Indianapolis investigating options of Lease/Lease Back of City-County Building

The City of Indianapolis issued this Request for Information yesterday:


REQUEST FOR INFORMATION

The Office of Mayor Gregory A. Ballard of the City of Indianapolis, and on behalf of Marion County departments and agencies, releases this Request for Information (RFI) with the intent to solicit the broadest array of turnkey approaches and ideas for management of the Indianapolis-Marion County City-County Building (“City-County Building”), located at 200 E. Market Street, Indianapolis, Indiana 46204.
I. Background
Mayor Ballard continually strives for creative solutions to provide top-level services to residents despite the current economic climate. Mayor Ballard challenges his team to do more with less and to think resourcefully in order to resolve funding issues.
This RFI represents one such possibility with the stated goals of increasing revenue to the City-County, finding cost-savings and monetizing the efficiencies of managing the City-County Building, and improving the quality of life for residents.
The City-County began a lessee relationship with the Indianapolis-Marion County Building Authority (“Building Authority”) in 1962, the year the City-County Building construction finished. The initial term was for forty years, and this term was amended for an additional ten years in 2002. The City-County currently pays the Building Authority $5 million per year for maintenance of the City-County Building. This term expires in the summer of 2012, and the City-County intends to take the option of ownership on the City-County Building at this time.
The City-County, under the direction of Mayor Ballard, has decided to take the option of ownership in order to create flexibility with an asset that can be used to provide services to citizens and help the community at large. The benefits of ownership come from the ability of the City-County to work with one or more third-parties to achieve: revenue, cost savings, monetization of efficiencies, shifted risk of ownership, and improvement to the building and surrounding area.
For reasons addressed in this RFI, the City-County is gathering information about possible turnkey solutions and strategies by which the City or other entity may manage the City-County Building more efficiently and cost effectively. The goal is to undertake a partnership to improve management and maintenance of the City-County Building and to create additional cost savings in a fair and legal application.
Below are areas of particular interest to the City-County, although the list is not meant to be exhaustive. Mayor Ballard’s administration is always interested in creative solutions that create revenue, cost savings, and efficiencies. In response to this RFI, the City invites respondents to challenge the City’s current thinking and suggest alternatives to the management and maintenance of the City-County Building.
A. Lease-Leaseback Or Alternative Structure
The City-County is interested in creative solutions to generate revenue, monetize efficiencies, and shift the risk of ownership through a lease-leaseback model. Under such a model, respondent would enter into a lease (not longer than thirty years) to manage and maintain the City-County Building, and the City-County would immediately lease its current space in the City-County Building, with no interruption.
Respondent is also encouraged to submit alternative structures that would achieve the stated goals in this RFI.
B. Fair & Legal Application
The respondent must ensure that any program established is compliant with all federal, state, and local law and ordinances and that it adheres to the provisions and requirements of all contracts. All current employees shall be given the opportunity to be hired on by the selected bidder. At a minimum, the employees must be offered a position within the new structure.
C. Lease Term
Respondent should detail the structure of the term of the lease. Submissions should detail the upfront dollar amount that respondent would pay to the City-County for such a lease, given the length of the lease proposed and other variables below. Respondent should state the duration of the lease with the City-County for the City-County Building. Submissions with several models that propose various scenarios of upfront payments and annual rents are encouraged.
D. Rent Payments
Currently, the City-County pays a total annual cost of $5 million (excluding utilities) to the Building Authority for operation and maintenance of the City-County Building. Based on the projected long term lease payment in Section C. (above), respondent should detail the total annual rent payments from the City-County to the respondent. In calculating this rent, the City-County prefers proposals with a Triple net (NNN) rent structure that includes rent, janitorial services, utilities, and management and operations of the City-County Building. Proposals should also include ways in which the City could insure the City-County Building more cost effectively (Section G. below).
Due to budget constraints, the City-County is very interested in proposed rents that remain similar to the current rent being paid.
It is understood by the City-County that the number of years proposed in Section C will affect the annual rent the City-County must pay. However, the City-County is very interested in proposed efficiencies, synergies, and cost savings respondent can propose to reduce these higher annual rents.
E. Cost of Maintenance
Respondent should detail the annual cost to the City-County for janitorial services and maintenance of the City-County Building. This section should also detail the structure of janitorial services, i.e. frequency and how respondent may reduce the costs of janitorial services for the building. Further, respondent should propose how every day, common repairs and preventative maintenance are provided for the City-County Building.
The City-County is particularly interested in proposals that provide for creative ways in which respondent may reduce these costs and create efficiencies for the City-County.
F. Cost of Utilities
The City-County is currently responsible for paying all utility costs for the City-County Building. In 2011, the City-County spent $894,802.83 for electricity and gas and $85,970.68 for water. As noted previously, the City-County prefers utility costs be included in the annual rent payment.
Respondent should detail ways in which energy efficiencies and savings may be achieved (see Section I. below).
G. Cost of Insurance
The annual payment to the Building Authority currently includes insurance on the City-County Building itself. The City-County insures for liability, workers’ compensation, and personal property. Respondent should propose how insurance would be handled in the most cost effective manner for the City-County. The City-County is not opposed to insuring all of the above, but if the City-County is responsible for these payments, respondent should reflect this through their monetary bids in the proposal.
H. Other Costs
Respondents should supply a list of annual other costs that respondent anticipates would be needed to manage and maintain the City-County Building, not listed above. Respondent should also provide creative proposals to reduce the amount of these costs while providing all services necessary for management and maintenance of the City-County Building.
I. Green Efficiencies
Mayor Ballard is a strong advocate of energy conservation and green initiatives. Beginning in 2009, Mayor Ballard began a program to upgrade the City-County Building, including improvements to energy efficiency, water conservation, and renewable energy applications, all with the goal to reduce the City's environmental footprint, making the building a model in Indianapolis.
Respondent may submit proposals to continue the initiatives began by Mayor Ballard in 2009 to make the City-County Building a more green, energy efficient building. Any proposal should detail the program, the upfront cost, and the expected yearly savings for the City/County.
J. Refurbishment Allowance
Respondent should submit an allowance amount or specific project proposal to allow for upgrades of the City-County Building. Any payment amount should be in addition to the upfront long term lease payment, and included in the annual rent for the City-County. Any proposal should align with Mayor Ballard’s priorities of sustainability, green space, and connectivity by also using the Cultural Trail as an asset.
K. City-County Building Improvements and Repairs
Respondent should detail how costs from necessary and/or unanticipated large-scale or large-cost improvements and repairs to the City-County Building will be allocated. The City-County prefers respondent to bear this risk and expects the cost structure proposed to monetize this risk.
L. Potential Cost Savings & Efficiencies
Please submit information regarding any other potential measures that could net the City cost savings or other efficiencies.
M. Total Costs
Please provide a chart based on the previous sections of all charges the City-County would be responsible for paying on an annual basis, with the total amount of annual rent. This should also include any escalator clause to the annual rent, if applicable.
N. Governance Structure
Respondent should provide the governance structure for how the City-County will be managed, including how decisions will be made, composition of a board (if applicable), and number of individuals involved in the management and maintenance of the City-County Building, including the anticipated role these individuals will play.
II. Submission Contents
Following this RFI, the City-County is likely to seek one or more vendor(s), via a separate and subsequent procurement process, to assist it in achieving its objectives. To reiterate, the purpose of this RFI is not to select a vendor(s). The purpose is to solicit feedback on the objectives set forth in this RFI and ideas from respondents to increase the City-County’s knowledge of potential available solutions.
Respondents may respond to this RFI by providing a proposed solution for all or any combination of the different components of this RFI. Respondents should base responses on their past experience and capabilities, and propose potential methods through which the City-County may structure one or more partnerships.
Respondents to this RFI are encouraged to provide each of the following (to the extent relevant based on the parts of this RFI the respondents wish to submit a response):
1. Name and contact information (address, phone, fax and email) for the individual who will act as the respondent’s principal contact throughout the RFI process and description of the individual members of the respondent’s team with experience related to the objectives described in this RFI.
2. A description of the respondent’s technical and practical experience in the following disciplines, to the extent each is applicable, and how this experience can advance the objectives in this RFI:
a. Operations and Management – provide examples to demonstrate capabilities in fully managing, maintaining, and operating municipal buildings, as applicable;
b. Personnel – provide a resume for each individual that will be directly involved with this project;
c. Efficiencies – provide examples of what efficiencies respondent may employ in order to reduce annual costs to the City-County, along with an incentive structure for respondent if efficiencies are successful;
d. Associated Experience – provide examples to demonstrate other capabilities in municipal building management, as applicable;
e. Public-Private Partnerships – provide examples of structuring public-private partnerships in the field of municipal building management, including capabilities with various models for the cost-effective, timely delivery of specific projects;
f. Financing Models – provide examples of strategic partner financing arrangements and examples of specific project financing arrangements within your experience;
g. Environmental Sustainability and Stewardship – provide examples of efforts to promote environmental sustainability and stewardship in past projects related to the operation and management of a municipal buildings;
h. Reference names and addresses for each example provided.
3. Potential structures for a fair, legal, and complete solution of the management of the City-County Building, including, but not limited to, listed initiatives in Section I of this RFI.
4. Proposed efficiencies, synergies (both operational and financial), and cost savings that can be achieved through a privatized management of the City-County Building.
5. A suggested Risk Matrix to illustrate your proposed allocation of sharing risks regarding failure of any part of the City-County Building.
6. Suggestions regarding the maximum length (including renewal terms) of any agreement for management of the City-County Building.
III. Deadline for Response to this RFI
Responses to this RFI should be submitted by 4:00 p.m. EDT, on Monday, July 2, 2012.
IV. Submission Requirements
Each submission should be sent in PDF format and emailed to David.Rosenberg@indy.gov.
Drawings or other graphic representations may be provided within the PDF. The submissions should include a table of contents, identifying the major sections outlined herein, and any illustrations, tables, charts or graphics included in the Proposal. Submissions (including all exhibits and attachments) shall not exceed 30 standard print pages. NO PAPER COPIES WILL BE ACCEPTED.
V. Inquiries
Any questions related to this RFI may be directed to:
David Rosenberg
Director of Enterprise Development
Office of the Mayor
Office: (317) 327-3601
David.Rosenberg@indy.gov
VI. Privilege Clause; Right to Alter
a. Notwithstanding any other provision in this RFI, the City may, in its sole discretion: (1) determine to enter into one or more transactions related to the management, maintenance, and operation of the City-County Building and (2) elect not to proceed with an RFP or with any transaction contemplated by this RFI.
b. The City is under no obligation to respondents to this RFI. The City may, in its sole discretion, decide not to proceed with any or all of the transactions contemplated herein or may proceed with such transaction or transactions by any other procurement means or delivery model it may deem fit.
c. The City further reserves the right to selectively identify on the basis of demonstrated qualifications and experience, some, but perhaps not all, respondents to this RFI for participation in the presentation stage of this RFI process, and for further participation in any RFP that may be issued or direct negotiations that may be entered into in relation to the transactions contemplated by this RFI.
d. The City reserves the right to alter any of the conditions and criteria outlined in this RFI, including the deadline for submissions, by posting addenda on the City’s website at http://www.indy.gov/eGov/City/OFM/Purch/Pages/home.aspx.
VII. No Contract; Costs and Expenses; Additional Information
a. This is an inquiry only. By responding to this RFI with a written submission or otherwise participating in the process as outlined by this RFI, each submitting party expressly agrees that no contract of any kind is formed under, or arises from this RFI and that no legal obligations as between any one or more proponents and the City will arise.
b. Each respondent is solely responsible for its own costs and expenses in preparing and submitting a response to this RFI and participating in the RFI process, including any provision of any additional information or attendance at meetings or interviews.
c. The City shall have no monetary obligation to any respondent to this RFI. The City will make information available to respondents via its website at http://www.indy.gov/eGov/City/OFM/Purch/Pages/home.aspx and will not respond to requests for additional information or make copies of documents as part of this solicitation process.
VIII. Ownership of Submissions & Public Records Act
The City will be entitled to retain all submissions received in response to this RFI without pay or compensation. Submitting parties are advised that the City is subject to the Indiana Access to Public Records Act, and that any documents or other records provided to the City may, by law, be subject to disclosure.
Any material respondent considers confidential should be marked as such. However, the final determination on the confidentially of the material shall be determined by the City-County under the Indiana Public Access Laws.
Please be advised that all responses will be posted online and available to the public shortly after they are received by the City.