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OUTLINE OF REPORT
I.
Executive Summary
A.
Background to Feasibility Study
B.
Summary of Redevelopment Recommendation
C.
Summary of Implementation Plan
D.
Summary of Conditions to Feasible Redevelopment
E.
Summary of Capital Costs and Annual Revenues
F.
Summary of Steps and Timetable to Achieve
Feasibility
G.
Redevelopment Alternative
II.
Feasibility Analysis
A.
Background
B.
Feasibility Analysis Process
1.
Objectives
2.
Approach and Methodology
C.
Objectives of Report and Conditions
III.
History, Current Situation & Future
Expectations
A.
History of the Site’s Redevelopment
1.
Developmental Center
2.
The CSU’s Plans
B.
Current Situation
C.
Future Expectations
1.
CSUS
2.
Other Stakeholders
IV.
Supply Assessment
A.
Overview
B.
Current Condition
1.
Site
2.
Improvements
3.
Historic Designation
C.
Market
1.
Land Available for Development
2.
Buildings Available for Lease or Sale
V.
Demand Assessment
A.
Demographic Information
1.
State of California and Central Valley Region
2.
County of San Joaquin
3.
City of Stockton
4.
Conclusions
B.
Current/Continued Occupancy of Space
1.
CSUS
2.
Third Party Tenants
C.
Potential Occupancy of Space
1.
Public vs. Private Sector Tenants
2.
Educational Users
3.
Office Users
4.
Residential Users
5.
Support Retail Users
VI.
Redevelopment, Demolition and Land Development
Plan
A.
Overview
1.
Redevelopment Principles
2.
Preservation vs. Demolition Criteria
B.
Redevelopment Plan – Base Conditions
1.
Master Plan
2.
Existing Improvements to be Preserved/Renovated
3.
Existing Improvements to be Razed
4.
Existing Leases to be Extended vs. Terminated
C.
Redevelopment Plan – Options
1.
Model A: CSU/Government Campus with Support Retail
a.
Uses of Preserved Buildings
b.
Uses of Vacant Land
2.
Model B: CSU/Government Campus with Support Retail, Housing and
Private Commercial Uses
a.
Uses of Preserved Buildings
b.
Uses of Vacant Land
D.
Satisfaction of Redevelopment Principles
1.
Maintenance of Campus Environment
2.
Improvement in Security
3.
Connection with Neighborhood
4.
Development of a Feasible Plan
5.
Satisfaction of SHPO’s Preservation Objectives
E.
Conditions of Redevelopment Plan
1.
Commitments by the CSU
2.
Commitments by State.
3 Commitments by
City.
4.
Commitments by County.
5.
Commitments by Other Local Agencies.
F.
Financing and Capitalization Issues
1.
Projections – Background and General Assumptions.
2.
Projections – Model A
a.
Assumptions
b.
Conclusions
3.
Projections – Model B
a.
Assumptions
b.
Conclusions
4.
Financing Options
a.
Overview
b.
Short Term Financing Options
c.
Long Term Financing Options
G.
Other Development Issues
1.
Downtown Development Plan
2.
Green Space
3.
Sustainability
4.
Third Party Management
VII.
Implementation Plan
A.
Engage Owner’s Representative
B.
Create Campus Authority
C.
Complete Master Plan
D.
Implement Master Plan
Map
of Campus
I. EXECUTIVE SUMMARY
A.
Background to Feasibility Study.
This report has been prepared in response to Senate Bill 679
(Johnston) (“SB 679”), which authorizes a “long-term feasibility
study” (the “study”) regarding the reuse of the site (the
“site”) of the former Stockton Development Center (the
“Developmental Center”) by the California State University (the
“CSU”).
·
Primary
Objective:
The primary objective of this study is to provide policymakers
with an understanding of the conditions under which the CSU’s
redevelopment and use of the Developmental Center, for the purpose of
forming the CSU Stanislaus Regional Center for Education and Human
Services (the “Center”), is economically viable.
·
Review
Undertaken:
We have reviewed the existing use of the property and the
potential for public and private sector development, and we have
estimated the costs of developing a mixed use center.
·
Key
Assumptions: This
analysis assumes several key objectives: maintenance of the campus
environment, improvement of campus and area security, creation of a
connection with nearby neighborhoods, minimization of costs, and
providing for the future economic viability of the Center.
·
Unresolved
Issues:
Issues that have not been resolved by this study include:
establishment of final budgets, approval by the Office of State
Historic Preservation (“SHPO”), determination of legal issues, and
material commitments by each stakeholder within a specific timeframe.
B.
Summary of Redevelopment Recommendation.
Redevelopment
of the site should be based on a public/private model that would
include: CSU, public and private office tenants, support retail,
assisted living, educational facilities, residential development, and
cultural uses. Current
improvements (totaling approximately 1,008,000 gross square feet) and
land would be dealt with as follows:
v
Demolition:
approximately 378,000 gross square feet
·
Creates pads available for:
-
Office building (100,000 square feet) -- State ground lease
-
Office building (50,000 square feet)
-- Private ground lease
-
Rental apartments (up to 200 units) -- Private ground lease
-
Educational facilities -- Local public agency/County ground
lease
ŕ
Stabilized Annual Revenue = $500,000 - $600,000
·
Creates open areas available for:
-
Parking (2765 spaces)
-
Green space
ŕ
Stabilized Annual Revenue = $400,000 - $500,000
v
Preservation:
approximately 630,000 gross square feet
·
Renovated Space: approximately 196,000 square feet
of space, leased to:
-
Support retail (~ 20,000 square feet)
-
Public and private office use (~ 147,000 square feet)
-
Cultural uses (~ 29,000 square feet)
ŕ
Stabilized Annual Revenue = $1,100,000 - $1,175,000
·
As Is Space: approximately
111,000 square feet of space, leased to:
-
Public and private office use (~ 24,000 square feet)
-
Senior living or educational use (~ 87,000 square feet)
ŕ
Stabilized Annual Revenue = $300,000 - $325,00
·
CSUS Space: approximately
323,000 square feet of space
-
Academic use – current (~ 72,000 square feet)
-
Academic use – future (~ 220,000 square feet)
-
Administrative/Operational use (~ 31,000 square feet)
ŕ
CSU general fund budget pays for occupied space
C.
Summary of Implementation Plan.
·
The CSU’s Chancellor’s Office to engage private
sector owner’s representative to plan and facilitate the
redevelopment
·
The CSU and the City to form joint powers authority
(“JPA”) to which the CSU will lease the land and improvements
·
JPA and the CSU to complete master plan and
facilitate its implementation
D.
Summary of Conditions to Feasible Redevelopment. The
successful redevelopment of the site requires that the relevant
stakeholders make certain commitments to the process, undertake
necessary actions, and complete their obligations within a specific
timeframe (including those listed below).
Further commitments may be determined at such time as all
currently unresolved issues are addressed.
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Stake-holder
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Commitment
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Timetable
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CSU
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·
Chancellor’s Office engagement of private sector
owner’s representative
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By 5/2000
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·
Formation of JPA with the City
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By 7/2000
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·
Demolition and infrastructure construction
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Begin Winter 2001
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·
Work with City and Stockton Redevelopment Agency
on adoption of redevelopment and completion of Environmental
Impact Report (“EIR”)
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Complete EIR by 5/2001
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·
Chancellor’s Office oversight of planning and
development
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Throughout
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·
Assume risk for redevelopment and operational
costs
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Throughout
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·
Grow academic programs from 450 FTEs (currently)
to 2000 FTEs (by FY 2010/2011)
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Through FY 2010/2011
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State
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·
Relocation of State agency offices to site and
completion of office building
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Legislation in Summer 2000
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·
Adoption of policy of coordination and expediency
from all State agencies involved in redevelopment process
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Summer 2000
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·
One time capital investment of $13 million
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FY 2000/2001
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Ongoing funding of $1.7 million
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FY 2001/2002
and thereafter
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City
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·
Formation of JPA with the CSU
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7/2000
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·
Continued funding of and assistance with EIR
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Complete by 5/01
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·
Incorporation of site in new redevelopment
district
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Complete by 7/01
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·
Provision of Stockton police protection
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FY 02/03 & thereafter
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·
Minimization or elimination of mitigation,
entitlement and permitting costs
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Commence immediately
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·
Use of tax increment revenues to support a portion
of financing for demolition, infrastructure and renovation costs
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Commence immediately
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County
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·
Minimization or elimination of mitigation,
entitlement and permitting costs
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Commence immediately
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·
Continued County Board of Supervisors support of
projects proposed by CAO and Staff in 3/00
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Commence immediately
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·
Continued compatible uses by Department of Mental
Health facility adjacent to site
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Commence immediately
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·
Commitment by County Office of Education
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Commence immediately
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Other
Local Agencies
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·
Commitment by Stockton Unified School District
and/or San Joaquin County Office of Education to locate
facilities at site
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Commence immediately
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·
Commitment by Private Industry Council to locate
facilities at site
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Commence immediately
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E.
Summary of Capital Costs and Annual Revenues
Capital Improvement Costs
·
Demolition =
$5,000,000
·
Renovation =
$17,150,000
·
Infrastructure =
$15,300,000
TOTAL
=
$37,450,000
Annual Stabilized
Revenues
·
Ground leases =
$500,000 - $600,000
·
Parking =
$400,000 - $500,000
·
Existing space leases =
$1,400,000 - $1,500,000
TOTAL =
$2,300,000 (in FY 2002/2003) to
$2,600,000 (in FY 2011/2012)
F.
Summary of Steps and Timetable to Achieve Feasibility
Spring 2000
Engage an owner’s representative
Spring – Summer 2000
Form JPA Engage
additional professionals thru RFQ process
Summer 2000
Clarify general scope of master development plan
Commence EIR
Begin preliminary lease/development negotiations
Enact State legislation
Fall 2000
Complete master development plan
Continue lease/development negotiations
Winter 2001
Execute lease/development agreements
Begin demolition and renovation
Spring 2001
Complete EIR
Incorporate site into new redevelopment district
G.
Redevelopment Alternative.
If the stakeholders are
not able to agree on a redevelopment plan or are unwilling to commit
to the undertakings necessary for successful completion of such a
plan, then the alternative to redevelopment would be to reconvey the
property to the State. In
such event, the State would be required to spend between $2.6 million
and $4 million per year in order to maintain the site in a warm
shutdown condition.
In addition, in order to bring the property up to a condition
whereby it can be sold for a reasonable value, the State would be
required to demolish and renovate buildings and make infrastructure
improvements at a cost roughly equivalent to the amount determined
under the recommended redevelopment plan.
II. FEASIBILITY ANALYSIS
A.
Background
In September 1999, Governor
Davis signed SB 679 authorizing the preparation of a study regarding
the reuse of the site of the Developmental Center by the CSU.
According to SB 679, the study is to be completed for the State
of California Department of Finance, DGS, the CSU, and the City of
Stockton. This study fulfills the requirements of SB 679 and provides:
·
The assumptions under which the reuse of the
Developmental Center, for the purpose of creating the Center, is
economically viable;
·
The steps required to achieve economic viability;
·
An estimated timeline for implementation; and
·
An analysis of the operating costs and capital
investments needed.
In the following sections we
provide the framework for our analysis, a history of the plans for
reuse of the site, an analysis of the competitive supply in the
market, an analysis of the demand for use of the site, an analysis of
the existing buildings on the site, and a plan for demolition,
redevelopment, and new development at the site.
We end the report by outlining the steps necessary for
implementation of the recommended plan.
B.
Feasibility Analysis Process
1.
Objectives.
The primary objective of this study is to provide policymakers
with an understanding of the conditions under which the CSU’s
redevelopment and use of the Developmental Center, for the purpose of
forming the Center, is economically viable.
Additional objectives necessary to develop a useful plan for
reuse of the site include:
·
A realistic, market-based view of the demand for
use of the site by public and private sector users;
·
An assessment of the existing structures on the
site;
·
Identification of any issues that must be resolved
prior to development of the site; and
·
Determination of actions and/or funding
requirements of the City, the County, the State, the CSU and
stakeholders.
Finally, from a survey of the
surrounding neighborhoods and an understanding of the needs and
desires of the stakeholders, our objective is to present a plan that
incorporates uses of the property that we believe are both appropriate
for the site and acceptable to the State, the CSU and the Stockton
community.
2.
Approach and Methodology.
After completing an initial
review of the existing use of the property and the potential for
public and private sector development, we have concluded that the
highest and best use for the site is likely as a campus with an
education emphasis, occupied by a mix of university oriented
facilities and government agency and private sector tenants.
Notwithstanding this conclusion, we have adopted a two model
approach to the study – as further described below – in order to
more fully explore the best way to mitigate the cost of developing and
operating the site while simultaneously creating a vibrant, active
community. The first
model analyzed in our approach – referred to as Model A – examines
the Center solely as a public sector government campus occupied only
by the CSU Stanislaus - Stockton (“CSUS”), State and local
government agencies, and other local public entities.
Private sector vendors are included only to the extent needed
to support the public agencies occupying the property (i.e.: support
retail) or to make appropriate use of the historic buildings (i.e.:
cultural tenants). The
second model in our approach – Model B – extends the analysis to
include not only CSUS and State and local agencies and support retail,
but also additional private-sector development that will expand the
uses at the site, thereby enhancing the community aspects of the
campus and helping to mitigate costs.
Our
study is based on:
·
Personal inspection and analysis of the site with
supporting consultants;
·
Interviews with CSUS’s staff;
·
Interviews with potential private sector tenants,
developers and consultants to the development industry, and with
State, County, City and other public agency personnel;
·
Interviews with community leaders, including the
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