AgdaPkt 2012-03-05 - Laserfiche WebLink

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8.A. - Page 4 While there are potential benefits, staff considers the drawbacks to be more significant and therefore recommends against daylighting this particular segment of the creek. However, it is conceivable that the developers could be encouraged to add a symbolic water feature to the project, since it is likely they will have groundwater discharged from the site to accommodate subterranean parking. Ground Lease Council also requested that staff study the possibility of leasing the land to the chosen developer, rather than selling it. Keyser Marston Associates (KMA), the City's real estate advisor, provided the following analysis: (Refer to Attachment 2, a Memorandum from KMA, for a more detailed analysis of ground leases.) There are several advantages to a ground lease. First among them is the ongoing revenue source to the City, which may be substantial. The City can also benefit financially at the end of the lease term when the value of the land and the improvements revert back to City control. In areas with high land costs, ground leases can also benefit a developer by reducing the initial capital required for a development. There are drawbacks to ground leases as well. Most significant among them is the reluctance of many developers to enter into such an arrangement. Developers usually prefer to purchase the land for their projects so that they receive the benefit of the site increasing in value over time. It can also be more difficult for the developer to acquire financing. However, it is easier for a landowner such as the City to get a ground lease in active real estate markets in desirable locations; given the upward trends in the local market, the Depot Circle site may fit that description. Another disadvantage is that the City would not receive a large initial payment which could be used for offsite improvements or other purposes. Finally, the City must act as a landlord, and must deal with issues such as enforcing the agreement, developing occasional amendments to the agreement, ensuring that the developer properly maintains the structure, ensuring that proper insurance is obtained for the building, and protecting against the overfinancing of the building. The RFP requires the proposers to respond to the option of a lease. Upon the receipt of the Proposals, the project analysis will include evaluation of the proposed disposition of the land, including the specific ground lease proposals from each developer. ALTERNATIVES Provide additional direction to staff. FISCAL IMPACT The fiscal impact will vary depending on the nature of the business terms that are eventually agreed to with the chosen developer. ENVIRONMENTAL REVIEW This staff report is informational only, with no action contemplated, and does not constitute a"project" for purposes of CEQA, as that term is defined in CEQA Guidelines Section 15378.