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HomeMy WebLinkAboutCOW 2004-10-25 Item 4E - Contract Supplement #2 - Tukwila Urban Center Services with ECONorthwest for $26,000 COUNCIL AGENDA SYNOPSIS tc Initials ITEM No. 411/41401x, fi I DleetiuR /mac Date I P[eDated 1 Mayor's Mayor's review 1 C�ui! avian I i 61 ,'Gf 1 �t r% Q' I 10.25.04 I Sll/r I 1' 13/s /1 1 sa rsos_ I 1 1 I I I 1 1 ITEM INFORMATION 1 CAS NUMBER: 04-147 I ORIGINAL AGENDA DATE: October 25, 2004 AGENDA ITEM TITLE Proposed contract supplement with ECONorthwest for services related to the TUC plan CATEGORY X Discussion Motion Resolution Ordinance Bid Award Public Hearing Other Mtg Date 10.25.04 Mtg Date Aft Date Mtg Date Mtg Date Mtg Date Mtg Date SPONSOR Council Mayor Adm Svcs X DCD Finance Fire Legal P&R Police PW SPONSOR'S This contract supplements ECOs previous work on the TUC Plan, providing more detailed analysis on: 1) at SUMMARY a policy level, potential financial strategy packages; and 2) the extent to which City investments could pay for themselves. ECO will also summarize previous reports for the Final TUC plan. The $26,000 contract will be 100% funded by the City's federal grant for TUC /TOD planning. REVIEWED BY COW Mtg. X CA &P Cmte F &S Cmte Transportation Cmte Utilities Cmte Arts Comm. Parks Comm. Planning Comm. DAlh: 10.12.04 RECOMMENDATIONS: SPONSOR /ADMIN. Recommend approval of contract supplement. COMMITTEE Forward to Committee of the Whole for discussion. COST IMPACT FUND SOURCE EXPENDITURE REQUIRED AMOUNT BUDGETED APPROPRIATION REQUIRED $26,000 $26,000 Fund Source: Federal grant for preparing the TUC/TOD plan. Comments: MTG. DATE RECORD OF COUNCIL ACTION MTG. DATE ATTACHMENTS 10.25.04 Staff memo to COW RE: Proposed contract supplement with ECONorthwest Proposed ECONorthwest Contract Supplement Staff Memo to CAP RE: Proposed contract supplement with ECONorthwest Copy of minutes of CAP meeting, October 12, 2004 City of Tukwila Steven M. Mullet, Mayor Depari.~ent of Community Development Steve Lancaster, Director MEMORANDUM TO: Committee of the Wholer~L~'- FROM: Steve Lancaster, DCD Directo RE: Proposed Supplemental Contract with ECONorthwest f~r services related to the Tukwila Urban Center (TUC) Plan DATE: October 20, 2004 RE: TUC ECONorthwest contract supplement#2 Background As part of our staff/consultant TUC planning team, ECONorthwest (ECO) has provided technical assistance with economic and fiscal issues related to the planning of the Tukwila Urban Center (TUC) and the transit-oriented development (TOD). ECO's original contract amount for $59,928.26 was approved in February 2003. A $20,000 contract supplement was approved in March 2004 for additional economic analysis related to the "catalyst" project. However, the project has continued to evolve and additional economic analysis is needed. Discussion The Tukwila community has selected a preferred land use scenario for the Tukwila Urban Center (TUC) plan. This plan has been presented to the Tukwila City Council and Planning Commission. Like any major investment, detailed economic analysis is warranted to ensure that these specific capital investments can be paid for. At the last joint Council/Planning Commission worksession, ECO identified the initial TUC catalyst projects and their rough costs, as well as the types of funding soumes typically available to a jurisdiction. The remaining work to be done builds upon this information and explores how these projects could be paid for. In Task 1, ECO will prepare preliminary financial strategy packages at a p(~licy level for consideration. In Task 2, ECO will simulate the extent to which the City's investment in the catalyst project "pays for itself". ECO will attend one worksession with the Council to present their findings on Tasks 1 and 2. In Task 3, ECO will summarize their economic and financial factors reports prepared over the last two years into an appendix to the final TUC plan. These tasks are anticipated to be completed during the winter 2004/05. This $26,000 contract supplement will be funded by the existing TUC/TOD grant. Washington 98188 Phone: 206-431-3670 * COMMUNITY AFFAIRS AND PARKS COMMITTEE ACTION Reviewed ECO's proposed scope of work and sent it to the COW for consideration. REQUESTED ACTION Forward to the full Council for their consent agenda at the November 1, 2004 meeting. p:\LYNNM\TUC\Contmcts\Market analysis\administrative\supplement 7.04\COW10.25.04memo. DOC Page 2 ~ Washington State Department of Transportation Organization and Address Supplemental Agreement ECONo.hwest 99 W. 10th JAgreement Suite 400 Number Eugene, OR 97401 LA 5377 Project Number Phone TCSP-TCSP (010) 541.687.0051 Project Title New Maximum Amount Payable Tukwila Transit Oriented Development atLongacres $ 105,938.26 Description of Work Prepare plans, market and fiscal analyses, and resource allocation studies. The Local Agency of City of Tukwila, Washington desires to supplement the agreement entered into with ECONorthwest and executed on 3.18.2003 and identified as Agreement No. LA 5377 All pmwsions in the basic agreement remain in effect except as expressly modified by this supplement. The changes to the agreement are described as follows: I Section 1, SCOPE OF WORK, is hereby changed to read: See.~ittached Exhibit B-1 II Section IV, TIME FOR BEGINNING AND COMPLETION, is amended to change the number of calendar days for completion of the work to read: En(;~:JaJ. e_has~z~n changed from D~e~_3.]~ZQOAJn III Section V, PAYMENT, shall be amended as follows: T~_JRclude hQur3, and expenses as3e, tXotth, in the attached.D_- 1. IV ~ctiorLXZI, SL[RCO~TRA_CTING: shall he amended.tQ_indudeJlzose items_ofworkaad_expenses_as ~et forth ln_Jhe~Rache~G~C~L- and G-~2 and by this reference made a part of this supplement. If you concur with this supplement and agree to the changes as stated above, please sign in the appropriate spaces below and return to this office for final action. By: ............. ECOBIo~hwest ................... By: ............ City .of Tuk~v/la Consultant Signature Approving Authority Signature DOT Form 140-063 EF Revised 10/97 EXHIBIT B-1 ECONorthwest Contract Supplement Proiect Status The community has selected a preferred land use scenario for the Tukwila Urban Center (TUC) plan. This plan, including the initial catalyst projects and associated costs, has been presented to the Tukwila City Council and Planning .~ommission. Concerns of the Council regarding plan implementation include the costs and benefits of the recommended investments, and the financial strategy needed to pay for them. ECONorthwest has been doing the technical work for the TUC plan related to economics and financing. ECO's contracted obligations and budget were completed in May 2004 with its presemation to the City Council. This contract supplement allows ECO to continue the financial work, adding more detail to the financial alternatives and strategies. Supplemental Tasks for ECONorthwest Task 1. Preliminary Evaluation of a Financial Strategy to Implement the TUC Plan Prepare a preliminary funding strategy to finance those transportation and land use/amenity improvements identified as necessary for implementing the TUC plan. Memo should address: · Recommended list of projects/improvements needed to implement the TUC plan and their approximate costs and timing. · Potential sources of funding. · At a policy level for Council consideration, a financing strategy consisting of a package of funding sources the City could choose (considering tools such as bonds, likely grant sources, LIDs, and impact fees). ECO will need the assistance of the City's finance director or staff, at a minimum, as follows: (1) to answer questions by phone as ECO prepares the strategy, and (2) to comment in writing on the draft of the strategy. ECO will attend one City Council work session to discuss the preliminary funding strategy. Product: Memorandum Meetings: One City Council/Planning Commission work session Schedule: Winter 2004/05 Budget: $15,000 ECO will bill for this task as follows: · $4,000 upon approval of the City of an outline of the memorandum · $7,000 upon delivery of a draft of the memorandum · $2,000 upon delivery of a final memorandum $2,000 after attendance and presentation at a joint Council / Planning Commission work session. Task 2: Simulation of Returns to the City One reason (not the only one) for the City to invest in the TUC and in what is referred to as the "catalyst" project is so the TUC will grow, more than it would otherwise, and potentially m a more diversified way, in order to generate additional revenue for the City. In particular, any additional development that the City investment generates should generate property tax and, for retail development, sales tax. ECO has done earlier simulations as part of this project, and has made it clear that such simulations are exactly that: simulations, not predictions. No one can predict with any confidence how the TUC retail sales will be different over a 20-year period with and without the investment. Thus, ECO and City staff agreed to the following simulation: 1. Estimate what the City will be investing. 2. Estimate how much the City would need to get repaid on that investment. Say the City's marginal (extra; new) investment in the catalyst project is $10 million in 2004 dollars. Assume that the City has patient capital: it does not want a big rate of return on its investment, but it would like to recover that money over a 20-year period at a low (possibly zero) rate of return. Say that works out to a need for an extra $600,000 per year. 3. Estimate, crudely, the amount of property tax or sales tax revenue that goes to servicing a new development, tn other words, we are looking for some estimate of net cash. The professional literature and our prior work suggest that the residential component of new development is not going to generate net cash. That does not mean the City should not support residential development in the TUC: such development supports GMA and regional requirements, the City's goal of creating a sense of place in the TUC, and ultimately, may create revenue to the City via property and sales taxes paid by business that now operate better because of the combined retail/residential base. So ECO would be making some rough estimate of net revenue contributions by type of business development. 4. Make assumptions about the amount of new business development (divided by retail and office) that would occur because of the investment. 5. Using the results of 3 and 4, estimate the present value of the new net revenue generated. 6. Using the results of 2 and 5 describe the extent to which the investment "pays for itselF' (given the assumptions in the simulation). Attend one work session with City Council/Planning Commission members to discuss outcomes. Discuss other fiscal issues or concerns raised by the Council. Product: Memorandum Meetings: One presentation (occurring at the same Council/Planning Commission Workshop in Task 1) Schedule: Winter 2004/05 Budget: $6,000 Task 3: Preparation of Economic Materials for the Final TUC Plan This project comprises two years of technical work and almost 10 memoranda or reports on some aspect of the economic or financial factors related to the TUC. The final plan adopted for the TUC will have an appendix summarizing all this work. ECO will work with City staff on developing an outline for the appendix, prepare the draft of that appendix, and revise it based on a single, consolidated set of City comments in writing. The City will be responsible for final formatting in a manner consistent with the plan document. Also, ECO will review and edit a section on Market Conditions in the Existing Conditions portion of the draft TUC Plan, to be written by Freedman Tung & Bottomley. Product: Appendix to final TUC Plan Meetings: None Schedule: Winter 2004/05 Budget: $5,000 Exhibit D-1 Consultant Fee Determination - Summary Sheet (Lump Sum, Cost Plus Fixed Fee, Cost Per Unit of Work) Project: Transit Oriented Development at Longacres/Tukwila Urban Center Plan Direct Salary Cost (DSC): Classification Man Hours Rate -- = Cost Project Manager 68.0 X .43.50 $ 2,958.00 Research Analyst 38.0 X " 18.50 703.00 Tech Assistant 22.0 X 13.00 286.00 Clerical Support 17.0 X 13.16 223.72 X X X X X Total DSC = $ 4,170.72 Overhead (OH Cost -- including Salary Additives): OH Rate x DSC of 2.1095 % x $ 4,170.72 8,798.13 Fixed Fee (FF): FF Rate x DSC of .3109 % x $ 4,170.72 1,296.68 Reimbursables: Itemized 1,734.47 Subconsultant Costs (See Exhibit G): 10,000.00 Grand Total 26,000.00 Prepared By: Roberta Smythe Date: October 13, 2004 EXHIBIT G Scope of Work for Berk and Associates as subcontractor to ECONorthwest Berk and Associates will be assisting ECONorthwest with all aspects of ECO's scope of work. In particular, Brett Sheckler will be doing most of the work for Berk and Associates. ECO will have primary responsibility for all project management, quality control, and presentations. Berk will assist with all aspects, of the technical analysis described below. Overview The community has selected a preferred land use scenario for the Tukwila Urban Center (TUC) plan. This plan, including the initial catalyst projects and associated costs, has been presented to the Tmkwila City Council and Planning Commission. Concems of the Council regarding plan implementation include the costs and benefits of the recommended investments, and the financial strategy needed to pay for them. Those concerns are the focus of this scope of work. Tasks for ECONorthwest Task 1. Preliminary Evaluation of a Financial Strategy to Implement the TUC Plan Scope for Berk and Associates ECO will work with the City staff to refine the scope of work and products. ECO will outline the memorandum, and make initial data requests to the City. Sheclder will conduct or assist with various aspects of the technical analysis and contribute to the memorandum. Berk will bill for Sheckler's service based on time and expenses. The expected level of effort is $5,000. Task 2: Simulation of Returns to the City Scope for Berk and Associates ECO will have primary responsibility for the review and formatting of the final product, and the presentation. Sheckler will have primary responsibility for a draft of the analysis. ECO and Berk will collaborate on defining the analytical strategy and refining it during the development of the memorandum. The expected level of effort is ~;4,000. Task 3: Preparation of Economic Materials for the Final TUC Plan Scope for Berk and Associates This is primarily a task for ECO. Scheckler ~vill review and comment on ECO's draft. The expected level of effort is $1,000. The total budget for Berk and Associates is $10,000. Exhibit G-1 Subconsultant Fee Determination - Summary Sheet PrOject: Transit Oriented Development at Longacres/Tukwila Urban Center Plan [Berk Associates) Direct Salary Cost (DSC): Classification Man Hours Rate = Cost Economist [Berk Assoc.) 100.0 X 32.10 $ 3,210.00 X X X X X X X X Total DSC = $ 3,210.00 Overhead (OH Cost -- including Salary Additives): OH Rate x DSC of 1.8267 % x $ 3,210.00 = 5,863.71 Fixed Fee (FF): FF Rate x DSC of .2825 % x $ 3,210.00 = 906.83 Reimbursables: Itemized = 19.47 Grand Total = 10,000.00 Prepared By: Roberta Smyth Date: October ]9, 2004 Exhibit G-2 Breakdown of Subconsultants Overhead Cost Account Title $ Beginning Total % of Direct Labor Direct Labor : 241,276.00 ] 00.00% Overhead Expenses: : FiCA ~ 18,458.00 7.65% Unemployment I 6,438.00 . 2.67% I Health/Accident Insurance i 33,603.00 13.93% I Medical Aid & Industrial Insurance HolidayNacation/Sick Leave 2,988.00 ! 1.24% Commission/Bonus/Pension 103,354.00 i 42.84% Total Fringe Benefits 164~841.00 i 68.32% General Overhead: State B&O Taxes 19,875.001 8.24% Insurance 1,867.00 0.77% Administration & Time Not Assignable 155,393.00 64.40% Printing, Stationery & Supplies 6,493.00 2.69% Professional Services 2,277.00 0.94% Travel Not Assignable 3,230.00 1.34% Telephone & Telegraph Not Assignable 9,162.00 3.80% Fees, Dues & Professional Meetings _ _~,394.00 , 0.99%_ I Utilities & Maintenance t 2,134.00 .i ....... 0.88% Professional Development L .... 2,_9 _9_6.._0__0_ .l~ ....... 1.24% Rent i __37,58_6.O0 t _ _ _ 14.75% Equipment Suppod ( .... _28,_763 00 _ 11.92% Office, Miscellaneous & Postage 5,716.00 2.37% Total General Overhead 275,886._00 .. 114.34o~/~o. Total Overhead (General + Fringe) 440,727.00 182.67% Overhead Rate (Total Overhead / Direct Labor) 182.67% City of Tukwila Steven M. Mullet, Mayor Department of CommunitY Development Steve Lancaster, Director MEMORANDUM TO: Community Affairs and Parks Committee FROM: Steve Lancaster, DCD Director ' ",~/~t~- RE: Proposed Contract with ECO Northwest DATE: October 6, 2004 RE: TUC ECONorthwest contract amendment742 Background As part of our staff/consultant TUC planning team, ECONorthwest (ECO) has provided technical assistance with economic and fiscal issues related to the planning of the Tukwila Urban Center (TUC) and the transit-oriented development (TOD). ECO's original contract amount for $59,928.26 was approved in February 2003. A $20,000 contract supplement was approved in March 2004 for additional economic analysis related to the "catalyst" project. However, the project has continued to evolve and additional economic analysis is needed. Discussion The Tukwila community has selected a preferred land use scenario for the Tukwila Urban Center (TUC) plan. This plan has been presented to the Tukwila City Council and Planning Commission. Like any major investment, detailed economic analysis is warranted to ensure that these specific capital investments can be paid for. At the last joint Council/Planning Commission worksession, ECO identified the initial TUC catalyst projects and their rough costs, as well as the types funding sources typically available to a jurisdiction. The remaming work to be done builds upon this intbrmation and determines how these projects could be paid for. In Task 1, ECO will prepare preliminary financial strategy packages at a policy level for consideration. In Task 2, ECO will simulate the extent to which the Cit~ 's investment in the catalyst project "pays for itself". ECO will attend one worksession with the Council to present their findings on Tasks I and 2. In Task 3, ECO will summarize their economic and financial factors reports prepared over the last two years into an appendix to the final TUC plan. This $26,000 contract sopplement will be funded by the existing TUC/TOD grant. Recommendation Review the draft contract and forward to the Committee of the Whole ~br consideration. EXHIBIT B-1 ECONorthwest Contract Supplement Proiect Status The community has selected a preferred land use scenario for the Tukwila Urban Center (TUC) plan. This plan, including the initial catalyst projects and associated costs, has been presented to the Tukwila City Council and Planning .Commission. Concerns of the Council regarding plan implementation include the costs and benefits of the recommended investments, and the financial strategy needed to pay for them. ECONorthwest has been doing the technical work for the TUC plan related to economics and financing. ECO's contracted obligations and budget were completed in May 2004 with its presentation to the City Council. This contract supplement allows ECO to continue the financial work, adding more detail to the financial alternatives and strategies. Supplemental Tasks for ECONorthwest Task 1. Preliminary Evaluation of a Financial Strategy to Implement the TUC Plan Prepare a preliminary funding strategy to finance those transportation and land use/amenity improvements identified as necessary for implementing the TUC plan, Memo should address: · Recommended list of projects/improvements needed to implement the TUC plan and their approximate costs and timing. · Potential sources of funding. · At a policy level for Council consideration, a financing strategy consisting of a package of funding sources the City could choose (considering tools such as bonds, likely grant sources, LIDs, and impact fees). ECO will need the assistance of the City's finance director or staff, at a minimum, as follows Il) to answer questions by phone as ECO prepares the strategy, and (2) to comment in writing on the draft of the strategy. ECO will attend one City Council work session to discuss preliminary funding strategy. Product: Memorandum Meetings: One City Council/Planning Commission work session Schedule: Fall/winter 2004, prior to the Council/Planning Commission ~vork session on the draft TUC plan. Buciget:$15,000 ECO will bill for this task as follows: · $4,000 upon approval of the City of an outline of the memorandum · $7,000 upon delivery ora draft of the memorandum · $2,000 upon delivery of a final memorandum · $2,000 after attendance and presentation at a joint Council / Planning Commission work session. Task2: Simulation of Returns to the City One reason (not the only one) for the City to invest in the TUC and in what is referred to as the "catalyst" project is so the TUC will grow, more than it would otherwise, and potentially in a more diversified way, in order to generate ~dditional revenue for the City. In particular, any additional development that the City investment generates should generate property tax and, for retail development, sales tax. ECOhas done earlier simulations as part of this project, and has made it clear that such simulations are exactly that: simulations, not predictions. No one can predict with any confidence how the TUC retail sales will be differem over a 20-year period with and without the investment. Thus, ECO and City staffagreed to the following simulation: 1. Estimate what the City will be investing. 2. Estimate how much the City would need to get repaid on that investment. Say the City's marginal (extra; new) investmem in the catalytic project is $10 million in 2004 dollars. Assume that the City haspatient capital: it does not want a big rate of return on its investment, but it would like to recover that money over a 20-year period at a low (possibly zero} rate of return. Say that works out to a need for an extra $600,000 per year. 3. Estimate, crudely, the amount of property tax or sales tax revenue that goes to servicing a new development. In other words, we are looking for some estimate of net cash. The professional literature and our prior work suggest that the residential component of new development is not going to generate net cash. That does not mean the City should not support residential development in the TUC: such development supports GMA and regional reqmrements, the City's goal of creating a sense of place in the TUC, and ultimately, may create revenue to the City via property and sales taxes paid by bus~ness that now operate better because of the combined retail/residential base. So ECO would be making some rough estimate of net revenue contributions by type of business development. 4. Make assumptions about the amount of new business development (divided by retail and office} that would occur because of the investmem. 5. Using the results of 3 and 4, estimate the present value of the new net revenue generated. 6. Using the results of 2 and 5 describe the extent to which the investment "pays for itself' (given the assumptions in the simulation). Attend one ~vork session with City Council/Planning Commission members to discuss outcomes. Discuss other fiscal issues or concerns raised by the Council. Product: Memorandum Meetings: One presentation (occurring at the same Council/Planning Commission Workshop in Task 1) Schedule: Fall 2004 Budget: $6,000 Task 3: Preparation of Economic Materials for the Final TUC Plan This project comprises two years of technical work and almost 10 memoranda or reports on some aspect of the economic or financial factors related to the TUC. The final plan adopted for the TUC will have an appendix summarizing all this work. ECO will work with City staff on developing an outline for the appendix, prepare the draft of that appendix, and revise it based on a single, consolidated set of City comments in writing. The City will be responsible for final formatting in a manner consistent with the plan document. Also, ECO will review and edit a section on Market Conditions in the Existing Conditions portion of the draft TUC Plan, to be written by Freedman Tung & Bottomley. Product: Appendix to final TUC Plan Meetings: None Schedule: Fall 2004 Budget: $5,000 Community and Parks Committee October 12, 2004 Present: Pam Linder, Chair; Joe Duffle, Dave Fenton. Stephen King, Steve Lancaster, Maggie Lubov, Lyrm Miranda, Jack Pace, Joyce Trantina, Lisa Verner. Sue Carlson (Segale Properties), Martin Dicker (King County). Southwest King Count. Economic Development InitiatiVe (SWKCEDD Presentation.. Jack Pace provided some background on ,Tukwila's participation in the SWKCEDI, and introduced Martin Dicker. Martin is a Senior Economic Development Specialist with King. Martin Dicker. Martin is a Senior Economic Development Specialist with King County. He described the goals of the Economic Development Initiative as increasing employment opportunities and household incomes throughout southwest King County. He recognized Pam Linder's contributions to the organization as a member of the Steer/ng Committee, and Jack Pace's contributions as a member of the Executive Committee. Martin described two significant programs of the Economic Development Initiative: the small Business Assistance Center located at highline Community College; and the Export Promotion Program. He also described how the relatively modest but critical financial support provided by Tukwila and other cities has been successful in leveraging significant financial support form other sources. Forwarded to November 1~ 2004 Citw Council meeting as a Special Presentation. Approval of Metro Implementation Contract for Commute Trip Reduction Program. Maggie Lubov distributed information relating to the City's Commute Trip Reduction (CTR) program and briefed the Committee concerning program status and funding. She described services to be provided by King County Metro under the proposed implementation contract. Tukwila has contracted for these services with Metro since 1995, and this has been a very beneficial relationship. Forward to COW with recommendation to approve.. TUC/ECONorthwest contract amendment #2. Lynn Miranda described the next of ECONorthwest's work the Tukwila Urban Center Plan identification phase on as: 1) of potential infraslructure funding strategies; 2) preparation of an "economic simulation" to provide information on the ability ofg!'oposed City investments to "pay for themselves" over time; and 3) preparation of a sunhuary of previous economic and financial factors reports, to be included in the proposed TUC plan. The proposed amendment increases ECONorthwest's contract by $26,000. Forward to COW with recommendation, to, approve.' ~ . . x"'~'~'~C~ Eode Enforcement Tax Lien Ordinance. Jack Pace introduced Stephen King of Kenyon/Disend. Stephen is DCD's primary legal resource for code enforcement. Stephen explained that under the City's current code enforcement regulations we have the abd~ty to undertake certain kinds of nmsance abatement wi~.k if the property owner ~'.