TO: AGENDA ITEM 5 8TH AND R PARKING STRUCTURE – … · September 19, 2018 TO: CADA Board of Directors SUBJECT: September 28, 2018 Board Meeting AGENDA ITEM 5 8TH AND R PARKING STRUCTURE

September 19, 2018 TO: CADA Board of Directors SUBJECT: September 28, 2018 Board Meeting AGENDA ITEM 5 8TH AND R PARKING STRUCTURE – AMENDED AND RESTATED

MEMORANDUM OF UNDERSTANDING BETWEEN THE DEPARTMENT OF GENERAL SERVICES (DGS) AND CADA

CONTACT: Wendy S. Saunders, Executive Director

RECOMMENDED ACTIONS: Staff recommends that the Board adopt a resolution which modifies the Memorandum of Understanding (MOU) between DGS and CADA that specifies the responsibilities of the parties related to planning, financing and constructing the 8th and R streets parking structure. The modifications clearly specify the roles of the State of California Department of Finance and the State Public Works Board on the project, and clarifies the maximum cost of the project. BACKGROUND On June 23, 2017, the CADA Board of Directors approved an MOU between DGS and CADA regarding CADA development of a parking structure on State-owned property located on the north side of R Street between 8th and 9th Streets (Project) to serve State of California employees and the general public. The Project is planned to include approximately 800 parking spaces and 12,000 square feet of ground floor retail space. The Project was authorized in the 2017-2018 State of California Budget and codified in California Government Code Section 14678.7. Financing of the Project through the California Infrastructure Bank (IBank) was also authorized. The authorization caps project cost at $30 million. On December 08, 2017, the CADA Board adopted a Mitigated Negative Declaration that analyzed the Project pursuant to CEQA. The Project architect, IPD, has completed Project schematic design. An image of the Project is included as Attachment 1. DGS has requested that CADA agree to amend the MOU to clarify the following points: 1. Any real estate acquisition related to the Project is subject to authorization by the State

Public Works Board. 2. All agreements related to financing the Project are subject to approval by the California

Department of Finance. 3. No Project demolition or construction activities will occur before necessary leasing,

contracting and financing are completed. 4. The maximum Project budget, except for acquisition costs, is $30 million.

STRATEGIC PLAN The actions recommended this report are consistent with CADA’s 2016-2021 Strategic Plan key priorities of improving neighborhood amenities and infrastructure and nurturing a strong relationship with the State of California. FINANCIAL IMPACT All third party costs incurred by CADA pursuant to development of the Project are being reimbursed by DGS. CADA is contributing staff time to manage the Project in support of its ongoing partnership with the State of California Department of General Services. ENVIRONMENTAL REVIEW A Mitigated Negative Declaration for the Project was prepared in accordance with CEQA, and adopted by the CADA Board of Directors on December 9, 2017. Attachments: 1. Project Image 2. Amended and Restated MOU (redline version) 3. Amended and Restated MOU (clean version)

Attachment 1

Attachment 2

redline R Street MOU - DOF final against 6-23-17 version presented to CADA Board Page 1 of 6

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Amended and Restated Memorandum of Understanding Between

California State Department of General Services and

Capitol Area Development Authority

1. Introduction The Department of General Services ((“DGS)”) of the State of California (“State”) and the Capitol Area Development Authority ((“CADA)”), each a “Party” and collectively the “Parties,” wish to enter into agreements in the future to allow for the expeditious constructionfinancing and development of a new parking structure with ground floor retail, which is anticipated to have approximately 800 parking spaces and seven stories, located at 805 R Street in the City of Sacramento, as authorized pursuant to Section 14678.7 of the California Government Code1 and funding authorized in the 2017 Budget Bill (the "Project"). The Project implementsis consistent with Principal 7 of the Transportation and Parking Objective of the 1997 Capitol Area Plan.2 Under these agreements, CADA will undertake completionfinancing and development of the parking structure, including assisting the acquisition ofstate in acquiring certain real property in partnership with DGS; demolition of existing improvements; completion of predevelopment activities; selection of a design-build contractor and execution of construction contracts; oversight of construction; project financing; and management of completed retail space. CADA’s activities will be undertaken in consultation with DGS. DGS and CADA previously executed a Memorandum of Understanding in 2017 regarding the Project (“MOU”) and now agree to amend and fully restate that MOU to clarify the Parties’ roles and responsibilities and highlight that any real property acquisition related to the Project is subject to authorization by the State Public Works Board (“SPWB”) and that any lease or related agreements implementing section 14678.7 will be submitted, prior to execution, to the Department of Finance of the State of California (“Finance”) for approval. This amended and restated MOU (“Amended MOU”) shall fully take the place of the previously executed MOU.

2. Purpose and Scope 1 All further statutory references are to the California Government Code unless otherwise specified. 2 See Table 2-2 of the Capitol Area Plan ("Land Use Diagram") and Table 5-1 (Parking Demand from New Office Development") and Figure 5-1 ("Parking Structures") of the 1997 Capitol Area Plan Implementation Program.

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The purpose of this Memorandum of Understanding (Amended MOU) is to clearly identify the roles and responsibilities of each party as they relate to: Project.

a. The lease between DGS and CADA of state-owned property located at 805 R Street;

b. CADA use of its best efforts to acquire Sacramento County Assessor’s Parcel Numbers 006-0266-016 and 006-0266-017, which shall be subsequently conveyed to DGS and included in the project;

c. The demolition of the existing warehouse at 805 R Street;

d. The development and construction of a parking structure with ground level

mixed use retail on the site and associated landscape and streetscape improvements consistent with existing and planned R Street corridor improvements.

e. Execution of a long-term lease between CADA and DGS for use of the

Project for State employee parking and public parking for the surrounding area, and for ground floor retail space. At termination of the Lease, DGS will retain ownership of the parking structure. If the Lease provides DGS with the option to terminate the Lease early, a mechanism will be included to ensure that the debt used to finance the Project is fully retired. Any early termination right will be structured in such a way that financing for the Project does not become cost prohibitive.

f. CADA financing of the Project, which shall be based on the income to

CADA from the long-term lease between CADA and DGS.

g. Operation of the Project over the term of the lease. The Parties understand and agree that they are required to obtain Finance approval of the terms, prior to execution, of any lease and all related agreements and contracts related to the financing of the R Street parking structure project pursuant to Government Code section 14678.7. For all other agreements pertaining to the development, design, and construction of the R Street parking structure project, DGS and CADA will coordinate to provide copies of these agreements to Finance and Finance shall monitor and approve the associated

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state-reimbursable costs to ensure budget compliance with Government Code section 14678.7.

3. Limitations of this Amended MOU a. The sole purpose of this Amended MOU is to provide a conceptualan outline of the actions that will be needed for the timely development of the Project and to facilitate the timely preparation of the documents that will be needed for the Project.

b. This Amended MOU does not commit CADA or DGS to entering into any further agreement(s), nor does it commit CADA or DGS in any way to expending any additional funds in connection with the development of the Project not contemplated by this MOU.).

c. This Amended MOU does not constitute a disposition of property or exercise of control over property by CADA or DGS. Execution of this Amended MOU does not constitute “approval” of a “project,” as those terms are defined in the California Environmental Quality Act. Execution of this Amended MOU is merely an agreement to enter into a period of negotiations according to the terms hereof, reserving final discretion and approval, which is not guaranteed, by CADA and, DGS, SPWB or Finance as to any future agreements.

d. The financing used to develop the Project may require the addition or modification of terms to address bondholder and/or lender requirements (e.g., remedies in the event of a default). These additions and modification may impact the operation of the Project as outlined herein.

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4. Amended MOU Term The term of this MOU Agreement is the period within which the project responsibilities of this agreement shall be performed. The term commences upon its approval by the CADA Board of Directors, Finance and DGS and terminates upon completion of the Project and execution of all agreements necessary for operation of the Project, or as described in section 5 herein, or an earlier date that is mutually acceptable to CADA and DGS.

5. Acquisition of Adjacent Parcels To allow for an efficiently designed mixed-use parking structure with ground floor retail, DGS, in partnership with CADA, will use its best efforts to obtain acquisition approval from the SPWB for Assessor’s Parcel Numbers 006-0266-016 and 006-0266-017 (“the 8th and 9th Street Property”) as authorized in Item 7760-301-0666 of the Budget Act of 2017. If the State, in partnership with CADA, is unable to acquire the 8th and 9th Street Property, this Amended MOU will terminate upon DGS fulfilling its reimbursement obligations related to CADA’s acquisition-related activities set forth in section 7 herein.

5.6. Lease of 805 R Street and the 8th and 9th Street Property to CADA The stateOnce the 8th and 9th Street Property is acquired, DGS intends to lease thethat property it ownstogether with the state-owned property at 805 R Street (, Assessor's Parcel Number 006-0266-014, the “DGS Property”),(“R Street Property” and together with the 8th and 9th Street Property, the “Site”) to CADA so that CADA may undertake the further development of the Project (the “Parking Structure Property Lease”). The Parking Structure Property Lease will be a stand-alone lease as opposed to an addition of the property to any existing lease between DGS and CADA.

6.1. Acquisition of Adjacent Parcels In order to allow for an efficiently designed mixed-use parking structure with ground floor retail, CADA will use its best efforts to acquire two privately owned parcels adjacent to the DGS Property (Assessor’s Parcel Numbers 006-0266-016 and 006-0266-017) as authorized in Section 14678.7 of the Government Code and with the funding provided in the 2017 State budget. CADA is authorized to undertake acquisition efforts on behalf of DGS. Nothing in this MOU is intended to limit CADA's exercise of its discretion in pursuing acquisition of the parcels.

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7. CADA Third-Party Contracting, Estimated Budget and Reimbursement of Third-Party Costs. CADA will contract with such third -party consultants as are required to undertake the actions contemplated by this agreement.it deems necessary to undertake the acquisition related activities and the financing, design, and construction related activities to implement the Project. DGS agrees that it will reimburse all of CADA’s reasonable third-party costs. CADA will pay these third -party costs and will present invoices to DGS, including backup documentation from time-to-time. DGS will reimburse CADA from lawfully available funds for its reasonable third-party costs within 60 days of invoice receipt. Total State costs for the acquisition of the 8th and 9th Street Property, including CADA’s reasonable third-party costs reimbursable by DGS, shall not exceed the appropriation provided through the Budget Act of 2017, as may be augmented by the SPWB; and, total State costs for the demolition of the existing warehouse and development of the Project, including CADA’s reasonable third-party costs reimbursable by DGS, shall not exceed the limit in section 14678.7.

8. CADA Financing of the Project After having secured the necessary leasing and contractual arrangements, CADA will its best efforts to secure financing to build the Project from the California Infrastructure and Economic Development Bank (“I-Bank”).

8.9. CADA Will Issue a Request for Proposals (RFP) for Selection of a Design-Build Contractor CADA will prepare and issue an RFP for the selection of a private design-build contractor to demolish the current warehouse at 805the R Street Property and to design and construct a seven story structure consisting of mixed use retail on the ground floor and seven stories of parking above providing approximately 800 parking spaces and associated landscape and streetscape on the Site using a design-build method of procurement. The stateNeither demolition nor any other construction activities for the Project will require the commence prior to CADA securing the necessary leasing, contractual and financing arrangements. The Project design toshall include electrical vehicle charging stations in the number stipulated by DGS. The State Architect, acting for the Director of DGS, will review and approve the design of the new parking structure in conjunction with CADA. The parking structure design will be consistent with the Capitol Area Plan, the City of Sacramento Urban Design Guidelines, and the R Street Corridor Master Plan.

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9.10. DGS Will LeaseLeaseback the Completed Parking Structure from CADA a. DGS will enter into an agreementlease, with CADA pursuanta term not to which DGS will leaseexceed 30 years, the completed parking structure back from CADA, with annual lease payments to CADA in amounts that are no less than the annual debt service required by the financing used to develop the Project. (“Financing Lease”). It is understood the total amount of State costs to be financed for the Project (other than acquisition related costs) will not exceed $30 million less any of CADA’s reasonable third-party Project related costs that are reimbursable by DGS. Upon DGS taking possession under the lease from CADA to DGSFinancing Lease, the Parties expect DGS will be responsible for maintenance, repair and operations costs of the completed parking structure. DGS will receive all income generated from parking operations., which amounts are to be used to pay debt service under the Financing Lease together with other funds that may be appropriated by the Legislature for such purpose from the Motor Vehicle Parking Facilities Money Account.

b. DGS recognizes that CADA has been an integral part of the revitalization of the R Street corridor and as such should be responsible for soliciting mixed use retail consistent with the neighborhood. Accordingly, the Parties intend that CADA act as the leasing agent and property manager of the ground floor retail spaces constructed as part of the Project under a separate management contract. Revenues generated through the lease of retail space will be contributed to the annual debt service, excluding reasonable costs incurred by CADA in managing the retail space.

10.1. CADA Financing of the Project

CADA will secure the financing to build the project based upon the income noted in Section 9, above. It is the intent of the parties that CADA will utilize California Infrastructure Bank financing for the Project, unless an alternative is identified which would permit development of the Project on more favorable terms.


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11. Parking Operation The partiesParties acknowledge that the state willDGS intends to contract for parking operation with a third party (e.g., the City of Sacramento or a private operator). In selection of a manager and an operating approach, however, the partiesThe Parties agree that the principle underpinning the operation will be maximal utilization of the facilityparking structure both during the day primarily for state employee parking, and in the evening, in support of the retailers within the Project, and retailers, office users and residents of the surrounding area, in support of the ongoing success of the R Street Corridor and in bringing in revenue in to support the debt incurred in constructing the parking structure. The partiesParties acknowledge that the parking facilitystructure will employ modern technology in order to maximize its utilization.

12. Effective Date and Signatures This Amended MOU shall be effective upon the signatures of the parties’Parties’ authorized officials. Parties indicate agreement with the terms of this Amended MOU by their signatures. Signatures and dates _________________________ ____________________________ Jim Martone, Chief Wendy S. Saunders, Executive Director Asset Management Branch Capitol Area Development Authority Real Estate Services Division Department of General Services _________________________ _____________________________ Date Date

Approval

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Approved as to form: _________________________ _____________________________

Leslie Lopez, Deputy Director Jeffrey A. Mitchell and Chief Counsel General Counsel Department of General Services CADA _________________________ _____________________________ Date Date

Approved by the Department of Finance: _________________________ Sally Lukenbill Principal Program Budget Analyst, Department of Finance

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Date

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1. Introduction The Department of General Services ((“DGS)”) of the State of California (“State”) and the Capitol Area Development Authority ((“CADA)”), each a “Party” and collectively the “Parties,” wish to enter into agreements in the future to allow for the expeditious constructionfinancing and development of a new parking structure with ground floor retail, which is anticipated to have approximately 800 parking spaces and seven stories, located at 805 R Street in the City of Sacramento, as authorized pursuant to Section 14678.7 of the California Government Code1 and funding authorized in the 2017 Budget Bill (the "Project"). The Project implementsis consistent with Principal 7 of the Transportation and Parking Objective of the 1997 Capitol Area Plan.2 Under these agreements, CADA will undertake completionfinancing and development of the parking structure, including assisting the acquisition ofstate in acquiring certain real property in partnership with DGS; demolition of existing improvements; completion of predevelopment activities; selection of a design-build contractor and execution of construction contracts; oversight of construction; project financing; and management of completed retail space. CADA’s activities will be undertaken in consultation with DGS. DGS and CADA previously executed a Memorandum of Understanding in 2017 regarding the Project (“MOU”) and now agree to amend and fully restate that MOU to clarify the Parties’ roles and responsibilities and highlight that any real property acquisition related to the Project is subject to authorization by the State Public Works Board (“SPWB”) and that any lease or related agreements implementing section 14678.7 will be submitted, prior to execution, to the Department of Finance of the State of California (“Finance”) for approval. This amended and restated MOU (“Amended MOU”) shall fully take the place of the previously executed MOU.

2. Purpose and Scope 1 All further statutory references are to the California Government Code unless otherwise specified. 2 See Table 2-2 of the Capitol Area Plan ("Land Use Diagram") and Table 5-1 (Parking Demand from New Office Development") and Figure 5-1 ("Parking Structures") of the 1997 Capitol Area Plan Implementation Program.

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The purpose of this Memorandum of Understanding (Amended MOU) is to clearly identify the roles and responsibilities of each party as they relate to: Project.

a. The lease between DGS and CADA of state-owned property located at 805 R Street;

b. CADA use of its best efforts to acquire Sacramento County Assessor’s Parcel Numbers 006-0266-016 and 006-0266-017, which shall be subsequently conveyed to DGS and included in the project;

c. The demolition of the existing warehouse at 805 R Street;

d. The development and construction of a parking structure with ground level

mixed use retail on the site and associated landscape and streetscape improvements consistent with existing and planned R Street corridor improvements.

e. Execution of a long-term lease between CADA and DGS for use of the

Project for State employee parking and public parking for the surrounding area, and for ground floor retail space. At termination of the Lease, DGS will retain ownership of the parking structure. If the Lease provides DGS with the option to terminate the Lease early, a mechanism will be included to ensure that the debt used to finance the Project is fully retired. Any early termination right will be structured in such a way that financing for the Project does not become cost prohibitive.

f. CADA financing of the Project, which shall be based on the income to

CADA from the long-term lease between CADA and DGS.

g. Operation of the Project over the term of the lease. The Parties understand and agree that they are required to obtain Finance approval of the terms, prior to execution, of any lease and all related agreements and contracts related to the financing of the R Street parking structure project pursuant to Government Code section 14678.7. For all other agreements pertaining to the development, design, and construction of the R Street parking structure project, DGS and CADA will coordinate to provide copies of these agreements to Finance and Finance shall monitor and approve the associated

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state-reimbursable costs to ensure budget compliance with Government Code section 14678.7.

3. Limitations of this Amended MOU a. The sole purpose of this Amended MOU is to provide a conceptualan outline of the actions that will be needed for the timely development of the Project and to facilitate the timely preparation of the documents that will be needed for the Project.

b. This Amended MOU does not commit CADA or DGS to entering into any further agreement(s), nor does it commit CADA or DGS in any way to expending any additional funds in connection with the development of the Project not contemplated by this MOU.).

c. This Amended MOU does not constitute a disposition of property or exercise of control over property by CADA or DGS. Execution of this Amended MOU does not constitute “approval” of a “project,” as those terms are defined in the California Environmental Quality Act. Execution of this Amended MOU is merely an agreement to enter into a period of negotiations according to the terms hereof, reserving final discretion and approval, which is not guaranteed, by CADA and, DGS, SPWB or Finance as to any future agreements.



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4. Amended MOU Term The term of this MOU Agreement is the period within which the project responsibilities of this agreement shall be performed. The term commences upon its approval by the CADA Board of Directors, Finance and DGS and terminates upon completion of the Project and execution of all agreements necessary for operation of the Project, or as described in section 5 herein, or an earlier date that is mutually acceptable to CADA and DGS.

5. Acquisition of Adjacent Parcels To allow for an efficiently designed mixed-use parking structure with ground floor retail, DGS, in partnership with CADA, will use its best efforts to obtain acquisition approval from the SPWB for Assessor’s Parcel Numbers 006-0266-016 and 006-0266-017 (“the 8th and 9th Street Property”) as authorized in Item 7760-301-0666 of the Budget Act of 2017. If the State, in partnership with CADA, is unable to acquire the 8th and 9th Street Property, this Amended MOU will terminate upon DGS fulfilling its reimbursement obligations related to CADA’s acquisition-related activities set forth in section 7 herein.

5.6. Lease of 805 R Street and the 8th and 9th Street Property to CADA The stateOnce the 8th and 9th Street Property is acquired, DGS intends to lease thethat property it ownstogether with the state-owned property at 805 R Street (, Assessor's Parcel Number 006-0266-014, the “DGS Property”),(“R Street Property” and together with the 8th and 9th Street Property, the “Site”) to CADA so that CADA may undertake the further development of the Project (the “Parking Structure Property Lease”). The Parking Structure Property Lease will be a stand-alone lease as opposed to an addition of the property to any existing lease between DGS and CADA.

6.1. Acquisition of Adjacent Parcels In order to allow for an efficiently designed mixed-use parking structure with ground floor retail, CADA will use its best efforts to acquire two privately owned parcels adjacent to the DGS Property (Assessor’s Parcel Numbers 006-0266-016 and 006-0266-017) as authorized in Section 14678.7 of the Government Code and with the funding provided in the 2017 State budget. CADA is authorized to undertake acquisition efforts on behalf of DGS. Nothing in this MOU is intended to limit CADA's exercise of its discretion in pursuing acquisition of the parcels.

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7. CADA Third-Party Contracting, Estimated Budget and Reimbursement of Third-Party Costs. CADA will contract with such third -party consultants as are required to undertake the actions contemplated by this agreement.it deems necessary to undertake the acquisition related activities and the financing, design, and construction related activities to implement the Project. DGS agrees that it will reimburse all of CADA’s reasonable third-party costs. CADA will pay these third -party costs and will present invoices to DGS, including backup documentation from time-to-time. DGS will reimburse CADA from lawfully available funds for its reasonable third-party costs within 60 days of invoice receipt. Total State costs for the acquisition of the 8th and 9th Street Property, including CADA’s reasonable third-party costs reimbursable by DGS, shall not exceed the appropriation provided through the Budget Act of 2017, as may be augmented by the SPWB; and, total State costs for the demolition of the existing warehouse and development of the Project, including CADA’s reasonable third-party costs reimbursable by DGS, shall not exceed the limit in section 14678.7.


8.9. CADA Will Issue a Request for Proposals (RFP) for Selection of a Design-Build Contractor CADA will prepare and issue an RFP for the selection of a private design-build contractor to demolish the current warehouse at 805the R Street Property and to design and construct a seven story structure consisting of mixed use retail on the ground floor and seven stories of parking above providing approximately 800 parking spaces and associated landscape and streetscape on the Site using a design-build method of procurement. The stateNeither demolition nor any other construction activities for the Project will require the commence prior to CADA securing the necessary leasing, contractual and financing arrangements. The Project design toshall include electrical vehicle charging stations in the number stipulated by DGS. The State Architect, acting for the Director of DGS, will review and approve the design of the new parking structure in conjunction with CADA. The parking structure design will be consistent with the Capitol Area Plan, the City of Sacramento Urban Design Guidelines, and the R Street Corridor Master Plan.

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9.10. DGS Will LeaseLeaseback the Completed Parking Structure from CADA a. DGS will enter into an agreementlease, with CADA pursuanta term not to which DGS will leaseexceed 30 years, the completed parking structure back from CADA, with annual lease payments to CADA in amounts that are no less than the annual debt service required by the financing used to develop the Project. (“Financing Lease”). It is understood the total amount of State costs to be financed for the Project (other than acquisition related costs) will not exceed $30 million less any of CADA’s reasonable third-party Project related costs that are reimbursable by DGS. Upon DGS taking possession under the lease from CADA to DGSFinancing Lease, the Parties expect DGS will be responsible for maintenance, repair and operations costs of the completed parking structure. DGS will receive all income generated from parking operations., which amounts are to be used to pay debt service under the Financing Lease together with other funds that may be appropriated by the Legislature for such purpose from the Motor Vehicle Parking Facilities Money Account.


10.1. CADA Financing of the Project

CADA will secure the financing to build the project based upon the income noted in Section 9, above. It is the intent of the parties that CADA will utilize California Infrastructure Bank financing for the Project, unless an alternative is identified which would permit development of the Project on more favorable terms.


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11. Parking Operation The partiesParties acknowledge that the state willDGS intends to contract for parking operation with a third party (e.g., the City of Sacramento or a private operator). In selection of a manager and an operating approach, however, the partiesThe Parties agree that the principle underpinning the operation will be maximal utilization of the facilityparking structure both during the day primarily for state employee parking, and in the evening, in support of the retailers within the Project, and retailers, office users and residents of the surrounding area, in support of the ongoing success of the R Street Corridor and in bringing in revenue in to support the debt incurred in constructing the parking structure. The partiesParties acknowledge that the parking facilitystructure will employ modern technology in order to maximize its utilization.

12. Effective Date and Signatures This Amended MOU shall be effective upon the signatures of the parties’Parties’ authorized officials. Parties indicate agreement with the terms of this Amended MOU by their signatures. Signatures and dates _________________________ ____________________________ Jim Martone, Chief Wendy S. Saunders, Executive Director Asset Management Branch Capitol Area Development Authority Real Estate Services Division Department of General Services _________________________ _____________________________ Date Date

Approval

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_________________________

Date

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1. Introduction The Department of General Services (“DGS”) of the State of California (“State”) and the Capitol Area Development Authority (“CADA”), each a “Party” and collectively the “Parties,” wish to enter into agreements in the future to allow for the expeditious financing and development of a new parking structure with ground floor retail, which is anticipated to have approximately 800 parking spaces and seven stories, located at 805 R Street in the City of Sacramento, as authorized pursuant to Section 14678.7 of the California Government Code1 and funding authorized in the 2017 Budget Bill (the "Project"). The Project is consistent with Principal 7 of the Transportation and Parking Objective of the 1997 Capitol Area Plan.2 Under these agreements, CADA will undertake financing and development of the parking structure, including assisting the state in acquiring certain real property in partnership with DGS; demolition of existing improvements; completion of predevelopment activities; selection of a design-build contractor and execution of construction contracts; oversight of construction; project financing; and management of completed retail space. CADA’s activities will be undertaken in consultation with DGS. DGS and CADA previously executed a Memorandum of Understanding in 2017 regarding the Project (“MOU”) and now agree to amend and fully restate that MOU to clarify the Parties’ roles and responsibilities and highlight that any real property acquisition related to the Project is subject to authorization by the State Public Works Board (“SPWB”) and that any lease or related agreements implementing section 14678.7 will be submitted, prior to execution, to the Department of Finance of the State of California (“Finance”) for approval. This amended and restated MOU (“Amended MOU”) shall fully take the place of the previously executed MOU.

2. Purpose and Scope

1 All further statutory references are to the California Government Code unless otherwise specified. 2 See Table 2-2 of the Capitol Area Plan ("Land Use Diagram") and Table 5-1 (Parking Demand from New Office Development") and Figure 5-1 ("Parking Structures") of the 1997 Capitol Area Plan Implementation Program.

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The purpose of this Amended MOU is to clearly identify the roles and responsibilities of each party as they relate to Project. The Parties understand and agree that they are required to obtain Finance approval of the terms, prior to execution, of any lease and all related agreements and contracts related to the financing of the R Street parking structure project pursuant to Government Code section 14678.7. For all other agreements pertaining to the development, design, and construction of the R Street parking structure project, DGS and CADA will coordinate to provide copies of these agreements to Finance and Finance shall monitor and approve the associated state-reimbursable costs to ensure budget compliance with Government Code section 14678.7.

3. Limitations of this Amended MOU a. The purpose of this Amended MOU is to provide an outline of the actions that will be needed for the timely development of the Project and to facilitate the timely preparation of the documents that will be needed for the Project.

b. This Amended MOU does not commit CADA or DGS to entering into any further agreement(s).

c. This Amended MOU does not constitute a disposition of property or exercise of control over property by CADA or DGS. Execution of this Amended MOU does not constitute “approval” of a “project,” as those terms are defined in the California Environmental Quality Act. Execution of this Amended MOU is merely an agreement to enter into a period of negotiations according to the terms hereof, reserving final discretion and approval, which is not guaranteed, by CADA, DGS, SPWB or Finance as to any future agreements.


4. Amended MOU Term The term commences upon its approval by the CADA Board of Directors, Finance and DGS and terminates upon completion of the Project, or as described in section 5 herein, or an earlier date that is mutually acceptable to CADA and DGS.

5. Acquisition of Adjacent Parcels

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To allow for an efficiently designed mixed-use parking structure with ground floor retail, DGS, in partnership with CADA, will use its best efforts to obtain acquisition approval from the SPWB for Assessor’s Parcel Numbers 006-0266-016 and 006-0266-017 (“the 8th and 9th Street Property”) as authorized in Item 7760-301-0666 of the Budget Act of 2017. If the State, in partnership with CADA, is unable to acquire the 8th and 9th Street Property, this Amended MOU will terminate upon DGS fulfilling its reimbursement obligations related to CADA’s acquisition-related activities set forth in section 7 herein.

6. Lease of 805 R Street and the 8th and 9th Street Property to CADA Once the 8th and 9th Street Property is acquired, DGS intends to lease that property together with the state-owned property at 805 R Street, Assessor's Parcel Number 006-0266-014, (“R Street Property” and together with the 8th and 9th Street Property, the “Site”) to CADA so that CADA may undertake the further development of the Project (the “Parking Structure Property Lease”). The Parking Structure Property Lease will be a stand-alone lease as opposed to an addition of the property to any existing lease between DGS and CADA.

7. CADA Third-Party Contracting, and Reimbursement of Third-Party Costs. CADA will contract with such third-party consultants as it deems necessary to undertake the acquisition related activities and the financing, design, and construction related activities to implement the Project. DGS agrees that it will reimburse all of CADA’s reasonable third-party costs. CADA will pay these third-party costs and will present invoices to DGS, including backup documentation from time-to-time. DGS will reimburse CADA from lawfully available funds for its reasonable third-party costs within 60 days of invoice receipt. Total State costs for the acquisition of the 8th and 9th Street Property, including CADA’s reasonable third-party costs reimbursable by DGS, shall not exceed the appropriation provided through the Budget Act of 2017, as may be augmented by the SPWB; and, total State costs for the demolition of the existing warehouse and development of the Project, including CADA’s reasonable third-party costs reimbursable by DGS, shall not exceed the limit in section 14678.7.


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9. CADA Will Issue a Request for Proposals (RFP) for Selection of a Design-Build Contractor CADA will prepare and issue an RFP for the selection of a private design-build contractor to demolish the current warehouse at the R Street Property and to design and construct a seven story structure consisting of mixed use retail on the ground floor and seven stories of parking above providing approximately 800 parking spaces and associated landscape and streetscape on the Site using a design-build method of procurement. Neither demolition nor any other construction activities for the Project will commence prior to CADA securing the necessary leasing, contractual and financing arrangements. The Project design shall include electrical vehicle charging stations in the number stipulated by DGS. The State Architect, acting for the Director of DGS, will review and approve the design of the new parking structure in conjunction with CADA. The parking structure design will be consistent with the Capitol Area Plan, the City of Sacramento Urban Design Guidelines, and the R Street Corridor Master Plan.

10. DGS Will Leaseback the Completed Parking Structure from CADA

a. DGS will lease, with a term not to exceed 30 years, the completed parking structure back from CADA, with annual lease payments to CADA in amounts that are no less than the annual debt service required by the financing used to develop the Project (“Financing Lease”). It is understood the total amount of State costs to be financed for the Project (other than acquisition related costs) will not exceed $30 million less any of CADA’s reasonable third-party Project related costs that are reimbursable by DGS. Upon DGS taking possession under the Financing Lease, the Parties expect DGS will be responsible for maintenance, repair and operations costs of the completed parking structure. DGS will receive all income generated from parking operations, which amounts are to be used to pay debt service under the Financing Lease together with other funds that may be appropriated by the Legislature for such purpose from the Motor Vehicle Parking Facilities Money Account.


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11. Parking Operation

The Parties acknowledge that DGS intends to contract for parking operation with a third party (e.g., the City of Sacramento or a private operator). The Parties agree that the principle underpinning the operation will be maximal utilization of the parking structure both during the day primarily for state employee parking, and in the evening, in support of the retailers within the Project, and retailers, office users and residents of the surrounding area, in support of the ongoing success of the R Street Corridor and bringing in revenue to support the debt incurred in constructing the parking structure. The Parties acknowledge that the parking structure will employ modern technology to maximize its utilization.

12. Effective Date and Signatures This Amended MOU shall be effective upon the signatures of the Parties’ authorized officials. Parties indicate agreement with the terms of this Amended MOU by their signatures. _________________________ ____________________________ Jim Martone, Chief Wendy S. Saunders, Executive Director Asset Management Branch Capitol Area Development Authority Real Estate Services Division Department of General Services _________________________ _____________________________ Date Date

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_________________________

Date

RESOLUTION NO. 18 –

Adopted by the Capitol Area Development Authority

September 28, 2018

A RESOLUTION OF THE BOARD OF DIRECTORS OF THE CAPITOL AREA DEVELOPMENT AUTHORITY APPROVING THE AMENDED AND

RESTATED MEMORANDUM OF UNDERSTANDING BETWEEN DGS AND CADA REGARDING THE 8TH AND R PARKING STRUCTURE

WHEREAS, on June 23, 2017, the CADA Board of Directors approved a Memorandum of Understanding (MOU) with the California Department of General Services regarding the obligations of the parties related to planning, financing and constructing a parking structure on R Street between 8th and 9th streets, and

WHEREAS, the parties now with to amend the previously approved MOU;

NOW, THEREFORE, BE IT RESOLVED by the Board of Directors of the Capitol Area Development Authority as follows:

Section 1. The Amended and Restated Memorandum of Understanding between California Department of General Services and the Capitol Area Development Authority regarding the development of the R Street Parking Structure is hereby approved.

* * * *

I, the undersigned, hereby certify that the foregoing Resolution was duly and regularly adopted and passed by the Board of Directors of the Capitol Area Development Authority in a regular meeting assembled on the 28th day of September 2018, by the following vote:

AYES:

NOES:

ABSENT:

ABSTENTIONS:

IN WITNESS, WHEREOF, I have hereunto set my hand and affixed the seal of said Capitol Area Development Authority this 28th day of September 2018.

_________________________ _________________________ Ann Bailey, Chair Rachel Mercurio, Secretary Capitol Area Development Authority Capitol Area Development Authority

Documents

TO: AGENDA ITEM 5 8TH AND R PARKING STRUCTURE – … · September 19, 2018 TO: CADA Board of Directors SUBJECT: September 28, 2018 Board Meeting AGENDA ITEM 5 8TH AND R PARKING STRUCTURE