REPORT TO COUNCIL
SUBJECT
Title
Authorize the City Manager to enter into an Agreement for Real Estate Services with CBRE Inc. for the Loyalton Property and Other City Properties and Enter into Listing Agreements for Individual Properties
Report
COUNCIL PILLAR
Deliver and Enhance High Quality Efficient Services and Infrastructure
BACKGROUND
The City of Santa Clara owns and maintains approximately 10,270 rural acres of undeveloped land in Lassen and Sierra Counties near the California-Nevada border. The property is located in northeastern California, about 30 miles north of Truckee, CA, 110 miles northeast of Sacramento, CA, and about 20 miles northwest of Reno, NV. The land is referred to locally as the Trosi Ranch, and within the City as the Loyalton Ranch Property. The City purchased the property with electric utility funds in 1977 for $1,613,850 or $157/acre. The City’s Electrical Department, doing business as Silicon Valley Power (SVP), is responsible for the maintenance of the property.
The City declared the property Surplus on June 7, 2022. On December 8, 2022 the City submitted all appropriate documents to the State and completed the Surplus Land Act process January 9, 2023 (Attachment 3). The City can now move forward with sale of the property and requires real estate services for the sale.
DISCUSSION
Pursuant to City Code Section 2.105.140(c), a qualifications based Request for Proposals (RFP) was conducted, with the award recommendation based on “best value.”
The City published a Request for Proposals (RFP) #22-23-55 to solicit proposals from qualified firms for Real Estate Brokerage services. The RFP was published using the City’s bid notification system, and one proposal was received from CBRE, Inc.
Evaluation Process: CBRE’s proposal was evaluated by a two-member evaluation team against the criteria published in the RFP. An interview was also conducted. Staff determined CBRE met all RFP criteria and is qualified to perform the services in the RFP.
Staff inquired with several firms that reviewed the RFP as to why they didn’t submit a proposal. The prevalent response was that they do not have the capacity or geographical presence to perform the breadth of required services.
Award Recommendation:
Staff recommends the award to CBRE, Inc, for Real Estate Services. At such time that services are required, staff will initiate task orders for specific real estate services and enter into individual listing agreements as needed.
Notice of Intended Award: A Notice of Intended Award announcing the City’s recommended vendor was issued on February 7, 2023.
Term of Agreement: The initial term of the proposed agreement will be five years. The City reserves the right to exercise up to five (5) one-year options to extend the agreement, for a total of ten years.
Summary of Agreement:
The scope of services of the proposed agreement (Attachment 1) will include the following work:
1. Contractor will provide real estate transaction services for the disposition of the city-owned Loyalton Ranch Property in accordance with the Technical Capabilities & Management Plan.
2. Provide the City with commercial brokerage services, representing the City’s interest in the disposition, acquisition, or leasing of real estate assets as required and providing associated services such as conducting due diligence, soliciting term sheets, performing financial analysis, and guiding the City through the transaction.
3. Provide City Staff with strategic planning for real estate assets owned or acquired by the City including marketing strategy; and periodic progress updates and timely communication with assigned staff. as required
4. Provide City Staff with development advisory and consulting on public-private partnerships for real property transactions as required
Compensation will vary depending on the services provided. For the Sale of Loyalton Ranch, CBRE’s compensation will be in the form of a commission payable by the City from the proceeds of the sale at closing. This commission will be 7%, with 5% kept by CBRE and 2% shared with a licensed buyer’s representative with a verified representation agreement, if applicable. If there is no buyer’s representative, the fee will be reduced to 6%. The property will be listed at $5.0 million.
ENVIRONMENTAL REVIEW
The action being considered does not constitute a “project” within the meaning of the California Environmental Quality Act (“CEQA”) pursuant to CEQA Guidelines section 15378 (b)(5) in that the proposed actions are agreements for professional consulting services which are administrative activities that will not result in direct or indirect physical changes in the environment.
FISCAL IMPACT
The fiscal impact will vary depending on the services. For Loyalton Ranch the total commission would vary between 6%-7% of the sale price.
Funds required for services not based on commission will be included in proposed budgets for corresponding years.
COORDINATION
This report has been coordinated with the Finance Department and City Attorney’s Office.
PUBLIC CONTACT
Public contact was made by posting the Council agenda on the City’s official-notice bulletin board outside City Hall Council Chambers. A complete agenda packet is available on the City’s website and in the City Clerk’s Office at least 72 hours prior to a Regular Meeting and 24 hours prior to a Special Meeting. A hard copy of any agenda report may be requested by contacting the City Clerk’s Office at (408) 615-2220, email clerk@santaclaraca.gov <mailto:clerk@santaclaraca.gov>.
RECOMMENDATION
Recommendation
1. Authorize the City Manager to negotiate and execute an Agreement for Real Estate Services with CBRE Inc. for the Loyalton Property and Other City Properties and Enter into Listing Agreements for Individual Properties;
2. Authorize the City Manager to negotiate and execute amendments to these agreements to (a) add or delete services consistent with the scope of services for the agreements (b) adjust future rates subject to the appropriation of funds; and
3. Authorize the City Manager to take any actions as necessary to implement and administer the agreement.
Staff
Reviewed by: Manuel Pineda, Chief Electric Utility Officer/Assistant City Manager
Approved by: Office of the City Manager
ATTACHMENTS
1. Draft Agreement for Real Estate Services
2. Draft Listing Agreement
3. Surplus Land Act Documentation