BACKGROUND
The 116 S. Grant Street building is located on the northwest corner of Oak and Grant Streets (APN: 013-123-025-000). The original building permits originate back to 2005. These building permits lapsed and were voided. In March 2012 a new building permit was issued and was finaled in June 2015. The building has remained unoccupied for the past five years. The building is four stories in height and approximately 56,248 square feet in size. Currently each floor is divided into 2 suites of similar size ranging from 5,216 - 5,769 leasable square feet (resulting in approximately 11,000 sq. ft. of leasable area on each floor). The fourth floor has a balcony overlooking the Roseville Civic Center and Town Square. The building has 160 dedicated parking spaces within the Oak Street Parking garage that will be reserved for this office building once the Oak Street parking garage reaches 80% occupancy.
Over the past few years, the City has been in discussions with Mr. Mohamed regarding acquisition of 116 S. Grant Street. The location of 116 S. Grant Street is optimal location in that it is adjacent to the Town Square and other City offices/operations. Prior to constructing 316 Vernon Street, the City of Roseville made an offer to acquire 116 S. Grant Street for a purchase price of $21 million, which at that time was less than the cost of constructing a new office building. The offer was declined. The purchase price has varied throughout the years ranging from $25 million to $16.7 million to the current $10.5 million asking price.
Over the past year, the City of Roseville Electric Utility has expressed interest in leasing a portion of the building, the first floor, for general administrative offices and a public counter to serve the City's utility costumers. The City has issued two Letters of Interest for this purpose. The Utility location on the first floor will combine utility services which will improve customer service, access and efficiency.
Roseville Electric has not expanded their office space footprint in more than fifteen years. The Utility has been holding funds for securing additional office space. With the continued and ever expanding legislative and State mandates, the Utility operations and programs are expected to continue to grow. Similarly the City continues to grow with approximately 20,000 dwelling units that have been approved for development within West Roseville. These units will add approximately 60,000 more residents to the City of Roseville. Additionally, the City has identified a future need for the possible expansion of City Council Chambers which could displace a portion of City operations.
According to CBRE's 3rd quarter market report, the current lease rates in the Roseville/Rocklin market for office space ranges between $1.95 - $2.12 per square foot. Assuming three floors are leased out at $2.00 per sq. ft., that would generate approximately $800,000 a year in revenue and reimburse the Electric Utility Fund for the purchase price in approximately thirteen years. Economic Development staff on a regular basis receives interest for office space within the downtown area; we would anticipate hiring a broker to help with leasing the remainder of the building.
On a regular basis, staff checks in with Mr. Mohamed regarding the sale or leasing of the office building. Each time the building owners have asked the City to consider acquisition. In May, October and early December of this year, staff checked in with Mr. Mohamed regarding the status of the building. In December, Mr. Mohamed met with City staff and made the following offer:
- Purchase price of $10,500,000.00
- Split Escrow Fees
- 30 Day Close
- City to perform and pay for the preparation of a Preliminary Site Assessment (PSA) Phase I and a commercial building inspection
- Special Condition: Plaque on building honoring the Mohamed family
The proposed purchase price is $10,500,000.00 (plus an estimated $5,000.00 in escrow fees), which would be funded through the Roseville Electric Fund with funds which can be used for capital acquisition but not operational expenses. No rate increases will result as a result of this acquisition. No General Fund resources would be needed to complete the purchase.