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Guide to Joint Development for Public Transportation Agencies (2021)

Chapter: Chapter 4 - Choosing a Developer

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Suggested Citation:"Chapter 4 - Choosing a Developer." National Academies of Sciences, Engineering, and Medicine. 2021. Guide to Joint Development for Public Transportation Agencies. Washington, DC: The National Academies Press. doi: 10.17226/26045.
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Suggested Citation:"Chapter 4 - Choosing a Developer." National Academies of Sciences, Engineering, and Medicine. 2021. Guide to Joint Development for Public Transportation Agencies. Washington, DC: The National Academies Press. doi: 10.17226/26045.
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Suggested Citation:"Chapter 4 - Choosing a Developer." National Academies of Sciences, Engineering, and Medicine. 2021. Guide to Joint Development for Public Transportation Agencies. Washington, DC: The National Academies Press. doi: 10.17226/26045.
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Suggested Citation:"Chapter 4 - Choosing a Developer." National Academies of Sciences, Engineering, and Medicine. 2021. Guide to Joint Development for Public Transportation Agencies. Washington, DC: The National Academies Press. doi: 10.17226/26045.
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Suggested Citation:"Chapter 4 - Choosing a Developer." National Academies of Sciences, Engineering, and Medicine. 2021. Guide to Joint Development for Public Transportation Agencies. Washington, DC: The National Academies Press. doi: 10.17226/26045.
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Suggested Citation:"Chapter 4 - Choosing a Developer." National Academies of Sciences, Engineering, and Medicine. 2021. Guide to Joint Development for Public Transportation Agencies. Washington, DC: The National Academies Press. doi: 10.17226/26045.
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Suggested Citation:"Chapter 4 - Choosing a Developer." National Academies of Sciences, Engineering, and Medicine. 2021. Guide to Joint Development for Public Transportation Agencies. Washington, DC: The National Academies Press. doi: 10.17226/26045.
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Suggested Citation:"Chapter 4 - Choosing a Developer." National Academies of Sciences, Engineering, and Medicine. 2021. Guide to Joint Development for Public Transportation Agencies. Washington, DC: The National Academies Press. doi: 10.17226/26045.
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Suggested Citation:"Chapter 4 - Choosing a Developer." National Academies of Sciences, Engineering, and Medicine. 2021. Guide to Joint Development for Public Transportation Agencies. Washington, DC: The National Academies Press. doi: 10.17226/26045.
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Suggested Citation:"Chapter 4 - Choosing a Developer." National Academies of Sciences, Engineering, and Medicine. 2021. Guide to Joint Development for Public Transportation Agencies. Washington, DC: The National Academies Press. doi: 10.17226/26045.
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Suggested Citation:"Chapter 4 - Choosing a Developer." National Academies of Sciences, Engineering, and Medicine. 2021. Guide to Joint Development for Public Transportation Agencies. Washington, DC: The National Academies Press. doi: 10.17226/26045.
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50 Choosing a Developer 4.1 Introduction and Summary of Best Practices Once a JD project has been identified and planned, the pivotal step is to attract highly advantageous proposals from capable, trustworthy developers. In most cases, a transit agency is required (by law, by FTA regulations, or by its own governing board policies) to select develop- ers through a competitive solicitation process that is fair, open, and transparent. Even if developer interest is first revealed through an unsolicited pro- posal, it is the policy of many agencies to then pursue such projects, if at all, through a competitive solicitation process. Therefore, this chapter begins with a discussion of best practice in the conduct of competitive solicitations, followed by a discussion of unsolicited proposals. It is useful to differentiate between an agency’s routine procure- ment of goods and services, on the one hand, and the solicitation of JD proposals, on the other. The former is typically a bid process in which specifications are issued and the lowest responsible bidder wins the contract. The latter is an effort to pick the most advantageous development concept and business relationship; the best financial offer may constitute only one criterion among several. Although the terms procurement and solicitation are often used interchangeably in prac- tice, this guide’s use of solicitation is intentional. 4.2 Choosing a Solicitation Format There is no single, universally preferred format for developer solici- tations. There are several types of solicitation document, which can be used separately or in combination. Many agencies with multiple JD projects or on-going JD programs have experimented with different formats, and some are comfortable choosing the most appropriate on a project-by-project basis. The four basic formats, described below, are a C H A P T E R 4 Choosing a Developer 1. Determine the appropriate solicitation format. 2. Define the selection process, which normally includes short-listing and interviews. 3. Define the project through Development Requirements and Guidelines (DRGs) from pre-solicitation planning. 4. Avoid a “price only” selection. Using a multi-criterion “best value” approach, define clear, project-specific evaluation criteria. 5. For unsolicited proposals: if of interest, advance via competitive solicitation; exception may be considered for public agency or abutter. Chapter 2: Creating a Joint Development Program Chapter 3: Planning a Joint Development Project Chapter 4: Choosing a Developer Chapter 5: Executing a Joint Development Project

Choosing a Developer 51   Request for Qualifications (RFQ), a Request for Proposals (RFP), a Request for Expressions of Interest (RFEI), and a simple Invitation to Bid (ITB).1 • An RFQ is a solicitation of developers who wish to enter the competitive selection process. An RFQ does not request a complete offer, and, even if the submittals include preliminary proposal concepts, they will not include a financial proposal and thus will not result directly in a contract, since at the very least financial terms would still need to be negotiated. There are two types of RFQ solicitation in common use. In the two-step process, the RFQ is followed by a full RFP. In this case, the RFQ is used to create a short list of teams that are found qualified to submit proposals, and the selection is made on the basis of the RFP. A variation is to invite the short-listed firms not to submit full development and financial proposals but to submit competing design concepts, which are sometimes supported by stipends. There is also a one-step RFQ process, in which the RFQ solicitation asks not only for qualifications, but for preliminary proposal concepts as well. In this case, the agency makes a preliminary selection based on the RFQ (and any associated interview process) without issuing an RFP. The refinement of the preliminary concepts into a detailed development proposal and business terms occurs during the exclusive negotiation period that follows selection. • An RFP requests more complete offers—in program, design, and business terms—so that the preliminary selection of a developer can progress directly to contract negotiations. As noted above, the issuance of an RFP can be the second stage of a two-step RFQ/RFP process. There is also a one-step RFP format in wide use, in which there is no prior RFQ. A one-step RFP may include a Statement of Qualifications (SOQ) as part of the submittal; this SOQ may be read first, so that if any bidder is deemed unqualified, its full proposal need not be evaluated.2 Finally, an RFP can be issued for multiple sites, inviting respondents to propose on one, some, or all. An example is a three-site RFP issued by KCATA in 2018.3 • An RFEI is a pre-solicitation request in which the agency seeks voluntary participation from the development community to help inform a subsequent RFQ or RFP. An RFEI is used when a development opportunity is emerging but lacks clear definition; respondents are asked not only to express interest but to offer ideas or raise questions about the site’s potential. RFEIs can be helpful for smaller agencies considering complex projects for the first time, as well as for larger, more experienced agencies contemplating unusually complex projects or sites in pioneering market locations. Responding to an RFEI is usually not a requirement for participating in the eventual RFQ or RFP process. Developers who intend to pursue the solicitation often bypass an RFEI, and this mechanism is consequently used sparingly. As an alternative, an agency may build an RFEI-like feature into an RFQ, as part of a two-step RFQ/RFP solicitation. NJ Transit, for example, has used a hybrid RFQ/REFI to launch its Aberdeen-Matawan, Bayonne 34th Street, and RiverLine Scattered-Site JD opportunities.4 • An ITB can be used when site conditions are straightforward, the zoning is acceptable to the transit agency, the contemplated development is relatively simple, and the agency is prepared to select the developer based principally on high bid. The ITB identifies and describes the site, states any development requirements or restrictions that the transit agency intends to include in the deed or lease, and states the minimum acceptable bid (if doing so is dictated by law and practice). The most thorough solicitation process is a two-step sequence in which developers are first qualified through an RFQ, following which an RFP is issued to the qualified pool. This process, although preferred by many agencies and some developers, is also the most time-consuming and expensive for both sides. Based on the surveys of transit agencies and developers conducted

52 Guide to Joint Development for Public Transportation Agencies for this guide and the research team’s experience with the selection process, there is an observ- able shift underway toward both of the one-step alternatives: a one-step RFP that includes a statement of qualifications and a one-step RFQ from which the agency selects a developer with whom to then negotiate the details of a full proposal. It can safely be said that preferences for the traditional two-step process and either of the one-step alternatives vary among both transit agencies and developers. Agencies generally want to gather the most information before choosing a winner; developers prefer shortening the timeframe or postponing the full proposal development effort until they know whether they are in contention. The transit agency’s objective should be to make the process easy for the developer while gaining the information and leverage needed to make a responsible decision. To that end, the choice of the most appropriate method may vary by project. The high-level pros and cons of the principal alternatives are outlined in Figure 26. Appendix I provides web links to several publicly available RFQs and RFPs issued in recent years. 4.3 Writing and Implementing an Effective Solicitation A successful solicitation is one that not only attracts good proposals but helps the agency build a reputation for fair, well thought-out solicitations that are worth the cost and risk of competing. Such documents are user-friendly in form and content and balance the need for information with the time and resource commitment required of the proponents. Figure 26. Comparison of principal developer solicitation formats. A successful solicitation helps the agency build a reputation for fair, well thought-out projects that are worth the cost and risk of competing.

Choosing a Developer 53   Based on the transit agency survey, the review of solicitation documents, and the research team’s own experience in preparing such documents, three topics represent essential content for a successful solicitation: • Defining the selection process going forward; • Defining the JD opportunity, including project-specific goals, the design and development intent, and the proposed method of conveyance; • Defining clear evaluation criteria, both for developer qualifications and for the content of the development proposals. Defining the Selection Process The solicitation document, whether an RFQ or an RFP, should provide respondents with a clear roadmap of the selection process—the concrete steps by which the agency intends to convert the RFQ or RFP into a preliminary selection and an eventual final award. (In this guide, the term preliminary selection refers to the initial choice of a winning proposal; final award refers to the binding agreements concluded at end of a successful negotiation process.) These steps (and the terminology used to label them) vary across agencies and projects. If an agency has published a JD policy that includes a guide to its selection process, the roadmap provided in the RFQ or RFP should reflect that model. For most RFQs or RFPs, a sound definition and description would include the following: • Issuing and awarding authority. The solicitation should clarify up-front whether the transit agency is issuing the RFQ or RFP on its own, with the sole power to make the preliminary selection and final award. While this is most often the case in JD projects involving transit agency property, there are also projects in which the transit agency is acting in partnership with a sister agency or jurisdiction such as a municipality or housing authority (because the latter owns part of the site, is helping to fund the project, or exercises regulatory control over it). In such cases, the agencies may be issuing the RFQ or RFP jointly, or the transit agency may be issuing it on their joint behalf. • Ethical provisions. The solicitation should state clearly the ethical provisions that apply to the solicitation and selection process. For example, proponents are typically prohibited from communicating with agency board members, staff or consultants other than during a specified question and response period or other agency-initiated procedure. • Team composition. Transit agencies (or other issuing and awarding authorities) may have requirements or goals with respect to the inclusion of disadvantaged business enterprises (DBEs), minority-owned businesses, woman-owned businesses, or small businesses on the development team. These provisions may be standing policy or project-specific. They also vary as to whether the inclusion applies to the ownership level of the development team, the composition of the design, building, and specialty support teams, or both. These provisions and their role in the selection process should be clearly stated. • Makeup of selection panel. In connection with identifying the issuing and awarding authority, the RFP should clarify which enti- ties will be represented on the panel that will review and short-list the submittals, conduct any interviews, and vote on the eventual recom- mendation to the board. The committee should be chaired and staffed by the TOD/JD office, which would also direct the work of any outside consultant supporting the solicitation. It is not essential for the RFQ or RFP to identify each panel member by name (although Defining the selection process • Issuing and awarding authority • Makeup of selection panel • Selection structure, if RFQ • Timetable • Ethical provisions • DBE or similar requirements • Short-listing and interviews • Best and Final Offer • Negotiation process for final award • Reservation of agency rights

54 Guide to Joint Development for Public Transportation Agencies proponents always wish to know), but at minimum it should clarify whether the panel includes any voting or non-voting representatives of other agencies. Even if the transit agency is the sole issuing and awarding authority, it may agree to grant the host municipality or some other relevant jurisdiction a role on the panel. • Selection structure for RFQ. If the solicitation document is an RFQ, what is the structure of the selection going forward? Is this a two- or one-step process as described in Section 4.2? • Selection timetable. Developers are more likely to participate in a competitive solicitation if they believe that the timetable is reasonable and predictable. While many public processes encounter delays and fall behind schedule, an RFQ or RFP can enhance confidence by pre- senting a timetable that allows realistic intervals for agency review of submittals and for the arranging and conduct of interviews or requests for information. While these intervals may be conservative, they should not be unreasonably long; the agency should commit adequate staff and consultant resources to meet a realistic schedule. The RFQ or RFP should also identify which procedural steps require a vote of the agency’s governing board. Such votes, which typically fall into the board’s agenda and notice cycle, are prone to delay. While the preliminary selection and final award almost always require a board vote, other steps, if possible, should be delegated to staff. This concern is more likely to arise in the negotiation process that occurs after preliminary selection, and it is addressed in Chapter 5, where that process is described. However, disclosing the sequence of board votes in the solicitation document can enhance predictability. • Innovation. Will respondents be allowed or encouraged to propose innovative approaches or alternative technical concepts not included in the RFP? Some solicitations encourage such innovation as a means of delivering a better technical solution or more favorable commercial agreement. If alternative concepts are proposed, the RFP must clearly state the parameters for such deviations and how they will be evaluated. • Short-listing and interviews. Will there be a formal short-listing, to be followed by inter- views and/or requests for further information? It is a common and recommended practice to interview short-listed respondents. Because interviews are face-to-face and interactive, they can add insight, both on technical issues and on the prospective relationship, something that the RFQ or RFP submittal alone cannot. It is a good investment of time to identify the key questions that arise from the submittals of the short-listed teams and to ask specifically that the teams be prepared to address these in the interview. The agency should reserve the right to request further information based on the interview and to call one or more teams back for further discussion. These short-listing and interview steps generally apply in the case of an RFP, as well as in the case of a one-step RFQ from which the preliminary selection will be made. In a two-step process (where the RFQ creates the short-list to which the RFP is issued), the need for a round of interviews in the qualifications stage will depend on the number and quality of submittals. • Stipends. For some exceptionally large or complex projects, the respondents may be paid a stipend to recognize the significant effort required to prepare a realistic proposal. Stipends are typically paid only to short-listed respondents who are invited to submit complete proposals or participate in a design competition. • Best and Final Offer. In the case of an RFP, does the agency reserve the right to ask short- listed respondents for a best and final offer, which could potentially change the commercial terms initially proposed? As long as the agency’s project team includes the legal and financial skills required to construct a fair and reasonable best and final offer request and to evaluate the submittals, this step can be helpful in concluding the selection. (It is, in effect, a negotiation with the short list.) That said, a best and final offer addressing commercial terms should be seen in the context of the full set of evaluation criteria, which are likely to include important non-commercial issues as well.

Choosing a Developer 55   • Negotiation process for final award. The solicitation should provide a look-ahead to the steps that will occur after preliminary selection, including any exclusive negotiation period, the contents of the JDA that is the intended outcome of those negotiations, and an expected timeframe for the real estate closing. Respondents should be told, in the solicitation docu- ment, the conditions under which the preliminary selection can result in a final award; or, if an agreement cannot be reached, the conditions under which the selected respondent could be dismissed or replaced. (See Chapter 5 for a detailed treatment of the post-selection phase. As explained, the scope and length of the exclusive negotiation period can vary significantly between a selection based on a one-step RFQ and a selection based on an RFP.) • Reservation of rights. The solicitation should include a disclaimer reserving the agency’s right to modify any or all steps, request additional information at any time, and waive minor nonconformities. It should also reserve the right to reject any or all submittals and cancel the RFQ or RFP process entirely, with no liability or obligation to the respondents, if such actions are deemed to be in the agency’s best interest. If, for all the agency’s careful planning, the solicitation does not result in responsive, worthwhile submittals (or if there is only one such submittal and selecting it would be contrary to board policy, applicable law, or executive judgment), the agency needs to be able to simply stop the process. This right to cancel the solicitation also protects the agency from having to proceed in the face of an unexpected market change—either for the better, in which case the agency might want to revisit the development program, or for the worse, in which case proceeding would be fruitless.5 Figure 27 summarizes a typical sequence of steps once an agency has received proposals in response to an RFP, or statements of qualification in response to a one-step RFQ. These steps, adapted to the project in question, should be described in the RFQ or RFP and then carried out to produce a preliminary selection. Defining the Project The most important role of a solicitation document, particularly an RFP in which full pro- posals are invited, is to communicate what the agency wants the selected developer to do: how much development, representing which land uses, deployed in which portions of the property, presenting what scale and character, and bearing what physical and functional relationship to the mobility functions operating at the site. Are there transit facilities that could be relocated or reconfigured as part of a proposed site plan, as opposed to those that are fixed? And how much flexibility do respondents have in structuring their proposals? The definition of the development opportunity should reflect the detailed content developed in the predevelopment site planning stage. As described in Chapter 3, the agency will have determined which portions of the site are being offered for development, which are optionally available under certain conditions, and which are off-limits, based on current and future transit needs. The site’s potential development program (or a menu of acceptable programs) should already have been vetted with community stakeholders and local officials and, ideally, aligned Figure 27. From submittal to selection.

56 Guide to Joint Development for Public Transportation Agencies with current or intended zoning. Developers responding to a solicitation want to see a specific foundation of local approval in place; this is essential to the culture of predictability that developers value. DRGs. Programmatic and site plan parameters are best commu- nicated through a set of site-specific DRGs that are part of, or attached to, the solicitation document. Writing these guidelines is more than a technical exercise; a key challenge is to determine how prescriptively or flexibly the opportunity should be presented to potential respondents. From the agency’s standpoint, too prescriptive an approach may stifle the business and design creativity of the responding teams and limit the quality of proposals. On the other hand, too flexible an approach may generate proposals inconsistent with the agency’s must-have requirements and complicate the ability to make an apples-to-apples evaluation of competing proposals. From the respondent’s standpoint, flexibility is generally welcome, but only if the key parameters are clear. An effective solicitation is one that finds the “sweet spot” between specificity and flexibility that is appropriate for the project in question. For example, many of WMATA’s RFPs address heavy rail stations with large, complex facilities, a heavily developed environment, and established intermodal functions. WMATA includes DRGs that provide a set of “test fit” suggestions, working assumptions, and performance standards, reflecting WMATA’s pre-solicitation planning. The DRGs typically include some outright requirements—hard parameters driven by engineering, transit service, urban planning, or stakeholder considerations—as well as less restrictive guidance described as assumptions but not requirements. Respondents are invited to propose a variety of site planning, replacement parking, busway, and drop-off solutions. While the guidelines establish an intended set of uses, the proponent is generally able to exercise commercial and design judgment in suggesting the specific mix of uses among the project’s buildings and phases. These RFPs thus provide both direction and flexibility. The same principle applies, with additional flexibility, in less constrained locations, including those served by bus and bus rapid transit (BRT) routes only. In its RFP for an agency-owned location in downtown Kansas City, KCATA required respondents to propose vertical mixed-use development, consistent with zoning, that would generate enhanced transit ridership. The RFP also stated that while the formal offering consisted of a 2-acre parcel, KCATA was willing to entertain proposals to develop other, adjacent portions of its 20-acre operations campus.6 The level of technical detail that the agency deems necessary may vary considerably, depending on the complexity of the site, its value, and the TOD-compatibility of local zoning. If the JD site is an at-grade lot unconstrained by fixed transit facilities and the zoning is consistent with the market opportunity, then the guidance provided in the RFP can be brief, relying on zoning. In more complex physical and zoning environments, a more robust planning effort is called for. In cases where the solicitation is a one-step RFQ, the detailed proposal will emerge during the exclusive negotiation period that follows the selection. While flexibility in the site plan and development program is a reason for choosing this selection format in the first place, a community planning process should still have occurred during the pre-solicitation stage (as described in Chapter 3), enabling the agency to include DRGs of appropriate flexibility in the RFQ. The same is true with respect to the transactional parameters discussed in the paragraphs that follow. Transactional framework. The solicitation should also spell out the high-level transac- tional framework established in the pre-solicitation planning stage. To the extent applicable, the solicitation document should describe: An effective solicitation finds the “sweet spot” between prescriptiveness and flexibility.

Choosing a Developer 57   • The intended method of conveyance: how the rights to the JD parcel (or commercial space or air rights) involved in the project will be conveyed to the developer. Is a long-term lease required, or at least strongly preferred? Is outright sale equally acceptable, or will it be con- sidered only as a last resort? Does the agency intend to treat the property as an equity contribution and stay in the deal? Might different parts of the project be conveyed in different ways (for example, a long-term ground lease for the main development parcel and a shorter master lease for a block of retail space within the station)? • The intended roles and responsibilities of the developer with respect to any transit facilities impacted by the JD project. Besides paying for the development rights and building a project, is the developer required (or invited) to improve, replace, or relocate any of the station’s transit facilities? If so, are they also expected to fund the construction or on-going operation and maintenance of those components? Defining the Evaluation Criteria The solicitation document should establish a clear set of evaluation and selection criteria, so that respondents do not have to guess the agency’s priority goals for the project and the agency receives proposals that are comparable and on-point. The need for clear criteria occurs at two distinct stages: in the evaluation of developer qualifications and proposal content. Developer qualifications. The evaluation of developer qualifications (through an RFQ or a statement of qualifications included as part of an RFP) rests on several criteria. These represent a combination of the basic capabilities required to deliver a project of the scope, type, and complexity envisioned and information that would indicate a history of defaults, litigation, or adverse community relations. The following are recommended: • Financial capacity, evidenced by audited financial statements of the developer and specific statements of interest (and eventually commitment) on the part of lenders and capital partners; • Technical capacity, in scope and depth, on the part of the developer, builder, lead designer, and key design specialists in disciplines of core relevance to the project, evidenced by descrip- tions of relevant projects and by the qualifications of key individuals assigned and committed to the current project; • Experience of the development team in working together previously, and the lead developer’s capacity to manage a team of the applicable complexity; • Specific experience with TOD/JD projects, including named references at the affected transit agencies; • Experience of the developer and lead architect in managing community relations, with multiple named references for each; and • Mandatory disclosure of any outstanding litigation affecting the developer, lead architect, or lead builder, and of any events of default on the part of the lead developer within a defined period of years. If the agency has a development team diversity requirement, the qualifications should include the relevant firms, key project personnel, roles and responsibilities, and, if applicable, ownership stake in the entity or project. Proposal content. An agency’s goals for its JD program or a particular JD project may include a blend of asset monetization, other quantifiable outcomes like ridership and associated revenue, and broader policies like TOD placemaking or equitable development. Strategies for managing the tradeoffs among monetary and other goals are addressed at length in Chapter 7 of this guide.

58 Guide to Joint Development for Public Transportation Agencies The question with respect to the solicitation is how an agency’s JD goals can be translated most effectively into project-specific evaluation criteria. While the details will vary widely, the following high-level framework is recommended: • Except for simple ITBs, and unless required by law, best practice is not to base a selection on high bid or best financial offer only, but on multiple criteria of which the financial offer is only one. Most agencies use a multi-criterion, best value approach encompassing financial as well as non-financial elements. The RFP should state the goals applicable to the project in question, including any hierarchy or weighting the agency intends to apply. This can be achieved by setting forth project-specific criteria or by incorporating a universal framework, such as Denver RTD’s Evaluation Criteria. • Even if the financial offer is not the sole criterion, if it is a criterion at all it should be defined in a way consistently understood by all respondents. Unless state law or established practice requires otherwise, the RFP should state clearly whether there is a minimum required bid price, such as FMV determined by a recent appraisal.7 In cases where the financial offer is expected to include both cash payments and in-kind obligations by the developer, the RFP should explain whether the value of such obligations is to be included in the bid price or addressed separately. (See the related discussion in Chapter 7.) • One method of ensuring comparability of financial terms across proposals is to include with the RFP a standard spreadsheet, into which each team is required to enter the components of its financial offer: lease or sale terms, estimated cost savings from in-kind improvements or operations, and so forth. The spreadsheet will then sort out and calculate, in uniform fashion, the net present value of the financial proposal. As a less elaborate alternative, the RFP should state the basic parameters to be followed by each team in calculating the value of their offering: the year to which the present value is to be calculated, the uniform discount rate to be used, and so forth. • A standardized proposal summary form, more qualitative in nature, can be included, on which each team is required to input the key non-financial elements of its proposal. This facilitates apples-to-apples comparisons across basic project features. • The RFP should emphasize the need for consistency with the DRGs described above. In general, the flexibility spelled out in the DRGs is the flexibility available to the proposing teams. Material departures from the guidelines may, at the agency’s sole discretion, make a proposal non-responsive. This is a critical mechanism for ensuring that JD projects are transit-oriented and consistent with prior community outreach. • If the design and development guidelines include threshold standards for particular criteria— such as a minimum percentage of affordable housing units, maximum commercial or resi- dential parking ratios, or a performance standard for open space—these should be stated as explicit pass-fail requirements. 4.4 Unsolicited Proposals It is common for transit agencies to receive unsolicited JD proposals. As noted in Chapter 2, this guide considers it best practice for a transit agency to adopt and publish proactively an official unsolicited proposal policy. Many transit agencies have adopted such policies, replacing either informal practice or the generic rules applicable to goods and services procurement. Among them are BART, LA Metro, the MBTA, Denver RTD, and KCATA. LA Metro’s expansive and detailed policy, although not necessarily aligned with every agency’s specific circumstances, reflects the importance of having an explicit policy, especially for agencies with large property inventories.8 When unsolicited proposals are for off-site JD transactions, such as a proposal by an adjacent developer to build an infill station or station improvements, or a proposal by a sister public

Choosing a Developer 59   agency to combine adjacent land holdings, they do not necessarily pose a procedural dilemma; the question is whether the proposed deal is worth pursuing. As discussed in Section 8.3 and Section 8.4, some notable projects have arisen from proposals of this kind. But when unsolicited proposals seek principally to build private development on transit agency land, they do pose a procedural dilemma (and sometimes a legal one as well) as to whether they can or should be considered, and if so, how—through a direct negotiation or a competitive process. In addition to governing board policies, enabling act requirements, and other applicable laws, FTA requires that JD on property in which it has a current or new funding interest be implemented through a competitive solicitation process and strongly encourages a competitive solicitation for properties in which it has a pre-existing interest.9 Unsolicited proposals may be disruptive of an agency’s JD work plan for a given timeframe. If an unsolicited proposal reveals credible market interest in a site that had not been identified as ripe for development, and if it offers significant financial, ridership, or TOD benefits, the agency may find it worthwhile to divert attention and resources from another project. But often this is not the case. This issue was examined through the transit agency survey and the review of agency policies (see Appendix I). While some agencies have no explicit policy, a common practice among those that do, and in the view of this guide the best practice in most circumstances, is illustrated in Figure 28. This framework begins with a threshold evaluation—at the agency’s sole discretion—of whether the unsolicited proposal is timely, potentially advantageous, and thus of interest to the agency. This determination may be made summarily, based on the information in the proposal and knowledge readily at hand. Alternatively, the agency may choose to undertake at least some components of the site readiness analysis described in Chapter 3. Such analysis is more likely if the proposal comes from a sister public agency or a developer of high credibility, or if the agency’s policy encourages unsolicited proposals in general. The agency’s initial review of an unsolicited proposal may lead to the following actions: • If deemed not to be of interest, the proposal is rejected up-front. • If deemed to be of interest, the proposal is subjected to a competitive, advertised solicitation in which the original proponent is on roughly the same footing as any other bidder. Practice Figure 28. Unsolicited proposal policy—summary of best practices.

60 Guide to Joint Development for Public Transportation Agencies varies as to whether this solicitation is identical to the agency’s usual RFP or is streamlined in some way. • While some agencies retain the right to enter into direct negotiations (if legally permissible), this discretion is best limited to cases in which the unsolicited proponent is a sister public agency or a uniquely situated abutting owner. As an example, the Allianz Field JD project, described in Chapter 8, resulted from an unsolicited proposal to Metro Transit by the City of St. Paul. An agency may wish to state, as part of its unsolicited proposal policy, whether its intent is to encourage or discourage such proposals in the first place. There are examples of both approaches, and either may be advantageous to a particular agency’s circumstances—so long as the policy lays out a clear procedural path and unambiguously reserves the agency’s right, in its sole discretion, to reject or further consider any unsolicited proposal. The agency should document the disposition of any such proposals received. Endnotes 1. Request for Qualifications (RFQ), Request for Proposals (RFP), Request for Expressions of Interest (RFEI), and Invitation to Bid (ITB) are common industry terms, and they are used throughout the guide for consistency. Actual nomenclature is more varied; for example, some agencies use “Invitation to Bid” as an umbrella term for what this guide defines as RFPs and ITBs; some use “Request for Information” rather than RFEI. 2. An RFP can be divided into more than one step, if initial unpriced proposals are desired before proceeding to complete offers with prices. For example, DART has used an RFP including first an “Informal Proposal” without pricing, an optional short listing, and then a “Formal Proposal” including price and other major commercial terms. 3. https://www.kcata.org/documents/procurement/RideKC_Development_RFP_A-08052019_-_TOD_for_ Three_%283%29_KCATA_Sites.pdf. 4. See NJT’s TOD/JD page: https://www.njtransitdevelopment.com/river-line-redevelopment-opportunities/. 5. The agency may also wish to include basic policy terms that the selected developer will be required to accept as part of a joint development agreement—explicitly taking them “off the table”. These include unique legal and policy considerations that may not arise in typical commercial real estate transactions. WMATA, for example, includes a list of non-negotiable provisions in its RFPs; among these are acknowledgements that changes in transit infrastructure are at the agency’s sole discretion and that developer construction will be governed by the agency’s adjacent construction manual. If such provisions are included, they should be stated “without limitation” (that is, listing these provisions does not limit any others that might become applicable). 6. KCATA 18th & Troost RFP: https://www.kcata.org/documents/procurement/KCATA_RFP_18-7036- 59B_18th__Troost_Development.pdf. 7. Some agencies, by legal requirement or by practice, do not state the minimum acceptable bid, so as to prevent respondents from “bidding down” to that number, or to a level just above it. Others find that stating the minimum, in addition to being more transparent, encourages a more robust competition. 8. http://media.metro.net/projects_studies/joint_development/images/jdprocess_201701_finalattachment_a.pdf. 9. FTA Joint Development Guidance: https://www.transit.dot.gov/sites/fta.dot.gov/files/docs/FTA-161221- 001%20Joint%20Development%20Circular.pdf, p. IV-4.

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Joint development is real estate development that occurs on transit agency property or through some other type of development transaction to which the transit agency is a party.

The TRB Transit Cooperative Research Program's TCRP Research Report 224: Guide to Joint Development for Public Transportation Agencies is designed to expand the successful use of joint development in North American transit systems—in the volume and variety of projects undertaken, the diversity of transit agencies participating, and the quality of outcomes achieved.

Supplemental to the report is TCRP Web-Only Document 73:Guide to Joint Development for Public Transportation Agencies: Appendices, the Executive Summary, and a long version presentation and a short version presentation of "Guide to Joint Development for Public Transportation Agencies."

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