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Home My WebLink About11/07/1995, C-5 - PREPARATION OF MARKETING PLAN FOR THE SALE OF OLD HEADQUARTERS FIRE STATION IIIIY^I�II�II�I^� I MEETING DATE: IIII Il�injl��` city of san tuts osIspo //-7- 95 COUNCIL AGENDA REPORT 'TE""" BERG FROM: Bill Statler, Director of Finance W; SUBJECT: PREPARATION OF MARKETING PLAN FOR THE SALE OF OLD HEADQUARTERS FIRE STATION CAO RECOMMENDATION Direct staff to begin preparing a marketing plan for the sale of the old headquarters fire station. DISCUSSION Background Upon completion of construction of the new headquarters fire station (located at Broad and Santa Barbara), the sale of the old headquarters fire station (located at Garden and Nipomo) is one of the key budget balancing strategies adopted by the Council in the 1995-97 Financial Plan. As discussed in the Budget Message (page A-4 and A-5 of the Financial Plan), this sale will help fund construction of the new headquarters fire station, which will cost $4.6 million when completed including land acquisition, design and construction. The sales value of the property depends on a number of factors, including market conditions at the time of the sale, whether this property is sold "as is" or as vacant land ready for a new development, and allowed land uses. While no formal appraisal has recently been performed on this site, we estimate that its sales value ranges from $500,000 to $700,000. For financial.planning purposes, a mid-range revenue projection of $600,000 is reflected in the 1995-97 Financial Plan. Preparation of a Marketing Plan Construction on the new headquarters fire station is well underway, and completion is projected for April of 1996. To ensure that the old site is ready for sale at that time, we should begin preparing a marketing plan now that can be implemented when the property is vacated. There are a number of issues that need to be addressed in preparing this plan, including: ■ Timing of the sale. Is there a preferred schedule for making this sale that would result in a more favorable sales price? ■. Condition of the site. Would it be better to demolish the existing building and sell it as a vacant piece of property, or retain the building on the assumption that it may have some value to a future owner? Past appraisals have indicated that demolition would result in a better overall net gain due to seismic/structural concerns and the "specialty" use nature of the station that might limit more efficient use of the site for commercial uses. However, this is an assumption that needs to be revisited. ■ Method of sale. What is the best way of selling the property? As set forth in the City's adopted property management policy, there are a number of sales and leasing options available ��►�►��IIIIIIIIII1° ��llll city of San 1"tS OBISpo COUNCIL AGENDA REPORT to us, including: sealed bids, requests for proposals, auction, and listing the property for sale with a broker. The advantages or disadvantages of each of these options will largely be driven by the City's overall goals for the sale of the property, which we will assume to be solely economic in preparing the plan. In either case, once an appraisal is completed, other governmental agencies such as the Housing Authority, County and San Luis Coastal Unified School District will have a "right of first refusal" under state law and our adopted property management policy. ■ Appraisal. How much can we reasonably expect to receive from selling the property? To establish a benchmark for offering this property to other governental agencies as well as in preparing a realistic marketing plan, an appraisal of the property by a professional, independent MAI firm will be necessary. ■ Implementation plan. What are the key steps in the process, when should they happen, and who will do them? After a basic strategy is developed, a detailed action plan identifying key tasks, timeframes and staff responsibilities needs to be prepared in finalizing the marketing plan. Other issues related to the sale of this property are outlined in the attached memorandum from the Community Development staff to the CAO. Property Sale Task Force To develop a recommended plan for Council consideration, a "task force" has been assembled composed of the CAO, Director of Public Works, Director of Finance, Fire Chief and Development Review Manager. It is anticipated that the task force will complete its work and return to the Council with a recommendation by January of 1996. FISCAL IMPACT The proceeds from the sale of this site - estimated at $600,000 in the 1995-97 Financial Plan - is an integral part of the budget-balancing strategy adopted by the Council; accordingly, there are no adverse fiscal impacts associated with this first step in the sales process. ATTACHMENT Memorandum from Community Development staff to the CAO outlining options for the sale of the old headquarters fire station. H:OLDHQFS.CAR MEMORANDUM DATE: September 18, 1995 TO: John Dunn, CAO FROM: Arnold Jonas, Community Development Director BY: Ronald Whisenand, Development Review Manager SUBJECT: Fire Station No. 1 Reuse Plan The purpose of this memo is to outline options for re-use of the City's Fire Station No. 1 property once the station is relocated to the new Broad/South/Santa Rosa Street site. FACTS: • Site 26,000 square feet including City Parking Lot No. 5 which currently adjoins the fire station but is considered part of the same property. • Parcel Status: The property appears to be made up of six "underlying" lots of record. Two of the lots are land locked (i.e. no frontage on an approved public street) and the existing structure is likely built over most if not all of the parcels. • Zoning: Office (0) • General Plan Land Use Designation: Office ALLOWABLE USES: • Allowable uses in the "O" zoning district with an administrative use permit include: a. banks, credit unions, and savings and loans b. broadcast studios C. churches d. private and public business and professional offices e. public parking lots/structures (with a Planning Commission Use Permit) f. parks g. veterinarians �= s3 Memorandum - John Dunn September 18, 1995 Page 2 • Single or multi-family residential development with an allowable density of 12 units per acre. Ibis property would support approximately 7 "units" as determined by Section 17.16.010 of the Municipal Code. 0 Parking for office use is determined at a ratioo of one space per 300 square feet of gross floor area(one space per 200 square feet for medical offices). Parking for residential use is calculated based on the total number of bedrooms. Parking reductions for low-income or elderly residents is provided for in the zoning regulations. LAND USE PERMIT PROCESS: • Development of the site will involve Architectural Review Commission review and approval for demolition and site improvements. • Non-residential uses of the site (listed above) will require an administrative use permit. MARKETING OPTIONS: These observations are from the staff and a respected commercial real estate professional. • The market is currently "lukewarm" to office development due to an excess supply of office space. • The large size of the property would make this parcel more desirable either from a lease or sale standpoint due to limited parcels of this size in the vicinity of the downtown. • A "triple net" (tenant pays portion of building expenses including property taxes, maintenance, insurance, etc.) lease rate of$1.15 - $1.40 per square foot is possible for a built-out office development. Due to the location away from the government centers and away from the downtown core, rates at the low end of this range could be expected. • Other options include trading for other property that the City desires or selling the property outright. The commercial real estate professional estimated that although the appraisal price could be higher, the estimated sale price was $500,000. He indicated that the property may be worth more with the structures remaining on the property. C s--� Memorandum - John Dunn September 18, 1995 Page 3 OTHIIt IMPORTANT CONEMWMS: • City Parking Lot No. 5 is currently used by both the Fire Department and by private parties. The City currently rents out approximately one half of the spaces on a monthly permit basis. Elimination of this parking lot would involve reasonable notice of the City intention to eliminate this month to month rental option and informing the parkers of other available options. • Residential development could be either private, public, or non-profit (i.e. Housing Authority). Note, density bonuses may exist for development of low-income housing projects. 0 As noted above, the property appears to consist of six separate lots. Although two of the lots have no frontage it is possible for the City to sell or lease the property as separate lots. The lots could be reconfigured with a lot line adjustment. • As noted above, a park would be considered an allowable use with an administrative use permit. Any other public use (other than listed above) would require a General Plan and zoning amendment to change the properties designation to Public (P). 0 The City Council, through previous action approving the budget, has included the sales proceeds of this property into the City's projected revenue for this fiscal year. RW/rw