- How does the Joint Development (JD) Program select developers?
- Does JD sell land?
- How does JD undertake its entitlement process?
- Does Metro provide financing?
- What kind of agreements does JD use?
- How are JD projects funded?
- How does Metro decide what uses will be considered for the project site?
- How long does the Joint Development Process take from start to completion of construction?
How does the Joint Development (JD) Program select developers?
Metro seeks out qualified developers through a competitive process by issuing a Request for Information and Qualifications (RFIQ) and/or a Request for Proposals (RFP). An RFIQ requires developers to submit a preliminary development concept for the project site as well as documentation of development experience. After evaluating RFIQ responses, Metro JD staff will select a shortlist of developers and invite them to respond to an RFP. An RFP requires a more developed response that details a refined project proposal and a complete financial proposal. Depending on the scale and complexity of a project, Metro may undertake this 2-step procurement process or directly issue an RFP.
Metro’s evaluation criterion assesses the track record of responding developers, which includes the nature and quality of their past projects, as well as demonstrated financial capability. Additionally, JD staff reviews the quality and design of respondents’ development proposal and their accordance with the Joint Development Program’s objectives and Development Guidelines.
Does JD sell land?
Metro enters long-term ground leases with private developers and does not typically sell land.
How does JD undertake its entitlement process?
All joint development projects are subject to the land use provisions of the municipality with regulatory land use control, including but not limited to zoning codes, General Plans, and community plans. Additionally, proposals must comply with CEQA (California Environmental Quality Act) laws with regard to environmental impacts.
Does Metro provide financing?
Metro does not provide financing for JD projects.
What kind of agreements does JD use?
There are various agreements that can be used in a joint development project, but the most typical set of agreements is the Exclusive Negotiation and Planning Agreement (ENA), Joint Development Agreement (JDA) and Ground Lease. Once Metro selects a developer for a site, an ENA is executed. This agreement signals the end of the competitive process and sets the parameters for a negotiation, giving exclusive rights to negotiate with Metro to the selected Developer. Most projects will progress the architectural design during the ENA phase, including securing entitlements and CEQA. Community engagement is also a large part of the ENA phase. The term of an ENA will generally last 18 months. Metro and the Developer will also negotiate financial terms during the ENA phase.
The ENA negotiations are memorialized in the JDA and Ground Lease, which include the terms of the joint development transaction and formally give the Developer the right to construct on the Metro-owned site. Only after the Metro Board approves the JDA and GL is the developer’s proposal authorized for construction.
How are JD projects funded?
Metro does not provide financing for joint development projects. Developers must bring their own ability to secure financing. Some projects are privately financed through a Developer’s own equity and ability to secure construction and permanent loans. Most JD projects include a capital stack with a variety of public and private sources. Depending on the nature of the project (residential, affordable housing, retail, hotel, etc.), these sources can include a combination of: private equity; traditional construction loans; new markets tax credits; low income housing tax credits; bond financing; pension fund investments; other public subsidies such as Community Development Block Grant and/or HOME funds; and foundation grants.
How does Metro decide what uses will be considered for the project site?
Prior to soliciting proposals from developers, Metro conducts a series of meetings with stakeholders to understand community goals for the project site, meets with other public sector partners, and reviews existing land use regulations, vision plans or other informational documents that provide site context. This information is combined to create the project’s Development Guidelines, which are taken to the Metro Board of Directors for approval and are included in the RFP for each site.
How long does the Joint Development Process take from start to completion of construction?
While each project varies, it is estimated to be a five-year process.