HomeMy Public PortalAbout04) ) Lowe Enterprises Real Estate Group P3 Proposal
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April 20, 2012
Mr. Jose Pulido
City of Temple City
9701 Temple City Blvd.
Temple City, CA 91780
RE: Public Private Partnership (P3) for Civic Center and Temple City Unified School District (TCUSD) Adjacent Property
Temple City, California
Dear Mr. Pulido,
We appreciate the time that you spent with Armando Gonzalez and me on April 2, 2012 to discuss the City’s plans
for the redevelopment of your Civic Center and the potential connection with the adjacent TCUSD property. As
discussed, given the complexities of the site, it may make the most sense to further investigate the development of
a joint project using a new joint entity which is comprised of the School District and the City of Temple City.
Lowe Enterprises (“Lowe”) has extensive experience working with a number of California cities in forming these P3
entities and can be helpful to the City of Temple City and the District in a similar effort. For example, we are working
with the City of San Pablo on a joint-use community center on a middle school campus. As City of Temple City’s
partner, we will work closely with you to meet all of City’s goals and objectives through the development of a new
Civic Center complex.
As we have presented previously, Lowe has proven experience working with clients to develop public “build-to-suit”
properties which meet the specific needs of the user groups. Our wide ranging history with commercial
development solutions typically has us seeking the best balance of features, attributes and affordability while still
delivering a high-quality product for the public sector at a below market cost for many years of use. We find that it
is also important to focus not only on the immediate needs, but also to address the long-term flexibility of the
buildings we develop for future changes to meet community needs.
From what you have described and based on our initial estimates, there is sufficient land area on the City of Temple
City property for the development of a cost effective city hall building and possible new county library. In order to
further the analysis in terms of land area needs, building costs and financing options, Lowe proposes a three phase
engagement program. Through this process Lowe will provide development and construction management services
to City of Temple City for the new facilities.
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Phase One- CONCEPTUAL: This phase consists of the initial preliminary review of the available sites, constraints,
opportunities, entitlement requirements, and financing options, project scheduling and includes the following
deliverables:
Three capacity study design concept options for the Civic Center and adjacent TCUSD properties
Study options for possible performance center
Develop a conceptual site plan depicting the selected option
Review of Entitlement/Planning requirements
Develop preliminary project schedule
Investigate and outline preliminary financing concepts
It is expected that the Phase I duration will be approximately 60 days from commencement and will conclude with a
presentation of the pros/cons of the options and City of Temple City’s selected option.
Phase Two- DESIGN, PERMITABLE DOCUMENTS and FINANCING:
Once a determination is made of a specific option, this phase continues the development process of planning,
entitlements, design, client approvals and arrangement of financing that brings the development to a point that it is
ready to commence construction. Phase two includes the following:
Selection of financing program
Entitlement processing with local jurisdiction (EIS/EIR/MND)
Engineering consultant selection process
Design development and construction documentation plans
Selection of general contractor
Negotiation of and execution of a guaranteed maximum contract for construction
Building plan check and permitting processes
Financing program issuance
It is expected that the Phase two duration will be approximately 12 to 16 months depending on entitlement and
permitting required.
Phase Three- CONSTRUCTION and OCCUPANCY:
Following the complete processing of design and approvals and financing the facilities can commence construction.
Phase three covers the construction process through completion and occupancy. Phase three includes the
following:
Commencement of construction
Development and construction management of the project
o Contract administration
o Insurance and risk management
o Project accounting
o Cost forecasting & reporting
o Financing administration
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o Schedule compliance
o Updated estimating and budgeting
o Bidding & award of contracts
o Quality control
o Safety compliance
o Close-out documentation
o Monthly reporting
o Compliance with City/agency development conditions
It is expected that the phase three duration will be approximately 18 months.
Development and Construction Management Fees:
Fees for Development and Construction management services are as follows:
Phase One: Professional service fee of $25,000 for initial investigations, review and recommendations.
During this phase, Lowe will work with Gonzalez Goodale Architects to develop a facility program. This
facility program will provide initial capacity studies and guidance for the City and School District personnel to
review the opportunity. Should the City elect at the end of Phase Two to move forward, then this service
fee amount would be credited to the City.
Phase Two: At the commencement of Phase Two it is contemplated that City of Temple City and Lowe
Enterprises Real Estate Group will enter into a comprehensive development and construction management
agreement for the planning, processing and ultimate development and construction of the facility which
cover both phase two and phase three. The total professional service fees for this total work are proposed
to be at 5% of the total development costs and paid on a monthly basis evenly over the development and
construction period. As an example if the total development costs are $30M over a 30 month period (phase
two and three), the monthly fee is therefore $50,000 (5% of $30M over a 30 month period). During phase
two of the work, Lowe will defer 100% of the monthly fee up to the closing of the financing. At that time,
the entire balance of the phase two fee (100%) will be earned and payable through the project finance (and
anticipated pre-development costs to date reimbursed to City of Temple City). Should for any reason City of
Temple City elect not to move forward with the project once phase two is completed, 50% of Lowe’s
deferred fees become payable. Finally, in any build-to-suit development, Lowe will advance 3rd party
approved design costs. Should for any reason City of Temple City elect not to move forward with the project
once phase two design is completed, The City of Temple City will reimburse Lowe for the approved 3rd party
design costs incurred. Lowe will, in exchange, provide all design materials to the City. In order to achieve
this we will propose an incentive structure which will align with the key City of Temple City goals and
objectives whether they be cost and/or schedule savings. The details of such an incentive structure can be
determined within the development and construction management agreement.
Phase Three: During construction the development and construction management agreement will be in
place and Lowe will continue to receive the balance of the 5% fee. A retention of 5% will be he ld to allow
for the fee to be reconciled to final project costs.
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Third-party costs: During the development period, all third party costs will be project costs and as such will
be a part of the project financing. During phase two of the development and construction period, all third
party costs, those of other consultants, architects, engineers and contractors, etc. will be paid directly by
Lowe. As described earlier, should for any reason the City of Temple City elect not to move forward with the
project once phase two design is completed, the City of Temple City will reimburse Lowe for the approved
3rd party design costs incurred. Once Phase three commences, all third party costs will be funded from the
construction financing of the project.
In order to further fine-tune the expected building type and associated cost estimates it will be helpful to obtain
further feedback and insight from you and City of Temple City in terms of timing, phasing, building type and use
programming. Lowe’s preliminary financing strategy is one which seeks out the most cost-effective capital for the
development, which in turn keeps the occupancy cost low, and competitive with current market opportunities.
Following further feedback, we can take into account both the economic and functional objectives for the building
and address those with a high quality, efficient and attractive design.
Lowe’s past experience of successful public sector “build-to-suit” projects and sustainable design, combined with
our ability to access capital for such developments are key attributes for an efficient P3 development partnership.
Furthermore, this combination of features and attributes work in conjunction to deliver an affordable solution for
the City of Temple City and TCUSD. Lowe is committed to delivering your P3 project with exceptionally high quality
and value. We appreciate this opportunity and look forward to discussing our “open-book” partnership approach
with you in more detail. Should you have any questions, please call.
Very truly yours,
Lowe Enterprises Real Estate Group
J. Alberto Lemus
Senior Vice President