HomeMy WebLinkAboutR13-Economic Development Agency
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DBVBLOPIIBBT DBPARTIIBBT
OF TIIB CITY OF SAIl BBIlIIARDIIIO
RBOUBST FOR COIMISSIOB/COUlICIL ACTIOB
From:
KENNETH J. HENDERSON
Executive Director
Subj ect: IlOWIITOWII COIISOLIDArBD
STArE OFFICE COIIPLEX
Date:
May 4, 1993
SvnoDsis of Previous CftMBission/Cnnn~il/CftMBittee Action(s):
None.
Recomm~ded Motion(s):
(COBIUD.itv Develolllllent Coamission)
MOTION:
That the Community Development Commission authorize staff
to develop and submit a proposal to the State of
California relative to the development of a downtown
office building to consolidate and house all appropriate
State Agencies within the City of San Bernardino Central
Business District. Further, that staff be authorized to
negotiate and execute a professional services agreement
with MacDonald Properties to assist in this effort.
~~ERSOB
IZecutive Director
Contact Person(s): Kenneth Henderson/Stafford Parker Phone: 5081
Project Area(s): Central Citv Ward(s): One
Supporting Data Attached: Staff ReDort
FUNDING REQUIREMENTS:
Amount: $ NI A
N/A
Source:
Budget Authority:
Commission/Council Botes:
KJH:SWP:dle:6l44R
COIMISSIOB IlEBTIBG AGDDA
lIeeting Date: 05/10/1993
Agenda Item 1IuII1ber: E
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DBVBLOPMBBT DBPARTMBBT
OF THE CITY OF SAW BBUARDIBO
STAFF REPORT
Downtown Consolidated State Office COBDlex
On April 8, 1993, a staff generated proposal, pursuant to Council
Resolution No. 93-64 dated March 11, 1993, was presented to federal
officials urging the retention of the Federal Bankruptcy Court in the
City of San Bernardino. The comprehensiveness of that proposal is s
fitting take-off for this staff report which seeks Commission approval
to submit a proposal to the State for consolidated offices that will
provide "one-stop service" in a single area or complex within the
Central Business District. The Bankruptcy Court proposal contained a
section entitled "Downtown Goals" and noted that the Downtown Urban
Plan identifies the development potential of downtown in a number of
areas. Essentially, these areas were as follows:
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A central focal point for City, County, State and Federal
offices.
Private office development such as law firms, insurance
companies and financial institutions.
Arts and entertainment uses, including restaurants, night
clubs, movie theaters, a performing arts center and special
public events.
Private retailing opportunities, including specialty retailing
such as antiques, arts and crafts.
Housing for professional, white-collar occupational clusters.
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The long-range plans referenced the "Super Block" bounded by 4th, 5th,
"D" and "E" streets as an initial starting point for the development
plan. Dubbed a "Government, Law and Justice Center" it was
contemplated this site would become the headquarters and focus of
governmental entitites and activities. Eventually, the entire center
will cover more than eight acres and include 2,400 parking spaces in
two high-rise structures.
A recently received September, 1992 study prepared by the State of
California General Services Department (GSD) underscores five factors
that could potentially affect State office space downtown in the cities
of San Bernardino and Riverside. These factors are documented and
referenced below:
KJH:SWP:dle:6l44R
COIIMISSIOB MBBTIBG AGDDA
Meeting Date: 05/10/1993
Agenda Item Bumber: -L3-
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DEVELOPIIUT DBPAR'.rIImnr STAFF IIBPORT
lIB: IlOWIITOWII COBSOLIDATBD STATE OFFICE COIIPLBX
May 10, 1993
Page ltullber -2-
1. Substantial growth (existing and projected) in demand for
office space for State agencies in the Inland Empire area; and
2. The preference of the State for consolidated offices in order
to increase efficiencies and decrease cost; and
3. Serious State consideration to relocate agencies from either
San Bernardino or Riverside to accomplish office consolidation
in a larger structure within the single selected City; and
4. Although occuring at various times, the expiration of most
leases in both cities will expire, on the average, within the
next five years; and
5. The recommendation of the State (General Services Department)
to pursue a program of master leases to accomplish
consolidation goals and its invitation to .....open discussions
with the cities of Riverside and San Bernardino regarding other
alternatives."
State Office SDace Growth
Since the last State public facilities construction in 1988 there has
been a substantial increase in the size and number of State agencies in
the Inland Empire due to the high growth rate of San Bernardino and
Riverside Counties. Riverside and San Bernardino Counties are the
State's number one and two fastest growing counties. State office
growth in Riverside has increased 26% annually and 23% annually in San
Bernardino since 1988. In 1988 there were 170 employees in San
Bernardino County and 160 in Riverside County. Presently there are 362
employees in San Bernardino County and 373 in Riverside.
The San Bernardino
needs restoration.
a new or remodeled
be accommodated.
State Building is already filled to capacity and
However, if the District 8 Caltrans offices move to
facility, further growth in the State building could
State Office Consolidation
Subsequent to an analysis of various consolidation options, the State
selected four options for detailed study:
Option #1: Continue leasing as needed.
Option #2: Consolidate leased space in two relatively modest sized
new State-owned office facilities, one in San
Bernardino and the other in Riverside.
KJH:SWP:dle:6l44R
COIKISSIOB IIBBTIBG AGBBDA
Meeting Date: 05/10/1993
Agenda Item Ihmber: -L3-
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DEVELOPIIDT DEPAll'.l"l'lU".r STAn' IlBPORT
RE: DOWBTOWII COllSOLIDADD STAD OFFICE COMPLEX
May 10, 1993
Page llumber -3-
Option #3: Consolidate all leased space in one State-owned facility
of sufficient capacity to accommodate the largest number
of agencies from both counties.
Option #4: Pursue one or more master building leases in the
planning area that would provide for consolidation of
existing lease space at dispersed sites and meet
anticipated agency growth.
Given the bleakness of the State budget, it rejected option three and
selected options one and four. The study also recommended the cities
of Riverside and San Bernardino be contacted to initiate discussions
"regarding other alternatives."
Affected State ARencies
If the State built a single larger building and relocated affected
agencies to the selected city, it could result in a San Bernardino
building of proposed tenants totaling 97,551 square feet (1st year).
104,735 (5th year) and 114,054 (10th year). For the City of Riverside.
the square footage for similar periods are 191,364 square feet (1st
year), 226,948 (5th year) and 242,567 (10th year).
Not all agencies were designated as appropriate for consolidation under
option number three. Proposed tenants for the larger State-owned
single building option for either city would include the 4th Appellate
District Court currently at 303 W. 5th Street in San Bernardino. Given
the selection of Riverside, under this scenario, the City of San
Bernardino could lose 203 employees from eight State agencies and
projected rent revenues. Conversely, Riverside would lose 139
employees, five State agencies and projected rent revenues.
Citv of San Bernardino ProDosal
The City of San Bernardino cannot afford to do nothing in view of
pending State lease expirations and current critical space
deliberations. It is appropriate for the City to initiate a proposal
to keep State offices in the City of San Bernardino. The primary
thrust of the proposal, crafted subsequent to extended dialogue with
the State, would focus on a single building to consolidate State
agencies within the Super Block. Keeping the building on the tax rolls
is a desirable feature for the City to assure generation of tax
increment funds.
KJH:SWP:dle:6144R
COIMISSIOB IIIBTIBG AGEBDA
Meeting Date: 05/10/1993
Agenda Item llumber: 13_
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DEVELOPIIBBT DBPAIll:ru5n".r STAFF REPORT
RB: DOWBTOWR COIISOLIDATBD STATE OFFIex COMPLBX
May 10, 1993
Page Bumber -4-
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Development of a single building (designed for 205,000 net leaseable
square feet and 613 employees with 220 parking spaces) would
necessitate conceptual approval to assemble a site for this purpose.
This would require demolition of the Platt Building and existing police
facility. The Platt Building demolition is a continued item on the May
10, 1993 Mayor and Common Council agenda. It is appropriate for the
Commission to consider the demolition of the existing police facility
in connection with the State proposal.
The State estimated its cost to build in September 1992 was
$50,876,000, including $1,100,000 in land costs. Proposed consolidated
State agencies in our City would be (a) San Bernardino Agencies: 4th
Appellate District Court, Department of Motor Vehicles, General
Services/Fleet Administration, Department of Veterans Affairs, Public
Utilities Commission, Franchise Tax Board, Department of Health
Services (two locations), Department of Consumer Affairs Department of,
Fair Employment and Housing, Department of Industrial Relations,
Employment Development Department; and (b) City of Riverside:
Departments of Justice (two locations), Social Services (2 locations)
and Motor Vehicles.
Financinl!
The September, 1992 State "Riverside/San Bernardino Regional Facilities
Study" recommends no potential financing methodology for any of its
considered office space development options. It reasons that "given
the current condition of State finances, such a recommendation would
involve a high degree of speculation." The report does comment on
three basic financing methods that it considered: (a) Conventional
capital outlay of funds from the normal State budget; (b) Revenue
bonds, which are debt instruments extinguished through a long-term
facility lease; and (c) Conventional financing which is the basis for
either conventional private leases or build-to-suit opportunities.
While capital outlay funds are the State's least expensive alternative,
it does not have the necessary funds. Issuance of 20 to 25 year lease
revenue bonds are the second less costly option. Lastly, the State has
concluded a build-to-suit program is its most expensive option because,
in the absence of State ownership, lease costs would be continuous and
the stability of future low rent levels is uncertain.
In creating a proposal that responds to these concerns or
apprehensions, staff would obviously have to mitigate these concerns in
a manner that is mutually beneficial to the City and State.
KJH:SWP:dle:6144R
COIRISSIOB MBBTIBG AGDDA
Meeting Date: 05/10/1993
Agenda Item Bumber:
/J.
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DKVELOPllD'r DEPARnuuu STAFF REPORT
HE: DOWlmlWII COBSOLlDATED STATE OFFICE COMPLEX
May 10, 1993
Page IIuIIIber -5-
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Further, the simple act of consolidation itself will avail the State of
unmeasured benefits. A lower lease rate based on economies of scale
could be anticipated; costs will be reduced operationally for security,
maintenance and duplication of other related expenses. Multiple
agencies that do or should work together would be clustered in the same
complex thus making State service to the public more visible and
accessible.
Staff Recommendation
In light of the State's invitation, staff is recommending approval of
the development and submission of a proposal to the State Department of
General Services. Staff further recommends that it be authorized to
take all actions attendant to the development and submission of said
proposal, including the retention of MacDonald Properties to work with
staff and the State in this effort.
Inasmuch as MacDonald Properties is working with staff on the new
police facility and bankruptcy court retention projects, both of which
are related to this proposal, it appropriate the firm be retained for
this purpose also.
Staff recommends adoption of the form motion.
~RSOR' Executive
Development Departaent
Director
KJH:SWP:dle:6l44R
CCRUSSIOR IlEETIlIG AGElUlA.
Meeting Date: 05/10/1993
Agenda Item lIlaber:
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