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FEDRAC PKT 09-14-2004City of Federal Way City Council Finance/Economic Development/Regional Affairs Committee Tuesday, September 14, 2004 City Hall 5:30 p.m. Hylebos Conference Room AGENDA 1. CALL TO ORDER 2. PUBLIC COMMENT 3. COMMITTEE BUSINESS A. Approval of the August 10, 2004 Minutes Action B. Presentations From Potential City Center Lifestyle/Retail Market Analysis Information Firms 4. OTHER 5. FUTURE AGENDA ITEMS 6. NEXT MEETING: FEDRAC — Economic Development: October 12, 2004 in the Hylebos Room FEDRAC: September 28, 2004 in the Hylebos Room Committee Members: City StaiE- Eric Faison, Chair Iwen Wang, Management Services Director Jeanne Burbidge Jason Suzaka, Management Analyst Jim Ferrell (253) 661-4061 H: IFINANCEIFINCOMM71200410914I0914 Agenda.doc City of Federal Way City Council Finance/Economic Development/Regional Affairs Committee August 10, 2004 City Hall 5:30 p.m. Mt. St Helens Conference Room MEETING MINUTES In attendance: Committee Members: Council Members Eric Faison, Chair, Jim Ferrell, and Jeanne Burbidge; Mayor Dean McColgan, Deputy Mayor Linda Kochmar, Council Members Jack Dovey and Michael Park; City Manager David Moseley; Management Services Director Iwen Wang; City Attorney Pat Richardson, Deputy Director of Community Development Services Patrick Doherty, and Administrative Assistant E. Tina Piety. 1. CALL TO ORDER Chair Faison called the meeting to order at 5:31 pm. 2. PUBLIC COMMENT There was no public comment. 3. COMMITTEE BUSINESS It was m/s/c to adopt the August 9, 2004, minutes as presented. A. Discussion & Identification of Process for Implementing Strategies Identified at August 9, 2004, FEDRAC Meeting — Council Member Ferrell stated that the most important first step is to talk to property owners about the proposed market study. Council Member Park stated that this is not the right time (fiscally and politically) to consider spending more money. We should revisit this issue at the City Council retreat in January. Council Member Dovey agreed this is not the time to consider spending more money, but we should move forward on those aspects of the project that will not cost the City money, such as meeting with the property owners. Chair Faison noted that the City has meet with some of the larger property owners (i.e., Harsch Investments, The Commons at Federal Way, and Top Foods). There was consensus that it would be a good idea to have council members and property owners meet to gather the input of property owners. Mr. Doherty suggested that consultants who perform such market studies could be invited to present their services to the City Council at a meeting the property owners are specifically invited to attend. Afterwards, a follow-up meeting could be held with property owners to solicit their input. The Committee agreed that this should be done. Discussion was held on the need to review the City's design guidelines because as currently written, they do not preclude "big box" retail from locating in our City Center. Discussion was also held concerning housing in our City Center and whether or not there is a need. To determine if a need for housing exists would require a separate study. FEDRAC Minutes August 10, 2004 Page 1 B. Exploration & Discussion of Funding Mechanisms for City Center Redevelopment Strategies — This discussion was placed on hold pending the outcome of meetings with consultants and property owners discussed above. 4. FUTURE MEETINGS The next scheduled meeting is September 14, 2004, 5:30 p.m., at the New City Hall Hylebos Conference Room. 5. ADJOURN The meeting adjourned at 6:20 pm. K:TEDRAC - Econ Dev\2004 - Agendas & Summaries\August 10, 2004, Summary.doc FEDRAC Minutes August 10, 2004 Page 2 MEMORANDUM TO: City Councilmembers FROM: Patrick Doh nomic Development Director DATE: September 14, 2004 SUBJECT: Gibbs Planning Group (GPG) retail consulting services proposal Attached you will find a proposal from Mr. Bob Gibbs of the Gibbs Planning Group for retail consulting services related to the Federal Way City Center. This memo is intended to correct a misstatement in the written proposal regarding the consulting fees, as well as to provide a clarification regarding the third element of the proposed scope of services; i.e., contacts with brokers, developers and tenants. Regarding the fees, although additional on-site work by GPG, beyond the agreed-upon scope proposed here, would incur a $2,500 per diem fee, the visit to Federal Way to make a presentation of the findings would NOT include a charge for this additional per diem fee, as stated on page 4. Mr. Gibbs had indicated, upon his visit in June, that he would apply the $2,500 charged for the June 3 presentation to the compensation for a service contract, if his firm is chosen to proceed with these retail consulting services. Regarding the third element of the GPG approach, as stated on page 5, Mr. Gibbs has indicated that, upon our permission, he and his staff would draw from their many contacts with real estate brokers, developers and retail tenants to share the Federal Way findings and begin to make "direct leads" towards potential new development in Federal Way. Mr. Gibbs wanted to make clear that this third element is clearly within the scope of services proposed herein and would occur within the timeline contemplated by the scope, although could continue beyond that timeline for selected contacts and/or industry meetings/conferences. GIBBS PLANNING GROUP 2 August, 2004 Patrick Doherty City of Federal Way 33530 1st Way South Sent via Fed -x P.O. Box 9718 Federal Way, Washington 98063 Dear Mr. Doherty: I am pleased to respond to your request for retail consulting services for your proposed mixed-use Town Center development located in Federal Way, Washington. The services described by this proposal have been designed provide the city with an understanding of the amounts and types of new retail development that will likely be supportable at the general area of your planned town center. It is my understanding that the City of Federal Way is seeking to learn an existing commercial area can be re -developed as a mixed use town center. Please find below a summary of GPG's proposed approach, scope of services and fees that respond to our understanding of your request: Task One: Retail Market Analysis: This task is designed to focus on determining the amount and types of retail development that are likely to be supportable in the study area. The findings of this task will give you a realistic understanding of the area's retail development potential. This market research can be the baseline data for the city to determine what types of new retail development is likely to be supportable under that existing status quo conditions through the next five years. Another critical issue is one of the long and short-term space requirements for the various types of retail. A third issue is the phasing of a commercial development, which is important not only for the redeveloped district's first impression, but also for realistic long-term growth through in -fill. It is anticipated, that the findings of this step will allow for you to set goals, policy and to make specific short and long term implementation actions. 330 E. Maple Street No. 310 Birmingham, Oregon 48009 RETAIL CONSULTING + TOWN PLANNING + MARKET RESEARCH Tel. 248.642.4800 gibbspllanning@aol.com Page 2 Federal Way Market Study Proposal Gibbs Planning Group, Inc. 2 August, 2004 The following issues will be addressed by Gibbs during Task One: a. What is the likely short term and long-term trade area served by the study area? b. What do we estimate the different patron segments (i.e. workers, tourists, residents, visitors) to be, as serviced by the retailers of the study area? C. GPG will collect demographic data including: household income, consumer expenditure potential by retail category, education levels, % white-collar employment, age, projected growth, etc. d. GPG will prepare a map identifying the location of all major retail centers in the primary and secondary trade areas, which will better explain the effects of the gravitational model of competing retail districts on the primary and secondary trade area. e. GPG will review the existing proposals for the development of the residential and commercial areas located in or adjacent to the study area. f. GPG will define a primary and secondary trade area for the supportable retail development. g. GPG will factor into its analysis of consumer expenditure the effects of pedestrian circulation, general vehicular circulation patterns, strength of existing retail competition, proposed adjacent residential and commercial construction, as well as other relevant conditions. h. GPG will prepare a written summary of the relevant population and demographic characteristics of the trade area including the socio- economic characteristics and buying patterns of the population. i. GPG will project the immediate and long-term economic opportunities the customer base can support. j. GPG will issue a letter of qualitative opinion as to whether or not retail development is supportable in the study area and what size of retailers would be most successful. k. GPG will prepare a written analysis of which retail categories (men's apparel, sporting goods, hardware, etc.) currently face excessive competition, thereby making them susceptible to store closures, as well as which retail categories show a void in competition and can therefore support additional development. 1. GPG shall provide a detailed list of potential retail and entertainment businesses that could be tenants in the new development. Page 3 Federal Way Market Study Proposal Gibbs Planning Group, Inc. 2 August, 2004 Task Two: Economic Models: Although GPG will not make specific recommendations regarding how much and what type of tenants (if any) Federal Way should seek, GPG will produce two (2) accurate economic models that will serve as an important data base for the city to make policy decisions. Please find below an outline of the proposed models for the City of Federal Way: Status Quo Model: Based upon the above research and analysis, GPG will produce a model that will forecast how downtown Federal Way's retail commerce will change during the next five years, given the following: • The region's economic growth continues to remain the same. • The national economy continues to remain in its present range (unemployment, GNP, growth, inflation, etc.). • The existing zoning and planning codes remain enforce. • The physical make-up of the downtown stays the same, i.e.: parking, open space, landmark buildings, surrounding residential neighborhoods, etc. • The cities present programs, business enhancement activities remain in place. This Status Quo model will forecast tenant mix, vacancy, rental rates, sales and other appropriate retail elements. Maximum Growth Model: This maximum model is designed to estimate the full growth (if any) potential of Federal Way's proposed town center, if all existing restraints were removed. This model will assume the following: • The national and regional economy continues to recover and remain with -in normal levels. • City zoning and building density and height standards are relaxed to accept market demands. • Adequate public parking decks are constructed to support the maximum market demand. • Any limitations with infrastructure including: utilities, streets, land are improved to meet the market potential. • Land will be made available to support market demand. • No additional major shopping centers are constructed outside of Federal Way's study area. Page 4 Federal Way Market Study Proposal Gibbs Planning Group, Inc. 2 August, 2004 This model, although unrealistic, will give the city an important understanding of the extreme market demand potential. This information can be used to make major policy decisions regarding adding or reducing existing zoning, parking and other city policy decisions. For example, GPG recently found for a mid-sized community outside of Baltimore, Maryland that it was likely to have a 20+ screen movie cinema proposed in its downtown. Not wanting such a large cinema (which was legally allowed by the existing zoning code), the city council passed a new zoning code limiting the size of any cinema to 2 screens or less. This revised policy reflected community values and allowed the downtown to remain as desired. Other GPG models have indicated that little or nothing was likely to move into a downtown, prompting the city to make significant zoning revisions in order to "dial-up" new development. Meetings and Presentations The services described by this proposal includes GPG's participation in the following meeting and presentations: • GPG team members will make a 2-3 day trip to the Federal Way to conduct the field research of the market study. • GPG will participate in up to three (3) conference calls with the development team from GPG's Michigan offices. • GPG will be available to make visit Federal Way and make a presentation on the findings of this study on an per diem bases as outlined below. Methodology GPG's market research is based upon a unique combination of hands-on research, solid gradational modeling and testing with actual local, regional and national developers and retailers. Based on U.S. Census data, a gradational model will be conducted by GPG, examining the subject site's trade areas, expender potential (demand) and the existing supply (as found above). Using the Gibbs model, various supply and demand scenarios are conducted, determining a full range of potential voids and over supply by each retail categories. Page S Federal Way Market Study Proposal Gibbs Pk mring Group, Inc. 2 August, 1004 The third element of LPG's approach (with your permission) will draw from our many contacts with real estate brokers, developers and tenants. Our findings will be shared with these industry leaders one-on-one and at national conferences such as the International Council of Shopping Centers, The Urban Land Institute, The Main Street Program, the National Town Builders and the Congress for the New Urbanism. These detailed discussions will not only allow for GPG to cross-check the accuracy of our findings, but often leads to direct leads with many potential developers and new retailers. As a result, GPG's findings are both among the most accurate and useful in the urban retail consulting field. Fees GPG's proposed fee for the above consulting services Tasks 1-2 is Twenty - f ivve Thousand Dollars ($25,000.) plus direct costs for all travel and document reproduction. GPG shall be available for additional consulting services on a per diem basis of $2,500. A 50% retainer is requested for GPG to begin the services described by this proposal. This retainer shall be applied towards the final invoice for GPG's services. Limits of Scope of Services: The services described in this contract are for general retail planning services only and should not be used as the sole basis of development, financing, leasing, design or planning. Actual site, building, parking, utility, grading, civil engineering, architectural plans and construction documents are not included within the scope of work of this proposal and are to be completed by others. In addition, the following items are not included in this proposal: a. Environmental reviews or analysis for toxic or contaminated site conditions. b. Civil engineering or design of grading, storm drainage, sewers 8s roads. C. Building and structural architectural design and engineering. d. Detailed cost projections or estimates. e. Fiscal development and operations forecasts. f. Real estate sales, leasing or brokerage services. Page 6 Federal Way Market Study Proposal Gibbs Planning Group, Inc. 2 August, 2004 Conditions of Agreement: a. GPG will begin services as described by this proposal upon receipt of a $12,500. retainer. This retainer will deducted from the final invoice for this proposal. b. This proposal will be valid for 30 days from today's date. C. This agreement will not be enforced by either party until each party has in its possession a copy of this agreement signed by the other. d. In the event of termination or suspension due to the fault of others than GPG, GPG will be paid compensation for all completed work, plus other fees which may have been authorized by the Costa Pacific Homes for expenses resulting from such termination or suspension. e. All claims, disputes and other matters in question arising out of, or relating to, this agreement or the branch thereof, will be decided by any arbitrator; said arbitrator will be appointed by American Arbitration Association, and arbitration shall occur in Oakland County, Michigan. L GPG's responsibility to any errors or omissions is limited to the fees invoiced for the services outlined by this proposal. g. This agreement represents the entire and integrated agreement between GPG and the signee, and supersedes all prior negotiations, representations or agreements, either written or oral. This agreement may be amended only by written instrument signed by both GPG and a representative of the signee. h. GPG will invoice the city on a monthly basis or at the completion of each Step. The city shall pay all GPG invoices with -in 30 days of, receipt. Sincerely, GIBBS PLANNING GROUP, INC. Robe J. Gi s, A A President The Above Proposal Terms are Accepted: Name Representing Title 0 s Mo V M c 0 �a 3 IQ 0 CL 0 6 CL O O N v O .S, ME N obo P" 75 r. F -- ..:; � Q N�4 P4 U U Q N M_ W H o v (1) W 0 000UUU U) O 0 U)(n(n(i)U O 0 O 0 O 0 O 0 � o ° U Q,3 x W ° 4 °' un 75 �..� O 1 Q. v v p v ■ •� rte+ _ Q c� � biD 1�- c v v . 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Q U v v O N 0 CL b.0v v cnC bA U = it UyG cam. ��- -C O 3 + G d ,�'" o (1) tom " O 3 ° N Q° U O O W° V_ n TS 1��9 V +l L� R v =j vi bA b.0O o v y) t x 0. G �bo O~ 3 v Q N '� �"' r. Q 3 N w v C', Com. X N O ++ ° u —T w0 v 'CS � i OCZ � O Y Q)�' �" �i bbA O D U O LnU) in �. • �. O O •. ' S vi N yd•, �'-� •.�. 14 = Ln c 10 �v a'��oo���Z�'�� ova ,R ��ov�3Q �."Cz v uQOHH U� w s�,� d ¢ v uw�° o W H 11111s H N Tualatin Commons DAVE L.ELAND A public/private development creates a city center and an identity for a suburban com- munity, population 11,000 and growing. Reprinted from Urban Land, published by ULI—the Urban Land Institute, 625 Indiana Avenue, N.W., Washington, DC 20004. The city of Tualatin, Oregon, was in the same boat as many rapidly growing suburban com- munities. With a strong employment base of technology and industrial parks, the city had doubled in size in a decade, and the continu- ous arrival of new residents from California and be- yond was keeping up the growth rate. Located just south of Portland, Tualatin lacked a strong identity of its own and was in danger of becoming simply an ordinary suburb—that is, until a combination of cir- cumstances and vision and hard work led to a solu- tion: the development of a central place, a down- town, a civic "living room" on a 19-acre site. This new city center has given Tualatin a unique and positive identity. Its realization testifies to the power of a true public/private partnership. Evolution of an Opportunity In 1975, Tualatin established a redevelopment dis- trict at its center. The aim was to encourage the de- velopment of a village -scale downtown through in- frastructure improvements and other incentives. Increased urban renewal tax revenues would pay the cost of the city's investment. Soon tax increment revenues began to materialize from suburban retail development and to accrue in excess of the redevel- opment district's bonded debt service. In 1985, the city's redevelopment agency, the Tualatin Development Commission, resolved to ac- quire land at a prime location in the middle of down- town. The purchases, totaling 19 acres, took place in a series of transactions from 1985 through 1987. Most of the land was undeveloped, but in a few cases buildings were acquired and demolished. The most significant parcel was the Hervin pet food fac- tory, which occupied a prominent position (geo- graphically, visually, and aromatically) in the center of town. The development district's tax increment reserve account enabled the development commis- sion to set aside the funds for developing the site without incurring additional bonded indebtedness. At first, the development commission sought a retail development for the property. But poor eco- nomic conditions in the 1980s and the arrival on the retail scene of big -box retailers and power centers conspired against this use. Tualatin could not attract the prime tenants necessary to trigger the proposed retail center within the development commission's mandates for a pedestrian -oriented city center. By the early 1990s, commercial vacancies were low in the downtown area, but new development was not occurring. Interest in proceeding with the development of the 19 -acre site was high. But, after two failed attempts by major develop- ers to carry through with the projects on the site, the city was a bit hesitant. It decided to take the mat- ter to the general public. A forum was held in which the development commission asked community resi- dents what they wanted in their city center. Ten ob- November 1994 • Urbana Land 25 This manmade lake turned a centrally located 100 -year floodplain into a focal point of Tuala- tin's downtown. The mixed-use project's landscaped plazas and esplanade em- phasize its pedestrian orientation. 26 Ten objectives emerged. These became the basis for guiding development of the property. The develop- ment goals for this site, said most citizens, should be: • a strong civic focus, through the use of public fa- cilities and spaces; • a traditional downtown, achieved through the en- couragement of diverse, private development; • good pedestrian and vehicular circulation; • day and night uses; • a strong visual presence at major entrances to downtown; • an improved economic climate for downtown businesses; • convenient and adequate parking; • links to nearby retail, civic, and recreation uses and to the city park a block away; • a downtown built for the long term (50+ years); and • retention of downtown's retail market share. The public was saying, "We do not want another strip mall. We want a blend of public and private uses— a special place." Rapidly growing suburban commu- nities usually lose the opportunity to create a sigm - cant town center quite early in the city's development. Tualatin's citizens did not want to lose their chance. Project feasibility In 1992, the time was right. The market was improv- ing. The development commission had money in re- serve for implementation. Local officials were eager Urban Land • November 1994 to make something special happen. Most city resi- dents favored the idea of developing a pedestrian - oriented central place. A feasible development based on market realities would require a marriage of citizen objectives with sound real estate principles. The development com- mission hired a consulting firm, Leland Consulting Group, to recommend options for the property and manage the process. The consultant's initial assess- ment noted that although parts of the property had high visibility and good access to strong traffic vol- umes, the back part of the property was weak. Also, the site would need to be filled as it was virtually en- tirely within the 100 -year floodplain. Leland Consulting also observed that the city was nervous about negotiating for an extended period of time with a master developer who might tie up the property for a year or more. The window of opportu- nity was small, mainly because of the politics involved, and there was pressure to produce results quickly. Leland recommended a iiuxed-use, public/private urban development that would enhance the down- town area and not compete with existing uses. In an effort to reduce costs and create value, Leland fur- ther recommended digging a lake in the center of the site and using the dirt from the excavation to elevate building pads above the 100 -year floodplain. The lake would create a ring of value around the en- tire site, including the weaker back part of the prop- erty. The city's provision of an esplanade and land- V 'it This manmade lake turned a centrally located 100 -year floodplain into a focal point of Tuala- tin's downtown. The mixed-use project's landscaped plazas and esplanade em- phasize its pedestrian orientation. 26 Ten objectives emerged. These became the basis for guiding development of the property. The develop- ment goals for this site, said most citizens, should be: • a strong civic focus, through the use of public fa- cilities and spaces; • a traditional downtown, achieved through the en- couragement of diverse, private development; • good pedestrian and vehicular circulation; • day and night uses; • a strong visual presence at major entrances to downtown; • an improved economic climate for downtown businesses; • convenient and adequate parking; • links to nearby retail, civic, and recreation uses and to the city park a block away; • a downtown built for the long term (50+ years); and • retention of downtown's retail market share. The public was saying, "We do not want another strip mall. We want a blend of public and private uses— a special place." Rapidly growing suburban commu- nities usually lose the opportunity to create a sigm - cant town center quite early in the city's development. Tualatin's citizens did not want to lose their chance. Project feasibility In 1992, the time was right. The market was improv- ing. The development commission had money in re- serve for implementation. Local officials were eager Urban Land • November 1994 to make something special happen. Most city resi- dents favored the idea of developing a pedestrian - oriented central place. A feasible development based on market realities would require a marriage of citizen objectives with sound real estate principles. The development com- mission hired a consulting firm, Leland Consulting Group, to recommend options for the property and manage the process. The consultant's initial assess- ment noted that although parts of the property had high visibility and good access to strong traffic vol- umes, the back part of the property was weak. Also, the site would need to be filled as it was virtually en- tirely within the 100 -year floodplain. Leland Consulting also observed that the city was nervous about negotiating for an extended period of time with a master developer who might tie up the property for a year or more. The window of opportu- nity was small, mainly because of the politics involved, and there was pressure to produce results quickly. Leland recommended a iiuxed-use, public/private urban development that would enhance the down- town area and not compete with existing uses. In an effort to reduce costs and create value, Leland fur- ther recommended digging a lake in the center of the site and using the dirt from the excavation to elevate building pads above the 100 -year floodplain. The lake would create a ring of value around the en- tire site, including the weaker back part of the prop- erty. The city's provision of an esplanade and land- scaped public spaces in the mid- dle of the downtown would also add significant value to adjacent real estate. To spare the development commission the concerns of deal- ing again with a single large devel- oper, Leland recommended that the commission function as the land developer and define a series / of small, bite -sized projects that could be tackled by small- or /I medium-sized developers. With the enthusiastic support N of the development commission and the city's Urban Renewal Ad- visory Committee, a technical de- n sign team was put together to de- I velop further plans. Key members were Leland Consulting Group - (project managers and real estate economists), Stastny Architecture (architects and urban designers), and Walker & Macy (landscape at- -�D chitects and planners). Harper Righ- ellis (civil engineers), Geotechni- cal Resources (soil scientists), SRU Shapiro (lake biologists), and Lane Advertising & Public Relations (marketing and commu- nications specialists) also played major roles. Initial studies showed that a public investment of $5 million (not including the cost of the land assembled years ago) would be needed. (This figure compared favor- ably with the $11 million in public investment require- ments estimated for previous plans.) About half of this investment could be recovered through land sales. In its endorsement of the preliminary plan in July 1992, the development commission established several ground rules: • Three of the seven development parcels had to be committed before construction of the lake would start. • The public sector's construction budgets for pub- lic improvements could not exceed $5 million. • Construction had to commence by the summer of 1993. The consulting team drew up a fast-track sched- ule and performed detailed studies. The market study was refined, and seven parcels around the lake were delineated for private development. The project was ready to present to the public. Lane Advertising & Public Relations led the campaign to keep the public informed and to assess community attitudes. A small but vocal faction in the community opposed the project because it be- lieved the public sector should not be involved in development. But most of the community was sup - SW Tualatin -Sherwood Road portive. Lane prepared a slide show demonstrating how the lake design met the criteria of the original citizens' goal statement and presented it widely. Key decision makers in the community were contacted and their concerns incorporated into the project plans. A continuous flow of press releases, a press kit, media interviews, flyers, a poster contest for ele- mentary school children, and stories in the city's newsletter kept the public informed. A motto for the project—the "heart of a great city"—was chosen. The Development Program The distinguishing features of projects developed around the lake were to be their urban scale, their ur- ban form, and their pedestrian orientation. Tualatin Commons would not look like any other business area in Tualatin or like any typical suburban devel- opment. The development program envisioned a wide range of uses, including a suites hotel, two Class A office buildings with some ground -level retail space, rental apartments and condominiums, a mixed-use (commercial/residential) complex, two freestanding high-quality restaurants, extensive public features in- cluding a lake and public esplanade, a community center, and off-street parking. An open-air market Site plan of Tualatin Commons. November 1994 9 Urban Land 27 28 colonnade is located adjacent to the larger rustic fountain, providing an area for events, fairs, Satur- day markets, and other public assembly activities. Performance -oriented design guidelines, drawn up by the architects and city staff, were the basis for design discussions between the development com- mission and prospective developers. project proposals were evaluated for more than their financial aspects. To market the development parcels, the city sent mailings introducing the project to a database list of potential developers, real estate brokers, and bankers, and the consultants and city staff met with interested parties. Project updates were regularly mailed to names on the list. A site plan and architec- tural renderings provided a clear image of the lake and the development surrounding it at completion. Market studies pinpointed opportunities for differ- ent income-producing land uses. As is the case with most successful public/private ventures, private capital followed public commit- ment. While a number of developers showed signifi- cant early interest, the city had to commit decisively to construction and long-term maintenance of the lake and public esplanade before any private developer would sign a development and disposition agreement and commit capital to the project. The site offered a number of important advan- tages to developers. The price of the land was com- petitive with similar property in the area but included the lake as a value -adding amenity. Developers would not have to come up with the purchase price until the design process was completed, thereby saving property -carrying charges, and the public approvals process was streamlined, thereby saving time and money. All needed infrastructure would be provided by the development commission. Approximately 30,000 cars drove by the site daily. Most important, there was a growing market opportunity in virtually every sector. Financing restrictions had put com- mercial construction on hold for a number of years, while demand continued to grow. The combination of market opportunity, the public commitment to build the lake, and the strong design and developer package resulted in the sale or commitment of six of the seven private development parcels in less than a year. Four parcels had letters of intent by the initial ground -breaking deadline. Ground breaking for the lake and other public ele- ments took place in July 1993, and the public portions of the development were completed by May 1994, when the community celebrated the grand opening. At that time, the 40 -suite hotel and the first phase of the 44 -unit residential development were nearing completion. In June, ground was broken for the two office buildings by Gionet Development and Equity Development, totaling 87,000 square feet; one of the restaurants is scheduled to break ground this fall. Construction will begin this month on a mixed-use commercial and residential complex con - Urban Land • November 1994 taining 13,000 square feet of retail space, 27 apart- ments, and seven condominiums. The developer is See Properties. The only private development par- cel remaining to be sold is the site for a second res- taurant (and, at the time of this writing in early fall, negotiations are underway with a prospective pur- chaser). The private developments are projected to have a total value of over $22 million at buildout, $1 million more than was projected in the early planning. Tualatin Commons was developed as a true public/private partnership. The private development parcels, including the adjacent off-street parking ar- eas, are owned in fee simple. The owners are re- sponsible for maintaining their structures and park- ing lot and for paying property taxes. The public sector owns the lake, the wide promenade around the lake, and the landscaped public plaza and foun- tain. The city is considering building and owning a community center that will include a small perform- ing arts facility, meeting space, and a home for the Tualatin Chamber of Commerce. All of the public uses are owned, operated, and maintained by the city. The Tualatin Parks and Recreation Department is responsible for scheduling events in the plaza, which, it has promised developers, will be regular and fre- quent to attract the public. A concert series last sum- mer premiered the plaza's schedule of events. A new paddleboat concession brings activity to the lake. By all appearances, Tualatin Commons is a suc- cess. The project came about because the commu- nity had a vision for its future and because the pub- lic and private sectors were willing to take part in an unusual partnership. The Urban Renewal Advisory Committee had advocated for a village -style down- town since 1975. In 1992, a group of concerned citi- zens organized themselves into Tualatin Futures, and this group made support for the implementation of Tualatin Commons its first task. Strong city lead- ership played an equally critical role. The develop- ment commission, made up of elected city council members, along with senior city staff and the con- sultants worked tirelessly to ensure that the project objectives were met. Their work and a strong mar- ket combined to give Tualatin the urban identity it was seeking. 4 - Dave Dave Leland was development adviser and project manager for Tualatin Commons. He is managing director of Leland Consulting Group, real estate economists and project nTanagers, of Portland, Oregon, and Denver, Colorado. Community/D-" Proposal Presented to: City of Federal Way September 10, 2004 Prepared by: Paul Schlesinger Expiration Date: October 31, 2004 TABLE OF CONTENTS Executive Overview Scope of Services r%�-Community/9 2 Phase I Retail Trade Area Determination 3 Phase II Retail Site Selection Tenant Analysis 4 Retail Recruiting Package 6 Fee and Delivery Schedule 7 Sponsor Requirements 8 Signature Page 9 r4l CommunitylD EXECUTIVE OVERVIEW Buxton is pleased to present this proposal to the City of Federal Way. The objective of this proposal is to outline the scope of the research that will produce critical fact -based information and marketing packages that can be used by the City of Federal Way to proceed with the attraction and expansion of the retail sector. In this proposal, the term "retail' also includes restaurants. In Phase I, we will complete an assessment of the retail trade in the City of Federal Way. This assessment will identify distinct geographic zones of customers and retail potential. An analysis of the existing retail product demand along with demographic and psychographic analyses of the households in the community will determine the opportunities for additional retail trade. In Phase II, based on the initial Phase I analysis, the City of Federal Way will select a specific site for further analysis. A drive time trade area will be developed from the site and the households profiled. This profile will be compared with the trade area profiles of locations targeted by specific retailers. Approximately twenty (20) specific retailers will be identified. The existing locations of these retailers in the region will also be analyzed to measure the household density needed by the retailer to establish a successful store. A distance study will also be conducted for each of these target retailers so that they will not negatively affect their existing stores in the same trade area. This research will be used to create retail recruitment packages to be used to attract potential tenants. The marketing package will show the retailer that the households in the trade area match the retailer's target location household profile. The marketing package will also include comparisons to existing retail centers with household profiles similar to the new center, reinforcing the new center as an opportunity for opening a successful unit. These materials address specific retailers and can also be used to attract developers to this project. Buxton provides market research services and economic development consultation and does not provide engineering services to determine the suitability of the environment, topography or infrastructure requirements. We are pleased to present the following outline of the scope of this project for your consideration. We look forward to your response. Buxton fCommunitylg SCOPE OF SERVICES PHASE I - RETAIL TRADE AREA DETERMINATION A. Analysis of potential retail zones to include: ■ Identification of potential retail zones ■ Analysis of the viability for retail development in each identified zone B. Analysis of households ■ Geocode all households in the zones identified above ■ Determine and analyze psychographics of these households ■ Segment and profile all households in each of the zones identified C. Product Demand Analysis • Determine average annual household purchases by product (approximately 400 products) ■ Index these purchases to measure product demand compared to national averages D. Deliverables ■ A written presentation to include: ■ Map of the drive time trade area for each selected zone ■ Household profiles based on psychographics ■ Product demand analysis for the drive time trade area ■ Conclusions and recommendations Bu'�Oly 3 community/Ly SCOPE OF SERVICES PHASE II - RETAIL SITE SELECTION AND TENANT ANALYSIS A. Analysis of a potential retail center within one of the zones analyzed in Phase I, which consists of the following: ■ Develop Drive Time Trade Area ■ Demographic and psychographic profile of households ■ Identification of dominant segment households ■ Population density of these segments B. Tenant selection and analysis • Identification of retailers with customer profiles similar to the household profiles within the Drive Time Trade area determined in section A above. ■ Analyze the effect of sales transfer (cannibalization) by stores of the same retailer in nearby communities, if applicable. ■ For each targeted retailer, determine the density of the retailer's dominant segment households in the trade areas around the retailer's other locations throughout the state and compare them to the community's dominant segment household density. W EMIL J -W- rM Communitylg SCOPE OF SERVICES PHASE II - RETAIL SITE SELECTION AND TENANT ANALYSIS (continued) C. Analysis of existing similar retail centers These retail centers may or may not be in neighboring communities and will be selected based on the similarity of the households surrounding these centers as compared to the households profiled surrounding the proposed site. This will better identify retailers that can be successful at this site and will supplement the profile information when marketing to these retailers. D. Deliverables Research report to include: • Trade area polygons overlaid on map • Household profile by Trade Area ■ Household profile comparisons to specific retailer's target area profiles • Dominant segment household densities Buxton rl V..M, CommunitylD SCOPE OF SERVICES PHASE II — RETAIL RECRUITING PACKAGE A. Marketing Binder We will prepare a Marketing Binder that can be used to market to potential tenants. This binder will indicate the retail potential that is determined in the analysis. Marketing Binders are intended to identify the best tenant mix for the proposed retail center based on the population contained in the established Trade Area. The binder will identify the top retail businesses and will include information to enable the retailer to determine the suitability of this retail center for their retail concept. The Marketing Binder to include: ■ Property description and trade area map ■ Trade area description • Psychographic trade area household profile and summaries ■ Demographic summaries and graphs illustrating the trade area ■ Recommended retailers with operating names, addresses, telephone numbers, key executives to contact and retail classification B. Retailer Specific Marketing Package These packages will be used to market the community to the prospective retail tenant or a retail developer and will include items from the Marketing Binder in above A. Each package will address a specific retailer and set forth the research results illustrating to the retailer the opportunity for opening a successful unit at this site. C. Deliverables ■ One (1) copy of the Marketing Binder • Additional copies of the Marketing Binder @ $200 each ■ One (1) copy of a retailer specific marketing packages (approximately 20) ■ Additional copies of the retailer specific package @ $100 each Buxton C— r communitylu FEE SCHEDULE FEE FOR SERVICES In consideration for services rendered by Buxton, the City of Federal Way agrees to pay Buxton the pre -approved, actual cost of travel and related out-of-pocket expenses not to exceed $2,000.00 incurred in connection with services performed under this agreement in net ten (10) days. Fees associated with the Community/Do program and its related processes are as below: Phase I Retail Trade Area Determination Phase II Retail Site Selection and Tenant Analysis And Retailer Specific Recruitment Package Total Cost $60,000.00* A $20,000 deposit is due upon execution of this Agreement. A progress payment in the amount of $25,000 will be due upon commencement of Phase II and the balance of $15,000 will be due upon delivery of the results of this proposal. *If this proposal is executed after November 1, 2004, the total cost for the Community/D product, including Phase I and Phase 11, will be $70,000. Additional Research Services (post analysis) The following hourly rates will apply for all services rendered outside the scope of this Agreement: CEO/President $250/hour Executive/Senior Vice President $225/hour Vice President/Director/Manager $200/hour GIS Senior Analyst/Analyst $175/hour Administrative $50/hour Estimated time of completion: Phase I - 30 business days from the execution of this agreement. Phase ll - 45 business days after Phase I is completed. Bux-ton c— F74 Community/9 SPONSOR REQUIREMENTS PROJECT REQUIREMENTS FOR SPONSOR In order to complete the Community/Do project in the time schedule presented, the following must be provided by the City of Federal Way. A. Project Liaison ■ Designate a local Project Manager who will interface with Buxton during the course of the project. B. Provide the following materials or reports (all materials will be returned at the completion of the project) ■ Economic planning analysis, community visioning or future studies. ■ Current zoning map, electronic format preferred. ■ Current electronic file of street network, if available. When using Mapinfo, AutoCAD, or ESRI shape files, please indicate what coordinate and datum systems were used. ■ Maps or plans for any major highway or roadway upgrade or construction planned in the next five years, electronic format preferred. ■ Most current traffic count reports, electronic format preferred. ■ List and locate on map, up to three sites or areas to be analyzed for desirability for retail or shopping center development after the completion of Phase I. ■ List and locate on map all shopping centers or malls in the city. ■ List and locate on map all major national retailers in the city. • List of any shopping center or national retailers that have purchased property, but not opened. Indicate if project is under construction. ■ Economic development marketing materials currently used by the community. ■ List of retailers that have been present in your community and vacated in the last 3-5 years. C. Meeting room to accommodate final report session. The sponsor is responsible for extending invitations to participants. Buxton will provide all briefing/presentation materials. Buxton 9 SIGNATURE PAGE This agreement is between the City of Federal Way and Buxton ("the Parties") for the performance of services described in this proposal. The Parties further agree that an independent contractor/employer relationship is created as a result of this agreement. Buxton will not be considered an agent or employee of the City of Federal Way for any purpose. The term of this agreement is one (1) year. This agreement may be terminated by either party at any time upon written notice of 30 days. If this agreement is terminated, Buxton will be paid for services performed up to the date the written notice is received. This agreement shall be administered and interpreted under the laws of the State of Texas. In order to avoid paying State of Texas Sales and Use Tax, the City of Federal Way may be required to provide Buxton with a certificate from the State Comptroller indicating that it is a non-profit corporation and not subject to State of Texas Sales and Use Tax. Agreed and accepted this day of , 2004. Patrick Doherty Deputy Director Community Development City of Federal Way 33325 8th Avenue South Federal Way, WA 98063 Phone: 253-661-4106 (Signature) Buxton Paul Schlesinger Vice President Buxtou