Posted by Shannon

In the coming months, California’s 427 Successor Agencies will need to sell the estimated 5,000-6,000 property assets as part of post-compliance with the requisite dissolution of Redevelopment Agencies mandated by AB 1484. Real estate and economic development advisory firm Kosmont Companies (Kosmont) has formed a partnership with Auction.com to help Successor Agencies evaluate and sell post-redevelopment properties.

“As far as we know, there has never been a public property sale of this magnitude by any state or local agency in the history of the United States. There have been lots of land sales by public agencies, especially by the federal government, but in recent history as far as I can see there has been no set of transactions set up statutorily to sell public assets in what amounts to be a public agency liquidation sale,” said Larry Kosmont, president and CEO of Kosmont Companies.

In addition to the magnitude of the number of assets, many of the properties have unique specifications or challenges that may make selling the properties challenging. “This is not a typical ‘I’m buying the best house on the block’ acquisition program. These are properties that in many cases were bought because they may have issues of zoning, irregularities, or were a part of the future vision for the broader overall revitalization of sites and land,” said Mr. Kosmont.

As expert advisors working Successor Agencies through the redevelopment dissolution process, Kosmont sought to devise a way to create a streamlined, fair way for agencies to get the best price for the properties they are required to sell. Because AB 1484 requires a liquidation of property and does not require agencies to follow usual RFP protocols, collaborating with Auction.com presented an opportunity to create an ideal solution for many of these properties. With over $20 billion worth of property sold since 2007, Irvine-based Auction.com provides a technology platform for an open marketplace where buyers enjoy maximum transparency and efficiency in transactions. All buyers are given the same information and can easily track the status of their bid.

It also provides multiple benefits for the Successor Agencies. Auction.com has the potential to draw a far larger number of potential buyers who may be interested in irregular or challenging properties, including international owners and investors who may not usually pay attention to the sale of public land. The larger pool will likely result in more competitive bidding, bringing greater proceeds to the state, the Successor Agencies and the local agencies who lost tax increment when Redevelopment Agencies were dissolved.. Auction.com boasts a closing rate over 90%, with bidders being pre-qualified. Sales are completed with a quick turn-around time, usually within 30 days.

Kosmont will serve as facilitator of the sales while Auction.com will serve as the marketplace. To learn more about Kosmont’s redevelopment dissolution services, click here or contact Larry Kosmont at lkosmont@kosmont.com.

- See more at: http://www.civicbusinessjournal.com/kosmont-teams-up-with-auction-com-to-provide-solutions-for-successor-agencies/#sthash.vgmdoCyU.dpuf

May 10, 2013 6:18 PM

MAIN LIBRARY — The Santa Monica Civic Center Auditorium can survive past its planned June closure, but it will have to revolutionize its layout, amenities and management structure if it plans to compete with other entertainment facilities in Los Angeles, a team of policy experts told residents Friday afternoon.

Members of the Public Policy Institute, including former Santa Monica City Manager John Alschuler, recommended an entire reboot on existing thinking about the 10-acre parcel that lies to the south of City Hall, even contemplating hotel, residential or commercial development on the site to subsidize the arts center, which could be run by a separate nonprofit organization with an appointed board.

Gone was talk of a soccer field to be shared with the Santa Monica-Malibu Unified School District, instead replaced by an urban cultural center where patrons of the Civic could attend a show or conference and then walk a short distance for a cup of coffee or glass of wine.

“We have to give people a reason to go there beyond nostalgia,” Alschuler said.

The City Council voted in October to mothball the Civic by June 30 after City Hall lost its redevelopment agency, which was going to fund a $51 million renovation of the aging facility.

That caused Nederlander Group, a private management firm, to back out of a deal to run and book the Civic, which had run at a deficit for years.

Rather than try to find money to make basic seismic repairs and put out $2 million to subsidize the money-losing operation while facing other budget pressures, the City Council decided to cut the city’s losses and mothball the facility at the relatively low cost of $185,000.

That closure could result in even more damage to the center should existing systems fall into disrepair from disuse, said D’Lynn Waldron, who put on multiple productions at the site.

That $51 million figure could be half of what’s needed to bring the facility back to life and ready to enter the ring with the other performance spaces in the Los Angeles region, said Dan Massiello of Kosmont Companies, a real estate advisory firm for municipalities.

Between the center’s state of disrepair and antiquated facilities, the decision to save it is an emotional one, based on its importance to the identity of the city and to its residents, the team said.

“If this was simply a question of economic logic, or if this was simply a question of quality of the performance space, we would be recommending that the building be torn down and rebuilt. It is certainly not a cost effective thing to do to preserve it,” Alschuler said.

That option was taken off the table for this discussion, but it will force residents and City Hall to think long and hard on what they want at the site, and how they plan to pay for it.

Operating revenues alone will never be enough to fund the debt service on loans needed to revitalize the facility, and traditional uses of the center will have to stop, said Mike Ross, who runs the Pasadena Convention Center.

At present, 40 percent of the center’s use comes from city departments, which pay nothing for the service.

The center must charge industry rates and manage the Civic at industry standards, something it struggled to do when managed by the Community & Cultural Services Department.

It also needs to modernize its facility to make it attractive not only to its traditional cat shows, but to musicals, operas, conventions and other special events.

That could mean reconfiguring the interior so that 2,000 of the 3,000 seats retract at the push of a button, while the remaining 1,000-seat capacity hovers above in a balcony, said John Sergio Fisher, an architect who specializes in theater consultation.

Improved acoustics, projection and comfier seats are also musts, he said.

This idealized version of the Civic will cost an estimated $4 to $6 million each year, and where that money will come from is at the heart of a touchstone issue for Santa Monicans.

The Civic Center sits like an island in the midst of a huge surface parking lot. In the eyes of developers, that land is gold.

A 300-room hotel could provide $3 million in hotel room taxes that go straight to City Hall’s General Fund, and a relatively dense residential development could bring in something similar, said Tom Wulf of Lowe Enterprises, a real estate firm.

Other options include a bond, approved by Santa Monica voters, or the sale of naming rights.

Ultimately, there is no silver bullet for the challenges facing the Civic, and it will take a lot of community involvement to develop a clear direction for the site and what residents are willing to accept to save it.

That will be necessary before going to private industry for potential partners to develop the site, Alschuler said.

The team came to its conclusions after a month of looking through a briefing book delivered by city officials, and one day of interviews.

Nina Fresco, a Landmarks commissioner and member of Save the Santa Monica Civic, wants to keep the door wide open to ideas that will preserve the historic structure, which became a local landmark 11 years ago.

“We want it saved, and we will be as open as possible,” she said.

The next community meeting will take place in Virginia Avenue Park on June 4 at 7:30 p.m. The matter will go back to the City Council on June 11.

ashley@smdp.com

City Manager Newsletter by Trackdown
April 2013 Special Edition

Dear Reader,

With this distribution letter you will find a link to the Special April, 2013 issue of the City Manager Newsletter by Trackdown. This issue features a list of those who serve in California cities that have the name “Frank.” The featured Sponsor for this issue is Larry Kosmont and the Kosmont Companies. Please note that this issue and all past issues of the newsletter are available on the Trackdown Management Services web site: www.trackdownmanagement.net

On Page 11 of this Special April, 2013 issue is an information page about the Kosmont Companies. Founded in 1986, Kosmont Companies has become a nationally recognized expert in economic development and real estate development projects involving government and private sector partnerships. Larry Kosmont has been working on the issue of getting
Californians back to work and returning “tax increment” financing through AB 690, The California JOBS Act. Parenthetically, Larry was the 1980 John Nail Award winner. Please visit the Kosmont Companies web page at: http://www.kosmont.com/

—————————————————

Kosmont Companies, a Certified Minority BusinessEnterprise (MBE), is a development services firm offering a full range of real estate and economic advisory, brokerage, project finance, investment, and planning services for both the public and private sectors.

Founded in 1986, Kosmont Companies has become a nationally recognized expert in economic development and real estate development projects involving government and private sector partnerships.

Whether the objective is getting a project entitled and approved, financed, developed, leased or sold, or if the goal is to generate new tax revenues, jobs or business opportunities, Kosmont Companies ensures success. Our diverse and uniquely qualified development services team provides the depth and expertise required to help clients conceptualize, structure and implement projects of all product types, sizes and complexities.

From the earliest planning and feasibility stages and throughout project development, Kosmont Companies effectively guides clients through intricate transaction and policy issues to create viable economic development strategies, achieve redevelopment/revitalization goals, and produce real estate projects and public asset management solutions.

Kosmont recognizes the powerful social and economic benefits of community development and redevelopment, and the firm is committed to bringing public, private, and non-profit organizations together in meaningful real estate transactions that help communities flourish.

Larry J. Kosmont, CRE®, is the Founder, President and CEO of Kosmont Companies. He is also Managing Partner of Renaissance Community Fund, which invests and develops mixed use, residential and commercial projects throughout California.

From 1975 to 1986, Larry served as City Manager, Director of Community Development, and Redevelopment Director in the cities of Santa Monica, Seal Beach, Bell Gardens, and Burbank. He served as President of the Southeast Los Angeles County City Managers’ Group (SELAC, currently Gateway Area Manager Group) for two consecutive years.

In 1995, Larry conceived of and created the Kosmont-Rose Institute “Cost of Doing Business Survey”,which is now recognized as the industry standard for comparing city taxes and economic incentives. The Survey covers 400 cities in all 50 states, and is published annually by California’s Claremont-McKenna College.

Others on the Kosmont team include: Partner & Senior Vice President. Susan Perry, Esq.; Senior Vice President C. WIl Soholt; Kenneth K. Hira; Ryan Aubry, LEED; Joseph Dieguez; Matt Goulet; Daniel B. Cromwell, CCIM; Mark Perscio, AICP; Mark Hughes; Nicole Miyoshi; Former City Manager Stephen G. Harding, who serves on the faculty of the University of La Verne and as City Manager in Jurupa Valley; and John Molloy. Kosmont Companies is a leader in negotiating residential, retail, mixed use, hospitality, office and industrial projects that have revitalized hundreds of communities and neighborhoods. With more than a quarter century of advisory services to the public sector,

Kosmont Companies is the most capable consulting firm in California to design and implement a sustainable economic development strategy. We have assisted hundreds of public agencies in their quest to retain jobs, attract & retain business, modify zoning approaches, draft General Plan and Specific Plan conditions, and to structure tax and incentive plans that target meaningful private investment.

Call Kosmont Companies to discuss potential economic development strategies.
Kosmont Companies, 865 South Figueroa Street, Suite 3500, Los Angeles, California 90017
Telephone: 213-417-3300 Fax: 213-417-3311

REGIONAL NEWS
No Property Fire Sales Anticipated in Next Phase of RDA Dissolution

by: Keeley Webster
Tuesday, April 16, 2013

LOS ANGELES — The next phase of the California redevelopment agency dissolution process is not likely to be any easier than the previous ones, according to panelists at an event Tuesday in downtown Los Angeles.

Over the next several months, successor agencies to the city’s and county’s redevelopment agencies will be drafting property management plans and making decisions about which properties to sell and which ones to retain, said speakers at the Urban Land Institute, Los Angeles District’s Urban Marketplace  event.

“The public sector is about to embark on a journey they never quite envisioned,” said Larry Kosmont, president and chief executive officer of Kosmont Cos., a Los Angeles-based  real estate and economic development  firm. “We are at the very beginning of the property management plans. It’s going to start to heat up over the next six months and it will work itself out over the next two years.”

The agencies were dissolved under the terms of a law passed in 2011, along with a companion bill that would have allowed RDAs to stay alive if they shared revenue with the state. The state Supreme Court struck down the companion bill in late 2011 while upholding the bill dissolving every single redevelopment  agency, which was something of an unexpected consequence.

Anyone interested in purchasing successor agency owned properties or partnering with cities on development  deals should act now, said Cecilia Estolano, a former Community Redevelopment Agency-Los Angeles head and partner with the consulting firm, Estolano LeSar Perez Advisors LLC.

“As Cecilia indicated, the time to approach cities about either purchasing properties or partnering with them to develop properties is now,” Kosmont said. “I view the property management plans as a down payment for cities to get back into the development  game.”

Kosmont described the dissolution as a “very detailed and labyrinthine process.”

“It’s like being turned upside down, with your feet in the air, so the state could shake out all the coins and dollar bills,” he said.

Kosmont Cos. has estimated that each of the 427 dissolving agencies owns on average 20 properties, which means that somewhere in the range of 8,000 properties could be sold.

“The key is how they will be sold and how do you buy them,” he said.

Some 90 cities have filed lawsuits against the state regarding earlier phases of the dissolution.

Until those issues are resolved, they are not going to receive their letters of completion needed from the state Department  of Finance to move forward in the process.

Up until now, properties that didn’t have development  agreements signed by June 7, 2011 — with small exceptions of certain types of uses — could not be moved, sold, or transferred, Estolano said.

“Nothing could be done until the DOF had cleaned all the cash out of the process,” Estolano said. “Until they had a finding of completion that the DOF conveys to a successor agency, the properties can’t move.”

It’s good for property investors to know that they can’t do a deal until an agency has issued a finding of completion, Estolano said.

Only four smaller cities in Los Angeles County have received finding of completion; and there are only 20 in state, Estolano said.

“More letters should be coming out in the next several weeks,” Estolano said. “If a city doesn’t have a dispute, they will be writing a check to the DOF.”

Issues being litigated have arisen from letters sent by the DOF to the cities saying, “here is how much cash you need to hand back to the auditor-controller,”  she said.

Only when DOF confirms the city has written the check will it issue the certificate of completion, she said.

Yesterday was the deadline for the DOF to go back to the auditor-controller  to ask which successor agencies have paid those bills, she said.

Other cities are in mediation because lot of money at stake, she said.

“Cities still need to do a long range property management plan and have approved by oversight board,” she said. “The cities have six months from when they received finding of completion to prepare that plan.”

Most successor agencies are already working on those plans.

She recommended  that real estate investors start working on deals with successor agencies before the long-range property plan is in place.

During the process, the city will be forced to disclose the value of the property.

The plan also will have to be approved by the successor agency’s oversight board and the DOF, so it saves real estate investors time if the deal they are trying to orchestrate  with the city is included in the successor agency’s property plan, she said.

She explained that one way people are putting deals together without redevelopment  tax increment dollars will be through unspent bond proceeds.

Once successor agencies receive a finding of completion, and receive that letter, they could start spending money on projects again, Estolano said.

“It is something you might want to ask the city manager about – if they have unspent bond proceeds that could help make the deal work,” she said.

“There is an entire industry around financing other than tax increment financing,” she said, citing hotel occupancy taxes, utility rebates, historic tax credits and a visa program for foreign investors.

Kosmont called those financing tools hand tools, while the now-dissolved  RDA’s were the power tools for economic development.

Both he and Estolano gave low odds that several bills to revive redevelopment  now being considered by the legislature will actually be approved.

“You will hear a lot from speakers on how opportunities  will emerge,” said David Waite, incoming chair of ULI-LA. “I don’t think this will be the opportunity for the private sector to swoop in and acquire assets on a fire sale basis that people have thought it might be.”

April 10, 2013
By Luke Money, Signal Staff Writer

After more than three years of planning and study, Santa Clarita City Council members voted this week to keep the door open on the possibility of a stand-alone conference center, but only if the city can find some way to reduce or offset the cost of building it.

Council members voted 4-1 Tuesday night to direct city staff to seek out a partnership with a private company to develop a conference center, the costs of which could range from $40 million to $65 million, according to Wil Soholt, a senior vice president with Kosmont Companies, which developed the draft master plan for the center.

In such a partnership, a private entity could assume the costs of construction in exchange for some form of public subsidy, Soholt said.

Councilman TimBen Boydston, who was the lone City Council member to vote against the item, took issue with that option.

“I want everyone to understand how little sense this makes to build a conference center when you are trying to subsidize it,” he said Tuesday.

Boydston said he would rather “kill” the idea of a conference center outright, given its cost.

“It doesn’t make any economic sense,” Boydston said.

Other council members said Tuesday’s vote was about exploring ways that could help construct a conference center at a lower cost, not guaranteeing it will be built.

“All we’re doing is saying, ‘Let’s see what the possibilities are,’” said Councilwoman Marsha McLean. “You can’t just kill something like that.”

Councilman Frank Ferry said completely doing away with the idea of the project would be “irresponsible” and cited the Santa Clarita Performing Arts Center at College of the Canyons as an example of an effective city partnership.

The city contributed $2.4 million during construction to increase the seating capacity of the Performing Arts Center. In return, the city has the option to hold community events at the venue.

“I get you don’t want any growth and you want us all to drive a horse and buggy,” Ferry told Boydston. “I get it; you’re consistent.”

On top of the building and maintenance costs for the center, the city would also have to pay to finance a center, likely through bonds, Soholt said.

The city would reap about $600,000 a year in operating income by running a conference center, Soholt said, but would likely still face a more than $2 million deficit per year while paying debt service on bonds.

The overall price tag for the project could vary based on how large the center is, where it is located and whether a parking structure needs to be constructed to serve it, according to Soholt.

After market analysis, the recommended size for a city conference center would be 55,000 square feet with a 20,000-square-foot main ballroom, according to the plan presented at Tuesday’s council meeting.

By comparison, the large banquet room of the Hyatt Regency Valencia, which serves as the city’s current conference center, is 5,684 square feet.

A 55,000-square-foot center would also require eight to 12 acres of land for construction, Soholt said.

Lmoney@signalscv.com 661-287-5525 On Twitter @LukeMMoney

April 8, 2013
By Luke Money, Signal Staff Writer

A proposed plan will be presented at a council meeting on Tuesday night

A master plan for a Santa Clarita conference center is set to be presented to City Council members Tuesday night.

The plan notes a center could have an annual budget shortfall of $1.1 million to $2.7 million a year on top of a construction price tag that would likely exceed $10 million.  Due to the costs associated with the project, city staff members are recommending the city search for a private-public partnership to construct the center.    Under such an agreement, a private developer would construct, own and operate a center, and the city would provide a public subsidy to use it.

The master plan culminates three years of work toward determining the feasibility of a stand-alone conference center in the city. Currently, the city’s main conference center is the grand ballroom of the Hyatt Regency Valencia.  In 2010, the city retained the hospitality research firm PKF Consulting USA to examine whether there was a public demand and economic market to support a Santa Clarita conference center.  PKF determined Santa Clarita could likely support a center between 40,000 and 60,000 square feet in size, according to city documents.

The city then enlisted the services of Kosmont Companies, a development services firm, and the Gensler architectural design and planning firm to develop the master plan for the conference center.

Posted 4/5/2013 – 10:02:53 AM

REDONDO BEACH, CA—Groundbreaking will be held here April 9 for a 147-room Hilton Garden Inn and a 172-room Residence Inn by Marriott at the corner of Marine Ave. and I-405 East.

The $59 million project is estimated to be a 13-month process with both hotels scheduled to open in 2014.

The development is a joint venture between Mogul Capital, LLC, and Trancas Retail Center Fund, LLC, of Park City, UT, with debt financing provided by Orix Municipal Finance of Dallas, TX. Summit dck, Inc., based in Irvine, CA, will oversee construction and Evolution Hospitality of San Clemente, CA, will provide management oversight for the project.

The Hilton Garden Inn will offer 2,200 sq. ft. of meeting and event space, a restaurant and bar, heated outdoor pool and spa, fitness center, business center and 24/7 market. The adjacent Residence Inn by Marriott will feature a complimentary hot breakfast buffet daily and evening reception Monday through Thursday, heated outdoor pool and spa, business center, 24/7 market and 1,800 sq. ft. of meeting and event space.

April 3, 2013 – From the April 2013 issue

You won’t find the term redevelopment anywhere in Assemblywoman Nora Campos’ bill. Instead, the Silicon Valley legislator is offering cities and counties the next best thing: the powerful tool known as tax increment financing.

Under Assembly Bill 690, cities can form “job and infrastructure districts” (JID) that would sell bonds and finance construction of public works projects as well as turn old warehouses into job-creating businesses. As was done under redevelopment in the past, the “districts” would pay off the debt service by capturing the increase in property tax revenues, known as tax increment.

Cities and business groups are jumping at this newest manifestation of economic development power. Many are still smarting after the state Legislature and Gov. Jerry Brown ended redevelopment in 2011 and forced redevelopment agencies to liquidate their holdings and send the check to the state.

Campos’ bill may be just the first of many similar bills sent down the pipeline, even if the author and its supporters refuse to label it as a redevelopment redux. All eyes will be on Brown, who doesn’t want to see redevelopment power resurrected.

“No. We are never going to use that term as long as we live,” joked Mary Ann Lutz, mayor of Monrovia. The San Gabriel Mountain foothill town has won awards for using redevelopment as a tool to revitalize its downtown and turn Huntington Drive into a high-tech corridor with the nationally known technology company that designs and manufactures unmanned surveillance systems, Aerovironment, as a keystone. “There is going to be a lot of them (bills), even though we’ve been told the governor will veto them,” she said.

Supporters of the bill shake off the label given by naysayers – “RDA 2.0,” said Campos’ chief of staff Sailaja Rajappan.

“No. It has nothing to do with so-called neighborhood blight,” she said. “AB 690 is about job creation and using the tool of tax increment financing.” Campos spokemen point out that tax increment financing is used in 47 other states.

Campos’ bill separates tax increment financing from redevelopment. Also, instead of using “blight,” a loosely defined metric under the old redevelopment rules, the bill substitutes unemployment. A JID must have an area of high unemployment, Rajappan said. The bill requires creation of 10 prevailing wage jobs for every $1 million invested.

Once a city decides to create a JID, it would need approval of 55 percent of the local voters, she explained.

A JID would bring a city and a developer together to remake an abandoned warehouse into a supermarket or a modern industrial facility, for example. Cities could join with other municipalities with high unemployment to build roads, bike lanes, bridges, parks or libraries, according to the bill.

“The first test is: Do you have high unemployment? If you don’t, we are not talking to you,” Rajappan said. “The only way a project would qualify is if it would generate jobs. Again, this is not about building a stadium in San Diego. “

Opponents admit this may be a “more honest” reiteration of redevelopment but some still worry about abuses.

“It is the same thing warmed over and will lead to the same abuses that existed before,” predicted Steven Frates, director of research at the Davenport Institute at Pepperdine University Graduate School of Public Policy. “It is political payoff for politicians and unions. “

However, the Southern California Association of Governments, which represents 191 cities in six counties, and the California Business Roundtable, have climbed on board. As part of a goal to stimulate job growth in Southern California, SCAG President and Simi Valley Councilman Glen Becerra met with Campos in Sacramento two weeks ago and was sold on the idea. He’s convinced more cities will jump on the bandwagon as the new bill moves through legislative committees and eventually to the Assembly and state Senate floors for votes.

“With the demise of redevelopment, there needs to be a judicious use of tax increment financing because it is a very powerful tool that local governments can have at their disposal, if used properly,” Becerra said Thursday.

So far, the League of California Cities has not taken a position on the bill, said Eva Spiegel, communications director based in Sacramento.

The measure is being backed by the Los Angeles County Business Federation, or Bizfed, as a way to move brownfields and other stalled properties toward new, job-creating retail, industrial or office developments.

Larry Kosmont, a Bizfed member and a specialist in economic development, helped Campos write the bill. He had the “factory belt” of Los Angeles County in mind. Cities such as El Monte, Southgate, Montebello and Huntington Park have 15 percent or higher unemployment and are littered with abandoned buildings that once housed hundreds of workers.

“The reason no one is buying up these old buildings is because they are too expensive for any company to retrofit them for handicap access and just to make it work. So, they export those jobs to Texas or Glendale, Ariz. where they can buy a cheap building,” Kosmont explained.

“This (AB 690) will level the playing field for the state of California. It will finally give businesses an ability to look at California in a better way,” Kosmont said.

When asked if giving tax increment financing back to cities would give breaks to corporations such as Walmart and Starbucks as corporate welfare, a common criticism of redevelopment in California over the last several decades, he said no.

“It would allow companies to create new jobs. I think the people of California would be getting the breaks,” Kosmont said.