions.
KOSMONT COMPANIES | 26
CITY OF SHAFTER
HOTEL MARKET DEMAND ANALYSIS
2301 Rosecrans Ave., Suite 4140
El Segundo, CA 90245
TEL: 424-297-1070 | URL: www.kosmont.com
MANAGEMENT REPORT
CITY OF SHAFTER
CITY COUNCIL REPORT
MEETING DATE: August 15, 2023
FROM: Gabriel A. Gonzalez, City Manager
PREPARED BY: Marco Martinez, City Attorney
SUBJECT: APPROVE THE SECOND AMENDMENT OF THE CITY MANAGER EMPLOYMENT AGREEMENT WITH GABRIEL A. GONZALEZ
RECOMMENDATION
Council find the action is not defined as a “project” per Section 15378(b)(4) of the CEQA Guidelines; and approve the Second Amendment to the City Manager Employment Agreement with Gabriel A. Gonzalez.
BACKGROUND
On February 18, 2020, the City Council appointed Gabriel A. Gonzaez as City Manager and approved an unemployment agreement setting forth the terms of that agreement.
The employment agreement required the Council conduct annual performance evaluations. Over the past two months, the City Council conducted a performance evaluation of the City Manager and determined that the City Manager's performance was satisfactory. The Council further directed that the City Manager be provided the following benefit to (1) reward him for past performance; and (2) provide an incentive for him to remain with the organization:
1. A one-time, non-PERS payment equaling ten percent (10%) of his current yearly salary.
The City Manager's current annual salary is $215,000. That means that the one-time payment will be $21,500 (gross amount) and will be payable upon approval of this amendment. All other terms of the current employment agreement remain unchanged.
Effective January 1, 2017, California Government Code Section 54953(c)(3) requires City Council to orally report in open session a summary of the salary, salary schedules, and compensation in form of fringe benefits for local agency executives, before the City Council may take final action on such compensation. This report and the oral presentation that is provided will satisfy those requirements.
ANALYSIS
FISCAL IMPACT
APPROVE THE SECOND AMENDMENT OF THE CITY MANAGER EMPLOYMENT AGREEMENT WITH GABRIEL A. GONZALEZ
- 2 -
The fiscal impact of this item results in a one-time payment from the general fund of $21,500.
CEQA ANALYSIS
The action is not defined as a “project” per Section 15378(b)(4) of the CEQA Guidelines because the action is the approval of a second amendment of an employment agreement and therefore, it is governmental fiscal activity that does not involve any commitment to a specific project that can result in a potentially significant impact and not subject to CEQA.
APPROVED BY THE CITY ATTORNEY
Yes
ALTERNATIVES
NEXT STEPS
ATTACHMENTS
1. Shafter - Second Amendment to City Manager Employment Agreement (2023 Gonzalez)-c1-c1
17236.00000\41546424.1
- 1 -
SECOND AMENDMENT TO
CITY MANAGER EMPLOYMENT AGREEMENT
This Second Amendment to the City Manager Employment Agreement (the “Second Amendment”) between the City of Shafter (the “City”), a California municipal corporation, and GABRIEL A. GONZALEZ, an individual (“GONZALEZ”), is entered into this ___, of August, 2023. The above parties may be individual referred to as “Party” and collectively referred to as the “Parties.”
RECITALS
A. The Parties entered into a City Manager Employment Agreement (“Agreement”) services on February 21, 2020; and
B. The Parties entered into a First Amendment to the Agreement in August of 2022 to amend the term of the Agreement and certain benefits terms; and C. The Parties now wish to further amend the terms of the Agreement to provide the City Manager with additional compensation in the form of a performance bonus for duties performed and to provide an incentive to remain in the position of City Manager.
AGREEMENT
In consideration of the mutual obligations in this First Amendment and the Agreement, the Parties agree as follows:
SECTION 1. Section 3 of the Agreement are hereby amended to add subsection (D) to read as follows:
“D. At the City Council’s sole and absolute discretion and in addition to the compensation terms contained in this section, City Manager may be paid a performance bonus in recognition of exemplary past performance and as an incentive to remain with the City as City’s City Manager. On August 1, 2023, City Manager shall be paid a performance bonus equal to ten percent (10%) of his Annual Base Salary shown in subsection 3(A).”
SECTION 2. Except as expressly modified by this First Amendment, all provisions of the Agreement remain in full force and effect. [SIGNATURES ON FOLLOWING PAGE]
17236.00000\41546424.1
- 2 -
IN WITNESS WHEREOF, the Parties hereto have executed this Second Amendment as of the date first herein written above.
CITY OF SHAFTER
By: _____________________________
Chad Givens, Mayor
CITY MANAGER
By: _____________________________
GABRIEL A. GONZALEZ
City Manager
ATTEST:
_____________________________
Yazmina Pallares, City Clerk
Approved as to form:
_____________________________
Marco A. Martinez, City Attorney
MANAGEMENT REPORT
CITY OF SHAFTER
CITY COUNCIL REPORT
MEETING DATE: August 15, 2023
FROM: Gabriel A. Gonzalez, City Manager
PREPARED BY: Bob Meadows, Business Development Coordinator SUBJECT: APPROVAL OF EXCLUSIVE NEGOTIATING AGREEMENT (ENA) FOR A TERM OF 160-DAYS WITH MICHAEL HAIR, OPERATING
AS LeORA, LLC
RECOMMENDATION
Council find the action is not defined as a “project” per Section 15378(b)(5) of the CEQA Guidelines; authorize the City Manager to enter into an Exclusive Negotiating Agreement ("ENA") with Michael Hair, operating as LeOra, LLC ("Developer") to acquire and develop the approximately one half acre City-owned property (APN 028- 200-31) near the corner of Lerdo Highway and S. Central Valey Highway.
BACKGROUND
Michael Hair, operating as LeOra, LLC ("Developer"), wishes to acquire and develop the approximately one-half-acre CIty-owned property (APN 028-200-31) near the corner of Lerdo Highway and S. Central Valley Highway. The Developer proposes to purchase the City property and secure a tenant to provide sales tax revenue for the City.
The Developer is a well-known Shafter real estate developer who has shown continued interest in purchasing and developing this property, bordered directly on the south by Kirshenmann Park. To the north, an alley separates this property from the three surrounding parcels, all owned by Lerdo LLC, with current tenants Dollar General, ARCO Gas & AM/PM Mini Mart, and Tacos La Villa. Developer understand the City's strong preference for the tenant to be a national brand. The ENA has a 160-day negotiating period for the City and Developer to reach mutually satisfactory deal terms for a future Disposition and Development Agreement ("DDA"), or this Agreement will be automatically terminated. Either party can also terminate it at any time within that period. The City has the option to grant a 90-day extension.
ANALYSIS
This parcel is currently a non-revenue-generating fixed asset for the City. The development of the property would create a more positive and attractive physical presence in the area as well as provide additional tax revenue of an undetermined amount to the City.
APPROVAL OF EXCLUSIVE NEGOTIATING AGREEMENT (ENA) FOR A TERM OF 160-DAYS WITH MICHAEL HAIR, OPERATING AS LeORA, LLC
- 2 -
FISCAL IMPACT
The fiscal impact is difficult to project and is dependent upon the developer acquiring a preferably national brand tenant to generate sales tax revenue for the City. Since this property is currently vacant, any impact derived from this Agreement appears to be positive for the City.
CEQA ANALYSIS
The Council find the action is not defined as a “project” per Section 15378(b)(5) of the CEQA Guidelines because the action is authorization to engage in an exclusive negotiating agreement, which is an organizational and administrative activity that will not result in direct or indirect physical changes to the environment and not subject to CEQA.
APPROVED BY THE CITY ATTORNEY
Yes
ALTERNATIVES
The Council can 1) not authorize the release of the ENA or 2) direct staff to revise the ENA based on directions provided and bring the revised ENA back to the Council for future consideration.
NEXT STEPS
Upon approval by the Council, City Manager is authorized to sign the Agreement on behalf of the City and enter into the ENA with Developer.
ATTACHMENTS
1. ENA Michael Hair August 16 2023 DRAFT
82816.00001\29865484.1 1
AGREEMENT TO NEGOTIATE EXCLUSIVELY
THIS AGREEMENT TO NEGOTIATE EXCLUSIVELY (the “Agreement”) is entered into as of August 16, 2023, by and between the City of Shafter, a public body, corporate and politic (the “City”), and LeOra, LLC, (the “Developer”), on the basis of the following facts, understandings and intentions of the parties:
RECITALS
A. On August 16, 2023, the “City” agreed to consider the sale of that certain commercial property located generally at Lerdo Highway and S. Central Valley Highway, Shafter, California (APN 028-200-31), (the “Property”). The Property is more specifically described in Exhibit A attached hereto and incorporated herein by this reference.
B. The Developer will deliver a future proposal (the “Proposal”) for consideration for approval by the City.
B. The Developer desires to enter into exclusive negotiations with the City for the disposition and development of the Property in accordance with the terms and conditions of this Agreement.
THEREFORE, the City and Developer agree as follows:
Section 1. Exclusive Negotiations
(a) Good Faith Negotiations. Developer and City agree to negotiate diligently and exclusively and in good faith for the Negotiation Period set forth in subsection (b) below to prepare a Disposition and Development Agreement (the “DDA”) to be considered for execution between Developer and City concerning the sale of the Property and commercial development of the Property.
(b) Negotiation Period. The negotiation period shall begin upon execution of this Agreement by both parties and shall continue for one hundred sixty (160) days unless earlier terminated pursuant to sections 2 or 3 (the “Negotiation Period”). If upon expiration of the Negotiation Period, a mutually satisfactory DDA has not been negotiated by Developer and City, then this Agreement shall automatically terminate at the end of such period, unless mutually extended by City and Developer. The City may approve one 90-day extension of the Negotiation Period. If a mutually satisfactory DDA has been successfully negotiated by Developer and City within the Negotiation Period, this Agreement shall terminate upon either (1) execution of the DDA by Developer and the approval and execution of the DDA by City, or (2) disapproval of the submitted DDA by the City in its policy discretion as more fully provided for in Section 5(b) below.
82816.00001\29865484.1 2
Section 2. Default and Expiration
(a) Developer Default. In the event Developer has not continued to negotiate diligently and in good faith, City shall give written notice thereof to Developer who shall then have ten (10) working days to commence negotiating in good faith. Following the receipt of such notice and the failure of Developer to thereafter commence negotiating in good faith within such ten (10) working days, this Agreement may be terminated by City. In the event of such termination by City, neither party shall have any further rights against or liability to the other under this Agreement.
(b) City Default. In the event City has not continued to negotiate diligently and in good faith, Developer shall give written notice thereof to City which shall then have (10) working days to commence negotiating in good faith. Following the receipt of such notice and the failure of City to thereafter commence negotiating in good faith within such ten (10) working days, this Agreement may be terminated by Developer. In the event of such termination by Developer, neither party shall have any further rights against or liability to the other under this Agreement.
(c) Expiration. Upon termination of this Agreement at the expiration of the Negotiation Period or such extension thereof, neither party shall have any further rights against or liability to the other under this Agreement. If a DDA has been executed by City and Developer, the DDA shall thereafter govern the rights and obligations of the parties with respect to the sale and development of the Property.
Section 3. Conduct of Negotiations
(a) Scope of Development. Negotiations hereunder shall be based upon the development of a commercial project (the “Project”) on the Property. The Project shall be consistent with the Proposal.
(b) Architectural Concept. Within ten (10) days after execution of this Agreement, the Developer shall contract with architectural and engineering firms satisfactory to the City to develop conceptual drawings showing proto-typical streetscapes that reflect conceptual building elevations and a schedule of proposed materials and finishes with respect to the proposed development (“Design Contracts”). These drawings and schedules are necessary for the development of the Property to the mutual satisfaction of both parties, in order for the parties to evaluate the design and economic aspects of the proposed Project and to conduct negotiation of a satisfactory DDA. The Developer shall bear all costs of the Design Contracts and all architectural and engineering work for the Project.
(c) Other Predevelopment Work. During the Negotiation Period, Developer shall pay all third-party costs incurred by the City, from time to time, related to this Agreement and the proposed Project, including without limitation, all costs for legal counsel retained by the City, and all costs for any studies, appraisals, analyses or documentation that may be required by the City under the California Environmental Quality Act (“CEQA”), in order for the City to
82816.00001\29865484.1 3
complete its review of the proposed Project. The Developer shall deliver to the City a deposit in an amount sufficient to cover the third-party costs estimated to be incurred by the City for the proposed Project. The City shall provide an accounting, from time to time, of the actual thirdparty costs incurred by the City, and to the extent such costs exceed the amount deposited by the Developer, the Developer shall, within 5 days after receipt of notice from the City, deliver an additional deposit in the amount necessary to cover the remaining estimated third-party costs. If the Developer for any reason elects not to pay any such costs, or for any reason fails to pay the City all amounts required to be paid by the Developer pursuant to this Agreement, the City may terminate this Agreement by providing written notice of such termination to the Developer, and thereafter neither party shall have any further rights against or liability to the other under this Agreement.
(d) Purchase Price and/or Other Consideration. The purchase price and/or other consideration to be paid by Developer for the Property or portion thereof under the DDA will be equal to the fair market value of the Property, will be based upon such factors as market conditions, density of development, cost of development, and public purpose, and will be subject to approval by the City after a public hearing as required by law. Mere failure by the parties to agree to economic terms of the DDA shall not constitute negotiating in bad faith by either party hereunder.
(e) Property Tenant. Developer must secure a tenant, preferably a national brand, who is a revenue-generating type of commercial or retail business.
Section 4. The Developer
(a) Nature of the Developer. Developer is an LLC involved in real estate business. (b) Office of the Developer. The principal office of Developer is: 6501 Fruitvale Avenue, Bakersfield, CA 93308.
(c) Employees and Consultants of the Developer. Developer has designated the following person(s) who will negotiate the DDA with City and who will engage in the activities necessary to determine the feasibility of the development:
Kristin A. Hagan, General Counsel
(d) Full Disclosure and Approval. Developer shall make full disclosure to City of its principals, offices, stockholders, partners, joint venturers, employees, other associates and all other pertinent information concerning Developer and its associates.
Section 5. City Responsibilities
(a) City Assistance and Cooperation. City shall cooperate fully in providing Developer with the appropriate information and assistance in its possession relevant to the Property and negotiation of the DDA.
82816.00001\29865484.1 4
(b) City Public Hearing. It is expressly understood and acknowledged by Developer that a DDA resulting from the negotiations hereunder shall become effective only after and if the DDA has been considered and approved by the City, in its policy discretion, at a public hearing called for such purpose in accordance with applicable law.
Section 6. Limitations
By its execution of this Agreement City is not committing itself to or agreeing to undertake: (a) disposition of land to Developer; or (b) any other acts or activities requiring the subsequent independent exercise of discretion by City, or any agency or department thereof.
This Agreement does not constitute a disposition of property or exercise of control over property by City and does not require a public hearing. Execution of this Agreement by City is merely an agreement to enter into a period of exclusive negotiations according to the term hereof, reserving final discretion and approval by City as to any DDA and all proceedings and decisions in connections therewith. Additionally, the execution of this Agreement and the negotiations hereunder do not constitute a “project” for purposes of CEQA.
Section 7. Miscellaneous Provisions
(a) Commissions. City represents that it has engaged no broker, agent or finder in connection with this transaction, and Developer agrees to hold City harmless from any claim by any broker, agent or finder retained by Developer.
(b) Notices. Formal written notices, demands, correspondence and communications between City and Developer shall be deemed sufficiently given if dispatched by registered or certified mail, postage prepaid, return receipt requested, to the office of City and Developer indicated below. Such written notices, demands, correspondence and communications may be sent in the same manner to such other persons and addresses as either party may from time-totime designate by mail as provided in this subsection.
Notices to City: City of Shafter
336 Pacific Avenue
Shafter, CA 93263
Attn: Gabriel Gonzalez, City Manager
Notices to Developer: LeOra, LLC
6501 Fruitvale Avenue
Bakersfield, CA 93308
Attn: Michael Hair, Member
(c) Attorneys’ Fees. If any dispute between Developer and City should result in litigation, the prevailing party shall be reimbursed for all reasonable costs incurred in connection with such litigation, including, without limitation, all reasonable attorneys’ fees.
82816.00001\29865484.1 5
(d) Arbitration of Disputes. Both parties may agree to arbitration in accordance with the Commercial Arbitration Rule of the American Arbitration. (e) Effect of Prior Agreements. By this Agreement, the parties intend to supersede any prior agreements or understandings concerning the development or sale of the Property, or any portion thereof, and all such prior agreements or understandings shall be considered of no further force or effect.
IN WITNESS WHEREOF this Agreement has been executed in duplicate, by the parties hereto on the day and year first above written.
“CITY “ “DEVELOPER”
___________________________________ ___________________________________ Gabriel Gonzalez, City Manager Michael Hair, Member
Attest:
___________________________________
Yazmina, Pallares, City Clerk
Approved as to Form:
___________________________________
Marco Martinez, City Attorney
82816.00001\29865484.1 1
EXHIBIT A
Description of Property
MANAGEMENT REPORT
CITY OF SHAFTER
CITY COUNCIL REPORT
MEETING DATE: August 15, 2023
FROM: Gabriel A. Gonzalez, City Manager
PREPARED BY: Yazmina Pallares, City Clerk
SUBJECT: LEAGUE OF CALIFORNIA CITIES 2023 ANNUAL CONFERENCE
DESIGNATION OF VOTING DELEGATE
RECOMMENDATION
Council find the action is not defined as a “project” per Section 15378(b)(5) of the CEQA Guidelines; and appoint a City of Shafter Councilmember as a voting delegate and up to two alternate voting delegates to vote on proposed policies at the League of California Cities Annual Conference September 20-22, 2023.
BACKGROUND
On September 20-23, 2023, the League of California Cities will hold its annual conference at the SAFE Credit Union Convention Center in Sacramanto. A special annual business meeting will be held on Friday, September 23, 2023, for the League membership to consider and take action on resolutions that establish league policy.
It is necessary for Council to designate a voting delegate, and up to two alternate voting delegates.
ANALYSIS
None.
FISCAL IMPACT
No budget action is necessary.
CEQA ANALYSIS
The action is not defined as a “project” per Section 15378(b)(5) of the CEQA Guidelines because the action is appointment of a voting delegate and alternatives for the League of California Cities annual conference and therefore, it is organizational and administrative activity that will not result in direct or indirect physical changes to the environment and not subject to CEQA.
APPROVED BY THE CITY ATTORNEY
Not Applicable
ALTERNATIVES
LEAGUE OF CALIFORNIA CITIES 2023 ANNUAL CONFERENCE DESIGNATION OF VOTING
DELEGATE
- 2 -
None.
NEXT STEPS
None.
ATTACHMENTS
None