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Item 9ACITY OF SOUTHLAKE MEMORANDUM March 14, 2014 To: Shana K. Yelverton, City Manager From: Ken Baker, Senior Director of PDS Subject: Award a contract to MXD Development Strategist for the preparation of the of the Retail Analysis (Saturation) study. Action Requested: The purpose of this item is to award a contract to MXD Development Strategist for the preparation of the of the Retail Analysis (Saturation) study. Background: As part of the fiscal year (FY) 2014 budget the City Council budgeted $40,000 to retain consulting services to analyze and report on various aspects of the retail market in the City including the existing, near term, and long term capacity of the City to support retail businesses. More specifically the plan will accomplish the following: i. What types of retail are under -served in the City? ii. What is the trade area served by various categories of retail? iii. What types of retail are supportable long term and should be attracted (target retail)? iv. What is a reasonable amount of retail (square footage) the City can support by types given future market and demographic trends, future shopping habits and expectations as well as competition? V. What is the potential sales volumes/tax revenue as a result of new retail? vi. What additional components (i.e., daytime population base and tourists) are available to help support retail? vii. Provide recommendations which will increase the likelihood of the City maintaining a sustainable retail base. Once the study is completed, it will be presented to the entire City Council for consideration. Amendments to the adopted Southlake 2030 Economic Development and Tourism plan are possible based upon the recommendations of this plan. The City interviewed four (4) consulting firms interested in this project and staff is recommending that the City enter into a contract with MXD Development Strategist for the development of the study. MXD Development Strategists Ltd. is a full service commercial development consulting firm based in Vancouver, B.C. Canada and working in 42 countries around the globe on master planning, market analysis, economic development and land development projects. Next Steps If the MXD Development Strategists contract is approved, staff will execute the contract and begin working with the consultant on the development of the plan. It is staff's intent to present the preliminary findings of the study to City Council at its June retreat. Attachment: (1) Contract I:1►�I:il.Tii1.^. CONSULTING AGREEMENT This Consulting Agreement (the "Agreement") is entered into as of the last date shown below by and between MXD Development Strategists ("Consultant"), and City of Southlake, Texas ("Client"). WHEREAS, the Client desires to retain Consultant for a Retail Analysis Study. WHEREAS, the Consultant agrees to provide certain consulting services to the Client to assist with such endeavors. NOW, THEREFORE, in consideration of the mutual covenants and agreements contained herein, the sufficiency of which are hereby acknowledged, the parties agree to the following: 1) Consultant agrees to provide the services and deliverables set forth in the Scope of Work attached hereto as Exhibit A. The estimated time frame for completion of the work shall be as tentatively outlined in Exhibit B. 2) Client agrees to pay a sum not to exceed USD $38,500 for the services as noted above to include travel and out-of-pocket expenses. Payments shall be by phase as noted in Exhibit B, and shall be due upon completion of such phase, except for the initial payment, as provided in Exhibit B. The Consultant is available to provide additional services beyond those outlined in the scope for additional fees to be negotiated separately. 3) Payment: All invoices shall be paid and are due within thirty (30) calendar days of the date of invoice issuance. Overdue accounts will be charged interest by MXD Development Strategists Ltd. at a rate of 2% on all oustanding balances. Final reports and deliverables prepared by MXD Development Strategists Ltd. shall not be provided until any outstanding accounts are settled. 4) Either party may terminate this Agreement if: a. the non -terminating party shall be in default under any term, provision or condition of this Agreement and fails to cure such default within ten (10) calendar days of receipt of written notice sufficiently describing the default; or b. either party shall file or have filed against it any proceeding under any bankruptcy, insolvency or other law affecting the enforceability of creditors' rights. 5) Client acknowledges that Consultant participates in, advises, and/or manages entities which may compete and conflict with the Client's economic and retail development interests. Notwithstanding such competing interests and potential conflicts, the Client acknowledges and agrees that such competition and conflicts are inherent and unavoidable, that the benefits which the Client receives by obtaining the services from Consultant outweigh the potential for such conflicts and that Consultant may continue to participate, advise, and/or manage such competing interests. 6) Consultant is an independent contractor and will be solely responsible for any claims of its employees or subcontractors for their actions. In the event litigation becomes necessary with respect to a breach or alleged breach of any of the agreements contained herein, the party in whose favor final judgment shall be entered shall be entitled to recover from the other party all costs and expenses of suit, including reasonable attorneys' fees. 7) 9) Stopping of Work by Consultant: When any invoice is outstanding and unpaid thirty (30) days after the date of billing, the Consultant may, at its discretion, stop work on the project. In addition, when any invoice is outstanding and unpaid ninety (90) days after the date of billing, the Consultant may withdraw from any governmental agency review process any applications, drawings, submittals or other project documents reflecting the Consultant's services. No notice of the Consultant's intent to stop work or to withdraw from any governmental review process shall be required. The Client forever releases, discharges and holds the Consultant harmless from any and all liability arising out of the Consultant's withdrawal of any applications, drawings, submittals or other project documents. To the extent permitted by applicable law, the Client shall fully indemnify, defend, and hold harmless the Consultant against any and all claims for liability asserted by any project participant for any action taken by the Consultant under this paragraph. 10) Restarting of Work by Consultant: If the services are suspended or abandoned, in whole or in part, for a period of ninety (90) days or more, or upon instruction by the Client to the Consultant to suspend activity on the project by written notice of thirty (30) calendar days by the Client to the Consultant, the Consultant shall be compensated for all services performed together with all reimbursable expenses due and the Agreement shall be deemed terminated. If the services are resumed after such suspension, the Agreement between the Client and the Consultant may be renegotiated prior to resumption of services by the Consultant. Such renegotiation may include a fee for remobilization costs incurred by the Consultant. In the event that this Agreement is terminated due to the suspension or abandonment of the services, the Client shall make full payment to the Consultant for all compensation due for work already performed prior to such termination hereunder upon receipt of a final invoice from the Consultant. For purposes of this Agreement, the term "suspension" or "abandonment" shall mean substantial discontinuance of labor, services, and expenses for a ninety (90) day period or written instruction by the Client to suspend substantially the services. 11) Intellectual Property Rights: Reports, plans, diagrams, drawings and specifications, including those in electronic form, prepared by the Consultant are the Instruments of Service for use solely with respect to the services and deliverables of this Agreement. The Consultant shall be deemed the author and owner of their Instruments of Service and shall retain all common law, statutory, and other rights, including copyrights. Only upon the approval of the Consultant, made by the written application by the Client to the Consultant, the Consultant may at its discretion grant the Client a non-exclusive license to reproduce the Consultant's Instruments of Service provided that the Client shall comply with all obligations, including prompt payment of all sums when due, under this Agreement. The Client shall be permitted to retain copies of reports, plans, diagrams, drawings and specifications, for information and reference in connection with the Client's use and development and/or occupancy of the plan area. Any authorized or unauthorized use of the Instruments of Service without the Consultant's consent shall be at the Client's sole risk and without liability to the Consultant. To the extent permitted by applicable law, the Client shall indemnify and hold harmless the Consultant and its Sub -Consultants from and against claims, damages, losses and expenses, including, but not limited to payment of attorney's fees, arising out of unauthorized use of the Instruments of Service that are part of the services and deliverables of this Agreement. The Consultant shall not be responsible or liable for any direct, actual or consequential damages which occur as the result of its inability to produce the Instruments of Service by reason of the casualty, destruction or loss of documents that occurs through no fault of the Consultant. 12) Force Majeure: Neither the Consultant nor the Client shall be responsible for any loss, damages, delay, or failure in performing hereunder arising or resulting from circumstances or occurrences outside such Party's reasonable control including act of war or terrorism; strike or lockout or stoppage or restraint of labor from whatever cause; riot; act of civil or military authority; actions by Government and their respective officers, agents, invitees, and employees as they relate to on -site construction, or investigation and remediation of environmental conditions on the Project Site by the Government; fire; or other natural disaster. 13) If any term or provision of this Agreement shall, to any extent, be held invalid or unenforceable, the remainder of this Agreement shall not be affected thereby, and each provision of this Agreement shall remain valid and enforceable to the fullest extent permitted by law. 14) All notices and/or payments required by this Agreement must be in writing and sent by fax, e- mailed, hand delivery, overnight mail service or certified mail, return receipt requested, to the addresses set forth below or such other address as either party may designate in writing as the address for such notices. 15) Each party represents to the other party that it has (a) fully read and understood the terms of this Agreement, (b) had the opportunity to seek the assistance of its own legal advisor regarding this Agreement and its terms, (c) full legal authority to enter into this Agreement and has taken all necessary legal steps to obtain such authority, (d) equally participated in the negotiation and drafting of this Agreement, and (e) not relied upon any statement, representation or warranty not contained in this Agreement and/or the exhibits attached hereto. 16) This Agreement, including the attached exhibits listed herein, constitutes the entire agreement of the parties with respect to the subject matter hereof and may not be modified, amended or rescinded except by a written agreement signed by both parties. No oral agreements, representations or warranties have been made and/or relied upon. 17) Applicable Law and Venue. This agreement is fully performable in Tarrant County, Texas, and shall be interpreted in accordance with the laws of the State of Texas, and the venue of any legal action relating to this Agreement shall lie in state district court in Tarrant County, Texas. Remainder of this page blank "CONSULTANT": MXD Development Strategists Signed: Name: Title: Dated: .2014 ADDRESS FOR NOTICE AND PAYMENT: MXD Development Strategists Ltd. Suite 200 —11120 Horseshoe Way Richmond, BC, Canada V7A 5H7 "CLIENT": CITY OF SOUTHLAKE Signed: Name: Title: Dated: .2014 ADDRESS FOR NOTICE: 1400 Main Street, Suite 310 Southlake, Texas 76092 Exhibit A Task& Project Understanding and Background Analysis The objective of this Task is to establish a solid foundation of market research to inform the Retail Market Analysis as well as Identifying Trends in Commercial Real Estate. Project Understanding & Policy Analysis Participate in a Kickoff Workshop with Project Team to discuss the project vision and timeline, to gather all related background information, and to understand the City's characteristics and potential issues that can impact commercial development. Interact with the Client to determine the implications and influence of existing adopted planning documents for the Commercial Retail Market. -3 Interact with City Staff to understand the overall visions of the City. -3 Document and assess the region's economic dynamics, population growth, employment change, patterns of community development as well as major economic initiatives in City and the surrounding area. As necessary, interview and reference local real estate professionals and government sources to gather background market intelligence. Identify the Policy Context and mechanisms that exist to guide Commercial land use in the City. Identify and analyze historical sales tax trends in Southlake. Review, document, and analyze pertinent Municipal Policy and Plan Areas, adopted planning documents, and growth strategies such as the Southlake 2030 Plan. Economic Overview & Case Studies Document National, State and Regional economic factors as forecast over the next decade to identify trends and opportunities. Identify major economic initiatives in the City as well as the Region's primary economic drivers, companies/employers and institutions. Prepare Case Study Profiles of Retail and Commercial Mixed -Use Projects throughout North America, to illustrate Industry Trends and document Best Practices in commercial development that could be pursued in Southlake. Retail Commercial Trends Document trends in the commercial real estate supply in the region. Document emerging trends in commercial retail throughout North America. Discuss "macro" to "micro" trends in commercial real estate and how "right -sizing" is becoming more prevalent after the global economic recession. Discuss how mixed -use developments have evolved into a popular and desired commercial format. Identify retailers that have been successfully locating within mixed -use developments over the past several years. Discuss how online retailing may impact future retail development in the City. Task & Retail Market Analysis A Retail Market Analysis would combine a detailed study of competitive supply and market demand projections to identify the existing, near, and long term capacity of the City to support Retail businesses. Document current retail facilities in Southlake, and major competitive facilities in the DFW Region. Provide a summary of format and performance characteristics including occupancy, rental rates, anchor tenants and leasing activity. Calculate current square footage of Retail within the City of Southlake. Estimate revenues per square foot for various categories of Retail. -3 Prepare a Retailer and Merchandise Category Void/Opportunity Matrix to distinguish retail offerings at various retail developments throughout Southlake. = Identify retailers (new & existing) looking to expand in the local/regional market. Delineate a Retail Trade Area using an analysis of drive times, competitive retail locations and local area demographics. Analyze Trade Area's demographic profile, including population growth, income levels, and other data affecting retail preferences. Document the employee base in Southlake and identify new employment center projects in the pipeline that could affect future Retail growth. Analyze Retail Trade Area's retail expenditure profile on each of the major forms of shopping, dining and entertainment. Analyze Visitor Trends & Profile (if applicable) for local and regional area, and quantify visitor retail expenditures. Assess Residual Retail Demand, based on an evaluation of current citywide retail inventory to warranted citywide retail inventory for current year to identify inventory surplus or lack thereof. Prepare Warranted Retail Floorspace Allocation, with specific floorspace recommendations regarding the amount, mix and competitive positioning of Convenience Shopping, Comparison Shopping, Food & Beverage and Entertainment. Subdivide overall recommendation of floorspace through a Retail Capture Rate Analysis to test and justify the recommended retail floorspace allocation based on specific merchandise categories. Divide the recommend retail program for each category into Anchors, Sub -Anchors and Inline Tenants. Create a macro scale rent revenue model that will display estimated sales per square foot of future retail. Apply the local sales tax rate to the total sales estimate from the rent revenue model to determine the potential retail tax revenue generated as the result of new retail. Apply industry standard building FSRs (Floor Space Ratio) based on the applicable retail development formats to simultaneously project Retail building demand and how those buildings can be defined in terms of land demand in relation to where such development could/should occur. Task C: Commercial Land Use Programming Allocation The allocation of land is more than simply identifying and quantifying how much land is required, but also requires an examination of where the current amount of land is located and what parcel sizes are currently available. Often times there can be a disconnect whereby the amount of land forecast in a general sense is available to meet demand, however a deeper examination often reveals that if the land may be scattered and disproportionately allocated. Accordingly, this Task will identify how much and WHERE such additional land should be allocated to most optimally accommodated tenant requirements and demand and opportunities. Summary Land Demand Profile of existing supply, forecasted new supply and demand (building sf and land acres/hectares). Identify the optimal land use allocation, amount, mix, phasing/absorption (over 20 to 25 years) and positioning of commercial land uses in the City, reflecting on the results of Tasks A & B. From the overall Retail Capture Rate Analysis (in Task B) allocate and position the optimal retail mix throughout the city, by the specific Merchandise Categories and provide recommendations for their competitive and complementary positioning and phasing. Identify potential locations for identified future retail floorspace through the use of a "Bubble Diagrams". Identify potential sites for redevelopment within Southlake that would be appropriate for future retail projects. Identify strategies to maximize the character, authenticity and destination appeal of each potential location within the City, to attract local, regional and visitor market segments, as well as to complement neighboring communities. Identify the optimal retail formats that are appropriate the retail allocations. Identify the target market audiences for the existing and anticipated new retail supply. Remainder of this page blank Task D: Summary Findings, Directions a Priorities Task D will establish a complementary positioning strategy to articulate how the Commercial Retail Development Study will support, balance and complement future growth areas and existing built up areas, while strengthening the overall appeal of Southlake as a location to Live, Work, Shop, Stay and Play Prepare illustrative image collages (as taken from the case studies noted in Task A), to visually communicate the potential look and feel of recommended projects. Define how the various components will collectively establish a foundation for retaining local businesses, creating employment opportunities, while attracting inflow from outside Southlake for retail spending, and overall economic benefit. Identify potential end -user Retail Tenants that fit the profile of the land use and development strategy. Outline the Prioritization Actions over the Short, Medium and Long Term. Provide direction for the optimal Development Absorption/Phasing Strategy within the City to ensure that development is "right -sized" to match market opportunities and capture target markets as the City approaches build -out projections. Illustrate diagrammatically in plans and tables the recommended Land Use & Development Allocation Phasing strategy, balanced against the market analysis findings for Task B. Provide general Policy Recommendations for integrating new commercial development formats in the Southlake built environment. Remainder of this page blank BELIVERIBLES a MEETINGS The following deliverables would be prepared for Tasks A - D: Participation in a KICKOFF WORKSHOP with City Staff. Macro -Economic Overview Summary identifying the overall development objectives for Southlake. Best Practices summary and Commercial Development Trends. Analysis of all adopted planning documents related to retail and commercial development. Market Analysis Summary including bullet point highlights, charts, tables, figures outlining the preliminary demand quantification for the City. PowerPoint Summary of Task A & B findings and analysis. Participation in an INTERIM GO -TO ONLINE WORKSHOP #1 with City Staff to present Task A & B Findings "Interim Research Summary". Land Use Allocation & Product Mix Summary Table, highlighting: Recommended composition of commercial uses including Retail, Entertainment, and Food and Beverage. Recommended market positioning for each land use, including target markets, formats etc. Tables and charts illustrating the Recommended Commercial Land Use Programs, Products and Land Use Mix, as well as their phasing/absorption projections. Preliminary Bubble Concept Diagrams to illustrate recommended locations of Key Anchor Functions & Districts including the location of major retail projects. Participation in INTERIM GO -TO ONLINE WORKSHOP #2 with City Staff to present Draft Final Report findings, implications and recommendations. -3 Allow City Staff to obtain comments from the Public regarding the Draft Final Report. -3 Input direction and feedback from Client and Public into Final Report. -3 The Final Retail Analysis Report will succinctly cover all aspects of the Scope of Work with detailed support and research included in Appendices. The Final Report will be conveyed visually with map graphics as well as supporting text. Images and graphics will also be used throughout to further illustrate the findings and recommendations. Participation in FINAL PRESENTATION WORKSHOP with the City of Southlake to present Final Report findings, policy directions, implications and recommendations. FINAL REPORT Document with Executive Summary. Exhibit B BENCHMARKS The general timeline of tasks and benchmarks are noted in the below Gantt Chart. The proposed chart can be changed as mutually agreed upon by the Consultant and the Client either prior to work commencement or during the project stages: WEEK 1 2 3 4 5 6 7 8 9 10 11 12 Project Initiation - Kickoff Meeting TASK A - PROJECT UNDESRSTANDING & BACKGROUND ANALYSIS TASK B - RETAIL MARKET ANALYSIS Interim Workshop- Go -To Meeting #1 TASK C - COMMERCIAL LAND USE PROGRAMMING ALLOCATION TASK D - SUMMARY FINDINGS, DIRECTIONS & PRIORITIES Interim Workshop- Go -To Meeting #2 CITY OF SOUTHLAKE REVIEWS DRAFT FINAL REPORT INPUT FROM STAKEHOLDERS & PUBLIC REVISIONS TO FINAL REPORT Final Presentation Workshop & Meeting Submittal of Final Document to the City of Southlake • M-r.RUMILLIM A Project Understanding & Background Analysis 2 Weeks $5,000* B Retail Market Analysis 2 Weeks $15,000 C Commercial Land Use Programming Allocation 3 Weeks 11,500.00 D Summary Findings, Directions & Priorities 2 Weeks $3,500 - Review by City Staff & Stakeholders / Revisions by MXD 3 Weeks $3,500 • • 1� * $2,500 due upon execution of agreement, with the remainder of payment for Task A to be upon completion of such phase.