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CITY COUNCIL AGENDA ITEM NO. 16



Meeting Date: June 24, 2008
Subject/Title: Adopt a resolution authorizing the City Manager or designee to execute a reimbursement agreement with Shea Homes for costs incurred by the City in the planning and development of the City’s Vineyards at Marsh Creek project.

Prepared by: Linda Maurer, Economic Development Manager

Submitted by: Casey McCann, Interim Community Development Director


RECOMMENDATION
Adopt a resolution authorizing the City Manager or designee to execute a reimbursement agreement with Shea Homes for costs incurred by the City in the planning and development of the City’s Vineyards at Marsh Creek project.

PREVIOUS ACTION
On April 27, 2004, the City Council adopted Ordinance 778, approving the Development Agreement for the Vineyards at Marsh Creek Project.

On November 13, 2007, the City Council adopted Resolution No. 2007-257, approving a contract with Royston Hanamoto Alley & Abey for development and design services related to the City’s Vineyards at Marsh Creek project.

BACKGROUND
A consultant team led by Royston Hanamoto Alley & Abey (RHAA), a landscape architecture firm based in San Francisco, was hired in November 2007 by the City in order to provide planning, design and analysis services as it relates to the event center and amphitheater parcels associated with the Vineyards at Marsh Creek project. The team also includes BAR Architects, an architectural firm and Economic Research Associates (ERA), an economic consulting firm with extensive experience in economic feasibility and market analysis.

After receiving Council approval, the housing market continued its slide and the Vineyards project essentially stopped all construction activity. In light of the new market conditions, staff decided to hold off on the public planning of this City project. Staff informed the consultant team in early February the City’s intention to delay the project until market conditions improved.

Since then, staff has been discussing a number of items relating to the Vineyards project, including certain deadlines included in the Development Agreement. One important deadline for the City is the acceptance of the winery/event center parcel by January 1, 2009, which is five years after the effective date of the Development Agreement.

Staff is cautious about accepting this property without fully understanding the market and economic feasibility of a City-owned event center project and is suggesting that the most logical approach would be to begin work on the market/economic feasibility portion of the Council approved contract, which would total approximately $64,000 of the $212,000 before the end of the 2008 calendar year.

Two important questions will be analyzed:
1) Is there a market at this location for an event center?
2) If there is a market, does it make economic sense for the City to own such a facility? Will the event center generate revenue? Will it require subsidy from the General Fund?

Answering these questions will guide future decisions on the acceptance (or a request for an extension of acceptance) of the winery/event center parcel. As a point of clarification, the amphitheater parcel, which is adjacent to this property, doesn’t fall into the same requirements as the winery/event center parcel.

Staff has approached Shea Homes, who assumed responsibility of this portion of the Development Agreement from Blackhawk Nunn, about funding the market/economic feasibility analysis this year. Shea has informed the City that they are not in a financial position to provide funding this year, but can do so in spring 2009. It should be noted that Shea is not obligated to provide any of the $3.5 million in funding until the start of Phase 2 of the project.

There is some urgency, due to the Development Agreement deadline, to understand the City’s potential project. Therefore, the Finance Director, in accordance with the City’s Capital Improvement Program policies, authorized the temporary use agricultural funds to pay the $64,000 phase 1 project cost. The temporary funding source has been identified within the project sheet “Vineyards at Marsh Creek – Amphitheater” in the 2008/09 Capital Improvement Program.

There is a strong linkage between the possible event center project and the use of agricultural funds. One of several proposed functions of the event center would be to provide agricultural support services to the growing wine and olive oil industries. A public, cooperative tasting room has been discussed at the Vineyards Committee and would be shared by many of the area wine grape and olive growers in the Brentwood region. There also have been some internal discussions about a requirement by the event center operator to purchase its wines and olive oil from those that participate in the cooperative on site, furthering agricultural enterprise activities.

And while agricultural funds would be used to jumpstart the project work, the proposed Reimbursement Agreement states that the fund would be repaid by Shea upon receipt of payment by April 30, 2009. The Reimbursement Agreement also obligates Shea to pay for any future work on the approved contract with RHAA.

FISCAL IMPACT
There is no General Fund impact relating to this item. The expenditure of up to $64,000 for the first phase of the consultant work relating to the market feasibility and economic analysis will require bridge funding until April 30, 2009. The Finance Director has authorized a temporary transfer of funds from the Agricultural Administrative Fund 262, in the amount of $64,000 to the Vineyards at Marsh Creek – Amphitheater project (CIP#337-37208). This project is included in the 2008/09 – 2012/13 CIP Budget. Upon reimbursement on April 30, 2009, the temporary funds will be transferred back to Fund 262.

Attachments
Resolution



RESOLUTION NO. 2008-___

A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF BRENTWOOD AUTHORIZING THE CITY MANAGER OR DESIGNEE TO EXECUTE A REIMBURSEMENT AGREEMENT WITH SHEA HOMES FOR COSTS INCURRED BY THE CITY IN THE PLANNING AND DEVELOPMENT OF THE CITY’S VINEYARDS AT MARSH CREEK PROJECT

WHEREAS, on November 13, 2007, the City Council adopted Resolution No. 2007-257, approving a contract with Royston Hanamoto Alley & Abey for development and design services related to the City’s Vineyards at Marsh Creek project; and

WHEREAS, the consultant team led by Royston Hanamoto Alley & Abey (RHAA), a landscape architecture firm based in San Francisco, also includes BAR Architects, an architectural firm and Economic Research Associates (ERA), an economic consulting firm with extensive experience in economic feasibility and market analysis; and

WHEREAS, while initially deciding to hold off on the public planning process, the City has decided to move forward with a portion of the project this calendar year to better understand the market and economic feasibility of a City-owned event center project; and

WHEREAS, Shea Homes has assumed the $3.5 million contribution outlined in the Development Agreement from Blackhawk Nunn, towards the City’s amphitheater, event center/winery project; and

WHEREAS, Shea Homes is not obligated to provide any of the $3.5 million in funding until Phase 2 of the Vineyards at Marsh Creek project, but has agreed to provide the necessary funding for the professional services contact with RHAA and its sub consultants in the amount of $212,000, with the first $64,000 payable to the City in April, 2009; and

WHEREAS, the City has drafted and Shea Homes has signed a reimbursement agreement regarding its repayment of funds expended by the City for this project, attached to this resolution as Exhibit A;

WHERES, there is some urgency, due to the Development Agreement deadline, to understand the City’s potential project, the Finance Director has authorized a temporary transfer of funds from the Agricultural Administrative Fund 262, in the amount of $64,000 to the Vineyards at Marsh Creek – Amphitheater project (CIP#337-37208); and

WHERAS, while agricultural funds would be used to jumpstart the project work, under the proposed Reimbursement Agreement, the fund would be repaid upon receipt of payment from Shea by April 30, 2009. The Reimbursement Agreement also obligates Shea to pay for any future work on the approved contract with RHAA.

NOW, THEREFORE BE IT RESOLVED that the City Council of the City of Brentwood authorizes the City Manager or designee to execute a reimbursement agreement with Shea Homes for costs incurred by the City in the planning and development of the City’s Vineyards at Marsh Creek project, in the form attached hereto, and to execute any other documents necessary to implement the agreement.

PASSED, APPROVED AND ADOPTED by the City Council of the City of Brentwood at a regular meeting held on the 24th day of June, 2008 by the following vote:

AYES:
NOES:
ABSENT:
ABSTAIN:
 
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