HomeMy WebLinkAboutSS2 - Correspondence"REGEMED AFTER AGENDA
Brown, Leilani PRJff,7D:"
From:
Denys Oberman [dho @obermanassociates.com]
Sent:
Friday, September 07, 2012 1:18 PM
To:
mhenn527 @hotmail.com; gardnerncy @aol.com; Curry, Keith; parandigm @aol.com; Hill, Rush;
Daigle, Leslie
Cc:
Brown, Leilani
Subject:
City Hall Site Reuse - Public Process and Request for Information
Importance:
High
Sensitivity:
Confidential
Mayor Gardner and Council Members:
The community has been eagerly awaiting the report regarding the feasibility and attractiveness of an upscale Hospitality Use
to locate on the city hall site, as a much- needed destination anchor for revitalization of the Lido Village /Penninsula /Marina
area. We are aware that the firm PKF was commissioned, and await the consultant report .
We believe that the report is part of information needed by both the Council and the Public to be able to intelligently
consider alternative uses, and the opportunity for commercial /economic success.
If the report is complete (preliminary or final deliverable), we request that it be made available to all ,so that it can be studiec
prior to the scheduled Sept. II City Council Study Session - - - -if not, we request that this topic be rescheduled until such time as
the report is available.
Thank you in advance for your consideration and response. We are looking forward to mobilizing the area for economic vitality
and sustainability with commitment to a Destination Anchor.
Denys Oberman
Newport Beach resident
Regards,
Denys H. Oberman, CEO
�dOBERMAN
Strategy and Financial Advisors
OBERMAN Associates, Inc. - Celebrating 35 Years
2600 Michelson Drive, Suite 1700
Irvine, CA 92612
Tel: (949) 476 -0790
Cell: (949) 230 -5868
Email: dho(a obermanassociates.com
Website: www.obermanassociates.com
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Existing City Hall Complex Reuse
SS2
09/11/2012
Comparison of Scenarios
PKF Consulting
Keyser Marston
Scenario
78 -room Hotel
120 -room Hotel
92 -unit Apartment; 6,000 SF retail
99 -unit Apartment
Development Cost
$18,500_,000
$29,800,000 _
_ _ _$34,062,000_ _
_ _ $_34,_91_9_,000
Public improvements
Low High
Low High
Low High
Low High
_
Pubic Improvements cost
_
$5,569,519 $8,950,105
$5,569,519 $8,950,105
_
$5,569,519 $8,950,105
_
$5,569,519 $8_950,105
Land Value Upon Completion
$27,500,000 _
$40,900,ODD
$52,236,000 _
$54,075,000
Residual going -in Cap Rate
n/a n/a
n/a n/a
6.1% 6.1%
6.0% 6.0%
Residual Terminal Cap Rate
8.5% 8.5%
8.5% 8.5%
n/a t n/a
n/a _ n/a
Residual Discount Rate
11.0% 11.0%
11.01y 11.0%
n/a n/a
n/a n/a
Residual Land Value (After Public
Improvements)
$3,430,481 $49,895
$5,530,481 $2,149,895
$12,604,481 $9,223,895
I
$13,586,481 $10,205,895
Representative Year Economic Impact
$20,600,000
$29,400,000
$2,069,OW
i
$2,227,000
10 Year (2015 -2024)
$254,249,861
$362,006,807
$25,918,136
$27,897,385
September 11, 2012
Existing City Hall Complex Reuse
UPDATE
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What is the appropriate future use of the City
Hall site?
E2 In April Zoi2, Council authorized the initiation of amendments to the General Plan,
Coastal Land Use Plan, and Zoning Map to allow "Mixed Use Development" on the
4.26 -acre site.
What are the proposed elements of the Mixed
Use designation?
Maximum of 99 residential units plus a maximum of 15,000 square feet of
commercial; OR
® Maximum of 78 -room Hotel
Community Development, Department September 10, 2012 2
Site Size
4.26 acres gross
3.96 acres net
(approximately)
Building Area
54,000 sq. ft.
(includes
fire station #2)
Designated
"Public Facilities"
Community Development Department September io, 2012
3
In addition to the various land use amendments, Staff
is concurrently preparing a Request for Qualifications
package
In June 2012, Council requested a Hotel
Feasibility /Market Analysis
Staff contracted with PKF Consulting
® Combined that work with an analysis by Keyser - Marston
Community Development Department September io, 2012 4
The market is capable of supporting 2 Hotels in Lido Village
The City Hall site is well- suited for the development of an Upscale
Boutique Hotel
u The site's existing lot configuration is acceptable given the site's
extensive frontage on Newport Blvd and 32nd Street
L-1 The location of Fire Station #2 is not a negative consideration in
redeveloping the site as a Hotel
0 3 Hotel Sizes were studied:
a 78 rooms
soo rooms
15o rooms
Community Development Department September io, 203.2 5
Hotel Type
Hotel rooms
Stabilized
Occupancy
Upscale Boutique Upscale Boutique Upscale Boutique
78 100 150
76% 75% 72%
Average Daily $220 $210 $195
Rate (2012 $)
Community Development Department September 10, 2012
0
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Hotel Type
Hotel rooms
Stabilized
Occupancy
Upscale Boutique Upscale Boutique Upscale Boutique
78 100 150
76% 75% 72%
Average Daily $220 $210 $195
Rate (2012 $)
Community Development Department September 10, 2012
0
o All three options are viable (78, soo, or 150
rooms)
However, o - ,, Upscale
Boutique Hotel size is szo rooms.
This size has enough critical mass to be
economically justified while keeping in character
with the site and surrounding neighborhood
Community Development Department September io, zoiz 7
Analyzed 4 Land Use Alternatives:
78- Room Hotel
Fa 120 -Room Hotel
92 Market -Rate Rental Units + 6,00o SF of Retail
99 Market -Rate Rental Units
rul Assumed several Public Benefits (Land value
Offsets):
ro Main Public Plaza and Promenade on site
Pedestrian Promenades on 32nd Street, Via Malaga, Via Oporto
® Fire Station reconstruction onsite (50% of Cost)
Community Development Department September io, 2012 8
Scenario
Development Cost
Public Improvements
Pubic Improvements cost
Land Value Upon Completion
Residual going -in Cap Rate
Residual Terminal Cap Rate
Residual Discount Rate
Residual Land Value (After Public
Improvements)
Representative Year Economic Impact
10 Year (2015 -2024)
mpanson of Scenarios
92 -unit Apartment; 6,000 SF retail
$34,062,000
Low High
$5,569,519 $8,950,105
Marston
99 -unit Apartment
$34,919;000
Low High
$5,569,519 $8,950,105
$52,236,000 $54,075,000
6.1% 6.1% 6.0% 6.0%
n/a n/a n/a n/a
n/a n/a n/a n/a
$12,604,481 $9,223,895 $13,586,481 $10,205,895
$2,069,000
;25.918.136
Community Development Department September io, 2012
$2,227,000
$27,897,385
• Apartment scenarios have a higher development cost
compared to either Boutique Hotel scenario
• Apartment scenarios also have a higher land value upon
completion
o Therefore, the potential annual ground rent will be higher for
Apartment scenarios
However, the Boutique Hotel's direct and indirect annual
economic impact on the local community is nearly Zo times
more a year ($20.6 Million v. $2.07 Million) than Apartment
scenarios
o The annual transient occupancy tax (TOT) of the Boutique
Hotel Scenarios ranges from $476,00o to $680,700 per year
Community Development Department September io, 2012 ii
The City Hall site is well- suited for an Upscale
Boutique Hotel or Market Rate Apartment
Community
Both land uses are economically viable and
will have a positive impact on the community
76 -room versus l.20-room hotel option
suggests Measures review (for thel.2o
rooms) and possible election
Community Development Department September io, 2012 12
a Staff will proceed with Mixed Use Land Use Amendments;
in City Council (evening) meeting on September 25, 2012 —
Final market and economic studies will be made available in advance;
Council direction sought regarding consideration of a3.20-room Upscale
Boutique Hotel in the Land Use Amendments
a Should Request for Qualifications be issued for both options?
78/12o- Room Hotel
Maximum 99 -unit market rate rental residential development with
ancillary retail
Both RFQs will include the public benefit components
Community Development Department September io, 2012 13
Harris, Lillian
From: Linda Klein [Iklein14 @me.comi
Sent: Tuesday, August 21, 2012 2:54 PM
To: Brown, Leilani
Subject: Fwd: What's going on here in Newport Beach?
Leilani,
Please enter in the public record.
Thank you.
Linda Klein
Begin forwarded message:
From: Linda Klein <lklein14tc'i.me.com>
Subject: What's going on here in Newport Beach?
Date: August 21, 2012 2:32:05 PM PDT
To: Dave' 'Kiff <DKiffjeDnewportbeachca.gov >, Nancy Gardner <gardnerncy(@aol.com >,
rhill(cDnewportbeachca.gov, curryk(a)pfm.com, edselich Ca) road run ner.com,
leslieidaigfe(a)aol.com, Michael Henn <mhenn527CcDhotmai1.com >, SRosansky,
@NewportBeachCa.gov
Dear Mayor Gardener, City Council Members and City Staff Members,
I am away and reading news of the revitalization and improvement and renewal plans for Ventura and Oxnard
waterfront areas, even Chula Vista, as well as other cities with precious waterfront locations around our state
empowering their communities and neighborhoods. I am struck by the differences between real Revitalization
in other cities and the degradation being planned in Newport Beach at the gateway to our amazing Peninsula
with the ocean and bay surrounding it.
You should SEE what these cities are doing for their precious areas that have less potential than ours! Newport
Beach is famous world wide as a destination that nobody who visits the west coast wants to miss. We enjoy a
reputation for great natural beauty and fine weather, as well as that of a wealthy coastal resort destination with
an abundance of upscale shopping, dining and entertainment amenities. We are looked up to by our sister city
of Cannes and discerning countries proud of their own coastlines in the Mediterranean and around the world.
And our city wants to dump WORKFORCE housing and apartments in this priceless ocean and bay front
spot ?!
How can you call this REVITALIZATION? Let's be honest here. Clearly this is a plan for DEVITALIZATION
and DEVALUATION.
Our city council is looking laughable, stupid, and shameless at first look, and very suspicious beneath.
EVERYBODY on the outside is asking WHY. Who are the winners in this plan? One has to look behind the
scenes at greed motives and financial benefits to developers and cronies. Enduring beauty for this unique
waterfront area and a legacy to the community is completely absent. Linda
Sent fi-om my iPad
On Aug 18, 2012, at 7:58 AM, cynthia koller <gracenbl cr, yahoo. com> wrote:
on
The article below quotes PKF Consulting who is also the Company the City is
using for the Hotel on the City Hall Site study and who Denys and I met with a few
weeks ago. This makes a strong argument that hospitality would be a good use
and revenue stream on this site. It will be interesting to compare our study with
the quotes from this article. Hope they are the same.
Have a good weekend. Cindy
Report: O.C. hotel sales Damp 125%
August 17th, 2012, 1:03 pm - - posted by Jon Lansner
in