Staff recommends that the City Council adopt a resolution authorizing the City Manager to execute a Purchase and Sale Agreement for the sale of the parcel located at 290 Conference Center Drive in the amount of $4,815,558, authorizing the City Manager to execute the necessary Grant Deed, and authorizing the City Manager or his designee to execute all necessary escrow documents.

The project site is located within the North Central Roseville Specific Plan (NCRSP) at the terminus of Conference Center Drive. The 11 acre undeveloped site has a Community Commercial - Special Area Overlay (CC/SA-NC) zoning designation and is bordered by Highway 65 to the north, open space to the east (Westfield Galleria Mall beyond), a vacant parcel to the south (Hyatt Place beyond), and Villasport athletic club to the west.

In August of 2014, City Council approved a Major Project Permit (MPP) Stage 1 and Stage 2 for the construction of a 250-room, ten-story, 190,000 square-foot hotel and 20,000 square-foot conference facility. That project was never constructed and in October of 2019 a MPP extension was approved extending the effectuation date of those entitlements to August 6, 2024. To date, the site has remained vacant and the City has no plans to develop or partner on the development of the site.

There are no identified future City needs for this land and the property is underutilized. Accordingly, the City Council declared the property as surplus on October 23, 2019. As required by the Surplus Land Act, letters offering to sell or lease the property were sent to local public and affordable housing developers; park, recreation and open space agencies; and school districts. None of these agencies expressed an interest in leasing or purchasing the property. The City has complied with the Surplus Land Act, and may dispose of the property pursuant to its own real property disposition procedures.

In June of 2020, the City released a Request for Proposals (RFP) for the sale and development of the subject site with the objective of developing the property in support of economic development efforts.

In response to the RFP, the City received two proposals and selected the project presented by APRR Management, LLC. due to the purchase price (highest offer by over $1 million) and the level of detail of the conceptual development plan (further project details are provided in the Project Description section below). At this time, the City wishes to move forward with the sale of the property as outlined within this report and consistent with the terms of the Purchase and Sale Agreement (see Attachment 1).

Project Description

The conceptual development plan noted in the RFP response includes a 64,000 square-foot (132 room) five-story luxury hotel, a 74,000 square-foot (123 room) four-story extended stay hotel, and an 80,000 square-foot two story office/retail building. The two story mixed use building will include an indoor/outdoor market with a retail, dining, and entertainment component on the ground floor and approximately 40,000 square feet of office space (accommodating up to a 160 person office space) on the second floor. The project is proposed to offer a dynamic mix of uses with a developed area totaling between 220,000 and 240,000 square feet (see Attachment 2).

The project design is preliminary in nature and will likely be modified as additional input is provided through the development process. The project will be evaluated per the California Environmental Quality Act (CEQA), prior to obtaining the appropriate approvals from the Development Services Department.

Purchase and Sale Agreement

Based on negations with APRR Management, LLC, City staff proposes moving forward with a Purchase and Sale Agreement. The Purchase and Sale Agreement identifies the terms and conditions of the property sale. Conditions of particular note are outlined below:

1. Purchase Price – The Buyer will purchase the property at a cost of $10.05 per square foot (for a total purchase price of $4,815,558).

2. Finance Terms – There is no funding request of the City. Additionally, no loan is needed for the Buyer to purchase the property and the offer is not contingent on the Buyer obtaining outside financing; however, due to the impacts of the COVID 19 pandemic, the applicant wishes to deposit funds into escrow in two phases to free up capital while completing their due diligence items. As such, a $150,000 non-refundable (pending compliance with PSA Paragraphs 10, 11, and 13(b) regarding seller defaults) earnest money deposit, will be deposited into an escrow account no later than February 15, 2021. Following that, the final payment installment will be made at the close of escrow no later than June 30, 2021.

3. Assignment Provision – The Buyer may reassign this Agreement (or any portion therein) to another legal entity following written consent of the City.

4. Close of Escrow – The close of escrow shall occur by June 30, 2021.

Pursuant to approval of the Purchase and Sale Agreement, staff estimates a property escrow of six (6) months wherein the Buyer will work on: 1) due diligence studies; 2) market research; and 3) processing of the Planning entitlements. The City retains the discretion regarding the approval of any future Planning entitlements.

The proceeds from the sale of the property (totaling $4,815,558 less escrow fees and taxes) will be deposited into the City’s Strategic Improvement Fund (SIF). No General Fund resources will be used as part of this project.

Following the sale of additional surplus property, staff anticipates returning to Council to request the allocation of funds to help initiate new economic development programs. Staff will bring back the proposed economic development programs to Council for review and consideration at a later date.

Economic Development / Jobs Created

The sale of the property will catalyze development at this site and will create several hundred jobs (related to construction, service and professional industries) and generate sales tax and transient occupancy tax (TOT) (related to the project’s retail, commercial and hotel components). In addition, the anticipated development will result in approximately 95 million dollars in capital investment, and annual property tax revenue will be generated, as the property will be converted from a tax-exempt property to a taxable property.

Further, staff finds the proposal to be in the City's best interest for the following reasons:

• The conceptual development proposal is consistent with the NCRSP and the proposed uses are principally permitted at the current location;

• The proposed project would provide unique amenities to the City’s retail core;

• The City has no plans to utilize the property for governmental purposes and the sale of the site would remove the City’s obligations to manage real property; and

• The project does not include any public financial or ownership participation and will be financed with private equity.

Based on the analysis noted within this report, Council can make the finding (per RMC Section 4.12.110(B)) that the sale and development of the property is in the best interest of the City.

The proposed project involves the sale of surplus property not located in an area of statewide, regional or area wide concern.  This activity is categorically exempt from CEQA as a Class 12 Exemption (State CEQA Guidelines Section 15312).  The Exemption has been prepared and no further CEQA action is required.

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Dominick Casey, City Manager