HomeMy WebLinkAbout1998-10-28 Business Park Advisory Committee MinutesREADING BUSINESS PARK ADVISORY COMMITTEE MINUTES
October 28, 1998; 7:30 p.m., RMLD AV Room
Committee members present: Bob Lelacheur, Don Stroeble, George
Hines, Dick McDonald, Bob Nordstrand, David Nugent, Neil Sullivan,
John Coote.
Absent: Mike Flammia.
Staff present: Lisa Smith (Grubb & Ellis), Jack Kerrigan (Grubb & Ellis),
Mike McGonigle (Grubb & Ellis), Assistant Town Manager Russell Dean,
Town Manager Peter Hechenbleikner.
The meeting was called to order by George Hines at 7:40 p.m.
Chairman Hines opened the meeting saying this was going to be the
committee's final evaluation process this evening if everything goes
according to plan. Chairman thanked all developers for submitting
proposals - that all were excellent and the process was difficult. He
indicated that developers had to have a sensitive ear because tonight
committee members may be saying things in the evaluation that
developers "may not agree with." Still, the process is an open meeting
and that is the way it goes.
Chairman Hines indicated that committee member Mike Flammia's law
firm had enlisted Home Depot as a corporate client and therefore had to
excuse himself from the proceedings. CPDC member Rick Schubert was
present to stand in as an observer to the process.
Chairman Hines then gave the committee some options relative to the
evaluations: to use narratives as a backup to rankings or compile notes
and assemble them as a narrative. The committee preferred the latter
approach.
Don Stroeble has an exhaustive list of questions. Three important areas
to rank each developer on: real estate market - not sure of timelines.
Anyone selected must cover capping using developer resources - Town
does not want another Homart. When economy goes south funds must
be guaranteed. Compatible uses emphasized. Usage should have a
continued long term viability. Also long term revenue stream important.
How quickly can development go up not a factor - long term viability is.
Chairman Hines said he had dialogue with Selectmen last night. The
committee is not restricted to referring three proposals. Possible
framework was committee would refer three proposals to which BOS
would begin negotiations. Interviews are a definite possibility at this
point. BOS should have as much information as possible. BOS has
asked for comprehensive evaluations on the 10 proposals.
Dave Nugent said a focused group of questions and follow up on financial
due diligence is a necessity. Grubb & Ellis happy to help out in this
regard.
Chairman Hines said some proposals more speculative than others.
Some "glossy," everything read is not to be taken as gospel.
Russ Dean then presented the committee with a 50-page presentation
piece with comprehensive analysis. Each committee member had done
an evaluation ranking (Highly Advantageous, Advantageous, etc.) on each
criteria listed in the request for proposals. A point equivalent was given
to each on a sliding scale (3, 2, 1, 0) and points were added up. The top
three proposals, using this system, were 1. Corporex, 2. Lincoln
Properties, and 3. Dickinson (proposal #2). Leach, Callan,
Locke/ Cashman/ Thurmo, and 3JMA LLC rounded out the field. Russ
Dean explained the various factors, which were to be considered by the
committee members in the RFP and analyzed the point totals to arrive at
the ranking. There were a total of 50 different factors and a total
possible point score of 1200.
Town Accountant Richard Foley pointed out in his revised analysis, there
were no substantial changes. However, he did note that a hotel
ingredient would make any proposal more lucrative due to the
Hotel/Motel Excise tax that reverts to the Town. This makes the
proposal richer on an annual basis.
Chairman Hines asked now for input from each committee member on
each proposal for the purpose of forming a narrative to accompany the
ratings:
3JMA LLC
Nordstrand: Entity formed for this purpose. Person proposing has no
organization. Little or no experience of those involved. Residential in 3
phases - no plan for office or hotel. Could end up with partial and
nothing else. Rated low on Financial Factors - Developer and Personnel
Factors; paid attention to the site and had a good understanding.
Capping costs sounded like financing that would come from the project.
Mining process - what happens when landfill is mined? What will be
mined? Items of value seem to have disappeared. Estimates given to do
mining impacted proposal of Town. Residential potential impact but
senior housing would not have same effect.
Locke/ Cashman/Thurmo
Major plus was Cashman - solid reputation. Nordstrand rated higher.
Presenter candid about real estate market and knowledgeable. Marriott
involvement undefined. Good team. No money up front for landfill a
negative. Long run would have been good tax wise. Good on
environment. Concern about softening of market on office development.
When do buildings get built? Office components, timing, etc. risky
factors and how it effects our site specifically. Cashman has deep pockets
but the office market is weak. Hotel market slightly stronger. Long term
value may be superior to others because of the mix. "Suburbanization"
of office trend likely to continue. Jack Kerrigan doesn't think an empty
building would be built in this market. Look for mixed uses - more
advantageous. Don't count on build to suits. Strongest part was
financing of capping. May end up with a capped landfill but just a
Marriott. Hotel market - surprising to get a proposal that included two
hotels. Heard before started there was no hotel market. Speculative
proposal made it seem most uncertain. Experience of team excellent but
speculation made it tough.
Callan
Not high because proposal was all office and there is another office park
nearby. Echoed by Nugent - took 4 years to close in a good market -
what does this mean for Reading? DMD leery of office space - office a
couple of miles away.
Leach
Leach proposal indefinite. Retail not nailed down. 135,000 square feet.
Financing seemed to be there if it's viable. Financing - Lelacheur -
presentation was poor. "Grayness" extended into financing. 10,000,000
less cost - possibility of spending 10 million to cap landfill. Uses were
minimized. Presentation geared toward experts. DMD it looks like the
best return. Not warm feeling about the 10 million. Seemed like capping
was a plus with team involved. Stroeble not a lot of comfort over the
numbers, off-site and on-site way off kilter relative to other proposals.
What does 3 million consist of? George Hines asked Ted Cohen if the
developer could be locked into a $1 for capping deal. Ted Cohen
answered yes, developer could be held to a figure. Neil Sullivan
mentioned Leach claims to have money. Dave Nugent said you could
have the best media presentations, present in the best light. Buying
someone's ability on track record important. Want to pick one on day-to-
day basis that can get the job done. Questioned truthfulness of the
proposal. No identification of users or potential users. What happens to
the downtown area? Too many unanswered questions. Not enough
definition of where money was going. Proposed a balance = indicated
long term viability. Everyone fairly close - want deal. Throw a large
number at the buyer and hope they take the bait. Developer's flagship is
Wal Mart. Retail is highest. Leach won't share specifics of this. Finard
strength is in retail/shopping center management. Big number has hit
everyone on the head. George Hines said the Selectmen are savvier than
that. Peter Hechenbleikner said he made calls on the Stratford project.
Good things. to say about the developer but nothing built on the site
since 1994. Some delays were caused by Raymark. No completion yet -
whose money was put into the project - partners or Leach's?
Dickinson
Bob Nordstrand: Numerically in top 3. Record is known in the area.
Personnel very good. Big box and theater uses are negatives. John
Coote: Did not hear presentation. Concerns about traffic volumes and
time of day. Rated low in environmental factors, but didn't show in the
final numbers. Impressed by quick turnaround of developing site.
Seemed to have ducks in a row. DS agrees with DMcD - would be built
and be up and running. Viability of big box is a question - Town's
reaction to big box is a negative. What becomes of a big box 10-20 years
down the road a la Lechmere? Concerned about 1800 parking spaces.
Compare to Woburn cinema site. Traffic an issue. Can mitigate with
some proper controls - worried about late night impact of movie times -
traffic and "round the clock" usage. Thinks movie theater would be more
popular than Woburn (sees a negative). What happens to the site behind
TASC? Does entire area become retail? Long term revenue stream not
as high as others. NS: Good track record. Strings attached to 3 million
on proposal a minus. Want Town to deliver material. A question on
finishing of office building. Could BOS negotiate a change in the timing
of payment? Yes. Is tying the COO to payments uncommon? THC: No.
Bear Hill was done same way. It isn't unusual. Significant payment up
front to put in an escrow account to recoup funds. Town could be seen
as a co-developer in this scenario. Issue that Town gets is
paramount. Deed may have reverter provision. Guarantee provision of
Careful about carrot that may not be there. Economic Development
factors: 2 of 3 generate low paying jobs. This is an issue. Wage levels
are an issue. Deserve consideration but thinks provisions have to be
weighed. DN: Feels greater consideration should be developer selection
and closing. Developers never build with their own money.
Commitments are there from tenants. Lechmere was a regional company
- no comparison. Personally liquidated Lechmere and Grossman's. Real
estate can be recycled. Want to tie up with person that has ability to
close. Understands environmental impacts of proposal. Get taxes back
quickly. Understands the site. Jack Kerrigan indicated a good spread of
use. Seem ready to go. Good mix of uses.
Lincoln Properties
BN: Very high on list. Quality development as a whole. First class
office/hotel and residential. Lincoln has experience to do a good job.
Company does their own planning. Number of children 300 units will
develop on school system. Dick McD: Good proposal. Good mix. All 300
units built at one time. Total package a plus. Assuming commitment to
site a solid proposal. Concerned about changing mix a la Fairfax,
Virginia when office market died proposal was changed to all residential.
DN: Concern is the mix. Lincoln is a great company - when will the
office get developed? Want to build all market units. Affordable housing
would be dealt with on site and 10% was not an unreasonable number.
Boston based company which is important. Rated highly by John Coote.
High incomes - subsidized housing. Well thought. out. Very clear that
proposal had time spent on it. Presented facts did not leave much to
the imagination that should be considered. Jack Kerrigan said strong
company, well financed. Negatives: highest impact on Town services.
Will be a factor. in final decision.
Corporex
Financial strength good, good track record. Owner and CEO came to
presentation - brought key people with them. Mixed use - doesn't
interfere with "Y" because of price tag. Question as to whether the lease
proposal is viable. Lease is perpetual. Chapter 59, Section 2B on real
estate taxes. Leased for public profit - taxed as if individual owns
property. DN: One of top 3 - concern that would stay with the project for
long period of time. Wants to pass title. Land lease attractive for 99
years - need to look into credit of Corporex. DS: Impressed by Corporex
- could conceive of placing X dollars of improvements on leased property.
Lease subordination represented as not necessary. Thinks seed money
would be used to get buildings up and running. Charles Street in Boston
done same way. Question if Corporex is willing to pay the cost of closure
and capping, then why not buy the property? Thinks they just do not
want to own. Could convert the lease. Can Town sell the liability on the
property? Environmental liability on property? Are we still liable?
Under 21 E we are always going to be liable - can develop an indemnity
clause. EPA and DEP do not have to honor this - can come after the
Town regardless. AIG (Lisa) will issue liability policy at $50,000 per year.
Lease would be subject to same zoning. Willing to put their own vendors
on property differentiates Corporex and Dickinson proposals. Investment
protection. Very strong presentation - confident of abilities - good
financial return, few environmental impacts. Reading site very valuable
to Corporex - would do the job with a view to the future. Five Seasons.
Are they flagging Hilton and will they be the owner? 87,000 square foot
health club is going to be a very busy place. Concept very popular in the
midwest. Club membership and initiation not that high. Office building
component a big plus. Health club/dining facility a big plus on drawing
companies to the office component. Start one and phase second. Club a
floating slab. Would not need deep pilings. Northeast development costs
high. Zoning, planning a concern due to lack of activity in northeast.
Project manager lives in Winchester but is merely "financing guy."
Chairman Hines asked Town Counsel Ted Cohen about deviating from
the rankings. Town counsel mentioned that land acquisition or
disposition generally followed the ranking rule of thumb, but that other
factors may influence the committee's decision-making process and
should not be ruled out, so far as. they are fair and equitable in nature.
Therefore, it was decided to use the rankings of the point score as a
definitive guide, but not a concrete, unchangeable directive.
Based upon the prior rankings and discussion, it was agreed that Callan
and 3JMA LLC would be eliminated from further consideration.
A discussion on how to reach a final ranking then took place. Committee
members voiced their opinion, and it was finally decided each committee
member would "rank" the proposals from 1 to 10, with 10 being the
highest. The composite and totals are below:
Cor orex
Lincoln
Dickinson
Leach
LCT
Member 1
10
10
5
3
7
Member 2
9
10
8
5
4
Member 3
9
10
10
8
9
Member 4
9
6
5
10
3
Member 5
10
9
5
2
9
Member 6
10
10
7
3
4
Member 7
10
10
10
0
0
Member 8
10
8
4
3
3
TOTAL
77
73
54
34
39
David Nugent made a motion to refer the top three proposals to the
Board of Selectmen. Sullivan second. Motion carries 8-0-0.
George Hines made the point he would need to justify to the Board of
Selectmen why a 10 million dollar proposal was not part of the final mix.
The committee restated the reasons detailed above. It was also noted the
Selectmen have the power and ability to reconsider any proposal they
want, although the committee has done its homework and these appear
to be the three best proposals.
Don Stroeble motioned the Reading Business Park Task Force
recommend to the Board of Selectmen the following:
- 1. That the Town consider retaining a law firm with extensive experience
in commercial real estate development, brownfields and
environmentally challenged sites to assist in contract negotiations for
re-use of the landfill.
2. That the purchase and sales or lease contract contains a reasonable,
but limited time for the developer to perform their due diligence.
Following that time period, the developer must commit to acquire the
property contingent only upon receiving appropriate zoning approvals.
Upon receiving Town approvals, the developer must commit funds
(e.g., cash, bond, letter of credit) sufficient to cover the cost of capping
the landfill.
3. That the usage and densities described in the proposals be the only
ones permitted on the site.
Lelacheur second. Motion carries 8-0-0.
Motion to adjourn made by Neil Sullivan at 10:25 p.m. Nordstrand
second. Motion carries 8-0-0.
Russell Dean