I contacted an old friend who is an experienced developer to try to better understand the proposals submitted in response to the RFP for the city’s High Rock Parking Lot Redevelopment.
I have struggled through both proposals and watched the videos of their presentations. What struck me most about the proposals were the many unanswered questions and assumptions.
My friend explained to me that there are a number of problems with responding to RFP’s such as those issued by Saratoga Springs. Foremost is the cost. Basically developers are acutely aware that the chances of being selected and of then reaching an actual agreement are quite low. It is hard to rationalize spending a lot of time and money on RFPs. So respondents come up with some ideas and try to package them into a credible document that can get them “in the door.” Once they have been selected and have a firm agreement they begin the real work.
He noted that there is a very wide range of character in the developers who pursue these agreements. Some produce proposals that they honestly believe can be done and are committed to achieve as much as possible. Others produce proposals that are purely meant to appeal to the fantasies of the municipal organizations issuing the RFPs. This end of the spectrum expects that the municipality will in the end accept a shadow of what was promised. The fact is that it is rare that what is proposed does not end up significantly modified and in most cases significantly downsized.
Many factors will contribute to the modifications. When a full market study is actually done to find out the demand for something like commercial or retail space, it may turn out that there is less demand than initially assumed. Actual engineering may expose serious problems with the site of the project. The level of available financing may turn out to be far less than anticipated. A particular, large tenant may decline to go through with purchasing or leasing space.
Sequence Development is one of the two companies responding to Saratoga Springs’ RFP for the High Rock Parking Lot Redevelopment. Recently Sequence Development was awarded the redevelopment rights for 1 Monument Square, the land on the Hudson River where the Troy City Hall once stood. This project has experienced major problems. An article from the October 9th edition of the Albany Business Review tells the basic story( Link To Business Review Article) . Reporter Michael Demasi characterizes the project as having been “repeatedly delayed and redesigned.” The article goes on to note “The comments at the IDA meeting laid bare the challenges the development team faces as it seeks an unspecified amount of tax breaks critical to financing the project.”The full article is well worth the read.
In the July 21st Times Union, reporter Ken Crowe wrote, “ The 1 Monument Square project is being redesigned again as architects, business owners and residents question whether the proposed redevelopment plans are right for the city. The design and appearance of the mixed-use building, the Troy Waterfront Farmers Market inclusion in the structure, the use of public funds, lack of a public parking garage and the closing of Front Street were among the issues raised at the Planning Commission meeting Tuesday night.”Further in the article he writes, “Evan Doublas, dean of Rensselaer Polytechnic Institute School of Architecture, said there’s a ‘communal sense of disappointment’ over the failure to redevelop the former 1.5-acre City Hall site between River Street and the Hudson River, and that the current proposal [Sequence’s] ‘is not worthy of Troy.’” Link To Times Union Article
1 Monument Square has apparently already been downsized but even in its current incarnation, it remains to be seen whether it will survive. Whether this was a case of an overambitious sales pitch or a series of bad luck events, I do not know. It is, however, a cautionary tale about just how difficult these kinds of large projects can be when developers attempt to deliver on their promises.
There is another factor to consider. My friend tells me that there is currently a lot of cheap money around in the real estate market. Investors are finding it difficult to find attractive places to put their money and he tells me developers are benefiting from this. Is this potentially another bubble? How much money can a developer make playing with other people’s money?
Saratoga’s RFP: The Parking Issue
The Saratoga Springs RFP calls for a minimum of 600 parking spaces. “Fundamental to this proposal is the requirement to address the current and envisioned parking demand for the Saratoga Springs City Center, City Hall, existing and proposed nearby activities, in addition to being available to the general public and downtown businesses.” I have emailed Brad Birge, head of city planning, to ask where the 600 number came from (he never responded). I checked with Mark Baker and neither of the applicants for this project ever contacted him to determine the needs of the City Center. As far as I know, they never contacted anyone at the city to determine what the city government’s parking needs are. (They currently park a significant number of cars in the lots).
It is important to note that the parking issue is complicated by the fact that the City Center’s parking needs can radically fluctuate depending upon the events scheduled. To dedicate a set number of spaces to the City Center would be a very inefficient use of parking spaces. This represents a challenging design problem. As far as I can tell, neither of the applicants effectively addressed this issue. Paramount, one of the two respondents to this RFP, proposes to designate one of three levels of parking to the City Center. They also say they plan to provide spaces to the City for its vehicles. The number of spaces for the city is not specified. Sequence Development proposes 592 spaces which is less than the 600 minimum called for in the RFP.
The City Center proposes a facility with 480 spaces all of which are open to the public for paid parking. In addition, after the facility is built there will still be 91 spaces left on the existing parcel. This represents 571 spaces. My guess is that the 600 space minimum may have meant the spaces required for the essential needs of the city before any additional needs are created for whatever else the developer builds. If Brad Birge ever responds I will post how he came up with the number. If in fact this is the number of spaces required before adding on any additional needs from the projected additional tenants then the two proposals have woefully under calculated the number of needed parking spaces.
I spoke to a local prominent developer and asked why he had not submitted a proposal for this RFP. He told me that the parking that would be required to meet the current city needs plus the additional needs of any mixed use development asked for in the RFP, given the size of the parcel, made the project unworkable.
The written proposals and a video of the City Council meeting at which they made their presentation is available on the City’s web site.
Link To Podcast Of Presentations By Developers
[I could not find the link on the new city web site to download the proposals from the two applicants.]
So let’s take a look at the actual proposals and presentations. Given the length of the documents I fully admit that the summary that follows is really my impressions.
The Sequence Proposal
The table below is from their proposal:
This project, to be charitable, is by their own characterization more concept then actual proposal. It includes a skeletal set of elements. The primitive nature of their graphic rendering reflects this.
The following people did the presentation for Sequence:
Jeff Hyman of Hemisphere
Jeff Buell of Sequence Development
Mike Phinney of Phinney Design Group (Oddly enough I could not find him listed in their formal proposal document)
A representative from JCJ Architecture (They never gave her name)
Mike Phinney is part of their “team.” Mr. Phinney is best known in the city as one of the owners of “The Local,” a restaurant and bar on the city’s West side. In fact, he is one of the principals of the Phinney Design Group which is a “multi-disciplinary Architecture, Interior Design and Green Building Consulting Firm” as described on their web site < Link To Web Site>. Since he was not identified in their written proposal, I assume he was brought in late because of his local connections.
In his public presentation Phinney characterized their proposal as “conceptual plans” and a “process” but not a final design. He explained that their team wants to schedule public forums and meetings to get community input. This would be followed by a Charrette with the “stakeholders.” All of this is meant to involve the community in order to insure that the end product would reflect what people want.
He went on to list a series of appealing images:
“Open Space/Green Techniques.”
“We can create pocket parks.”
“Office and Retail Development”
“Parking is an opportunity”
The housing will be” work force.”
At one point he asked a member of the team to share her “sketches of thoughts”.
The proposal contains many, many ideas for how the buildings might incorporate green building including roof top gardens. It speculates about providing space to the city government. As should be apparent, the project is full of creative ideas but few specifics.
They indicated their hope to work out some sort of PILOT (Payment in Lieu of Taxes) and to potentially help pay for the parking through moneys from the Saratoga County Industrial Development Agency.
He did concretely offer that their plan was for a structure with four levels with 16,400 square feet per level.
Central to their plan in their written proposal was a large space meant for a major employer with from 150 to 300+ employees. It is interesting to note that earlier in their written proposal they state that their target is a company with 50 to 150 employees. Apparently there was a need for more rigorous proof reading. For simplicity sake I am going to assume they will need 150 parking spaces for 150 employees.
They project 106,900 square feet of residential housing. Their chart (see above) has a column titled “spaces.” In the row that residential is on they have the number 100. For the purposes of this analysis I am going to assume that they meant 100 units rather than spaces. The city requires that there be 1.5 spaces for every unit of housing so they will need 150 parking spaces.
So if we add up the office workers’ needs and the residents needs we get a conservative 300 spaces.
I did a rough Google search on calculating parking for retail space. According to one site I found, they recommend 6 spaces per 1000 square feet for restaurants and 2 spaces per 1000 feet of “retail-service establishment.” For simplicity, I estimated that 25% of the retail would be for restaurants. When you run their projection of 57,800 square feet you get 164 parking spaces.
So I get: Spaces
Office Employer 150
According to their proposal, they “suspect” that “approximately” 250 of the 592 spaces would serve the proposed office and residences. They say this will leave 342 spaces for “…the Retail component on site, as well as the Civic Center Government needs, the City Center, and the public at large.” I am not sure what they meant by “Civic Center Government.” They probably meant the city government.
I calculate that they are actually left with 128 spaces for the City Center, the municipal government’s needs, and the public. If this number were even remotely correct, they will fall well short of the parking needed.
Their plan does not include a direct connecting structure between their project and the City Center which was included in the RFP but was not made a requirement.
The proposal has them purchase the land from the city for $2,600,000.00 or about $1,000,000,00 per acre. The city has not had the land appraised so it is unclear how generous an offer this is.
Reliable sources tell me that their retail space would be one and a third times the size of the current retail space on Broadway. My uninformed opinion is that this is a stunning amount of additional retail for the downtown. I feel confident that there have been no marketing surveys to show that the demand exists for this much retail. I assume that were they to be approved for the project, they would do such a survey. Were it to turn out that there did not appear to be the demand, this would obviously greatly affect this project.
JCJ Architecture which is part of this project does have an impressive track record of developments they have successfully been involved with.
As noted in the introduction to this post, these proposals cannot be seen as firm commitments. Still, this proposal seems deeply flawed to me.
Paramount Development Proposal
Paramount’s proposal is a joint effort with Community Builders. Community Builders has an excellent reputation.
Their plan involves the following:
Interestingly, my sources indicated that the New York State Department of Housing and Community Renewal is very interested in funding housing in Saratoga Springs. This would suggest that they might find state money for the subsidized elements of this proposal.
In their proposal they project 607 parking spaces. They would dedicate the top level to the City Center with 259 spaces. They would allocate 30 spaces for municipal vehicles and employees. They would allocate 60 spaces for the market-rate and for-sale apartments. They would allocate 80 spaces for the senior and young family apartments. Finally, they would allocate 178 spaces for public parking.
The problem here is that the city requires 1.5 parking spaces for each housing unit. Since the proposal is for 166 housing units this would require 259 parking spaces. They are proposing only 140 parking spaces for the residences.
They have also not identified the additional parking required by their very ambitious retail plans.
They are planning for a 49,800 square feet of retail. Using the same calculations for parking related to retail as with the Sequence proposal, I come up with a need for 150 parking spaces.
So the total parking required for this project for just the housing and retail would be approximately 400. This would leave a balance of 200 spaces for the City Center, the City Government, and the general public. Assuming that the City Center plan accurately handles the demands for its patrons along with the general public and that the additional parking in the lots is necessary for the public and the city employees and departments, this would result in an enormous short fall.
There also appears to be a fundamental flaw in their engineering analysis. Their plan requires an underground parking level. I understood from Mark Baker and from what Tommy McTygue said last spring at the library, that Village Brook which runs under the property, makes this option untenable. One of the members of the Paramount group told me that their architect had determined from a soil sample that this was a viable option. He told me that the Hampton Inn had gone down a level. I checked on the Hampton Inn and found that this was not true. Since they are planning three levels of parking, this would mean they would lose one third of what they had planned for. As noted earlier, what they had planned for was inadequate.
My developer friend also told me that underground parking is very expensive to construct and very expensive to maintain. He told me that his group does everything they can to avoid this.
While this proposal has about ten percent less retail, it still has a great deal of retail. As with the Sequence proposal, I am skeptical about the viability for scale of retail they are proposing.
I am completely sympathetic with the value of a mixed use building that incorporates retail and residential space. This is axiomatic to the new urbanism. The problem is that no serious analysis was done about what is viable in the available space assuming that there is a need for a large number of parking spaces.
There were three key issues that needed to be thought through before this RFP was issued.
- The first, and it should have been obvious, is what is the value of the parcel? Before any developer took the time to prepare a proposal, they should have been told up front what the city wanted either in terms of a lease or a sale price. If, for example, the land is worth more than the $2.6 million dollars offered by Sequence, then Sequence would have either had to reconsider its proposal in light of how much they had to pay for the land or maybe they would have decided the cost was too great and not answered the RFP. I simply do not understand how the city could have issued an RFP without doing this basic assessment. The Mayor has said that an appraisal will be done. What if the appraisal comes up with a price of more than Sequence is proposing? Does that void Sequence’s proposal? I do not know.
- The second issue is the lack of clarity regarding parking needs. The RFP requires a parking component that addresses “the current and envisioned parking demand for the Saratoga Springs City Center, City Hall, existing and proposed nearby activities, in addition to being available to the general public and downtown businesses.” It then states “It is expected that proposals would offer public parking to serve a minimum of 600 vehicles.” It is not clear if the figure 600 represents the basic number of spots the city needs. If it does then the developer would have to create these spaces and then figure on top of that the parking spaces needed for the new commercial and residential space the RFP asks for. The respondents have not done this. [I noted earlier that a local developer passed on this because he estimated that the parking spaces required to meet existing and new needs within the space allowed was unworkable. He of course, is a local person who is more familiar with the parking issues in the city.]
- How much additional retail/restaurant space can the city handle? It would be a very serious error to rely on the developers making these proposals to answer this question. Empty storefronts are something this city needs to avoid! The city needed to do this analysis before it issued the RFP.
A development of this scale is never going to be easy as I noted at the beginning of this prost. The debacle that Troy is going through should be a cautionary warning to this community. To simply go on faith that all the unanswered questions will be answered is simply folly.
The fact is that the rush to get an RFP out was politically driven. To continue with this folly is to waste staff time and resources.