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HomeMy WebLinkAbout05/21/1996, C-8 - SALE OF OLD HEADQUARTERS FIRE STATION 1 council j acEnda izEpoat "=N'fC-g CITY OF S AN L U IS OBIS P FROM: Bill Statler, Director of Finance SUBJECT: SALE OF OLD HEADQUARTERS FIRE STATION CAO RECOM1VUVDA7ION Adopt a resolution declaring the old headquarters fire station site (748 Pismo Street) surplus property and authorizing the City Administrative Officer to take actions leading to its sale at the highest possible market price. DISCUSSION Background Upon completion of the new headquarters fire station (located at Broad and Santa Barbara), the sale of the old headquarters fire station (located at Garden and Pismo) 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 A4 and A-5 of the Financial Plan), this sale will help fund construction of the new headquarters fire station; which will cost$4.8 million when completed, including land acquisition, design and construction. 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. On November 7, 1995, the Council reaffirmed its intent to sell the property upon completion of the new headquarters fire station, and directed staff to begin preparing a marketing plan. The Council also reaffirmed at that time that the primary goal for selling this site is economic, and that we should strive for the highest sales price possible. Accordingly, the proposed plan has been prepared with this goal in mind. Proposed Marketing Plan The proposed marketing plan has been developed by a staff task force assembled for this purpose consisting of the City Administrative Officer, Assistant CAO, Director of Public Works, Director of Finance, Fire Chief, and Development Review Manager. The site is zoned as "office", and it is our intent to market it solely for uses that are consistent with this zoning. The proposed approach in selling the old headquarters fire station consists of two key steps: ■ Solicit government agency interest Consistent with the procedures set forth in the City's property management manual, the first step in the proposed process is to send a letter to all of the government agencies operating in San Luis Obipso informing them of the e �'/ Council Agenda Repoit- Sale of Old Headquarters Fire Station Page 2 availability of the site and soliciting their interest in purchasing it. We will be clear in the letter that our goal in selling the site is economic, and as such, we will be looking to receive the best price possible for the property. We will request that they let us know within 45 days of receiving the letter if they are interested in pursuing purchase negotiations. ■ Select a commercial broker. We would only move onto this step if we do not receive any interest in purchasing the property at market rates from other government agencies. While we would prefer a sale at market value to another government agency, this may simply not be feasible. As set forth in the November 7 agenda report, we have reviewed all of the options available to us, which include sealed bids, request for proposals, auction and listing the property for sale with a broker. If we can not find another government agency that is interested in this site, we have concluded that the most business-like approach to selling this property is to contract with a professional firm that specializes in doing this. All of the other options require significant staff efforts, and to be most effective, require real estate marketing skills that the staff does not currently have. In summary, because the sale of property is a task we do not perform on a regular, ongoing basis, we believe that our business objectives will be best achieved by using the services of a qualified, commercial real estate broker. Accordingly, if we need to move to this step, we are recommending that the Council authorize the CAO to prepare and issue an RFP for broker services, and to award the contract to the best overall proposer. While cost will be a factor in the selection process, other criteria will be considered as well, including: understanding of the services required by the City and our sale objectives; quality and responsiveness of the proposal; demonstrated ability to do the work; recent experience in performing similar services, including working with public agencies;proposed approach in marketing the property; and references. There are a number of well-qualified commercial brokerage firms in the San Luis Obispo area, and accordingly, we plan to focus our RFP efforts on local firms. Regardless of which approach ultimately leads to serious purchase negotiations, any sales agreement will be subject to final Council approval. Sale of the Adjacent Paddng Lot In addition to the headquarters fire station, this property also includes an adjacent parking lot with 39 spaces. Nineteen of these spaces are allocated to fire department employees, and twenty of them are made available to the public on a monthly parking permit basis. This lot is managed by the parking program, and is commonly known as Lot # 5. Of the 20 public spaces, only eight of them are currently being rented. In addition to the adjacent lot, there is currently space for 5 to 6 parking spaces on the building site itself (this area is currently used for fire engine parking). C br'2 Council Agenda Report - Sale of Old Headquarters Fire Station Page 3 There has been discussion in the past as to whether this sale should include this adjacent lot. After an in-depth evaluation of the pros and cons of either approach, we have concluded that marketing this property will be significantly enhanced if this lot is included in the sale. This conclusion is largely based on the on-site parking requirements for the existing building. City parking requirements for office uses are one space per 300 square feet. At 9,600 square feet, the parking requirement for this building is 32 spaces, which is very close to the number of spaces available on this adjacent lot. While this may have a small adverse affect on downtown parking, this lot is on the periphery of the downtown core, and there does not appear to be demand for all 20 of the public parking spaces currently available. In summary, we believe that the marketing of this site will be significantly enhanced if it is offered with on-site parking, and that public parking will be minimally affected. On the other hand, if it appears that there is little market interest in this lot, or only interest in the portion needed to meet minimum parking requirements, we can make a decision at a later point to retain all or a portion of it. It should be noted that this is one of the three parking lots (along with lots 14 and 15) that have been tentatively identified as potential sites for increasing usage by the public by "creating" 100 new public spaces in the downtown. Under this concept, up to 39 new metered spaces would be created at this lot, and the existing 8 monthly permits would be cancelled at some point. The sale of this lot would preclude such an experiment to determine if short term patrons of the downtown would use this somewhat remote parking lot. The Parking Manager does not believe that the use of this lot for short-term parking would be successful based on previous experience; nonetheless, the sale of this lot would preclude a trial program at this site. Appraisal Services To assist us in negotiations with either interested government agencies or private sector parties that a broker will bring to the table, we will need an appraisal of the property by a professional, independent MAI firm. This is within the contract award authority of the CAO, and the selection process is already underway. Use of the Proceeds from the Sale It should be noted that all proceeds from the sale of all or part of this lot are appropriately credited to the General Fund, as Parking Fund resources were not used to purchase this site originally. CONCURRENCES ■ Pi'mvring Commission As required under the government code and the City's property management policy, the sale or acquisition of City real property requires review by the Planning Commission for consistency with the General Plan. The Planning Commission reviewed this item at their May 8 meeting, and on a 6-0 vote, determined that the disposition of this property is consistent with the policies of the City's General Plan. The Planning Commission further determined that this disposition is exempt from review �-3 Council Agenda Report - Sale of Old Headquarters File Station Page 4 under the California Environmental Quality Act the (CEQA), as section 15312 of the California Administrative Code specifically exempts the sale of surplus government property from CEQA review. However, it should be noted that any subsequent development of the property may be subject to environmental review at that time. ■ BL4 Parking Committee. The BIA parking committee reviewed this item at their May 10 meeting. No concerns were raised by the Committee members regarding the sale of the adjacent parking lot. The Committee did request that the City try to accommodate the needs of current permit holders when this lot transitions to private ownership. The staff concurs with this recommendation, and we will work with prospective buyers in developing a transition plan that mutually meets the needs of permit holders and the new owner. In the interim, no further permits will be issued for this site. ■ City Staff. The task force assembled by the CAO to oversee this sale and the Parking Manager concur with the recommended sales plan. FISCAL IMPACT The revenue 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, it is important to go forward with the sale of this site at full market value if we are to retain our budgeted financial condition. No supplemental appropriations are required for the appraisal and broker services: funds are available within existing resources for the appraisal services,which are not expected to be greater than $3,500; and any broker fees will be paid from the proceeds of the sale. ALTERNATIVES Retain the Old Headquarters Fire Station Site Based on the need for the revenue from the sale of this site in balancing the budget in funding the new headquarters fire station as approved in the 1995-97 Financial Plan, this option is not recommended. Sell the Site at Less than Full Market Value The objective in selling this site is primarily economic. Accordingly, based on the need for this revenue as discussed above, this option is not recommended Use Another Method to Sell the Property As discussed above, there are a number of other approaches that could be taken in selling the site. However, we believe that the recommended plan of first offering the site to other governmental agencies, and then using the services of a professional broker if this is not �-8 y Council Agenda Report - Sale of Old Headquarters File Station Page 5 successful, is the best approach in meeting our sales objective of receiving the highest possible price for the property. Retain Some or All of the Adjacent Paddng Lot There are two basic alternatives to the recommended approach of including the entire site in the sale: ■ Retain all of the adjacent parking spaces. Due to the City's on-site parking requirements, this option is not recommended: to meet the City's code requirements (which can not be met through off-site parking or parking in-lieu fees in an office zone), a minimum of 32 spaces should be made available with this sale. With an estimated 6 spaces on site, this means selling at least 26 of the 39 spaces in the adjacent lot. ■ Retain only 26 spaces. This would meet the minimum number of spaces that should be sold, leaving 13 public spaces. As noted above, depending upon the prospective owner's plans for the site, this may in fact be the best "market" solution; however, this decision should not be made until we have the "market" information available to us. ATTACEIIMUE Fr Resolution declaring the old headquarters fire station surplus property and authorizing the City Administrative Officer to take actions leading to its sale. H:OLDHQFS3.CAR RESOLUTION NO. (1996 Series) A RESOLUTION OF THE COUNCIL OF THE CITY OF SAN LUIS OBISPO DECLARING THE OLD HEADQUARTERS FIRE STATION SURPLUS PROPERTY AND AUTHORIZING THE CITY ADMINISTRATIVE OFFICER TO TAKE ACTIONS LEADING TO ITS SALE WHEREAS, the old headquarters fire station located at 748 Pismo Street will no longer be required upon completion of the new headquarters fire station, which is currently under construction and scheduled for occupancy on June 1, 1996; and WHEREAS, the revenue from the sale of the old headquarters fire station upon completion of the new headquarters fire station is a key budget balancing strategy in the adopted 1995-97 Financial Plan; and WHEREAS, on May 8, 1996 the Planning Commission determined that: the disposition of this property is consistent with the policies of the Land Use Element of the General Plan, provided the property is developed with uses allowed by the General Plan and Zoning Regulations of the City; and disposition of surplus City property is exempt from the California Environmental Quality Act pursuant to Section 15312 of the California Administrative Code. NOW, THEREFORE, BE IT RESOLVED by the Council of the City of San Luis Obispo as follows: SECTION 1. Effective with the occupancy of the new headquarters fire station (tentatively scheduled for June 1, 1996), the old headquarters fire station is hereby declared surplus property. SECTION 2. The City Administrative Officer is authorized to take the following actions in selling the property at the highest possible market price: a.) Send a letter to all of the government agencies operating in San Luis Obipso informing them of the availability of the site, the City's economic goals in selling the site, and soliciting their interest in purchasing the property; and begin negotiations with any interested agencies. b.) In the event that the City is not successful in identifying other governmental agencies that are interested in purchasing the property at full market value, issue a request for proposals (RFP) for commercial brokerage services and award the contract to the best overall proposer. SECTION 3. The Council will be advised on the progress of any purchase offers, and will approve any sales agreement. L'-F-6 Resolution No. (1996 Series) Page 2 Upon motion of , seconded by and on the following roll call vote: AYES: NOES: ABSENT: the foregoing resolution was adopted this day of , 1996. ATTEST: City Clerk Mayor Allen Settle APPROVED AS TO FORM: 4eyprorn F-7