Title
Amend Ordinance to Modify Terms with Equus-Ellis Limited Partnership for Redevelopment of Former City-Owned Property at 135 N. 2nd Ave. (Ordinance S-47052)
Description
Request to authorize the City Manager, or his designee, to amend the terms of a disposition and redevelopment agreement S-45119, and other agreements as necessary (Agreements), with Equus-Ellis Limited Partnership or its City-approved designee (Developer), associated with the sale and redevelopment of the former City-owned Ellis Building located at 135 N. 2nd Ave. (Site).
Report
Summary
In November 2018, City Council authorized business terms to enter into Agreements with the Developer for the purchase and redevelopment of the Ellis Building from the City. Following this authorization, the Developer performed their due diligence and closed on the sale of building in April 2019 for $2,250,000. The Developer commenced work on the Site in the summer of 2019 with a project that included ground floor and basement retail and restaurant uses with office on the remaining floors. A deed restriction limited allowable uses to office on the upper floors. The Developer was also required to complete the project within 24 months with one floor of a leasable office suite being completed by Sept. 1, 2020.
Work has continued at the Site since commencement and the Developer is preparing to open the building this fall with a day care user, a food and beverage user and a wellness clinic. The leasable office suite on the 6th floor is also nearing completion. However, due to the COVID-19 global pandemic’s impact on office users and resulting uncertainty of the near-term market for commercial space, the Developer has asked the City for an allowance to lease three floors of the building as co-living residential use rather than an office use. Additionally, the Developer has requested acknowledgement that obligations to pay for chilled water services from the City have been satisfied.
The following business terms have been negotiated:
- Amend the Agreements to allow for no more than three floors of the Building to be utilized for a co-living residential use.
- Completion of the 6th floor leasable office space shall be extended by three months to Dec. 1, 2020.
- Project completion date shall be extended by 12 months to July 9, 2022, to allow additional time for completion of the co-living residential space.
- The City will waive chilled water charges owed for the period after Nov. 21, 2019, provided that Developer is connected to Clearway Energy's chilled water loop by Dec. 31, 2020.
All other terms and conditions of the Agreements shall remain in full force and effect.
Concurrence/Previous Council Action
On Nov. 7, 2018, City Council authorized business terms with the Developer for the sale and redevelopment of the building through Ordinance S-45119. On Jan. 12, 2019 via Ordinance S-45340, City Council approved a 90-day extension for the Developer to conduct additional due diligence and, on Aug. 28, 2019, City Council authorized the Developer to utilize the right-of-way along 2nd Avenue for construction staging through Ordinance S-45982.
Location
135 N. 2nd Ave.
Council District: 7
Department
Responsible Department
This item is submitted by Deputy City Manager Jeff Barton and the Community and Economic Development Department.