Urban Redevelopment Urban Redevelopment at its Best: at its Best: A Canadian overview and best A Canadian overview and best practices for procurementpractices for procurement

David L.A. Gordon

School of Urban and Regional Planning

Queen’s University

URBAN REDEVELOPMENTURBAN REDEVELOPMENT

• False Creek, Vancouver

• Granville Island, Vancouver

• St. Lawrence, Toronto• Dockside Green,

Victoria• Woodward’s

Vancouver

• Garrison Woods, Calgary

• The Bridges, Calgary• Cornell, Markham• Regent Park, Toronto• Iqaluit core area• Benny Farm, Montreal

PUBLIC SECTOR PUBLIC SECTOR OBJECTIVESOBJECTIVES

• Property tax revenue• Public facilities at no cash cost• Cash for land: Up-front / annual cash flow• Strong identity for public facility• Attract private hotel / office / arts centre• Active role in implementing plan• Urban design / renewal / infrastructure• Retain LT ownership & participate in $

PUBLIC SECTOR PUBLIC SECTOR CONSTRAINTSCONSTRAINTS

• Risk averse; not entrepreneurial• No obligations & no losses• Slow; Low value on time• Retaining facilities may be difficult• Public Lands:

• Demand to keep site open in construction

• Perceived right to public scrutiny• Additional levels of approval

PRIVATE SECTOR PRIVATE SECTOR OBJECTIVESOBJECTIVES

• Commercial: LT profit & annual cash flow• Condominium: Short - term profit• Government assistance with financing• Retain control• Ability to finance & sell• Prefer to own; may accept LT lease• Fast approvals• Reduce up-front capital & holding costs

STAINBACK’S SIX STAINBACK’S SIX APPROACHES TO SOLICIT APPROACHES TO SOLICIT

PRIVATE SECTOR INTERESTPRIVATE SECTOR INTEREST1. Three-step Request For Interest/ Request For

Qualifications/ Request for Proposals process

2. Two-step RFQ/RFP process

3. Single-step RFP process

4. Pre-qualified Developer/RFP process

5. Sole-source developer method

6. RFQ/negotiate method

SEVEN APPROACHES TO SEVEN APPROACHES TO SOLICIT PRIVATE SECTOR SOLICIT PRIVATE SECTOR

INTERESTINTEREST

1. Tender or Auction

2. Sole-source developer method

3. Single-step RFP process

4. Two-step RFQ/RFP process

5. Pre-qualified Developer/RFP process

6. RFQ/negotiate method

7. Three-step RFI/RFQ/RFP process

TENDER OR AUCTIONTENDER OR AUCTION

• Advantages:• Fast• Simple to organise• Easy to evaluate• Low-risk• Transparent

• Disadvantages:• Agency may not wish to sell land• Loss of control over site• Hard to meet non-financial objectives• May lose upside return in a redeveloping area

SOLE-SOURCE DEVELOPER SOLE-SOURCE DEVELOPER METHODMETHOD

Advantages:• OK if existing relationship – Master Developer• Works if there is an obvious candidate• OK if nobody interested• Fast & simple • Saves money for agency & developer

• Disadvantages:• Local developer backlash• Other public partners uncomfortable• Media backlash

– appearance of corruption/fix

• Example: Canadian Opera Company & Cadillac-Fairview

SINGLE-STEP RFP PROCESSSINGLE-STEP RFP PROCESS

• Finance, Design and Development Issues in one step

• Advantages:• Addresses non-financial issues better than a tender• Faster than two or three step RFP processes (4-7

months)• Disadvantages:

• Often attracts many responses – 15-35• Developers hate it; some won’t bid• Best bid may come from a low-capacity developer• Best finance bid may have worst design• Media/political pressure to take the best $ offer

• Examples: Victoria Arena, Halifax Queen’s Landing, Brandon North Hill Properties, Calgary Bridges

TWO-STEP RFQ/RFP PROCESSTWO-STEP RFQ/RFP PROCESS

• Request For Qualifications, then Request For Proposals

• Shortlist to five firms from RFQ• Evaluate by capacity and building type experience• Advantages:

• RFQ much cheaper to submit for developer• Better odds for developer; more will RFQ• Open and transparent• Shortlist by financial capacity and experience – better PR

• Disadvantages:• RFQ takes an additional 3-5 months

• Examples: CBC Broadcast Centre, Victoria Dockside Lands, Woodward’s (Vancouver), Ottawa LeBreton Flats, Regent Park Phase I,

CBC Broadcast Centre

PREQUALIFIED PREQUALIFIED DEVELOPER/RFP PROCESSDEVELOPER/RFP PROCESS

• Pre-qualify to 5-7 developers by reputation & financial capacity• Advantages:

• Even easier for developers – no RFQ• OK if there are obvious candidates• Saves 2-4 months compared to RFQ/RFP

• Disadvantages:• Requires staff/consultants who know industry well• Shortlist process open to question

• Example: Sports Facilities

RFQ/NEGOTIATE METHODRFQ/NEGOTIATE METHOD

• Advantages:• Avoids lengthy RFP process• Some competition in RFQ• Public & Private partners work together on issues• Better learning for the public sector partner

• Disadvantages:• Other developers feel they could do a better deal• Fewer design/development ideas than the RFP process

• Example: Downtown development projects

THREE-STEP RFI/RFQ/RFP THREE-STEP RFI/RFQ/RFP PROCESSPROCESS

• Solicit ideas and concepts prior to a RFQ• Advantages:

• Markets the site• Initial reaction from the private sector

• Disadvantages:• Can take 10-12 months to complete• Developers may not give ideas for fear of helping competitors• Design competition, visioning exercise, ULI panel may work.

• Weak Example: Kingston Multipurpose Facility;

• Great Example: Benny Farm, Montreal

Kingston Multipurpose Facility

PROPOSAL CALL HOMEWORKPROPOSAL CALL HOMEWORK

• Do a Schedule• Check Land Use:

• Title• Zoning & Comprehensive Plan

• Approval Process• Establish the Process with the Boss• Do a Market Assessment• Test the Waters & Build a List• Do Some Site Planning/ Urban Design• Review with Key Local Stakeholders• Hire Professional Advisors

RFQ COMPONENTS IRFQ COMPONENTS I

• Market analysis – sell the opportunity• Describe sponsoring agency organization• Site description• Proposed development• Planning Status & Regulations• Surrounding Area -Now & Proposed• [Preliminary design principles & guidelines]

RFQ COMPONENTS IIRFQ COMPONENTS II

• Describe the public agency roles• Expectations of private partner• Submission requirements• Describe selection process • Evaluation criteria• Schedule & closing date• Applicable regulations & disclaimers:

• may reject any and all proposals• may not accept highest financial offer, etc.

REQUEST FOR REQUEST FOR QUALIFICATIONS PROCESSQUALIFICATIONS PROCESS

• Develop the RFQ (2-3 weeks)• Review and approve the RFQ (1-2)• Establish developer evaluation criteria (1 con.)• Identify private sector prospects (1 con.)• [Pre-market to prime prospects] (1 con.)• Pre-proposal conference (1-2)• Evaluate developer proposals (2-3)• Review results with appropriate agencies (1-2)• Announce short-listed teams (1)

• Total Time 13-22 weeks

RFP COMPONENTS IRFP COMPONENTS I

• [if RFQ] Announce the short listed developers• [Market analysis – sell the opportunity]• [Describe sponsoring agency organization]• Describe the public agency roles

• Developer or Agency Responsibility: • Approvals• Permits & Fees

• Expectations of private partner• Financial & legal objectives:

• Timing & amounts for cash• Sale / Lease / Joint Venture conditions• Performance bonds / Letters of credit

RFP COMPONENTS IIRFP COMPONENTS II

• Site Conditions: Soils, Services, Buildings• Detailed Urban design guidelines & preliminary

design• Design process & approval• Describe selection process & schedule• Submission requirements• Evaluation criteria• Schedule & closing date• Applicable regulations & disclaimers:

• may reject any and all proposals; • may not accept highest financial offer, etc.

REQUEST FOR PROPOSAL REQUEST FOR PROPOSAL PROCESSPROCESS

• Develop the RFP (1-2 weeks)• Review and approve the RFQ (2-3)• Establish developer evaluation criteria (2-3)• Produce and issue RFP (2-3) • Developers prepare response (6-8)• Evaluate developer proposals (2-3)• Develop interview questions (1 con.)• Arrange and interview short list (1-2)• Review results with the boss (1)• Rank the top three developers (1)• Announce the selected developer(s) (1)

• Total Time: 16-26 weeks

RUNNING A PROPOSAL CALL IRUNNING A PROPOSAL CALL I

• STAFF:• Business-like• Fast• Independent advice• Small

• K.I.S.S. Principle

RUNNING A PROPOSAL CALL IIRUNNING A PROPOSAL CALL II

• CONSULTANTS:• Proposal call manager• Design consultant• Appraiser• Real estate lawyer• Developer consultant• Market research• Accountant• Quantity Surveyor• Fairness Advisor

SURP INTERNSHIP SURP INTERNSHIP PROGRAMMEPROGRAMME

• Federal Government Co-op Program for locations across Canada

• First and second year graduate students

• Recruit directly from school

• Interview on-campus or in Ottawa

• Paid professional positions

• Potential for bridging through co-op